<PAGE>
As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
INTIRA CORPORATION
(Exact name of Registrant as specified in its charter)
----------------
<TABLE>
<S> <C> <C>
Delaware 4813 43-1875028
(State or other (Primary Standard
jurisdiction of Industrial (I.R.S. Employer
incorporation or Classification Code
organization) Number) Identification Number)
</TABLE>
----------------
5667 Gibraltar Drive
Pleasanton, California 94588
(925) 924-8000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------
Bernard V. Schneider
President and Chief Executive Officer
Intira Corporation
5667 Gibraltar Drive
Pleasanton, California 94588
(925) 924-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
<TABLE>
<S> <C>
Douglas H. Collom, Esq. James S. Scott, Sr., Esq.
Wilson Sonsini Goodrich & Rosati Shearman & Sterling
Professional Corporation 599 Lexington Avenue
650 Page Mill Road New York, NY 10022-6069
Palo Alto, CA 94304-1050 (212) 848-4000
(650) 493-9300
</TABLE>
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Amount of
Title of Each Class of Proposed Maximum Aggregate Registration Fee
Securities to be Registered Offering Price(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock ($0.001 par value).... $103,500,000.00 $27,324.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell nor does it seek an offer to buy these securities in any +
+jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated March 31, 2000.
Shares
Intira Corporation
Common Stock
------------
This is an initial public offering of shares of common stock of Intira
Corporation. All of the shares of common stock are being sold by
Intira.
Prior to this offering, there has been no public market for the common stock.
It is currently estimated that the initial public offering price will be
between $ and $ per share. Intira has applied for quotation of the
common stock on the Nasdaq National Market under the symbol "NTRA".
See "Risk Factors" beginning on page 5 to read about factors you should
consider before buying shares of the common stock.
------------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
------------
<TABLE>
<CAPTION>
Per
Share Total
----- -----
<S> <C> <C>
Initial public offering price.................................... $ $
Underwriting discount............................................ $ $
Proceeds, before expenses, to Intira............................. $ $
</TABLE>
To the extent the underwriters sell more than shares of common
stock, the underwriters have the option to purchase up to an additional
shares from Intira at the initial public offering price less the underwriting
discount.
------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 2000.
Goldman, Sachs & Co.
Lehman Brothers
Robertson Stephens
Stifel Nicolaus
------------
Prospectus dated , 2000.
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Intira appearing elsewhere in this prospectus. You should
carefully consider, among other things, the matters set forth in "Risk Factors"
beginning on page 5 of this prospectus.
Intira Corporation
We provide netsourcing solutions for mission-critical network-based
applications, also referred to as e-business applications. Netsourcing is the
outsourcing of the information technology, or IT, and network infrastructure
necessary to support these applications. We engineer, deploy and manage
comprehensive solutions through our technologically advanced netsourcing
platform, which consists of our data centers, our nationwide broadband network
and our service management centers. We have designed our netsourcing platform
for the sole purpose of meeting our customers' high performance and
availability requirements for their e-business applications.
We believe that our netsourcing solutions provide the following benefits to
our customers:
OneSource--OneCall. We provide our customers with a single point of contact
and accountability for all of the IT and network infrastructure required to
support their mission-critical e-business applications.
Guaranteed Availability. Because we are responsible for and control all of
the IT and network infrastructure of our netsourcing solutions, we are able to
offer each customer a comprehensive service level agreement covering the entire
netsourcing platform that guarantees up to 99.95% application availability. We
believe this is among the highest guarantees in the industry.
Tailored Solutions. We build tailored solutions that meet our customers'
specific application requirements from our standard set of netsourcing
services. This enables us to efficiently implement a customer's netsourcing
solution without the delays or costs associated with designing new services for
each customer.
Time-to-Market Advantage. Our netsourcing solutions enable our customers to
reduce their time to market and compete effectively by allowing them to rapidly
deploy their e-business applications and to focus on their core businesses.
Scalability. Both the netsourcing solutions we build for our customers and
our netsourcing platform are designed to scale quickly as the requirements of
our customers' mission-critical e-business applications evolve.
Cost-Efficient Solution. Our netsourcing solutions enable our customers to
leverage our leading netsourcing technologies as well as benefit from our wide
range of technical expertise.
Our data centers, located in Pleasanton, California, St. Louis, Missouri and
New York City, are "lights-out" facilities which means that they are highly
automated, requiring minimal human intervention. Our data centers are connected
by our nationwide broadband network that extends to 35 major cities throughout
the United States and Canada. Our service management centers integrate all
components of our netsourcing platform and proactively manage, monitor and
troubleshoot each customers' netsourcing solutions 24-hours-a-day, seven-days-
a-week.
1
<PAGE>
We target Fortune 1000 companies and Internet-based businesses that depend
on the performance and availability of their mission-critical e-business
applications. Our customers use our netsourcing solutions to facilitate the
operation and management of a wide variety of e-business applications,
including online marketing and sales, customer service, fulfillment, software,
document and multimedia distribution and online training. As of March 28, 2000,
we had 20 netsourcing customers who have contracted with us for an average of
$650,000 in annual netsourcing services over an average contract length of 32
months. Our netsourcing customers include Emerson Electric, FTD.com, Hewlett-
Packard, Intelisys, New Balance Athletic Shoe and Telstra.
We were incorporated in Missouri in January 1998 and reincorporated in
Delaware in January 2000. Our principal executive offices are located at 5667
Gibraltar Drive, Pleasanton, California 94588, and our telephone number is
(925) 924-8000.
----------------
We have filed a trademark application for the mark "Intira." The mark
"OneSource--OneCall" and our logo are unregistered trademarks. Each trademark,
trade name or service mark of any other company appearing in this prospectus
belongs to its holder.
2
<PAGE>
The Offering
<TABLE>
<S> <C>
Shares offered.................. shares
Shares to be outstanding after
this offering.................. shares
Proposed Nasdaq National Market
symbol......................... "NTRA"
Use of proceeds................. For general corporate purposes, including
working capital, capital expenditures, funding
our losses and potential acquisitions of, or
investments in, complementary businesses,
technologies and products.
</TABLE>
The shares of common stock to be outstanding after this offering is
based on 39,842,179 shares outstanding as of December 31, 1999 after giving
effect to the automatic conversion of all of our preferred stock into
16,033,886 shares of common stock upon the completion of this offering and the
issuance of 1,897,346 shares of common stock to Viatel Corporation after
December 31, 1999 in connection with a commercial relationship we have
established with Viatel. The number of shares to be outstanding after this
offering excludes:
. 13,600,527 shares of common stock available for future issuance under our
currently effective equity incentive plans of which options to purchase
7,624,902 shares were outstanding at December 31, 1999, with exercise
prices ranging from $0.27 to $3.20 per share, and options to purchase
4,565,816 shares granted since December 31, 1999, with exercise prices
ranging from $5.87 to $6.67 per share;
. 5,238,912 shares of common stock issuable upon exercise of outstanding
warrants, 567,672 of which have an exercise price of $0.001 per share and
the remainder of which have an exercise price of $0.007 per share;
. 78,128 shares of common stock issued after December 31, 1999, other than
in connection with exercises under outstanding options; and
. 4,875,000 shares available for future issuance under equity incentive
plans that will be effective upon the completion of this offering.
All of the information in this prospectus reflects a 5-for-2 stock split
effected in January 2000 in connection with our reincorporation into Delaware
and a 3-for-2 stock split to be effected prior to the completion of this
offering. In addition, all of the information in this prospectus assumes that
the underwriters will not exercise their option to purchase additional shares.
3
<PAGE>
Summary Financial Information
(in thousands, except for per share information)
<TABLE>
<CAPTION>
Period from
Inception
(January 20, 1998) Year Ended
to December 31, 1998 December 31, 1999
-------------------- -----------------
<S> <C> <C>
Statement of Operations Data:
Revenue................................. $ 62 $ 4,048
Operating expenses...................... 7,159 63,091
Operating loss.......................... (7,097) (59,043)
Net loss................................ (7,574) (62,533)
Basic and diluted net loss per share.... $ (0.47) $ (3.13)
Shares used in computing basic and
diluted net loss per share............. 16,280 20,008
</TABLE>
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- -------- -----------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents...................... $ 11,195 $107,395 $
Total assets................................... 83,690 204,961
Revolving credit facility...................... 19,324 19,324
Current portion of capital lease obligations... 17,736 17,736
Long-term debt, less current portion........... 2,122 46,485
Capital lease obligations, less current
portion....................................... 23,887 23,887
Accumulated deficit............................ (70,107) (70,107)
Total stockholders' equity..................... 1,414 78,322
</TABLE>
The balance sheet data displayed in the "Pro Forma" column above reflects:
. the February 2000 sale of 13% senior discount notes with $188.5
million aggregate principal amount at maturity due in February 2010
and warrants to purchase 4,671,240 shares of common stock, from
which we received net proceeds of $96.2 million; and
. the issuance of 1,897,346 shares of common stock to Viatel after
December 31, 1999.
The balance sheet data displayed in the "Pro Forma As Adjusted" column above
also reflects:
. the automatic conversion of our outstanding preferred stock into
16,033,886 shares of common stock upon the completion of this
offering; and
. the sale of shares of common stock offered by this prospectus at an
assumed initial public offering price of $ per share, after
deducting the underwriting discounts and estimated offering
expenses payable by us, as described in "Use of Proceeds" on page
20 of this prospectus.
4
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below before making an investment
decision. If any of the following risks actually occurs, our business,
financial condition and results of operations could be seriously harmed. In
that case, the trading price of our common stock could decline, and you could
lose all or part of your investment.
We are an early stage company with a limited operating history. As a result,
our business is difficult to evaluate and our operating results will be
difficult to forecast.
We were incorporated in January 1998 and initially offered a broad range of
services, including netsourcing, Internet and private network services. In mid-
1999 we decided to focus exclusively on providing netsourcing solutions. To
date, we have generated a limited amount of revenue from netsourcing services.
For the year ended December 31, 1999, we had total revenue of only $4.0
million, of which $2.5 million was derived from our netsourcing services.
Due to our limited operating history, particularly with respect to
netsourcing, there is limited financial and operating data with which to
evaluate our performance and prospects and the merit of investing in our common
stock. Furthermore, the netsourcing market has only begun to emerge and neither
we nor you have the benefit of a highly comparable historical business model
for purposes of analyzing our performance and business plan. The revenue and
income potential of our netsourcing business is unproven and you should not
rely on the results for any historical period as an indication of our future
performance. If we do not achieve our expected revenue growth, our operating
results will be below our expectations and the expectations of investors and
market analysts, which could cause the price of our common stock to decline.
We have experienced increasing operating losses, net losses and negative cash
flow and we expect to incur future losses.
We have generated increasing quarterly losses, net losses and negative cash
flows since inception. For the year ended December 31, 1999, our first full
year of operations, we had an operating loss of $59.0 million, a net loss of
$62.5 million and negative cash flow of $26.4 million from operating activities
and $34.0 million from investing activities. In addition, we had an accumulated
deficit of $70.1 million as of December 31, 1999. We expect that our operating
losses, net losses and negative cash flows will continue to increase for the
foreseeable future as we continue to expand our business and incur significant
development, sales and marketing and administrative expenses. We cannot be
certain that we will ever achieve operating income, net income or positive cash
flows. If we cannot, we may not be able to meet our working capital
requirements or pay interest owed on our debt, either of which could have a
material adverse effect on our business and could cause the price of our common
stock to decline. Please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations" beginning on page 24 of this prospectus
for more detailed information concerning our losses, financial condition and
results of operations.
In particular, we anticipate that our expenses will increase substantially
over the next 12 months as we:
. increase our sales and marketing activities;
. expand our Pleasanton, California and St. Louis, Missouri data centers;
. work with Viatel to make our planned data centers in Amsterdam,
Frankfurt, London and Paris operational;
. enhance our IT and network infrastructure; and
. hire additional personnel to keep pace with our growth.
5
<PAGE>
In addition, we may establish data centers in other cities in the United
States and Europe as well as in Canada and the Pacific Rim. After locating an
appropriate site for a data center, it typically requires up to six months to
construct the necessary facilities, install equipment and telecommunications
infrastructure and hire the operations and sales personnel needed to conduct
business at that site. As a result, we incur significant costs before a data
center begins generating revenue.
Our operating expenses are largely based on currently-anticipated revenue
trends, which may not be realized. In addition, our expenses will increase as
we expand our business. A high percentage of our expenses are and will continue
to be fixed. We will need to generate significant revenue to achieve
profitability. Challenges in doing so include our ability to:
. increase our customer base;
. maintain and expand existing customer use of our netsourcing solutions;
. expand our geographic reach and enhance our netsourcing solutions to meet
customer demands; and
. hire and retain qualified personnel, particularly for sales and IT
positions.
If we are unable to expand our sales organization successfully or if we do not
develop and maintain successful relationships with our channel partners, our
ability to sell our netsourcing solutions will be adversely affected.
We must expand our sales organization in order to attract new customers and
increase revenue. Any failure to expand our sales organization could limit our
ability to increase our netsourcing customer base and grow our business. In
addition, if our sales organization does not sell our netsourcing solutions
effectively, we will not be able to achieve our anticipated revenue growth,
which may cause the price of our common stock to decline. Our netsourcing
solutions require sales personnel who are familiar with the IT and network
problems associated with supporting complex e-business applications. To sell
our netsourcing solutions effectively, we need to attract and retain personnel
with these skills for our direct sales force. However, competition for skilled
sales personnel is intense. In addition, we reorganized our sales organization
in connection with our decision in mid-1999 to focus exclusively on netsourcing
solutions. As a result, the majority of our sales organization has been with us
less than one year.
In addition to our sales organization, we anticipate that one of the
principal means for selling our netsourcing solutions will be through our
channel partners. If we are unable to develop and maintain good relationships
with channel partners, our ability to continue to sell our netsourcing
solutions may be negatively impacted. To date we have made a number of sales of
our services through our channel partners, including Hewlett-Packard and IBM.
These companies are under no obligation to refer their customers to us or
inform us of business opportunities, and they may compete with us or develop
marketing relationships with our competitors.
If the market for netsourcing solutions does not continue to develop, our
ability to grow our business will be adversely affected.
The market for netsourcing has only recently begun to develop and if it
fails to gain widespread acceptance or develops more slowly than expected, or
if our netsourcing solutions, in particular, do not achieve market acceptance,
our ability to increase our revenue will be adversely affected. In addition, as
part of our netsourcing solution, we are responsible for the entire netsourcing
platform that supports our customers' e-business applications. This means that
our customers must transfer responsibility for and control of all of the
underlying IT and network infrastructure that support their
6
<PAGE>
applications. Many potential customers may be reluctant to transfer this
responsibility because they do not want to be dependent on a third party,
especially an early stage company like us, for the availability of their
mission-critical e-business applications. If we are unable to overcome this
reluctance and convince businesses of the benefits of our netsourcing
solutions, we will be unable to achieve our anticipated revenue growth.
We derive our netsourcing revenue from a limited number of customers, and any
decrease in revenue from a major customer could seriously harm our business.
The loss of a single customer or channel partner could have a significant
negative impact on our revenue for a particular period. As of March 28, 2000,
we had only 20 netsourcing customers. Accordingly, our netsourcing revenue to
date has been recognized from a small number of customers. In the year ended
December 31, 1999, revenue from three separate customers associated with
Hewlett-Packard represented 53% of our total revenue. We expect that a large
percentage of our revenue may continue to depend on a small number of large
customers or customers obtained through a significant channel partner.
Additionally, because our revenue is concentrated among a limited number of
customers, the timing of the receipt of a single customer sale can have a
significant impact on our revenue and lead to significant fluctuations in
quarterly operating results.
Customer claims based on service failures could reduce revenue and lead to lost
business.
We offer all of our customers service level agreements in which we guarantee
specified levels of application availability ranging from 98.5% to 99.95%, as
well as network performance, data recovery services, reporting and on-time
installation. These commitments are generally limited to a credit consisting of
free service for a specified period of time. For example, in a given month, for
every 15 minutes of application downtime that exceeds a level of guaranteed
application availability in a customer's service level agreement, we will
credit that customer one day of netsourcing fees, up to a maximum of one
month's credit. Any significant obligations arising from our failure to meet
our service level commitments will reduce our revenue and adversely affect our
results of operations.
Our systems could fail for many reasons, which could cause service
interruptions and harm our business.
If our systems fail for any reason, our services may be interrupted, which
would cause a corresponding interruption in our customers' application. Any
service interruptions could significantly harm our operating results and,
additionally, could adversely affect our reputation. We have experienced
temporary service interruptions in the past, and may experience them again in
the future. Our operations are dependent upon our ability to protect our IT and
network infrastructure against damage from human error, fire, earthquakes,
floods, power loss, telecommunications failures, sabotage, physical or
electronic security breaches, acts of vandalism and similar events. Despite the
precautions we have taken and plan to take, including providing for multiple
redundancies, the occurrence of a natural disaster or other unanticipated
problems at one or more of our data centers could result in interruptions in
the netsourcing solutions we provide to our customers. Furthermore, although
our service level agreements typically provide that we are not liable for any
incidental, punitive, indirect and consequential damages arising from service
disruptions or equipment failure, we may nonetheless be found liable for
damages, which could exceed our liability insurance.
7
<PAGE>
Unpredictability of our quarterly and annual operating results could affect our
stock price.
We may experience significant fluctuations in our future quarterly and
annual operating results due to a variety of factors, including:
. demand for and market acceptance of outsourcing solutions for supporting
mission-critical e-business applications, generally, and our netsourcing
solutions, in particular;
. our ability to increase our customer base and retain and increase sales
to existing netsourcing customers as they scale and enhance their e-
business applications;
. the length of each sale cycle;
. the expansion and success of our marketing efforts;
. fluctuations in the amount of IT and network infrastructure used by
customers;
. our ability to integrate new information and network technologies and
services;
. introductions of new products or services or enhancements of existing
ones by us and our competitors;
. changes in our pricing policies and those of our competitors; and
. the timing and magnitude of capital expenditures, including costs
relating to the expansion of our operations.
In addition, a relatively large portion of our expenses are fixed,
particularly with respect to hardware, depreciation, lease obligations,
interest and personnel. Consequently, our results of operations are
particularly sensitive to fluctuations in revenue.
As a result of these factors, it is possible that in any future quarter our
operating results could be below the expectations of securities analysts or
investors. In this event, there could be a significant decline in the price of
our common stock.
Our growth could be limited if we are unable to attract and retain qualified
personnel.
We believe that our success depends largely on our ability to attract and
retain highly skilled technical, managerial, sales and marketing personnel. If
we are unable to successfully attract and retain personnel, we may not be able
to successfully expand our business and increase our revenue. We may not be
able to hire the necessary personnel to implement our business strategy, or we
may need to pay higher compensation for employees than we currently expect. In
particular, many of our sales, data center, management and development
positions require personnel with sophisticated technical skills and experience.
Individuals with these skills are in short supply and competition for them is
intense. In addition, public companies, such as ours, may experience difficulty
attracting personnel because there may be less opportunity to profit from stock
options with a public company than with a private company.
Our ability to sell our netsourcing solutions depends upon the continued use of
the Internet and the migration of companies to the e-business model.
Our ability to sell our netsourcing solutions could suffer dramatically if
companies do not continue to use the Internet and migrate to an e-business
model that relies on network-based commerce and communications by and among
customers, suppliers and employees. Companies' use of the Internet and
migration to an e-business model are relatively new and still evolving and
could also be limited by:
. concerns over transaction security and user privacy;
8
<PAGE>
. inadequate network infrastructure for all or key components of the
Internet; and
. inconsistent performance of the Internet.
For example, in February 2000, the e-business applications of a number of
companies, including eBay, Yahoo! and Amazon.com experienced disruptions
because of actions by computer hackers. Concern over these types of Internet
sabotage or other security breaches could cause companies to delay or abandon
their plans to increase their use of the Internet or adopt an e-business model.
This in turn would reduce the demand for outsourcing solutions to support e-
business applications and adversely affect our ability to sell our netsourcing
solutions and grow our business.
The market in which we compete is highly competitive and if we fail to compete
effectively, we will be unable to attract a sufficient number of new customers
or retain our current customers.
The market in which we compete is highly competitive. There are few
substantial barriers to entry and we have no patented technology that would bar
competitors from our market. We expect to face additional competition from
existing competitors and new market entrants in the future. Our current and
potential competitors in the market include:
. providers of web and application hosting services;
. providers of co-location services;
. application service providers;
. national and regional Internet service providers and telecommunications
companies; and
. IT integration, consulting and outsourcing firms.
Our competitors and potential competitors may operate in one or more of
these areas and include AT&T, Digex, Digital Island, Exodus Communications,
GlobalCenter, IBM, Intel, NaviSite, Qwest Communications and USInternetworking.
Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we do.
As a result, certain of these competitors may be able to:
. develop, acquire and expand their IT and network infrastructures and
service offerings more quickly;
. devote greater resources to the marketing and sale of their products;
. adapt to new or emerging technologies and changes in customer
requirements more quickly;
. adopt more aggressive pricing policies; and
. take advantage of acquisitions and other strategic opportunities more
readily.
Some competitors have entered into joint ventures or consortiums to provide
services that may be competitive with our netsourcing solutions. For example,
Qwest and IBM have recently announced an alliance to build 28 data centers in
North America, over the next three years, with IBM responsible for building the
data centers and Qwest providing the network infrastructure. We also believe
that there is likely to be continued consolidation in our markets, which could
increase competition. For example, in the future, large application providers
may merge or form strategic alliances with national Internet service providers
and compete with us to provide support for e-business applications.
9
<PAGE>
The prices we charge for our netsourcing solutions may be higher than those
charged by our competitors. In the future we could be exposed to increasing
price competition. A large portion of a netsourcing provider's costs is fixed
and additional services can be provided with only an incremental increase in
costs. As a result, if there are several netsourcing providers with unused
capacity, severe price competition could ensue. In addition, some of our
competitors may also be able to provide customers with additional benefits or
services that we cannot, which could reduce the overall costs of their services
relative to our netsourcing solutions. We may be required to reduce prices
periodically to respond to competition. Our failure to achieve or sustain
adequate pricing levels would adversely affect our operating results and could
cause a decline in the price of our common stock.
Our business, financial condition and prospects could be seriously harmed if we
fail to manage our growth effectively.
Our business, financial condition and prospects could be seriously harmed if
we fail to manage our growth effectively. We are experiencing, and expect to
continue experiencing, rapid growth with respect to the geographic expansion of
our data centers and network infrastructure, expansion of our service offerings
and customer base, and increases in the number of employees. The number of our
employees has increased from 74 at December 31, 1998 to 165 at December 31,
1999 and to 207 at March 15, 2000. This growth has placed, and we expect it to
continue to place, a significant strain on our financial, managerial,
operational and other resources. This expansion also requires significant time
commitment from our senior management and places a significant strain on their
ability to manage our existing business. Our ability to manage our growth
effectively will require us to continue to expand operating and financial
procedures and controls, to replace or upgrade our operational, financial and
management information systems and to attract, train, motivate and retain key
employees.
We are dependent on a limited number of third party suppliers for
telecommunications services and infrastructure equipment and any failure to
obtain required services or equipment could cause interruptions in our service.
We depend on other companies to supply telecommunications services for our
network and equipment for our infrastructure. In the quantities and quality we
require, these services and equipment are available only from limited sources.
We do not own any of the fiber optic telecommunications network that supports
our netsourcing platform. Any failure of telecommunications service providers
to provide the capacity we require may result in the reduction or interruption
of services to our customers. We also rely on telecommunications providers to
connect many of our customers to our netsourcing platform. If for any reason,
these telecommunications providers fail to provide adequate capacity for our
customers' needs on a timely basis, our business will be harmed.
In addition, we require significant amounts of infrastructure equipment,
such as servers, at our data centers to meet our customers' netsourcing
requirements. Generally, we do not carry significant inventories of equipment
and have no guaranteed supply arrangements with our vendors. As a result, our
ability to deploy and expand our customer solutions may be limited if the
necessary equipment cannot be obtained quickly or cost-effectively from our
vendors. In addition, if our sole or limited source suppliers fail to provide
products or components that comply with evolving Internet and
telecommunications standards or that are not compatible with other products or
components used by us in our netsourcing platform, our business will be harmed.
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<PAGE>
We may need additional capital to fund our operations and finance our growth,
and we may not be able to obtain it on terms acceptable to us or at all.
We may need additional capital to fund our operations and finance our
growth, and we may not be able to obtain it on terms acceptable to us or at
all. We require substantial amounts of capital to fund our business. Since our
inception, we have experienced significant negative cash flow from operations
and we expect this to continue. In the past, we have funded our working
capital, operating losses and capital expenditures through proceeds from equity
and debt financings, and, to a lesser extent, equipment leases. We believe that
the estimated net proceeds from this offering together with cash on hand and
our expected revenue growth will be sufficient to fund our operations through
at least the end of 2001. However, we may need to raise additional capital from
equity or debt resources earlier if:
. we are not successful in implementing our business plan, expanding our
customer base and significantly increasing revenue in a short period of
time;
. we expand more rapidly than currently anticipated;
. our working capital needs, operating losses and capital expenditures
exceed our current expectations; or
. we make acquisitions of, or investments in, complementary businesses,
technologies and products.
Moreover, the existing agreements that govern our debt contain covenants
that may limit our ability to obtain additional financing. We may not be able
to obtain additional debt or equity financing in a timely manner, on acceptable
terms or at all. If we cannot, we may be forced to alter our business strategy,
curtail or abandon our plans to expand our operations and our sales and
marketing efforts, sell assets or forego strategic opportunities. Any of these
events would have a material adverse effect on our business and could cause a
decline in the price of our common stock.
Our high level of debt may impair our ability to achieve profitability.
As of February 29, 2000, our total bank borrowings, debt, capital lease
obligations and accounts payable were approximately $153.5 million and our
total borrowing availability under existing equipment loans and working capital
lines of credit was approximately $28.0 million, subject to the applicable
borrowing conditions. We may incur additional debt in the future. Our high
level of debt could negatively affect us in a number of ways, including:
. limiting our ability to obtain additional financing to fund future
working capital, operating losses, capital expenditures, acquisitions and
other general corporate requirements;
. limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete;
. placing us at a competitive disadvantage relative to less leveraged or
better capitalized competitors; and
. requiring the dedication of a significant portion of our cash flow from
operations to make payments on our debt, thereby limiting the
availability of such cash flow to fund other general corporate
requirements.
In February 2000, we issued 13% senior discount notes with $188.5 million
aggregate principal amount due at maturity in February 2010. We are not
required to make cash interest payments on these notes until February 2005.
Thereafter, and each year until 2010, $24.6 million of our cash flow from
operations will be used to make interest payments on these notes, thus reducing
funds available for other corporate purposes.
In addition, a portion of our debt is secured by substantially all of our
assets. This may further limit our ability to obtain new financing or refinance
our existing debt on commercially reasonable
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<PAGE>
terms. Also, if we default on our outstanding debt, the lenders could foreclose
on the collateral, which could significantly harm our business. If we are
unable to generate sufficient cash flow from operations, we will have to
refinance all or a portion of our existing debt or obtain other sources of
financing. If we cannot refinance our debt or obtain sources of financing, we
will have to sell assets or default on the payments of our debt, which could
seriously harm our business and would cause a decline in the price of our
common stock.
We may not be able to update our IT and network infrastructure quickly enough
to meet customer requirements, which would adversely affect our ability to
attract new customers and retain current ones.
If we are unable to update our IT and network infrastructure quickly enough
to meet or exceed customer requirements, our ability to sell our netsourcing
solutions and gain market share would be adversely affected. The markets we
serve are characterized by rapidly changing technology, evolving industry
standards, emerging competition and the frequent introduction of new services,
software and other products. Businesses are constantly developing more complex
applications requiring greater processing power, bandwidth and storage
capacity. Our success depends partly on our ability to enhance existing or
develop new netsourcing services that meet changing customer needs in a timely
and cost-effective manner. We cannot be sure, however, that we will
successfully meet these needs. For example, if software application
architecture changes in significant ways, we may be forced to update our
netsourcing platform. This could require substantial time and expense, and even
then we could not be sure that we would succeed in adapting our netsourcing
platform to these and other technological developments.
Our business could be harmed if our systems are not compatible with other
products and services.
We believe that our ability to compete successfully depends on the continued
compatibility of our netsourcing solutions with products, services and
architectures offered by various vendors. Our failure to conform to a
prevailing standard, or the failure of a common standard to emerge, could have
a material adverse effect on our ability to sell our netsourcing solutions and
grow our business. Although we will work with vendors to test new products, we
cannot be sure that their products will be compatible with our netsourcing
platform or that they will adequately address changing customer needs. While we
currently plan to support emerging standards, we cannot be sure what new
industry standards will develop. We also cannot be sure that we will be able to
conform to these new standards quickly enough to stay competitive.
We may experience difficulties in managing the expansion of our netsourcing
capabilities.
If we are unable to expand and adapt our IT and network infrastructure to
meet increasing and changing customer requirements, including the demands
placed on our netsourcing platform as our customer base expands, we may lose
customers and be unable to attract new ones. The successful expansion and
development of our IT and network infrastructure and capabilities will depend
on our ability to assess new markets, identify additional data center sites,
install facilities and establish local peering interconnections with Internet
service providers, all in a timely manner, at reasonable costs and on terms and
conditions acceptable to us. Our failure to achieve or maintain high levels of
data storage capacity, transmission speed and application availability could
significantly reduce consumer demand for our netsourcing solutions and
adversely affect our ability to grow our business and meet our service level
agreement commitments. We may not be able to provide our existing customers and
any new customers with the increasing levels of data storage capacity,
transmission speed or the availability that they may require for a number of
reasons, including:
. our inability to predict and prepare for increases in capacity needs;
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<PAGE>
. our potential inability to develop the network infrastructure needed to
maintain adequate data transmission speeds; or
. our inability to secure additional network capacity from third party
suppliers.
The lengthy sales cycle for our netsourcing solutions makes our revenue
susceptible to fluctuations.
If we are unable to obtain customer commitments or if we experience delays
obtaining customer commitments due to lengthy sales cycles, our revenue could
be adversely affected. Our sales cycle is typically two to four months and is
occasionally lengthened due to the fact that we need to educate potential
customers on the benefits of netsourcing and convince them to overcome their
reluctance to transfer responsibility for and control of the netsourcing
infrastructure that supports their mission-critical e-business applications,
especially to an early-stage company. As a result, any given period may include
substantial selling expenses without related revenue and, accordingly, our
revenue may fluctuate substantially. These risks could have a material adverse
effect on our operating results and could cause a decline in the price of our
common stock.
Potential regulation of Internet service providers could adversely affect our
operations.
Potential regulation of Internet service providers could adversely affect
our operations. The FCC treats Internet service providers, including Internet
backbone operators that lease transmission capacity from common carriers, as
information service providers. Information service providers like us are exempt
from regulations governing common carriers, including the obligation to
directly contribute to the Universal Services Fund, a fund which was created by
federal statute and is funded by interstate telecommunications carriers for the
purpose of ensuring that all segments of the population of the United States
have access to basic telecommunications services. If this regulatory
classification were to change, we could be subject to a greater degree of
regulation, including being required to contribute to the Universal Service
Fund and complying with reporting requirements and other regulations, all of
which would increase our operating expenses.
The Federal Communications Commission or other government authorities could
enact regulatory changes that may negatively impact our operations.
Changes in the regulatory environment relating to Internet connectivity and
telecommunications services market, including regulatory changes which impact
the cost of transmission services or increase the likelihood of competition,
could negatively affect the prices at which we sell our services which could
adversely affect our operating results.
Our business is dependent on the development and maintenance of the Internet
infrastructure.
Our success will depend largely on the development and maintenance of the
Internet infrastructure. This includes maintenance of a reliable network
backbone with the necessary speed, data capacity and security, as well timely
development of complementary products such as high speed modems, for providing
reliable Internet access and services. Because global commerce and the online
exchange of information is new and evolving, we cannot predict whether the
Internet will prove to be a viable commercial marketplace in the long term. The
Internet has experienced, and is likely to continue to experience, significant
growth in the numbers of users and amount of traffic. If the Internet continues
to experience increased numbers of users, increased frequency of use or
increased bandwidth requirements, the Internet infrastructure may be unable to
support the demands placed on it. In addition, the Internet could lose its
viability due to delays in the development or adoption of new standards and
protocols to handle increased levels of activity or due to increased
governmental regulation. The infrastructure and complementary products or
services necessary to make the Internet a viable commercial marketplace for the
long term may not be developed successfully, in a timely manner or at all. All
of these risks could have an adverse effect on the demand for our netsourcing
services.
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We are dependent on Viatel for our planned European expansion.
If Viatel fails to perform or is unable to complete our European data
centers on a timely basis, our ability to commence European operations will be
harmed, which could negatively affect our business. In January 2000, we entered
into a binding memorandum of understanding with Viatel in order to extend the
availability of our netsourcing solutions to Europe. Under this memorandum,
Viatel is obligated to build out and dedicate to us portions of their existing
data centers in Amsterdam, Frankfurt, London and Paris by the end of 2000.
Although the requirements for the data centers have been developed by us with
Viatel, Viatel will be primarily responsible for construction of the data
center facilities, including purchasing and installing the necessary equipment.
As a result, our ability to expand our services into Europe is heavily
dependent on Viatel.
We are currently negotiating with Viatel to enter into commercial agreements
that would supersede the memorandum of understanding. We cannot assure you that
we will be able to finalize these contractual arrangements on terms that are
acceptable to us, if at all. If we are unable to finalize these contractual
arrangements with Viatel, the terms of our commercial relationship with Viatel
may be governed by the memorandum of understanding. Any serious or protracted
dispute with Viatel over the terms of the memorandum of understanding could
adversely affect our ability to expand our business into Europe, including
opening our planned data centers in Amsterdam, Frankfurt, London and Paris.
Furthermore, if a dispute with Viatel were to arise and Viatel did not complete
the planned data centers, we would be required to find another partner to help
us expand into Europe. We may not be able to enter into a relationship with a
suitable replacement partner on terms that are acceptable to us, if at all.
As we expand internationally, we will face risks relating to international
economic and political conditions.
In addition to our planned data centers in Amsterdam, Frankfurt, London and
Paris, we may also establish data centers in other European metropolitan cities
as well as in Canada and the Pacific Rim. We may not be able to market, sell
and deliver our services outside the United States successfully. In addition,
there are risks inherent in conducting business internationally. These include:
. challenges in staffing and managing foreign operations;
. different technology standards and potential incompatibility with our
existing netsourcing platform;
. unexpected changes in regulatory requirements or different legal
requirements;
. localization requirements;
. unfamiliar employment laws and practices in foreign countries;
. fluctuations in currency exchange rates;
. tariffs and other trade barriers;
. potentially adverse tax consequences; and
. political instability.
Any of these risks could adversely affect our international operations and,
consequently, our business, results of operations and financial condition.
Our executive team has been together for a relatively short period of time may
not be able to work together to successfully implement our business strategy.
Our management team is relatively new and has not worked together
previously. Almost all of our executive officers, including our president and
chief executive officer, our chief financial officer,
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<PAGE>
and several vice presidents, have been employed by us for a relatively short
period of time. This may make it difficult to successfully implement our core
business objectives of expanding our netsourcing platform, developing leading
products and services and expanding our customer base. If our management team
fails to successfully work together and address our business objectives, our
business and prospects will be harmed.
We depend on a limited number of key personnel who would be difficult to
replace.
Our success depends on the continued services of our key technical, sales
and senior management personnel. Losing one or more of our key employees could
adversely affect our ability to grow our business. Except for our employment
agreement with Bernard Schneider, our president and chief executive officer,
the employment of all of our executive officers and key technical personnel is
at will or terminable upon no more than 14 days advance notice. Our employment
agreement with Mr. Schneider is for a three-year period and terminates in
January 2002. See "Management--Employment Agreements" beginning on page 52 of
this prospectus.
We face security risks in transmitting confidential information over our
network infrastructure.
Despite our design and implementation of a variety of security measures,
security breaches caused by unauthorized access, computer viruses, sabotage and
other problems may occur, including unauthorized access to confidential
information, such as credit card and bank account numbers stored in our
computer systems and those of our customers. Such security problems could
result in liability to us, harm our reputation and result in the loss of
existing or potential customers. A significant concern with respect to
electronic commerce and communications is the secure transmission of
confidential information over public networks. The costs required to eliminate
computer viruses and alleviate other security problems could be prohibitively
expensive and the efforts to address such problems could result in
interruptions or delays in service to our customers.
Our business will be adversely affected if we are unable to protect our
intellectual property.
We attempt to protect our intellectual property rights by limiting access to
the distribution of our software, documentation and other proprietary
information and by relying on a combination of copyright, trademark and trade
secret laws. In addition, we enter into confidentiality agreements with all of
our employees and certain customers, vendors and strategic partners. These
steps may fail to prevent the misappropriation of our intellectual property,
particularly in foreign countries where the laws may not protect our
proprietary rights as fully as in the United States. If we fail to adequately
protect our proprietary rights, our competitors could offer similar products,
potentially harming our competitive position and decreasing our revenues.
In addition, we presently do not have any patents issued or patent
applications pending. We cannot be sure that any future patent applications
will be approved, that any issued patents will protect our intellectual
property or that any issued patents will not be challenged by third parties.
Other parties may independently develop similar or competing technology or
design around any of our future patents.
We may become a party to litigation in the future to protect our
intellectual property or as a result of an alleged infringement of others'
intellectual property. These claims and any resulting lawsuit, if successful,
could subject us to significant liability for damages and/or invalidation of
our proprietary rights. These lawsuits, regardless of their success, would
likely be time-consuming and expensive to resolve and would divert management
time and attention. In recent years, there has
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<PAGE>
been significant litigation in the United States involving patents and other
intellectual property rights. In the future, we may be subject to a successful
claim of infringement against us and our failure or inability to develop non-
infringing technology or license the infringed technology on acceptable terms
and on a timely basis, would harm our business by reducing our revenues or
increasing our expenses.
Hewlett-Packard, on behalf of Intria-HP, has asserted that our use of the mark
"Intira" violates their trademark rights and this dispute may potentially force
us to change our name or otherwise adversely affect our business.
In February 2000, we received a letter from Hewlett-Packard on behalf of its
affiliate Intria-HP Corporation, a Canadian company and provider of financial
processing solutions, asserting that our use of the name "Intira" violates
their trademark rights with respect to the mark "Intria" and "Intria-HP" and
requesting that we stop using the name Intira. If Intria-HP or Hewlett-Packard
were to bring suit against us, the dispute could be time consuming and costly
and we cannot assure you that we will necessarily prevail in litigation. Due to
the unpredictable nature of intellectual property disputes generally and given
that this matter is at an early stage, we cannot ascertain the availability of
injunctive relief or other equitable and legal remedies that Hewlett-Packard or
Intria-HP may have or estimate the total expenses, possible damages or
settlement value, if any, that we may incur in connection with Hewlett-
Packard's claim. In addition, our business could be harmed if we were to engage
in a protracted dispute with Hewlett-Packard, one of our principal customers
and channel partners. We could potentially be prevented from using the name
"Intira," be required to enter into a licensing agreement with Intria-HP or
Hewlett-Packard and pay monetary damages. Furthermore, Hewlett-Packard and/or
Intria-HP may not agree to issue a license to us and, even if they do, the
terms of such a license may not be acceptable to us. In the event of a
successful claim against us forcing us to change our name, our ability to
develop our brand name would be seriously harmed and this could adversely
affect our ability to attract customers and grow our business.
We may engage in acquisitions, and we may be unable to successfully integrate
any new operations, technologies, products or personnel.
In the future, we may engage in acquisitions of product lines, technologies
and businesses. We currently have no commitments or agreements with respect to
any such acquisition. In the event that such an acquisition does occur, we may
be particularly susceptible to risks associated with the integration of
operations, technologies, products and personnel and the diversion of
management's attention from other business concerns.
Control by existing stockholders may limit your ability to influence the
outcome of director elections and other matters requiring stockholder approval.
Upon completion of this offering, our executive officers, directors and
principal stockholders and their affiliates will own shares or
approximately % of the outstanding shares of common stock. If they act
together, these stockholders would be able to significantly influence matters
requiring approval by our stockholders, including the election of directors and
the approval of mergers or other business combination transactions. This
concentration of ownership could have the effect of delaying or preventing a
change in our control or otherwise discouraging a potential acquirer from
attempting to obtain control of us, which in turn could cause the market price
of our common stock to decline or prevent our stockholders from realizing a
premium in the market price associated with the prospect of an acquisition.
One of our founders who is no longer employed with us may claim that he owns
our inventions and any such claim may adversely affect our business.
We do not have an agreement with Timothy M. Roberts, one of our founders,
and our former president and chief technology officer and a former member of
our board of directors, that we own all
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intellectual property, if any, relating to our business that Mr. Roberts may
have developed either prior to his employment with us or in connection with his
employment. Although we do not believe that any of the intellectual property,
if any, to which Mr. Roberts may lay claim are material to our business, any
potential rights he might assert could hurt our business. Mr. Roberts may claim
that he solely or jointly owns such intellectual property, including any
improvements that we may develop to this intellectual property. Any dispute
with Mr. Roberts over the ownership of our intellectual property could be time
consuming and costly and may result in litigation. If Mr. Roberts is successful
in a claim that he owns solely or jointly any of our intellectual property, he
may attempt to use our intellectual property to compete with us or attempt to
license our intellectual property to third parties to compete with us.
We expect to experience volatility in our stock price, which could negatively
affect your investment.
Prior to this offering, you could not publicly buy or sell our common stock.
Despite this offering, an active public market for our common stock may not
develop or be sustainable. The market for technology stocks has been extremely
volatile. The following factors could cause the market price of our common
stock to fluctuate significantly from the price paid by investors in this
offering:
. the loss of a major customer or channel partner;
. the addition or the departure of key personnel;
. actual or anticipated variations in our quarterly or yearly operating
results;
. announcements by us or our competitors of significant contracts, new
products or technological innovations, acquisitions, strategic
relationships, or capital commitments;
. changes in financial estimates of our business, in particular or our
industry, in general, by securities analysts;
. sales by us or our current stockholders of common stock or other equity
securities;
. press coverage of network outages or Internet service interruptions;
. changes in market valuations of networking, Internet and netsourcing
companies; and
. general fluctuations in stock market prices and volumes.
If our stockholders sell a substantial number of shares of our common stock in
the public market, the price of our common stock could fall.
Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock after this offering could
reduce the market price of our common stock. In addition, the sale of these
shares could impair our ability to raise capital through the sale of additional
equity securities. See "Management--Incentive Stock Plans" beginning on page 54
of this prospectus and "Shares Eligible for Future Sale" beginning on page 69
of this prospectus.
Provisions of our charter documents and the agreements that govern our debt
obligations may have anti-takeover effects that could prevent a change in
control.
Provisions of our certificate of incorporation, bylaws, and Delaware law
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our stockholders. For example, our certificate of
incorporation eliminates the ability of stockholders to call a special meeting
and allows our board of directors to issue shares of currently undesignated
preferred stock with rights, privileges and preferences that do not need to be
approved by our stockholders before these
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<PAGE>
shares may be issued. See "Description of Capital Stock--Antitakeover
Effects..." beginning on page 69 of this prospectus. In addition, the
agreements that govern our debt obligations contain provisions which may make
it more difficult for a third party to acquire us. For example the agreement
governing the senior discount notes we issued in February 2000 provides that
upon the occurrence of a change of control transaction, we must offer to
repurchase the notes at a premium.
You will experience immediate dilution in the book value per share of the
common stock you purchase in this offering.
The initial public offering price of our common stock is expected to be
substantially higher than the book value per share of our outstanding common
stock immediately after this offering. Based on the assumed initial offering
price of $ , if you purchase our common stock in this offering, you
will incur immediate dilution of approximately $ in the book value per
share of our common stock from the price you pay for our common stock. See
"Dilution" on page 22 of this prospectus.
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<PAGE>
NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus. Although we
believe that our plans, intentions and expectations reflected in or suggested
by the forward-looking statements we make in this prospectus are reasonable, we
can give no assurance that such plans, intentions and expectations will be
achieved. Such forward-looking statements include, but are not limited to,
statements as to our expectations regarding: our future revenue opportunities;
future market acceptance of our services; the future growth of our customer
base; our future expense levels including product development, selling,
marketing, general and administrative expenses and amortization of goodwill and
other intangibles; our future capital needs and anticipated capital
expenditures; our expansion of our marketing and sales forces; our data center
expansion plans; our acquisitions of complementary products, technologies and
businesses; our use of the net proceeds from this offering; our intentions
regarding retained earnings and dividends; and future financial accounting
pronouncements. When we use words such as "may," "will," "should," "believe,"
"expect," "anticipate," "intend," "plan," "estimate," "predict," "potential,"
"continue" or similar words, we are making forward-looking statements. This
prospectus also contains forward-looking statements attributed to third parties
relating to their estimates regarding market data and forecasts described
below.
You should note that an investment in our common stock involves risks and
uncertainties that could affect our future business success or financial
results. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of a number of factors, including
those set forth in "Risk Factors" and elsewhere in this prospectus.
In this prospectus, we use market data and industry forecasts which we have
obtained from International Data Corporation, Keynote Systems and the Yankee
Group, publicly available information and industry publications. Neither we nor
any of the underwriters represent that any such information is accurate. Each
of these sources may have their own definitions for a particular market or
market segment, and accordingly, the information obtained from one source might
not be comparable with information obtained from other sources. Industry
publications generally state that the information they provide has been
obtained from sources believed to be reliable, but that the accuracy and
completeness of such information is not guaranteed. We have not independently
verified any of this information. In particular, we do not know what rate of
general economic growth was assumed in preparing forecasts. Forecasts of
developing industries, such as ours, are not based upon sophisticated analyses
of substantial amounts of historical data, as in the case of more mature
industries. Thus, forecasts of developing industries like ours are much less
likely to be accurate.
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USE OF PROCEEDS
We estimate that our net proceeds from the sale of common stock in this
offering will be approximately $ million, or $ million if the
underwriters exercise their option to purchase additional shares in full, based
upon an assumed initial public offering price of $ per share and after
deducting estimated underwriting discounts and estimated offering expenses of
$ payable by us.
We expect to use the net proceeds from this offering for capital
expenditures, working capital, including operating losses, and other general
corporate purposes. A portion of the net proceeds may also be used to acquire
or invest in complementary businesses, technologies, product lines or services.
We have no current plans, agreements or commitments with respect to any
acquisitions or investments, and are not engaged in any negotiations with
respect to any acquisitions or investments. Our management will have broad
discretion concerning the use of the net proceeds of this offering. We intend
to invest the net proceeds of this offering in short-term, interest-bearing,
investment grade securities pending their use.
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock or other
securities and do not anticipate paying cash dividends in the future. The
agreements that govern our debt obligations also restrict our ability to pay
dividends on shares of our capital stock.
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CAPITALIZATION
The following table sets forth our cash and capitalization as of December
31, 1999:
. on an actual basis;
. on a pro forma basis to reflect:
. the February 2000 sale of 13% senior discount notes with $188.5
million aggregate principal amount at maturity due February 2010 and
warrants to purchase 4,671,240 shares of common stock from which we
received net proceeds of $96.2 million; and
. the issuance of 1,897,346 shares of common stock to Viatel after
December 31, 1999; and
. on a pro forma as adjusted basis to also reflect:
. the automatic conversion of our outstanding preferred stock into
16,033,886 shares of common stock upon the closing of this offering;
and
. the sale of the shares of common stock in this offering
at an assumed initial public offering price of $ per share
after deducting the underwriting discounts and estimated offering
expenses payable by us.
The outstanding share information excludes:
. 13,600,527 shares of common stock available for future issuance under our
currently effective equity incentive plans, of which options to purchase
7,624,902 shares were outstanding at December 31, 1999, with exercise
prices ranging from $0.27 to $3.20 per share, and options to purchase
4,565,816 shares granted since December 31, 1999, with exercise prices
ranging from $5.87 to $6.67 per share;
. 5,238,912 shares issuable upon exercise of outstanding warrants, 567,672
of which have an exercise price of $0.001 per share and the remainder of
which have an exercise price of $0.007 per share;
. 78,128 shares of common stock issued after December 31, 1999, other than
in connection with exercises under outstanding options; and
. 4,875,000 shares available for future issuance under equity incentive
plans that will be effective upon completion of this offering.
You should read this information together with our consolidated financial
statements and the accompanying notes.
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- -------- -----------
(in thousands)
<S> <C> <C> <C>
Cash and cash equivalents...................... $ 11,195 $107,395 $
======== ======== =====
Current portion of capital lease obligations... 17,736 17,736
======== ======== =====
Long-term debt, less current portion........... 2,122 46,485
Capital lease obligations, less current
portion....................................... 23,887 23,887
Stockholders' equity:
Convertible preferred stock, $0.001 par value,
5,000,000 shares authorized, actual, pro
forma and pro forma as adjusted; 4,275,701
shares issued and outstanding, actual and pro
forma; and no shares issued and outstanding,
pro forma as adjusted........................ 45,750 45,750
Common stock, $0.001 par value, 100,000,000
shares authorized, actual, pro forma and pro
forma as adjusted; 21,934,528 shares issued
and outstanding, actual; 28,503,114 shares
issued and outstanding, pro forma;
shares issued and outstanding, pro forma as
adjusted..................................... 43,764 120,672
Deferred compensation.......................... (17,959) (17,959)
Accumulated deficit............................ (70,107) (70,107)
Treasury stock, 23,581 common shares........... (34) (34)
-------- --------
Stockholders' equity.......................... 1,414 78,322
-------- -------- -----
Total........................................ $ 27,423 $148,694 $
======== ======== =====
</TABLE>
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DILUTION
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. We calculate net tangible book value per
share by dividing the net tangible book value (total assets less intangible
assets and total liabilities) by the number of outstanding shares of common
stock.
After giving effect to the issuance of 1,897,346 shares of Viatel after
December 31, 1999 and the automatic conversion of all outstanding shares of our
preferred stock into 16,033,886 shares of common stock upon the completion of
this offering, our pro forma net tangible book value at December 31, 1999 was
$ , or $( ) per share of common stock. After giving effect to the
sale of the shares of common stock at an assumed initial public
offering price of $ per share, less the underwriting discount and estimated
offering expenses payable by us, our pro forma net tangible book value at
December 31, 1999 would be , or $ per share. This represents an
immediate increase in the pro forma net tangible book value of $ per share
to existing stockholders and an immediate dilution of $ per share to new
investors, or approximately % of the assumed initial public offering price
of $ per share.
The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $
Pro forma net tangible book value per share at December 31,
1999........................................................... $
Increase per share attributable to new investors................ $
Pro forma net tangible book value per share after the offering.... $
Dilution per share to new investors............................... $
====
</TABLE>
After giving effect to the issuance of 1,897,346 shares to Viatel after
December 31, 1999 and the automatic conversion of all outstanding shares of our
preferred stock into an aggregate of 16,033,886 shares of common stock upon the
completion of this offering, the following table shows on a pro forma basis at
December 31, 1999, the number of shares of common stock purchased from us, the
total consideration paid to us and the average price paid per share by existing
stockholders and by new investors purchasing common stock in this offering. The
share figures in the table exclude:
. 13,600,527 shares available for future issuance under our currently
effective equity incentive plans of which 7,624,902 shares of common
stock were issuable upon exercise of options outstanding as of December
31, 1999, with exercise prices ranging from $0.27 to $3.20 and of which
options to purchase 4,565,816 shares granted since December 31, 1999,
with exercise prices ranging from $5.87 to 6.67 per share;
. 5,238,912 shares issuable upon exercise of outstanding warrants, 567,672
of which have an exercise price of $0.001 per share and the remainder of
which have an exercise price of $0.007 per share;
. 78,128 shares of common stock issued after December 31, 1999, other than
in connection with exercises under outstanding options; and
. 4,875,000 shares available for issuance under our equity incentive plans
that will be effective upon completion of this offering.
<TABLE>
<CAPTION>
Total Average
Shares Purchased Consideration Price
----------------- ----------------- Per
Number Percentage Amount Percentage Share
------ ---------- ------ ---------- -------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ % $ % $
---- --- ----- --- -----
New investors....................
---- --- ----- --- -----
Total.......................... 100% $ 100%
==== === ===== ===
</TABLE>
In addition, we may from time to time use our stock to pay for acquisitions,
investments or strategic alliances, such as our agreement with Viatel. To the
extent we use our stock for these purposes, our stockholders, including
investors in this offering, will experience dilution in their ownership
interest in our company.
22
<PAGE>
SELECTED FINANCIAL DATA
The statement of operations data set forth below for the period from January
20, 1998 (inception) to December 31, 1998, and for the year ended December 31,
1999, and the balance sheet data as of December 31, 1998 and 1999 have been
derived from our consolidated financial statements, which have been audited by
KPMG LLP, independent auditors, and are included in the back of this
prospectus. The historical results are not necessarily indicative of results to
be expected for any future period. You should read the data presented below in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
to those statements appearing in the back of this prospectus.
<TABLE>
<CAPTION>
Period from
January 20, 1998
(inception) to Year Ended
December 31, 1998 December 31, 1999
----------------- -----------------
(in thousands, except share data)
<S> <C> <C>
Statement of Operations Data:
Revenue................................... $ 62 $ 4,048
Operating expenses:
Service costs (A)........................ 1,891 26,987
Sales and marketing (A).................. 1,311 8,147
General and administrative (A)........... 1,312 4,663
Product development (A).................. 66 669
Depreciation and amortization............ 2,548 13,103
Stock-based compensation (A)............. 31 6,622
Accrued exit costs....................... -- 2,900
------- --------
Total operating expenses................ 7,159 63,091
------- --------
Loss from operations...................... (7,097) (59,043)
------- --------
Interest income........................... 169 737
Interest expense.......................... (646) (4,457)
Gain on sale of equipment................. -- 230
------- --------
Net loss.................................. $(7,574) $(62,533)
======= ========
Basic and diluted net loss per share...... $ (0.47) $ (3.13)
======= ========
Shares used in computing basic and diluted
net loss per share....................... 16,280 20,008
======= ========
</TABLE>
(A)Components of stock-based compensation include charges related to operating
expenses in 1998 and 1999 as follows: service costs $12,000 and $1.5 million,
respectively; sales and marketing $7,000 and $2.5 million, respectively;
general and administrative $10,000 and $2.1 million, respectively; and product
development $2,000 and $567,000, respectively.
See note 2 to our consolidated financial statements for an explanation of the
determination of the shares used to compute net loss per share.
<TABLE>
<CAPTION>
December 31,
---------------
1998 1999
------ -------
(in thousands)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents...................................... $4,332 $11,195
Working capital deficit........................................ (3,954) (30,259)
Total assets................................................... 34,703 83,690
Revolving credit facility...................................... -- 19,324
Current portion of capital lease obligation.................... 7,696 17,736
Long-term debt, less current portion........................... -- 2,122
Capital lease obligations, less current portion................ 20,736 23,887
Accumulated deficit............................................ (7,574) (70,107)
Total stockholders' equity..................................... 5,393 1,414
</TABLE>
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and our consolidated financial statements and the
related notes included elsewhere in this prospectus. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of certain factors including the risks discussed in
"Risk Factors" and elsewhere in this prospectus.
Overview
We provide netsourcing solutions for mission-critical network-based
applications, also referred to as e-business applications. Netsourcing is the
outsourcing of the IT and network infrastructure required to support these
applications. We target Fortune 1000 companies and Internet-based businesses
that depend upon the performance and availability of their mission-critical e-
business applications.
Since our incorporation in Missouri in January 1998, we have devoted
substantially all of our efforts to developing our IT and network
infrastructure, recruiting and training qualified and experienced personnel,
establishing relationships with leading technology companies and raising
capital. At December 31, 1999, we had an accumulated deficit of $70.1 million
and we expect that our operating losses, net losses and negative cash flows
will continue to increase for the foreseeable future as we continue to incur
significant development, sales and marketing and administrative expenses.
In December 1998, we began offering netsourcing, Internet and private
network services and in mid-1999 decided to focus exclusively on providing
netsourcing services. We continue to support a limited number of Internet and
private network services customers. For the year ended December 31, 1999, we
derived $1.5 million, or 37%, of our $4.0 million in total revenue from our
non-netsourcing customers. We expect that the portion of our revenue derived
from non-netsourcing customers will decrease as their contracts expire and, in
most cases, are not renewed.
We have contracts with 50 customers, 20 of which are netsourcing customers
and the remainder are Internet and private network customers. Our netsourcing
customers have contracted for minimal annual commitments ranging from $30,000
to $1.9 million. These netsourcing customers average over $650,000 in annual
contractual commitments. Our typical netsourcing contract has a two to three
year term and we recognize revenue ratably over the contract term. A customer's
monthly recurring fees are based on their requirements for:
. level of application availability;
. volume of on-line and tape backup storage;
. server processing and administrative requirements;
. bandwidth from both our nationwide broadband network and public Internet
connections;
. security services;
. reporting, monitoring and management of the netsourcing solution; and
. other optional enhanced services.
Our netsourcing revenue also includes nonrecurring fees for the design,
configuration and installation of the IT and network infrastructure required to
support our customers' e-business applications. These installation fees, which
typically range from $20,000 to $75,000, are recognized ratably over the term
of a customer's netsourcing service agreement. Customer credits issued under
service level guarantees are recognized as a reduction of revenue as incurred.
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<PAGE>
As of March 28, 2000, we had 20 netsourcing customers. Accordingly, to date
our netsourcing revenue has been recognized from a small number of customers.
Because a single customer contract can represent a relatively significant
dollar amount, the timing of the contract and installation of the solution can
have a significant impact on our revenue for a particular period.
We incur operating costs and expenses related to the delivery of our
netsourcing solutions, including direct service costs, as well as sales and
marketing, general and administrative, product development and depreciation and
amortization expenses. Since inception, our expenses have consisted primarily
of compensation and benefits, costs related to developing and maintaining our
network infrastructure, and costs related to operating our data centers.
We also incur costs related to the acquisition of hardware that are
capitalized and depreciated over the estimated useful life of the hardware.
Costs related to the acquisition of software licenses are capitalized and
amortized on a straight-line basis over the lesser of either three years or the
term of the contract with the netsourcing customer, depending on the nature of
the software license agreement. Direct costs related to the integration of
software applications for a customer on our netsourcing platform are
capitalized and amortized over the term of the customer's netsourcing service
agreement.
In January 2000, we entered into a binding memorandum of understanding with
Viatel, under which we have the right to lease data center space and bandwidth
from Viatel in Europe. Under the memorandum, Viatel will provide a substantial
portion of the data center and network infrastructure at their expense. Viatel
will lease these facilities to us at 75% of their market base rates. We
currently plan to open data centers in Amsterdam, Frankfurt, London and Paris
by the end of 2000. Additionally, Viatel will be obligated to provide network
provisioning with capacity supplied at 90% of the lowest market rates available
for a 10-year period. In connection with our entering into the memorandum of
understanding, we issued 1,897,346 shares of common stock to Viatel.
In December 1999, we entered into a senior secured revolving credit facility
that provides borrowings of up to $25.0 million for the purchase of equipment
and general working capital needs. As of December 31, 1999 we had borrowed
$25.0 million under such facility. In February 2000, we received aggregate net
proceeds of $96.2 million from the issuance of 13% senior discount notes with
$188.5 million aggregate principal amount at maturity of due February 2010 and
warrants to purchase 4,671,240 shares of common stock. The original issue
discount on the notes will accrete until February 2005, at which time interest
accrues and is payable semi-annually in cash.
In connection with the grant of restricted stock and stock options in 1998
and 1999, we recorded aggregate deferred compensation of $24.6 million and
compensation expense of $31,000 and $6.6 million in 1998 and 1999,
respectively. Deferred compensation represents the difference between the
deemed fair market value of the stock underlying the options on the date of
grant and the exercise price of the options. The aggregate deferred
compensation of $24.6 million is being amortized ratably over the vesting terms
of the respective stock or option agreements and will result in compensation
expense of approximately $11.8 million in 2000, $4.1 million in 2001, $1.5
million in 2002 and $600,000 in 2003. In connection with the grant of options
in the first quarter of 2000, we expect to record additional deferred
compensation of $28.6 million. This amount will also be amortized ratably over
the vesting terms of the respective stock options.
We have generated net operating losses for the periods ended December 31,
1998 and 1999. We may not be able to utilize all or any of the resultant tax
loss carryforwards unless we generate taxable income during the carryforward
period. We have not recognized a benefit related to the net operating loss
carryforwards due to the uncertainty surrounding the realization of the
favorable tax attributes in future tax returns and we have placed a valuation
allowance against nearly all of our net deferred tax assets.
25
<PAGE>
Results of Operations
Revenue
From our incorporation in January 1998 until we began selling our
netsourcing, Internet and private network services in the third quarter of
1998, we were principally engaged in development-stage activities and did not
generate any appreciable revenue through December 31, 1998. In 1999, we
recognized $4.0 million in revenue, of which $2.5 million, or 63%, was derived
from our netsourcing customers.
Service Costs
Service costs consist primarily of salaries and benefits for operations
personnel, the cost of leasing telecommunications lines that are part of our
netsourcing platform, Internet connectivity charges and costs related to
operating our data centers, including rent, maintenance and utility fees.
Service costs increased from $1.9 million in the period from our incorporation
to December 31, 1998, to $27.0 million in 1999. In 1998, our cost of services
related solely to operating our St. Louis, Missouri data center for a four
month period. Our service costs increased in 1999 in connection with the
substantial completion of our private telecommunications network and the
operation of our St. Louis data center for 12 months and our New York City data
center for three months. We expect service costs to increase in future periods
as we increase the size and number of data centers that we operate and as we
expand the capacity and reach of our data centers and network to support our
growing netsourcing customer base.
Sales and Marketing
Sales and marketing expenses consist primarily of salaries and benefits for
sales and marketing personnel, commissions and related benefits, and marketing
program expenses such as advertising, product literature, events and public
relations programs. Sales and marketing expenses increased from $1.3 million in
1998 to $8.1 million in 1999. This increase is due primarily to increased
salary and benefit expenses related to the growth in our sales and marketing
organization from 11 persons at the end of 1998 to 46 persons at the end of
1999. We expect sales and marketing expenses to increase in future periods as
we continue to invest in these areas to attract new netsourcing customers.
General and Administrative
General and administrative expenses consist primarily of salaries and
benefits for finance, human resource, business development and administrative
personnel, professional service fees and corporate overhead costs. General and
administrative expenses increased from approximately $1.3 million in 1998 to
$4.7 million in 1999. This increase is due to increases in personnel in the
above described organizations from seven persons at the end of 1998 to 20
persons at the end of 1999, corporate overhead, professional service fees and
other administrative expenses, including costs associated with the relocation
of our headquarters from St. Louis, Missouri to Pleasanton, California in
December 1999. We expect general and administrative expenses to increase in
future periods as we hire additional personnel and incur additional costs
related to the growth of our business and our operations as a public company.
Product Development
Product development expenses consist primarily of salaries and benefits for
our product and technology development team. Product development expenses
increased from $66,000 in 1998 to $669,000 in 1999. This increase is due
primarily to costs relating to expanding our product development organization
from two persons at the end of 1998 to seven persons at the end of 1999 in
connection with the development of our netsourcing solutions. We expect product
development expenses to increase in future periods as we continue to develop
our netsourcing offerings.
26
<PAGE>
Depreciation and Amortization
Depreciation and amortization expenses increased from $2.5 million in 1998
to $13.1 million in 1999. Our depreciation and amortization expenses increased
in connection with operating our St. Louis, Missouri data center for twelve
months and our New York City data center for three months in 1999 as compared
to operating network infrastructure and our St. Louis data center for only four
months in 1998.
Stock-based Compensation
Stock-based compensation expense increased from $31,000 in 1998 to $6.6
million in 1999 due to the grant of options to purchase 7,912,325 shares of
common stock in fiscal year 1999.
Accrued Exit Costs
Accrued exit costs in 1999 consisted of $2.4 million related to our decision
not to pursue our national dial-up Internet access business and $500,000
related to our decision to no longer pursue our collocation business. These
costs represent the estimated future operating lease payments and the estimated
loss on the planned disposition of capital assets that supported these
businesses. We did not incur any accrued exit costs in 1998.
Interest Expense, Net
Net interest expense includes interest income from our cash and cash
equivalents, investments, and interest expense related to our financing
obligations, including bank borrowings and borrowings associated with equipment
leasing. Net interest expense increased from $477,000 in 1998 to $3.7 million
in 1999. This increase was due primarily to increased equipment and capital
lease obligations and debt obligations under our credit facilities. Net
interest expense will increase substantially in the future as a result of the
issuance of senior discount notes in February 2000 and other debt.
Liquidity and Capital Resources
Since our inception and through December 31, 1999 we have financed our
operations through sales of our equity securities and borrowings under debt
instruments, including capital leases from financial institutions and equipment
vendors.
Net cash used in operating activities amounted to $3.8 million in 1998 and
$26.4 million in 1999. The increase in cash used in operations was primarily
caused by increasing net operating losses that were partially offset by non-
cash depreciation and amortization charges and increases in accounts payable
and accrued expenses.
Net cash used in investing activities amounted to $4.8 million in 1998 and
$34.0 million in 1999. The net cash used for investing activities was primarily
for the acquisition of property and equipment required to support the growth of
the business and to expand data center and network infrastructure.
Net cash provided by financing activities amounted to $12.9 million in 1998
and $67.3 million in 1999. Cash provided by financing activities in 1999
included $46.3 million in net proceeds from the issuance of common and
preferred stock in 1999 in addition to an increase of $28.0 million in debt
financing, net of principal payments of $10.9 million. Non-cash financing
transactions included capital lease financing for equipment of $27.9 million in
1998 and $17.6 million in 1999.
In December 1999, we entered into a senior secured revolving credit facility
that provides borrowings of up to $25.0 million for the purchase of equipment
and general working capital needs. The facility bears interest, at our option,
at either (A) the greater of the prime rate, the base certificate of deposit
rate plus 1.0% or the federal funds effective rate plus 0.5%, in each case,
plus 3.0% or (B) the eurodollar rate plus 4.0%. As of December 31, 1999, the
rate on this facility was 11.5%. Interest payments are due quarterly with the
principal and any remaining interest due on December 28, 2000.
27
<PAGE>
Borrowings under the facility are secured by all of our property and equipment
and a compensating balance of $5.0 million. We must pay a quarterly commitment
fee of 1% on the unused portion of the facility. As of December 31, 1999, we
had outstanding debt of $25.0 million under this facility.
We also have a master loan and security agreement with a commercial
financing company for up to $8.0 million. We have $3.0 million outstanding on
this facility at December 31, 1999. The interest rate on this facility is
currently 14.5%.
We have also financed the acquisition of some of our network and data center
equipment under capital lease arrangements, and other equipment, primarily
buildings and the use of fiber optic lines, under operating lease arrangements.
Our capital lease obligations extend through 2004, while our operating leases
expire at various dates through 2011. Our capital lease obligations are secured
by the equipment subject to lease, while our operating lease agreements are
secured by short-term investments. In 2000 the aggregate payments required
under our capital lease obligations are expected to be approximately $19.6
million, and payments under our operating leases are expected to be
approximately $17.1 million. Our total obligations under our capital and
operating leases at December 31, 1999 amount to $162.0 million.
In February 2000, we sold 13% senior discount notes due February 2010 and
warrants to purchase an aggregate of 4,671,240 shares of common stock,
resulting in net proceeds to us of $96.2 million. Original issue discount on
the senior discount notes will accrete until February 2005 to the final
principal amount of $188.5 million and then interest will accrue and be payable
in cash semi-annually until maturity. The senior discount notes are redeemable
prior to maturity at specified premiums and contain restrictive covenants
limiting, among other things, our ability to incur future indebtedness, issue
certain types of preferred stock, make investments and pay dividends. The
warrants are exercisable 180 days after the completion of this offering at a
price of $0.007 per share. The warrants expire in February 2010 or upon
retirement of the senior discount notes.
We believe that the estimated net proceeds from this offering, together with
our existing cash and funds available under our credit facilities, will be
sufficient to fund our capital expenditures, working capital and operating
losses until at least the end of 2001. However, we may need additional capital
earlier if:
. we are not successful in implementing our business plan, expanding our
customer base and significantly increasing revenue in a short period of
time;
. we expand more rapidly than currently anticipated;
. our working capital needs, operating losses and capital expenditures
exceed our current expectations; or
. we make acquisitions of, or investments in, complementary businesses,
technologies and products.
Other than the current bank and lease facilities, we have no present
commitments or arrangements for any future equity or debt financing and we
cannot assure you that any such future financing will be available to us on
acceptable terms, or at all.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," or SFAS 133. The new standard establishes accounting
and reporting standards for derivative instruments, including derivative
instruments embedded in other contracts, and for hedging activities. SFAS 133
will be effective for our fiscal year ending December 31, 2001. We do not
expect SFAS 133 to have a material effect on our financial position, results of
operations or liquidity because we do not invest in derivatives or speculative
instruments.
28
<PAGE>
BUSINESS
Overview
We provide netsourcing solutions for mission-critical network-based
applications, also referred to as e-business applications. Netsourcing is the
outsourcing of the complex IT and network infrastructure required to support
these applications. We engineer, deploy and manage comprehensive solutions
through our technologically advanced netsourcing platform, which consists of
our data centers, our nationwide broadband network and our service management
centers. We have designed our netsourcing platform for the sole purpose of
meeting our customers' high performance and availability requirements for their
e-business applications. Our comprehensive netsourcing solutions:
. provide customers with a single point of contact and accountability for
all of the IT and network infrastructure necessary to support their
applications;
. enable us to offer our customers service level agreements that guarantee
the availability of their e-business applications up to 99.95%;
. enable customers to reduce their time to market and compete effectively
by rapidly deploying their e-business applications;
. offer customers tailored solutions from our standard set of netsourcing
services to meet customer specific application availability and
performance requirements;
. allow customers to leverage our technologically advanced netsourcing
platform and our in-house expertise; and
. rapidly scale as the customer's e-business application requirements grow
and evolve.
We target Fortune 1000 companies and Internet-based businesses that depend
upon the performance and availability of their mission-critical e-business
applications. As of March 28, 2000, we had 20 netsourcing customers, including
Emerson Electric, FTD.com, Hewlett Packard, Intelisys, New Balance Athletic
Shoe and Telstra.
Industry Background
The rapid growth of the Internet has enabled a new class of business models
to emerge, including the business-to-business and business-to-consumer models,
and, additionally, has increased the use of Internet and extranet applications
by traditional businesses. Businesses are developing and deploying complex e-
business applications to:
. communicate rapidly and efficiently with their customers, suppliers and
employees worldwide;
. streamline ordering, invoicing and payment transactions by their
customers and vendors;
. provide efficient customer service and technical support; and
. conduct targeted and tailored web-based sales efforts.
Companies are increasingly relying upon the performance and availability of
these e-business applications. Failures associated with the implementation and
support of these applications can result in longer times to market, decreased
customer satisfactions and lost revenue for these companies.
29
<PAGE>
When companies look to develop their e-business applications, many recognize
that they face significant challenges in deploying their e-business
applications, including:
. the time and costs associated with engineering, deploying and managing
technologically advanced IT and network infrastructure;
. hiring, training and retaining expertise from a wide variety of technical
disciplines including experience with and knowledge of servers, operating
systems, data storage, database administration, local and wide-area
networking, performance management, security and operational support; and
. ensuring the rapid scalability of the IT and network infrastructure on
which their e-business applications rely.
According to a 1998 report from International Data Corporation, a leading
industry research firm, 71.5% of all application downtime is a result of
failures occurring within the infrastructure, including failures of the server,
operating systems, network and misconfigurations. To ensure high application-
availability and performance, direct control and proactive management of all of
these potential points of failure is required on a 24-hours-a-day, seven-days-
a-week basis.
These cost and management challenges have caused an increasing number of
companies to seek to outsource the IT and network infrastructure and related
support of their increasingly complex, mission-critical e-business
applications. The Yankee Group, an industry research firm, estimates the
addressable market for outsourced IT and networking services will be
approximately $20 billion by 2003. Prior to the availability of netsourcing
services, companies typically contracted with one or more of the following
types of providers for the deployment of their e-business applications:
traditional IT outsourcing providers, telecommunications service providers or
first-generation hosting providers.
Traditional IT outsourcing providers have historically focused on mainframe
and midrange computer systems and generally do not have core expertise in the
UNIX-based and Microsoft Windows NT operating systems on which most e-business
applications are being developed today. They have also been slow to develop
Internet expertise and infrastructure. In addition, companies with short time-
to-market requirements may be concerned about the lengthy project timelines
that are common among the traditional IT outsourcing providers for engineering
and deploying complex, mission-critical e-business applications. These
providers have also been traditionally focused on contracts costing in excess
of $10 million per year, which is above what most companies have budgeted to
manage their e-business applications.
Another option companies may consider is working with a telecommunications
service provider. The core expertise of a telecommunications service provider
is based on their voice and data networks and related services. With most of
these service providers, web-hosting has evolved as an add-on business and they
are generally focused on collocation services or low-end web hosting. While
this can help companies in the context of outsourcing the network, it still
leaves the customer responsible for the integration of the data center services
with the network, thus providing only a partial solution. The diversity of
telecommunications service providers' infrastructure and their focus on voice
and data networks also makes it difficult for these service providers to offer
integrated, real-time management across their multiple layers of networks and
collocation centers.
First-generation hosting providers are often limited by their existing
infrastructure and expertise when attempting to provide a solution that meets
the key requirements of mission-critical applications. Many of these providers
often deliver these value-added services, on top of their core expertise of
providing Internet access and collocation floor space, through acquisitions or
subcontracting services. The growing complexity of e-business applications and
the lack of
30
<PAGE>
integration across these providers' IT, network and back office infrastructures
results in solutions that are pieced together without a means by which real-
time, proactive monitoring and management can occur from a single point across
the entire infrastructure. Additionally, this places the burden on the customer
to assume the responsibility of integrating the pieces of the IT and network
infrastructure to ensure the support of its mission-critical applications.
Given the limitations of traditional options, we believe that there is a
growing need for a comprehensive, integrated, scalable solution for
engineering, deploying and managing the IT and network infrastructure that
support mission-critical e-business applications.
The Intira Solution
We design our netsourcing solutions to meet our customers' high availability
and performance requirements for their mission-critical e-business
applications. We believe that our netsourcing solutions provide the following
benefits to our customers:
One Source--One Call. Our netsourcing solutions enable our customers to
outsource the entire IT and network infrastructure necessary to support their
e-business applications to a single source. By taking responsibility for and
control of the engineering, deployment and management of the entire netsourcing
platform, we are able to provide our customers with a single point of contact
and accountability for the support of their mission-critical e-business
applications. Unlike many companies that provide outsourcing software for
supporting e-business applications, we do not subcontract with third parties to
provide any of our netsourcing services. Instead, all of our netsourcing
services are provided by us. Our 24-hours-a-day, seven-days-a-week service
management centers proactively manage, monitor and troubleshoot the operation
of our netsourcing platform and each customer's netsourcing solution. We
actively monitor up to 400 discrete data points that may impact the
availability and performance of a customer's netsourcing solution. We also
provide customers with secure web-based tools that allow access to over
30 reports, allowing them to review the performance of their netsourcing
solutions.
Guaranteed Availability. We design, integrate and control all of the IT and
network infrastructure necessary to support mission-critical e-business
applications. Our netsourcing platform includes a technologically advanced
infrastructure with multiple levels of redundancy, as well as sophisticated
monitoring and management tools. Our responsibility for and control of all
aspects of the netsourcing platform enable us to offer each customer a
comprehensive service level agreement that guarantees the availability of these
applications. In an environment where a limited period of downtime of a
mission-critical e-business application can have a significant adverse impact
on a customer's business, guaranteed application availability is critical.
Depending upon the netsourcing solution selected by the customer, we guarantee
application availability from 98.5% to up to 99.95%. Application availability
of 99.95% equates to less than 22 minutes of downtime per month.
Tailored Solutions. Our tailored solutions provide the necessary application
availability and service levels that meet the specific business requirements of
each customer. Although each customer's overall solution is different, it is
built from our standard set of netsourcing services that we have developed.
This allows us to efficiently provide netsourcing solutions tailored to
customers' individual needs, without the delays or costs associated with
designing new services or platforms for each customer.
Time-to-Market Advantage. Our netsourcing solutions allow customers to
rapidly engineer and deploy their e-business applications, often in a matter of
two to six weeks compared to the two to four month period that is common for
deploying e-business applications in-house. The rapid deployment of mission-
critical applications is often a key element in the success of companies'
operations.
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<PAGE>
Scalability. To compete effectively, companies must quickly scale and adapt
their mission- critical e-business applications and add functionality after
initial implementation. These improvements include scaling of bandwidth,
deployment of servers, distribution of content and applications to multiple
locations and additional storage, security and monitoring needs. By using our
netsourcing solutions, companies can meet their needs rapidly without
disrupting their existing applications.
Cost-Efficient Solution. Many companies may find it challenging and costly
to internally develop and maintain the technologically advanced IT and network
infrastructure necessary to support their mission-critical e-business
applications. They also may face difficulties in attracting and retaining a
wide range of experienced technical professionals. Our netsourcing solutions
enable our customers to leverage our investment in leading netsourcing
technologies as well as our skilled, experienced in-house technical personnel.
Our netsourcing solutions allow customers access to technology that is often
not cost-justified for a single customer to acquire on a stand-alone basis.
This lowers the costs associated with scaling rapidly to meet expanding
application availability and performance requirements.
Strategy
Our objective is to be the leading provider of netsourcing solutions for
companies that deploy or intend to deploy mission-critical e-business
applications. In order to achieve this objective, we are implementing a
business strategy focused on the following key elements:
Focus Exclusively on High-End Netsourcing Solutions. We plan to continue to
focus exclusively on our comprehensive, integrated netsourcing solutions to
attract additional customers and gain market share of the growing netsourcing
market. In contrast to many current outsourcing service providers, who have
limited service offerings or provide netsourcing as one of a portfolio of
services, we will exclusively focus on the higher end of the netsourcing market
which requires high levels of application availability, scalability and
performance for their mission-critical e-business applications.
Leveraging Our Solutions-Oriented Sales Strategy. Due to the comprehensive
nature of our netsourcing solutions, our sales process involves high levels of
interaction with the senior management of our prospective customers, requiring
a very experienced direct sales force. We intend to continue to develop an
experienced direct sales team that is highly knowledgeable about the complex
challenges that companies face in supporting their mission-critical e-business
applications, as well as develop new and expand existing channel partner
relationships with system integrators, hardware and software vendors and
consulting companies. Furthermore, we actively seek to increase the size and
scope of the netsourcing solutions we provide to our existing customers as they
scale and enhance their e-business applications.
Scale Our Business Cost-Effectively. We have invested significant resources
in developing a scalable, comprehensive and fully integrated platform to
support mission-critical e-business applications. We have designed our
netsourcing platform, including our service management centers, to integrate
with new data centers and network capabilities as these resources become
available. Consequently, we expect to realize cost efficiencies as we expand
our business. We also expect that our platform design and our expertise in
designing netsourcing solutions will enable us to efficiently scale our
business as we add new customers and meet the expanded netsourcing service
requirements of our existing customers.
Continue to Develop Our Netsourcing Platform. We are committed to investing
resources to design and implement enhancements to our IT and network
infrastructure. We intend to continue to enhance the features and functionality
of our netsourcing solutions by building upon our existing expertise in
designing effective netsourcing solutions for our customers.
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Continue Targeted International Expansion. The scope and growth of e-
business is global. Accordingly, we intend to offer our netsourcing solutions
outside the United States to support both foreign businesses and domestic-based
businesses that have international operations. We believe that companies will
desire a single netsourcing provider to meet their global needs. We expect to
have data centers in Amsterdam, Frankfurt, London and Paris by the end of 2000
and, we may add additional data centers in other major European cities in the
future. We also intend to expand into other targeted international markets,
including Canada and the Pacific Rim.
Our Netsourcing Platform
Our commitment to high application performance and availability is the
foundation for the delivery of our services. Our netsourcing platform
seamlessly integrates our technologically advanced data centers, our nationwide
broadband network and our service management centers.
[SERVICE MANAGEMENT CENTER GRAPHIC APPEARS HERE]
Data Centers. We currently operate three data centers, in Pleasanton,
California, St. Louis, Missouri and New York City with an aggregate of
approximately 120,000 gross square feet of space. We are in the process of
expanding our St. Louis and Pleasanton data centers to add an aggregate of
50,000 gross square feet of space. To ensure high levels of application
availability, we design our data centers to be "lights out," technologically
advanced, fault tolerant and highly redundant.
Our data centers are designed to be "lights out" centers, meaning that they
are highly automated and require minimal human intervention, which
significantly reduces the chance of human error. Unlike collocation facilities,
where the customers install and maintain control of their own equipment and
have access to the facilities, we manage, monitor and maintain all of the
equipment in our data centers. Additionally, we do not allow customers into our
data centers and strictly monitor security by limiting access only to
authorized data center personnel. We also employ extensive security technology,
including firewalls, multiple levels of intrusion detection and end-user
authentication.
Our data centers use high-end technology commonly found in the data centers
of Fortune 500 companies that meets our stringent availability, scalability and
manageability criteria, including:
. server platforms from Hewlett-Packard, Sun Microsystems and IBM, using
UNIX-based and Microsoft Windows NT operating systems;
. storage platforms from Hewlett-Packard, EMC and IBM; and
. tape robotics systems from Storage Technology.
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<PAGE>
All of our data centers interoperate with each other as a result of being
interconnected via our nationwide network. The local area network
infrastructure, scalable storage systems, cabling, network connections to our
data centers, power systems, cooling and fire suppression systems are also all
designed and engineered to ensure redundancy. In addition, the devices and
technologies that make up our data centers' tape backup and restore systems
perform real-time, daily, weekly or monthly backup, depending on our customer's
netsourcing solution. Furthermore, each customer's specific netsourcing
solution can be mirrored, or duplicated, at an alternative data center
location. This mirroring feature protects the solution from downtime resulting
from catastrophic failure at a specific data center. We use storage systems
that enable real-time data mirroring and are designed to restore the
availability of data within minutes.
In January 2000, we entered into a binding memorandum of understanding with
Viatel under which we have the right to lease data center space and bandwidth
from Viatel in Europe at a reduced market rate for a 10-year period. Under the
terms of the memorandum, Viatel will provide a substantial portion of the data
center and network infrastructure at their expense. We believe that our
relationship with Viatel will expedite our entry into Europe and lower our cost
of entry. Viatel will lease these facilities to us at 75% of their market base
rates. We expect to have our Amsterdam, Frankfurt, London and Paris data
centers operational by the end of 2000. We are in the process of creating our
international organization and will be adding staff to support our European
operations in the second quarter of this year. See "Risk Factors--Risks
associated with dependence on Viatel ..." on page 14 of this prospectus for a
further discussion of our relationship with Viatel and our plans to enter into
commercial agreements which will supersede the currently effective binding
memorandum of understanding.
Nationwide Network. Our data centers are connected by our nationwide
broadband network that extends to 35 major cities throughout the United States
and Canada and enables our customers to have convenient and secure access to
our netsourcing platform. Our nationwide broadband network operates primarily
at OC-3 capacity and is scalable to OC-48 capacity. Since we were not
encumbered with the need to integrate into or accommodate the limitations of a
legacy network, our network was specifically engineered to meet the
availability and performance requirements of our netsourcing solutions. Our
network delivers both private and public network services and Internet access
and is engineered to deliver consistent Quality of Service, or QoS. The network
employs asynchronous transfer mode, or ATM, technology to create secure,
dependable virtual channels to carry customer traffic. Because our private
network services are delivered using scalable ATM technology, our customers can
easily upgrade to higher-capacity access circuits as their application
requirements expand.
To ensure high levels of availability, our network is designed with multiple
levels of redundancy including:
. a self healing synchronous, optical network, or SONET, ring
architecture;
. multiple Internet connection points with several Internet service
providers;
. inherent redundant capabilities of ATM and Internet Protocol
technologies; and
. 38 points of presence in major United States cities and in Toronto,
Canada including two points of presence at each data center city with
multiple redundancies and no single point of failure.
As part of our effort to provide high availability and performance for our
customers' applications, we have deployed direct private transit Internet
connections that enable our customers to avoid the delays and potential data
loss commonly experienced at heavily congested public Internet exchange points.
Our private peering relationships with the largest six Internet providers
enable us to monitor
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<PAGE>
the capacity of all of our connections and ensure that we will have the
aggregate bandwidth to move large quantities of data at high transmission
speeds. Our private Internet connections also enable our customers to launch
new applications which require high bandwidth availability and run more
effectively on a private network. Our private network backbone combined with
our private Internet connections provide the ability to handle large peaks in
traffic while providing sufficient redundancy to protect customers'
applications.
Our network infrastructure also offers customers multiple levels of security
to isolate each customer's private information from public access. To ensure
security, our private network infrastructure is physically isolated with
cabling, switches and routers separately maintained from the public network
infrastructure.
Service Management Centers. Our service management centers manage, monitor
and troubleshoot every aspect of each customer's netsourcing solution. Each
service management center can fully manage our entire netsourcing platform
providing full redundancy and backup. Our service management centers monitor
and manage our netsourcing platform and each customer's netsourcing solution
24-hours-a-day, seven-days-a-week. Highly skilled professionals with experience
in various operating systems, database backup and recovery, networking and
various types of security systems staff our service management centers. Our
service management centers are located in Pleasanton, California, St. Louis,
Missouri and New York City.
Another key attribute of the service management centers is our integrated
back office system which consists of a set of tools that delivers a
comprehensive solution for our customers. We have integrated all these
management tools, including provisioning, service management and reporting,
into a highly automated service environment. As a result, we are able to
provide customers with proactive, responsive, OneSource--OneCall customer care
and support service. Leveraging a significant in-house investment in resources
and technology integration, our service management centers can concurrently
monitor over 400 discrete data points within the Intira infrastructure,
including server and storage transfer rates, network response time, server
utilization and database response times. Overall, we provide more than 30
different customer reports through a secure web site which gives our customers
a comprehensive view into the operational performance of their networking
solution.
Service Level Agreements
Our comprehensive service level agreement, or SLA, covers availability
across all IT and networking components, including application servers,
database servers, the network within the data center, Internet and private
network services, storage devices, and security. Depending on their needs,
customers can choose application availability commitments ranging from 98.5% to
99.95%. Application availability of 99.95% equates to less than 22 minutes of
application downtime per month. In January 2000, Keynote Systems, an industry
research firm, reported that the ten top e-commerce web sites averaged not more
than 97.3% application availability for the four weeks ended December 26, 1999.
To put this into perspective, 97.3% application availability translates to
approximately 19.7 hours of application availability downtime per month. Under
a customer's SLA, we also provide commitments for network performance, data
recovery services, reporting and on-time installation.
Our confidence in our ability to engineer, deploy and manage the IT and
network infrastructure that supports a customer's mission-critical e-business
application is demonstrated by the credit we provide to a customer's account in
the event that any of our commitments are not met. In a given month, for every
15 minutes of application downtime that exceeds the level of guaranteed
application availability in a customer's SLA, we will credit that customer one
day of netsourcing fees, up to a maximum of one month's credit. The commitments
contained in the SLAs are subject to typical
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<PAGE>
exclusions, including, among others, scheduled maintenance, customer-owned or
ordered telephone company circuits, faults in the customer's applications,
equipment or facilities, customer acts, omissions or consequential damages.
Service Offerings
Our netsourcing solutions consist of a suite of services designed to ease
the integration burden on the customer and meet the requirements of their
application and their desired application availability. Our suite of
netsourcing services include:
Data Management Services. As part of every netsourcing solution, we supply
core data management services, which include server and storage provisioning
and standard operational management for running the application. These services
include:
<TABLE>
<CAPTION>
Required
Data Management or
Service Name Optional Description
--------------- -------- -----------
<C> <C> <S>
Server Provisioning......... Required Provides the servers and operating
systems on which our customers run
their applications.
Standard Server
Administration............. Required Provides comprehensive management and
administration for the servers and
operating systems as well as basic
customer management reporting.
Operational Database
Administration............. Optional Provides day-to-day management and
administration of databases, including
DB, Oracle, Microsoft SQL Server and
Sybase.
Server Load Balancing....... Optional Provides load balancing, which is the
allocation of server resources across
multiple application server platforms
enhancing application availability.
Database Failover........... Optional Replicates a database in real time from
a primary server to a secondary
server, which can be located in the
same physical data center and, for
increased availability, at another
data center.
Online Disk Storage......... Optional Provides large-scale storage for
customer data using high-end storage
area network technology.
Tape Backup and Restore..... Optional Provides back-up and restoration of
customers' data from disk to tape
media, both within the data centers
and between two data centers.
</TABLE>
Network Services. Utilizing our nationwide broadband network, we provide our
clients with a full suite of private network and public Internet access. Our
network services include:
<TABLE>
<CAPTION>
Required
Network or
Service Name Optional Description
------------ -------- -----------
<C> <C> <S>
Data Center Connectivity.... Required Connects the customer's application
infrastructure to the nationwide
broadband network.
Public Network Internet
Access..................... Optional Provides dedicated Internet
connectivity through our network.
Private Network Services.... Optional Provides Internet Protocol private
network services to customers in
cities on our network.
Virtual Private Network..... Optional Enables the use of the public Internet
to securely transfer information.
</TABLE>
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<PAGE>
Enhanced Services. We offer a wide array of value-added options to provide
additional security, performance and functionality. These services include:
<TABLE>
<CAPTION>
Required
Enhanced or
Service Name Optional Description
------------ -------- -----------
<C> <C> <S>
Enhanced Monitoring and Provides customers with additional
Reporting.................. capabilities to view critical system
Optional performance reports on a daily,
weekly, monthly, quarterly and yearly
basis.
Streaming Media............. Optional Provides software required to transmit
audio and video content over our
network on demand.
Firewall.................... Optional Offers a perimeter defense around
customer's netsourcing solution to
ensure its integrity by preventing
unauthorized access and consists of
encryption and authentication
services.
Intrusion Detection......... Optional Allows us to provide a fully managed,
scalable intrusion detection offering
by monitoring all network traffic of
specific network segments for attack
traffic signatures.
Caching..................... Optional Allows us to move our customer's web
content at point-of-presence closer to
their end users and therefore improve
the performance of their applications
and service offerings.
</TABLE>
Customer Engineering Implementation Services. Our in-house design
professionals engineer and deploy a customer's netsourcing solution.
<TABLE>
<CAPTION>
Customer Engineering Required
Implementation or
Service Name Optional Description
-------------------- -------- -----------
<C> <C> <S>
Statement of Work........... Required Provides a comprehensive service
description that becomes part of the
contract with the customer and
details all of the services for a
particular customer, including
implementation schedule,
configuration, roles and
responsibilities, reporting processes
and change management.
Implementation.............. Required Implements a customer's netsourcing
solution.
Capacity Planning........... Optional Offers planning services designed to
maintain availability and performance
of customer's applications.
</TABLE>
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<PAGE>
We also have an advanced billing system that generates one bill for our
customers, consolidating charges for all services provided, and that can be
customized for the specific requirements of each customer.
The following is an example of a netsourcing solution for a business portal
application for which a customer required 99.95% application availability. This
configuration is designed for high redundancy and security without a single
point of failure. Transactions are mirrored across our network to a duplicate
configuration residing at another data center location. This mirrored site acts
as a failover site in case the primary site were to experience a significant
failure.
The skill sets required to engineer, deploy and manage this complex
infrastructure on an ongoing basis include expertise in: server and operating
systems, data storage and back-up, database administration, public and private
networking, performance management and security.
Sales and Implementation Process
In addition to our ongoing services, our customer engineering and
implementation services division provides the professional services required to
engineer and deploy each customer's individual netsourcing solution. Our
engineers and sales personnel work with our customers to fully understand the
requirements for supporting their e-business applications, including their
desired levels for application availability. Through this process, we create a
statement of work, which provides the blueprint for the solution we will build
for the customer and includes all of the detail of the services for a
particular customer, including services implementation schedule, services
configuration, roles and responsibilities, reporting processes and the
procedures for implementing ongoing changes. This process allows our customers
to review and approve their netsourcing solution, including the configuration
of their netsourcing solution and their desired service commitments. We believe
this enables customers to better understand the netsourcing solution we have
designed to support their e-business applications and the associated fee
structure. Once the customer's netsourcing solution is implemented, a three-day
test-run is executed prior to launching the solution for the customer. From
this point on, our technical operations personnel are responsible for the
monitoring and management of a customer's solution.
Sales and Marketing
Our sales objective is to achieve market penetration of our target customers
and to increase the size and scope of the netsourcing solutions that we provide
to our existing customers as they scale and enhance their e-business
applications. We sell our netsourcing solutions directly through a highly
skilled professional sales force and our channel partners.
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<PAGE>
Our sales organization is headquartered in Pleasanton, California and
includes personnel in our St. Louis and New York City data centers as well as
field offices in the Atlanta, Baltimore, Boston, Chicago, Dallas, Los Angeles,
Philadelphia, Seattle and Washington D.C. metropolitan areas and in Toronto,
Canada. We intend to open additional field sales offices in other major United
States and international metropolitan areas. Initially, we expect our
international sales efforts to focus primarily on the markets supported by our
planned data centers in Amsterdam, Frankfurt, London and Paris.
Due to the comprehensive nature of our netsourcing solutions, our sales
process involves high levels of interaction with the senior management of our
prospective customers, requiring a very experienced direct sales force. We have
developed programs to attract and retain high quality, motivated sales
representatives who have the technical skills and selling experience necessary
to sell our netsourcing services. As of March 15, 2000, we had approximately 25
direct sales representatives and we intend to increase our sales organization
substantially over the next year.
In addition to our direct sales force, we have developed channel partner
relationships with leading IT companies, including Hewlett-Packard and IBM, to
generate sales referrals and sales leads. We will continue to aggressively
expand our channel partner strategies to jointly pursue sales and marketing
opportunities. Potential additional channel partners include system and
software integrators and independent software vendors and other platform
providers.
Our marketing organization is responsible for developing brand awareness,
identifying key target markets, marketing our services, public relations, joint
marketing with channel partners and sales support. Our marketing efforts
include a broad range of marketing communications, including advertising,
events, direct mail programs and management of our Web site. Our public
relations efforts focus on cultivating industry analyst and media relationships
with the goal of securing broad media coverage and recognition as a leader and
innovator in netsourcing solutions.
Customers
We have designed our netsourcing services to address the sophisticated needs
of Fortune 1000 companies and Internet-based businesses that depend upon the
performance and availability of their mission-critical e-business applications.
We target leading companies in financial services, high technology,
manufacturing, application service provisioning, software, media publishing,
entertainment and other markets. Our customers use our netsourcing solutions to
facilitate the operation and management of a wide variety of e-business
applications, including online marketing and sales, customer service,
fulfillment, software, document and multimedia distribution and online
training. Our customer contracts typically are for two to three years with a
current average length of 32 months. Our customers typically have the right to
terminate their netsourcing agreement with advance notice. These customers will
be required to pay a termination fee which is typically a percentage of the
monthly netsourcing commitments specified in their netsourcing agreements.
As of March 28, 2000, we had contracts with 20 netsourcing customers. On
average, these customers have contracted with us for $650,000 in annual
recurring netsourcing services. The following is a list of our customers which
have contracted with us for more than $30,000 in recurring monthly netsourcing
services.
<TABLE>
<S> <C> <C>
Emerson Electric Intelisys Online Choice.com
Engineering Animation Military.com PartMiner
FTD.com MiracleMail SingleSourceIT.com
Hewlett-Packard New Balance Athletic Shoe Telstra
</TABLE>
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<PAGE>
The following are examples of some of our customers' mission-critical e-
business applications that our netsourcing solutions support:
. FTD.com's business-to-consumer e-commerce application that provides
online floral and gift delivery.
. Emerson Electric's network-based application for company-wide procurement
that helps reduce costs and increase efficiency.
. PartMiner's business-to-business e-commerce application that provides a
marketplace for electronic components.
. Military.com's affinity portal for current and former military personnel.
Our netsourcing revenue to date has been recognized from a small number of
customers. In our fiscal year ended December 31, 1999, revenue from three
separate customers associated with Hewlett-Packard represented 53% of our total
revenue. These same customers represented 29% of revenue for the two months
ended February 29, 2000. We expect that a significant amount of our revenue may
continue to depend on a small number of customers or customers obtained through
a significant channel partner, although we expect the percentage of our revenue
from any specific channel partner to continue to decline in the future as we
grow and expand our business. See "Risk Factors--We derive our netsourcing
revenue from a limited number of customers . . ." on page 7 of this prospectus.
Competition
Our market is highly competitive. There are few substantial barriers to
entry and we expect that we will face additional competition from existing
competitors and new market entrants in the future. The principal competitive
factors in this market include:
. reliability, scalability and security of IT and network infrastructure;
. technical expertise across a wide range of disciplines;
. quality of service, including customer service and support;
. bundling of products and services;
. the quality and effectiveness of sales personnel;
. introductions of new services;
. brand name recognition; and
. price.
Our current and potential competitors in the market include:
. providers of web and application hosting services;
. providers of co-location services;
. application service providers;
. national and regional Internet service providers and telecommunications
companies; and
. IT integration, consulting and outsourcing firms.
Our competitors may operate in one or more of these areas and include AT&T,
Digex, Digital Island, Exodus Communications, GlobalCenter, IBM, Intel,
NaviSite, Qwest Communications and USInternetworking. See "Risk Factors--The
market in which we compete is highly competitive . . ." beginning on page 9 of
this prospectus for a further discussion of the competitive risks that we face.
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<PAGE>
Intellectual Property
We rely on a combination of copyright, trademark, trade secret and other
intellectual property law, nondisclosure agreements and other protective
measures to protect our proprietary rights. We attempt to protect our
intellectual property rights by limiting access to the distribution of our
software, documentation and other proprietary information. In addition, we
enter into confidentiality agreements with all of our employees and certain
customers, vendors and strategic partners. We presently have no patents and no
patent applications.
In February 2000, we received a letter from Hewlett-Packard on behalf of its
affiliate Intria-HP Corporation, a Canadian company and a provider of financial
processing solutions, asserting that our use of the name "Intira" violates
their trademark rights with respect to the mark "Intria" and "Intria-HP" and
requesting that we stop using the name Intira. If Intria or Hewlett-Packard
were to bring suit against us, the matter could be time consuming and costly,
and we cannot assure you that we will necessarily prevail in litigation. Due to
the unpredictable nature of intellectual property disputes generally and given
that this dispute is at an early stage, we cannot ascertain the availability of
injunctive relief or other equitable and legal remedies that Intira may have or
estimate the total expenses, possible damages or settlement value, if any, that
we may incur in connection with Hewlett-Packard or Intria-HP's claim. In
addition, our business could be harmed if we were to engage in a protracted
dispute with Hewlett-Packard or Intria-HP, one of our principal customers and
channel partners. We could potentially be prevented from using the name
"Intira," be required to enter into a licensing agreement with Intria-HP or
Hewlett-Packard and/or pay monetary damages. Further, we cannot assure you that
Hewlett-Packard or Intria-HP will agree to issue a license to us and, even if
they do the terms of such a license would be acceptable to us. In the event of
a successful claim against us forcing us to change our name, our ability to
develop our brand name could be seriously harmed and this could adversely
affect our ability to attract customers and grow our business. See "Risk
Factors--Hewlett-Packard on behalf of Intria-HP has asserted that our use of
the mark "Intira" violates their trademark rights. . ." on page 16 of this
prospectus for a further discussion of this claim.
To date, other than the claim with respect to the use of our name discussed
above, we have not received any material claims that we are infringing the
proprietary rights of third parties, but we cannot be certain that third
parties will not make such material claims in the future. See "Risk Factors--
Our business will be adversely affected if we fail to protect our intellectual
property...." on page 15 for a more detailed discussion of risks associated
with intellectual property.
Government Regulation
We offer a suite of service, many of which are wholly outside the scope of
federal and state communications regulation, and therefore are unregulated
(except for regulations generally applicable to all businesses). Our network
services are treated by the Federal Communications Commission or the FCC, as
information services. Although the FCC has asserted jurisdiction to regulate
information services, information services are not currently regulated by the
FCC. Our data management services, customer engineering implementation
services, and streaming media and security services are not currently subject
to regulation by the FCC or the state public utilities commissions, either
because such services are not telecommunications services or are information
services.
FCC Regulation. The FCC regulates the services offered by telecommunications
carriers to the extent that they involve the provision, origination, or
termination of interstate or international telecommunications. But while the
FCC regulates telecommunications services, the FCC has not regulated
information services (although the FCC has asserted that is possesses
jurisdiction to regulate information services). A telecommunications service is
the offering of telecommunications to the public for a fee. An information
service is the offering of a capability for generating, acquiring, storing,
transforming, processing, retrieving, utilizing or making available information
via telecommunications.
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<PAGE>
In practice, because the network services that we sell to our customers are
used exclusively for Internet access and to provide access to the Internet, our
network services offer the capability to generate, acquire, store, transform,
process, retrieve, utilize, and make available information via
telecommunications. Accordingly, our network services are unregulated
information services. We are not a common carrier or a telecommunications
carrier with respect to its Internet access services. In addition, because we
lease telecommunications capacity from common carriers in order to operate our
network services and are not a carrier ourselves. We are not currently required
to report telecommunications revenue to the FCC and are not required to pay
universal service contributions assessed by the FCC. The Universal Service Fund
was created by federal statute and is funded by interstate telecommunications
carriers for the purpose of ensuring that all segments of the population of the
United States have access to basic telecommunications services.
However, although computer applications offered over a network are not
subject to regulation, the FCC has indicated that some services offered over
the Internet, such as phone-to-phone Internet protocol telephony may be
functionally indistinguishable from traditional telecommunications service
offerings and may in the future be subject to federal regulation. In the
future, the FCC's tentative analysis could be applied to delivery of video and
audio programming over the Internet, or streaming media. Like IP telephony, the
delivery of video and audio programming or streaming media over the Internet
will raise questions about appropriate regulatory treatment of this new medium.
State Regulation. The individual state public utilities commissions maintain
jurisdiction over telecommunications facilities and services that involve the
origination or termination of intrastate communications. Recently, the FCC
issued rules on the jurisdictional nature of dial-up calls to Internet service
providers. The FCC declared that Internet traffic is largely interstate and,
therefore, subject to federal--not state--jurisdiction. Subsequently, however,
the U.S. Court of Appeals for the D.C. Circuit vacated that decision and
remanded the matter to the FCC for further action. Therefore, this matter is
now back before the FCC. Accordingly, the FCC's prior characterization of
Internet traffic as largely interstate may change. If in the future Internet
traffic comes to be treated as intrastate, this would confer regulatory
jurisdiction on state public utilities commissions. It is also possible that,
in the future, state legislatures and regulators will attempt to regulate the
Internet, either by regulating transactions or by restricting the content of
the available information and services.
Copyright Liability. Like all businesses, the Company is subject to the laws
providing copyright protection. Recently, the Digital Millenium Copyright Act,
the DMCA, was enacted, which establishes new "safe harbor" protections for
online service providers against copyright liability. Insofar as we could be
considered an online service provider, we stand to benefit from the DMCA. Under
the DMCA, online service providers may be protected from copyright infringement
liability for four categories of conduct: (a) transitory communications, where
the provider merely acts as a data conduit, transmitting unaltered digital
information that has been selected and requested solely by another; (b) system
caching--the practice of retaining copies, for a limited time, of unaltered
material that has been made available online to a subscriber by someone other
than the provider; (c) storage of information solely at subscribers' direction;
and (d) subscribers' interactions with information location tools, such as
hyperlinks, online directories, search engines, and the like. To be fully
protected by the DMCA's limitations on copyright liability, however, an online
service provider must comply with certain eligibility criteria,
Liability for Defamatory or Indecent Materials Disseminated Through Our
Network. Because we provide streaming media and caching services, the Company
is subject to the evolving law governing liability of online service providers
for defamatory or indecent materials posted or supplied by others. The
Communications Decency Act provides that no provider or user of an interactive
computer service shall be treated as the publisher or speaker of any
information provided by another information content provider." In recent
decisions, courts have found that this defense provision of
42
<PAGE>
the Communications Decency Act shields online service providers from liability
for defamation. However, this area of the law is not settled and continues to
evolve. In addition, in 1998, Congress sought to regulate objectionable content
on the Internet by enacting the Child Online Protection Act, which imposes
civil and criminal penalties on any person who engages in the business of
selling or transferring materials via the Internet that are harmful to
children, and fails to restrict children from accessing such materials. The
enforcement of the Child Online Protection Act has been stayed while the courts
are considering the constitutionaliy of this statute.
Employees
At March 15, 2000, we had a total of 207 employees, all of whom were based
in the United States, except for two employees based in Toronto, Canada. Of the
total, 11 were engaged in product and technology development, 50 were engaged
in sales, 13 were engaged in marketing, 107 were engaged in engineering and
operations, and 26 were in administration and finance. None of our employees is
subject to a collective bargaining agreement and we believe that our relations
with our employees are good.
Facilities
Our California data center and principal administrative, sales, marketing
and research and development facility, occupy approximately 102,000 square feet
in Pleasanton, California pursuant to a lease that expires in January 2010 with
options to renew. We also occupy approximately 21,000 square feet at the data
center facility in St. Louis, Missouri under a lease that expires 2003 with
options to renew and 46,000 square feet at our New York City data center
facility under a lease that expires 2015 with options to renew. In addition, we
occupy a total of approximately 7,000 square feet of office space in St. Louis
under a lease, that expires in 2004.
We have sales offices throughout the United States, including regional sales
offices in the Atlanta, Baltimore, Boston, Chicago, Dallas, Los Angeles,
Philadelphia, Seattle and Washington D.C. metropolitan areas and in Toronto,
Canada.
While we anticipate the need to obtain additional space at our current
locations and additionally to add locations, we believe that acquisition of
additional space will be on commercially reasonable terms.
Legal Proceedings
We are not a party to any material legal proceedings.
43
<PAGE>
MANAGEMENT
Executive Officers And Directors
The following table sets forth information with respect to our executive
officers and directors as of the date of this prospectus.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Bernard V. Schneider............ 43 President, Chief Executive Officer and
Director
David S. Boone.................. 39 Vice President, Finance and Chief Financial
Officer
Jeffrey J. Condon............... 53 Vice President of Product Development
John M. Kirkpatrick............. 42 Vice President of Business Development
Steven V. Sidore................ 40 Vice President of Operations and
Engineering
John R. Steensen................ 50 Vice President and Chief Technology Officer
Thomas J. Swanson............... 44 Vice President of Sales
Dina L. Toothman................ 40 Vice President of Marketing
James A. Brasunas(1)............ 51 Director
David S. Britts(2).............. 35 Director
Yogen K. Dalal(1)............... 49 Director
Ronald J. Kruszewski(1)(2)...... 49 Director
Michael J. Mahoney(2)........... 40 Director
</TABLE>
- --------
(1) Member of Compensation Committee
(2) Member of Audit Committee
Bernard V. Schneider has served as president and chief executive officer
since January 1999 and as a member of our board of directors since November
1998. From October 1997 to January 1999, Mr. Schneider served as corporate vice
president and treasurer of Ascend Communications, a provider of data networking
systems, which was acquired by Lucent Technologies, a provider of
communications systems, software and products. At Ascend he also held the
positions of vice president of strategic business development from July 1996
until October 1997 and vice president of marketing from June 1995 to July 1996.
From July 1990 to June 1995, Mr. Schneider was director of data product
management at Sprint Corporation, a telecommunications company.
David S. Boone has served as vice president, finance and chief financial
officer since November 1999. From February 1999 until November 1999, Mr. Boone
served as a vice president and principal of SouthCoast Capital, a private
equity and venture capital firm. From August 1993 to February 1999, Mr. Boone
served in a variety of positions, including as a vice president of business
development and a divisional chief financial officer, at Frito Lay, a division
of PepsiCo, a global manufacturer and marketer of snack foods.
Jeffrey J. Condon has served as vice president of product development since
July 1999. From April 1997 to July 1999, Mr. Condon served as the director of
web-enabling solutions for Applied Theory, a provider of Internet business
solutions. From April 1991 to April 1997, Mr. Condon served in a variety of
positions including director of product marketing for international operations
and senior director of application engineering and marketing at Software AG, a
provider of database management and application development software.
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<PAGE>
John M. Kirkpatrick has served as vice president of business development
since October 1999. From May 1999 to October 1999 and from July 1998 to October
1998, Mr. Kirkpatrick was an independent business consultant. From October 1998
to May 1999, Mr. Kirkpatrick served as vice president of business development
of Qwest Communications, a provider of telecommunication services. From July
1997 to July 1998, Mr. Kirkpatrick served as vice president and general manager
of Teligent, a provider of integrated communications systems. From May 1996 to
April 1997, Mr. Kirkpatrick served as vice president of sales of ICG/Netcom, a
division of ICG Communications, an Internet service provider. From May 1992 to
March 1996, Mr. Kirkpatrick served as director of business development strategy
with Lucent Technologies.
Steven V. Sidore has served as vice president of operations and engineering
since August 1999. From January 1999 to July 1999, Mr. Sidore served as vice
president of engineering at Iridium LLC, a global satellite phone and paging
company. From September 1997 to December 1998, Mr. Sidore served as vice
president of business development of Spatial Dynamics, a provider of consulting
services for technology acquisition, development and evaluation. From 1982 to
September 1997, Mr. Sidore held various engineering and management positions
with Pacific Bell, a provider of telecommunications services, including most
recently as executive director of network operations and technology manager for
Pacific Bell's Personal Communications Services.
John R. Steensen has served as vice president and chief technology officer
since February 2000. From January 1993 to January 2000, Mr. Steensen served as
president of Spatial Dynamics and its predecessor, Southwest Business Services,
both providers of consulting services for technology acquisition, development
and evaluation.
Thomas J. Swanson has served as vice president of sales since May 1999. From
September 1998 to April 1999, Mr. Swanson served as senior vice president of
sales and marketing for NetBalance, a provider of information technology asset
management solutions. From April 1994 to July 1998, Mr. Swanson served in a
variety of positions at Prism Solutions, a data warehouse company, most
recently as vice president of North American sales.
Dina L. Toothman has served as vice president of marketing since April 1999.
From December 1995 to March 1999, Ms. Toothman served in a variety of
positions, most recently as director of marketing, with Ascend Communications,
which was subsequently acquired by Lucent Technologies. From January 1994 to
October 1995, Ms. Toothman served as director of corporate communications with
Radius, a digital publisher and maker of video technology.
James A. Brasunas has served as a member of our board of directors since May
1999. Since October 1999, Mr. Brasunas has served as chief executive officer of
Partner Communications & Services, a high-speed Internet service provider. From
May 1999 to October 1999, Mr. Brasunas was an independent consultant. Mr.
Brasunas has served as a director of Partner Communications & Services since
May 1999. From May 1998 until May 1999, Mr. Brasunas was an independent
business consultant. From February 1994 to May 1998, Mr. Brasunas served in a
number of positions with MCI WorldCom, a provider of international
telecommunications services, most recently as vice president of carrier sales.
David S. Britts has served as a member of our board of directors since June
1999 as the designated representative of our outstanding preferred stock. Since
March 1999, Mr. Britts has been a partner with Chase Capital Partners, a
venture capital firm. From July 1998 to March 1999, Mr. Britts served as a
director in the Corporate Finance Group of Credit Suisse First Boston, an
investment banking firm. From April 1996 to July 1998, Mr. Britts served as a
director of Deutsche Morgan Grenfell, an investment banking firm. From April
1994 to April 1996, Mr. Britts served as an associate with Lehman Brothers, an
investment banking firm.
Yogen K. Dalal has served as a member of our board of directors since July
1999. He joined Mayfield Fund, a venture capital firm, in September 1991 and
has been a general partner of several
45
<PAGE>
venture capital funds affiliated with Mayfield since June 1992. Dr. Dalal is
also a director of Broadvision, Nuance and Tibco Software.
Ronald J. Kruszewski has served as a member of our board of directors since
March 1999. Since October 1997, Mr. Kruszewski has served as president, chief
executive officer, and a director of Stifel Financial Corp., an investment
banking and brokerage firm which is affiliated with Stifel, Nicolaus & Company,
Incorporated, an underwriter in this offering. From August 1989 until September
1997, Mr. Kruszewski held a variety of positions at Robert W. Baird & Co., an
investment banking and brokerage firm, including from 1993 to 1997 as managing
director and chief financial officer.
Michael J. Mahoney has served as a member of our board of directors since
March 2000. Mr. Mahoney has served in a variety of positions at Viatel, an
international telecommunications provider, including as chief executive officer
since September 1996. Mr. Mahoney was also president of Viatel from September
1999 to January 2000 and managing director of Viatel's intercontinental
business unit from January 1996 to September 1996, chief operating officer of
Viatel from September 1996 to September 1997, and executive vice president,
operations and technology from July 1994 to September 1996. Viatel is a
publicly traded company, and Mr. Mahoney has served on its board of directors
since 1995 and as chairman of its board since September 1998.
There are no family relationships among any of our directors, officers or
key employees.
Board of Directors
Upon completion of this offering, our bylaws will provide for a board of
directors consisting of six members. Our certificate of incorporation will
provide for a classified board of directors consisting of three classes of
directors, serving staggered three-year terms. As a result, one-third of our
board of directors will be elected each year. To implement the classified
structure, prior to the consummation of the offering, two of the nominees to
the board of directors will be elected to terms expiring at the first annual
meeting of stockholders after the closing of this offering, two will be elected
to terms expiring at the second annual meeting of stockholders after the
closing of this offering and two will be elected to terms expiring at the third
annual meeting of stockholders after the closing of this offering. Thereafter,
each class of directors will be elected for three-year terms. Messrs. Britts
and Brasunas have been designated Class I Directors, whose term will expire at
the annual meeting of stockholders held in 2001. Messrs. Kruszewski and Dalal
have been designated Class II Directors, whose term will expire at the annual
meeting of stockholders held in 2002. Messrs. Schneider and Mahoney have been
designated Class III Directors, whose term will expire at the annual meeting of
stockholders held in 2003. This classification of the board of directors may
delay or prevent a change in control of our company or in our management. See
"Description of Capital Stock--Antitakeover Effects of Some Provisions of Our
Certificate of Incorporation and Bylaws" on page 67 of this prospectus.
Board Committees
We established an audit committee in February 2000. The audit committee
currently consists of Messrs. Britts, Kruszewski and Mahoney. The audit
committee reviews our internal accounting procedures, reviews our quarterly and
annual financial statements and consults with, and reviews the services
provided by, our independent auditors.
We established a compensation committee in August 1999. The compensation
committee currently consists of Messrs. Brasunas, Dalal and Kruszewski. The
compensation committee reviews and recommends to the board of directors the
compensation of all of our officers and directors, including stock compensation
and loans, and establishes and reviews general policies relating to the
compensation and benefits of our employees.
46
<PAGE>
Compensation Committee Interlocks and Insider Participation
Prior to establishing the compensation committee, the board of directors as
a whole performed the functions delegated to the compensation committee. No
interlocking relationship exists between any member of our board of directors
or our compensation committee and any member of the board of directors or
compensation committee of any other company, and no such interlocking
relationship has existed in the past.
Director Compensation
We do not currently compensate our directors in cash for their services as
members of the board of directors although they are reimbursed for certain
expenses in connection with attendance at board of directors and committee
meetings.
Under our 2000 stock plan, nonemployee directors are eligible to receive
stock option grants at the discretion of our board of directors. In addition,
our 2000 stock plan includes an automatic grant mechanism that provides that
options will be automatically granted to nonemployee directors. Each current
nonemployee director will upon the date of effectiveness of this offering be
automatically granted an option to purchase up to 40,000 shares of common
stock. In addition, any new nonemployee director will be automatically granted
an option to purchase up to 40,000 shares on the date he or she is first
elected or appointed to the board of directors. Each option will be granted at
the fair market value of the common stock on the date of grant. The option
shares will vest over four years with the option shares vesting ratably on a
monthly basis over 48 months. If a nonemployee director continues to serve as a
member of our board of directors for four years from the date of the initial
grant, he or she will be automatically granted another option to purchase up to
40,000 shares of common stock on the fourth anniversary of the previous
automatic stock option grant date. Any subsequent option grant will be subject
to the same four-year vesting schedule. For further information regarding the
provisions of the 2000 stock plan, see "--Incentive Stock Plans--2000 Stock
Plan" beginning on page 54 of this prospectus.
Limitations on Directors' Liability and Indemnification
Upon completion of this offering, our certificate of incorporation will
limit the liability of directors to the fullest extent permitted by Delaware
law. The limitation of liability does not apply to liabilities arising under
the federal securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission. Delaware law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except liability for:
.a breach of their duty of loyalty to the corporation or its stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
.unlawful payments of dividends or unlawful stock repurchases or
redemptions; or
.any transaction from which the director derived an improper personal
benefit.
Upon completion of this offering, our certificate of incorporation will also
provide for indemnification of our directors, officers and employees or other
agents to the fullest extent permitted by law. Our bylaws will also permit us
to secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions in his or her capacity as
an officer, director, employee or other agent, regardless of whether we would
have the power to indemnify him or her under Delaware law.
47
<PAGE>
We have entered into agreements to indemnify our current directors and
executive officers in addition to the indemnification provided for in our
certificate of incorporation and bylaws. These agreements, among other things,
provide for indemnification of our directors and executive officers for
judgments, fines, settlement amounts and certain expenses, including attorneys'
fees incurred by the director or executive officer in any action or proceeding,
arising out of the person's services as a director or executive officer of
Intira, any of our subsidiaries or any other company or enterprise to which the
person provides services at our request. We believe that these provisions and
agreements are necessary to attract and retain qualified persons as directors
and executive officers.
At various times in 1998 and 1999, we entered into indemnification
agreements with Richard Skoba, Mark Ivie, Timothy M. Roberts, James Roberts, W.
Munro Roberts, III, Ronald J. Kruszewski and James Lahay, in connection with
and as an inducement to such individuals having agreed to serve as members of
our board of directors. Of those individuals, Mr. Kruzsewski remains a member
of our board of directors at this time. The indemnification agreements provide
that we will indemnify these individuals to the fullest extent permitted by
applicable law in effect as of the date of each respective agreement. Each
agreement terminates upon the later of 10 years after the date that the
individual ceases to serve as a director, officer, employee or agent of Intira
or the final termination of any legal proceeding then pending in respect of
which the individual has indemnification rights under his agreement.
The limited liability and indemnification provisions in our certificate of
incorporation and bylaws may discourage stockholders from bringing a lawsuit
against our directors for breach of their fiduciary duties and may reduce the
likelihood of derivative litigation against our directors and officers, even
though a derivative action, if successful, might otherwise benefit us and our
stockholders. A stockholder's investment in us may be adversely affected to the
extent we pay the costs of settlement or damage awards against our directors
and officers under these indemnification provisions.
There is no pending litigation or proceeding involving any of our directors,
officers or employees in which indemnification is sought, nor are we aware of
any threatened litigation that may result in claims for indemnification.
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<PAGE>
Executive Compensation
The following table sets forth in summary form information concerning the
compensation awarded to, earned by, or paid for services rendered in all
capacities during the year ended December 31, 1999 by our president and chief
executive officer and any other executive officer or former executive officer
whose salary and bonus for 1999 exceeded $100,000. These individuals are
referred to elsewhere in this prospectus as named executive officers. Other
than the salary, bonus and commission described in the table below, we did not
pay any named executive officer any fringe benefits, perquisites or other
compensation in excess of 10% of such executive officer's salary and bonus
during the years specified. Bonus and commission figures for 1999 include
bonuses and commissions earned and paid in 1999 as well as bonuses and
commissions earned in 1999 but paid subsequently. For 1999, no other annual
compensation was paid to any named executive officer other than commissions.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------
Annual
Compensation Securities
Name and Principal ---------------- Underlying All other
Positions Salary Bonus Commissions Options Compensation
------------------ -------- ------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current Executive
Officers
Bernard V. Schneider.... $174,294 $ -- $ -- -- (1) $27,500(2)
President and Chief
Executive Officer
Steven V. Sidore ....... 71,354 37,500 -- 375,000(3) 100,000(4)
Vice President of
Operations and
Engineering
Thomas J. Swanson ...... 124,479 87,500 66,667(5) 890,626(6) --
Vice President of Sales
Dina L. Toothman ....... 112,500 56,250 -- 656,250(7) --
Vice President of
Marketing
Former Executive
Officers
Timothy M. Roberts(8)... 90,000 -- -- -- 280,001(9)
President and Chief
Technology Officer
James Roberts(10)....... 120,000 -- -- -- 12,401(11)
Director of Marketing
Richard Skoba(12)....... 135,000 -- 73,807 -- 9,686(13)
Vice President of
Channel Management
</TABLE>
- --------
(1) In January 2000, our board of directors granted Mr. Schneider an option to
purchase up to an additional 187,500 shares of common stock at an exercise
price per share of $5.87.
(2) Represents $27,500 in living expenses under Mr. Schneider's employment
agreement. See "Certain Transactions" on page of this prospectus for a
description of Mr. Schneider's employment agreement.
(3) In January 2000, our board of directors granted Mr. Sidore an option to
purchase up to an additional 75,000 shares of common stock at an exercise
price per share of $5.87.
(4) Represents $100,000 in relocation expenses. See "--Employment Agreements"
beginning on page 52 of this prospectus for a description of Mr. Sidore's
employment agreement.
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<PAGE>
(5) Relates to commission payments under Mr. Swanson's employment agreement.
See "--Employment Agreements" on page 52 of this prospectus for a
description of the terms of Mr. Swanson's employment agreement.
(6) In January 2000, our board of directors granted Mr. Swanson an option to
purchase up to an additional 75,000 shares of common stock at an exercise
price per share of $5.87.
(7) In January 2000, our board of directors granted Ms. Toothman an option to
purchase up to an additional 75,000 shares of common stock at an exercise
price per share of $5.87.
(8) Mr. Roberts resigned as president and chief executive officer in January
1999 and as vice president, chief technology officer in September 1999.
See "Certain Transactions" on page 58 of this prospectus regarding our
agreements with Mr. Roberts.
(9) Represents $210,000 paid according to his severance agreement, $60,000 in
professional services expenses incurred in connection with Mr. Roberts'
new business ventures, $4,800 in personal auto expenses and $5,201 in
premiums under our medical insurance plan.
(10) Mr. Roberts resigned as vice president of marketing in April 1999 to
become director of marketing, a position which he subsequently resigned in
January 2000. See "Certain Transactions" on page 58 of this prospectus
regarding Mr. Roberts' severance agreement.
(11) Represents $7,200 in personal auto expenses and $5,201 in premiums under
our medical insurance plan.
(12) Mr. Skoba resigned as vice president of channel management in February
2000. See "Certain Transactions" on page 58 of this prospectus regarding
Mr. Skoba's severance agreement.
(13) Represents $7,200 in personal auto expenses and $2,486 in premiums under
our medical insurance plan.
Option Grants in Last Fiscal Year
The following table provides information relating to stock options granted
to each of the named executive officers during 1999. We granted a total of
7,912,325 options to our employees and consultants during 1999. All of these
options were granted under our 1999 stock option plan, our 1999 equity
incentive plan or our 1999 executive stock option plan and have a term of 10
years, subject to earlier termination in the event an optionee ceases to be an
employee, officer or consultant.
In general, the exercise prices of the options we grant are equal to the
fair market value of our common stock, as valued by our board of directors, on
the date of grant. However, as noted in the table below, we have granted
certain options with exercise prices below fair market value.
Under our 1999 stock option plan, our 1999 equity incentive plan and our
1999 executive stock option plan, in the event of an acquisition, merger or an
asset purchase, if the acquiring corporation fails to assume or substitute the
remaining unvested options, then all of the option shares will become
immediately vested. See "--Incentive Stock Plans" beginning on page 54 of this
prospectus. In addition, under the terms of management retention agreements
with our executive officers, in the event of a change of control transaction in
which an executive officer's employment is terminated within 12 months after
the completion of that transaction, 25% of the terminated executive officer's
shares subject to the option shall become vested and immediately exercisable.
See "--Change of Control Arrangements" on page 54 of this prospectus.
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<PAGE>
The potential realizable values at 5% and 10% appreciation are calculated by
giving effect to our assumed initial offering price of $ per share at
assumed rates of stock appreciation of 5% and 10%, compounded annually for the
ten-year term of the option, and subtracting from that result the total
exercise price. These assumed appreciation rates comply with the rules
promulgated by the Securities and Exchange Commission and do not represent our
prediction of the performance of our stock price.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Number of Percent of Appreciation
Securities Total Options for Option
Underlying Granted to Exercise Fair Market Term
Options Employees Price Value on Expiration -------------
Name Granted During Period Per Share Grant Date Date 5% 10%
---- ---------- ------------- --------- ----------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Current Executive
Officers
Bernard V. Schneider... -- -- -- -- -- -- --
Steven V. Sidore....... 375,000 4.7% $2.40 $2.85 9/14/2009 $ $
Thomas J. Swanson...... 890,625 11.3 0.27 0.27 5/27/2009
Dina L. Toothman....... 656,250 8.3 0.27 0.27 5/27/2009
Former Executive
Officers
Timothy M. Roberts..... -- -- -- -- -- -- --
James Roberts.......... -- -- -- -- -- -- --
Richard Skoba.......... -- -- -- -- -- -- --
</TABLE>
Aggregate Option Exercises and Option Values
The following table sets forth the number of shares of common stock subject
to exercisable stock options held as of December 31, 1999, by the named
executive officers. No named executive officer exercised any options to
purchase common stock during the year ended December 31, 1999. The figures in
the column entitled "Value of Unexercised In-the-Money Options at December 31,
1999" are calculated upon the assumed initial public offering price of $
per share minus the per share exercise price, multiplied by the number of
shares underlying the option.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Unexercised
In-the-Money
Shares Underlying Options
Unexercised Options at December 31,
at December 31, 1999 1999
---------------------- ---------------
Name Vested Unvested Vested Unvested
- ---- ---------- ----------- ------ --------
<S> <C> <C> <C> <C>
Current Executive Officers
Bernard V. Schneider.................... -- -- $ -- $ --
Steven V. Sidore........................ 62,500 312,500
Thomas J. Swanson....................... 259,766 630,859
Dina L. Toothman........................ 218,750 437,500
Former Executive Officers
Timothy M. Roberts...................... -- -- -- --
James Roberts........................... -- -- -- --
Richard Skoba........................... -- -- -- --
</TABLE>
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<PAGE>
Employment Agreements
Bernard V. Schneider. In December 1998, we entered into a three-year
employment agreement with Mr. Schneider, our president and chief executive
officer. The agreement provides for an annual base salary of $175,000, and
provides for a monthly living allowance in the amount of $2,500 to be used for
a car, room and board, food and all other expenses for so long as our
headquarters were in St. Louis, Missouri. Our obligation for Mr. Schneider's
living allowance terminated in November 1999 in connection with the relocation
of our headquarters to Pleasanton, California. Under his employment agreement,
Mr. Schneider may also receive discretionary bonuses payable from time to time
based on the achievement of individual and company performance objectives
established by the board of directors. In connection with his employment
agreement, we sold Mr. Schneider 1,875,000 shares of common stock at a price
per share of $0.27. Mr. Schneider's shares were initially subject to a right of
repurchase, which has subsequently lapsed due to the achievement of specified
milestones.
Thomas J. Swanson. In April 1999, we entered into a one-year employment
agreement automatically renewable for successive one-year terms with Mr.
Swanson, our vice president of sales. The agreement provides for an annual base
salary of $200,000, a signing bonus of $25,000 and a monthly commission payment
equivalent to the greater of 1.1% of billed monthly revenue or $8,333.34. Under
his employment agreement, Mr. Swanson may also receive up to $200,000 per year
in connection with the achievement of certain sales performance objectives. In
connection with his employment agreement, we granted Mr. Swanson an option to
purchase up to 890,625 shares of common stock with an exercise price of $0.27
per share. 12.5% of the option shares vested three months following the date of
the option grant, and the remaining option shares vest in equal monthly
installments over 24 months following the initial three month vesting date. In
the event that Mr. Swanson's employment with us terminates, he shall receive up
to $100,000 severance pay over a six month period.
Dina L. Toothman. In April 1999, we entered into a one-year employment
agreement automatically renewable for successive one-year terms with Ms.
Toothman, our vice president of marketing. Ms. Toothman's agreement provides
for an annual base salary of $150,000. Under her employment agreement, Ms.
Toothman may also receive discretionary bonuses payable from time to time based
on the achievement of individual and company performance objectives. In
connection with her employment agreement, we granted Ms. Toothman an option to
purchase up to 656,250 shares of common stock with an exercise price of $0.27
per share. 12.5% of the option shares vested three months following the date of
the option grant, and the remaining option shares vest in equal monthly
installments over 24 months following the initial three month vesting date. In
the event that Ms. Toothman's employment with us terminates for other than good
cause, she shall receive $75,000 payable over a period of six months, and each
outstanding option shall accelerate so that each option shall become fully
exercisable immediately prior to her termination.
David S. Boone. In October 1999, we entered into an at-will employment
agreement with Mr. Boone, our chief financial officer. The agreement provides
for an annual base salary of $200,000, subject to annual review concerning
increases, as well as relocation expenses, a prorated portion of which Mr.
Boone is obligated to repay should he terminate his employment with us within
12 months after the date of the agreement. Under his employment agreement,
Mr. Boone may also receive discretionary bonuses payable from time to time
based on the achievement of individual and company performance objectives
established by the board of directors. In connection with his employment
agreement, we granted Mr. Boone an option to purchase up to 618,750 shares of
common stock, subject to vesting in equal monthly installments over a 24-month
period at an exercise price of $2.40 per share.
52
<PAGE>
Jeffrey J. Condon. In August 1999, we entered into an at-will employment
agreement with Mr. Condon, our vice president of product development. Mr.
Condon's agreement provides for an annual base salary of $150,000. Under his
employment agreement, Mr. Condon may also receive discretionary bonuses payable
from time to time based on the achievement of individual and company
performance objectives. In connection with his employment agreement, we granted
Mr. Condon an option to purchase up to 243,750 shares of common stock with an
exercise price of $2.85 per share. 12.5% of the option shares vested three
months following the date of the option grant, and the remaining option shares
vest in equal monthly installments over 24 months following the initial three
month vesting date.
John M. Kirkpatrick. In October 1999, we entered into an at-will employment
agreement with Mr. Kirkpatrick, our vice president of business development. Mr.
Kirkpatrick's agreement provides for an annual base salary of $180,000 as well
as relocation expenses, a prorated portion of which Mr. Kirkpatrick is
obligated to repay should he terminate his employment with us prior to October
2000. Under his employment agreement, Mr. Kirkpatrick may also receive
discretionary bonuses payable from time to time based on the achievement of
individual and company performance objectives. In connection with his
employment agreement, we granted Mr. Kirkpatrick an option to purchase up to
375,000 shares of common stock with an exercise price of $3.20 per share. 12.5%
of the option shares vested three months following the date of the option
grant, and the remaining option shares vest in equal monthly installments over
24 months following the initial three month vesting date.
Steven V. Sidore. In July 1999, we entered into an at-will employment
agreement with Mr. Sidore, our vice president of operations and engineering.
Mr. Sidore's agreement provides for an annual base salary of $200,000 as well
as a relocation bonus of $100,000. If Mr. Sidore terminates his employment with
us prior to July 2000, he will be obligated to repay a prorated portion of his
relocation bonus. Under his employment agreement, Mr. Sidore may also receive
discretionary bonuses payable from time to time based on the achievement of
individual and company performance objectives. In connection with his
employment agreement, we granted Mr. Sidore an option to purchase up to 375,000
shares of common stock with an exercise price of $2.40 per share. 12.5% of the
option shares vested three months following the date of the option grant, and
the remaining option shares vest in equal monthly installments over 24 months
following the initial three month vesting date.
John R. Steensen. In February, 2000, we entered into an at-will employment
agreement with Mr. Steensen, our vice president and chief technology officer.
The agreement provides for an annual base salary of $175,000, subject to annual
review concerning increases. Under his employment agreement, Mr. Steensen may
also receive discretionary bonuses payable from time to time based on the
achievement of individual and company performance objectives established by the
board of directors. In connection with his employment agreement, we granted Mr.
Steensen an option to purchase up to 420,000 shares of common stock with an
exercise price of $6.67 per share, subject to vesting. 12.5% of the option
shares will vest three months following the date of the option grant, and the
remaining shares vest in equal monthly installments over 24 months following
the initial three month vesting date. In the event that Mr. Steensen's
employment with Intira terminates for any reason other than cause, he shall
receive $87,500 payable over a period of six months.
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Change in Control Arrangements
We have entered into management retention agreements with each of our
executive officers. Unless stated otherwise above, the agreements provide that
in the event of the executive's involuntary termination without cause or
voluntary termination for good reason within twelve months after a change in
control, 25% of shares subject to the option shall become automatically
accelerated and exercisable. For purposes of these agreements, a "change in
control" occurs if:
. any person becomes the "beneficial owner," directly or indirectly, of our
securities representing 50% or more of the total voting power represented
by our then outstanding voting securities;
. our stockholders approve an agreement for the sale or disposition by us
of all or substantially all of our assets; or
. our stockholders approve a merger or consolidation of us with any other
corporation, other than a merger or consolidation that would result in
our voting securities outstanding immediately prior thereto continuing to
represent more than 50% of the total voting power of the surviving entity
of the merger.
Incentive Stock Plans
2000 Stock Plan.
Our board of directors adopted the 2000 stock plan, referred to as the 2000
plan, in March 2000, and we anticipate our stockholders will approve our 2000
plan prior to the completion of this offering. Our 2000 plan is the successor
equity incentive plan to our 1999 stock option plan, 1999 equity incentive plan
and our 1999 executive stock option plan, the predecessor plans. Our board of
directors has decided not to grant any additional options under the predecessor
plans as of the effective date of this offering. The outstanding options
granted under the predecessor plans will remain subject to the terms of the
applicable plan and stock option agreement. The terms of the predecessor plans
are similar to those of the 2000 plan.
The purpose of the 2000 plan is to provide us with a continued opportunity
to retain and attract employees, directors and consultants who are essential to
our future growth and success by providing such individuals with an opportunity
to acquire shares of our common stock. Our 2000 plan provides for the grant of
nonstatutory stock options to our employees, directors and consultants, and for
the grant of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code to our employees.
Number of Shares of Common Stock Available under the 2000 Plan. A total of
3,750,000 shares of our common stock are authorized for issuance under the 2000
plan. On the first day of each fiscal year during the term of the 2000 plan,
beginning with our fiscal year 2001, the number of shares available for
issuance under our 2000 plan will increase by an amount of shares equal to the
lesser of 4% of the outstanding shares of our common stock on the first day of
our fiscal year, 4,500,000 shares or an amount as our board may determine.
Administration of the 2000 Plan. Our board of directors or a committee of
our board administers the 2000 plan. In the case of options intended to qualify
as "performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code, the committee will consist of two or more "outside
directors" within the meaning of Section 162(m) of the Internal Revenue Code.
The administrator has the power to determine the terms of the options granted,
including the exercise prices, the number of shares subject to each option, the
exercisability of the options and the form of consideration payable upon
exercise.
Options. The administrator determines the exercise price of options granted
under the 2000 plan, but with respect to nonstatutory stock options intended to
qualify as "performance-based
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<PAGE>
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
and all incentive stock options, the exercise price must be at least equal to
the fair market value of our common stock on the date of grant. The term of an
incentive stock option may not exceed 10 years, except that with respect to any
participant who owns 10% of the voting power of all classes of our outstanding
capital stock, the term must not exceed five years and the exercise price must
equal at least 110% of the fair market value on the grant date. The
administrator determines the term of all other options.
No optionee may be granted an option to purchase more than 375,000 shares in
any fiscal year. In connection with his or her initial service, an optionee may
be granted options to purchase up to an additional 450,000 shares.
After termination of one of our employees, directors or consultants, such
employee director or consultant may exercise his or her option for the period
of time stated in the option agreement. Generally, if termination is due to
death or disability, the option will remain exercisable for 12 months. In all
other cases, the option will generally remain exercisable for 90 days. However,
an option may never be exercised later than the expiration of its term.
Automatic Grants to Nonemployee Directors. Our 2000 plan provides for the
periodic automatic grant of options to our nonemployee directors. Each option
granted under this automatic grant provision will have an exercise price per
share equal to 100% of the fair market value of our common stock on the date of
grant and will have a term of 10 years, unless terminated earlier upon the
optionee's termination of service as a director, in which case, the director
has 90 days to exercise the vested portion of the option. Following is a brief
description of the options that will automatically be granted to nonemployee
directors under the 2000 plan.
Initial Grant. Each current nonemployee director will automatically be
granted an option to purchase up to 40,000 shares of our common stock on
the effectiveness of this offering. In addition, each new nonemployee
director will receive an automatic grant to purchase up to 40,000 shares of
our common stock on the date he or she first becomes a nonemployee
director, whether by appointment by our board or election by our
stockholders. An employee director who ceases to be an employee will not be
eligible to receive this initial grant. Each initial share option grant
will become vested and exercisable with respect to the shares over four
years with the option shares vesting ratably on a monthly basis over 48
months.
Subsequent Grants. Each nonemployee director will automatically be
granted an additional option to purchase 40,000 shares of our common stock
on the fourth anniversary of the previous automatic stock option grant
date. Each subsequent option grant will become vested and exercisable
according to the vesting schedule described above.
The other terms and conditions of the options automatically granted to
nonemployee directors under the 2000 plan will be governed by the terms of our
2000 plan.
Transferability of Options. Our 2000 plan generally does not allow for the
transfer of options, and only the optionee may exercise an option during his or
her lifetime. The administrator may, however, allow options to be transferable.
Adjustments upon Merger or Asset Sale. Our 2000 plan provides that in the
event of our merger with or into another corporation or a sale of substantially
all of our assets, the successor corporation will assume or substitute each
option or stock purchase right. If the outstanding options are not assumed or
substituted, the administrator will provide notice to the optionee that he or
she has the right to exercise the option as to all of the shares subject to the
option, including unvested shares, for a period of 15 days from the date of the
notice. The option will terminate upon the expiration of the 15-day period.
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<PAGE>
Amendment and Termination of our 2000 Plan. Our 2000 plan will automatically
terminate in 2010, unless we terminate it earlier. In addition, our board of
directors has the authority to amend, suspend or terminate the 2000 plan
provided such amendment suspension or termination does not adversely affect any
option previously granted under our 2000 plan.
2000 Employee Stock Purchase Plan.
Our board of directors adopted the 2000 employee stock purchase plan,
referred to as the purchase plan, in March 2000, and we anticipate our
stockholders will approve our purchase plan prior to the completion of this
offering. Our purchase plan provides eligible employees the opportunity to
purchase shares of our common stock at a discount through payroll deductions.
Number of Shares of Common Stock Available under the Purchase Plan. A total
of 1,125,000 shares of our common stock are authorized for issuance under the
purchase plan. In addition, the number of shares authorized for issuance under
the purchase plan will increase annually on the first day of each fiscal year,
beginning with our fiscal year 2001, equal to the lesser of 1% of the
outstanding shares of our common stock on the first day of the fiscal year,
750,000 shares or an amount as our board may determine.
Administration of the Purchase Plan. Our board of directors or a committee
of our board administers the purchase plan. Our board of directors or its
committee has full and exclusive authority to interpret the terms of the
purchase plan and determine eligibility.
Eligibility to Participate. All of our employees are eligible to participate
if they are customarily employed by us or any participating subsidiary for at
least 20 hours per week and more than five months in any calendar year.
However, an employee may not be granted an option to purchase stock under the
purchase plan if such employee:
. immediately after grant owns stock possessing 5% or more of the total
combined voting power or value of all classes of our capital stock, or
. has rights to purchase stock under all of our employee stock purchase
plans that accrue at a rate that exceeds $25,000 worth of stock for each
calendar year.
Offering Periods and Contributions. Our purchase plan is intended to qualify
under Section 423 of the Internal Revenue Code and contains consecutive,
overlapping 24-month offering periods. Each offering period includes four 6-
month purchase periods. The offering periods generally start on the first
trading day on or after May 1 and November 1 of each year, except for the first
such offering period which will commence on the first trading day on or after
the effective date of this offering and will end on the last trading day on or
after May 1, 2000.
Our purchase plan permits participants to purchase common stock through
payroll deductions of up to 15% of their eligible compensation which includes a
participant's base straight time gross earnings and commissions. A participant
may purchase a maximum of 7,500 shares during a 6-month purchase period.
Purchase of Shares. Amounts deducted from a participant's eligible
compensation and accumulated during a six-month purchase period are used to
purchase shares of our common stock at the end of that period. The price is 85%
of the lower of the fair market value of our common stock at the beginning of
an offering period or at the end of a purchase period. If the fair market value
at the end of a purchase period is less than the fair market value at the
beginning of the offering period, participants will be withdrawn from the
current offering period following their purchase of shares on the purchase date
and will be automatically re-enrolled in a new offering period. Participants
may end their participation at any time during an offering period, and will be
paid their payroll deductions to date. Participation ends automatically upon
termination of employment with us.
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<PAGE>
Transferability of Rights. A participant may not transfer rights granted
under the purchase plan other than by will, the laws of descent and
distribution or as otherwise provided under the purchase plan.
Adjustments upon Merger or Asset Sale. In the event of our merger with or
into another corporation or a sale of all or substantially all of our assets, a
successor corporation may assume or substitute each outstanding option. If the
successor corporation refuses to assume or substitute for the outstanding
options, the offering period then in progress will be shortened, and a new
exercise date will be set.
Amendment and Termination of the Purchase Plan. Our purchase plan will
terminate in 2010. However, our board of directors has the authority to amend
or terminate our purchase plan, except that, subject to certain exceptions
described in the purchase plan, no such action may adversely affect any
outstanding rights to purchase stock under our purchase plan.
401(k) Plan
In 1999, we adopted the Intira 401(k) Savings Plan and Trust, covering our
eligible full-time employees located in the United States. The 401(k) plan is
intended to meet the requirements of the Internal Revenue Code, as amended, so
that contributions to the 401(k) plan by employees, and the investment earnings
thereon, are not taxable to employees until withdrawn from the 401(k) plan.
Under the 401(k) plan, employees may elect to reduce their current eligible
compensation by up to the lesser of 15% of their annual compensation or the
statutorily prescribed annual limit ($10,500 in 2000) and to have the amount of
the reduction contributed to the 401(k) plan. The 401(k) plan permits us to
make discretionary matching contributions to the 401(k) plan on behalf of
participants in the 401(k) plan who have completed at least a year of service
with us. To date, there have been no matching contributions.
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CERTAIN TRANSACTIONS
The following is a description of transactions since our inception in
January 1998 to which we have been a party, in which the amount involved in the
transaction exceeds $60,000 and in which any director, executive officer or
holder of more than 5% of our capital stock had or will have a direct or
indirect material interest other than compensation arrangements which are
otherwise described under "Management."
Transactions with Directors, Executive Officers and 5% Stockholders
Common Stock
Lucent Technologies. Between March 1998 and August 1998, we sold 3,750,000
shares of common stock at a per share price of $2.67 to Ascend Communications,
which was subsequently purchased by Lucent Technologies, a holder of more than
5% of our outstanding common stock.
Stifel CAPCO. In May 1998, we sold 843,750 shares of common stock and a
warrant to purchase an additional 759,375 shares of common stock to Stifel
CAPCO, whose representative, Ronald J. Kruszewski, is a member of our board of
directors, for a total amount of $600,000. Stifel, Nicolaus & Company,
Incorporated, which is an affiliate of Stifel CAPCO, is an underwriter on this
offering. The warrant to purchase additional shares carried an exercise price
per share of $1.97. Stifel CAPCO exercised its warrant in full in July 1998 for
a total cash payment of $1.5 million.
Preferred Stock
In June 1999, we sold 16,033,886 shares of preferred stock at a per share
price of $2.85 which share figure and per share purchase price reflect our
five-for-two forward stock split effected in January 2000 and the three-for-two
forward stock split to be effected prior to the completion of this offering.
Purchasers of the preferred stock include the following stockholders, each of
whom holds more than 5% of our outstanding stock after giving effect to the
conversion of the preferred stock:
. Chase Venture Capital Associates, L.P., whose representative, David
Britts, is a member of our board of directors;
. Funds affiliated with New Enterprise Associates;
. Funds affiliated with Mayfield Venture Partners, whose representative,
Yogen Dalal, is a member of our board of directors; and
. Funds affiliated with Spectrum Equity Investors.
The following table summarizes purchases of preferred stock by these
stockholders.
<TABLE>
<CAPTION>
Number of
Name of Stockholder Series A Shares
------------------- ---------------
<S> <C>
Chase Venture Capital Associates, L.P.. 5,169,395
New Enterprise Associates.............. 3,504,677
Mayfield Fund.......................... 3,504,673
Spectrum Equity Investors.............. 3,504,673
</TABLE>
Stock Option Grants to Directors
In September 1999, we granted to James A. Brasunas, a member of our board of
directors an option to purchase 18,750 shares of our common stock under our
1999 stock option plan at a per share exercise price of $2.85, the fair market
value of a share of our common stock as determined by the board of directors on
the date of the grant. The option is subject to vesting over a one year period,
with an equal portion of the shares subject to the option vesting each quarter
until all the shares are vested.
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<PAGE>
Employment Agreements
Please see "Management--Employment Agreements" beginning on page 54 of this
prospectus for information regarding employment agreements we have entered into
with our executive officers.
Loan Arrangements
In February 2000 we loaned David Boone, our vice president of finance and
chief financial officer, $400,000 under a secured full recourse loan with 0%
interest, in connection with Mr. Boone's purchase of a home as part of his
relocation to our headquarters in the San Francisco Bay Area. Principal
indebtedness under Mr. Boone's note will become due and payable on the earlier
of 90 days following Mr. Boone's termination of employment with Intira for
cause, 90 days following his voluntary termination of employment with us or
five years from the date of the loan. In the event that Mr. Boone's employment
with us is terminated without cause, we will forgive 100% of the loan.
Agreements with Former Executive Officers
Timothy M. Roberts. In February 1998, Timothy Roberts, our founder and
former president, who resigned from those positions in January 1999 and who
resigned as vice president, chief technology officer in August 1999, purchased
7,500,000 shares of common stock under a stock purchase agreement at a price
per share of $0.001. In August 1999, we entered into a severance agreement with
Mr. Roberts under which Mr. Roberts received a lump sum severance payment in
the amount of $210,000 in August 1999 and we agreed to pay for the health
benefits of Mr. Roberts and his immediate family for a 12 month period ending
in September 2000. We also reimbursed Mr. Roberts $60,000 for professional
service expenses he incurred in connection with starting his new business
ventures. In March 2000, we entered into an amended and restated separation and
mutual release, which, among other things, restated certain portions of the
severance agreement and contains a mutual release of claims.
Mark Ivie. Mark Ivie, our former vice president, corporate development, who
resigned from that position in October 1999, purchased 1,406,250 shares of
common stock under a shareholders' agreement at a price per share of $0.001. In
October 1999, we entered into a severance agreement with Mr. Ivie. Under his
severance agreement, Mr. Ivie will receive a monthly severance amount of $7,500
for six months ending in April 2000, and we agreed to pay for the health
benefits of Mr. Ivie and his immediate family for a 12 month period ending in
October 2000.
James Roberts. James Roberts, our former director of marketing who resigned
in January 2000, purchased 1,312,500 shares of common stock under a
shareholders' agreement at a price per share of $0.001. In January 2000, we
entered into a severance agreement with Mr. Roberts. Under his severance
agreement, Mr. Roberts will receive semi-monthly severance payments of $3,750
for six months ending in July 2000, and we agreed to pay for the health
benefits of Mr. Roberts and his immediate family for a 12 month period ending
in January 2001.
Richard Skoba. Richard Skoba, our former vice president of channel
management, who resigned from such position in February 2000, purchased
1,312,500 shares of common stock under a shareholders' agreement at a price per
share of $0.001. In February 2000, we entered into a severance agreement with
Mr. Skoba. Under his severance agreement, Mr. Skoba will receive semi-monthly
severance payments of $7,500 for three months ending in May 2000, and we agreed
to pay for the health benefits of Mr. Skoba and his immediate family for a six-
month period ending in August 2000.
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Lucent Technologies Equipment Lease
In 1998 and 1999, we entered into capital leases for computer equipment with
Lucent Technologies, formerly Ascend Communications, which owns greater than 5%
of our common stock. The equipment consists primarily of computer equipment
used in our network and data center operations. Commitments totaling
approximately $22,000,000 were payable to Lucent expensed as of December 31,
1998, and commitments totaling approximately $42,000,000 were payable to Lucent
as of December 31, 1999. The obligations under the capital leases are secured
by the related computer equipment. Certain of the leases have been assigned by
Lucent to other leasing companies. The leases expire on various dates through
2004.
Agreements with Chase
Revolving Credit Line. In December 1999, we entered into a senior secured
revolving credit facility with The Chase Manhattan Bank that provides
borrowings of up to $25.0 million for the purchase of equipment and general
working capital needs. David Britts, a member of our board of directors, is a
general partner of Chase Venture Capital Associates, an affiliate of The Chase
Manhattan Bank and a holder of greater than 5% of our common stock. At the
Company's option, the facility bears interest at either (A) the greater of
prime rate, the base certificate of deposit rate plus 1.0%, or the federal
funds effective rate plus 0.5%, in each case, plus 3.0% or (B) the eurodollar
rate plus 4.0%. As of December 31, 1999, the rate on this facility was 11.5%.
Interest payments are due quarterly with the principal and any remaining
interest due on December 27, 2000. Borrowings under the facility are secured by
all of our property and equipment and a compensating balance of $5.0 million.
We must pay a quarterly commitment fee of 1.0% on the unused portion of the
facility. As of December 31, 1999, we had outstanding debt of $25.0 million
under this facility. In connection with the establishment of this credit
facility, we issued The Chase Manhattan Bank a warrant to purchase up to
567,672 shares of our common stock at an exercise price per share of $0.001.
The Chase Manhattan Bank warrant will remain outstanding after the completion
of this offering and will expire on December 30, 2009 or upon a merger or
consolidation into another company, unless earlier exercised. We agreed to pay
The Chase Manhattan Bank a fee equal to 3.0% of the aggregate commitment under
the facility and an annual administration fee equal to $15,000 for acting as
lender in this transaction.
Sale of 13% Senior Discount Notes. In February 2000, we sold 13% senior
discount notes that mature in February 2010 with principal indebtedness at
maturity of $188.5 million and warrants to purchase up to 4,671,240 shares of
common stock at an exercise price per share of $0.007. CB Capital Investors and
Chase Securities, affiliates of Chase Capital Associates, purchased notes and
warrants in this transaction. CB Capital Investors purchased 13% senior
discount notes with principal amount at maturity of $18.8 million and warrants
to purchase 464,646 shares of common stock. Chase Securities purchased 13%
senior discount notes with principal amount at maturity of $13.3 million and
warrants to purchase 328,350 shares of common stock. Chase Securities acted as
our placement agent in connection with the sale of the 13% senior discount
notes and the common stock purchase warrants. We paid Chase Securities a fee of
$4,018,141, or 4.0% of our gross proceeds from the sale of the 13% senior
discount notes for acting as placement agent in this transaction.
Agreements with Viatel
In January 2000 we entered into a binding memorandum of understanding with
Viatel under which we have the right to lease data center space and bandwidth
from Viatel at a reduced market rate for a 10 year period. Michael J. Mahoney,
a member of our board of directors, is the president and chief executive
officer of Viatel. Viatel will provide the operational infrastructure for the
data centers at their expense. We believe that the Viatel relationship will
expedite our entry into Europe.
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We issued to Viatel 1,897,346 shares of common stock in connection with
entering into the memorandum of understanding. See "Risk Factors--We are
dependent on Viatel for our planned European expansion" on page 14 of this
prospectus for a further discussion of our relationship with Viatel and our
negotiation of commercial contracts with Viatel to supercede the currently
effective binding memorandum of understanding.
Indemnification
We have entered into indemnification agreements with each of our directors
and executive officers. Such indemnification agreements will require us to
indemnify our directors and officers to the fullest extent permitted by
Delaware law. We also previously entered into indemnification agreements with
certain of our former directors and one current director. See "Management--
Limitation of Directors' Liability and Indemnification" on page 47 of this
prospectus for a further description of our indemnification obligations.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of December 31, 1999, and as
adjusted to reflect the sale of common stock offered in this prospectus, by:
. each stockholder known by us to own beneficially more than 5% of our
common stock, as explained below;
. each of the named executive officers;
. each of our directors; and
. all of our current directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to options
or warrants held by that person that are currently exercisable or will become
exercisable within 60 days after December 31, 1999 are deemed outstanding,
while the shares are not deemed outstanding for purposes of computing
percentage ownership of any other person. Unless otherwise indicated in the
footnotes below, the persons and entities named in the table have sole voting
or investment power with respect to all shares beneficially owned, subject to
community property laws where applicable.
The number and percentage of shares beneficially owned are based on the
aggregate of 39,842,179 shares of common stock outstanding as of December 31,
1999, which assumes the conversion of the preferred stock upon the completion
of this offering. See "Capitalization" on page 21 for a further discussion of
the outstanding share number at such date.
<TABLE>
<CAPTION>
Number of Percentage of
Shares Shares
Underlying Beneficially
Number of Vested Owned
Shares Options -----------------
Name and Address of Beneficial Beneficially Beneficially Before After
Owner Owned Owned Offering Offering
- ------------------------------ ------------ ------------ -------- --------
<S> <C> <C> <C> <C>
5% Stockholders
Chase Venture Capital Associates,
L.P.(1).......................... 5,737,067 -- % %
280 Madison Avenue
New York, New York 10017
Lucent Technologies .............. 3,750,000 --
600 Mountain Avenue
Murray Hill, New Jersey 07974
New Enterprise Associates(2)...... 3,504,677 --
2490 Sand Hill Road
Menlo Park, California 94025
Mayfield Fund(3).................. 3,504,673 --
2800 Sand Hill Road
Suite 256
Menlo Park, CA 94025
Spectrum Equity Investors(4)...... 3,504,673 --
One International Place
29th Floor
Boston, Massachusetts 02110
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Percentage of
Shares Shares
Underlying Beneficially
Number of Vested Owned
Shares Options -----------------
Name and Address of Beneficial Beneficially Beneficially Before After
Owner Owned Owned Offering Offering
- ------------------------------ ------------ ------------ -------- --------
<S> <C> <C> <C> <C>
Executive Officers and Directors
Bernard V. Schneider.............. 4,059,376 --
Steven V. Sidore.................. -- 62,500 * *
Thomas J. Swanson................. -- 259,766 * *
Dina L. Toothman.................. 17,525 218,750 * *
James A. Brasunas................. 16,227 4,688 * *
David S. Britts(5)................ 5,737,067 --
Yogan K. Dalal(6)................. 3,504,673 --
Ronald J. Kruszewski(7)........... 1,603,126 --
Michael J. Mahoney(8)............. 1,897,346 --
All directors and officers as a
group (10 persons)(9)............ 16,835,340 545,704
Former Executive Officers
Timothy M. Roberts(10)............ 2,947,186 --
James Roberts(11)................. 1,828,125 --
Richard Skoba..................... 1,297,343 --
</TABLE>
- --------
* Represents beneficial ownership of less than 1%.
(1) Includes 567,672 shares purchasable under a warrant that is presently
exercisable by The Chase Manhattan Bank, an affiliate of Chase Venture
Capital Associates, L.P. David Britts, a member of our board of directors,
is a general partner of Chase Venture Capital Associates, L.P.
(2) Includes 3,467,880 shares held by New Enterprise Associates VIII, L.P.,
1,752 shares held by NEA Ventures 1999, and 35,045 shares held by NEA
Presidents Fund, L.P.
(3) Includes 3,049,064 shares held by Mayfield X, L.P., 105,140 shares held by
Mayfield Associates Fund IV, and 350,468 shares held by Mayfield
Principals Fund, L.P. Yogen Dalal, a member of our board of directors, is
a general partner of each such fund.
(4) Includes 3,364,485 shares held by Spectrum Equity Investors III, L.P.,
105,140 shares held by SEI III Entrepreneur's Fund, L.P., and 35,048
shares held by Spectrum III Investment Managers' Fund, L.P.
(5) Shares held by Chase Venture Capital Associates, L.P., of which Mr. Britts
is a general partner. Mr. Britts disclaims beneficial ownership of the
shares held by the Chase Venture Capital entity, except to the extent of
his pecuniary interest as a general partner.
(6) Shares held by Mayfield X, L.P., Mayfield Associates Fund IV and Mayfield
Principals Fund, L.P. Dr. Dalal, a member of our board of directors and a
general partner of each such fund, disclaims beneficial ownership of the
shares held by the entities associated with the Mayfield Fund, except to
the extent of his pecuniary interest as a general partner.
(7) Shares held by Stifel CAPCO, LLC. Mr. Kruszewski, a member of our board of
directors, is a managing director of Stifel CAPCO, LLC. Mr. Kruszewski
disclaims beneficial ownership of the shares held by the Stifel entity,
except to the extent of his pecuniary interest as a managing director.
(8) Shares held by Viatel. See "Certain Transactions" beginning on page 58 of
this prospectus. Mr. Mahoney is the chairman and chief executive officer
of Viatel.
(9) Includes 567,762 shares of common stock issuable upon exercise of a
warrant held by The Chase Manhattan Bank in connection with a revolving
credit facility.
(10) Shares held by the Timothy M. Roberts Revocable Trust and the Roberts
Children Trust.
(11) Shares held by the James J. Roberts Revocable Trust, the Jeffrey J.
Roberts Irrevocable Trust and the Margaret M. Roberts Irrevocable Trust.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
Upon completion of this offering, we will be authorized to issue 300,000,000
shares of common stock, $0.001 par value, and 5,000,000 shares of undesignated
preferred stock, $0.001 par value. Based upon shares and options outstanding as
of December 31, 1999, immediately after this offering, we estimate there will
be approximately shares of common stock outstanding. No shares of
preferred stock will be issued and outstanding.
In addition, upon completion of this offering, our certificate of
incorporation and bylaws will contain provisions that are intended to enhance
the likelihood of continuity and stability in the composition of the board of
directors and which may have the effect of delaying, deferring or preventing a
future takeover or change in control of us unless such takeover or change in
control is approved by our board of directors.
Common Stock
Holders of common stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Holders of common stock do not have
cumulative voting rights, and therefore, holders of a majority of the shares
voting for the election of directors can elect all of the directors. If this
occurs, the holders of the remaining shares will not be able to elect any
directors.
Holders of the common stock are entitled to receive such dividends as may be
declared from time to time by the board of directors out of funds legally
available therefor, subject to the terms of any existing or future agreements
between Intira and our debtholders. We have never declared or paid cash
dividends on our capital stock and expect to retain future earnings, if any,
for use in the operation and expansion of our business, and do not anticipate
paying any cash dividends in the foreseeable future. In the event of
liquidation, dissolution or winding up of our business, the holders of common
stock are entitled to share ratably in all assets legally available for
distribution after payment of all debts and other liabilities and subject to
the prior rights of any holders of preferred stock then outstanding. Holders of
common stock have no preemptive or other subscription or conversion rights.
There are no redemption or sinking fund provisions applicable to the common
stock.
Preferred Stock
Effective upon the closing of this offering, we will be authorized to issue
5,000,000 shares of undesignated preferred stock. The board of directors has
the authority to issue the preferred stock in one or more series and to fix the
price, rights, preferences, privileges and restrictions thereof, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption price, liquidation preferences and the number of shares
constituting a series or the designation of such series, without any further
vote or action by our stockholders. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of delaying, deferring or
preventing a change in control of Intira without further action by the
stockholders and may adversely affect the market price of, and the voting and
other rights of, the holders of common stock. The issuance of preferred stock
with voting and conversion rights may adversely affect the voting power of the
holders of common stock, including the loss of voting control to others. We
have no current plans to issue any shares of preferred stock.
Warrants
Upon completion of this offering, warrants to purchase up to 5,238,912
shares of common stock will be outstanding.
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<PAGE>
Credit facility warrant. In December 1999 and in connection with an
establishment of a $25.0 million credit facility, we issued to The Chase
Manhattan Bank a warrant to purchase up to 567,672 shares of our common stock
at an exercise price per share of $0.001. The warrant is exercisable in full or
in part by the payment of the exercise price in cash or under a cashless
exercise in which the warrant holder would cancel the number of warrant shares
equal in value to the exercise price for the warrant shares being purchased.
The warrant will expire on the earlier to occur of December 30, 2009 or upon
the closing of a change of control transaction.
High-yield debt warrants. In February 2000 and in connection with the sale
of 13% senior discount notes, we sold warrants to purchase up to 4,671,240
shares of common stock at an exercise price per share of $0.007. Generally,
these warrants will become exercisable upon the earliest to occur of the
closing of a change of control transaction, 180 days following the completion
of this offering or February 2, 2005. The warrants are exercisable in full or
in part by the payment of the exercise price in cash or under a cashless
exercise in which the warrant holder would cancel the number of warrant shares
equal to the exercise price for the warrant shares being purchased. The
warrants will expire on February 2, 2010.
Registration Rights
Equity Holder Registration Rights
Set forth below is a summary of the registration rights of the holders of
23,284,357 shares of common stock who acquired their shares in the following
transactions:
. our sale of 3,750,000 shares of common stock to Lucent Technologies,
formerly Ascend Communications, between March and August 1998;
. our sale of 843,750 shares of common stock to Stifel CAPCO in May 1998
and our issuance of 759,375 shares of common stock upon Stifel CAPCO's
exercise of a warrant in July 1998;
. our sale of 16,033,886 shares of preferred stock in June 1999 which
shares will convert into common stock immediately upon completion of this
offering; and
. our sale of 1,897,346 shares of common stock to Viatel.
See "Certain Transactions" beginning on page 58 of this prospectus for a
further description of the sale of these securities. The registration rights of
these holders of the common stock are subject to customary conditions and
limitations.
Demand Registration. Beginning six months following the completion of this
offering, the holders of these registration rights may request that we register
their shares of common stock subject to our right, upon the advice of our
underwriters, to reduce the number of shares proposed to be registered. In
order to exercise these rights, at least a majority in interest of the holders
of these registrable securities must make the request for registration. In
addition, we are obligated to register only the requested shares if the sale of
the shares has an anticipated total offering price to the public of at least
$25.0 million. We are obligated to effect only two registrations under these
holders' demand rights. If any shares requested to be included in a
registration must be excluded due to market factors, as determined by the
managing underwriter, the shares registered on behalf of the selling
stockholders will be allocated among all holders of these registrable
securities who are participating in the registration on the basis of the number
of shares with such rights held by such stockholders. However, registrable
securities requested to be included in such registration shall not be reduced
unless all other securities that do not have these registration rights are
first entirely excluded from the registration.
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<PAGE>
Piggyback Registration. After completion of this offering, the holders of
these registration rights will have unlimited rights to request that shares be
included in any registration of common stock initiated by us other than
registrations of employee benefit plans or relating to this offering or
business combinations subject to Rule 145 under the Securities Act. The
underwriters may, for marketing reasons, limit the shares requested to be
registered on behalf of all stockholders having the right to request inclusion
in such registration. However, the registrable securities requested to be
included in such registration cannot be cut back to less than 25% of the number
of shares being so registered. Additionally, all other securities which do not
have these registration rights must first be entirely excluded from the
registration before any requested registrable securities are excluded.
Form S-3 Registration. After we have qualified for registration on Form S-3,
which will not be available until at least 12 months after completion of this
offering, holders of these registration rights may request in writing that we
effect an unlimited number of registrations of these registrable securities on
Form S-3. In order to exercise these rights, at least 40% in interest of the
holders of these registrable securities must make the request for registration.
In addition, we are obligated to register only the requested shares if the sale
of these shares has an anticipated total offering price to the public of at
least $5.0 million. We are not obligated to effect a registration on Form S-3
upon the request of the holders of these registrable securities more than once
in any 12-month period.
Transferability. These registration rights are transferable upon notice of
the transfer by the holder to us, provided that the transferee or assignee
assumes the rights and obligations of the transferor for such shares and such
transferee or assignee:
. is a partner or retired partner, member or retired member of a holder of
these registrable securities;
. is a family member or trust for a holder of these registrable securities;
or
. acquires at least 20% of the registrable securities shares held by such
assigning or transferring holder of these registrable securities.
Termination. For all holders of less than 1% of our outstanding capital
stock, these registration rights will terminate upon the earlier to occur of
three years following the date of the completion of this offering or at the
time the registrable shares held by that holder may be sold within any three-
month period without restriction under Rule 144 of the Securities Act. For
holders of more than 1% of our outstanding common stock, these registration
rights will not terminate until that holder no longer holds 1% of our shares.
Debt Holder Registration Rights
Set forth below is a summary of the registration rights of holders of
warrants to purchase up to 4,671,240 shares of our common stock who acquired
these warrants in connection with the issuance of our 13% senior discount notes
in February 2000. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" on page
27 of this prospectus for a further discussion of our senior discount note
transaction. In the event of a conflict between the registration rights of the
equity investors under the caption "--Equity Holder Registration Rights" above,
and the registration rights of the senior discount note warrantholders, the
registration rights of the equity holders will prevail. The registration rights
of the holders of the warrants are subject to customary conditions and
limitations.
Demand Registration. Generally, beginning 140 days following the completion
of this offering, the holders of these registration rights may request that we
register the shares of common stock issuable upon exercise of the warrants. In
order to exercise these rights, at least a majority of the holders of the
warrants, as determined by the number of shares issuable upon exercise of the
warrants, must
66
<PAGE>
make the request for registration. We are obligated to effect only two
registrations under this demand right. If shares requested to be included in a
registration must be excluded due to market factors, as determined by the
managing underwriter, the shares registered on behalf of the selling
stockholders will be allocated among all holders of these registrable
securities who are participating in the registration on the basis of the number
of shares with such rights held by such securityholders. However, the number of
shares of registrable securities shall not be reduced unless all other
securities that do not have these registration rights are first entirely
excluded from the registration.
Piggyback Registration. After completion of this offering, holders of these
registration rights will have unlimited rights to request that shares be
included in any registration of common stock initiated by us other than
registrations of employee benefit plans or business combinations subject to
Rule 145 under the Securities Act. The underwriters may, for marketing reasons,
limit the shares requested to be registered on behalf of all stockholders
having the right to request inclusion in such registration.
Transferability. These registration rights are transferable and the
transferee or assignee will assume the rights and obligations of the transferor
or assignor relating to these registration rights for such shares.
Termination. These registration rights will terminate at the time the
registrable shares held by that holder may be sold within any three-month
period without restriction under Rule 144 of the Securities Act.
Antitakeover Effects of Some Provisions of Our Certificate of Incorporation and
Bylaws
Some of the provisions of our certificate of incorporation and bylaws that
will become effective upon the completion of this offering could make the
following more difficult:
. acquisition of us by means of a tender offer;
. acquisition of us by means of a proxy contest or otherwise; or
. the removal of our incumbent officers and directors.
These provisions, summarized below, are generally expected to discourage
coercive takeover practices and inadequate takeover bids. These provisions are
also designed to encourage persons seeking to acquire control of us to first
negotiate with our board. We believe that the benefits of increased protection
resulting from our potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure us outweigh the
disadvantages of discouraging these proposals because we believe that the
negotiation of these proposals could result in an improvement of their terms.
Election and Removal of Directors. Upon completion of this offering, our
board of directors will be divided into three classes. The directors in each
class will serve for a three-year term, one class being elected each year by
our stockholders. This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of us because these provisions generally makes it more difficult
for stockholders to replace a majority of the directors. See "Management--Board
of Directors" on page 46 of this prospectus for a further discussion of the
structure of the Board of Directors.
Stockholder Meetings. Upon completion of this offering, under our bylaws,
only the board of directors, the chairman of the board, the president or the
chief executive officer may call special meetings of stockholders.
Requirements for Advance Notification of Stockholder Nominations and
Proposals. Upon completion of this offering, our bylaws will contain advance
notice procedures with respect to stockholder proposals and the nomination of
candidates for election as directors, other than nominations made by or at the
direction of the board of directors or a committee of the board.
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<PAGE>
Undesignated Preferred Stock. The authorization of undesignated preferred
stock makes it possible for the board of directors to issue preferred stock
with voting or other right or preferences that could impede the success of any
attempt to effect a change of control of Intira. These and other provisions may
have the effect of deferring hostile takeovers or delaying changes in control
or management of us.
See "Risk Factors--Provisions of our charter documents...'' beginning on page
17 of this prospectus for a further discussion of the charter documents.
Effect of Delaware Antitakeover Statute
We are subject to Section 203 of the Delaware General Corporation law which
regulates corporate acquisitions. Section 203 generally prevents Delaware
corporations, including those whose securities are listed for trading on the
Nasdaq National Market, from engaging in a business combination with any
interested stockholder for three years following the date that such stockholder
became an interested stockholder. A business combination includes, among other
things, a merger or consolidation involving Intira and the interested
stockholder and the sale of more than 10% of our assets. Generally, an
interested stockholder is any entity or person beneficially owning 15% or more
of our outstanding voting stock and any entity or person affiliated with or
controlling or controlled by such entity or person. A Delaware corporation may
opt out of the section with an express provision in its original certificate of
incorporation or an express provision in its certification of incorporation or
bylaws resulting from amendments approved by the holders of at least a majority
of the corporation's outstanding voting shares. We have not opted out of the
section.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Bank Boston, N.A.
The transfer agent's address is 150 Royall Street, Canton, Massachusetts 02021
and its telephone number is (781) 575-3120.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of common stock in the public
market could adversely affect the market price of the common stock.
Upon completion of this offering, we will have outstanding shares
of common stock, assuming the issuance of shares of common stock
offered hereby, and no other exercise of outstanding warrants or options after
December 31, 1999. Of these shares, the shares sold in the offering
will be freely tradeable without restriction or further registration under the
Securities Act. However, if shares are held by affiliates, as that term is
defined in Rule 144 under the Securities Act, their sales of shares would be
subject to certain limitations and restrictions that are described below.
The remaining shares of common stock held by existing stockholders,
were issued and sold by Intira in reliance on exemptions from the registration
requirements of the Securities Act. Of these shares, shares will be
subject to lock-up agreements described below on the effective date of the
offering. On the effective date of this offering, no shares will be eligible
for sale pursuant to Rule 144(k). Upon expiration of the lock-up agreements 180
days after the effective date of this offering, shares will become
eligible for sale, subject in most cases to the limitations of Rule 144.
<TABLE>
<CAPTION>
Approximate
Shares
Eligible
Days After Date of this for Future
Prospectus Sale Comment
- ----------------------- ----------- -------
<S> <C> <C>
On Effectiveness........ Shares sold in the offering; freely
tradable shares under Rule 144(k) that are
not subject to the lock-up
90 Days after Freely tradable shares salable under Rule
Effectiveness.......... 144 that are not subject to the lock-up
180 Days after Effective Lock-up on remaining shares expires;
Date................... shares salable under Rules 144, 144(k) and
701
After 180 Days from date
of prospectus.......... Additional shares become saleable under
Rules 144 and 701
</TABLE>
The officers, directors and stockholders of Intira have agreed not to sell
or otherwise dispose of any of their shares for the time periods described
above. Goldman, Sachs & Co., however, may in its sole discretion, at any time
without notice, release all or any portion of the shares subject to lock-up
agreements.
In addition, there are 5,238,912 shares of common stock subject to
outstanding warrants. All of these warrant shares are subject to lock-up
agreements. Of these 5,238,912 warrant shares, warrants to purchase up to
4,671,240 shares of common stock were issued after December 31, 1999. These
warrants to purchase up to 4,671,240 shares are not exercisable prior to 180
days after the completion of this offering. The other 567,672 warrant shares
are presently exercisable.
In addition, as of December 31, 1999, there were a total of 7,624,902 shares
of common stock subject to outstanding options under our 1999 stock option
plan, 1999 equity incentive plan and 1999 executive stock option plan, all of
which option shares are subject to lock-up agreements. On the date 180 days
after the effective date of this offering, when the lock-up period expires,
approximately shares of common stock subject to outstanding options will
be vested.
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<PAGE>
Immediately after the completion of this offering, we intend to file a
registration statement of Form S-8 under the Securities Act to register all of
the shares reserved for future issuance under those stock plans, including
shares issuable upon exercise of outstanding stock options, our 2000 stock
option plan and our 2000 employee stock purchase plan. After the effective date
of the registration statement on Form S-8, shares purchased upon exercise of
options granted pursuant to our stock plans generally would be available for
resale in the public market, subject to the lock-up provision.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell, within any three-
month period, a number of shares that does not exceed the greater of
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain other requirements
regarding the manner of sale, notice filing and the availability of current
public information about Intira.
Rule 144(k)
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, notice
filing, volume limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted, these shares may be sold immediately upon the completion
of this offering.
Rule 701
In general, any Intira employee, director, officer, consultant or advisor
who purchased shares from us under Rule 701 in connection with the exercise of
an option under our 1999 equity incentive plan before the effective date of
this offering is entitled to resell such shares in accordance with Rule 70 190
days after the closing date of this offering in reliance on Rule 144, without
having to comply with certain restrictions of Rule 144, including the holding
period, contained in Rule 144.
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<PAGE>
WHERE YOU MAY FIND ADDITIONAL INFORMATION ABOUT INTIRA
We filed with the SEC a registration statement under the Securities Act for
the shares of common stock in this offering. This prospectus does not contain
all of the information in the registration statement and the exhibits and
schedule that were filed with the registration statement. For further
information about us and our common stock, we refer you to the registration
statement and the exhibits and schedule that were filed with the registration
statement. Statements contained in this prospectus about the contents of any
contract or any other document that is filed as an exhibit to the registration
statement are not necessarily complete, and we refer you to the full text of
the contract or other document filed as an exhibit to the registration
statement. A copy of the registration statement and the exhibits and schedule
that were filed with the registration statement may be inspected without charge
at the public reference facilities maintained by the SEC in Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part of
the registration statement may be obtained from the SEC upon payment of the
prescribed fee. You may call the SEC at 1-800-SEC-0330 for further information
on the operation of the public reference facilities. The SEC maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.
Upon completion of this offering, we will become subject to the information
and periodic reporting requirements of the Securities Exchange Act, and, in
accordance with the requirements of the Securities Exchange Act, will file
periodic reports, proxy statements and other information with the SEC. These
periodic reports, proxy statements and other information will be available for
inspection and copying at the regional offices, public reference facilities and
web site of the SEC referred to above.
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<PAGE>
UNDERWRITING
Intira and the underwriters named below have entered into an underwriting
agreement with respect to the shares being offered. Subject to certain
conditions, each underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co., Lehman Brothers
Inc., FleetBoston Robertson Stephens, Inc. and Stifel, Nicolaus & Company,
Incorporated are the representatives of the underwriters.
<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co.........................................
FleetBoston Robertson Stephens Inc..........................
Lehman Brothers Inc.........................................
Stifel, Nicolaus & Company, Incorporated....................
---
Total.....................................................
===
</TABLE>
If the underwriters sell more shares than the total number set forth in the
table above, the underwriters have an option to buy up to an additional
shares from Intira to cover such sales. They may exercise that
option for 30 days. If any shares are purchased pursuant to this option, the
underwriters will severally purchase shares in approximately the same
proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters by Intira. Such amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.
<TABLE>
<CAPTION>
Paid by Intira
--------------
No Exercise Full Exercise
----------- -------------
<S> <C> <C>
Per Share.......................................... $ $
Total.............................................. $ $
</TABLE>
Shares sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this prospectus.
Any shares sold by the underwriters to securities dealers may be sold at a
discount of up to $ per share from the initial public offering price. Any
such securities dealers may resell any shares purchased from the underwriters
to certain other brokers or dealers at a discount of up to $ per share from
the initial public offering price. If all the shares are not sold at the
initial public offering price, the representatives may change the offering
price and the other selling terms.
Intira and its directors, officers and significant stockholders have agreed
with the underwriters not to dispose of or hedge any of their common stock or
securities convertible into or exchangeable for shares of common stock during
the period from the date of this prospectus continuing through the date 180
days after the date of this prospectus, except with the prior written consent
of Goldman, Sachs & Co. This agreement does not apply to any existing employee
benefit plans. See "Shares Eligible for Future Sale" beginning on page 69 of
this prospectus for a discussion of certain transfer restrictions.
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<PAGE>
Prior to this offering, there was no public market for Intira's common
stock. The initial public offering price has been negotiated among Intira and
the representatives. Among the factors considered in determining the initial
public offering price of the shares, in addition to prevailing market
conditions, were Intira's historical performance, estimates of the business
potential and earnings prospects of Intira, an assessment of Intira's
management and the consideration of the above factors in relation to market
valuation of companies in related businesses.
The common stock will be quoted on the Nasdaq National Market under the
symbol "NTRA".
In connection with this offering, the underwriters may purchase and sell
shares of common stock in the open market. These transactions may include
short sales, stabilizing transactions and purchases to cover positions created
by short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in this offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while this offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the
underwriting discount received by it because the representatives have
repurchased shares sold by or for the account of such underwriter in
stabilizing or short covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by
the underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed
five percent of the total number of shares offered.
Intira currently anticipates that it will undertake a directed share
program pursuant to which it will direct the underwriters to reserve up to
shares of common stock for sale at the initial public offering price
to directors, officers, employees and friends through a directed share
program. The number of shares of common stock available for sale to the
general public in the public offering will be reduced to the extent these
persons purchase any reserved shares. Any shares not so purchased will be
offered by the underwriters to the general public on the same basis as the
other shares offered hereby.
In May 1998, Intira sold 843,750 shares of common stock and a warrant to
purchase an additional 759,375 shares of common stock to Stifel CAPCO, an
affiliate of Stifel, Nicolaus & Company, Incorporated, one of the underwriters
in this offering, for a purchase price of $600,000. Ronald J. Kruszewski, a
member of Intira's board of directors, is president, chief executive officer
and a director of Stifel Financial Corp., which is also affiliated with
Stifel, Nicolaus & Company, Incorporated.
Intira estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately $ .
Intira has agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
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<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, and for the underwriters by Shearman & Sterling, New York, New
York. As of the date of this prospectus, WS Investment Company 99B, an
investment partnership composed of certain current and former members of and
persons associated with Wilson Sonsini Goodrich & Rosati, Professional
Corporation, in addition to certain current individual members of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, beneficially own an
aggregate of 78,128 shares of common stock.
EXPERTS
The consolidated financial statements of Intira Corporation as of December
31, 1998 and 1999 and for the period from January 20, 1998 (inception) to
December 31, 1998 and for the year ended December 31, 1999, have been included
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
74
<PAGE>
INTIRA CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report............................................... F-2
Consolidated Balance Sheets................................................ F-3
Consolidated Statements of Operations...................................... F-4
Consolidated Statements of Stockholders' Equity............................ F-5
Consolidated Statements of Cash Flows...................................... F-6
Notes to Consolidated Financial Statements................................. F-7
</TABLE>
F-1
<PAGE>
FORM OF INDEPENDENT AUDITORS' REPORT
When the stock split described in Note 9 is effected, we will be in a
position to render the following report
/s/ KPMG LLP
The Board of Directors
Intira Corporation:
We have audited the accompanying consolidated balance sheets of Intira
Corporation and subsidiary as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the period from January 20, 1998 (inception) to December 31, 1998 and for the
year ended December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Intira
Corporation and subsidiary as of December 31, 1998 and 1999, and the results of
their operations and their cash flows for the period from January 20, 1998
(inception) to December 31, 1998, and for the year ended December 31, 1999 in
conformity with generally accepted accounting principles.
St. Louis, Missouri
February 2, 2000, except as to the
first paragraph in Note 9 which is as
of March 8, 2000
F-2
<PAGE>
INTIRA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1999
(In thousands, except share data)
<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
ASSETS
------
Cash and cash equivalents................................... $ 4,332 $ 11,195
Accounts receivable, net of allowance for doubtful accounts
of $176 at December 31, 1999............................... 38 1,806
Short-term investments--restricted.......................... -- 11,852
Prepaid expenses and other current assets................... 250 776
------- --------
Total current assets.................................... 4,620 25,629
Property and equipment, net................................. 30,083 57,260
Debt issuance costs......................................... -- 801
------- --------
Total assets............................................ $34,703 $ 83,690
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Revolving credit facility................................. $ -- $ 19,324
Current portion of long-term debt......................... -- 878
Current portion of capital lease obligations.............. 7,696 17,736
Accounts payable.......................................... 829 11,313
Current portion of deferred revenues in excess of costs... -- 180
Accrued exit costs........................................ -- 2,900
Other accrued liabilities................................. 49 3,557
------- --------
Total current liabilities............................... 8,574 55,888
Deferred revenues in excess of costs, less current portion.. -- 379
Long-term debt, less current portion........................ -- 2,122
Capital lease obligations, less current portion............. 20,736 23,887
------- --------
Total liabilities....................................... 29,310 82,276
------- --------
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, par value $.001 per share
Authorized, 5,000,000 shares; issued and outstanding
4,275,701 shares........................................ -- 45,750
Common stock, par value $.001 per share
Authorized, 100,000,000 and 25,000,000 shares,
respectively;
issued and outstanding 21,934,528 and 21,997,761 shares,
respectively............................................. 13,146 43,764
Deferred compensation..................................... (179) (17,959)
Accumulated deficit....................................... (7,574) (70,107)
Treasury stock, 23,581 common shares at cost.............. -- (34)
------- --------
Total stockholders' equity.............................. 5,393 1,414
------- --------
Total liabilities and stockholders' equity.............. $34,703 $ 83,690
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
INTIRA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from January 20, 1998 (inception) to December 31, 1998
and the year ended December 31, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Revenue..................................................... $ 62 $ 4,048
Operating expenses:
Service costs.............................................. 1,891 26,987
Sales and marketing........................................ 1,311 8,147
General and administrative................................. 1,312 4,663
Product development........................................ 66 669
Depreciation and amortization.............................. 2,548 13,103
Stock-based compensation................................... 31 6,622
Accrued exit costs......................................... -- 2,900
------- --------
Total operating expenses................................ 7,159 63,091
------- --------
Loss from operations.................................... (7,097) (59,043)
------- --------
Other income (expense):
Interest income............................................ 169 737
Interest expense........................................... (646) (4,457)
Gain on sale of equipment.................................. -- 230
------- --------
(477) (3,490)
------- --------
Net loss.................................................... $(7,574) $(62,533)
======= ========
Basic and diluted loss per share............................ $ (0.47) $ (3.13)
======= ========
Shares used in per share calculations....................... 16,280 20,008
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
INTIRA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Period from January 20, 1998 (inception) to December 31, 1998
and the year ended December 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Convertible
preferred Treasury
stock Common stock stock Total
-------------- --------------- Deferred Accumulated ------------- stockholders'
Shares Amount Shares Amount compensation deficit Shares Amount equity
------ ------- ------ ------- ------------ ----------- ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 20,
1998 (inception)....... -- $ -- -- $ -- $ -- $ -- -- $ -- $ --
Issuance of stock....... -- -- 20,073 12,936 -- -- -- -- 12,936
Issuance of stock for
deferred compensation.. -- -- 1,925 210 (210) -- -- -- --
Amortization of deferred
compensation........... -- -- -- -- 31 -- -- -- 31
Net loss................ -- -- -- -- -- (7,574) -- -- (7,574)
----- ------- ------ ------- -------- -------- --- ---- -------
Balance at December 31,
1998................... -- -- 21,998 13,146 (179) (7,574) -- -- 5,393
Issuance of common and
preferred stock........ 4,276 45,750 161 540 -- -- -- -- 46,290
Issuance of options to
purchase common stock.. -- -- -- 24,402 (24,402) -- -- -- --
Issuance of warrants to
purchase common stock.. -- -- -- 5,676 -- -- -- -- 5,676
Forfeitures of common
stock under deferred
compensation program... -- -- (224) -- -- -- -- -- --
Amortization of deferred
compensation........... -- -- -- -- 6,622 -- -- -- 6,622
Acquisition of common
stock for treasury..... -- -- -- -- -- -- 24 (34) (34)
Net loss................ -- -- -- -- -- (62,533) -- -- (62,533)
----- ------- ------ ------- -------- -------- --- ---- -------
Balance at December 31,
1999................... 4,276 $45,750 21,935 $43,764 $(17,959) $(70,107) 24 $(34) $ 1,414
===== ======= ====== ======= ======== ======== === ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
INTIRA CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period from January 20, 1998 (inception) to December 31, 1998
and the year ended December 31, 1999
(In thousands)
<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(7,574) $(62,533)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 2,548 13,103
Gain on sale of equipment............................... -- (230)
Increase in accrued interest on capital lease
obligations............................................ 605 1,472
Stock-based compensation................................ 31 6,622
Accrued exit costs...................................... -- 2,900
Changes in operating assets and liabilities:
Accounts receivable................................... (38) (1,768)
Prepaid expenses and other current assets............. (250) (526)
Deferred revenues in excess of costs.................. -- 559
Accounts payable...................................... 829 10,484
Accrued liabilities................................... 49 3,508
------- --------
Net cash used in operating activities............... (3,800) (26,409)
------- --------
Cash flows from investing activities:
Proceeds from sale of equipment........................... -- 360
Purchases of restricted short-term investments............ -- (11,852)
Purchases of property and equipment....................... (4,777) (22,504)
------- --------
Net cash used in investing activities............... (4,777) (33,996)
------- --------
Cash flows from financing activities:
Proceeds from revolving credit facililty and issuance of
warrants................................................. -- 25,000
Proceeds from issuance of long-term debt.................. -- 13,886
Principal payments on long-term debt...................... -- (10,886)
Payments for debt issuance costs.......................... -- (801)
Principal payments on capital lease obligations........... (27) (6,187)
Proceeds from issuance of common and convertible preferred
stock.................................................... 12,936 46,290
Payments to acquire common stock for treasury............. -- (34)
------- --------
Net cash provided by financing activities........... 12,909 67,268
------- --------
Net increase in cash and cash equivalents................... 4,332 6,863
Cash and cash equivalents, beginning of period.............. -- 4,332
------- --------
Cash and cash equivalents, end of period.................... $ 4,332 $ 11,195
======= ========
Supplemental disclosure of cash flow information--cash paid
for interest............................................... $ 41 $ 2,985
======= ========
Non-cash investing and financing activities:
Issuance of common stock for property and equipment....... $ -- $ 338
======= ========
Acquisition of equipment under capital leases............. $27,854 $ 17,568
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
INTIRA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1999
(1) Organization and Description of Business
Intira Corporation (formerly named Digital Broadcast Network Corporation)
was incorporated on January 20, 1998. The Company provides netsourcing
solutions for mission-critical network-based applications, also referred to as
e-business applications. Netsourcing is the outsourcing of the information
technology, or IT, and network infrastructure required to support these
applications. The Company has determined that it does not have any separately
reportable operating segments. As of December 31, 1999, all of the Company's
revenues have been derived from and all of the Company's assets are located in
North America. Although planned principal operations had commenced, no
significant revenues were generated through December 31, 1998, and therefore,
Intira was considered a development stage enterprise. As of December 31, 1999,
Intira is no longer considered a development stage enterprise.
(2) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of Intira
Corporation and its wholly-owned subsidiary (collectively, the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents
The Company considers cash in banks and highly liquid investments purchased
with an original maturity of three months or less to be cash and cash
equivalents.
Investments
All of the Company's short-term investments consist of commercial paper and
certificates of deposit of financial institutions for which the Company has the
intent and the ability to hold until maturity. Remaining maturities at the time
of purchase are generally less than one year. Therefore, all such investments
are classified as held to maturity investments and recorded at amortized cost
in the accompanying consolidated financial statements.
In connection with the debt agreements discussed in Note 9 and various lease
agreements, the Company is required to maintain specified compensating balances
or pledge certificates of deposit. All of the Company's short-term investments
are restricted under such borrowings and leases.
Revenue Recognition
Revenues consist of recurring monthly fees from customer use of the
Company's netsourcing services and initial fees received for consulting,
design, configuration and installations. Recurring revenues are billed monthly
and recognized ratably over the term of the contract, generally two to three
years. Initial fees and the related costs of $1.4 million and $819,000,
respectively, are deferred and recognized over the terms of the contract.
Customer credits issued under service level guarantees are recognized as a
reduction of revenues as incurred.
F-7
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
Property and Equipment
Purchased property and equipment are stated at cost. Equipment under capital
leases is recorded at the present value of future minimum lease payments or
fair value, whichever is less. Depreciation and amortization are computed using
the straight-line method over the estimated useful lives of the assets.
Equipment recorded under capital leases and leasehold improvements are
amortized on a straight-line basis over the shorter of the lease term or the
estimated useful life of the asset. The range of useful lives is as follows:
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Network and data management equipment.................................. 3-5
Leasehold improvements................................................. 5-15
Computer equipment and software........................................ 3
Furniture and fixtures................................................. 7
</TABLE>
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less cost to
sell.
The Company has certain lease and other operating obligations related to
assets used in business activities which have been exited and are no longer
being pursued. Specifically, the Company has narrowed its service offering to
focus on netsourcing, and has ceased offering co-location and dial-up services
as these activities no longer conformed to the Company's operating strategy.
Charges of $2.9 million ($0.14 per share) were recorded as accrued exit costs
in the year ended December 31, 1999 to reflect the estimated costs remaining
under these leases and other operating agreements and the estimated costs to
terminate these agreements.
Debt Issuance Costs
Debt issuance costs are deferred and amortized to interest expense over the
term of the related debt agreement using the interest method.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided to the extent that deferred tax assets are not more likely than not
expected to be recovered. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the
enactment date.
F-8
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
Stock-Based Compensation
The Company accounts for stock-based compensation to employees using the
intrinsic value method, with deferred compensation costs charged to expense
using the straight-line method over the vesting period. Stock based awards to
nonemployees are recorded at fair value.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
Loss per Share
Basic loss per share includes only the weighted average number of common
shares outstanding. Diluted loss per share considers the dilutive effects of
stock options, warrants and convertible securities. All such securities have
been excluded from the computation of diluted loss per share due to their
antidilutive effect. Information regarding securities excluded from the
computation of loss per share for the year ended December 31, 1999 is as
follows. No such securities were outstanding during the period from January 20,
1998 to December 31, 1998.
<TABLE>
<CAPTION>
1999
---------
<S> <C>
Outstanding stock options.......................................... 7,624,902
=========
Warrants to acquire common stock................................... 567,672
=========
</TABLE>
Risks and Uncertainties and Concentrations
Factors that may materially and adversely affect the Company's future
operating results include: demand for and market acceptance of the Company's
products and services; introductions of products and services or enhancements
by the Company and its competitors; competitive factors that affect pricing;
capacity utilization of the Company's leased network; reliable continuity of
service and network availability; the availability and cost of bandwidth; the
timing of customer installations; customer retention; the timing and success of
marketing efforts and product and service introductions by the Company; the
timing and magnitude of capital expenditures, including costs relating to the
expansion of operations and the ability to utilize equipment upon the
expiration of current customer contracts; the timely expansion of its network
infrastructure; fluctuations in the amount of bandwidth used by customers; the
retention of key personnel; conditions specific to the Internet industry and
other general economic factors; and new government legislation and regulation.
During the year ended December 31, 1999, approximately 53% of the Company's
revenues were derived from sales to one customer acting as an intermediary for
several other customer/end users. Accounts receivable from this customer were
approximately 39% of total accounts receivable as of December 31, 1999. In
addition, during the year ended December 31, 1999, approximately 26% of the
Company's bandwidth costs were provided by a single provider. Accounts payable
to this provider totaled approximately 4% of total accounts payable at December
31, 1999.
F-9
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
Recently Issued Accounting Pronouncements
In June 1998, Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, was issued. This
standard, which will be effective for fiscal years beginning after June 15,
2000, required that most derivative instruments, other than those meeting the
criteria to be classified as hedges, be reported on the Company's consolidated
balance sheets at fair value. The Company does not expect the adoption of SFAS
No. 133 to have a material effect on its financial position or results of
operations.
(3) Restricted Short-term Investments
Restricted short-term investments at December 31, 1999 consisted of
certificates of deposit and commercial paper. The investments had an amortized
cost totaling $11.9 million, which approximates fair value, and various
maturity dates through 2000.
(4) Property and Equipment
Property and equipment consisted of the following at December 31, 1998 and
1999 (in thousands):
<TABLE>
<CAPTION>
1998 1999
------- -------
<S> <C> <C>
Network and data management equipment....................... $27,854 $45,422
Leasehold improvements...................................... 2,336 17,619
Computer equipment and software............................. 1,612 8,440
Furniture and fixtures...................................... 829 1,191
------- -------
32,631 72,672
Less accumulated depreciation and amortization.............. 2,548 15,412
------- -------
$30,083 $57,260
======= =======
</TABLE>
(5) Debt
Debt consisted of the following at December 31, 1999 (in thousands):
<TABLE>
<CAPTION>
1999
-------
<S> <C>
Revolving credit facility........................................... $19,324
=======
Long-term debt--master loan and security agreement.................. 3,000
Less current portion................................................ 878
-------
Long-term debt, less current portion.............................. $ 2,122
=======
</TABLE>
Effective February 19, 1999, the Company entered into an agreement to
purchase certain equipment and obtain financing under two credit facilities.
The first credit facility allowed the Company to borrow up to $20.0 million
over a one-year drawdown period to finance the purchase of equipment. However,
the Company never acquired the equipment and the related facility was not
utilized. The second credit facility allowed the Company to borrow up to
$10.0 million over a one-year drawdown period for working capital needs. This
loan bore interest at 14% of which 3% was payable quarterly on the outstanding
balance with the remaining 11% accrued and added to the principal
F-10
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
balance on a monthly basis. The Company repaid all outstanding principal and
interest balances in full on December 30, 1999. In addition, during 1999, the
Company was not in compliance with a covenant of the agreement, which default
was waived by the lender.
Effective December 30, 1999, the Company entered into a senior secured
revolving credit facility with a financial institution that provides borrowings
of up to $25.0 million for the purchase of equipment and general working
capital needs. At the Company's option, the facility bears interest at either
(A) the greater of prime rate, the base certificate of deposit rate plus 1.0%,
or the federal funds effective rate plus 0.5%, in each case, plus 3.0% or (B)
the eurodollar rate plus 4.0%. As of December 31, 1999, the rate on this
facility was 11.5%. Interest payments are due quarterly with the principal and
any remaining interest due on December 28, 2000. Borrowings under the facility
are secured by all property and equipment owned by the Company and a
compensating balance of $5.0 million. On a quarterly basis, the Company must
pay a commitment fee of 1.0% on the unused portion of the facility. In
connection with the borrowings under the facility, the Company incurred debt
issuance costs of $801,000, which are amortized over the term of the debt. The
net proceeds to the Company, after related expenses and retirement of debt,
approximated $13.1 million.
In connection with this facility, the Company granted the issuer a
detachable warrant to purchase 567,672 shares of common stock at an exercise
price of $0.001 per share. Upon issuance, the short-term debt was recorded net
of a discount of $5.7 million representing the Company's estimate of the fair
value of the warrants using the Black-Scholes pricing model with the following
weighted-average assumptions: expected dividend yield 0%, risk-free interest
rate of 6.25%, and expected life of ten years. The discount, which is recorded
as a reduction in the carrying value of the debt and included as a component of
stockholders' equity, will be amortized as a component of interest expense over
the term of the debt. The warrant expires in December 2009.
Also effective December 30, 1999, the Company entered into a master loan and
security agreement with a financial institution that permits the Company to
borrow up to $3.0 million for the purchase of equipment. The note bears
interest at a rate of 14.5% and provides for monthly principal and interest
payments totaling $103,082 through the maturity date of December 1, 2002. The
note is secured by equipment with a fair value of approximately $3.3 million.
Proceeds from this borrowing of $2.1 million were restricted until the closing
of the borrowing referred to in Note 12.
The aggregate maturities of long-term debt for each of the three years
subsequent to December 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Year ending
December 31, Amounts
------------ -------
<S> <C>
2000............................................................. $ 878
2001............................................................. 981
2002............................................................. 1,141
-------
$3,000
=======
</TABLE>
(6) Leases
The Company is obligated under various capital leases that expire at various
dates through 2004. Equipment recorded under capital leases consists primarily
of computer equipment used in network and data center operations. At December
31, 1998 and 1999, equipment recorded under capital leases was $27.9 million
and $45.4 million, respectively, and accumulated amortization for
F-11
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
equipment held under capital leases was approximately $2.2 million and $13.0
million, respectively. Obligations under capital leases are secured by the
related equipment.
The Company is obligated under operating leases that expire at various dates
through 2011, primarily related to building rent and the usage of fiber optic
lines. Rent expense for the periods ended December 31, 1998 and 1999 totaled
approximately $310,000 and $1.5 million, respectively. Payments under operating
leases are secured by certain short-term investments.
Future minimum capital lease payments and future minimum lease payments
under operating leases (with initial or remaining lease terms in excess of one
year) as of December 31, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Year ending Capital Operating
December 31, Leases Leases
------------ ------- ---------
<S> <C> <C>
2000................................................... $19,583 $ 17,108
2001................................................... 19,591 16,247
2002................................................... 6,840 11,542
2003................................................... 486 10,089
2004................................................... 6 9,693
Thereafter.............................................. -- 50,799
------- --------
Total minimum lease payments.......................... 46,506 $115,478
========
Less amount representing interest (at rates ranging from
8% to 14%)............................................. 4,883
-------
Present value of net minimum capital lease payments... 41,623
Less current portion.................................... 17,736
-------
Capital lease obligations, less current portion....... $23,887
=======
</TABLE>
(7) Related Party Transactions
The Company leases certain computer equipment held under capital leases from
Lucent Technologies Inc., a stockholder. Commitments totaling approximately
$22.0 million and $42.0 million were payable to this stockholder as of December
31, 1998 and 1999, respectively. Depreciation expense relating to equipment
recorded under capital leases from this stockholder is recorded in accordance
with the Company's depreciation policies.
(8) Income Taxes
The primary reconciling differences between income tax expense and the
amount of tax benefit that would be expected to result by applying the federal
statutory rate of 34% to the loss before income taxes for the period from
January 20, 1998 (inception) to December 31, 1998 and the year ended December
31, 1999, relate to the nonutilization of net operating losses and state income
taxes.
F-12
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
Temporary differences and carryforwards that give rise to deferred income
tax assets at December 31, 1998 and 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1999
------- --------
<S> <C> <C>
Net operating loss carryforwards............................. $ 1,330 $ 25,975
Deferred revenues............................................ -- 551
Property and equipment....................................... 435 --
Start-up costs............................................... 1,231 330
Allowance for doubtful accounts.............................. -- 70
Organizational costs......................................... -- 34
Accrued liabilities.......................................... 19 79
Deferred compensation........................................ 12 2,592
------- --------
Gross deferred income tax assets............................. 3,027 29,631
Less valuation allowance..................................... (3,027) (26,881)
------- --------
Net deferred income tax assets............................... -- 2,750
Deferred income tax liability--property and equipment........ -- 2,750
------- --------
Net deferred income tax...................................... $ -- $ --
======= ========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Based upon the historical
taxable loss, a valuation allowance has been established for deferred tax
assets. The valuation allowance increased by $21.3 million during the year
ended December 31, 1999.
At December 31, 1999, the Company had net operating loss carryforwards of
approximately $64.9 million which will expire beginning in 2018.
(9)Stockholders' Equity
On May 28, 1999, the Board of Directors approved a ten-for-one common stock
split of the Company's common stock. On December 21, 1999, the Board of
Directors approved a five-for-two split of the Company's common stock, which
was effective upon the Company's reincorporation into Delaware in January 2000.
In addition, on March 8, 2000, the Board of Directors approved a three-for-two
split of the Company's common stock to be effected prior to the completion of
an initial public offering. All common share information in the accompanying
consolidated financial statements has been restated to reflect these stock
splits.
Preferred Stock
In June 1999, the Company issued an aggregate of 4,275,701 shares of
convertible preferred stock at $10.70 per share for proceeds totaling $45.8
million. Non-cumulative dividends on the preferred shares are 8% of the
issuance price as and if declared by the Board of Directors. Holders of the
preferred stock have voting rights equal to the number of common shares into
which the preferred shares can be converted. As long as 35% of the preferred
shares are outstanding, the preferred stockholders are entitled to elect two
members to the Board of Directors. The preferred shares are convertible into
common stock at any time at the option of the holder, and are mandatorily
convertible into common stock immediately prior to the closing of a firm
commitment underwriting of an initial public offering of the Company's common
stock, or upon the Company's written receipt of consent for conversion by the
holders of two-thirds of the then outstanding preferred
F-13
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
shares. The preferred shares are convertible into 3.75 common shares (such
conversion figure reflects the five-for-two stock split effected in January
2000 and the three-for-two stock split to be effected prior to the completion
of an initial public offering). Upon any liquidation, dissolution or winding up
of the Company, the holders of the preferred stock will be entitled to receive
the original purchase price per share plus all declared but unpaid dividends,
before any distribution is made to holders of common stock.
Common Stock
During 1998, in connection with its initial capitalization, the Company
issued 12,844,761 shares of common stock for aggregate proceeds of $336,615. In
addition, during 1998, the Company issued an executive 1,875,000 shares of
common stock for proceeds totaling $500,000. During 1998, the Company issued an
additional 3,750,000 shares of its common stock for cash proceeds totaling
$10.0 million.
On May 22, 1998, for a total amount of $600,000, the Company issued 843,750
shares of common stock and a warrant to purchase 759,375 additional shares at
$1.97 per share. The warrant was exercised on July 27, 1998 for a total of $1.5
million. Proceeds to the Company from these transactions totaled $2.1 million.
During 1999, the Company issued an aggregate of 52,829 shares of common
stock for cash proceeds totaling $162,035.
During 1999, the Company issued an aggregate of 108,522 shares of common
stock in exchange for services in connection with the Company's design and
development of its corporate headquarters. The value of the services received
totaling $337,986 was included in property and equipment.
On October 13, 1999, the stockholders approved an increase in the authorized
number of shares of common stock to 50,000,000 shares. On January 26, 2000, the
stockholders approved another increase in the authorized number of shares of
common stock to 100,000,000 shares.
Subsequent to December 31, 1999, the Company issued an additional 78,128
shares of common stock for cash proceeds of $250,000.
(10) Stock-Based Compensation
Deferred Compensation Program
Pursuant to agreements of employment, the Company awarded 1,924,875 shares
of common stock to 59 employees during 1998 under a deferred compensation
program. Shares awarded vest ratably beginning after 90 days of employment with
the Company, then again on the respective anniversary date of employment with
the Company for the term of the employment agreement, generally from six to
seven years from the date of hire. As of December 31, 1998 and 1999, a total of
264,450 shares and 306,563 shares, respectively, had vested under this plan,
and rights to 224,584 shares were forfeited during the year ended December 31,
1999. All shares issued pursuant to such stock-based compensation are
restricted as to resale. For the periods ended December 31, 1998 and 1999, the
Company recognized total compensation expense of $31,000 and $52,000,
respectively, relating to the vested portion of these shares at an estimated
fair market value of $0.11 per share at the date of grant. This compensation
expense was amortized against deferred
F-14
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
compensation which is presented as a reduction of stockholders' equity. No
additional shares of common stock were issued under the program during 1999.
Subsequent to December 31, 1999, the Board of Directors approved certain
changes to the deferred compensation program. The terms of all outstanding
restricted shares were changed such that 20% of the restricted shares were
deemed vested as of the employee's hire date and the remaining 80% of the
restricted shares vest ratably on a monthly basis over the succeeding 48
months. Additionally, in connection with the planned relocation of the
Company's headquarters, certain restricted shares will become fully vested upon
the employees' continued employment through specified dates, generally before
June 30, 2000.
Stock Option Plan
In March 1999, the Company adopted the 1999 Stock Option Plan and in
November 1999, the Company adopted the 1999 Equity Incentive Plan and the 1999
Executive Stock Option Plan, (collectively, the "Plans") pursuant to which the
Company's Board of Directors may grant stock options to officers and employees.
The Plans authorize grants of options to purchase up to 10,000,000 shares of
authorized but unissued common stock. All stock options granted generally have
vesting terms of two to four years and become exercisable after two to four
years from the date of grant.
On September 15, 1999, the Company granted a director options to purchase
18,750 shares of the Company's common stock. The options were granted with an
exercise price of $2.85 per share which was equal to the fair market value of
the Company's common stock at the date of grant. The options vest over a one-
year period and expire after 10 years. Compensation expense totaling
approximately $4,000 was recorded during 1999 in connection with these options.
At December 31, 1999, there were 2,375,098 additional shares available for
grant under the Plans. The per share weighted-average fair value of stock
options granted during the year ended December 31, 1999 was $0.47, on the date
of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions: expected dividend yield 0%, risk-free interest
rate of 6.25%, and expected lives ranging from two to four years.
The Company applies the intrinsic value method in accounting for its Plans.
Under this method, compensation expense is recognized over the vesting period
of the options for the amount by which the estimated deemed fair market value
of the stock at the grant date exceeds the exercise price. Stock options
granted in 1999 resulted in total deferred stock-based compensation of $24.4
million, of which $6.6 million was amortized to expense. Amortization of stock-
based compensation relates to operating expenses as follows (in thousands):
<TABLE>
<CAPTION>
1998 1999
----- ------
<S> <C> <C>
Service costs.................................................. $ 12 $1,515
Sales and marketing............................................ 7 2,471
General and administrative..................................... 10 2,069
Product development............................................ 2 567
----- ------
$ 31 $6,622
===== ======
</TABLE>
F-15
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
Had the Company determined compensation cost based on the fair value at the
grant date for all stock options under the fair value method, the Company's net
loss would have reflected the pro forma amounts indicated below (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
1998 1999
------- ---------
<S> <C> <C>
Net loss, as reported................................... $(7,574) $ (62,533)
Pro forma net loss...................................... (7,574) (62,753)
======= =========
Basic and diluted loss per share, as reported........... $ (0.48) $ (3.31)
Pro forma basic and diluted loss per share.............. (0.48) (3.32)
======= =========
</TABLE>
Stock option activity during the year ended December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Weighted
average
Number of exercise
options price
--------- --------
<S> <C> <C>
Balance at December 31, 1998............................. -- $ --
Granted.................................................. 7,912,325 2.01
Forfeited................................................ (287,423) 0.27
--------- -----
Balance at December 31, 1999............................. 7,624,902 $2.08
========= =====
</TABLE>
At December 31, 1999, exercise prices and weighted average remaining
contractual lives of outstanding options were as follows:
<TABLE>
<CAPTION>
Weighted average
Weighted average remaining contractual
Range of Options exercise prices of life of options
exercise prices outstanding options outstanding outstanding in years
--------------- ----------- ------------------- ---------------------
<C> <S> <C> <C>
$0.27 2,483,827 $0.27 9.38
$2.40-$3.20 5,141,075 2.76 9.83
---------
7,624,902
=========
</TABLE>
At December 31, 1999, the number of options exercisable was 992,763 and the
weighted average exercise price of those options was $0.96.
Subsequent to December 31, 1999, the Board of Directors approved certain
changes to the Company's stock-based compensation plans. Specifically, in
connection with the planned relocation of the Company's headquarters, certain
options will become fully vested for some employees continuing employment
through specified dates, generally before June 30, 2000.
(11) Employee Benefit Plan
The Company has established a defined contribution plan qualifying under
Section 401(k) of the Internal Revenue Code. Substantially all employees of the
Company are eligible to participate in the plan. The plan allows eligible
employees to contribute between 1% and 20% of their annual compensation, with
matching contributions made by the Company on a discretionary basis. No
discretionary contributions were made during 1998 or 1999.
F-16
<PAGE>
INTIRA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
(12) Subsequent Events
In January 2000, the Company entered into a binding memorandum of
understanding which grants the Company an indefeasible right to use network
capacity and data center space from Viatel who is constructing a cross-border
broadband network in Europe. In exchange for these services, which will be
provided at specified reductions from market rates, the partner will be issued
1,897,346 shares of the Company's common stock. The agreement is expected to
close in March 2000.
On February 2, 2000, the Company entered into an agreement with a number of
institutional investors to sell 100,000 units consisting of 13% Senior Discount
Notes due 2010 (the Senior Discount Notes) and warrants to purchase an
aggregate of 4,671,240 shares of common stock. Interest on the initial proceeds
of the Senior Discount Notes of $100.4 million will accrete for the first five
years to the final principal amount of $188.5 million and will then be payable
in cash semiannually to maturity. The Senior Discount Notes are redeemable
prior to maturity at specified premiums and contain restrictive covenants
limiting, among other things, future indebtedness, issuance of common and
preferred stock, and payment of dividends. The warrants are exercisable at a
price of $0.007 per share upon the earliest of a change in control of the
Company, 180 days after an initial public offering or other registration of the
Company's stock, or January 2005. In addition, the Company issued warrants to
purchase an aggregate of 1,605,240 shares of common stock which are exercisable
only if an initial public offering with proceeds of at least $50.0 million is
not completed by April 30, 2001. All of the warrants expire in January 2010 or
upon retirement of the Senior Discount Notes.
F-17
<PAGE>
[INTIRA ART WORK]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You
must not rely on any unauthorized information or representations. This
prospectus is an offer to sell only the shares offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus is current only as of its date.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 1
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 20
Dividend Policy........................................................... 20
Capitalization............................................................ 21
Dilution.................................................................. 22
Selected Financial Data................................................... 23
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 24
Business.................................................................. 29
Management................................................................ 44
Certain Transactions...................................................... 58
Principal Stockholders.................................................... 62
Description of Capital Stock.............................................. 64
Shares Eligible for Future Sale........................................... 69
Where You May Find Additional Information About Intira.................... 71
Underwriting.............................................................. 72
Legal Matters............................................................. 74
Experts................................................................... 74
Index to Consolidated Financial Statements................................ F-1
</TABLE>
----------------
Through and including , 2000 (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether
or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to an unsold
allotment or subscription.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shares
Intira Corporation
Common Stock
----------------
[ARTWORK]
----------------
Goldman, Sachs & Co.
Lehman Brothers
Robertson Stephens
Stifel Nicolaus
Representatives of the Underwriters
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Intira in connection with
the sale of common stock being registered. All amounts are estimates except
the SEC registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee............................................. $ 27,234
NASD filing fee.................................................. 10,350
Nasdaq National Market listing fee............................... 95,000
Printing and engraving costs..................................... 300,000
Legal fees and expenses.......................................... 550,000
Accounting fees and expenses..................................... 400,000
Blue sky fees and expenses....................................... 20,000
Transfer agent and registrar fees................................ 10,000
Miscellaneous expenses........................................... 37,416
----------
Total.......................................................... $1,450,000
==========
</TABLE>
Item 14. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article X of Intira's Restated Certificate of Incorporation provides for
the indemnification of directors to the fullest extent permissible under
Delaware law.
Article VI of Intira's Bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of Intira if such person acted in
good faith and in a manner reasonably believed to be in and not opposed to the
best interest of Intira, and, with respect to any criminal action or
proceeding, the indemnified party had no reason to believe his or her conduct
was unlawful.
Intira has entered into indemnification agreements with its directors and
executive officers, in addition to indemnification provided for in Intira's
Bylaws, and intends to enter into indemnification agreements with any new
directors and executive officers in the future.
Item 15. Recent Sales of Unregistered Securities
Since our incorporation in January 1998, we have issued unregistered
securities to a limited number of persons as described below:
None of these transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration of the Securities Act by virtue
of Section 4(2) thereof, Regulation D promulgated thereunder or 701 pursuant
to the compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701. The recipients of securities in each such
transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof, and appropriate legends were affixed to the share
certificates and instruments issued in such
II-1
<PAGE>
transactions. All recipients had adequate access, through their relationships
with the Company, to information about the Company.
1. In February 1998, we issued and sold an aggregate of 12,055,385 shares
of common stock to founders at an aggregate purchase price of $1,608.
These transactions were exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) in that the shares were issued
to our five founders, each of whom was an executive officer.
2. In February 1998, we issued and sold an aggregate of 124,988 shares of
common stock to an outside investor at a purchase price of $0.40 per
share, for an aggregate purchase price of $50,000. We also issued an
option to such investor to purchase up to 625,013 shares of common stock
at a per share purchase price of $0.40 which options were exercised in
full between March and June 1998. These transactions were exempt from
the registration requirements of the Securities Act by virtue of Section
4(2) in that the shares were issued to a sophisticated investor who
represented that such investor had the opportunity to discuss the merits
and risks of investing purchasing the shares of common stock with an
accountant and/or an attorney.
3. In March 1998, we issued and sold 39,375 shares of common stock to an
outside investor at a purchase price of $0.89 per share, for an
aggregate purchase price of $34,997. This transaction was exempt from
the registration requirements of the Securities Act by virtue of Section
4(2) in that the shares were issued to a sophisticated investor who
represented that such investor had the opportunity to discuss the merits
and risks of investing purchasing the shares of common stock with an
accountant and/or an attorney.
4. Between March 1998 and August 1998, we issued and sold a total of
3,750,000 shares of common stock to an outside investor at a purchase
price of $2.67 per share, for an aggregate purchase price of
$10,000,000. This transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) and
Regulation D based on the representations of the investor that such
investor was accredited under Rule 501.
5. In May 1998, for a total amount of $600,000, we issued and sold 843,750
shares of common stock and a warrant to purchase an additional 759,375
shares of common stock at an exercise price per share of $1.97. The
purchaser exercised its warrant in full in July 1998 for a total amount
of $1,500,000. These transactions were exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) and
Regulation D based on the representations of the investor that such
investor was accredited under Rule 501.
6. In September 1998 and November 1998, we issued an aggregate of 1,924,875
shares of common stock to our employees in the form of a stock bonus not
in lieu of any compensation. We received no payment from such employees
in exchange for the issuance of such shares. These issuances were exempt
from the registration requirements of the Securities Act by virtue of
Section 2(a)(3) in that the transaction was not a sale of securities.
7. In November 1998, we issued and sold 1,875,000 shares of common stock to
one of our executive officers at a purchase price of $0.27 per share,
for an aggregate purchase price of $500,000. This transaction was exempt
from the registration requirements of the Securities Act by virtue of
Section 4(2) in that the shares were issued to one of our executive
officers.
8. Between February 1999 and May 1999, we issued and sold an aggregate of
122,287 shares of common stock to outside investors at a purchase price
per share of $3.07 per share, for an aggregate purchase price of
$375,001. These transactions were exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) based on
the representations of each of the investors that such investor was a
sophisticated investor.
9. In June 1999, we issued and sold an aggregate of 16,033,886 shares of
Series A Preferred Stock to a total of 11 investors at a purchase price
per share of $2.85 per share, for an
II-2
<PAGE>
aggregate purchase price of $45,750,002. The share number and per share
purchase price reflects the effects of the five-for-two forward stock
split effected in January 2000 on the three-for-two stock split to be
effected prior to the completion of the offering on the conversion ratio
for the preferred stock. These transactions were exempt from the
registration requirements of the Securities Act by virtue of Section
4(2) and Regulation D based on the representations of each of the
investors that such investor was accredited under Rule 501.
10. Between December 1999 and January 2000, we issued and sold an aggregate
of 117,192 shares of common stock at a purchase price of $3.20 per
share, for an aggregate purchase price of $375,010. These transactions
were exempt from the registration requirements of the Securities Act by
virtue of Section 4(2) and Regulation D based on the representations of
each of the investors that it was accredited under Rule 501.
11. In December 1999, we issued to one entity a warrant to purchase 567,672
shares of common stock at an exercise price of $0.007 per share. This
transaction was exempt from the registration requirements of the
Securities Act by virtue of Section 4(2) and Regulation D based on the
representations of the investor that it was accredited under Rule 501.
12. In February 2000, we issued warrants to purchase an aggregate of
6,276,480 shares of common stock for an exercise price of $0.001 per
share, 4,671,240 of which warrants shall remain exercisable after the
public offering. This transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) based on
representations by each of the investors that such investor was an
accredited investor under Rule 501.
13. In February 2000, we issued and sold 1,897,346 shares of common stock
to a commercial vendor. This transaction was exempt from the
registration requirements of the Securities Act by virtue of Section
4(2).
Item 16. Exhibits and Financial Statement Schedules
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant to be in effect upon
completion of the offering made under this Registration Statement.
3.2 Bylaws of the Registrant to be in effect upon completion of the
offering made under this Registration Statement.
4.1* Form of Common Stock certificate.
4.2 Amended and Restated Investors' Rights Agreement, dated June 30, 1999,
by and among the Registrant and certain stockholders of the Registrant
named therein.
4.3 Exchange and Registration Rights Agreement, dated January 31, 2000,
among the Registrant and the Purchasers named therein relating to
$188,500,000 Aggregate Principal Amount at Maturity of 13% Senior
Discount Notes Due 2010.
4.4 Registration Rights and Stockholders Agreement, dated January 31,
2000, among the Registrant and the Purchasers named therein.
4.5 Warrant, dated December 30, 1999, for the purchase of up to 567,672
shares of common stock issued by the Registrant to The Chase Manhattan
Bank.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
4.6 Form of warrant, dated February 2, 2000, for the purchase of up to
4,671,240 shares of common stock issued by the Registrant to the
holders of the 13% senior discount notes.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1A Form of Indemnification Agreement to be in effect after the closing of
the offering made under this Registration Statement entered into by
the Registrant with each of its directors and executive officers.
10.1B Form of Indemnification Agreement entered into by the Registrant and
W. Munro Roberts, III, and Richard Skoba, Ronald Kruszewski, Timothy
M. Roberts, James J. Roberts, Mark Ivie and James Lahay.
10.2 1999 Stock Option Plan and form of agreement thereunder.
10.3 1999 Equity Incentive Plan and forms of agreement thereunder.
10.4 1999 Executive Officer Stock Option Plan and form of agreement
thereunder.
10.5 2000 Stock Plan and form of stock option agreement thereunder.
10.6 2000 Employee Stock Purchase Plan and form of agreement thereunder.
10.7* Form of Management Retention Agreement.
10.8 Lease Agreement, dated April 16, 1998, by and between the Registrant
and Charter Communications Entertainment I, L.P. for 977 Charter
Commons, Chesterfield, County of St. Louis, Missouri.
10.9 Office Lease, dated March 24, 1999, by and between the Registrant and
67 Broad Street LLC for office space at 75 Broad Street, New York, New
York.
10.10 Office Building Net Lease, dated August 26, 1999, by and between the
Registrant and CEP Gibraltar LLC for 5667 Gibraltar Drive, Pleasanton,
California and 5731 W. Las Positas Drive, Pleasanton, California.
10.11 Credit Agreement, dated as of December 30, 1999, by and among the
Registrant, the Several Lenders from time to time parties thereto and
The Chase Manhattan Bank, as Administrative Agent.
10.12 Guarantee and Collateral Agreement, dated as of December 30, 1999,
made by the Registrant in favor of The Chase Manhattan Bank, as
Administrative Agent.
10.13 Purchase Agreement, dated as of January 31, 2000, among the Registrant
and the Purchasers named therein, relating to $188,500,000 Aggregate
Principal Amount at Maturity of 13% Senior Discount Notes Due 2010,
Series A Warrants to Purchase 4,671,240 shares of Common Stock and
Series B Warrants to Purchase 1,605,240 shares of Common Stock.
10.14 Employment Agreement, dated December 3, 1998, by and between the
Registrant and Bernard V. Schneider.
10.15 Employment Agreement, dated October 15, 1999, by and between the
Registrant and David Boone.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.16 Promissory Note, dated March 14, 2000, made in by David Boone in favor
of the Registrant and related Security Agreement by and between the
Registrant and David Boone.
10.17 Employment Agreement, dated October 1, 1999, by and between the
Registrant and John Kirkpatrick.
10.18 Employment Agreement, dated April 1, 1999, by and between the
Registrant and Dina Toothman.
10.19 Employment Agreement, dated April 20, 1999, by and between the
Registrant and Thomas Swanson.
10.20 Employment Agreement, dated July 25, 1999, by and between the
Registrant and Steve Sidore.
10.21 Employment Agreement, dated June 14, 1999, by and between the
Registrant and Jeff Condon.
10.22* Employment Agreement, dated February 1, 2000, by and between the
Registrant and John R. Steensen.
10.23 Separation Agreement, dated February 11, 2000, by and between the
Registrant and Richard Skoba.
10.24 Severance Agreement, dated January 15, 2000, by and between the
Registrant and James Roberts, and related Letter of Understanding
dated January 15, 2000.
10.25 Severance Agreement, dated October 15, 1999, by and between the
Registrant and Mark Ivie.
10.26 Amended and Restated Settlement Agreement and Mutual Release, dated
March 27, 2000, by and between the Registrant and Timothy M. Roberts.
21.1 Subsidiary of the Registrant.
23.1 Consent of KPMG LLP.
23.2* Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-7).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
Item 17. Undertakings
Intira 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 by Intira for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Intira pursuant to the provisions referenced in Item 14
II-5
<PAGE>
of this registration statement or otherwise, Intira has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Intira of expenses incurred or paid by
a director, officer, or controlling person of Intira in the successful defense
of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered
hereunder, Intira will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Intira hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by Intira pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Pleasanton, State of
California, on the 30th day of March, 2000.
Intira Corporation
/s/ Bernard V. Schneider
By: __________________________________
Name: Bernard V. Schneider
Title: President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Bernard V. Schneider and David
S. Boone, and each of them acting individually, as his or her true and lawful
attorneys-in-fact and agents, each with full power of substitution, for him or
her in any and all capacities, to sign any and all amendments to this
Registration Statement (including post-effective amendments or any abbreviated
registration statement and any amendments thereto filed pursuant to Rule
462(b) increasing the number of securities for which registration is sought),
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, with full power of each to act alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully for all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his, her or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bernard V. Schneider President, Chief Executive March 30th, 2000
____________________________________ Officer and Director
Bernard V. Schneider (Principal Executive
Officer)
/s/ David S. Boone Chief Financial Officer and March 30th, 2000
____________________________________ Vice President, Finance
David S. Boone (Principal Financial and
Accounting Officer)
/s/ David S. Britts Director March 30th, 2000
____________________________________
David S. Britts
/s/ Ronald J. Kruszewski Director March 30th, 2000
____________________________________
Ronald J. Kruszewski
/s/ James A. Brasunas Director March 30th, 2000
____________________________________
James A. Brasunas
/s/ Yogen K. Dalal Director March 30th, 2000
____________________________________
Yogen K. Dalal
/s/ Michael J. Mahoney Director March 30th, 2000
____________________________________
Michael J. Mahoney
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant to be in effect after
the closing of the offering made under this Registration Statement.
3.2 Bylaws of the Registrant to be in effect after the closing of the
offering made under this Registration Statement.
4.1* Form of Common Stock certificate.
4.2 Amended and Restated Investors' Rights Agreement, dated June 30, 1999,
by and among the Registrant and certain stockholders of the Registrant
named therein.
4.3 Exchange and Registration Rights Agreement, dated January 31, 2000,
among the Registrant and the Purchasers named therein relating to
$188,500,000 Aggregate Principal Amount at Maturity of 13% Senior
Discount Notes Due 2010.
4.4 Registration Rights and Stockholders Agreement, dated January 31,
2000, among the Registrant and the Purchasers named therein.
4.5 Warrant, dated December 30, 1999, for the purchase of shares of up to
567,672 common stock issued by the Registrant to The Chase Manhattan
Bank.
4.6 Form of warrant, dated February 2, 2000, for the purchase of up to
4,671,240 shares of common stock issued by the Registrant to the
holders of the 13% senior discount notes.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1A Form of Indemnification Agreement to be in effect after the closing of
the offering made under this Registration Statement entered into by
the Registrant with each of its directors and executive officers.
10.1B Form of Indemnification Agreement entered into by the Registrant and
W. Munro Roberts, III, and Richard Skoba, Ronald Kruszewski, Timothy
M. Roberts, James J. Roberts, Mark Ivie and James Lahay.
10.2 1999 Stock Option Plan and forms of agreement thereunder.
10.3 1999 Equity Incentive Plan and form of agreement thereunder.
10.4 1999 Executive Stock Option Plan and form of agreement thereunder.
10.5 2000 Stock Plan and form of agreement thereunder.
10.6 2000 Employee Stock Purchase Plan and form of agreement thereunder.
10.7* Form of Management Retention Agreement.
10.8 Lease Agreement, dated April 16, 1998, by and between the Registrant
and Charter Communications Entertainment I, L.P. for 977 Charter
Commons, Chesterfield, County of St. Louis, Missouri.
10.9 Office Lease, dated March 24, 1999, by and between the Registrant and
67 Broad Street LLC for office space at 75 Broad Street, New York, New
York.
10.10 Office Building Net Lease, dated August 26, 1999, by and between the
Registrant and CEP Gibraltar LLC for 5667 Gibraltar Drive, Pleasanton,
California and 5731 W. Las Positas Drive, Pleasanton, California.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
10.11 Credit Agreement dated, as of December 30, 1999, by and among the
Registrant, the Several Lenders from time to time parties thereto and
The Chase Manhattan Bank, as Administrative Agent.
10.12 Guarantee and Collateral Agreement, dated as of December 30, 1999,
made by the Registrant in favor of The Chase Manhattan Bank, as
Administrative Agent.
10.13 Purchase Agreement among the Registrant and the Purchasers named
therein, dated as of January 31, 2000, relating to $188,500,000
Aggregate Principal Amount at Maturity of 13% Senior Discount Notes
Due 2010, Series A Warrants to Purchase 4,671,240 shares of Common
Stock and Series B Warrants to Purchase 1,605,240 shares of Common
Stock.
10.14 Employment Agreement, dated December 3, 1998, by and between the
Registrant and Bernard V. Schneider.
10.15 Employment Agreement, dated October 15, 1999, by and between the
Registrant and David Boone.
10.16 Promissory Note, dated March 14, 2000, made by David Boone in favor of
the Registrant and related Security Agreement by and between the
Registrant and David Boone.
10.17 Employment Agreement, dated October 1, 1999, by and between the
Registrant and John Kirkpatrick.
10.18 Employment Agreement, dated April 1, 1999, by and between the
Registrant and Dina Toothman.
10.19 Employment Agreement, dated April 20, 1999, by and between the
Registrant and Thomas Swanson.
10.20 Employment Agreement, dated July 25, 1999, by and between the
Registrant and Steve Sidore.
10.21 Employment Agreement, dated June 14, 1999, by and between the
Registrant and Jeff Condon.
10.22* Employment Agreement, dated February 1, 2000, by and between the
Registrant and John R. Steensen.
10.23 Separation Agreement, dated February 11, 2000, by and between the
Registrant and Richard Skoba.
10.24 Severance Agreement, dated January 15, 2000, by and between the
Registrant and James Roberts, and related Letter of Understanding
dated January 15, 2000.
10.25 Severance Agreement, dated October 15, 1999, by and between the
Registrant and Mark Ivie.
10.26 Amended and Restated Settlement Agreement and Mutual Release, dated
March 27, 2000, by and between the Registrant and Timothy M. Roberts.
21.1 Subsidiary of the Registrant.
23.1 Consent of KPMG LLP.
23.2* Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-7).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
Exhibit 3.1B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INTIRA CORPORATION
Intira Corporation, a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Intira Corporation. The corporation was
originally incorporated under the same name and the original Certificate of
Incorporation of the corporation was filed with the Secretary of State of the
State of Delaware on January 26, 2000.
B. This Amended and Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of the General Corporation Law of the
State of Delaware by the Board of Directors and the Stockholders of the
corporation.
C. Pursuant to Section 242 and Section 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
amends and restates the provisions of the Certificate of Incorporation of this
corporation.
D. The text of the Certificate of Incorporation is hereby restated in its
entirety to read as follows:
<PAGE>
"ARTICLE I
The name of the corporation is Intira Corporation (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware is
1209 Orange Street, in the City of Wilmington, Delaware 19801, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
ARTICLE IV
This Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock and Preferred Stock. The total number of
shares of Common Stock which the Company is authorized to issue is 300,000,000,
$0.001 par value, and the total number of shares of Preferred Stock the Company
is authorized to issue is 5,000,000, $0.001 par value.
The Preferred Stock may be issued from time to time in one or more series
pursuant to a resolution or resolutions providing for such issue duly adopted by
the Board of Directors (authority to do so being hereby expressly vested in the
Board). The Board of Directors is further authorized to determine or alter the
rights, preferences, privileges and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and to fix the number of shares of any
series of Preferred Stock and the designation of any such series of Preferred
Stock. The Board of Directors, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the number
of shares constituting any series, may increase or decrease (but not below the
number of shares in any such series then outstanding), the number of shares of
any series subsequent to the issue of shares of that series.
The authority of the board of directors with respect to each such class or
series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and the number
of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series
shall be declared and paid, or set aside for payment, whether dividends at the
rate so determined shall be cumulative or accruing, and whether the shares of
such class or series shall be entitled to any
2
<PAGE>
participating or other dividends in addition to dividends at the rate so
determined and if so, on what terms;
(c) the right or obligation, if any, of the corporation to redeem
shares of the particular class or series of Preferred Stock and, if redeemable,
the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the
amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares of such class
or series shall be convertible into, or exchangeable for, shares of capital
stock of any other class or series, including the price or prices or the rate or
rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem or
purchase shares of such class or series pursuant to a sinking fund or fund of a
similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares of
such class or series or any shares of any other class or series of Preferred
Stock;
(h) limitations, if any, on the issuance of additional shares of such
class or series or any shares of any other class or series of Preferred Stock;
and
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the board of directors of the
corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
Elections of directors need not be by written ballot unless a stockholder
demands election by written ballot at the meeting and before voting begins or
unless the Bylaws of the Corporation shall so provide.
3
<PAGE>
ARTICLE VII
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 constitute the whole Board of Directors of the corporation shall be
designated in the Bylaws of the corporation.
2. The Board of Directors shall be divided into three classes designated
as Class I, Class II and Class III, respectively. Directors shall be assigned
to each class in accordance with a resolution or resolutions adopted by the
Board of Directors. At the first annual meeting of stockholders following the
date hereof, the term of office of the Class I directors shall expire and Class
I directors shall be elected for a full term of three years. At the second
annual meeting of stockholders following the date hereof, the term of office of
the Class II directors shall expire and Class II directors shall be elected for
a full term of three years. At the third annual meeting of stockholders
following the date hereof, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting.
3. Notwithstanding the foregoing provisions of this Article, each director
shall serve until his or her successor is duly elected and qualified or until
his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
4. Any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal, or other causes shall be filled by
either (i) the affirmative vote of the holders of a majority of the voting power
of the then-outstanding shares of voting stock of the corporation entitled to
vote generally in the election of directors ("Voting Stock") voting together as
a single class; or (ii) by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum of the Board of
Directors. Newly created directorships resulting from any increase in the number
of directors shall, unless the Board of Directors determines by resolution that
any such newly created directorship shall be filled by the stockholders, be
filled only by the affirmative vote of the directors then in office, even though
less than a quorum of the Board of Directors. Any director elected in accordance
with the preceding sentence shall hold office for the remainder of the full term
of the class of directors in which the new directorship was created or the
vacancy occurred and until such director's successor shall have been elected and
qualified.
5. Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause only by the affirmative vote of the holders of
at least a majority of the voting power of all of the then-outstanding shares of
the Voting Stock, voting together as a single class; or (ii) without cause only
by the affirmative vote of the holders of a majority of the voting power of all
of the then-outstanding shares of the Voting Stock.
6. No action shall be taken by the stockholders of the corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.
4
<PAGE>
ARTICLE VIII
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE IX
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter, amend or repeal the
Bylaws of the Corporation.
ARTICLE X
1. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived any
improper personal benefit, and to the extent that such exemption from liability
or limitation thereof is not permitted under the Delaware General Corporation
Law as the same exists or may hereafter be amended. If the Delaware General
Corporation Law is amended after the filing of this Certificate of Incorporation
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
2. To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as may hereafter be amended, a director of the Corporation
shall be indemnified by the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director.
3. The Corporation shall indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.
4. Neither any amendment nor repeal of this Article X, nor the adoption of
any provision of this Corporation's Certificate of Incorporation inconsistent
with this Article X, shall eliminate or reduce the effect of this Article X, in
respect of any matter occurring, or any action or proceeding accruing or arising
or that, but for this Article X, would accrue or arise, prior to such amendment,
repeal or adoption of an inconsistent provision.
5
<PAGE>
ARTICLE XI
Meetings of stockholders may be held within or without the State of Delaware,
as the Bylaws may provide. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside of the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the Bylaws of the Corporation.
ARTICLE XII
Advance notice of new business and stockholder nominations for the election of
directors shall be given in the manner and to the extent provided in the Bylaws
of the Corporation."
6
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of the Company has caused this
Certificate of Incorporation to be signed by Bernard V. Schneider, its President
and Chief Executive Officer, effective as of ______, 2000.
INTIRA CORPORATION
By:
---------------------------
Bernard V. Schneider
President and Chief Executive Officer
Attest:
- --------------------------------------
David S. Boone
Vice President of Finance,
Chief Financial Officer and Secretary
7
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
INTIRA CORPORATION
a Delaware Corporation
Effective as of _________, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CORPORATE OFFICES......................................................... 1
1.1 REGISTERED OFFICE................................................. 1
1.2 OTHER OFFICES..................................................... 1
ARTICLE II MEETINGS OF STOCKHOLDERS 1
2.1 PLACE OF MEETINGS................................................. 1
2.2 ANNUAL MEETING.................................................... 1
2.3 SPECIAL MEETING................................................... 1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS.................................. 2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS... 2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE...................... 3
2.7 QUORUM............................................................ 3
2.8 ADJOURNED MEETING; NOTICE......................................... 4
2.9 VOTING............................................................ 4
2.10 WAIVER OF NOTICE.................................................. 4
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING........ 4
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS....... 5
2.13 PROXIES........................................................... 5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE............................. 5
2.15 CONDUCT OF BUSINESS............................................... 6
ARTICLE III DIRECTORS............................................................... 6
3.1 POWERS............................................................ 6
3.2 NUMBER............................................................ 6
3.3 CLASSES OF DIRECTORS.............................................. 6
3.4 RESIGNATION AND VACANCIES......................................... 7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.......................... 8
3.6 REGULAR MEETINGS.................................................. 8
3.7 SPECIAL MEETINGS; NOTICE.......................................... 8
3.8 QUORUM............................................................ 8
3.9 WAIVER OF NOTICE.................................................. 9
3.10 ADJOURNED MEETING; NOTICE......................................... 9
3.11 CONDUCT OF BUSINESS............................................... 9
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................. 9
3.13 FEES AND COMPENSATION OF DIRECTORS................................ 9
3.14 REMOVAL OF DIRECTORS.............................................. 9
</TABLE>
<PAGE>
AMENDED AND RESTATED BYLAWS OF
INTIRA CORPORATION
ARTICLE I
CORPORATE OFFICES
-----------------
1.1 REGISTERED OFFICE
-----------------
The registered office of the Corporation shall be 1209 Orange Street, in
the City of Wilmington, County of New Castle, State of Delaware, 19801. The
name of the registered agent of the Corporation at such location is The
Corporation Trust Company.
1.2 OTHER OFFICES
-------------
The board of directors may at any time establish other offices at any place
or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
2.1 PLACE OF MEETINGS
-----------------
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the Corporation.
2.2 ANNUAL MEETING
--------------
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. At the meeting, directors shall be
elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
---------------
A special meeting of the stockholders may be called at any time only by (i)
the board of directors, (ii) the chairman of the board, (iii) the president or
(iv) the chief executive officer.
If a special meeting is called by any person other than the board of
directors, the request shall be in writing, specifying the time of such meeting
and the general nature of the business proposed to
<PAGE>
be transacted, and shall be delivered personally or sent by registered mail or
by telegraphic or other facsimile transmission to the chairman of the board, the
president, any vice president, or the secretary of the corporation. No business
may be transacted at such special meeting otherwise than specified in such
notice. The officer receiving the request shall cause notice to be promptly
given to the stockholders entitled to vote, in accordance with the provisions of
Sections 2.4 and 2.5 of this Article II, that a meeting will be held at the time
requested by the person or persons who called the meeting, not less than thirty-
five (35) nor more than sixty (60) days after the receipt of the request. If the
notice is not given within twenty (20) days after the receipt of the request,
the person or persons requesting the meeting may give the notice. Nothing
contained in this paragraph of this Section 2.3 shall be construed as limiting,
fixing, or affecting the time when a meeting of stockholders called by action of
the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
--------------------------------
All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.6 of these Bylaws not less
than 10 nor more than 60 days before the date of the meeting to each stockholder
entitled to vote at such meeting. The notice shall specify the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
---------------------------------------------------------------
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before the
meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder, such stockholder must have given timely notice and in proper form
of his intent to bring such business before such meeting. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
secretary of the Corporation not less than 90 days prior to the meeting;
provided, however, that in the event that less than 100 days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be so received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. To be in
proper form, a stockholder's notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to make
the nominations, propose the business, and, as the case may
be, the name and address of the person or persons to be
nominated or the nature of the business to be proposed;
-2-
<PAGE>
(ii) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote at such
meeting and, if applicable, intends to appear in person or
by proxy at the meeting to nominate the person or persons
specified in the notice or introduce the business specified
in the notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be
made by the stockholder;
(iv) such other information regarding each nominee or each
matter of business to be proposed by such stockholder as
would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated, or
intended to be nominated, or the matter been proposed, or
intended to be proposed by the board of directors; and
(v) if applicable, the consent of each nominee to serve as
director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the foregoing
procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
--------------------------------------------
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the Corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
------
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then either (i) the chairman of the meeting, or (ii) the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
-3-
<PAGE>
When a quorum is present or represented at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provisions of the statutes or
of the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of the question.
2.8 ADJOURNED MEETING; NOTICE
-------------------------
When a meeting is adjourned to another time or place, unless these Bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than 30 days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
2.9 VOTING
------
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Sections 2.12 and 2.14 of these
Bylaws, subject to the provisions of Sections 217 and 218 of the General
Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors
and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.10 WAIVER OF NOTICE
----------------
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these Bylaws.
2.11 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
----------------------------------------------------------
The stockholders of the Corporation may not take action by written consent
without a meeting but must take any such actions at a duly called annual or
special meeting.
-4-
<PAGE>
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
-----------------------------------------------------------
In order that the Corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than 60 nor less than 10 days before the date of such meeting, nor
more than 60 days prior to any other action.
If the board of directors does not so fix a record date, the fixing of such
record date shall be governed by the provisions of Section 213 of the General
Corporation Law of Delaware.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.13 PROXIES
-------
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the Corporation, but no such
proxy shall be voted or acted upon after 3 years from its date, unless the proxy
provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholder's attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of Section
212(c) of the General Corporation Law of Delaware.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
-------------------------------------
The officer who has charge of the stock ledger of a Corporation shall
prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The stock ledger shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders and
of the number of shares held by each such stockholder.
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2.15 CONDUCT OF BUSINESS
-------------------
Meetings of stockholders shall be presided over by the chairman of the
board, if any, or in his absence by the president, or in his absence by a vice
president, or in the absence of the foregoing persons by a chairman designated
by the board of directors, or in the absence of such designation by a chairman
chosen at the meeting. The secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and conduct of business.
ARTICLE III
DIRECTORS
---------
3.1 POWERS
------
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these Bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER
------
The authorized number of directors of the Corporation shall be six (6). No
reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 CLASSES OF DIRECTORS
--------------------
The Directors shall be divided into three classes designated as Class I,
Class II and Class III, respectively. Directors shall be assigned to each class
in accordance with a resolution or resolutions adopted by the Board of
Directors. At the first annual meeting of stockholders following the date
hereof, the term of office of the Class I Directors shall expire and Class I
Directors shall be elected for a full term of three years. At the second annual
meeting of stockholders following the date hereof, the term of office of the
Class II Directors shall expire and Class II Directors shall be elected for a
full term of three years. At the third annual meeting of stockholders following
the date hereof, the term of office of the Class III Directors shall expire and
Class III Directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
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Notwithstanding the foregoing provisions of this Article, each Director
shall serve until his successor is duly elected and qualified or until his
earlier death, resignation or removal. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
3.4 RESIGNATION AND VACANCIES
-------------------------
Any director may resign at any time upon written notice to the Corporation.
Subject to the requirements, if any, set forth in the certificate of
incorporation, stockholders may remove directors with or without cause. Unless
otherwise provided in the certificate of incorporation, any vacancy occurring in
the board of directors with or without cause may be filled by a majority of the
remaining members of the board of directors, although such majority is less than
a quorum, or by a plurality of the votes cast at a meeting of stockholders, and
each director so elected shall hold office until the expiration of the term of
office of the director whom he has replaced.
Unless otherwise provided in the certificate of incorporation or these
Bylaws:
(i) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all
of the stockholders having the right to vote as a single
class may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by
the provisions of the certificate of incorporation, vacancies
and newly created directorships of such class or classes or
series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or
by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
Corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may apply to the Court of Chancery for a decree summarily
ordering an election as provided in Section 211 of the General Corporation Law
of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least 10% of the total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the General Corporation Law of
Delaware as far as applicable.
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3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
----------------------------------------
The board of directors of the Corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS
----------------
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
------------------------
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the Corporation. If the notice is mailed, it
shall be deposited in the United States mail at least 4 days before the time of
the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least 48 hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director who the
person giving the notice has reason to believe will promptly communicate it to
the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
Corporation.
3.8 QUORUM
------
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation.
3.9 WAIVER OF NOTICE
----------------
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
Bylaws, a written waiver thereof, signed by
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the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors, or members of a committee of
directors, need be specified in any written waiver of notice unless so required
by the certificate of incorporation or these Bylaws.
3.10 ADJOURNED MEETING; NOTICE
-------------------------
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.11 CONDUCT OF BUSINESS
-------------------
Meetings of the board of directors shall be presided over by the chairman
of the board, if any, or in his absence by the chief executive officer, or in
their absence by a chairman chosen at the meeting. The secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting. The chairman of any
meeting shall determine the order of business and the procedures at the meeting.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
-------------------------------------------------
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.13 FEES AND COMPENSATION OF DIRECTORS
----------------------------------
Unless otherwise restricted by the certificate of incorporation or these
Bylaws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
3.14 REMOVAL OF DIRECTORS
--------------------
Unless otherwise restricted by statute, any director or the entire board of
directors may only be removed pursuant to the provisions set forth in the
certificate of incorporation. If at any time a
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class or series of shares is entitled to elect one or more directors, the
provisions of this Article 3.14 shall apply to the vote of that class or series
and not to the vote of the outstanding shares as a whole.
ARTICLE IV
COMMITTEES
----------
4.1 COMMITTEES OF DIRECTORS
-----------------------
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the Corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolutions of the
board of directors or in the Bylaws of the Corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the Corporation or a revocation
of a dissolution, or (v) amend the Bylaws of the Corporation; and, unless the
board resolution establishing the committee, the Bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
-----------------
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
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4.3 MEETINGS AND ACTION OF COMMITTEES
---------------------------------
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these Bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.6 (regular meetings),
Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9
(waiver of notice), Section 3.10 (adjournment and notice of adjournment),
Section 3.11 (conduct of business) and 3.12 (action without a meeting), with
such changes in the context of those Bylaws as are necessary to substitute the
committee and its members for the board of directors and its members; provided,
however, that the time of regular meetings of committees may also be called by
resolution of the board of directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these Bylaws.
ARTICLE V
OFFICERS
--------
5.1 OFFICERS
--------
The officers of the Corporation shall be a chief executive officer, one or
more vice presidents, a secretary and a chief financial officer. The
Corporation may also have, at the discretion of the board of directors, a
chairman of the board, a president, a chief operating officer, one or more
executive, senior or assistant vice presidents, assistant secretaries and any
such other officers as may be appointed in accordance with the provisions of
Section 5.2 of these Bylaws. Any number of offices may be held by the same
person.
5.2 APPOINTMENT OF OFFICERS
-----------------------
Except as otherwise provided in this Section 5.2, the officers of the
Corporation shall be appointed by the board of directors, subject to the rights,
if any, of an officer under any contract of employment. The board of directors
may appoint, or empower an officer to appoint, such officers and agents of the
business as the Corporation may require (whether or not such officer or agent is
described in this Article V), each of whom shall hold office for such period,
have such authority, and perform such duties as are provided in these Bylaws or
as the board of directors may from time to time determine. Any vacancy
occurring in any office of the Corporation shall be filled by the board of
directors or may be filled by the officer, if any, who appointed such officer.
5.3 REMOVAL AND RESIGNATION OF OFFICERS
-----------------------------------
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by
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the board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors or, in the case of an officer appointed by
another officer, by such other officer.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.
5.4 CHAIRMAN OF THE BOARD
---------------------
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these Bylaws. If there is no
chief executive officer, then the chairman of the board shall also be the chief
executive officer of the Corporation and shall have the powers and duties
prescribed in Section 5.5 of these Bylaws.
5.5 CHIEF EXECUTIVE OFFICER
-----------------------
The Chief Executive Officer of the Corporation shall, subject to the
control of the Board of Directors, have general supervision, direction and
control of the business and the officers of the Corporation. He or she shall
preside at all meetings of the stockholders and, in the absence or nonexistence
of a Chairman of the Board at all meetings of the Board of Directors. He or she
shall have the general powers and duties of management usually vested in the
chief executive officer of a Corporation, including general supervision,
direction and control of the business and supervision of other officers of the
Corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws.
The Chief Executive Officer shall, without limitation, have the authority
to execute bonds, mortgages and other contracts requiring a seal, under the seal
of the Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
5.6 PRESIDENT
---------
Subject to such supervisory powers as may be given by these Bylaws or the
Board of Directors to the Chairman of the Board or the Chief Executive Officer,
if there be such officers, the president shall have general supervision,
direction and control of the business and supervision of other officers of the
Corporation, and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws. In the event a Chief Executive Officer
shall not be appointed, the President shall have the duties of such office.
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5.7 VICE PRESIDENT
--------------
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the chief executive officer and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the chief executive
officer. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
board of directors, these Bylaws, the chief executive officer or the chairman of
the board.
5.8 SECRETARY
---------
The secretary shall keep or cause to be kept, at the principal executive
office of the Corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the Corporation or at the office of the Corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these Bylaws. He shall keep the seal of the Corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these Bylaws.
5.9 CHIEF FINANCIAL OFFICER
-----------------------
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the Corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
Corporation as may be ordered by the board of directors, shall render to the
chief executive officer and directors, whenever they request it, an account of
all of his transactions as treasurer and of the financial condition of the
Corporation, and shall have such other
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powers and perform such other duties as may be prescribed by the board of
directors or these Bylaws.
5.10 ASSISTANT SECRETARY
-------------------
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.11 AUTHORITY AND DUTIES OF OFFICERS
--------------------------------
In addition to the foregoing authority and duties, all officers of the
Corporation shall respectively have such authority and perform such duties in
the management of the business of the Corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
---------
6.1 THIRD PARTY ACTIONS
-------------------
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation to procure a
judgement in its favor) by reason of the fact that he is or was director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
---------------------------------------------
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to
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procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
6.3 SUCCESSFUL DEFENSE
------------------
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
6.4 DETERMINATION OF CONDUCT
------------------------
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that the indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 6.1 and 6.2. Such determination shall be made
(1) by the board of Directors or the Executive Committee by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) or if such quorum is not obtainable or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
6.5 PAYMENT OF EXPENSES IN ADVANCE
------------------------------
Expenses incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
-----------------------
The indemnification and advancement of expenses provided or granted
pursuant to the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking
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indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another while holding
such office.
6.7 INSURANCE INDEMNIFICATION
-------------------------
The Corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
6.8 THE CORPORATION
---------------
For purposes of this Article VI, references to "the Corporation" shall
include, in addition to the resulting Corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
and subject to the provisions of this Article VI (including, without limitation
the provisions of Section 6.4) with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
----------------------
For purposes of this Article VI, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably deemed to have acted in a manner "not opposed to the best interests
of the Corporation" as referred to in this Article VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
-----------------------------------------------------------
The indemnification and advanced of expenses provided by, or granted
pursuant to, this Article VI shall, unless otherwise provided when authorized or
ratified, continue as to a person who
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has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
-------------------
7.1 MAINTENANCE AND INSPECTION OF RECORDS
-------------------------------------
The Corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these Bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
Corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
-----------------------
Any director shall have the right to examine the Corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his position as a director. The Court of Chancery is
hereby vested with the exclusive jurisdiction to determine whether a director is
entitled to the inspection sought. The Court may summarily order the
Corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
----------------------------------------------
The chairman of the board, the chief executive officer, any vice president,
the chief financial officer, the secretary or assistant secretary of this
Corporation, or any other person authorized by the board of directors or the
chief executive officer or a vice president, is authorized to vote, represent,
and exercise on behalf of this Corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of this
Corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
-17-
<PAGE>
ARTICLE VIII
GENERAL MATTERS
---------------
8.1 CHECKS
------
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the Corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
------------------------------------------------
The board of directors, except as otherwise provided in these Bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
--------------------------------------
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the Corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the Corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
Corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
The Corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the Corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend
-18-
<PAGE>
on fully paid shares, the Corporation shall declare a dividend upon partly paid
shares of the same class, but only upon the basis of the percentage of the
consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
-----------------------------------
If the Corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the Corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the Corporation shall issue to represent
such class or series of stock a statement that the Corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
-----------------
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the Corporation and cancelled at the same time. The Corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
-------------------------
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these Bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a Corporation and a natural
person.
8.7 DIVIDENDS
---------
The directors of the Corporation, subject to any restrictions contained in
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the Corporation's
capital stock.
-19-
<PAGE>
The directors of the Corporation may set apart out of any of the funds of
the Corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
Corporation, and meeting contingencies.
8.8 FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
----
The Corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK
-----------------
Upon surrender to the Corporation or the transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
-------------------------
The Corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
Corporation to restrict the transfer of shares of stock of the Corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
-----------------------
The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
----------
The original or other Bylaws of the Corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
Corporation may, in its certificate of
-20-
<PAGE>
incorporation, confer the power to adopt, amend or repeal Bylaws upon the
directors. The fact that such power has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal Bylaws.
ARTICLE X
DISSOLUTION
-----------
If it should be deemed advisable in the judgment of the board of directors
of the Corporation that the Corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the Corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the Corporation shall be dissolved.
ARTICLE XI
CUSTODIAN
---------
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
-------------------------------------------
The Court of Chancery, upon application of any stockholder, may appoint one
or more persons to be custodians and, if the Corporation is insolvent, to be
receivers, of and for the Corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would have
expired upon qualification of their successors; or
(ii) the business of the Corporation is suffering or is threatened
with irreparable injury because the directors are so divided
respecting the management of the affairs of the Corporation
that the required vote for action by the board of directors
cannot be obtained and the stockholders are unable to terminate
this division; or
-21-
<PAGE>
(iii) the Corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate
or distribute its assets.
11.2 DUTIES OF CUSTODIAN
-------------------
The custodian shall have all the powers and title of a receiver appointed
under Section 291 of the General Corporation Law of Delaware, but the authority
of the custodian shall be to continue the business of the Corporation and not to
liquidate its affairs and distribute its assets, except when the Court of
Chancery otherwise orders and except in cases arising under Sections 226(a)(3)
or 352(a)(2) of the General Corporation Law of Delaware.
-22-
<PAGE>
ARTICLE XII
LOANS TO OFFICERS
-----------------
The Corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the Corporation or of its
subsidiaries, including any officer or employee who is a Director of the
Corporation or its subsidiaries, whenever, in the judgment of the Board of
Directors, such loan, guarantee or assistance may reasonably be expected to
benefit the Corporation. The loan, guarantee or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the Board of
Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Bylaw shall be deemed to deny, limit
or restrict the powers of guaranty or warranty of the Corporation at common law
or under any statute.
-23-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV COMMITTEES............................................................... 10
4.1 COMMITTEES OF DIRECTORS........................................... 10
4.2 COMMITTEE MINUTES................................................. 11
4.3 MEETINGS AND ACTION OF COMMITTEES................................. 11
ARTICLE V OFFICERS.................................................................. 11
5.1 OFFICERS.......................................................... 11
5.2 APPOINTMENT OF OFFICERS........................................... 11
5.3 REMOVAL AND RESIGNATION OF OFFICERS............................... 11
5.4 CHAIRMAN OF THE BOARD............................................. 12
5.5 CHIEF EXECUTIVE OFFICER........................................... 12
5.6 PRESIDENT......................................................... 12
5.7 VICE PRESIDENT.................................................... 13
5.8 SECRETARY......................................................... 13
5.9 CHIEF FINANCIAL OFFICER........................................... 13
5.10 ASSISTANT SECRETARY............................................... 14
5.11 AUTHORITY AND DUTIES OF OFFICERS.................................. 14
ARTICLE VI INDEMNITY................................................................ 14
6.1 THIRD PARTY ACTIONS............................................... 14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION..................... 14
6.3 SUCCESSFUL DEFENSE................................................ 15
6.4 DETERMINATION OF CONDUCT.......................................... 15
6.5 PAYMENT OF EXPENSES IN ADVANCE.................................... 15
6.6 INDEMNITY NOT EXCLUSIVE........................................... 15
6.7 INSURANCE INDEMNIFICATION......................................... 16
6.8 THE CORPORATION................................................... 16
6.9 EMPLOYEE BENEFIT PLANS............................................ 16
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES....... 16
ARTICLE VII RECORDS AND REPORTS..................................................... 16
7.1 MAINTENANCE AND INSPECTION OF RECORDS............................. 17
7.2 INSPECTION BY DIRECTORS........................................... 17
7.3 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.................... 17
ARTICLE VIII GENERAL MATTERS........................................................ 18
8.1 CHECKS............................................................ 18
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.................. 18
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES............................ 18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.4 SPECIAL DESIGNATION ON CERTIFICATES............................... 19
8.5 LOST CERTIFICATES................................................. 19
8.6 CONSTRUCTION; DEFINITIONS......................................... 19
8.7 DIVIDENDS......................................................... 19
8.8 FISCAL YEAR....................................................... 20
8.9 SEAL.............................................................. 20
8.10 TRANSFER OF STOCK................................................. 20
8.11 STOCK TRANSFER AGREEMENTS......................................... 20
8.12 REGISTERED STOCKHOLDERS........................................... 20
ARTICLE IX AMENDMENTS............................................................... 20
ARTICLE X DISSOLUTION............................................................... 20
ARTICLE XI CUSTODIAN................................................................ 21
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES....................... 21
11.2 DUTIES OF CUSTODIAN............................................... 22
ARTICLE XII LOANS TO OFFICERS....................................................... 23
</TABLE>
<PAGE>
EXHIBIT 4.2
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
June 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. INFORMATION RIGHTS AND RIGHT OF REFUSAL............. 1
1.1 Financial Information.......................... 1
1.2 Inspection Rights.............................. 2
1.3 Board Visitation Rights........................ 2
1.4 Right of Refusal............................... 2
1.5 Vesting Imposed................................ 3
1.6 Termination of Certain Rights.................. 3
2. REGISTRATION RIGHTS................................. 4
2.1 Definitions.................................... 4
2.2 Request for Registration....................... 5
2.3 Piggyback Registrations........................ 6
2.4 Form S-3 Registration.......................... 8
2.5 Obligations of the Company..................... 9
2.6 Furnish Information............................ 10
2.7 Delay of Registration.......................... 10
2.8 Indemnification................................ 10
2.9 Rule 144 Reporting............................. 12
2.10 Termination of the Company's Obligations....... 13
2.11 Limitations on Subsequent Registration Rights.. 13
2.12 "Market Stand-Off" Agreement................... 13
2.13 S-3 Registration Requirements.................. 14
3. RIGHT OF FIRST OFFER................................ 14
3.1 General 14
3.2 New Securities................................. 14
3.3 Procedures..................................... 15
3.4 Failure to Exercise............................ 15
3.5 Termination.................................... 16
4. ASSIGNMENT AND AMENDMENT............................ 16
4.1 Assignment..................................... 16
4.2 Amendment of Rights............................ 17
5. DRAG ALONG RIGHTS................................... 17
5.1 Drag Along Right............................... 17
6. GENERAL PROVISIONS.................................. 17
6.1 Notices 17
6.2 Entire Agreement............................... 18
6.3 Governing Law.................................. 18
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
6.4 Severability................................... 18
6.5 Third Parties.................................. 18
6.6 Successors And Assigns......................... 18
6.7 Captions....................................... 18
6.8 Counterparts................................... 18
6.9 Costs And Attorneys' Fees...................... 18
6.10 Adjustments for Stock Splits, etc.............. 18
6.11 Termination of Prior Agreement................. 18
6.12 Aggregation of Stock........................... 18
</TABLE>
Exhibit A - Schedule of Investors
Exhibit B - Schedule of Prior Investors
ii
<PAGE>
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (this "Agreement")
---------
is made and entered into as of June 30, 1999 (the "Effective Date") by and among
--------------
Digital Broadcast Network, a Missouri corporation (the "Company"), certain
-------
purchasers of the Company's Class A Common Stock, listed on Exhibit A hereto
(each, a "Prior Investor" and collectively, the "Prior Investors"), and the
-------------- ---------------
Investors listed on Exhibit B hereto (each, a "Series A Investor", and
-----------------
collectively with the Prior Investors, the "Investors").
---------
R E C I T A L S
- - - - - - - -
WHEREAS, each of the Prior Investors posses certain registration rights,
information rights, rights of first refusal and other rights pursuant to a
Rights Agreement by and among the Company and each of the Prior Investors (each,
a "Prior Agreement" and collectively, the "Prior Agreements");
--------------- ----------------
WHEREAS, each of the Prior Agreements may be amended only with the written
consent of the Company and the Prior Investors;
WHEREAS, each of the Series A Investors is a party to the Series A
Preferred Stock Purchase Agreement of even date herewith (the "Series A
--------
Agreement") between the Company and the Series A Investors, pursuant to which
- ---------
the Series A Investors are purchasing shares of the Series A Preferred Stock of
the Company (the "Series A Stock");
--------------
WHEREAS, in order to induce the Company to enter into the Series A
Agreement and to induce the Series A Investors to invest funds in the Company
pursuant to the Series A Agreement, each of the Prior Investors hereby agree to
waive its rights under its respective Prior Agreement and to amend and restate
in its entirety its respective Prior Agreement, and the Investors and the
Company hereby agree that this Agreement shall govern the rights of the
Investors to cause the Company to register shares of the common stock of the
Company (the "Common Stock") issued or issuable to such Investors and to such
------------
other persons described in this Agreement, and certain other matters as set
forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. INFORMATION RIGHTS AND RIGHT OF REFUSAL.
1.1 Financial Information. The Company covenants and agrees that,
---------------------
commencing on the date of this Agreement, (i) with respect to each of the Prior
Investors, for so long as it holds at least 40% of the Class A Common Stock (the
"Class A Stock") purchased by it pursuant to the respective Stock Purchase
-------------
Agreement, by and among the Company and such Prior Investors (each, a "Class A
-------
Agreement"), and (ii) with respect to each Series A Investor, for so long as it
- ---------
holds at least 40% of the Series A Stock purchased by it pursuant to the Series
A Agreement, and/or the equivalent
<PAGE>
number (on an as-converted basis) of shares of Common Stock issued upon
conversion of such shares of Series A Stock (the "Series A Conversion Stock"),
-------------------------
the Company will:
(a) Annual Reports. Furnish to such Investor, as soon as
--------------
practicable and in any event within 120 days after the end of each fiscal year
of the Company, an audited consolidated balance sheet as of the end of such
fiscal year, an audited consolidated statement of operations and an audited
consolidated statement of cash flows of the Company and its subsidiaries for
such year, setting forth in each case in comparative form the figures from the
Company's previous fiscal year (if any), all prepared in accordance with
generally accepted accounting principles and practices and compiled by an
independent certified public accountant;
(b) Quarterly Reports. Furnish to such Investor as soon as
-----------------
practicable, and in any case within 45 days of the end of each fiscal quarter of
the Company (except the last quarter of the Company's fiscal year), quarterly
unaudited financial statements, including an unaudited balance sheet, an
unaudited statement of operations and an unaudited statement of cash flows,
together with a comparison to the Company's operating plan and budget and
statements of the Chief Financial Officer, or other comparable officer,
explaining any significant differences in the statements from the Company's
operating plan and budget for the period and stating that such statements are in
accordance with and were prepared from the books and records of the Company as
of the date and for the fiscal quarter covered, and fairly present the financial
position of the Company;
(c) Annual Budget. Furnish to such Investor (i) monthly
-------------
financial statements compared against the Company's annual operating plan, as
provided to the board of directors of the Company (the "Board"), and (ii) a copy
-----
of the Company's annual operating plan, prepared on a monthly basis, within 30
days prior to the beginning of the Company's fiscal year.
1.2 Inspection Rights. As to each Prior Investor, for so long as
-----------------
such Prior Investor holds at least 40% of the shares of Class A Stock purchased
by it pursuant to its respective Class A Agreement and as to Series A Investor,
for so long such Series A Investor holds at least 40% of the shares of the
Series A Stock purchased by it pursuant to the Series A Agreement, and/or the
equivalent number (on an as-converted basis) of shares of Series A Conversion
Stock or any combination thereof, the Company shall permit such Investor, at
such Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by such Investor, but not exceeding once in each fiscal quarter;
provided however, that the Company shall not be obligated under this Section 1.2
- ----------------
to provide information which it deems in good faith to be a trade secret or
similar confidential information if the Prior Investor or Series A Investor does
not first execute an appropriate nondisclosure agreement, and/or does not comply
with the Company's reasonable security procedures.
1.3 Board Visitation Rights. The Company covenants and agrees that,
-----------------------
as to each Series A Investor, for so long as such Series A Investor holds at
least 600,000 shares of the Series A Stock purchased by it pursuant to the
Series A Agreement, and/or the equivalent number (on an as-converted basis) of
shares of Series A Conversion Stock, one (1) representative designated by such
Series A Investor (a "Series A Investor's Representative") (i) shall be entitled
----------------------------------
to attend each meeting of the Board as an observer and shall be given reasonable
notice of each meeting of the
- 2 -
<PAGE>
Board in the same manner and at the same time that directors of the Company are
given notice of such meeting and (ii) shall be entitled to receive the same
information, documents and Board packages distributed to the other directors in
connection with such meeting and (iii) any and all such other documents which
are in the ordinary course distributed to the members of the Board. Each Series
A Investor and Series A Investor's Representative shall comply with all
reasonable confidentiality restrictions and guidelines imposed by the Company
with respect to such information and the matters discussed in such meetings. Any
Series A Investor's Representative may be changed or replaced from time to time
at a particular Series A Investor's discretion by written notice to the Company.
Failure to give reasonable notice shall not be deemed to negate the affirmative
vote or consent of the board of directors of the Company.
1.4 Right of Refusal.
----------------
(a) Defined. As used in this Section 1.4, the term "Right of
------- --------
Refusal" means a right of first refusal granted to the Company by a
- -------
securityholder of the Company pursuant to a written agreement (including the Co-
Sale Agreement dated the date hereof, by and between the Company and certain
shareholders is set forth therein) which provides that if such securityholder or
its assigns offers to sell, pledge or otherwise transfer any shares of the
Company's capital stock to any third party (a "Prospective Transferee"), then
----------------------
the Company shall first be entitled to purchase all or some portion of such
offered shares at the same price and on the same terms offered to the
Prospective Transferee; provided, such Right of Refusal shall not be applicable
--------
to: (i) a gratuitous transfer of such shares, provided and only if such
transferor obtains the Company's prior written consent to such transfer; which
such consent shall not be unreasonably withheld (ii) a transfer of title to such
shares effected pursuant to the transferor's will or the laws of intestate
succession; or (iii) a transfer to the Company in pledge as security for any
purchase-money indebtedness incurred by the transferor in connection with the
acquisition of such shares.
(b) Representation; Covenant to Maintain Right of Refusal. The
-----------------------------------------------------
Company represents and warrants to the Series A Investors that all shares of
Common Stock that are outstanding on the Effective Date or that are subject to
any stock options or similar rights to acquire shares of Common Stock from the
Company that are outstanding on the Effective Date, are subject, to a Right of
Refusal in favor of the Company, except as provided in Schedule 1.4(b) hereto.
The Company further covenants and agrees with the Series A Investors to impose a
Right of Refusal with respect to: (i) all shares of Common Stock and any other
shares of the Company's capital stock (other than shares purchased by the
----------
Investors, shares purchased pursuant to the Series A Agreement or shares issued
pursuant to pre-existing agreements, including the Company's employee stock
option plan to be approved by the Company's shareholders) that are hereafter
issued by the Company or that may hereafter be subject to any stock options,
warrants or similar rights granted by the Company; and (ii) any shares issued in
replacement of the shares described in (i) above, or as a result of a stock
dividend or stock split in respect of such shares or in replacement of such
shares in a recapitalization or similar transaction (the shares of the Company's
stock described in (i) and (ii) above hereinafter referred to as "Subject
-------
Shares"). The Company shall not assign any Right of Refusal it holds to purchase
- ------
Subject Shares to any party other than the Series A Investors without the prior
written consent of each such Series A Investor.
- 3 -
<PAGE>
(c) Grant of Secondary Refusal Right to Investors. If the Company
---------------------------------------------
declines to fully exercise its Right of Refusal with respect to any Subject
Shares, it must so notify each Investor in writing at least 20 days prior to the
expiration of the Company's Right of Refusal with respect to any Subject Shares,
and then each Investor shall have the right, for a period of 20 days after
receipt of the Company's written notice that the Company has declined to fully
exercise the Right of Refusal with respect to any such Subject Shares, to
purchase that percentage of the remaining Subject Shares determined by dividing
(i) the total number of shares of Class A Stock and/or Series A Stock (the
"Preferred Stock") then owned by such Investors by (ii) the total number of
---------------
shares of Preferred Stock then owned by all Investors, at the same price and on
the same terms that such Subject Shares were offered to the Prospective
Transferee(s) of such Subject Shares; provided however, that if any such
----------------
Prospective Transferee has offered to pay for any Subject Shares with property,
services or any other non-cash consideration, then the Investors shall
nevertheless have the right to pay for such Subject Shares with cash in an
amount equal to the fair value of the non-cash consideration offered by the
Prospective Transferee in question, where the fair value of such non-cash
consideration shall be conclusively determined in good faith by the Board.
1.5 Vesting Imposed. The Company shall maintain, and shall not
---------------
modify, the Right of Refusal, the vesting conditions or the repurchase rights
described in Section 3.28 of the Series A Agreement as such apply to each of the
Founders (as defined below), without the prior written consent of the holders of
at least 60% of the Series A Stock, which consent will not be unreasonably
withheld. As used herein, the term "Founders" means Mark Ivie, Rich Skoba, and
--------
Bernard Schneider.
1.6 Termination of Certain Rights. The Company's obligations under
-----------------------------
Sections 1.1 through 1.5 above will terminate upon the earlier of: (a) the
closing of the Company's initial firm commitment underwritten public offering of
its Common Stock pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended (the "Securities Act"), which would trigger
--------------
the automatic conversion of each outstanding share of Series A Stock; or (b) the
closing of an acquisition of the Company by another corporation or entity by a
consolidation or merger in which the holders of the Company's outstanding voting
stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than 50% of the voting power of the
corporation or other entity surviving such transaction. Notwithstanding the
foregoing, the Company's obligations under Section 1.3 will only terminate upon
the earlier to occur of (i) the date on which all of the shares of the Series A
Stock cease to be Restricted Securities under the Securities Act, (ii) the date
on which the holders of the Series A Stock no longer have a contractual right to
nominate members of the Board or (iii) the date on which any Investor having
rights under Section 1.3 ceases to hold at least 600,000 shares (as adjusted for
stock splits, dividends or recombination) of the Series A Stock.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
-----------
(a) Registration. The terms "register", "registered" and
------------ -------- ----------
"registration" refer to a registration effected by preparing and filing a
------------
registration statement or similar document in
- 4 -
<PAGE>
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(b) Registrable Securities. The term "Registrable Securities"
---------------------- ----------------------
means: (1) all the shares of Common Stock issued or issuable upon the conversion
of any shares of Series A Stock and (2) any shares of Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, in
exchange for or in replacement of any shares of Common Stock or Series A Stock
described in clause (1) of this subsection (b) and (3) the shares of Class A
Stock purchased by the Prior Investors pursuant to their respective Class A
Agreements; excluding in all cases, however, any Registrable Securities sold by
---------
a person in a transaction in which rights under this Section 2 are not assigned
in accordance with this Agreement or any Registrable Securities sold to the
public or sold pursuant to Rule 144 promulgated under the Securities Act.
Notwithstanding the foregoing, the term Registrable Securities shall include,
for purposes of Sections 2.3 and 2.8 hereof only, shares of Class A Common Stock
held by the holders of the Class A Common Stock, as of the date hereof.
(c) Registrable Securities Then Outstanding. The number of
---------------------------------------
shares of "Registrable Securities then outstanding" shall mean the number of
---------------------------------------
shares of Common Stock which are Registrable Securities and (1) are then issued
and outstanding or (2) are then issuable pursuant to the exercise or conversion
of then outstanding and then exercisable options, warrants or convertible
securities.
(d) Holder. For purposes of Sections 2, 3 and 4 of this
------
Agreement, the term "Holder" means any person owning of record Registrable
------
Securities or any assignee of record of such Registrable Securities to whom
rights under Section 2 or Section 3 have been duly assigned in accordance with
this Agreement; provided however, that for purposes of this Agreement, a record
-------- -------
holder of shares of Series A Stock convertible into such Registrable Securities
shall be deemed to be the Holder of such Registrable Securities; and provided
--------
further, that the Company shall in no event be obligated to register shares of
- -------
Series A Stock, and that Holders of Registrable Securities will not be required
to convert their shares of Series A Stock into Common Stock in order to exercise
the registration rights granted hereunder until immediately before the closing
of the offering to which the registration relates (and then only to the extent
necessary to sell the Registrable Securities to be sold in such offering).
Notwithstanding the foregoing, the term Holder shall include, for purposes of
Sections 2.3 and 2.8 hereof only, each of the holders of the Class A Common
Stock.
(e) Form S-3. The term "Form S-3" means such form under the
-------- --------
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) SEC. The term "SEC" or "Commission" means the U.S.
--- --- ----------
Securities and Exchange Commission.
- 5 -
<PAGE>
2.2 Request for Registration.
------------------------
(a) If the Company shall receive at any time subsequent to the
third anniversary of the Closing (as such term is defined in the Series A
Agreement) a written request from the Holders of at least 50% of the Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act having an aggregate offering price of not less than
$25,000,000, then the Company shall:
(i) within 20 days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) use its best efforts to effect as soon as practicable,
in accordance with Section 2.5 below, the registration under the Securities Act
of all Registrable Securities which the Holders request to be registered,
subject to the limitations of subsection 2.2(b).
(b) If the Holders initiating the registration request
hereunder (the "Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection 2.2(a)
and the Company shall include such information in the written notice referred to
in subsection 2.2(a). The underwriter will be selected by the Company and shall
be reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his or her Registrable Securities
in such registration shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 2.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities requested to be registered by each Holder; provided
--------
however, that the number of shares of Registrable Securities to be included in
- -------
such underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, the Company may delay filing a
registration statement, and may withhold efforts to cause the registration
statement to become effective, if the Company (i) determines in good faith that
such registration might interfere with the negotiation or completion of any
transaction that is being executed by the Company (whether or not a final
decision has been made to close such transaction) at the time the right to delay
is exercised, or (ii) shall furnish to the Holders requesting a registration
statement pursuant to this Section 2.2 a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board it would be seriously detrimental to the Company and its shareholders for
such registration statement to be filed and it is therefore essential to deter
the filing of such
- 6 -
<PAGE>
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than 90 days after receipt
of the request of the Initiating Holders; provided however, that the Company may
-------- -------
not utilize either of these rights more than once in any 12-month period. If,
after a registration statement becomes effective, the Company advises the
Holders of registered shares that the Company considers it appropriate for the
registration statement to be amended, the Holders of such shares shall suspend
any further sales of their registered shares until the Company advises them that
the registration statement has been amended.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 2.2:
(i) after the Company has effected two registrations
pursuant to this Section 2.2 and such registrations have been declared or
ordered effective;
(ii) during the period starting with the date 90 days
prior to the Board's good faith estimate of the filing date (provided that
notice of such estimated filing date is given to the Initiating Holders within
30 days of their request for registration) and ending on the date 180 days after
the effective date of, a registration subject to Section 2.3 hereof; provided
that the Company is actively employing in good faith reasonable efforts to cause
such registration statement to become effective; or
(iii) if the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.
(e) The Company shall pay all expenses incurred in connection
with each registration requested pursuant to this Section 2.2 (excluding
underwriters' or brokers' discounts and commissions and the selling Holders' pro
rata share of applicable filing fees and registration fees) including, without
limitation, all printers', attorneys' and accounting fees and the reasonable
fees and disbursements of one counsel for the selling Holder or Holders and
counsel for the Company, and the Company's pro rata share of applicable filing
fees and registration fees.
2.3 Piggyback Registrations. The Company shall notify all Holders
-----------------------
of Registrable Securities in writing at least 30 days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but (i) excluding registration statements relating to any registration
---------
under Section 2.4 of this Agreement, to a stock option, stock purchase or
similar plan or any transaction registered pursuant to Rule 145 promulgated
under the Securities Act (a "Rule 145 Transaction"), and (ii) excluding a
---------
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered) and will afford each such
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within 20 days after receipt of the above-
described
- 7 -
<PAGE>
notice from the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities such Holder
wishes to include in such registration statement. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless continue to have
the right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Company with respect
to offerings of its securities, all upon the terms and conditions set forth
herein. Any Holder who elects to include some or all of its Registrable
Securities pursuant to this Section 2.3 shall cooperate with the Company in the
preparation of any and all documents and instruments the Company deems necessary
or convenient for the preparation of any applicable registration statement, and
such Holders shall supply the Company with any and all information the Company
deems necessary or convenient with respect to any registration statement.
(a) Underwriting. If a registration statement for which the
------------
Company gives notice pursuant to this Section 2.3 is for an underwritten
offering, then the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any Holder's Registrable Securities to
be included in a registration pursuant to this Section 2.3 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, first, to the
-----
Company and second, to each of the Holders requesting inclusion of their
------
Registrable Securities in such registration statement on a pro rata basis based
upon the total number of Registrable Securities requested to be registered by
such Holder, provided, however, that the right of the underwriters to exclude
-------- -------
shares (including Registrable Securities) from the registration and underwriting
as described above shall be restricted so that: (i) the number of Registrable
Securities included in any such registration is not reduced below 25% of all the
shares included in the registration, except for a registration relating to the
Company's initial public offering of its Common Stock, from which all
Registrable Securities may be excluded; and (ii) all shares that are not
Registrable Securities shall first be excluded from such registration and
underwriting before any Registrable Securities are so excluded. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least 10 business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "Holder", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder", as defined in this sentence.
(b) Expenses. All expenses incurred in connection with a
--------
registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions)
- 8 -
<PAGE>
including, without limitation, all federal and "blue sky" registration and
qualification fees, printers' and accounting fees and disbursements of one
counsel for the selling Holder or Holders and counsel for the Company shall be
borne by the Company.
2.4 Form S-3 Registration. In case the Company shall receive from
---------------------
any Holder or Holders of at least 40% of all Registrable Securities then
outstanding a written request or requests that the Company effect a registration
on Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, then the
Company will:
(a) Notice. Promptly, but in no event later than 20 days
------
after receipt of the Holders' request give written notice of the proposed
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders; and
(b) Registration. As soon as practicable, effect such
------------
registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 20 days after receipt of such written notice from
the Company; provided however, that the Company shall not be obligated to effect
-------- -------
any such registration, qualification or compliance pursuant to this Section 2.4.
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $5,000,000;
(3) If the Company elects to delay filing a registration
statement, and withholding efforts to cause the Form S-3 registration statement
to become effective, if the Company (i) determines in good faith that such
registration might interfere with the negotiation or completion of any
transaction that is being executed by the Company (whether or not a final
decision has been made to close such transaction) at the time the right to delay
is exercised or (ii) shall furnish to the Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board, it would be seriously detrimental to the Company
and its shareholders for such Form S-3 Registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the Form
S-3 registration statement no more than once during any 12-month period for a
period of not more than 90 days after receipt of the request of the Holder or
Holders under this Section 2.4. If, after a Form S-3 registration statement
becomes effective, the Company advises the holders of registered shares that the
Company considers it appropriate for such registration statement to be amended,
the holders of such shares shall suspend any further sales of their registered
shares until the Company advises them that such registration statement has been
amended.
- 9 -
<PAGE>
(4) if the Company has, within the 12-month period
preceding the date of such request, already effected one registration on Form S-
3 for the Holders pursuant to this Section 2.4.
(c) Expenses. The Company shall pay all expenses incurred in
--------
connection with each registration requested pursuant to this Section 2.4
(excluding underwriters' or brokers' discounts and commissions) including,
without limitation, all filing, registration and qualification, printers',
attorneys' and accounting fees and the reasonable fees and disbursements of one
counsel for the selling Holder or Holders and counsel for the Company.
2.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 90 successive days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an underwriting agreement.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
- 10 -
<PAGE>
(h) Notify each Holder covered by 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 as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering, or if not underwritten, in form and substance as is customarily
given to underwriters and reasonably satisfactory to counsel to the Holder
offering the greatest number of Registrable Securities for sale in the
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities, and (ii) a "comfort" letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, or if not
underwritten, in form and substance as is customarily given to underwriters and
reasonably satisfactory to counsel to the Holder offering the greatest number of
Registrable Securities for sale in the registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
2.6 Furnish Information. Each Selling Shareholder covenants and
-------------------
agrees to furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to timely effect the registration of their
Registrable Securities. Additionally, the Company shall have no obligation with
respect to any registration requested pursuant to Sections 2.2 or 2.4 if, due to
the operation of this Section 2.6, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's
obligations to initiate such registration as specified in Section 2.2 or 2.4.
2.7 Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of Section 2.
2.8 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) By the Company. To the extent permitted by law, the
--------------
Company will indemnify and hold harmless each Holder, the partners, officers and
directors of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any losses, claims, damages or liabilities
--------
(joint or
- 11 -
<PAGE>
several) to which they may become subject under the Securities Act, the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"):
---------
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(ii) the omission or alleged omission to state in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by the Company
of the Securities Act, the 1934 Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
federal or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer, director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
-------- -------
indemnity agreement contained in this subsection 2.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law, each
------------------
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder within the meaning of the
Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, partner or
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation due to information specifically
provided by the Selling Holder for inclusion in the registration statement; and
each such Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, underwriter or
other Holder, partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity agreement
-------- -------
contained in this subsection 2.8(b) shall not
- 12 -
<PAGE>
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of such Holder,
which consent shall not be unreasonably withheld; and provided further, that the
-------- -------
total amounts payable in indemnity by a Holder under this Section 2.8(b) in
respect of any Violation shall not exceed the net proceeds received by such
Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section 2.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2.8,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided however, that an indemnified party
-------- -------
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
of interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.8 to the extent so prejudiced, but the omission so to deliver written notice
to the indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 2.8.
(d) Contribution. 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 exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.8 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 2.8 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
2.8, 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 Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders shall be 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
Registrable Securities offered and sold by such Holder 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.
- 13 -
<PAGE>
(e) Survival. The obligations of the Company and Holders
--------
under this Section 2.8 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
2.9 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as the Company has become subject to the reporting
requirements of the 1934 Act, 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, at all times in
accordance with the requirements of Rule 144(c), after the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(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 1934 Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time after 90 days) after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the 1934 Act (at any time after it has become
subject to the reporting requirements of the 1934 Act), (ii) a copy of the most
recent annual or quarterly report of the Company and (iii) such other reports
and documents of the Company as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell any
such securities without registration (at any time after the Company has become
subject to the reporting requirements of the 1934 Act).
2.10 Termination of the Company's Obligations. The Company shall
----------------------------------------
have no obligations provided in Section 2 hereof with respect to: (i) any
request or requests for registration made by any Holder on a date more than
three years after the closing date of the Company's initial public offering; or
(ii) any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Sections 2.2, 2.3 or 2.4 hereof if, in the reasonable
opinion of counsel to the Company, all such Registrable Securities proposed to
be sold by a Holder may then be sold in a three-month period without
registration under the Securities Act pursuant to Rule 144 under the Securities
Act; provided however, that the provisions of this Section 2.10 shall not apply
-------- -------
to any Holder who owns more than 1% of the Company's outstanding capital stock
until such time as such Holder owns less than 1% of the Company's outstanding
capital stock.
2.11 Limitations on Subsequent Registration Rights. From and after
---------------------------------------------
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least two-thirds of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Sections
2.2, 2.3 or 2.4 hereof, unless under the terms of such agreement, such holder or
prospective holder may include
- 14 -
<PAGE>
such securities in any such registration only to the extent that the inclusion
of such securities will not reduce the amount of Registrable Securities of the
Holders to be included or (b) to demand registration of their securities.
2.12 "Market Stand-Off" Agreement. Investor hereby agrees that,
---------------------------
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided however, that:
-------- -------
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements; and
(c) such market stand-off time period shall not exceed 180 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 2.12 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or to a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be promulgated
in the future.
2.13 S-3 Registration Requirements. Notwithstanding anything else
-----------------------------
contained in this Agreement, the Company shall not become obligated to become
subject to the 1934 Act and, each Investor acknowledges, until such time as the
Company becomes subject to the 1934 Act, the Company will be legally precluded
from registering securities under a Form S-3 and, accordingly, no provisions in
this Agreement to the contrary shall be deemed to require the Company to
undertake such a registration until the Company legally is qualified to do so.
3. RIGHT OF FIRST OFFER.
3.1 General. Each Holder, for purposes of this Section 3 the term
-------
Holder shall mean, (i) with respect to each of the Investors, for so long as it
holds at least 40% of the Series A Stock purchased by it pursuant to the Series
A Agreement and (ii) with respect to each of the Prior Investors, for so long as
it holds at least 40% of the Class A Stock purchased by it pursuant to the Class
A Agreement, and any party to whom such Holder's rights under this Section 3
have been duly assigned in accordance with Section 4.1(b) and in such event, if
the assignee qualifies under
- 15 -
<PAGE>
Section 4.1(b) then the transferor Prior Investor shall retain its rights under
this section 3.1 so long as the transferor holds at least 20% of the Class A
Stock purchased by it pursuant to the Class A Agreement, (each such Holder or
----
assignee hereinafter referred to as a "Rights Holder") has the right of first
-------------
offer to purchase such Rights Holder's Pro Rata Share (as defined below) of all
(or any part) of any "New Securities" (as defined in Section 3.2) that the
Company may from time to time issue after the date of this Agreement. A Rights
Holder's "Pro Rata Share" for purposes of this right of first offer is the ratio
--------------
of (a) the number of Registrable Securities as to which such Rights Holder is
the Holder (and/or is deemed to be the Holder under Section 2.1(d)) to (b) a
number of shares of Common Stock equal to the sum of (i) the total number of
shares of Common Stock then outstanding plus (ii) the total number of shares of
Common Stock into which all then outstanding shares of Series A Stock of the
Company are then convertible plus (iii) then outstanding options to purchase
shares of Common Stock pursuant to equity incentive plans approved by the Board.
3.2 New Securities. "New Securities" shall mean any Common Stock
-------------- --------------
or preferred stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or preferred stock; provided however, that
-------- -------
the term "New Securities" does not include:
---- --- -------
(i) shares of the Common Stock (and/or options or warrants
therefor) issued or issuable to employees, officers, directors, contractors,
advisors or consultants of the Company pursuant to stock options or other stock
incentive agreements or plans approved by the Board, including the approval of
the directors nominated by the holders of the Series A Stock (the "Series A
Directors");
(ii) any Common Stock or other securities issuable upon
conversion of or with respect to any then outstanding shares of Preferred Stock
or Common Stock or other securities issuable upon conversion thereof;
(iii) any shares of the Company's Common Stock or
preferred stock (or any other security of the Company) issued in connection with
any stock split or stock dividend;
(iv) any securities offered by the Company to the public
pursuant to a registration statement filed under the Securities Act;
(v) any securities issued pursuant to the acquisition of
another corporation or entity by the Company by consolidation, merger, purchase
of all or substantially all of the assets or other reorganization in which the
Company acquires, in a single transaction or series of related transactions, all
or substantially all of the assets of such other corporation or entity, 50% or
more of the voting power of such other corporation or entity, or 50% or more of
the equity ownership of such other entity, provided such issuance is approved by
the Board, including the approval of the Series A Directors; or
(vi) any capital stock (and/or options or warrants
therefor) issued to parties providing the Company with equipment leases, real
property leases, loans provided by commercial lenders, credit lines, guaranties
of indebtedness, cash price reductions or similar financing,
- 16 -
<PAGE>
provided each such issuance is approved by the Board, including the approval of
the Series A Directors; or
(vii) any capital stock (and/or options or warrants
therefor) issued to parties pursuant to pre-existing contracts and any capital
stock issued pursuant to any New Security whereby all Holders waived their
rights of refusal under this Agreement.
3.3 Procedures. In the event that the Company proposes to
----------
undertake an issuance of New Securities, it shall give to each Rights Holder
written notice of its intention to issue New Securities (the "Notice"),
------
describing the type of New Securities and the price and the general terms upon
which the Company proposes to issue such New Securities. Each Rights Holder
shall have twenty (20) days from the date of mailing of any such Notice to agree
in writing to purchase up to such Rights Holder's Pro Rata Share of such New
Securities for the price and upon the general terms specified in the Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed such Rights Holder's Pro Rata Share).
Notwithstanding the terms set forth in the Notice, each Holder shall have the
right to pay cash for New Securities offered in the Notice. If any Rights Holder
fails to so agree in writing within such twenty (20) day period to purchase up
to such Rights Holder's full Pro Rata Share of an offering of New Securities (a
"Nonpurchasing Holder"), then such Nonpurchasing Holder shall forfeit the right
--------------------
hereunder to purchase that part of its Pro Rata Share of such New Securities
that it did not so agree to purchase and the Company shall promptly give each
Rights Holder (if any) who has timely agreed to purchase its full Pro Rata Share
of such offering of New Securities (a "Purchasing Holder") written notice of the
-----------------
failure of any Nonpurchasing Holder to purchase such Nonpurchasing Rights
Holder's full Pro Rata Share of such offering of New Securities (the
"Overallotment Notice"). Each Purchasing Holder shall have a right of
--------------------
overallotment such that such Purchasing Holder may agree to purchase a portion
of the Nonpurchasing Holder's unpurchased Pro Rata Share of such offering on a
pro rata basis according to the relative Pro Rata Shares of the Purchasing
Holders at any time within ten (10) days after receiving the Overallotment
Notice.
3.4 Failure to Exercise. In the event that the Rights Holders fail
-------------------
to exercise in full the right of first offer within such twenty plus ten day
period, then the Company shall have 120 days thereafter to sell the New
Securities with respect to which the Rights Holders' rights of first offer
hereunder were not exercised, at a price and upon general terms not materially
more favorable to the purchasers thereof than specified in the Company's Notice.
In the event that the Company has not issued and sold the New Securities within
such 120 day period, then the Company shall not thereafter issue or sell any New
Securities without again first offering such New Securities to the Rights
Holders pursuant to this Section 3.
3.5 Termination. This right of first offer shall terminate (i)
-----------
immediately before the closing of the first underwritten sale of Common Stock to
the public pursuant to a registration statement filed with, and declared
effective by, the SEC under the Securities Act, covering the offer and sale of
Common Stock to the public at an offering price of at least $21.40 per share
(such offering price being subject to proportional adjustment to reflect
subdivisions, combinations, stock dividends and similar transactions affecting
the number of outstanding shares of Common Stock) for an aggregate gross public
offering price (calculated before deduction of underwriters' discounts and
commissions) of at least $25,000,000, or (ii) upon (a) the acquisition of all or
substantially all the
- 17 -
<PAGE>
assets of the Company or (b) an acquisition of the Company by another
corporation or entity by consolidation or merger in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than 50% or
more of the voting power of the corporation or other entity surviving such
transaction.
4. ASSIGNMENT AND AMENDMENT.
4.1 Assignment. Notwithstanding anything herein to the contrary:
----------
(a) Information Rights. The rights of each Investor under
------------------
Section 1.1 or 1.2 hereof may be assigned only to a party who acquires from
Investor (or Investor's permitted assigns) at least that number of shares of
Series A Stock and/or an equivalent number (on an as-converted basis) of shares
of Series A Conversion Stock or Class A Stock, as the case may be, described in
Section 1.1 or 1.2 hereof, respectively. The rights of the Investors under
Sections 1.3, 1.4, 1.5 and 1.6 hereof may not be assigned except to a subsidiary
of any Investor that acquires at least 50% of the shares of Series A Stock or
Class A Stock purchased by such Investor under the Series A or Class A Agreement
and/or an equivalent number (on an as-converted basis) of shares of Series A
Conversion Stock and in the event that an Investor is a limited liability
company, the Investor shall have the right to distribute its rights to its
members who receive Registrable Securities, provided that in all cases the
rights of said members shall be aggregated with all other members and/or said
limited liability company for purposes of exercising any rights under this
Agreement.
(b) Registration Rights; Refusal Rights. The registration
-----------------------------------
rights of a Holder under Section 2 hereof and the rights of first offer of a
Rights Holder under Section 3 hereof may be assigned only to: (i) any partner or
retired partner, member or retired member of any such Holder or Rights Holder
which is a partnership or limited liability company; (ii) any family member or
trust for the benefit of any Holder or Rights Holder who is an individual; (iii)
with respect to the registration rights under Section 2, to any transferee who
acquires at least 20% of the shares of Registrable Securities then held by such
Holder; and (iv) with respect to the rights of first offer under Section 3, to
any transferee who acquires at least 20% of the shares of Registrable Securities
then held by such Holder; provided however, that no party may be assigned any of
-------- -------
the foregoing rights unless the Company is given written notice by the assigning
party at the time of such assignment stating the name and address of the
assignee and identifying the securities of the Company as to which the rights in
question are being assigned; and provided further, that any such assignee shall
-------- -------
receive such assigned rights subject to all the terms and conditions of this
Agreement, including without limitation the provisions of this Section 4.
4.2 Amendment of Rights. Unless otherwise provided for herein, any
-------------------
provision of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and the Investors
(and/or any of the Investors' respective permitted successors or assigns)
holding shares of Series A Stock and/or Series A Conversion Stock and/or Class A
Stock representing and/or convertible into a majority of all of the Investors'
Shares (as defined below). As used herein, the term "Investors' Shares" shall
-----------------
mean the shares of Common Stock then issuable upon conversion of all then
outstanding shares of Series A Stock issued under the Series A Agreement
- 18 -
<PAGE>
plus all then outstanding shares of Conversion Stock that were issued upon the
conversion of any shares of Preferred Stock issued under the Series A Agreement,
plus all then outstanding shares of Class A Stock. Any amendment or waiver
effected in accordance with this Section 4.2 shall be binding upon each
Investor, Holder and Rights Holder, each permitted successor or assignee of each
Investor, Holder or Rights Holder, and the Company.
The foregoing notwithstanding, the rights of any Prior Investor shall not
be amended or waived in an adverse manner without the prior written consent of
such Prior Investor.
5. DRAG ALONG RIGHTS.
5.1 Drag Along Rights. Anything contained herein to the contrary
-----------------
notwithstanding, if at any time, the Board (at a meeting at which the entire
Board is present) and the holders of 2/3 of the Series A Stock shall approve a
proposal for (i) the sale of the capital stock of the Company, (ii) the merger
or consolidation of the Company, or (iii) the sale by the Company or its
subsidiaries of all or substantially all of their assets (each, an "Approved
--------
Sale Proposal"), and the Company has received from an independent nationally
- -------------
recognized investment banking firm, approved by 2/3 of the Board, which approval
shall not be unreasonably withheld, a fairness opinion stating that the terms
and conditions of Approved Sale Proposal are fair and equitable to the holders
of the Company's Common Stock in all material respects, then such Investors (or
their designated representative) may deliver a notice (a "Required Sale Notice")
--------------------
with respect to such Approved Sale Proposal to each other shareholder stating
that such Investors have approved or propose to effect the Approved Sale
Proposal and providing the identity of the persons involved in such Approved
Sale Proposal and the terms thereof. Each such shareholder, upon receipt of a
Required Sale Notice, shall be obligated, which obligation shall be enforceable
by the holders of a majority of the Series A Stock (or their designees), to (i)
sell their shares of capital stock of the Company and participate in the
transaction (a "Required Sale") contemplated by the Approved Sale Proposal, (ii)
-------------
vote their shares of stock in favor of such Approved Sale Proposal at any
meeting of shareholders called to vote on or approve such Approved Sale Proposal
and (iii) otherwise to take all necessary action to cause the Company and the
shareholders to consummate such Approved Sale Proposal. Any such Required Sale
Notice may be rescinded by such Investors by delivering written notice thereof
to all of the shareholders. Upon the consummation of the Required Sale, each
shareholder shall receive the same proportion of the aggregate consideration
from such Required Sale that such holder would have received if a Liquidation
Event (as defined in the Company's Articles of Incorporation) had occurred and
such consideration had been distributed by the Company pursuant to the rights
and preferences set forth in the Company's Articles of Incorporation (giving
effect to applicable orders of priority) and if any shareholders of a Class Are
given an option as to the form and amount of consideration to be received, all
shareholders of such class will be given the same option. Notwithstanding the
foregoing, in the event that the Approved Sale Proposal would result in proceeds
(if other than cash, the fair market value of which shall be determined by the
Board) to the Company's shareholders in an amount less than two (2) times the
Original Issue Price (as that term is defined in Section 1 of the Company's
Series A Certificate of Designation (the "Certificate")), then in such event the
Board approval required by the first sentence of this Section 5.1 shall be made
without the participation of the Series A Directors (as that term is defined in
Section 4.3 of the Certificate).
- 19 -
<PAGE>
6. GENERAL PROVISIONS.
6.1 Notices. Any notice, request or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or five days after deposit in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
(a) if to an Investor, at such Investor's respective address
as set forth on Exhibit A hereto.
---------
(b) if to the Company, at 977 Charter Commons, Chesterfield,
Missouri 63017; attn: General Counsel.
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder by giving ten days advance
notice to all other parties. Notice shall conclusively be deemed to have been
given when personally delivered or when deposited in the mail in the manner set
forth above.
6.2 Entire Agreement. This Agreement, together with all the
----------------
Exhibits hereto, constitutes and contains the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.
6.3 Governing Law. This Agreement shall be governed by and
-------------
construed exclusively in accordance with the internal laws of the State of
Missouri as applied to agreements to be performed entirely within Missouri,
excluding that body of law relating to conflict of laws and choice of law.
6.4 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
6.5 Third Parties. Nothing in this Agreement, express or implied,
-------------
is intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
6.6 Successors And Assigns. Subject to the provisions of Section 4,
----------------------
the provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and permitted assigns of the parties hereto.
6.7 Captions. The captions to sections of this Agreement have been
--------
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
- 20 -
<PAGE>
6.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6.9 Costs And Attorneys' Fees. In the event that any action, suit
-------------------------
or other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
6.10 Adjustments for Stock Splits, etc. Wherever in this Agreement
---------------------------------
there is a reference to a specific number of shares of Common Stock or preferred
stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
6.11 Termination of Prior Agreement. Each of the parties hereto
------------------------------
agree that this Agreement supersedes, replaces in its entirety and renders null
and void, each of the Prior Agreements.
6.12 Aggregation of Stock. All shares held or acquired by
--------------------
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement. Entities and
persons shall be considered affiliated with another entity or person only if
they control, are controlled by or are under common control with such other
entity or person.
- 21 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANY:
Digital Broadcast Network,
a Missouri corporation
By:\s\ Bernard Schneider
---------------------
Name: Bernard Schneider
Title: Chief Executive Officer
Address: 977 Charter Common
Chesterfield, Missouri 63017
[Signature Page to Investors' Rights Agreement]
<PAGE>
INVESTORS:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
a California Limited Partnership
By: Chase Capital Partners,
its sole General Partner
By: \s\ Shahan D. Soghikian
-----------------------
Shahan D. Soghikian
General Partner
[Signature Page to Investors' Rights Agreement]
<PAGE>
NEW ENTERPRISE ASSOCIATES VIII,
LIMITED PARTNERSHIP
By: NEA Partners VIII, Limited Partnership
Its General Partner
By: [UNINTELLIGIBLE]
------------------
Its: General Partner
----------------
NEA VENTURES 1999, LIMITED
PARTNERSHIP
By: Vice President
By: \s\ Susie Greathouse
-----------------------
Its: Vice President
----------------
NEA PRESIDENTS FUND, L.P.
By: NEA General Partners, L.P.
By: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: General Partner
-----------------
[Signature Page to Investors' Rights Agreement]
<PAGE>
MAYFIELD X, L.P.
By: Mayfield X Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
MAYFIELD ASSOCIATES FUND IV, L.P.
By: Mayfield IX Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
MAYFIELD PRINCIPALS FUND, L.L.C.
By: Mayfield X Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
[Signature Page to Investors' Rights Agreement]
<PAGE>
SPECTRUM EQUITY INVESTORS III, L.P.
By: Spectrum Equity Associates, III, L.P.
Its: General Partner
By: \s\ Robert A. Nicholson
-----------------------
Robert A. Nicholson
Its: Duly Authorized Signatory
SEI III ENTREPRENEURS' FUND, L.P.
By: SEI III Entrepreneurs' LLC
Its: General Partner
By: \s\ Robert A. Nicholson
-----------------------
Robert A. Nicholson
Its: Duly Authorized Signatory
SPECTRUM III INVESTMENT MANAGERS'
FUND, L.P.
By: \s\ Robert A. Nicholson
-----------------------
Robert A. Nicholson
Its: Duly Authorized Signatory
[Signature Page to Investors' Rights Agreement]
<PAGE>
HEWLETT-PACKARD COMPANY
By: \s\ Craig A. White
--------------------
Craig A. White
Senior Vice President and General
Manager,
Finance and Complements Group
Address: 333 Logue Avenue
Mountain View, CA 94043
[Signature Page to Investors' Rights Agreement]
<PAGE>
PRIOR INVESTORS:
ASCEND COMMUNICATIONS INCORPORATED
By: \s\ Annette Severiens
---------------------
Name: Annette Severiens
-----------------
Its: Assistant Treasurer
-------------------
STIFEL CAPCO, L.L.C.
By:
------------------------
Name:
---------------------
Its:
----------------------
[Signature Page to Investors' Rights Agreement]
<PAGE>
PRIOR INVESTORS:
ASCEND COMMUNICATIONS INCORPORATED
By:
------------------------
Name:
---------------------
Its:
----------------------
STIFEL CAPCO, L.L.C.
By: \s\ James J. Lahay
------------------
Name: James J. Lahay
--------------
Its:
---------------------
[Signature Page to Investors' Rights Agreement]
<PAGE>
EXHIBIT A
---------
Schedule of Investors
<TABLE>
<CAPTION>
Series A Investors Address Shares of Series A Stock
- -------------------------- ------------------------
Name and Address No. of Shares Purchased
- ---------------- -----------------------
<S> <C>
Chase Venture Capital Associates, L.P. 1,378,505
280 Madison Avenue
New York, NY 10017
New Enterprise Associates VIII, Limited Partnership 924,768
2490 Sand Hill Road
Palo Alto, CA 94025
NEA Ventures 1999, Limited Partnership 467
2490 Sand Hill Road
Palo Alto, CA 94025
NEA Presidents Fund, L.P. 9,345
2490 Sand Hill Road
Palo Alto, CA 94025
Mayfield X, L.P. 813,084
2800 Sand Hill Road
Suite 250
Menlo Park, CA 94025
Mayfield Associates Fund IV, L.P. 28,037
2800 Sand Hill Road
Suite 250
Menlo Park, CA 94025
Mayfield Principals Fund, L.L.C. 93,458
2800 Sand Hill Road
Suite 250
Menlo Park, CA 94025
</TABLE>
<PAGE>
EXHIBIT 4.3
================================================================================
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
among
INTIRA CORPORATION,
as Issuer,
and
THE PURCHASERS NAMED HEREIN
Dated as of January 31, 2000
Relating to:
$188,500,000 Aggregate Principal Amount at Maturity of
13% Senior Discount Notes Due 2010
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions........................................................... 1
2. Exchange Offer........................................................ 5
3. Shelf Registration.................................................... 8
4. Special Interest...................................................... 10
5. Registration Procedures............................................... 12
6. Registration Expenses................................................. 21
7. Indemnification....................................................... 21
8. Underwritten Registrations............................................ 25
9. Miscellaneous......................................................... 25
(a) Remedies......................................................... 25
(b) No Inconsistent Agreements....................................... 25
(c) Amendments and Waivers........................................... 25
(d) Notices.......................................................... 26
(e) Successors and Assigns........................................... 27
(f) Counterparts..................................................... 27
(g) Headings......................................................... 27
(h) Governing Law.................................................... 27
(i) Severability..................................................... 27
(j) Notes Held by the Issuer or Its Affiliates....................... 28
(k) Third-Party Beneficiaries........................................ 28
(l) Entire Agreement................................................. 28
</TABLE>
-i-
<PAGE>
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as
---------
of January 31, 2000, by and among INTIRA CORPORATION, a Delaware corporation
(together with its successors, the "Issuer"), and THE PURCHASERS NAMED ON THE
------
SIGNATURE PAGES HEREIN (collectively, the "Purchasers").
----------
This Agreement is entered into in connection with the Purchase
Agreement, dated as of January 31, 2000, by and among the Issuer and the
Purchasers (the "Purchase Agreement") relating to the sale by the Issuer to the
------------------
Purchasers of (i) 188,500,000 initial aggregate principal amount at maturity of
the Issuer's 13% Senior Discount Notes Due 2010, (ii) Series A Warrants to
purchase 3,114,160 shares of Common Stock (the "Series A Warrants") of the
-----------------
Issuer and (iii) Series B Warrants to purchase 1,070,160 shares of Common Stock
(the "Series B Warrants" and together with the Series A Warrants, the "Warrants"
----------------- --------
and together with the Notes, the "Securities") of the Issuer. In order to
----------
induce the Purchasers to enter into the Purchase Agreement, the Issuer has
agreed to provide the registration rights set forth in this Agreement for the
benefit of the holders of Registrable Notes (as defined), including, without
limitation, the Purchasers. The execution and delivery of this Agreement is a
condition to the Purchasers' obligation to purchase the Securities under the
Purchase Agreement. Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
"Advice" is defined in the last paragraph of Section 5.
------
"Agreement" is defined in the first introductory paragraph to this
---------
Agreement.
"Applicable Period" is defined in Section 2(b).
-----------------
"Business Day" means any day other than a Legal Holiday.
------------
"Closing Time" means the Closing Time as defined in the Purchase
------------
Agreement.
<PAGE>
-2-
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, then the body
performing such duties at such time.
"Effectiveness Date" means the 180th day after the Notice Date, in the
------------------
case of the Exchange Registration Statement, and the earlier of the 180th day
after the delivery of the Shelf Notice or 60 days after the date on which an
Exchange Registration Statement would have had to be declared effective
hereunder, in the case of the Initial Shelf Registration.
"Effectiveness Period" is defined in Section 3(a).
--------------------
"Event Date" is defined in Section 4(b).
----------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Notes" is defined in Section 2(a).
--------------
"Exchange Offer" is defined in Section 2(a).
--------------
"Exchange Registration Statement" is defined in Section 2(a).
-------------------------------
"Filing Date" means the 90th day after the Notice Date (regardless of
-----------
whether the actual filing precedes such date).
"Holder" means a Person in whose name a Note is registered on the
------
Issuer's register.
"Indemnified Person" is defined in Section 7(c).
------------------
"Indemnifying Person" is defined in Section 7(c).
-------------------
"Indenture" is defined in Section 2(a).
---------
"Initial Shelf Registration" is defined in Section 3(a).
--------------------------
"Inspectors" is defined in Section 5(o).
----------
"Issuer" is defined in the first introductory paragraph to this
------
Agreement.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in The City of New York or San Francisco, CA, are authorized by
law, regulation or
<PAGE>
-3-
executive order to remain closed. If any payment date in respect of the Notes is
a Legal Holiday, then payment may be made at that place on the next succeeding
day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
"NASD" means the National Association of Securities Dealers, Inc.
----
"Notes" means the 13% Senior Discount Notes Due 2010 that are issued
-----
under the Purchase Agreement, as amended or supplemented from time to time.
"Notice Date" means the date on which the Issuer receives the notice
-----------
from the Required Holders referred to in the first sentence of Section 2(a) or,
in connection with a Shelf Registration, the date on which the Issuer receives
the Shelf Notice from the Required Holders referred to in Section 2(c).
"Participant" is defined in Section 7(a).
-----------
"Participating Broker-Dealer" is defined in Section 2(b).
---------------------------
"Person" means any individual, corporation (including, without
------
limitation, a business trust, professional corporation and insurance company),
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or any legally recognizable entity.
"Prospectus" means the prospectus included in any Registration
----------
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Notes covered by such Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Purchase Agreement" is defined in the second introductory paragraph
------------------
to this Agreement.
"Purchasers" is defined in the first introductory paragraph to this
----------
Agreement.
"Records" is defined in Section 5(o).
-------
<PAGE>
-4-
"Registrable Notes" means each Note upon original issuance thereof and
-----------------
at all times subsequent thereto and each Exchange Note if upon original issuance
thereof such Exchange Note may not be sold without restriction under federal
securities laws (other than due solely to the status of such Holder as an
affiliate of the Issuer within the meaning of the Securities Act) (a "Restricted
----------
Exchange Note") until, in the case of any such Note or Exchange Note, as the
- -------------
case may be, the earliest to occur of (i) a Registration Statement (other than,
with respect to any Restricted Exchange Note) covering such Note or Exchange
Note, as the case may be, has been declared effective by the Commission and such
Note or Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement; (ii) such Note or Exchange Note, as
the case may be, is sold in compliance with Rule 144; (iii) in the case of any
Note, such Note has been exchanged pursuant to the Exchange Offer for an
Exchange Note or Exchange Notes which may be resold without restriction under
federal securities laws; or (iv) such Note or Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Purchase Agreement.
"Registration Statement" means any registration statement of the
----------------------
Issuer, including, but not limited to, the Exchange Registration Statement, that
covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Reorganization" has the meaning set forth in the Purchase Agreement.
--------------
"Required Holders" means Holders holding a majority of the Accreted
----------------
Value of the Registrable Notes.
"Restricted Exchange Notes" is defined in the definition of
-------------------------
"Registrable Note."
"Rule 144" means Rule 144 under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders of such securities that are not affiliates of the Issuer
being free of the registration and prospectus delivery requirements of the
Securities Act.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may
---------
be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
<PAGE>
-5-
"Rule 415" means Rule 415 under the Securities Act, as such Rule may
--------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" is defined in the second introductory paragraph to this
----------
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the Commission thereunder.
"Shelf Exchange" is defined in Section 3(a).
--------------
"Shelf Notice" is defined in Section 2(c).
------------
"Shelf Registration" is defined in Section 3(b).
------------------
"Special Interest" is defined in Section 4(a).
----------------
"Subsequent Shelf Registration" is defined in Section 3(b).
-----------------------------
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb).
"Transaction Documents" means the Transaction Documents as defined in
---------------------
the Purchase Agreement.
"Trustee" means the trustee under the Indenture.
-------
"underwritten registration or underwritten offering" means a
--------------------------------------------------
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.
"Warrants" is defined in the second introductory paragraph to this
--------
Agreement.
2. Exchange Offer
--------------
(a) At any time after the earlier of February 2, 2001 or the
consummation of an Initial Public Equity Offering (as defined in the
Registration Rights and Stockholders Agreement, dated January 31, 2000), the
Issuer shall at the written request of Required Holders file a registration
statement with the Commission no later than the Filing Date, pursuant to which
the Issuer shall offer to exchange (the "Exchange Offer") any and all of the
--------------
Registrable Notes for a like aggregate principal amount at maturity of debt
securities of the Issuer which are identical in all material respects to the
Notes (the "Exchange Notes") and which are entitled to the benefits of a trust
--------------
indenture (the "Indenture") (A) which complies with all requirements of the
---------
Commission to effect or maintain the qualification thereof under the TIA and
<PAGE>
-6-
which has been qualified under the TIA and (B) that is otherwise in form and
substance reasonably satisfactory to the Required Holders (which must be
considered in good faith within time frames that permit the Issuer to comply
with its obligations hereunder) containing the covenants set forth in Sections
6.01(a), (b), (c) and (e) (for delivery to the Trustee only) and (g) and
Sections 7 and 8, the events of default and remedies set forth in Section 11.01,
the redemption provisions, related definitions and other material terms of the
Notes (excluding, in any event, Sections 3, 4, 5, 6.01(d) and (f), 9 and 13) as
are set forth in the Purchase Agreement, customary "boilerplate" indenture
provisions and no others, except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon, except as otherwise
specifically required by the other provisions of this Agreement. The Issuer
shall not be obligated to effect more than one Exchange Offer. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and shall comply with all applicable tender
-------------------------------
offer rules and regulations under the Exchange Act. The Issuer agrees to use its
reasonable best efforts to (i) file the initial Exchange Registration Statement
with the Commission on or prior to the Filing Date; (ii) cause the Exchange
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date; (iii) keep the Exchange Offer open for at least
20 Business Days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is first mailed to Holders; and (iv) consummate the
Exchange Offer on or prior to the 45th day following the date on which the
Exchange Registration Statement is declared effective. If after such Exchange
Registration Statement is initially declared effective by the Commission, the
Exchange Offer or the issuance of the Exchange Notes thereunder is interfered
with by any stop order, injunction or other order or requirement of the
Commission or any other governmental agency or court, then such Exchange
Registration Statement shall be deemed not to have become effective for purposes
of this Agreement. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Notes received by it will be acquired in
the ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Notes, that such
Holder is not an affiliate of the Issuer within the meaning of the Securities
Act and any additional representations that in the written opinion of counsel to
the Issuer are necessary under then-existing interpretations of the Commission
in order for the Exchange Registration Statement to be declared effective. Upon
consummation of the Exchange Offer in accordance with this Section 2, the
provisions of this Agreement shall continue to apply, mutatis mutandis, solely
with respect to Registrable Notes that are Exchange Notes held by Participating
Broker-Dealers, and the Issuer shall have no further obligation to register
Registrable Notes (other than in respect of any Restricted Exchange Notes)
pursuant to Section 3 of this Agreement. No securities other than the Exchange
Notes shall be included in the Exchange Registration Statement.
<PAGE>
-7-
(b) The Issuer shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Purchasers, which shall contain a summary statement
of the positions taken or policies made by the Commission with respect to the
potential "underwriter" status of any broker-dealer that is the beneficial owner
(as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by
such broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"),
---------------------------
whether such positions or policies have been publicly disseminated by the
Commission or such positions or policies, in the judgment of the Purchasers,
represent the prevailing views of the Commission. Such "Plan of Distribution"
section shall also allow, to the extent permitted by applicable policies and
regulations of the Commission, the use of the Prospectus by all Persons subject
to the prospectus delivery requirements of the Securities Act, including, to the
extent so permitted, all Participating Broker-Dealers and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Notes.
The Issuer shall use its reasonable best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in connection with offers and sales of the Exchange Notes, which period shall
not exceed 180 days from the date on which the Exchange Offer commences (the
"Applicable Period"). The Issuer shall provide sufficient copies of the latest
-----------------
version of such Prospectus to such Persons, promptly upon request, and in no
event later than three (3) Business Days after such request, at any time during
such period.
Interest on the Exchange Notes will accrete from the last interest
accretion date on which interest accreted on the Notes surrendered in exchange
therefor or, if no interest has accreted on the Notes, then from the Closing
Time.
In connection with the Exchange Offer, the Issuer shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York, which
may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York time, on the last Business
Day on which the Exchange Offer shall remain open; and
<PAGE>
-8-
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer, the
Issuer shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer;
(2) deliver to the Trustee for cancellation all Registrable Notes
so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes, equal in aggregate
principal amount at maturity to the Notes of such Holder so accepted for
exchange.
The Exchange Notes will be issued under the Indenture and the Exchange
Notes, and the Notes, if any, will vote and consent together on all matters as
one class, and none of the Exchange Notes or the Notes, if any, will have the
right to vote or consent as a separate class on any matter.
(c) In addition to conducting the Exchange Offer provided for in
Section 2(a) above, if (i) because of any change in law or in currently
prevailing interpretations of the Commission, the Issuer reasonably determines
in good faith, based upon written advice of qualified counsel (including,
without limitation, qualified in-house counsel), that it is not permitted to
effect the Exchange Offer; (ii) the Exchange Offer is not commenced on or prior
to the Effectiveness Date; (iii) the Exchange Offer is, for any reason, not
consummated on or prior to the 180th day after the Notice Date; (iv) in the case
of any Holder that participates in an Exchange Offer, the Issuer receives an
opinion of counsel (including, without limitation, qualified in-house counsel)
to such Holder reasonably acceptable to the Issuer to the effect that such
Holder did not receive Exchange Notes on the date of the exchange that may be
sold without restriction under federal securities laws; or (v) any Holder is an
Affiliate of the Issuer, then, (x) in the case of each of clause (i) through
(iv) of this sentence, the Issuer shall upon the request of the Required Holders
and (y) in the case of clause (v) of this sentence, the Issuer shall upon the
request of a Holder, in each case, at any time after the earlier of: (A)
February 2, 2001 and (B) the consummation of an Initial Public Equity Offering,
promptly deliver to the Holders a written notice thereof (the "Shelf Notice")
------------
and shall file a Shelf Registration pursuant to Section 3; provided, however,
that the Issuer shall not be required to effect more than two Shelf
Registrations pursuant to clause (v) of this Section 2(c).
3. Shelf Registration
------------------
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
<PAGE>
-9-
(a) Shelf Registration. The Issuer shall (i) privately exchange the
------------------
Notes for Exchange Notes issued pursuant to the Indenture (such Exchange
Notes to contain any appropriate restrictive legends as required by law) (a
"Shelf Exchange") and (ii) as promptly as reasonably practicable file with
--------------
the Commission a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Notes
issued in the Shelf Exchange (the "Initial Shelf Registration"). The Issuer
--------------------------
shall file with the Commission the Initial Shelf Registration within 30
days of the delivery of the Shelf Notice and shall use its reasonable best
efforts to cause such Shelf Registration to be declared effective,
supplemented, amended and current under the Securities Act on or prior to
the Effectiveness Date. The Initial Shelf Registration shall be on Form S-1
or another appropriate form permitting registration of all Exchange Notes
constituting Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuer shall not permit any securities other
than the Registrable Notes to be included in any Shelf Registration. The
Issuer shall use its reasonable best efforts to keep the Initial Shelf
Registration continuously effective, supplemented, amended and current
under the Securities Act until the date which is two years from the Closing
Time (the "Effectiveness Period") or such shorter period ending when (i)
--------------------
all Registrable Notes covered by the Initial Shelf Registration have been
sold in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Notes has been declared effective under the Securities Act.
Any Exchange Notes issued under the Indenture in connection with a Shelf
Exchange will vote and consent together on all matters as one class with
Holders of Notes and Exchange Notes. Interest on Registrable Notes issued
in the Shelf Exchange will accrue interest from the last interest payment
date on which interest was paid on the Notes surrendered in exchange
therefor or, if no interest has been paid on the Notes, then from the
Closing Time.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration (as defined) ceases to be effective
for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), then
the Issuer shall use its commercially reasonable efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof and in
any event shall within 30 days of such cessation of effectiveness amend the
Shelf Registration in a manner to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf
-----------------------------
Registration is filed, then the Issuer shall use its commercially
reasonable efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and to keep
such Subsequent Shelf Registration
<PAGE>
-10-
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration or any Subsequent Shelf Registrations was
previously continuously effective. As used herein the term "Shelf
-----
Registration" means the Initial Shelf Registration and any Subsequent
------------
Shelf Registration.
(c) Supplements and Amendments. The Issuer shall promptly supplement
--------------------------
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested
by the Holders of a majority in aggregate principal amount at maturity of
the Registrable Notes covered by such Shelf Registration or by any
underwriter of such Registrable Notes, in each case, with the Issuer's
consent, which consent shall not be unreasonably withheld or delayed.
4. Special Interest
----------------
(a) The Issuer and the Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Issuer fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuer agrees to pay, in cash, as liquidated damages, Special Interest on
the Registrable Notes ("Special Interest") under the circumstances and to the
----------------
extent set forth below (each of which shall be given independent effect):
(i) if (A) the Exchange Registration Statement has not been filed
on or prior to the Filing Date or (B) notwithstanding that the Issuer has
consummated or will consummate an Exchange Offer, the Issuer is required to
file an Initial Shelf Registration and such Shelf Registration is not filed
on or prior to the 90th day (or 30 days, if the Filing Date has occurred
prior to the Shelf Notice being given) after delivery of the Shelf Notice,
then, in the case of subclause (A), commencing on the day after the Filing
Date or, in the case of subclause (B), commencing on the 91st day (or the
31st day if the Filing Date has occurred prior to the Shelf Notice being
given) following delivery of the Shelf Notice, Special Interest shall
accrue on the Registrable Notes over and above the stated interest at a
rate of 0.50% per annum of the Accreted Value of the Registrable Notes for
the first 90 days immediately following the Filing Date or such 91st day
(or the 31st day if the Filing Date has occurred prior to the Shelf Notice
being given), as the case may be, such Special Interest rate increasing by
an additional 0.25% per annum of the Accreted Value of the Registrable
Notes at the beginning of each subsequent 90-day period;
(ii) if (A) the Exchange Registration Statement is not declared
effective on or prior to the Effectiveness Date applicable thereto or (B)
notwithstanding that the Is-
<PAGE>
-11-
suer has consummated or will consummate an Exchange Offer, the Issuer is
required to file an Initial Shelf Registration and such Shelf Registration
is not declared effective by the Commission on or prior to the applicable
Effectiveness Date, then, commencing on the day after such applicable
Effectiveness Date, Special Interest shall accrue on the Registrable Notes
over and above the stated interest at a rate of 0.50% per annum of the
Accreted Value of the Registrable Notes for the first 90 days immediately
following the day after the applicable Effectiveness Date, such Special
Interest rate increasing by an additional 0.25% per annum of the Accreted
Value of the Registrable Notes at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuer has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to 45 days after the date on which the Exchange Registration
Statement was declared effective; (B) the Exchange Registration Statement
ceases to be effective prior to consummation of the Exchange Offer; or (C)
if applicable, a Shelf Registration has been declared effective and such
Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Special Interest shall accrue on the Registrable
Notes over and above the stated interest at a rate of 0.50% per annum of
the Accreted Value of the Registrable Notes for the first 90 days
commencing on the (x) 91st day after such effective date in the case of (A)
above or (y) the day such Exchange Registration Statement or Shelf
Registration ceases to be effective in the case of (B) and (C) above, such
Special Interest rate increasing by an additional 0.25% per annum of the
Accreted Value of the Registrable Notes at the beginning of each such
subsequent 90-day period;
provided, however, that the Special Interest rate on the Registrable Notes may
not exceed in the aggregate 2.00% per annum of the Accreted Value of the
Registrable Notes; provided, further, that (1) upon the filing of the Exchange
Registration Statement or each Shelf Registration (in the case of (i) above);
(2) upon the effectiveness of the Exchange Registration Statement or each Shelf
Registration, as the case may be (in the case of (ii) above); or (3) upon the
exchange of Exchange Notes for all Registrable Notes tendered (in the case of
(iii)(A) above) or upon the effectiveness of an Exchange Registration Statement
or Shelf Registration which had ceased to remain effective (in the case of
(iii)(B) and (C) above), Special Interest on any Registrable Notes then accruing
Special Interest as a result of such clause (or the relevant subclause thereof),
as the case may be, shall cease to accrue.
(b) The Issuer shall notify the Holders within three business days
after each and every date on which an event occurs in respect of which Special
Interest is required to be paid (an "Event Date"). Any amounts of Special
----------
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable in cash semi-annually on each February 1 and August 1 (to the Holders of
Registrable Notes of record on the regular record date therefor (as
<PAGE>
-12-
specified in the Purchase Agreement) immediately preceding such dates),
commencing with the first such date occurring after any such Special Interest
commences to accrue. The amount of Special Interest will be determined by
applying the applicable Special Interest rate to the Accreted Value of the Notes
outstanding on a daily basis during such period but utilizing a 360-day year
comprised of 12 30-day months. Notwithstanding the fact that any Registrable
Notes for which Special Interest is due thereafter cease to be Registrable
Notes, all obligations of the Issuer to pay Special Interest with respect to
such Registrable Notes shall survive until such time as such obligations with
respect to such Registrable Notes shall have been satisfied in full.
(c) The parties hereto agree that the Special Interest provided for
in this Section 4 constitutes the sole and exclusive remedy for a breach of
Sections 2 and 3 hereof and is a reasonable estimate of the damages that may be
incurred by Holders of Registrable Notes in the circumstances set forth in
Section 4(a).
5. Registration Procedures
-----------------------
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuer shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuer hereunder, the Issuer shall:
(a) Prepare and file with the Commission prior to the Filing Date,
the Exchange Registration Statement or Shelf Registration, as the case may
be, as prescribed by Section 2 or 3 and use its reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein; provided that, if (i) a Shelf Registration is
filed pursuant to Section 3 or (ii) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period and has advised
the Issuer that it is a Participating Broker-Dealer, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, then the Issuer shall, if requested, furnish to and afford the
Holders of the Registrable Notes to be registered pursuant to such Shelf
Registration or each such Participating Broker-Dealer, as the case may be,
covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each
case at least five (5) Business Days prior to such filing). The Issuer
shall not file any such Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority in aggregate
principal amount at
<PAGE>
-13-
maturity of the Registrable Notes covered by such Registration Statement,
or any such Participating Broker-Dealer, as the case may be, their counsel,
or the managing underwriters, if any, shall reasonably object within five
(5) Business Days of their receipt of such materials.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period
or the Applicable Period, as the case may be; cause the related Prospectus
to be supplemented by any Prospectus supplement required by applicable law,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act and the Exchange Act applicable to it with
respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Issuer
shall be deemed not to have used its reasonable best efforts to keep a
Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking
to sell Exchange Notes not being able to sell such Registrable Notes or
such Exchange Notes during that period unless such action is required by
applicable law, rule or regulation or unless the Issuer complies with this
Agreement, including, without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of Section 5.
(c) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period from whom the Issuer has received written notice that
it will be a Participating Broker-Dealer, notify the selling Holders of
Registrable Notes and each such Participating Broker-Dealer, their counsel
and the managing underwriters, if any, promptly (but in any event within
three Business Days), and confirm such notice in writing, (A) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-
effective amendment, when the same has become effective (including in such
notice a written statement that any Holder may, upon request, obtain,
without charge, one conformed copy of such Registration Statement or post-
effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits); (B)
of the issuance by the Commission of any stop order suspending the
effectiveness
<PAGE>
-14-
of a Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the initiation of any proceedings for
that purpose; (C) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the Registrable
Notes the representations and warranties of the Issuer contained in any
agreement (including any underwriting agreement contemplated by Section
5(n) hereof) cease to be true and correct in any material respect; (D) of
the receipt by the Issuer of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange
Notes to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for
such purpose; (E) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that, in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and (F) of the Issuer's reasonable determination that
a post-effective amendment to a Registration Statement would be
appropriate.
(d) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus
or suspending the qualification (or exemption from qualification) of any of
the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is
issued, to use its commercially reasonable efforts to obtain the withdrawal
of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount at maturity of the Registrable Notes
being sold in connection with an underwritten offering, (i) as promptly as
practicable incorporate in a prospectus supplement or post-effective
amendment such information or revisions to information therein re-
<PAGE>
-15-
lating to such underwriters or selling Holders as the managing
underwriters, if any, or such Holders or their counsel reasonably request
to be included or made therein; (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Issuer has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment and
(iii) supplement or make amendments to such Registration Statement.
(f) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes
and to each such Participating Broker-Dealer who so requests and to counsel
and each managing underwriter, if any, without charge, one conformed copy
of the Registration Statement or Registration Statements and each post-
effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer, deliver to each selling Holder of
Registrable Notes or each such Participating Broker-Dealer, as the case may
be, their respective counsel, and the underwriters, if any, without charge,
as many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuer
hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Notes and
each Participating Broker-Dealer, and the underwriters or agents, if any,
and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers
of the Exchange Notes pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its reasonable best efforts to register or qualify,
and cooperate with the selling Holders of Registrable Notes and each such
Participating Broker-Dealer, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Notes or Ex-
<PAGE>
-16-
change Notes, as the case may be, for offer and sale under the securities
or Blue Sky laws of such jurisdictions within the United States as any
selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing; provided that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes
are offered pursuant to an underwritten offering, counsel to the
underwriters shall, at the cost and expense of the Issuer, perform the Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes by Participating
Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; provided that the Issuer shall not be required to
(i) qualify generally to do business in any jurisdiction where it is not
then so qualified; (ii) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject; or (iii) subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes, any Participating Broker-
Dealer and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(E) or 5(c)(F) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the Commission, at the Issuer's
sole expense, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
<PAGE>
-17-
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(k) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with
certificates for the Registrable Notes in a form eligible for deposit with
The Depository Trust Company; (ii) provide a CUSIP number for the
Registrable Notes; and (iii) provide copies of the form of Indenture to the
Trustee and the Holders.
(l) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Notes and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite the registration
or the disposition of such Registrable Notes and, in such connection, (i)
make such representations and warranties to the underwriters, with respect
to the business of the Issuer and its subsidiaries and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
companies to underwriters in underwritten offerings of debt securities
similar to the Notes and confirm the same in writing if and when reasonably
requested; (ii) obtain the opinion of counsel to the Issuer and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings
of debt securities similar to the Notes; (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory
to the managing underwriter or underwriters from the independent certified
public accountants of the Issuer (and, if necessary, any other independent
certified public accountants of any subsidiary of the Issuer or of any
business acquired by the Issuer for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of debt
securities similar to the Notes; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and
procedures no less favorable than those set forth in Section 7 hereof (or
such other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount at maturity of Registrable Notes covered by such
Registration Statement, the managing underwriter or underwriters or agents
and the Issuer) with respect to all parties to be indemnified pursuant to
such Section 7; and (v) deliver such other documents and certificates as
may be reasonably requested by the managing underwriter or underwriters or
selling Holders to evidence compliance with the matters covered in clauses
(i) through (iv) above
<PAGE>
-18-
and with any customary conditions contained in any underwriting agreement
entered into by the Issuer pursuant to this clause (l).
(m) If (i) a Shelf Registration is filed pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder
of such Registrable Notes being sold, and each Participating Broker-Dealer,
any underwriter participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any such
selling Holder, each Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where normally
----------
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Issuer and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
-------
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Issuer and its
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Records which
the Issuer determines, in good faith, to be confidential and any Records
which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such Registration Statement;
(ii) the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction; (iii) the information in such
Records has been made generally available to the public other than as a
result of a disclosure or failure to safeguard by such Inspector; or (iv)
disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially
involving such Inspector and arising out of, based upon, related to, or
involving this Agreement, or any transactions contemplated hereby or
arising hereunder. Each selling Holder of such Registrable Notes and each
Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential
and shall not be used by it as the basis for any market transactions in the
securities of the Issuer unless and until such is made generally available
to the public. Each inspector, each selling Holder of such Registrable
Notes and each Participating Broker-Dealer will be required to further
agree that it will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction pursuant to clauses (ii) or (iv) of
the previous sentence or otherwise, give notice to the Issuer and allow the
Issuer, at the Issuer's expense, to undertake appropriate action to obtain
a protective order or otherwise prevent disclosure of the Records deemed
confidential.
<PAGE>
-19-
(n) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a) and 3(a), as the case may be, to be
qualified under the TIA not later than the effective date of the Exchange
Offer or the first Registration Statement relating to the Registrable
Notes; and in connection therewith, cooperate with the trustee under any
such indenture and the Holders of the Registrable Notes, to effect such
changes to such indenture as may be required from time to time for such
indenture to be so qualified in accordance with the terms of the TIA; and
execute, and use its commercially reasonable efforts to cause such trustee
to execute, all documents as may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such indenture to be so qualified in a timely manner.
(o) Comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Notes are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Issuer after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(p) Upon consummation of the Exchange Offer or a Shelf Exchange,
obtain an opinion of counsel to the Issuer, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the
Shelf Exchange, that the Exchange Notes or Registrable Notes, as the case
may be, and the related indenture constitute legally valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their respective terms.
(q) If the Exchange Offer or the Shelf Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuer (or to such
other Person as directed by the Issuer) in exchange for the Exchange Notes
or Registrable Notes, as the case may be, the Issuer shall mark, or cause
to be marked, on the Registrable Notes being delivered for cancellation,
that such Registrable Notes are being cancelled in exchange for the
Exchange Notes or Registrable Notes issued in the Shelf Exchange, as the
case may be; in no event shall Registrable Notes being delivered for
cancellation be marked as paid or otherwise satisfied.
<PAGE>
-20-
(r) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc.
(s) Use its reasonable best efforts to take all other steps necessary
or advisable to effect the registration of the Registrable Notes covered by
a Registration Statement contemplated hereby.
The Issuer may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuer such information
regarding such seller and the distribution of such Registrable Notes as the
Issuer may, from time to time, reasonably request. The Issuer may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within twenty (20) Business Days after receiving such request. With
respect to a Shelf Registration, no Holder who has failed to furnish such
information shall be entitled to the Special Interest provided for in Section 4
that would otherwise have accrued or be payable during the period of time
commencing with the end of such twenty-Business Day period ending on the date
such requested information is received by the Issuer. Each seller as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Issuer all information required to be disclosed in order to make the
information previously furnished to the Issuer by such seller not materially
misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuer of the happening of any event of the kind described in
Section 5(c)(B), 5(c)(D), 5(c)(E), or 5(c)(F), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating Broker-
Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
------
by the Issuer that the use of the applicable Prospectus may be resumed, and has
received copies of any amendments or supplements thereto. In the event the
Issuer shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (i) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (ii) the Advice.
<PAGE>
-21-
6. Registration Expenses
---------------------
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer shall be borne by the Issuer
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with federal securities and state securities or Blue Sky
laws (including, without limitation, reasonable fees and disbursements of one
counsel in connection with Blue Sky qualifications of the Registrable Notes or
Exchange Notes and determination of the eligibility of the Registrable Notes or
Exchange Notes for investment under the laws of such jurisdictions (x) where the
holders of Registrable Notes are located, in the case of the Exchange Notes, or
(y) as provided in Section 5(h) hereof, in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)); (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company; (iii) fees and disbursements of
all independent certified public accountants referred to in Section 5(m)(iii)
(including, without limitation, the expenses of any "cold comfort" letters
required by or incident to such performance); (iv) fees and expenses of all
other Persons retained by the Issuer (including fees and expenses of the
Trustee); (v) internal expenses of the Issuer (including, without limitation,
all salaries and expenses of officers and employees of the Issuer performing
legal or accounting duties); (vi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement, but excluding any fees and
disbursements of underwriters, including, without limitation, underwriting
discounts, commissions and transfer taxes attributable to the sale of each
Registrable Note; (vii) any fees associated with making the Registrable Notes or
Exchange Notes eligible for trading through The Depository Trust Company; and
(viii) the reasonable expenses of Shulte Roth & Zabel LLP if retained by the
Required Holders, not to exceed $10,000 incurred in connection with reviewing
the Indenture under Section 2 (a).
7. Indemnification
---------------
(a) The Issuer agrees to indemnify and hold harmless each Holder of
Registrable Notes and each Participating Broker-Dealer, the officers, directors,
employees and agents of each such Person, and each Person, if any, who controls
any such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against any and
-----------
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with investigating or defending any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue state-
<PAGE>
-22-
ment of a material fact contained in any Registration Statement or Prospectus
(as amended or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Participant furnished to the Issuer in writing
by or on behalf of such Participant expressly for use therein; provided,
however, that the Issuer shall not be liable if such untrue statement or
omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Notes or Exchange Notes which are the subject thereof from such Participant and
it is established in the related proceeding that such Participant failed to
deliver or provide a copy of the Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuer with Section 5 of this
Agreement.
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Issuer, its directors and officers
and each Person who controls the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to each Participant, but only with reference
to information relating to such Participant furnished to the Issuer in writing
by such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, then such Person (the "Indemnified Person") shall
------------------
promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Person") in writing, and the Indemnifying Person, upon request of
- --------------------
the Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and ex-
<PAGE>
-23-
penses actually incurred by such counsel related to such proceeding; provided,
however, that the failure to so notify the Indemnifying Person shall not relieve
it of any obligation or liability which it may have hereunder or otherwise. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed in writing to the contrary; (ii)
the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that, unless there is a
conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and any such separate firm for the Issuer, its
directors, officers and such control Persons of the Issuer shall be designated
in writing by the Issuer. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there is a final non-appealable judgment for the
plaintiff, the Indemnifying Person agrees to indemnify any Indemnified Person
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its
consent if (i) such settlement is entered into more than 30 days after receipt
by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying
Person shall not have reimbursed the Indemnified Person in accordance with such
request prior to the date of such settlement; provided, however, that the
Indemnifying Person shall not be liable for any settlement effected without its
consent pursuant to this sentence if the Indemnifying Person is contesting, in
good faith, the request for reimbursement. No Indemnifying Person shall, without
the prior written consent of the Indemnified Person, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Person
is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
release of such Indemnified Person, in form and substance satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of an Indemnified Person.
<PAGE>
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(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is legally unavailable to, and accordingly
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions (or alleged statements or omissions) that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
fault of the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuer on the one hand or by the Participants or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations appropriate
under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
<PAGE>
-25-
8. Underwritten Registrations
--------------------------
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, then the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount at maturity of such
Registrable Notes included in such offering and reasonably acceptable to the
Issuer; provided, however, that the Issuer shall be entitled to select one co-
lead manager to administer such offering, which co-lead manager shall be
reasonably acceptable to the Holders of a majority in aggregate principal amount
at maturity of such Registrable Notes included in such offering.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
9. Miscellaneous
-------------
(a) Remedies. Except as otherwise specifically provided herein, in
--------
the event of a breach by the Issuer of any of its obligations under this
Agreement, each Holder of Registrable Notes and each Participating Broker-Dealer
holding Exchange Notes, in addition to being entitled to exercise all rights
provided herein, in the Indenture or, in the case of a Purchaser, in the
Purchase Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Except as
otherwise specifically provided herein, the Issuer agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuer has not entered into, as
--------------------------
of the date hereof, and shall not enter into, after the date of this Agreement,
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The Issuer has not entered into
and shall not enter into any agreement with respect to any of the Issuer's
securities which will grant to any Person piggy-back rights with respect to a
Registration Statement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provi-
<PAGE>
-26-
sions hereof may not be given, otherwise than with the prior written consent of
(i) the Holders of not less than a majority in aggregate principal amount at
maturity of the then outstanding Registrable Notes and (ii) in circumstances
that would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount at
maturity of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount at maturity of the Registrable Notes being tendered or being sold by such
Holders pursuant to such Registration Statement.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Notes, at the most current address
of such Holder set forth on the records of the Issuer or the registrar
under the Indenture, as the case may be; and
(ii) if to the Issuer at 5667 Gibraltar Drive, Pleasanton, CA 94588,
attention: Bernard Schneider, or at such other address as the Issuer shall
have specified to each Holder in writing with a copy to Cahill Gordon &
Reindel, 80 Pine Street, New York, NY 10005, attention: Jonathan A.
Schaffzin, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
<PAGE>
-27-
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registrable Notes.
Notwithstanding anything herein to the contrary, the Issuer and its
Subsidiaries will be permitted to undertake the Reorganization at any time and,
upon the effectiveness of such Reorganization, Opco (if it is the Issuer) will
be released from all of the obligations hereunder; provided that the holding
company resulting from the Reorganization shall have assumed all of the
obligations of the Issuer and shall be substituted for (so that from and after
the date of the Reorganization, the provisions of this Agreement referring to
the "Issuer" shall refer instead to the new holding company and not to the
initial issuer), and may exercise every right and power of, the Issuer under
this Agreement with the same effect as if it had been named herein as the issuer
and the prior issuer shall be released from the obligations.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF A JURISDICTION OTHER THAN SUCH STATE. EACH OF THE PARTIES HERETO AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of
<PAGE>
-28-
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(j) Notes Held by the Issuer or Its Affiliates. Whenever the consent
------------------------------------------
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuer or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended third-party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement is intended by the parties as a final and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral or written
agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Purchasers on the one
hand and the Issuer on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
INTIRA CORPORATION
By: /s/ David S. Boone
________________________________
Name: David Boone
Title: Chief Financial Officer
<PAGE>
-2-
ARES LEVERAGED INVESTMENT
FUND, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
By: /s/ Eric Beckman
________________________________
Name: Eric Beckman
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
By: /s/ Eric Beckman
________________________________
Name: Eric Beckman
Title: Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BlackRock Financial Management, Inc.,
As Managing Member
By: /s/ Dennis M. Schaney
________________________________
Name: Dennis M. Schaney
Title: Managing Director
<PAGE>
-3-
CARLYLE HIGH YIELD PARTNERS, L.P.
By: TCG High Yield, L.L.C.,
its General Partner
By:[UNINTELLIGIBLE]
________________________________
Name:
Title: Managing Director
CB CAPITAL INVESTORS, LLC
By: Chase Capital Partners, its Manager
By: /s/ Richard D. Waters, Jr.
________________________________
Name: Richard D. Waters, Jr.
Title: General Partner - Mezzanine
CONTINENTAL CASUALTY COMPANY
By: /s/ Richard W. Dubberke
________________________________
Name: Richard W. Dubberke
Title: Vice President
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT,
in its capacity as the investment adviser of
the Goldman Sachs High Yield Fund,
a separate series of the Goldman Sachs Trust
By: /s/ Christopher Testa
---------------------------
Name: Christopher Testa
Title: Vice President
GOLDMAN, SACHS & CO.,
as delegate of Goldman Sachs Asset
Management International, in its capacity as
the investment adviser of the Goldman Sachs
Global High Yield Portfolio, a separate
series of Goldman Sachs Funds, S.I.C.A.V.
By: /s/ Christopher Testa
---------------------------
Name: Christopher Testa
Title: Vice President
OZ MASTER FUND, LTD.
By: [UNINTELLIGIBLE]
---------------------------
Name:
Title:
<PAGE>
SANKATY HIGH YIELD PARTNERS II, L.P.
By:________________________________
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By:________________________________
Name:
Title:
WAYLAND INVESTMENT FUND, LLC
By: CFSC Wayland Advisors, Inc.,
its Manager
By: [ILLEGIBLE]
--------------------------------
Name:
Title:
CHASE SECURITIES INC.
By: /s/ Jessica Laxman
--------------------------------
Name: Jessica Laxman
Title: Vice President
WAYLAND INVESTMENT FUND, LLC
By: CFSC Wayland Advisors, Inc.,
its Manager
By: [ILLEGIBLE]
--------------------------------
Name:
Title:
COINVESTMENT I, LLC
By Laurence D. Fink,
as Managing Member
By: /s/ Laurence D. Fink
--------------------------------
Name: Laurence D. Fink
Title: Managing Member
PUTMAN FIDUCIARY TRUST COMPANY on behalf of:
PUTNAM HIGH YIELD FIXED INCOME FUND, LLC
PUTNAM HIGH YIELD MANAGED TRUST
By: /s/ John R. Verani
--------------------------------
Name: John R. Verani
Title: Senior Vice President
PUTNAM INVESTMENT MANAGEMENT, INC. on behalf
of:
PUTNAM HIGH YIELD TRUST
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM VARIABLE TRUST-PVT HIGH YIELD FUND
PUTNAM MASTER INCOME TRUST
PUTNAM PREMIER INCOME TRUST
PUTMAN MASTER INTERMEDIATE INCOME TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM FUNDS TRUST-PUTNAM HIGH YIELD
PUTNAM STRATEGIC INCOME FUND
PUTNAM VARIABLE TRUST-PVT DIVERSIFIED
TRAVELERS SERIES FUND INC.-PUTNAM
DIVERSIFIED INCOME
By: /s/ John R. Verani
--------------------------------
Name: John R. Verani
Title: Senior Vice President
THE PUTNAM ADVISORY COMPANY, INC. on behalf
of:
ABBOTT LABORATORIES ANNUITY RETIREMENT
PLAN
AMERITECH CORPORATION PENSION PLAN
NORTHROP GRUMMAN EMPLOYEE BENEFIT PLAN
By: /s/ John R. Verani
--------------------------------
Name: John R. Verani
Title: Senior Vice President
<PAGE>
Sun America, Inc.
___________________________________
Name of Purchaser
By:/s/ Rafael Fogel
--------------------------------
Name: Rafael Fogel
Title: Authorized Agent
<PAGE>
EXHIBIT 4.4
================================================================================
REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
among
INTIRA CORPORATION,
as Issuer,
and
THE PURCHASERS
named herein
Dated as of January 31, 2000
================================================================================
<PAGE>
THIS REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT (the "Agreement")
---------
is made and entered into as of January 31, 2000, among Intira Corporation, a
Delaware corporation (the "Issuer"), and the Purchasers listed on the signature
------
pages thereto (each a "Purchaser" and, collectively, the "Purchasers").
--------- ----------
This Agreement is made pursuant to the Purchase Agreement, dated as of
January 31, 2000, between the Issuer and the Purchasers (the "Purchase
--------
Agreement"), relating to the sale by the Issuer to the Purchasers of (i)
- ---------
$188,500,000 initial aggregate principal amount at maturity of the Issuer's 13%
Senior Discount Notes Due 2010 (the "Notes"), (ii) Series A Warrants (the
-----
"Series A Warrants") to purchase 3,114,160 shares of Common Stock of the Issuer
- ------------------
and (iii) Series B Warrants (the "Series B Warrants") to purchase 1,070,160
-----------------
shares of Common Stock of the Issuer (collectively, the "Purchased Securities").
--------------------
In order to induce the Purchasers to enter into the Purchase Agreement, the
Issuer has agreed to provide to the Holders (as defined herein) the registration
rights and other rights for the Registrable Securities (as defined herein) set
forth in this Agreement. The execution of this Agreement is a condition to the
obligations of the Purchasers to purchase the Purchased Securities under the
Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"Advice" shall have the meaning ascribed to that term in the last
------
paragraph of Section 4.
"Affiliate" means, with respect to any specified Person: (i) any
---------
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any
other Person that owns, directly or indirectly, 10% or more of such
specified Person's Capital Stock or any officer or director of any such
specified Person or other Person or, with respect to any natural Person,
any person having a relationship with such Person by blood, marriage or
adoption no more remote than first cousin; or (iii) any other Person 10% or
more of the Voting Stock of which is beneficially owned or held directly or
indirectly by such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to
the foregoing. With respect to a Purchaser, an Affiliate shall also
include, without limitation, any Person managed or advised by, or
controlling or under common control with, such Purchaser or any of its
Affiliates.
<PAGE>
-3-
"Agreement" shall have the meaning ascribed to that term in the
---------
preamble hereto.
"Blackout Period" shall have the meaning ascribed to that term in
---------------
Section 2.1.
"Board of Directors" shall mean the Board of Directors of the Issuer
------------------
or any authorized committee of such Board of Directors.
"Business Day" shall mean a day that is not a Legal Holiday.
------------
"Capital Stock" shall mean, (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other
equivalents (however designated and whether or not voting) of corporate
stock, including each class of common stock and preferred stock of such
Person; (ii) with respect to any Person that is not a corporation, any and
all partnership, membership or other equity interests of such Person; and
(iii) any rights, warrants or options exchangeable for or convertible into
any of the foregoing.
"Common Stock" shall mean the authorized Common Stock, $.001 par
------------
value, of the Issuer, and any stock into which such Common Stock may
thereafter be converted or changed.
"Demand" shall have the meaning ascribed to that term in Section 2.1.
------
"Demand Registration" shall have the meaning ascribed to that term in
-------------------
Section 2.1.
"Disinterested Directors" shall mean, with respect to any transaction
-----------------------
or series of related transactions, a member of the Board of Directors who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of related transactions.
"Effectiveness Period" shall have the meaning ascribed to that term in
--------------------
Section 2.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
"Fair Market Value" shall mean with respect to any asset or property,
-----------------
the price which could be negotiated in an arm's-length free market
transaction, for cash, between an informed and willing seller and an
informed and willing buyer neither of which is under pressure or compulsion
to complete the transaction. Fair Market Value
<PAGE>
-4-
shall be conclusively determined by the Board of Directors acting in good
faith evidenced by a board resolution thereof.
"Holder" shall mean each of the Purchasers, for so long as the
------
Purchasers own any Registrable Securities, and their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities.
"Included Securities" shall have the meaning ascribed to that term in
-------------------
the Section 3.3.
"Initial Public Equity Offering" shall mean the first underwritten
------------------------------
public offering (but excluding any offering pursuant to Form S-8 under the
Securities Act or any other publicly registered offering pursuant to the
Securities Act pertaining to an issuance of shares of Common Stock or
securities exercisable therefor under any benefit plan, employee
compensation plan, or employee or director stock purchase plan) of Common
Stock of the Issuer pursuant to an effective registration statement under
the Securities Act.
"Issuer" shall have the meaning ascribed to that term in the preamble
------
hereto and shall also include the Issuer's successors.
"Legal Holiday" shall mean a Saturday, a Sunday or a day on which
-------------
banking institutions in The City of New York or San Francisco, California
or at a place of payment are authorized by law, regulation or executive
order to remain closed.
"Lock-Up Period" shall have the meaning ascribed to that term in
--------------
Section 2.1.
"Person" means any individual, corporation (including, without
------
limitation, a business trust, professional corporation and insurance
company), limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof or any legally
recognizable entity.
"Piggy-Back Registration" shall have the meaning ascribed to that term
-----------------------
in Section 2.2.
"Prospectus" shall mean the prospectus included in any Registration
----------
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
pursuant to the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration
Statement, and all
<PAGE>
-5-
other amendments and supplements to any such prospectus, including post-
effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference, if any, in such prospectus.
"Purchase Agreement" shall have the meaning ascribed to that term in
------------------
the preamble hereto.
"Purchased Securities" shall have the meaning ascribed to that term in
--------------------
the preamble hereto.
"Purchasers" shall have the meaning ascribed to that term in the
----------
preamble hereto.
"Registrable Securities" shall mean the Warrant Shares deliverable
----------------------
upon exercise of the Warrants, as adjusted from time to time in accordance
with the Warrants. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
Registration Statement with respect to the sale of such securities by the
Holder thereof shall have been declared effective under the Securities Act
and such securities shall have been disposed of by such Holder in
accordance with such Registration Statement; (b) such securities shall be
eligible for sale to the public pursuant to Rule 144 (or any successor
provision) promulgated under the Securities Act without being subject to
the volume limitations in Rule 144(e) (assuming that for purposes of this
clause (b) that no Holder is an affiliate (as defined in Rule 144) and the
Warrants are exercised on a cashless basis as provided therein) of the
Issuer; (c) such securities shall have been otherwise transferred and new
certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Issuer and subsequent disposition of such
securities shall not require registration or qualification under the
Securities Act or any similar state law then in force; or (d) such
securities shall have ceased to be outstanding.
"Registration Expenses" shall mean all expenses incident to the
---------------------
Issuer's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees and expenses, fees
and expenses of compliance with securities or blue sky laws (including,
without limitation, in the event of an underwritten offering, reasonable
fees and disbursements of counsel for the underwriters in connection with
blue sky qualifications of the Registrable Securities), rating agency fees,
printing expenses, messenger, telephone and delivery expenses, fees and
disbursements of counsel for the Issuer and all independent certified
public accountants, and, in the event of an underwritten offering, the fees
and disbursements of underwriters customarily paid by issuers or sellers of
securities (but not including any underwriting discounts or commis-
<PAGE>
-6-
sions or transfer taxes, if any, or fees and expenses of counsel and/or
experts for the Holders, in each case attributable to the sale of
Registrable Securities by Holders of such Registrable Securities).
"Registration Statement" shall mean any registration statement of the
----------------------
Issuer which covers any of the Registrable Securities pursuant to the
provisions of this Agreement and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Requisite Shares" shall mean a number of Registrable Securities
----------------
equivalent to more than 50% of the Warrant Shares issuable pursuant to the
Warrants as of the date hereof; provided that no account shall be taken of
--------
the Registrable Securities underlying the Series B Warrants prior to the
Triggering Event with respect to the Series B Warrants.
"Rule 144" shall mean Rule 144 under the Securities Act (or any
--------
successor provision), as it may be amended from time to time.
"Rule 144A" shall mean Rule 144A under the Securities Act (or any
---------
successor provision), as such Rule may be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities Act" shall mean the Securities Act of 1933, as amended and
--------------
the rules and regulations promulgated by the Commission thereunder.
"Series A Warrants" shall have the meaning ascribed to that term in
-----------------
the preamble hereto.
"Series B Warrants" shall have the meaning ascribed to that term in
-----------------
the preamble hereto.
"Triggering Event" shall mean, as to any Registrable Securities, the
----------------
occurrence of the Exercisability Date as defined in the Warrant; provided
--------
that, in the case of the Series B Warrants, a Disqualifying Event (as
defined in the Series B Warrant) shall not previously have occurred.
"Voting Stock" shall mean any class or classes of Capital Stock
------------
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of
Directors, managers or trustees of any Person (irrespective of whether or
not, at the time, stock of any other class or classes shall
<PAGE>
-7-
have, or might have, voting power by reason of the happening of any
contingency); provided that the Issuer Preferred Stock will be considered
--------
Voting Stock to the extent, at any time, the voting rights therein entitle
the holders thereof to designate a director.
"Warrants" shall mean the Series A Warrants and Series B Warrants sold
--------
to the Purchasers pursuant to the Purchase Agreement, whether held by any
of them or any subsequent assignee or transferee.
"Warrant Shares" shall, with respect to Series A Warrants, have the
--------------
meaning provided in the Series A Warrants, and, with respect to the Series
B Warrants, have the meaning provided in the Series B Warrants.
"Withdrawal Election" shall have the meaning ascribed to that term in
-------------------
Section 2.3.
2. Registration Rights and Other Rights and Obligations of the
-----------------------------------------------------------
Holders.
- -------
2.1. Demand Registration. (a) Request for Registration. At any time
------------------- ------------------------
on or after the earlier of (1) the 140th day following an Initial Public Equity
Offering or (2) the occurrence of a Triggering Event, Holders owning,
individually or in the aggregate, at least the Requisite Shares may make up to
two written requests (a "Demand") for registration under the Securities Act of
------
their Registrable Securities (a "Demand Registration"); provided that (i) it
------------------- --------
shall not be necessary to exercise any Warrants except in connection with a sale
of the underlying Registrable Securities and (ii) no Demand may be made to
register Registrable Securities constituting or underlying Series B Warrants
prior to the Triggering Event with respect to such Registrable Securities. Any
such Demand will specify the number of Registrable Securities proposed to be
sold and will also specify the intended method of disposition thereof. Subject
to the other provisions of this Section 2.1, the Issuer shall give written
notice of such Demand within 10 days after the receipt thereof to all other
Holders. Within 15 days after receipt of such notice by any Holder, such Holder
may request in writing that its Registrable Securities be included in such
registration and the Issuer shall include in the Demand Registration the
Registrable Securities of any such selling Holder requested to be so included.
Each such request by such other selling Holders shall specify the number of
Registrable Securities proposed to be sold and the intended method of
disposition thereof. Upon a Demand, the Issuer will (i) prepare and file within
45 days of such Demand and use its reasonable best efforts to cause to become
effective within 90 days of such filing a Registration Statement in respect of
all the Registrable Securities which Holders request for inclusion therein;
provided that if such Demand occurs during a Black Out Period (as defined below)
- --------
or a period (not to exceed 180 days) during which the Issuer is prohibited or
restricted from issuing, selling or registering Common Stock pursuant to any
underwriting or purchase agreement relating to an underwritten public offering
of Common Stock or securities convertible into or exchangeable
<PAGE>
-8-
for Common Stock under Rule 144A or registered under the Securities Act or any
agreement with a securityholder of the Issuer exercising registration rights
pursuant to the agreements set forth in Schedule 1 attached hereto (a "Lock-Up
---------- -------
Period"), the Issuer shall not be required to file such Registration Statement
- ------
prior to the end of the Black Out Period or Lock-Up Period, as the case may be,
in which event, the Issuer will use its best efforts to cause such Registration
Statement to become effective no later than the later of (a) 180 days after such
Demand, (b) 90 days after the end of the Black Out Period or Lock-Up Period or
(c) the date that would otherwise apply under this clause (i) above, as the case
may be; provided, further, that in the case of a Lock-Up Period under an
-------- -------
underwriting agreement for the Initial Public Equity Offering, the foregoing
proviso shall not otherwise delay the Issuer's obligations hereunder and (ii)
keep such Registration Statement effective for the shorter of (a) 60 days and
(b) such period of time as all of the Registrable Securities included in such
Registration Statement have been sold thereunder (the "Effectiveness Period").
--------------------
Notwithstanding anything set forth in the immediately preceding sentence, the
Issuer may postpone the filing period, suspend the effectiveness of any
registration, suspend the use of any Prospectus and shall not be required to
amend or supplement the Registration Statement, any related Prospectus or any
document incorporated therein by reference (other than an effective registration
statement being used for an underwritten offering) in the event that, and for a
period, in the case of any particular Demand Registration, not to exceed an
aggregate of 60 days ("Black Out Period") if (i) an event or circumstance occurs
----------------
and is continuing as a result of which the Registration Statement, any related
Prospectus or any document incorporated therein by reference as then amended or
supplemented would, in the Issuer's good faith judgment, based on advice of
qualified counsel, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and
(ii)(A) the Issuer determines in its good faith judgment that the disclosure of
such event at such time would have a material adverse effect on the business,
operations or prospects of the Issuer or (B) the disclosure otherwise relates to
a material business transaction which has not yet been publicly disclosed;
provided, further that, if the effectiveness of any Registration Statement is
- -------- -------
suspended as a result of a Black Out Period, the Effectiveness Period shall be
extended by the number of days in any Black Out Period. Any suspension with
respect to the Registration Statement shall not be limited in the aggregate
(other than as set forth above), but each such Black Out Period shall continue
only for as long as reasonably necessary, in the good faith judgment of the
Issuer, to avoid the circumstances described in clauses (i) and (ii) above or to
amend the Registration Statement or supplement the Prospectus to comply with the
requirements of the Securities Act.
In the event of the occurrence of any Black Out Period during an
Effectiveness Period or Lock-Up Period, the Issuer will promptly notify the
Holders of Registrable Securities thereof in writing.
<PAGE>
-9-
(b) Effective Registration. Except as specifically provided herein,
----------------------
the Issuer is only required to effect two Demand Registrations under this
Agreement (whether or not all of the Holders of Registrable Securities elect to
participate in such Demand Registration on the basis set forth herein). A
registration will not be deemed to have been effected as a Demand Registration,
and thereby satisfy the obligation hereunder, unless it has been declared
effective by the SEC and the Issuer has complied in all material respects with
its obligations under this Agreement with respect thereto, subject to the
penultimate sentence of this Section 2.1(b); provided that if, after it has
--------
become effective, the offering of Registrable Securities pursuant to such
registration is or becomes the subject of any stop order, injunction or other
order or requirement of the SEC or any other governmental or administrative
agency, or if any court prevents or otherwise limits the sale of Registrable
Securities pursuant to the registration (for any reason other than the act or
omissions of the Holders) for the period of time contemplated hereby, such
registration will be deemed not to have been effected. If (i) a registration
requested pursuant to this Section 2.1 is deemed not to have been effected or
(ii) the registration requested pursuant to this Section 2.1 does not remain
effective for the Effectiveness Period, then the Issuer shall not be deemed to
have effected a Demand Registration and its obligations pursuant to this Section
2.1 will continue. The Holders of Registrable Securities shall be permitted to
withdraw all or any part of the Registrable Securities from a Demand
Registration at any time prior to the effective date of such Demand
Registration. If at any time a Registration Statement is filed pursuant to a
Demand Registration, and subsequently a sufficient number of the Registrable
Securities are withdrawn from the Demand Registration so that such Registration
Statement does not cover that number of Registrable Securities at least equal to
25% of the Shares outstanding as of such date, the Holders who have not
withdrawn their Registrable Securities shall have the opportunity to include an
additional number of Registrable Securities in the Demand Registration so that
such Registration Statement covers that number of Registrable Securities at
least equal to 25% of the Registrable Securities outstanding as of such date.
If an additional number of Registrable Securities is not so included, the Issuer
may withdraw the Registration Statement. Such withdrawn Registration Statement
will nonetheless count as a Demand Registration pursuant to this Section 2.1.
Except as set forth in the last sentence of Section 2.1(c), without the prior
written consent of the Requisite Holders no other securityholder of the Issuer
shall be permitted to include their securities in a Demand Registration.
(c) Priority in Demand Registrations Pursuant to Section 2.1. If a
--------------------------------------------------------
Demand Registration pursuant to this Section 2.1 involves an underwritten
offering and the lead managing underwriter advises the Issuer in writing that,
in its view, the number of Registrable Securities requested by the Holders to be
included in such registration, together with any other securities permitted to
be included in such registration exceeds the number which, in the view of such
lead managing underwriter, can be sold, then the number of such Registrable
Securities to be included in such registration shall be allocated pro rata among
--------
all requesting Holders
<PAGE>
-10-
on the basis of the relative number of Registrable Securities then held by each
such Holder (provided that any Registrable Securities thereby allocated to any
such Holder that exceed such Holder's request shall be reallocated among the
remaining requesting Holders in like manner). In the event that the number of
Registrable Securities requested to be included in such registration is less
than the number which, in the view of the lead managing underwriter, can be
sold, other securityholders of the Issuer may include in such registration the
securities such securityholders propose to sell up to the number of securities
that, in the view of the lead managing underwriter, can be sold without
materially and adversely affecting the success of the offering, including the
price at which the Registrable Securities can be sold.
(d) Selection of Underwriter. If the Holders so elect, the offering
------------------------
of Registrable Securities pursuant to a Demand Registration shall be in the form
of an underwritten offering. Holders of the Requisite Shares shall select one
or more nationally recognized firms of investment bankers (to whom the Issuer
shall not have reasonably objected) to act as the managing underwriter or
underwriters in connection with such offering and shall select any additional
investment bankers and managers to be used in connection with the offering.
(e) Expenses. The Issuer will pay all Registration Expenses in
--------
connection with the registrations requested pursuant to Section 2.1(a). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to any registration statement requested pursuant to this
Section 2.1.
2.2. Piggy-Back Registration. If at any time the Issuer proposes to
-----------------------
file a Registration Statement under the Securities Act with respect to an
offering by the Issuer for its own account or for the account of any of its
respective securityholders of any Securities (other than (i) an Initial Public
Equity Offering, unless other securityholders of the Issuer are participating
therein; (ii) a registration statement on Form S-4 or S-8 (or any substitute or
comparable forms that may be adopted by the SEC); (iii) a registration statement
filed in connection with an offer or offering of securities solely to the
Issuer's existing securityholders; (iv) a Demand Registration), then the Issuer
shall give written notice of such proposed filing to the Holders of Registrable
Securities as soon as practicable (but in no event less than 15 Business Days
before the anticipated filing date or, if confidentiality is necessary, within
one business day following the anticipated filing date; provided, in any such
--------
case, the Holders have not less than 20 Business Days notice prior to the
pricing of the offering), and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each such
Holder may request (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method of
distribution thereof) (a "Piggy-Back Registration"). The Issuer shall use its
-----------------------
best efforts to cause the managing underwriter or underwriters of such proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on the same terms and
<PAGE>
-11-
conditions as any similar securities of the Issuer or any other securityholder
included therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof;
provided, however, in no event shall the Issuer be required to reduce the number
- -------- -------
of securities proposed to be sold by the Issuer or alter the terms of the
securities proposed to be sold by the Issuer in order to induce the managing
underwriter or underwriters to permit Registrable Securities to be included.
Any Holder shall have the right to withdraw its request for inclusion of its
Registrable Securities in any Registration Statement pursuant to this Section
2.2 by giving written notice to the Issuer of its request to withdraw prior to
the effectiveness of the Registration Statement. The Issuer may withdraw a
Piggy-Back Registration at any time prior to the time it becomes effective;
provided that the Issuer shall give prompt notice thereof to participating
- --------
Holders. The Issuer will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2.2,
and each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a registration statement effected pursuant to
this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Issuer of its
obligation to effect a registration upon the request of Holders pursuant to
Section 2.1, and no failure to effect a registration under this Section 2.2 and
to complete the sale of Registrable Securities in connection therewith shall
relieve the Issuer of any other obligation under this Agreement.
2.3. Reduction of Offering. (a) Piggy-Back Registration. If the
--------------------- -----------------------
lead managing underwriter of any underwritten offering described in Section 2.2
has informed, in writing, the Holders of the Registrable Securities requesting
inclusion in such offering that it is its view that the total number of
securities which the Issuer, the Holders and any other Persons desiring to
participate in such registration intend to include in such offering is such as
to materially and adversely affect the success of such offering, including the
price at which such securities can be sold, then the number of securities
included in such offering (other than the securities of the Issuer included in
such offering) shall be reduced or limited pro rata in proportion to the
--- ----
respective number of securities requested to be registered to the extent
necessary to reduce the total number of securities requested to be included in
such offering to the number of securities, if any, recommended by such lead
managing underwriter; provided that if such offering is effected for the account
--------
of any securityholder of the Issuer other than the Holders, pursuant to the
demand registration rights of any such securityholder, then the number of
securities to be offered for the account of the Issuer (if any) and the Holders
shall be reduced or limited pro rata in proportion to the respective number of
--- ----
securities requested to be registered to the extent necessary to reduce the
total number of securities requested to be included in such offering to the
number of securities, if any, recommended by such lead managing underwriter. If
a reduction in the Registrable Securities pursuant to this paragraph would, in
the judgment of the lead managing underwriter, be insufficient to substantially
<PAGE>
-12-
eliminate the adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such Registrable
Securities will be excluded from such offering.
In the event a securityholder of the Issuer exercises piggyback
registration rights under Section 2.3 of the Amended and Restated Investors'
Rights Agreement (the "Rights Agreement"), dated June 30, 1999, with respect to
an offering in which any Holders also request inclusion in such offering
pursuant to Section 2.2 of this Agreement, then the number of securities to be
offered shall be reduced or limited in accordance with the Rights Agreement.
If, as a result of the proration provisions of this Section 2.3, any
Holder shall not be entitled to include all Registrable Securities in a Piggy-
Back Registration that such Holder has requested to be included, such Holder may
elect to withdraw his request to include Registrable Securities in such
registration (a "Withdrawal Election"); provided that a Withdrawal Election
------------------- --------
shall be made prior to the effectiveness of the Registration Statement and shall
be irrevocable and, after making a Withdrawal Election, a Holder shall no longer
have any right to include Registrable Securities in the registration as to which
such Withdrawal Election was made.
2.4. Lock-Up of Holders. If the Issuer has reasonably complied with
------------------
all of its obligations under this Agreement, all Holders of Registrable
Securities, upon request of the lead managing underwriter with respect to such
underwritten public offering, agree not to sell or otherwise dispose of any
Registrable Security owned by them for a period not to exceed 180 days from the
consummation of such underwritten public offering.
3. Covenants and Board Rights.
--------------------------
3.1. Affiliate Transactions. So long as the original Purchasers
----------------------
(including any of their Affiliates) beneficially own 50% or more of the shares
of Common Stock originally issuable to such Purchasers under the Warrants on an
as converted basis (after giving effect to any adjustments made pursuant to the
terms thereof), the Issuer shall not, and shall not permit any of the Restricted
Subsidiaries to, without the prior written consent of the holders of a majority
of the Warrants and Warrant Shares, (A) issue any Capital Stock at a price that
is less than the Current Market Price (as defined in the Warrants) of such
Capital Stock (other than pursuant to the exercise of stock options issued to
employees, officers or directors as of the date hereof or as hereafter approved
by a majority of the Board of Directors, including a majority of Disinterested
Directors) and (B) make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding,
<PAGE>
-13-
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
---------------------
(i) such Affiliate Transaction is on terms that are not materially
less favorable to the Issuer or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Issuer or such Restricted Subsidiary with an unrelated Person entered into
on an arm's-length basis; and
(ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration of $1.0 million or
more, the Issuer delivers to the Purchasers a resolution of the Board of
Directors set forth in an Officers' Certificate that such Affiliate
Transaction is approved by a majority of the Disinterested Directors and
certifying that such Affiliate Transaction complies with clause (i) above
and is in the best interests of the Issuer or such Restricted Subsidiary;
provided that if there are either no Disinterested Directors or the
--------
Affiliate Transaction is occurring prior to a Liquidity Event and the
consideration therefor would equal $5.0 million or more, the Issuer must
deliver a favorable written opinion from an Independent Financial Advisor
as to the fairness to the Issuer or its Restricted Subsidiaries of such
Affiliate Transaction from a financial point of view.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
(i) (a) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan or
program, related trust agreement or any other similar arrangement for or
with any employee, officer or director heretofore or hereafter entered into
in the ordinary course of business, including vacation, health, insurance,
deferred compensation, retirement, savings or other similar plans or (b)
the payment of compensation, performance of indemnification or contribution
obligations, or an issuance, grant or award of stock, options, or other
equity-related interests or other securities, to employees, officers or
directors in the ordinary course of business;
(ii) transactions between or among the Issuer and/or the
Restricted Subsidiaries;
(iii) payment of reasonable director's fees;
(iv) Affiliate Transactions in effect or approved by the Board of
Directors on the Closing Time and set forth on Schedule 8.06 to the
-------------
Purchase Agreement, including any amendments thereto (provided that the
--------
terms of such amendments are not
<PAGE>
-14-
materially less favorable to the Issuer or the Restricted Subsidiary than
the terms of such agreement prior to such amendment); and
(v) Restricted Payments that are permitted under Section 8.02 to
the Purchase Agreement and Permitted Investments described under clause
(d), (e) and (g) of the definition thereof;
(vi) transactions with Ascend Communications, Inc. and its
Affiliates in the ordinary course of business on terms no less favorable,
taken as a whole, than could be obtained on an arm's length basis; and
(vii) customary investment and commercial banking services from The
Chase Manhattan Bank and its Affiliates.
3.2. Board Rights. Subject to the last sentence of this
------------
paragraph, the original Purchasers (and holders of Warrants and Warrant Shares
that are Affiliates of the original Purchasers) who beneficially own in
aggregate 50% or more of the shares of Common Stock originally issuable to such
Purchasers under the Warrants on an as converted basis (after giving effect to
any adjustments made pursuant to the terms hereof) (the "Original Purchasers")
-------------------
will have the right, (by a majority in interest) prior to the earlier of an
Initial Public Equity Offering or a Warrant Change of Control, to collectively
designate and vote for election one member of the Board of Directors that is
independent of the Purchasers and their Affiliates. Such designee shall be
reasonably acceptable to the other directors of the Issuer. Such right shall
terminate as to the original Purchasers (and their Affiliates) if they cease to
beneficially own 50% or more of the Warrants and Warrant Shares originally
issued to them in aggregate (after giving effect to any adjustments made
pursuant to the terms thereof). Any such designee shall be subject to removal
only with the consent of Persons having the right to designate a director under
this Section 3.2, but may be removed for cause otherwise in accordance with the
Issuer's certificate of incorporation and bylaws.
4. Registration Procedures.
-----------------------
In connection with the obligations of the Issuer with respect to
any Registration Statement pursuant to Sections 2.1 and 2.2 hereof, the Issuer
shall:
(a) A reasonable period of time prior to the initial filing of a
Registration Statement or Prospectus and a reasonable period of time prior
to the filing of any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), furnish to the Holders of the Registrable Securities included
in such Registration Statement, and the managing underwriters, if any,
copies of all such documents proposed to be filed, which documents
<PAGE>
-15-
(other than those incorporated or deemed to be incorporated by reference)
will be subject to the review of such Holders, and such underwriters, if
any, and use reasonable commercial efforts to cause the officers and
directors of the Issuer, counsel to the Issuer and independent certified
public accountants to the Issuer to respond to such reasonable inquiries as
shall be necessary, in the opinion of respective counsel to such Holders
and such underwriters, to conduct a reasonable investigation within the
meaning of the Securities Act. The Issuer shall not file any such
Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities included in such Registration Statement shall reasonably object
on a timely basis;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the applicable time period required hereunder; cause the related Prospectus
to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
as so amended or in such Prospectus as so supplemented;
(c) Notify the holders of Registrable Securities to be sold and
the managing underwriters, if any, promptly, and (if requested by any such
person), confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed
and (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information; (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any
stop order, order or injunction suspending or enjoining the use of a
Prospectus or the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iv) of the receipt by the
Issuer of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening
of any proceeding for such purpose; and (v) of the happening of any event
or information becoming known that makes any statement made in a
Registration Statement or related Prospectus untrue in any material respect
or that requires the making of any changes in such Registration Statement
or Prospectus so that, in the case of a Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated
<PAGE>
-16-
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and that in the
case of a Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the lifting
of any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction described in
Section 4(h), at the earliest practicable moment;
(e) If requested by the lead managing underwriters, if any, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriters, if any, reasonably believe
should be included therein and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the Securities
Act as soon as practicable after the Issuer has received notification of
the matters to be incorporated in such Prospectus supplement or post-
effective amendment; provided, however, that the Issuer shall not be
-------- -------
required to take any action pursuant to this Section 4(e) that would, in
the opinion of counsel for the Issuer, violate applicable law;
(f) Upon written request to the Issuer, furnish to each Holder of
Registrable Securities to be sold pursuant to a Registration Statement and
each managing underwriter, if any, without charge, at least one conformed
copy of such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to
be incorporated therein by reference, and all exhibits to the extent
requested (including those previously furnished or incorporated by
reference) as soon as practicable after the filing of such documents with
the SEC;
(g) Deliver to each Holder of Registrable Securities to be sold
pursuant to a Registration Statement, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of
prospectus) and each amendment or supplement thereto as such persons
reasonably request; and the Issuer hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the Holders of
Registrable Securities to be sold,
<PAGE>
-17-
the underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as any such Holder or
underwriter reasonably requests in writing; and keep each such registration
or qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective hereunder and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the Issuer
-------- -------
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action
which would subject it to general service of process or to taxation in any
jurisdiction where it is not so subject;
(i) In connection with any sale or transfer of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders thereof and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or such Holders may request at
least 5 Business Days prior to any sale of Registrable Securities;
(j) Upon the occurrence of any event contemplated by Section
4(c)(v), as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file any
other required document so that, as thereafter delivered, such Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(k) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other reasonable actions in connection
therewith (including those reasonably requested by the managing
underwriters, if any) in order to expedite or facilitate the disposition of
such Registrable Securities, and, whether or not an underwriting agreement
is entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the
underwriters and selling Holders, if any, with respect to the business of
the Issuer and its subsidiaries (including with respect to businesses or
assets acquired or to be acquired by any of them), and the Registration
<PAGE>
-18-
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions
of counsel to the Issuer and updates thereof (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any, addressed to each of the underwriters, and
selling Holders, if any), covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may
be reasonably requested by such underwriters or selling Holders; (iii) use
their best efforts to obtain customary "cold comfort" letters and updates
thereof from the independent certified public accountants of the Issuer
(and, if necessary, any other independent certified public accountants of
any subsidiary of the Issuer or of any business acquired by the Issuer for
which financial statements and financial data is, or is required to be,
included in the Registration Statement), addressed (where reasonably
possible) to each of the underwriters and selling Holders, if any, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings; (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable to the underwriters, if any, than those set forth in Section 5
hereof (or such other provisions and procedures acceptable to the managing
underwriters, if any); and (v) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold or by the managing underwriters, if any, to evidence
the continued validity of the representations and warranties made pursuant
to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Issuer;
(l) Make available for inspection by a representative of any
selling Holders and underwriter participating in any such disposition of
Registrable Securities, and any attorney, consultant or accountant retained
by such selling Holders or underwriter, at the offices where normally kept,
during reasonable business hours, all pertinent financial and other
records, corporate documents and properties of the Issuer and its
subsidiaries (including with respect to businesses and assets acquired or
to be acquired to the extent that such information is available to the
Issuer) and cause the officers, directors, agents and employees of the
Issuer and its subsidiaries (including with respect to businesses and
assets acquired or to be acquired to the extent that such information is
available to the Issuer) to supply all information in each case reasonably
requested by any such representative, underwriter, attorney, consultant or
accountant in connection with such Registration Statement; provided,
--------
however, that such persons must not be competitors of the Issuer or any of
-------
its Subsidiaries or associated with any such competitor or Affiliate in any
material respect and shall first agree in writing with the
<PAGE>
-19-
Issuer that any information that is reasonably and in good faith designated
by the Issuer in writing as confidential at the time of delivery of such
information shall be kept confidential by such Persons, unless (i)
disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities; (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the
filing of the Registration Statement or the use of any Prospectus); (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by such
Person; or (iv) such information becomes available to such Person from a
source other than the Issuer and its subsidiaries and such source is not
bound by a confidentiality agreement;
(m) Comply with all applicable rules and regulations of the SEC
and make generally available to their securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 under the Securities Act, no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm commitment
or reasonable efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule
158 under the Securities Act; and
(n) Cooperate with each seller of Registrable Securities covered
by any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.
The Issuer may require a Holder of Registrable Securities to be
included in a Registration Statement to furnish to the Issuer such information
regarding (i) the intended method of distribution of such Registrable
Securities; (ii) such Holder; and (iii) the Registrable Securities held by such
Holder as is required by law to be disclosed in such Registration Statement and
the Issuer may exclude from such Registration Statement the Registrable
Securities of any Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request. The Issuer shall not be
required to provide indemnification to any Underwriter or any other person
relating to information referred to in clauses (i) and (ii) provided to the
Issuer in writing specifically for inclusion in such Registration Statement.
If any such Registration Statement refers to any Holder by name or
otherwise as the Holder of any securities of the Issuer, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such
<PAGE>
-20-
Holder, to the effect that the holding by such Holder of such securities is not
to be construed as a recommendation by such Holder of the investment quality of
the Issuer's securities covered thereby and that such holding does not imply
that such Holder will assist in meeting any future financial requirements of the
Issuer or (ii) in the event that such reference to such Holder by name or
otherwise is not required by the Securities Act, the deletion of the reference
to such Holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to be
required.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Issuer of the
happening of any event of the kind described in Section 4(c)(ii), 4(c)(iii),
4(c)(iv) or 4(c)(v) hereof, such Holder will forthwith discontinue disposition
of such Registrable Securities covered by such Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof, or until it is advised
in writing (the "Advice") by the Issuer that the use of the applicable
------
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Issuer shall give any such
notice, the Effectiveness Period shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each Holder of Registrable Securities covered by such
Registration Statement shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof or (y) the Advice, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus.
5. Indemnification and Contribution.
--------------------------------
(a) The Issuer shall indemnify and hold harmless each Holder, each
underwriter who participates in an offering of Registrable Securities, their
respective Affiliates, each Person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and each of their respective directors, officers, employees and
agents, as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto), covering
Registrable Securities, including all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained
<PAGE>
-21-
in any Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the prior written consent of the Issuer; and
(iii) from and against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of one counsel chosen by the
Holders or any underwriter (except to the extent otherwise expressly
provided in Section 5(c) hereof)), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under subparagraph (i) or (ii) of this
Section 5(a);
provided that this indemnity does not apply to any loss, liability, claim,
- --------
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission (i) made in reliance upon and in
conformity with written information furnished to the Issuer by a Holder or any
underwriter in writing expressly for use in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) or
(ii) contained in any preliminary prospectus if such Holder or such underwriter
failed to send or deliver a copy of the Prospectus (in the form it was first
provided to such parties for confirmation of sales) to the Person asserting such
losses, claims, damages or liabilities on or prior to the delivery of written
confirmation of any sale of securities covered thereby to such Person in any
case where such delivery is required by the Securities Act and such Prospectus
would have corrected such untrue statement or omission. Any amounts advanced by
the Issuer to an indemnified party pursuant to this Section 5 as a result of
such losses shall be returned to the Issuer if it shall be finally determined by
such a court in a judgment not subject to appeal or final review that such
indemnified party was not entitled to indemnification by the Issuer.
(b) By accepting the benefits of this Agreement, each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Issuer,
each underwriter who participates in an offering of Registrable Securities and
the other selling Holders and each of their respective directors, officers
(including each officer of the Issuer who signed the Registration
<PAGE>
-22-
Statement), employees and agents and each Person, if any, who controls the
Issuer, any underwriter or any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 5(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Issuer by such
selling Holder expressly for use in the Registration Statement (or any amendment
thereto), or any such Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
other than on account of this indemnity agreement. An indemnifying party may
participate at its own expense in the defense of any such action. If an
indemnifying party so elects within a reasonable time after delivery of such
notice to the indemnified party, such indemnifying party, jointly with any other
indemnifying party, may assume the defense of such action with counsel chosen
thereby and approved by the indemnified parties defendant in such action;
provided that if any such indemnified party reasonably determines, based on
- --------
advice of counsel, that there may be legal defenses available to such
indemnified party which are different from or in addition to those available to
such indemnifying party or that representation of such indemnifying party and
any indemnified party by the same counsel would present a conflict of interest,
then such indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party shall be entitled to conduct the defense of such indemnifying
party and counsel for each indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as permitted by
the provisions of this paragraph, such indemnifying party shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel), separate from its own counsel, for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 5 is held to be unavailable to the indemnified parties for legal reasons
although applicable in accordance with its
<PAGE>
-23-
terms, the Issuer and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Issuer and the Holders, as incurred;
provided that no Person guilty of fraudulent misrepresentation (within the
- --------
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person that was not guilty of such fraudulent
misrepresentation. As between the Issuer and the Holders, such parties shall
contribute to such aggregate losses, liabilities, claims, damages and expenses
of the nature contemplated by such indemnity agreement in such proportion as
shall be appropriate to reflect the relative fault of the Issuer, on the one
hand, and Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Issuer, on the one hand, and of the
Holders, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuer, on the one hand, or by or on behalf of the Holders, on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Issuer and
the Holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 5 were to be determined by
pro rata allocation or by any other method of allocation that does not take into
- --- ----
account the relevant equitable considerations. For purposes of this Section 5,
each Affiliate of each Holder, and each director, officer, employee, agent and
Person, if any, who controls a Holder or such Affiliate within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Holder, and each director of the Issuer,
each officer of the Issuer who signed the Registration Statement, and each
Person, if any, who controls the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Issuer.
6. Underwritten Registrations
--------------------------
No Person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such Registrable Securities on
the basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
7. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Issuer or by a
--------
Holder of any of its obligations under this Agreement, each Holder and the
Issuer, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to
<PAGE>
-24-
specific performance of its rights under this Agreement. The Issuer and each
Holder agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach of any of the provisions of this Agreement
and each hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Holders
of a majority of the Warrants and Warrant Shares. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders whose securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of a
majority of the Registrable Securities being sold by such Holders pursuant to
such Registration Statement; provided, however, that the provisions of this
-------- -------
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. Notwithstanding the
foregoing, no amendment, modification, supplement, waiver or consent with
respect to Section 5 shall be made or given otherwise than with the prior
written consent of each Holder or former Holder affected thereby.
(c) Notices. All notices and other communications provided for
-------
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(i) if to the Issuer, as provided in the Purchase Agreement,
(ii) if to the Purchasers, as provided in the Purchase Agreement,
or
(iii) if to any other Person who is then the registered Holder of
Shares or Registrable Securities, to the address of such Holder as it appears in
the register therefor of the Issuer.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by
hand, if personally delivered; one Business Day after being timely delivered to
a next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure
<PAGE>
-25-
to the benefit of each Holder. The Issuer may not assign any of its rights
hereunder without the prior written consent of each Holder; provided that in the
--------
case of a merger or consolidation of the Issuer with another Person pursuant to
which the issuer or issuers of any securities issued to Holders in connection
with such merger or consolidation, such issuer or issuers become obligated under
this Agreement. Notwithstanding the foregoing, no successor or assignee of the
Issuer shall have any of the rights granted under this Agreement until such
Person shall acknowledge its rights and obligations hereunder by a signed
written statement of such person's acceptance of such rights and obligations. If
any transferee of any Holder shall acquire Warrant Shares in any manner, whether
by operation of law or otherwise, such Warrant Shares shall be held subject to
all of the terms of this Agreement, and by taking and holding such Warrant
Shares such person shall be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement and such Person
shall be entitled to receive the benefits hereof.
Notwithstanding anything herein to the contrary, the Issuer and its
Subsidiaries will be permitted to undertake the Reorganization at any time and,
upon the effectiveness of such Reorganization, Opco (if it is the Issuer) will
be released from all of the obligations hereunder; provided that the holding
--------
company resulting from the Reorganization shall have assumed all of the
obligations of the Issuer and shall be substituted for (so that from and after
the date of the Reorganization, the provisions of this Agreement referring to
the "Issuer" shall refer instead to the new holding company and not to the
initial issuer), and may exercise every right and power of, the Issuer under
this Agreement with the same effect as if it had been named herein as the issuer
and the prior issuer shall be released from the obligations.
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same Agreement.
(f) Governing Law; Submission to Jurisdiction. THIS AGREEMENT
-----------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK. THE ISSUER, THE EXISTING STOCKHOLDERS AND THE PURCHASERS HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
<PAGE>
-26-
(g) Severability. The remedies provided herein are cumulative and
------------
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(h) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning hereof.
All references made in this Agreement to "Section", "paragraph" and "clause"
refer to such Section or paragraph of this Agreement, unless expressly stated
otherwise.
(i) Legends. Each Holder agrees that the legend required by the
-------
Warrants and the Purchase Agreement shall be placed on certificates representing
any Warrant Shares owned by them.
The Issuer agrees to remove the legend on the Warrant Shares upon
the resale of such Warrant Shares in accordance with the terms of this
Agreement.
(j) No Conflicting Agreements. After the date hereof, the Issuer
-------------------------
will not enter into any agreement that conflicts with the rights granted to the
Holders and indemnified persons in this Agreement or otherwise conflicts with
the provisions hereof. After the date hereof, without the written consent of the
Holders of a majority of the Warrants and Warrant Shares constituting
Registrable Securities, the Issuer shall not grant to any Person any rights
which conflict with the provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Registration Rights and Stockholders Agreement to be duly
executed and delivered as of the date first above written.
INTIRA CORPORATION
By: /s/ David Boone
-------------------------------
Name: David Boone
Title: Chief Financial Officer
<PAGE>
ARES LEVERAGED INVESTMENT
FUND, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
By: /s/ Eric Beckman
----------------------------------
Name: Eric Beckman
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
By: /s/ Eric Beckman
----------------------------------
Name: Eric Beckman
Title: Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BlackRock Financial Management, Inc.,
As Managing Member
By: /s/ Dennis M. Schaney
----------------------------------
Name: Dennis M. Schaney
Title: Managing Director
<PAGE>
CARLYLE HIGH YIELD PARTNERS, L.P.
By: TCG High Yield, L.L.C.,
its General Partner
By: /s/ Jack Mann
-------------------------------------
Name: Jack Mann
Title: Managing Director
CB CAPITAL INVESTORS, LLC
By: Chase Capital Partners, its Manager
By: /s/ Richard D. Waters
-------------------------------------
Name: Richard D. Waters, Jr.
Title: General Partner--Mezzanine
CONTINENTAL CASUALTY COMPANY
By: /s/ Richard W. Dubberke
-------------------------------------
Name: Richard W. Dubberke
Title: Vice President
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT,
in its capacity as the investment
adviser of the Goldman Sachs High
Yield Fund, a separate series of the
Goldman Sachs Trust
By: /s/ Christopher Testa
-------------------------------------
Name: Christopher Testa
Title: Vice President
GOLDMAN, SACHS & CO.,
as delegate of Goldman Sachs Asset
Management International, in its
capacity as the investment adviser of
the Goldman Sachs Global High Yield
Portfolio, a separate series of
Goldman Sachs Funds, S.I.C.A.V.
By: /s/ Christopher Testa
-------------------------------------
Name: Christopher Testa
Title: Vice President
OZ MASTER FUND, LTD.
By: [ILLEGIBLE]
-------------------------------------
Name:
Title:
<PAGE>
SANKATY HIGH YIELD PARTNERS II, L.P.
By:
-------------------------------------
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By:
-------------------------------------
Name:
Title:
WAYLAND INVESTMENT FUND, LLC
By: CFSC Wayland Advisors, Inc.,
its Manager
By: [ILLEGIBLE]
-------------------------------------
Name:
Title:
Registration Rights and Stockhlders Agreement
CHASE SECURITIES INC.
By: /s/ Jessica ^^^
--------------------------------
Name: Jessica ^^^
Title: Vice President
Registration Rights and Stockhlders Agreement
COINVESTMENT I, LLC
By Laurence D. Fink,
as Managing Member
By: /s/ Laurence D. Fink
--------------------------------
Name: Laurence D. Fink
Title: Managing Member
PUTNAM FIDUCIARY TRUST COMPANY on behalf of:
PUTNAM HIGH YIELD FIXED INCOME FUND, LLC
PUTNAM HIGH YIELD MANAGED TRUST
By: /s/ John R. Verani
-----------------------------
Name: John R. Verani
Title: Senior Vice President
PUTNAM INVESTMENT MANAGEMENT, INC. on behalf of:
PUTNAM HIGH YIELD TRUST
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM VARIABLE TRUST-PVT HIGH YIELD
FUND
PUTNAM MASTER INCOME TRUST
PUTNAM PREMIER INCOME TRUST
PUTNAM MASTER INTERMEDIATE INCOME
TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM FUNDS TRUST-PUTNAM HIGH YIELD
PUTNAM STRATEGIC INCOME FUND
PUTNAM VARIABLE TRUST-PVT DIVERSIFIED
TRAVELERS SERIES FUND INC.-PUTNAM
DIVERSIFIED INCOME
By: /s/ John R. Verani
------------------------------------------------
Name: John R. Verani
Title: Senior Vice President
THE PUTNAM ADVISORY COMPANY, INC. on behalf of:
ABBOT LABORATORIES ANNUITY RETIREMENT
PLAN
AMERITECH CORPORATION PENSION PLAN
NORTHROP GRUMMAN EMPLOYEE BENEFIT
PLAN
By: /s/ John R. Verani
------------------------------------------------
Name: John R. Verani
Title: Senior Vice President
Registration Rights and Stockholders Agreement
Sun America Inc.
-----------------------------------
Name of Purchaser
By: /s/ Rafael Fogel
--------------------------------
Name: Rafael Fogel
Title: Authorized ^^^
<PAGE>
Schedule 1
----------
1. Amended and Restated Investors' Rights Agreement, dated June 30, 1999.
2. Agreements contemplated by the Binding Memorandum of Understanding dated
January 19, 2000 between the Issuer and Viatel, Inc.
<PAGE>
EXHIBIT 4.5
- --------------------------------------------------------------------------------
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND NO SALE OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT (i) REGISTRATION
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR (ii) DELIVERY OF AN
OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
- --------------------------------------------------------------------------------
DIGITAL BROADCAST NETWORK CORPORATION
(D/B/A INTIRA CORPORATION)
Warrant for the Purchase of Shares of Common Stock
No. B-1 151,379.36 Shares
---
FOR VALUE RECEIVED, DIGITAL BROADCAST NETWORK CORPORATION (D/B/A INTIRA
CORPORATION) (the "Company"), a Missouri corporation, hereby certifies that THE
CHASE MANHATTAN BANK or its registered assigns (the "Holder") is entitled,
subject to the provisions of this Warrant, to purchase from Company, at any time
or from time to time during the Exercise Period, as hereinafter defined, an
aggregate of ONE HUNDRED FIFTY-ONE THOUSAND, THREE HUNDRED AND SEVENTY-NINE AND
36/100 (151,379.36) fully paid and nonassessable Warrant Shares (as hereinafter
defined) at purchase price per Warrant Share equal to the Exercise Price (as
hereinafter defined). The number of Warrant Shares to be received upon the
exercise of this Warrant is subject to adjustment from time to time as
hereinafter set forth.
Section 1. Definitions. Terms defined in the Credit Agreement dated as of
December 30, 1999 between Company, the Lenders from time to time parties thereto
and The Chase Manhattan Bank (as amended from time to time the "Credit
Agreement"), unless otherwise defined herein are used herein as therein defined.
The following additional terms, as used herein, have the following respective
meanings:
"Additional Shares" means any shares of Common Stock other than Common
Stock issued upon the exercise of any Warrant.
"Appraiser" has the meaning set forth in Section 7(d)(iii).
"Common Stock" means the authorized Class A Common Stock no par value,
of Company, and any stock into which such Class A Common Stock may thereafter be
converted or
<PAGE>
changed, including, upon a reincorporation of Company in Delaware, the common
stock of such Delaware corporation.
. "Convertible Securities" means rights to subscribe for, or any rights
or options to purchase, shares of Common Stock, or any stock or other securities
convertible into or exchangeable for shares of Common Stock.
"Current Market Price" means for shares of Common Stock the current
market price of such Common Stock as determined in accordance with subsection
7(d).
"Exercise Period" means the period from and including the date hereof
to and including 5:00 p.m. (New York City time) on the tenth anniversary of the
date hereof (or if such day is not a Business Day, the next succeeding Business
Day), provided that upon the closing of a transaction in which Company merges or
--------
consolidates with or into another corporation with the result that the holders
of a majority of the outstanding voting stock of Company immediately prior to
the merger or consolidation do not hold a majority of the outstanding voting
stock of the corporation surviving such merger or consolidation, the warrants
shall be deemed exercised.
"Exercise Price" means, with respect to any Warrant Share, an amount
equal to the greater of the par value of such Warrant Share and $0.0001 per such
Warrant Share.
"Fully Diluted Common Stock" means, at any time, the then outstanding
Common Stock plus (without duplication) all shares of Common Stock issuable,
whether at such time or upon the passage of time or the occurrence of future
events, upon the exercise, conversion or exchange of all then-outstanding
rights, warrants, options, convertible securities or exchangeable securities or
indebtedness, or other rights exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock, and securities convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"Warrant Shares" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time.
Section 2. Exercise of Warrant. This Warrant may be exercised in whole or
in part, at any time or from time to time, during the Exercise Period, by
presentation and surrender hereof to Company at its principal office at the
address set forth on the signature page hereof (or at such other address as
Company may hereafter notify the Holder in writing), or at the office of its
stock transfer agent or warrant agent, if any, with the Purchase Form annexed
hereto duly executed and accompanied by proper payment of that portion of the
Exercise Price represented by the number of Warrant Shares specified in such
form being exercised. Such payment may be made, at the option of the Holder,
either (a) by cash, certified or bank cashier's check or wire transfer in an
amount equal to the product of (i) the Exercise Price times (ii) the number of
Warrant Shares as to which this Warrant is being exercised or (b) by receiving
from Company the number of Warrant Shares equal to (i) the number of Warrant
Shares as to which this Warrant is being exercised minus (ii) the number of
Warrant Shares having a value, based on the Current Market Price on the trading
day immediately prior to the date of such exercise, equal to the
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product of (x) the Exercise Price times (y) the number of Warrant Shares as to
which this Warrant is being exercised. If this Warrant should be exercised in
part only, Company shall, upon surrender of this Warrant, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable hereunder. Upon receipt by Company of this
Warrant and the Purchase Form annexed hereto, together with the applicable
portion of the Exercise Price, at such office, in proper form for exercise, the
Holder shall be deemed to be the holder of record of the Warrant Shares,
notwithstanding that the stock transfer books of Company shall then be closed or
that certificates representing such Warrant Shares shall not then be actually
delivered to the Holder. Company shall pay any and all documentary stamp or
similar issue taxes payable in respect of the issue of the Warrant Shares.
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issuance or delivery of certificates
representing Warrants or Warrant Shares in a name other than that of the Holder
at the time of surrender for exercise, and, until the payment of such tax, shall
not be required to issue such Warrant Shares.
Section 3. Due Authorization; Reservation of Shares. (a) Company represents
and warrants that this Warrant has been duly authorized, executed and delivered
by Company and is a valid and binding agreement of Company and entitles the
Holder hereof or its assignees to purchase Warrant Shares upon payment to
Company of the Exercise Price applicable to such shares. Company hereby agrees
that at all times there shall be reserved for issuance and delivery upon
exercise of this Warrant all shares of its Common Stock or other shares of
capital stock of Company from time to time issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon such
exercise and paid for, shall be validly issued, fully paid and nonassessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive rights.
(b) Company represents and warrants that the execution and delivery by it
of this Warrant do not require any action by or in respect of Company (other
than those that have been taken), or filing with, any governmental body, agency
or official and do not contravene or constitute a default under or violation of
(i) any provision of applicable law or regulation, (ii) the certificate of
incorporation or bylaws of Company, or (iii) any material agreement, judgment,
injunction, order, decree or other instrument binding upon Company.
Section 4. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Current Market Price of such fractional share.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant
is exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to Company for other Warrants of different denominations,
entitling the Holder or Holders thereof to purchase in the aggregate the same
number of Warrant Shares. Subject to Section 10 hereof, the Holder of this
Warrant shall be entitled to assign its interest in this Warrant in whole or in
part to any person or persons. Upon surrender of this Warrant to Company, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, Company shall, without charge, execute and deliver a new Warrant
or Warrants
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in the name of the assignee or assignees named in such instrument of assignment
and, if the Holder's entire interest is not being assigned, in the name of the
Holder, and this Warrant shall promptly be canceled. In the event of any
assignment in part, the Exercise Price shall be apportioned between the Warrant
to be issued to the Holder with respect to that portion not transferred and the
Warrant to be issued to the transferee based on their respective interests. This
Warrant may be divided or combined with other Warrants that carry the same
rights upon presentation hereof at the office of Company, together with a
written notice specifying the names and denotations in which new Warrants are to
be issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or for which it may
be exchanged. Upon receipt by Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Warrant, if mutilated, Company shall execute
and deliver a new Warrant of like tenor and date.
Section 6. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in Company, either at law or equity, and
the rights of the Holder are limited to those expressed in this Warrant.
Section 7. Anti-dilution Provisions and Other Adjustments; Purchase Right.
The number of Warrant Shares which may be purchased upon the exercise hereof
shall be subject to change or adjustment as follows:
(a) Stock Dividends, Splits, Combinations, Reclassifications, etc. If
Company at any time (i) shall declare a dividend or make a distribution on its
Common Stock payable in shares of its capital stock (whether shares of Common
Stock or of capital stock of any other class), (ii) shall subdivide shares of
its Common Stock into a greater number of shares, (iii) shall combine or have
combined its outstanding Common Stock into a smaller number of shares or (iv)
shall issue by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which Company
is the continuing corporation), other securities of Company, the Holder shall be
entitled to purchase the aggregate number and kind of shares of capital stock
and other securities which, if the Warrant had been exercised immediately prior
to such event, the Holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, distribution, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) RESERVED.
(c) Distribution of Evidences of Indebtedness or Assets. If Company at any
time shall fix a record date for the making of a distribution to all holders of
its Common Stock (including any such distribution to be made in connection with
a consolidation or merger in which Company is to be the continuing corporation)
of evidences of its indebtedness or assets (excluding dividends paid in or
distributions of Company's capital stock for which the number of Warrant Shares
purchasable hereunder shall have been adjusted pursuant to subsection (a) of
this Section 7 or regular cash dividends or distributions payable out of
earnings or surplus and made in the ordinary course of business) the number of
Warrant Shares purchasable hereunder after
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such record date shall be determined by multiplying the number of Warrant Shares
purchasable hereunder immediately prior to such record date by a fraction, of
which the denominator shall be the Current Market Price per share of Common
Stock on such record date, less the fair market value (as determined in the
reasonable judgment of the Board of Directors of Company and described in a
statement mailed by certified mail to the Holder) of the portion of the assets
or evidences of indebtedness so to be distributed to a holder of one share of
Common Stock, and the numerator shall be such Current Market Price per share of
Common Stock. Such adjustment shall become effective immediately after such
record date. Such adjustment shall be made whenever such a record date is fixed;
and in the event that such distribution is not so made, the number of Warrant
Shares purchasable hereunder shalt again be adjusted to be the number that was
in effect immediately prior to such record date.
(d) Determination of Market Price. For the purpose of any computation under
Section 4 or subsection (b) or (c) of this Section 7, the Current Market Price
per share of Common Stock on any record date shall be the average of the current
market value, determined as set forth below, of Common Stock for the 20 trading
days prior to the date in question.
(i) If the Common Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such an exchange, the current
market value shall be the last reported sale price of the Common Stock on
such exchange on such trading day or if no such sale is made on such day,
the mean of the closing bid and asked prices for such day on such exchange;
or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean of the last
bid and asked prices reported on such trading day (A) by the Nasdaq Stock
Market or (B) if reports are unavailable under clause (A) above by the
National Quotation Bureau Incorporated; or
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market value shall be such value as is reasonably determined in
good faith by the Board of Directors of Company.
(e) Stock Other Than Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to subsection (a) of this Section 7, the
Holder shall become entitled to receive any shares of the capital stock of
Company other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 7, and the
provisions of this Warrant with respect to the Common Stock shall apply on like
terms to any such other shares.
(f) Notice of Certain Actions. In the event that at any time:
(A) Company shall authorize the issuance to all holders of its Common
Stock of Convertible Securities; or
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(B) Company shall authorize the distribution to all holders of its
Common Stock of evidences of its indebtedness or assets (other than
dividends paid in or distributions of Company's capital stock for which the
number of Warrant Shares purchasable hereunder shall have been adjusted
pursuant to subsection (a) of this Section 7 or regular cash dividends or
distributions payable out of earnings or surplus and made in the ordinary
course of business); or
(C) Company shall authorize any capital reorganization or
reclassification of the Common Stock (other than a subdivision or
combination of the outstanding Common Stock and other than a change in par
value of the Common Stock) or of any consolidation or merger to which
Company is a party and for which approval of any stockholders of Company is
required (other than (1) a consolidation or merger in which Company is the
continuing corporation and that does not result in any reclassification or
change of the Common Stock outstanding or (2) a consolidation or merger in
which Company merges into a subsidiary in connection with a reincorporation
in Delaware), or of the conveyance or transfer of the properties and assets
of Company substantially as an entirety; or
(D) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of Company; or
(E) Company shall propose to take any other action that would require
an adjustment of the number of Warrant Shares purchasable hereunder
pursuant to this Section 7;
then Company shall cause to be mailed by certified mail to the Holder, at least
20 days prior to the applicable record or effective date hereinafter specified,
a notice describing such issuance, distribution, reorganization,
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, winding-up or other action and stating (x) the date as of which the
holders of Common Stock of record entitled to receive any such Convertible
Securities or distributions are to be deemed or (y) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
(g) Common Stock Defined. Whenever reference is made in this Section 7 to
the issue of shares of Common Stock, the term "Common Stock" shall include any
equity securities of any class of Company hereinafter authorized which shall not
be limited to a fixed or determinable amount in respect of the right of the
holders thereof to participate in dividends or distributions of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of Company.
However, subject to the provisions of Section 9 hereof, shares issuable upon
exercise hereof shall include only Warrant Shares as of the date hereof or
shares of any class or classes resulting from any reclassification or
reclassifications thereof or as a result of any corporate reorganization as
provided for in Section 9 hereof.
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Section 8. Officers' Certificate. Whenever the number of Warrant Shares
purchasable hereunder shall be adjusted as required by the provisions of Section
7, Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office an officers' certificate showing the adjusted
number of Warrant Shares purchasable hereunder determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment and the
manner of computing such adjustment. Each such officers' certificate shall be
signed by the chairman, president or chief financial officer of Company and by
the secretary or any assistant secretary of Company. Each such officers'
certificate shall be made available at all reasonable times for inspection by
the Holder or any holder of a Warrant executed and delivered pursuant to Section
4 hereof and Company shall, forthwith after each such adjustment, mail a copy,
by certified mail, of such certificate to the Holder or any such holder.
Section 9. Reclassification, Reorganization, Consolidation or Merger. In
case of any Reorganization Transaction (as hereinafter defined), Company shall,
as a condition precedent to such transaction, cause effective provisions to be
made so that the Holder shall have the right thereafter, by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such Reorganization Transaction by a holder of the
number of shares of Common Stock that would have been received upon exercise of
this Warrant immediately prior to such Reorganization Transaction. Any such
provision shall include provision for adjustments in respect of such shares of
stock and other securities and property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section 9 shall similarly apply to successive
Reorganization Transactions. For purposes of this Section 9, "Reorganization
Transaction" shall mean (excluding any transaction covered by Section 7) any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of Company (other than a subdivision or combination of the
outstanding Common Stock and other then a change in the par value of the Common
Stock) or any consolidation or merger of Company with or into another
corporation (other than a merger with a subsidiary in which merger Company is
the continuing corporation and that does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock of
the class issuable upon exercise of this Warrant) or any sale, lease, transfer
or conveyance to another corporation of all or substantially all of the assets
of Company.
Section 10. Transfer Restrictions. (a) Compliance with Securities Act.
The Holder, by acceptance hereof, agrees that this Warrant, and the Warrant
Shares to be issued upon exercise hereof are being acquired for investment and
that such holder will not offer, sell or otherwise dispose of this Warrant, or
any Warrant Shares except under circumstances which will not result in a
violation of the Securities Act of 1933, as amended (the "Act) or any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Act and any applicable state securities
laws or an exemption from such registration is available, the holder hereof
shall confirm in writing that the Warrant Shares so purchased are being acquired
for investment and not with a view toward distribution or resale in violation of
the Act and shall confirm such other matters related thereto as may be
reasonably requested by the Company. This Warrant and all Warrant Shares issued
upon exercise of this Warrant (unless registered under the Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS,
NO SALE OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT (i) REGISTRATION UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS, OR (ii) DELIVERY OF AN
OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
Said legend shall be removed by the Company, upon the request of the
Holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated. In addition, in connection with the issuance of
this Warrant, the Holder specifically represents to the Company by acceptance of
this Warrant as follows:
(A) The Holder is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof
in violation of the Act.
(B) The holder understands that this Warrant has not been registered
under the Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of the holder's
investment intent as expressed herein.
(C) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under
any applicable state securities laws, or unless exemptions from registration and
qualification are otherwise available. The holder is aware of the provisions of
Rule 144, promulgated under the Act.
(D) The holder is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated under the Act.
(b) Disposition of Warrant or Shares. With respect to any offer, sale or
other disposition of this Warrant or any Warrant Shares acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Warrant
Shares, the holder hereof agrees to give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written opinion
of such holder's counsel, or other evidence satisfactory to the Company, to the
effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state securities law then in effect) of this Warrant or the Warrant Shares and
indicating whether or not under the Act certificates for this Warrant or the
Warrant Shares to be sold or otherwise disposed of require any restrictive
legend as to applicable restrictions on transferability in order to ensure
compliance with such law. Upon receiving such written notice and reasonably
satisfactory opinion or other evidence, the Company, as promptly as practicable
but no later than fifteen (15) days after receipt of the written notice, shall
notify such holder that such Holder may sell or otherwise dispose of this
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Warrant or such Warrant Shares, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
Section 10(b) that the opinion of counsel for the holder or other evidence is
not reasonably satisfactory to the Company, the Company shall so notify the
holder promptly with details thereof after such determination has been made.
Notwithstanding the foregoing, this Warrant or such Warrant Shares may, as to
such federal laws, be offered, sold or otherwise disposed of in accordance with
Rule 144 under the Act, provided that the Company shall have been furnished with
such information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 have been satisfied. Each certificate
representing this Warrant or Warrant shares thus transferred (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the
aforesaid opinion of counsel for Holder, such legend is not required in order to
ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
Section 11. Market Stand-Off. The Holder hereby agrees that, during the
period of duration (up to, but not exceeding, (x) 180 days or (y) such shorter
period as shall apply to the Permitted Investors)) specified by the Company and
an underwriter of Common Stock or other equity securities of the Company,
following the effective date of a registration statement of the Company filed
under the Securities Act, it shall not, to the extent requested by the Company
and such underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during
such period except Common Stock included in such registration. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the securities of Holder until the end of such
period, and Holder agrees that, if so requested, Holder will execute an
agreement in the form provided by the underwriter containing terms which are
essentially consistent with the provisions of this Section.
Section 12. Listing on Securities Exchanges. Company shall use all
commercially reasonable efforts to list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance upon the exercise of this Warrant, and shall use its commercially
reasonable efforts to maintain such listing, so long as any other shares of its
Common Stock shall be so listed, all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and Company shall use its
commercially reasonable efforts to so list on each national securities exchange,
and shall use all reasonable efforts to maintain such listing of, any other
shares of capital stock of Company issuable upon the exercise of this Warrant if
and so long as any shares of capital stock of the same class shall be listed on
such national securities exchange by Company. Any such listing shall be at
Company's expense.
Section 13. Availability of Information. (a) Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act to the
extent it is required to do so under the Exchange Act. Company shall also
cooperate with each Holder of any Warrants and holder of any Warrant Shares in
supplying such information as may be necessary for such holder to complete and
file any information reporting forms currently or hereafter
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required by the Securities and Exchange Commission as a conditon to the
availability of an exemption from the Securities Act for the sale of any
Warrants or Warrant Shares. The provisions of this Warrant in full or
otherwise.
(b) If at any time Company is not subject to the requirements of Section
13 or 15(d) of the Exchange Act, Company will promptly furnish at its expense,
upon request, for the benefit of Holders form time to time of Warrants and
holders form time to time of Warrant Shares, to Holderd to Warrants and holders
form time to time of Warrant Shares, to Holders of Warrants, holders or Warrant
Shares and prospective urchasers of Warrants and Warrant Shares information
satisfying the requirements of subsection (d) (4) (i) of Rule 144A under the
Securities Act.
Section 14. Governing Laws. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, Company has duly caused this Warrant be executed by and
attested by their duly authorized officers and to be dated as of December 30,
1999.
DIGITAL BROADCAST NETWORK CORPORATION
By /s/ David S. Boone
-----------------------------------
Name: David S. Boone
Title: CFO
Attest:
By /s/ Larry Beilenson
-----------------------------------
Name: Larry Beilenson
Title: Secretary
Address:
c/o Intira Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention:
Telecopier Number:
Telephone:
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PURCHASE FORM
Dated _________, __
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____ shares of Common Stock and hereby makes payment
of _____ in payment of the exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name____________________________________________________________________
(please typewrite or print in block letters)
Address __________________________________________________________________
Signature _________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name____________________________________________________________________
(please typewrite or print in block letters)
Address __________________________________________________________________
its right to purchase _____ shares of Common Stock represented by this Warrant
and does hereby irrevocably constitute and appoint ___________ Attorney, to
transfer the same on the books of Company, with full power of substitution in
the premises.
Date _______, ____
Signature __________________
<PAGE>
EXHIBIT 4.6
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO THE APPLICABLE
TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000, AND THE
REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 31, 2000.
COPIES OF SUCH AGREEMENTS ARE AVAILABLE AT THE OFFICES OF THE ISSUER.
INTIRA CORPORATION
Series A Warrant for the Purchase of Shares of Common Stock
No. ____ _________ Shares
FOR VALUE RECEIVED, INTIRA CORPORATION (the "Issuer"), a Delaware
corporation, hereby certifies that [ ] or its registered
assigns (the "Holder") is entitled, subject to the provisions of this Series A
Warrant (this "Warrant"), to purchase from the Issuer, at any time or from time
to time during the Exercise Period, as hereinafter defined, an aggregate of [
] [( )] fully paid and nonassessable shares of Common Stock at a
purchase price per share equal to the Exercise Price. The number of Warrant
Shares to be received upon the exercise of this Warrant is subject to adjustment
from time to time as hereinafter set forth.
Section 1. Definitions. Terms defined in the Purchase Agreement dated as
of January 31, 2000 among the Issuer and the Purchasers listed on the signature
pages thereto (as amended from time to time, the "Purchase Agreement"), unless
otherwise defined herein, are used herein as therein defined. The following
additional terms, as used herein, have the following respective meanings:
"Common Stock" means the authorized Common Stock, par value $.001 per
share, of the Issuer, and any stock into which such Common Stock may thereafter
be converted or changed.
"Current Market Price" per share of Common Stock means on any record date
the average of the current market value, determined as set forth below, of
Common Stock for the 20 trading days prior to the date in question.
<PAGE>
-2-
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such an exchange,
the current market value shall be the last reported sale price of the
Common Stock on such exchange on such trading day or if no such sale is
made on such day, the mean of the closing bid and asked prices for such day
on such exchange; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean of the last
bid and asked prices reported on such trading day (A) by the Nasdaq Stock
Market or (B) if reports are unavailable under clause (A) above by the
National Quotation Bureau Incorporated; or
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market value shall be such value as is reasonably determined in
good faith by the Board of Directors of the Issuer, which determination
shall be conclusive.
"Exercisability Date" means the first day on or after which any of the
following has occurred: (i) immediately prior to a Warrant Change of Control,
(ii) the 180th day (or such earlier date as determined by the Issuer in its sole
discretion) following an Initial Public Equity Offering, (iii) other than in
connection with an Initial Public Equity Offering or a registration effected in
connection with the Reorganization or any benefit plan, employee compensation
plan, or employee or director stock purchase plan, a class of equity securities
of the Issuer becomes subject to registration under the Exchange Act, or (iv)
February 2, 2005.
"Exercise Period" means the period from and including the Exercisability
Date to and including 5:00 p.m. (New York City time) on the tenth anniversary of
the date hereof (or if such day is not a Business Day, the next succeeding
Business Day).
"Exercise Price" means an amount equal to $0.01 per share of Common Stock.
"Initial Public Equity Offering" shall mean the first underwritten public
offering (but excluding any offering pursuant to Form S-8 under the Securities
Act or any other publicly registered offering pursuant to the Securities Act
pertaining to an issuance of shares of Common Stock or securities exercisable
therefor under any benefit plan, employee compensation plan, or employee or
director stock purchase plan) of Common Stock of the Issuer pursuant to an
effective registration statement under the Securities Act.
"Warrant Change of Control" means the occurrence of any of the following:
(i) any "person" or "group" is or becomes the "beneficial owner" (as such terms
are used in Section 13(d)(3) of the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercis-
<PAGE>
-3-
able immediately or only after the passage of time), directly or indirectly, of
more than 50% of the voting or economic power represented by all of the
outstanding Common Stock (treating convertible preferred stock as converted for
this purpose) of the Issuer, (ii) during any period of two consecutive years,
Continuing Directors cease for any reason to constitute a majority of the Board
of Directors of the Issuer or (iii) the Issuer consolidates or merges with or
into any other Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets to any other Person, other
than a consolidation or merger or disposition of assets (a) of or by the Issuer
into, with or to a Restricted Subsidiary or (b) pursuant to a transaction in
which the outstanding Common Stock (treating convertible preferred stock as
converted for this purpose) of the Issuer is changed into or exchanged for
securities or other property with the effect that the beneficial owners of such
outstanding Equity Interests of the Issuer immediately prior to such
transaction, beneficially own, directly or indirectly, at least a majority of
the voting or economic power represented by all of the outstanding Common Stock
(treating convertible preferred stock as converted for this purpose) of the
surviving corporation or the Person to whom the Issuer's assets are transferred
immediately following such transaction.
"Warrant Shares" means the shares of Common Stock and any other securities
or property issuable or deliverable upon exercise of this Warrant, as adjusted
from time to time.
Section 2. Exercise of Warrant. This Warrant may be exercised in whole or
in part, at any time or from time to time, during the Exercise Period, by
presentation and surrender hereof to the Issuer at its principal office at the
address set forth on the signature page hereof (or at such other address as the
Issuer may hereafter notify the Holder in writing), or at the office of its
stock transfer agent or warrant agent, if any, with the Purchase Form annexed
hereto duly executed and accompanied by proper payment of that portion of the
Exercise Price represented by the number of shares of Common Stock specified in
such form being exercised. Such payment may be made, at the option of the
Holder, either (a) by cash, certified or bank cashier's check or wire transfer
in an amount equal to the product of (i) the Exercise Price times (ii) the
number of shares of Common Stock as to which this Warrant is being exercised or
(b) by receiving from the Issuer the number of Warrant Shares equal to (i) the
number of Warrant Shares as to which this Warrant is being exercised minus (ii)
the number of Warrant Shares having a value, based on the Current Market Price
on the trading day immediately prior to the date of such exercise, equal to the
product of (x) the Exercise Price times (y) the number of shares of Common Stock
as to which this Warrant is being exercised. If this Warrant should be
exercised in part only, the Issuer shall, upon surrender of this Warrant,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable hereunder. Upon receipt
by the Issuer of this Warrant and the Purchase Form annexed hereto, together
with the applicable portion of the Exercise Price, at such office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of the
Warrant Shares, notwithstanding that the stock transfer books of
<PAGE>
-4-
the Issuer shall then be closed or that certificates representing such Warrant
Shares shall not then be actually delivered to the Holder. The Issuer shall pay
any and all documentary stamp or similar issue taxes payable in respect of the
issue of the Warrant Shares. The Issuer shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issuance
or delivery of certificates representing Warrants or Warrant Shares in a name
other than that of the Holder at the time of surrender for exercise, and, until
the payment of such tax, shall not be required to issue such Warrant Shares.
Section 3. Due Authorization; Reservation of Shares. (a) The Issuer
represents and warrants that this Warrant has been duly authorized, executed and
delivered by the Issuer and is a valid and binding agreement of the Issuer and
entitles the Holder hereof or its assignees to purchase Warrant Shares upon
payment to the Issuer of the Exercise Price applicable to such shares. The
Issuer hereby agrees that at all times there shall be reserved for issuance and
delivery upon exercise of this Warrant all shares of its Common Stock or other
shares of capital stock of the Issuer from time to time issuable upon exercise
of this Warrant. All such shares shall be duly authorized and, when issued upon
such exercise and paid for, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights.
(b) Assuming the veracity of the Holder's representations in Section
10(a) hereof, the Issuer represents and warrants that the execution and delivery
by it of this Warrant do not require any action by or in respect of the Issuer
(other than those that have been taken) or filing with any governmental body,
agency or official and do not contravene or constitute a default under or
violation of (i) any provision of applicable law or regulation, (ii) the
certificate of incorporation or bylaws of the Issuer, or (iii) any material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Issuer.
Section 4. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Issuer shall pay to the Holder an amount in cash equal to such fraction
multiplied by the Current Market Price of such fractional share.
Section 5. Exchange, Transfer, Assignment or Loss of Warrant. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Issuer for other Warrants of different
denominations, entitling the Holder or Holders thereof to purchase in the
aggregate the same number of Warrant Shares. Subject to Section 10 hereof and
Section 9 of the Purchase Agreement, the Holder shall be entitled to assign its
interest in this Warrant in whole or in part, without charge to the Holder
hereof, to any person or persons. Upon surrender of this Warrant to the Issuer,
with the Assignment Form annexed hereto duly executed and funds sufficient to
pay any transfer tax, the Issuer
<PAGE>
-5-
shall, without charge, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees named in such instrument of assignment and, if the
Holder's entire interest is not being assigned, in the name of the Holder, and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at the
office of the Issuer, together with a written notice specifying the names and
denotations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or for which it may be exchanged. Upon receipt by the
Issuer of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Issuer shall at its expense execute and deliver
a new Warrant of like tenor and date.
Section 6. Rights of the Holder. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Issuer, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant; provided, however, that the Holder shall be entitled to receive all
Distributions and Distribution Rights in respect of Common Stock as though this
Warrant had been exercised.
Section 7. Anti-dilution Provisions and Other Adjustments; Purchase Right.
The number of Warrant Shares which may be purchased upon the exercise hereof
shall be subject to change or adjustment as follows:
(a) Stock Dividends, Splits, Combinations, Reclassifications, etc. If
the Issuer at any time (i) shall declare a dividend or make a distribution
on its Common Stock payable in shares of its capital stock (whether shares
of Common Stock or of capital stock of any other class), (ii) shall
subdivide shares of its Common Stock into a greater number of shares, (iii)
shall combine or have combined its outstanding Common Stock into a smaller
number of shares or (iv) shall issue by reclassification of its Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Issuer is the continuing corporation),
other securities of the Issuer, the Holder shall be entitled to purchase
the aggregate number and kind of shares of capital stock and other
securities which, if the Warrant had been exercised immediately prior to
such event, the Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) Stock Other Than Common Stock. In the event that at any time, as
a result of an adjustment made pursuant to subsection (a) of this Section
7, the Holder shall become entitled to receive any shares of the capital
stock of the Issuer other than
<PAGE>
-6-
Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 7,
and the provisions of this Warrant with respect to the Common Stock shall
apply on like terms to any such other shares.
(c) Certain Distributions. If at any time the Issuer grants, issues
or sells options, convertible securities, or rights to purchase Capital
Stock, warrants or other securities pro rata to the record holders of any
---------
Common Stock (the "Distribution Rights") or, without duplication, makes any
dividend or otherwise makes any distribution, including, subject to
applicable law, pursuant to any plan of liquidation, dissolution or winding
up ("Distribution") on Common Stock (whether in cash, property, evidences
of indebtedness or otherwise), then the Issuer shall grant, issue, sell or
make to each registered Holder of Warrants then outstanding the aggregate
Distribution Rights or Distribution, as the case may be, which such Holder
would have acquired if such Holder had held the maximum number of Warrant
Shares acquirable upon complete exercise of such Holder's Warrants
(regardless of whether the Warrants are then exercisable and without giving
effect to the cashless exercise option) immediately before the record date
for the grant, issuance or sale of such Distribution Rights or
Distribution, as the case may be, or, if there is no such record date, the
date as of which the record holders of Common Stock are to be determined
for the grant, issue or sale of such Distribution Rights or Distribution,
as the case may be.
(d) Common Stock Defined. Whenever reference is made in this Section
7 to the issue of shares of Common Stock, the term "Common Stock" shall
include any equity securities of any class of the Issuer hereinafter
authorized which shall not be limited to a fixed or determinable amount in
respect of the right of the holders thereof to participate in dividends or
distributions of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Issuer. However, subject to the
provisions of Section 9 hereof, shares issuable upon exercise hereof shall
include only Warrant Shares as of the date hereof or shares of any class or
classes resulting from any reclassification or reclassifications thereof or
as a result of any corporate reorganization as provided for in Section 9
hereof.
Section 8. Officers' Certificate. Whenever the number of Warrant Shares
purchasable hereunder shall be adjusted as required by the provisions of Section
7, the Issuer at its expense shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office an officers'
certificate showing the adjusted number of Warrant Shares purchasable hereunder
determined as herein provided, setting forth in reasonable detail the facts
requiring such adjustment and the manner of computing such adjustment. Each
such officers' certificate shall be signed by the chairman, president or chief
financial officer of the Issuer
<PAGE>
-7-
and by the secretary or any assistant secretary of the Issuer. Absent manifest
error, the officers' certificate shall be conclusive evidence that the
adjustment is correct. Each such officers' certificate shall be made available
at all reasonable times for inspection by the Holder or any Holder of a Warrant
executed and delivered pursuant to Section 4 hereof and the Issuer shall,
forthwith after each such adjustment, mail a copy, by certified mail, of such
certificate to the Holder or any such Holder. The Issuer shall, upon the
reasonable request in writing of the Holders of a majority of the Warrants (at
the Issuer's expense), retain independent public accountants of recognized
national standing selected by the Board of Directors of the Issuer to make any
computation required in connection with adjustments under this Warrant, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment, which shall be binding on the Holders and the Issuer.
Section 9. Reclassification, Reorganization, Consolidation or Merger.
(a) In case of any Reorganization Transaction (as hereinafter defined) or
the Reorganization, the Issuer shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter, by exercising this Warrant, to purchase the kind and
highest amount of shares of stock and other securities and property receivable
upon such Reorganization Transaction by a holder of the number of shares of
Common Stock that would have been received upon exercise of this Warrant
immediately prior to such Reorganization Transaction. Any such provision shall
include provision for adjustments in respect of such shares of stock and other
securities and property that shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Warrant. The foregoing provisions of
this Section 9 shall similarly apply to successive Reorganization Transactions.
For purposes of this Section 9, "Reorganization Transaction" shall mean
(excluding any transaction covered by Section 7) any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
Issuer (other than a subdivision or combination of the outstanding Common Stock
and other then a change in the par value of the Common Stock) or any
consolidation or merger of the Issuer with or into another corporation (other
than a merger with a subsidiary in which merger the Issuer is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or any sale, lease, transfer or
conveyance to another corporation of all or substantially all of the assets of
the Issuer.
(b) Notwithstanding anything contained in the Warrants or in the Purchase
Agreement to the contrary, the Issuer shall not effect any Reorganization
Transaction unless, in connection with the consummation thereof, each Person
(other than the Issuer) which may be required to deliver any stock, securities
or property upon the exercise of this Warrant as provided herein shall assume,
by written instrument delivered to the Holder, (a) the obligations of the
Issuer under this Warrant, (b) the obligations of the Issuer under the
Registration Rights
<PAGE>
-8-
and Stockholders Agreement and (c) the obligation to deliver to the Holder such
shares of stock, securities or property as, in accordance with the foregoing
provisions of this Section 9, the Holder may be entitled to receive. Nothing in
this Section 9 shall be deemed to authorize the Issuer to enter into any
transaction not otherwise permitted by the Purchase Agreement.
Section 10. Transfer Restrictions.
(a) Compliance with Securities Act. The Holder, by acceptance hereof,
agrees that this Warrant, and the Warrant Shares to be issued upon exercise
hereof are being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Warrant, or any Warrant Shares except under
circumstances which will not result in a violation of the Securities Act or any
applicable state securities laws. Upon exercise of this Warrant, unless the
Warrant Shares being acquired are registered under the Securities Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder hereof shall confirm in writing that the Warrant Shares so
purchased are being acquired for investment and not with a view toward
distribution or resale in violation of the Securities Act and shall confirm such
other matters related thereto as may be reasonably requested by the Issuer.
This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless
registered under the Securities Act and any applicable state securities laws)
shall be stamped or imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS
SECURITY IS SUBJECT TO THE APPLICABLE TERMS OF THE PURCHASE AGREEMENT,
DATED AS OF JANUARY 31, 2000, AND THE REGISTRATION RIGHTS AND STOCKHOLDERS
AGREEMENT, DATED AS OF JANUARY 31, 2000. COPIES OF SUCH AGREEMENTS ARE
AVAILABLE AT THE OFFICES OF THE ISSUER.
Said legend shall be removed by the Issuer, upon the request of the
Holder, at such time as the restrictions on the transfer of the applicable
security shall have terminated.
<PAGE>
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(b) Disposition of Warrant or Warrant Shares. With respect to any
offer, sale or other disposition of this Warrant or any Warrant Shares acquired
pursuant to the exercise of this Warrant prior to registration of such Warrant
or Warrant Shares, the Holder hereof agrees to comply with all of the applicable
provisions of Section 9 of the Purchase Agreement. Each certificate
representing this Warrant or Warrant Shares thus transferred (except a transfer
pursuant to Rule 144) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the
aforesaid opinion of counsel for Holder, such legend is not required in order to
ensure compliance with such laws. The Issuer may issue stop transfer
instructions to its transfer agent in connection with such restrictions.
Section 11. Market Stand-Off. The Holder hereby agrees that, during the
period of duration (up to, but not exceeding, 180 days) specified by the Issuer
and an underwriter of Common Stock or other equity securities of the Issuer,
following the effective date of a registration statement of the Issuer filed
under the Securities Act, it shall not, to the extent requested by the Issuer
and such underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any Common Stock of the Issuer held by it at any time during
such period except Common Stock included in such registration. In order to
enforce the foregoing covenant, the Issuer may impose stop-transfer instructions
with respect to the securities of Holder until the end of such period, and
Holder agrees that, if so requested, Holder will execute an agreement in the
form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section.
Section 12. Listing on Securities Exchanges. The Issuer shall use all
commercially reasonable efforts to list on each national securities exchange, if
any, on which any Common Stock may at any time be listed, subject to official
notice of issuance upon the exercise of this Warrant, and shall use its
commercially reasonable efforts to maintain such listing, so long as any other
shares of its Common Stock shall be so listed, all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Issuer shall
use its commercially reasonable efforts to so list on each national securities
exchange, and shall use all reasonable efforts to maintain such listing of, any
other shares of capital stock of the Issuer issuable upon the exercise of this
Warrant if and so long as any shares of capital stock of the same class shall be
listed on such national securities exchange by the Issuer. Any such listing
shall be at the Issuer's expense.
Section 13. Availability of Information. The Issuer shall comply with the
reporting requirements set forth in Section 6 of the Purchase Agreement.
<PAGE>
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Section 14. Governing Law. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of New York, excluding choice-of-law principles of the law of such
state that would require the application of the laws of a jurisdiction other
than such state.
<PAGE>
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IN WITNESS WHEREOF, the Issuer has duly caused this Warrant to be executed
by and attested by one of its duly authorized officers and to be dated as of
February 2, 2000.
INTIRA CORPORATION
By:__________________________________
Name: David Boone
Title: Chief Financial Officer
Address:
Intira Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: David Boone
Telecopier: (925) 224-7964
Telephone: (925) 224-7951
<PAGE>
PURCHASE FORM
Dated _________, __
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing _____ shares of Common Stock and hereby makes payment
of _____ in payment of the exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name________________________________________________________________________
(please typewrite or print in block letters)
Address ____________________________________________________________________
Signature __________________________________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________________________ hereby sells,
assigns and transfers unto
Name________________________________________________________________________
(please typewrite or print in block letters)
Address ____________________________________________________________________
its right to purchase _____ shares of Common Stock represented by this Warrant
and does hereby irrevocably constitute and appoint ___________ Attorney, to
transfer the same on the books of the Issuer, with full power of substitution in
the premises.
Date _______, ____
Signature ________________________
<PAGE>
EXHIBIT 10.1A
INTIRA CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is made as of ________,
2000, by and between Intira Corporation (the "Company"), a Delaware corporation,
and _____________ (the "Indemnitee"), and shall become effective as of the time
the Securities and Exchange Commission declares effective the Company's
Registration Statement on Form S-1 relative to its initial underwritten public
offering of Common Stock under the Securities Act of 1933, as amended.
WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and its related
entities;
WHEREAS, in order to induce Indemnitee to continue to provide services to
the Company, the Company wishes to provide for the indemnification of, and
advancement of expenses to, Indemnitee to the maximum extent permitted by law;
WHEREAS, Indemnitee does not regard the current protection available as
adequate under the present circumstances, and the Indemnitee and other
directors, officers, employees, agents and fiduciaries of the Company may not be
willing to continue to serve in such capacities without additional protection;
WHEREAS, the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the Company's directors, officers, employees,
agents and fiduciaries, the significant increases in the cost of such insurance
and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in view of the considerations set forth above, the Company desires
that Indemnitee shall be indemnified by the Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.
1. Certain Definitions.
-------------------
(a) "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same
<PAGE>
proportions as their ownership of stock of the Company, becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company's then outstanding Voting Securities, (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (iii) the stockholders
of the Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of the
Company's assets.
(b) "Claim" shall mean any threatened, pending or completed action,
suit, proceeding or alternative dispute resolution mechanism, or any hearing,
inquiry or investigation that Indemnitee in good faith believes might lead to
the institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.
(c) References to the "Company" shall include, in addition to Intira
Corporation any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which Intira Corporation
(or any of its wholly owned subsidiaries) is a party which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, agents or fiduciaries, so that if Indemnitee is
or was a director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indemnitee
would have with respect to such constituent corporation if its separate
existence had continued.
(d) "Expenses" shall mean any and all expenses (including attorneys'
fees and all other costs, expenses and obligations incurred in connection with
investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, to be a witness in or to participate in, any
action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of any Claim regarding any
Indemnifiable Event and any federal, state, local or foreign taxes imposed on
the Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement.
-2-
<PAGE>
(e) "Expense Advance" shall mean an advance payment of Expenses to
Indemnitee pursuant to Section 3(a).
(f) "Indemnifiable Event" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
(g) "Independent Legal Counsel" shall mean an attorney or firm of
attorneys, selected in accordance with the provisions of Section 2(c) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean any appropriate person or body
consisting of a member or members of the Company's Board of Directors or any
other person or body appointed by the Board of Directors who is not a party to
the particular Claim for which Indemnitee is seeking indemnification, or
Independent Legal Counsel.
(j) "Voting Securities" shall mean any securities of the Company that
vote generally in the election of directors.
2. Indemnification.
---------------
(a) Indemnification of Expenses. The Company shall indemnify
---------------------------
Indemnitee to the fullest extent permitted by law if Indemnitee was or is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, any Claim by reason of (or
arising in part out of) any Indemnifiable Event against Expenses, including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses. Such payment of Expenses shall be made by the Company
as soon as practicable but in any event no later than five (5) business days
after written demand by Indemnitee therefor is presented to the Company.
-3-
<PAGE>
(b) Reviewing Party. Notwithstanding the foregoing, (i) the
---------------
obligations of the Company under Section 2(a) shall be subject to the condition
that the Reviewing Party shall not have determined (in a written opinion, in any
case in which the Independent Legal Counsel referred to in Section 2(c) hereof
is involved) that Indemnitee would not be permitted to be indemnified under
applicable law, and (ii) the obligation of the Company to make an Expense
Advance shall be subject to the condition that, if, when and to the extent that
the Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced or
-------- -------
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto (as to
which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for any Expense Advance shall
be unsecured and no interest shall be charged thereon. If there has not been a
Change in Control, the Reviewing Party shall be selected by the Board of
Directors, and if there has been such a Change in Control (other than a Change
in Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel. If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the right to commence
litigation seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents to service of process
and to appear in any such proceeding. Absent such litigation, any determination
by the Reviewing Party shall be conclusive and binding on the Company and
Indemnitee.
(c) Change in Control. The Company agrees that if there is a Change
-----------------
in Control of the Company (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), then with respect to all matters
thereafter arising concerning the rights of Indemnitee to payments of Expenses
and Expense Advances under this Agreement or any other agreement or under the
Company's Certificate of Incorporation or Bylaws as now or hereafter in effect,
Independent Legal Counsel, if desired by Indemnitee, shall be selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law and the Company agrees to abide
by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all matters concerning a single Indemnitee, and such
Independent Legal Counsel shall be the Independent Legal
-4-
<PAGE>
Counsel for any or all other Indemnitees unless (i) the Company otherwise
determines or (ii) any Indemnitee shall provide a written statement setting
forth in detail a reasonable objection to such Independent Legal Counsel
representing other Indemnitees.
(d) Mandatory Payment of Expenses. Notwithstanding any other
-----------------------------
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim regarding any Indemnifiable Event, Indemnitee shall be indemnified against
all Expenses incurred by Indemnitee in connection therewith.
3. Expenses; Indemnification Procedure.
-----------------------------------
(a) Advancement of Expenses. The Company shall advance all Expenses
-----------------------
incurred by Indemnitee. The advances to be made hereunder shall be paid by the
Company to Indemnitee as soon as practicable but in any event no later than five
(5) business days after written demand by Indemnitee therefor to the Company.
Expenses incurred in defending any proceeding may be advanced by the Company
prior to the final disposition of the proceeding upon receipt of an undertaking
by or on behalf of Indemnitee to repay the Expenses incurred, if it shall be
determined ultimately that Indemnitee is not entitled to be indemnified.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
--------------------------------
condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
Claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be directed to the Chief
Executive Officer of the Company at the address shown on the signature page of
this Agreement (or such other address as the Company shall designate in writing
to Indemnitee). In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee's
power.
(c) No Presumptions; Burden of Proof. For purposes of this
--------------------------------
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
----
contendere, or its equivalent, shall not create a presumption that Indemnitee
- ----------
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by applicable
law. In addition, neither the failure of the Reviewing Party to have made a
determination as to whether Indemnitee has met any particular standard of
conduct or had any particular belief, nor an actual determination by the
Reviewing Party that Indemnitee has not met such standard of conduct or did not
have such belief, prior to the commencement of legal proceedings by Indemnitee
to secure a judicial determination that Indemnitee should be indemnified under
applicable law, shall be a defense to Indemnitee's claim or create a presumption
that Indemnitee has not met any particular standard of conduct or did not have
any particular belief.
(d) Notice to Insurers. If, at the time of the receipt by the
------------------
Company of a notice of a Claim pursuant to Section 3(b) hereof, the Company has
liability insurance in effect which may
-5-
<PAGE>
cover such Claim, the Company shall give prompt notice of the commencement of
such Claim to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such Claim in accordance with the terms of such
policies.
(e) Selection of Counsel. In the event the Company shall be obligated
--------------------
hereunder to pay the Expenses of any Claim the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(not to be unreasonably withheld) upon the delivery to Indemnitee of written
notice of the Company's election so to do. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the same
Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee's
separate counsel in any such Claim at Indemnitee's expense and (ii) if (A) the
employment of separate counsel by Indemnitee has been previously authorized by
the Company, (B) Indemnitee shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnitee in the conduct of any
such defense, or (C) the Company shall not continue to retain such counsel to
defend such Claim, then the fees and expenses of Indemnitee's separate counsel
shall be at the expense of the Company.
4. Additional Indemnification Rights; Nonexclusivity.
-------------------------------------------------
(a) Scope. The Company hereby agrees to indemnify the Indemnitee to
-----
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change after the date of this Agreement in any applicable law,
statute or rule which expands the right of a Delaware corporation to indemnify a
member of its board of directors or an officer, employee, agent or fiduciary, it
is the intent of the parties hereto that Indemnitee shall enjoy by this
Agreement the greater benefits afforded by such change. In the event of any
change in any applicable law, statute or rule which narrows the right of a
Delaware corporation to indemnify a member of its board of directors or an
officer, employee, agent or fiduciary, such change, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement, shall
have no effect on this Agreement or the parties' rights and obligations
hereunder except as set forth in Section 9(a) hereof.
(b) Nonexclusivity. The indemnification provided by this Agreement
--------------
shall be in addition to any rights to which Indemnitee may be entitled under the
Company's Certificate of Incorporation, its Bylaws, any other agreement, any
vote of stockholders or disinterested directors, the General Corporation Law of
the State of Delaware, or otherwise. The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though Indemnitee may have ceased
to serve in such capacity.
5. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent
-6-
<PAGE>
Indemnitee has otherwise actually received payment (under any insurance policy,
provision of the Company's Certificate of Incorporation, bylaw or otherwise) of
the amounts otherwise indemnifiable hereunder.
6. Partial Indemnification. If Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
7. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
---------------------
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
8. Liability Insurance. To the extent the Company maintains liability
-------------------
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
9. Exceptions. Notwithstanding any other provision of this Agreement, the
----------
Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for acts,
----------------------------
omissions or transactions from which Indemnitee may not be indemnified under
applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses
------------------------------
to Indemnitee with respect to Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) with respect to actions or
proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other agreement or insurance policy or under the Company's
Certificate of Incorporation or Bylaws now or hereafter in effect relating to
Claims for Indemnifiable Events, (ii) in specific cases if the Board of
Directors has approved the initiation or bringing of such Claim, or (iii) as
otherwise required under Section 145 of the Delaware General Corporation Law,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recovery, as the case may
be.
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses
------------------
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this
-7-
<PAGE>
Agreement, if a court of competent jurisdiction determines that each of the
material assertions made by the Indemnitee in such proceeding was not made in
good faith or was frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
--------------------------
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
10. Period of Limitations. No legal action shall be brought and no cause
---------------------
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
-------- -------
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
11. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
--------------------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Attorneys' Fees. In the event that any action is instituted by
---------------
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee with respect to such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses with respect to such action, unless as a part of such action a court
of competent jurisdiction over such action determines that each of the material
assertions made by Indemnitee as a basis for such action were not made in good
faith or were frivolous. In the event of an action instituted by or in the name
of the Company under this Agreement to enforce or interpret any of the terms of
this Agreement, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action), and
shall be entitled to the advancement of Expenses with respect to such action,
unless as a part of
-8-
<PAGE>
such action a court having jurisdiction over such action determines that each of
Indemnitee's material defenses to such action were made in bad faith or were
frivolous.
14. Notice. All notices, requests, demands and other communications
------
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
15. Consent to Jurisdiction. The Company and Indemnitee each hereby
-----------------------
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
16. Severability. The provisions of this Agreement shall be severable
------------
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Choice of Law. This Agreement shall be governed by and its provisions
-------------
construed and enforced in accordance with the laws of the State of Delaware as
applied to contracts between Delaware residents entered into and to be performed
entirely within the State of Delaware.
18. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
19. Amendment and Termination. No amendment, modification, termination or
-------------------------
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
20. Integration and Entire Agreement. This Agreement sets forth the
--------------------------------
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations,
-9-
<PAGE>
commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.
21. No Construction as Employment Agreement. Nothing contained in this
---------------------------------------
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification
Agreement as of the date first above written.
"COMPANY" INTIRA CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
Address: 5667 Gibraltar Drive
Pleasanton, California 94588
"INDEMNITEE"
_______________________________
Name:
Address:_____________________________
_____________________________
_____________________________
[SIGNATURE PAGE TO INTIRA CORPORATION INDEMNIFICATION AGREEMENT]
-11-
<PAGE>
EXHIBIT 10.1B
INDEMNIFICATION AGREEMENT
This Agreement, made and entered into this 15 day of June, 1998
("Agreement"), by and between digital broadcast network corporation, a Missouri
corporation ("Company"), and ________________ ("Indemnitee"):
RECITALS:
To induce the Indemnitee to serve and continue to serve as a member of the
Board of Directors of the Company, the Company has determined and agreed to
enter into this Agreement with the Indemnitee.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Services by Indemnitee. Indemnitee agrees to serve as a
----------------------
director of the Company. Indemnitee may at any time and for any reason resign
from such position (subject to any other contractual obligation or any
obligation imposed by operation of law), in which event the Company shall have
no obligation under this Agreement to continue Indemnitee in such position.
Section 2. Indemnification - General. The Company shall indemnify, and
-------------------------
advance Expenses (as hereinafter defined) to, Indemnitee (a) as provided in this
Agreement and (b) to the fullest extent permitted by applicable law in effect on
the date hereof and as amended from time to time. The rights of Indemnitee
provided under the preceding sentence shall include, but will not be limited to,
the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of the
------------------------------------------------------------
Company. Indemnitee shall be entitled to the rights of indemnification
- -------
provided in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed Proceeding (as hereinafter defined), other than a
Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against all Expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him or
on his behalf in connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company and, with respect to any
criminal Proceeding, had no reasonable cause to believe his conduct was
unlawful.
Section 4. Proceedings by or in the Right of the Company. Indemnitee
---------------------------------------------
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to be made a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; provided, however, that, if
-------- -------
applicable law
<PAGE>
so provides, no indemnification against such Expenses shall be made in respect
of any claim, issue or matter in such Proceeding as to which Indemnitee shall
have been adjudged to be liable to the Company unless and to the extent that the
court in which such Proceeding shall have been brought or is pending, shall
determine that such indemnification may be made.
Section 5. Indemnification for Expenses of a Party Who is Wholly or
--------------------------------------------------------
Partly Successful. Notwithstanding any other provision of this Agreement, to
- -----------------
the extent that Indemnitee is, by reason of his Corporate Status, a party to and
is successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness. Notwithstanding
-----------------------------------------
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.
Section 7. Advancement of Expenses. The Company shall advance all
-----------------------
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within ten days after the receipt by the Company of a statement
or statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 8. Procedure for Determination of Entitlement to Indemnification.
-------------------------------------------------------------
(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if and
to the extent required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (i) if a Change in
Control (as hereinafter defined) shall have occurred, by Independent Counsel (as
hereinafter defined) in a written opinion to the Board of Directors, a copy of
which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not
have occurred, (A) by the Board of Directors by a majority vote
-2-
<PAGE>
of a quorum consisting of Disinterested Directors (as hereinafter defined), or
(B) if a quorum of the Board of Directors consisting of Disinterested Directors
is not obtainable or, even if obtainable, such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board of
Directors, or (C) by the shareholders of the Company; and, if it is so
determined that Indemnitee is entitled to indemnification, payment to Indemnitee
shall be made within ten (10) days after such determination. Indemnitee shall
cooperate with the person, persons or entity making such determination with
respect to Indemnitee's entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation
or information which is not privileged or otherwise protected from disclosure
and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorney's fees and
disbursements) incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective
of the determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination or entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, the Independent Counsel shall be selected as provided in this Section
8(c). If a Change of Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give written
notice to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request that such
selection be made by the Board of Directors, in which event the preceding
sentence shall apply), and Indemnitee shall give written notice to the Company
advising it of the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company
or to Indemnitee, as the cast may be, a written objection to such selection
provided, however, that such objection may be asserted only on the ground that
- -------- -------
the Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in Section 17 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is so made and substantiated, the
Independent Counsel so selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that such objection
is without merit. If, within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 8(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition any court of competent jurisdiction for resolution of
any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom all objections
are so resolved or the person so appointed shall act as Independent Counsel
under Section 8(b) hereof The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
to Section 10(a)(iii) of this Agreement, Independent Counsel shall be discharged
and relieved of any further responsibility in such capacity (subject to the
-3-
<PAGE>
applicable standards of professional conduct then prevailing). The parties agree
that the decision and determination of such Independent Counsel shall be final
and binding on the Parties.
Section 9. Presumptions and Effect of Certain Proceedings.
----------------------------------------------
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 8(a) of this Agreement, and the Company shall have the
burden of proof to overcome that presumption in connection with the making by
any persons, persons or entity of any determination contrary to that
presumption.
(b) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
----------------------
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 7 of this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 8(b) of this Agreement
within 90 days after receipt by the Company of the request for indemnification,
(iv) payment of indemnification is not made pursuant to Section 5 or 6 of this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Missouri, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement of
Expenses. Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a); provided, however, that
-------- -------
the foregoing clause shall not apply in respect of a proceeding brought by
Indemnitee to enforce his rights under Section 5 of this Agreement.
(b) In the event that a determination shall have been made
pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this
-4-
<PAGE>
Section 10, the Company shall have the burden of proving that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made pursuant to Section
8(b) of this Agreement that Indemnitee is entitled to indemnification,
Indemnitee and the Company shall be bound by such determination in any judicial
proceeding or arbitration commenced pursuant to this Section 10, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
(d) In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
of Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Section 11. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
-----------------------------------------------------------
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Articles of Incorporation, the Bylaws, any agreement, a vote of
shareholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action
taken or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal.
(b) To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees, or
agents of the Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such person serves at the
request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any such director, officer, employee or agent under such policy or
policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to seek such rights, including execution of such documents as
are necessary to enable the Company to bring suite to enforce such rights.
(d) The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
-5-
<PAGE>
Section 12. Duration of Agreement. This Agreement shall continue until and
---------------------
terminate upon the later of: (a) 10 years after the date that Indemnitee shall
have ceased to serve as a director, officer, employee, or agent of the Company
or of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which Indemnitee served at the request of the Company;
or (b) the final termination of any Proceeding then pending in respect of
Indemnitee is granted rights of indemnification or advancement of expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10
of this Agreement relating thereto. This Agreement shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Indemnitee and his heirs, executors and administrators.
Section 13. Severability. If any provision or provisions of this
------------
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that it is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provision of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.
Section 14. Exception to Right of Indemnification or Advancement of
-------------------------------------------------------
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
- --------
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding brought by Indemnitee, or any claim
therein prior to a Change in Control, unless the bringing of such Proceeding or
making of such claim shall have been approved by the Board of Directors.
Section 15. Identical Counterparts. This Agreement may be executed in one
----------------------
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence of this Agreement.
Section 16. Headings. The headings of the paragraphs of this Agreement
--------
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
-6-
<PAGE>
Section 17. Definitions. Purposes of this Agreement:
---------------------------------------
(a) "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
subject to such reporting requirement; provided, however, without limitation,
-------- -------
such a Change in Control shall be deemed to have occurred if after the Effective
Date (i) any "person" as such item is used in Sections 13(d) and 14(d) of the
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining such percentage
interest; (ii) there occurs a proxy contest, or the Company is a party to a
merger, consolidation, sale of assets, plan of liquidation or other
reorganization not approved by at least two-thirds of the members of the Board
of Directors then in office, as a consequence of which members of the Board of
Directors in office immediately prior to such transaction or event constitute
less than a majority of the Board of Directors thereafter, or (iii) during any
period of two consecutive years, other than as a result of an event described in
clause (a)(ii) of this Section 17, individuals who at the beginning of such
period constituted the Board of Directors (including for this purpose any new
director whose election Or nomination for election by the Company's stockholders
was approved by a vote of at least two -thirds of the directors then still in
office who were directors at the beginning of such period) cease for any reason
to constitute at least a majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is or
was a director, officer, employee or agent of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who
is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.
(d) "Effective Date" means ____________.
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness is
a Proceeding.
(f) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law, that is an unrelated
and neutral third party to the Company and Indemnitee, and neither presently is,
nor in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either party, (ii) any other party to the
Proceeding giving rise to a claim for indemnification.
-7-
<PAGE>
(g) "Proceeding" includes an action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
(i) initiated by an Indemnitee pursuant to Section 10 of this Agreement to
enforce his rights under this Agreement or (ii) pending on or before the
Effective Date.
Section 18. Modification of Waiver. No supplement, modification or
----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify
--------------------
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
Section 20. Notices. All notices, requests, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communications shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee to:
___________________
___________________
(b) If to the Company to:
digital broadcast network corporation
977 Charter Commons
Chesterfield, MO 63017
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this Agreement shall be
-------------
governed by, and construed and enforced in accordance with, the laws of the
State of Missouri.
Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed to
-------------
include usage of the feminine pronoun when appropriate.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
digital broadcast network corporation
By:_______________________________________
By:_______________________________________
-9-
<PAGE>
EXHIBIT 10.2
DIGITAL BROADCAST NETWORK CORPORATION
1999 STOCK OPTION PLAN
(Amended and Restated as of October 13, 1999)
1. Purposes of the Plan. The purposes of this 1999 Stock Plan are to
--------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.
The Stock Plan was originally adopted by the Board on March 10,
1999.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Administrator" means the Board or any of its Committees as
-------------
shall be administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by
---------
the Board in accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
------------
(g) "Company" means Digital Broadcast Network Corporation, a
-------
Missouri corporation.
(h) "Consultant" means any natural person who is engaged by the
----------
Company or any Parent or Subsidiary to render consulting or advisory services to
such entity and who satisfies the requirements of subsection (c)(1) of Rule 701
under the Securities Act of 1933, as amended.
(i) "Director" means a member of the Board of Directors of the
--------
Company.
(j) "Disability" means total and permanent disability as
----------
defined in Section 22(e)(3) of the Code.
<PAGE>
(k) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code.
(o) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(p) "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.
(q) "Option" means a stock option granted pursuant to the Plan.
------
(r) "Option Agreement" means a written or electronic agreement
----------------
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
<PAGE>
(s) "Option Exchange Program" means a program whereby outstanding
-----------------------
Options are exchanged for Options with a lower exercise price.
(t) "Optioned Stock" means the Common Stock subject to an Option or a
--------------
Stock Purchase Right.
(u) "Optionee" means the holder of an outstanding Option or Stock
--------
Purchase Right granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 1999 Stock Plan, as amended.
----
(x) "Service Provider" means an Employee, Director or Consultant.
----------------
(y) "Share" means a share or shares of the Common Stock, as adjusted
-----
in accordance with Section 12 below.
(z) "Subsidiary" means any corporation (other than the Company),
----------
whether now or hereafter existing, in an unbroken chain of corporations
beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is 2,000,000 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan upon exercise of an Option, shall
not be returned to the Plan and shall not become available for future
distribution under the Plan.
4. Administration of the Plan.
--------------------------
(a) Administrator. The Plan shall be administered by the Board or a
-------------
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
-3-
<PAGE>
(ii) to select the Service Providers to whom Options may from time
to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each such
award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an Option may
be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;
(x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to (or
lesser than) the minimum amount required to be withheld. The Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options and Stock Purchase Rights may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees.
-4-
<PAGE>
(b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate such relationship at any time, with or
without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by
------------
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of such
Option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time of grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of
-5-
<PAGE>
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
from a brokerage firm under a cashless exercise program approved the Company in
connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder to Officers and Directors shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
-6-
<PAGE>
Exercise of an Option in any manner shall result in a decrease in the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
-------------------------------------------------
ceases to be a Service Provider, such Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement (of at least
thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
-----------------
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
10. Non-Transferability of Options and Stock Purchase Rights. The Options
--------------------------------------------------------
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and
-7-
<PAGE>
the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option , as well
as the price per share of Common Stock covered by each such outstanding Option
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company. The conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option or Stock Purchase Right shall be considered
assumed if, following the merger or sale of assets, the option or right confers
the right to purchase or receive, for each Share of Optioned Stock subject to
the Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option for
each
-8-
<PAGE>
Share of Optioned Stock subject to the Option to be solely common stock of
the successor corporation or its Parent equal in fair market value to the per
share consideration received by holders of Common Stock in the merger or sale of
assets.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. No action authorized by section 13(a)
--------------------
shall reduce the amount of any existing Option or change the terms and
conditions thereof without the Optionee's consent. No amendment of the Plan
shall, without approval of the shareholders of the Company, (a) increase the
total number of shares which may be issued under the Plan or increase the amount
or type of benefits that may be granted under the Plan; or (b) modify the
requirements as to eligibility under the Plan.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
14. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
15. Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any
-9-
<PAGE>
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
16. Reservation of Shares. The Company, during the term of this Plan,
---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
-10-
<PAGE>
DIGITAL BROADCAST NETWORK CORPORATION
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1999 Stock Option
Plan shall have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Date of Grant _________________________________
Vesting Commencement Date _________________________________
Exercise Price per Share $_________________________________
Total Number of Shares Granted _________________________________
Total Exercise Price $_________________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
6.25% of the Shares subject to the Option shall vest three months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to Optionee's continuing to be a Service Provider on
such dates.
<PAGE>
Termination Period:
------------------
This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or Disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during
-----------------
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by
------------------
delivery of an exercise notice in the form attached as Exhibit A (the "Exercise
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
-2-
<PAGE>
3. Optionee's Representations. In the event the Shares have not
--------------------------
been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.
---------
4. Lock-Up Period. Optionee hereby agrees that, if so requested
--------------
by the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the 180-
day period (or such other period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market Standoff
Period") following the effective date of a registration statement of the Company
filed under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price
-----------------
shall be by any of the following, or a combination thereof, at the election of
the Optionee:
(a) cash or check;
(b) consideration received by the Company from a brokerage firm
under a formal cashless exercise program approved by the Company in connection
with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised
------------------------
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
Applicable Law.
7. Non-Transferability of Option. This Option may not be
-----------------------------
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
-3-
<PAGE>
8. Term of Option. This Option may be exercised only within the
--------------
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
----------------
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
---------------
liability the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(b) Exercise of ISO. If this Option qualifies as an ISO, there
---------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
-4-
<PAGE>
10. Entire Agreement; Governing Law. The Plan is incorporated
-------------------------------
herein by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws but not the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
---------------------------------
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
________________________________ _______________________________________
Signature By
________________________________ _______________________________________
Print Name Title
________________________________
________________________________
Residence Address
-5-
<PAGE>
EXHIBIT A
1999 STOCK OPTION PLAN
EXERCISE NOTICE
Digital Broadcast Network Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Digital Broadcast Network
Corporation (the "Company") under and pursuant to the 1999 Stock Option Plan
(the "Plan") and the Stock Option Agreement dated ________, 19______ (the
"Option Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company the full
-------------------
purchase price of the Shares, as set forth in the Option Agreement, and any and
all withholding taxes due in connection with the exercise of the Option.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee; and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the
<PAGE>
Shares (the "Offered Price"), and the Holder shall offer the Shares at the
Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the 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 Section, then the Holder may
sell or otherwise transfer such 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, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of First
-------------------------------------
Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
-2-
<PAGE>
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE
ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH
MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF
THESE SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth,
-3-
<PAGE>
this Exercise Notice shall be binding upon Optionee and his or her heirs,
executors, administrators, successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
10. Governing Law; Severability. This Exercise Notice is governed by the
---------------------------
internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
_____________________________ _____________________________________
Signature By
_____________________________ _____________________________________
Print Name Title
Address: Address:
- ------- -------
_____________________________ _____________________________________
_____________________________ _____________________________________
_____________________________________
Date Received
-4-
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: DIGITAL BROADCAST NETWORK CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely, and Optionee will bear the economic risk of holding such
Securities for that indefinite period of time, unless and until the Securities
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and with any other legend required under applicable
state securities laws.
<PAGE>
(c) Optionee is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions. If the Securities are resold in reliance on Rule 144, certain
conditions specified by Rule 144 must be satisfied, including (without
limitation): (1) the resale occurring not less than one year after the later of
the date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; (2) the
resale being made through a broker in an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (3) the
availability of certain public information about the Company, (4) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (5) the timely filing of a Form 144,
if applicable.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Optionee:
_____________________________________
Date:___________________________, 19__
-2-
<PAGE>
CA
DIGITAL BROADCAST NETWORK CORPORATION
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1999 Stock
Option Plan shall have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Date of Grant _______________________________
Vesting Commencement Date _______________________________
Exercise Price per Share $______________________________
Total Number of Shares Granted _______________________________
Total Exercise Price $______________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _______________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
6.25% of the Shares subject to the Option shall vest three months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to Optionee"s continuing to be a Service Provider on
such dates.
<PAGE>
Termination Period:
------------------
This Option shall be exercisable for three months after Optionee
ceases to be a Service Provider. Upon Optionee's death or Disability, this
Option may be exercised for one year after Optionee ceases to be a Service
Provider. In no event may Optionee exercise this Option after the
Term/Expiration Date as provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company
---------------
hereby grants to the Optionee named in the Notice of Grant (the "Optionee"), an
option (the "Option") to purchase the number of Shares set forth in the Notice
of Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable
-----------------
during its term in accordance with the Vesting Schedule set out in the Notice of
Grant and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable
------------------
by delivery of an exercise notice in the form attached as Exhibit A (the
---------
"Exercise Notice") which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as may be required by the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
-2-
<PAGE>
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit B
and shall read the applicable rules of the Commissioner of Corporations attached
to such Investment Representation Statement.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
--------------
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall be by
-----------------
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash or check;
(b) consideration received by the Company from a brokerage firm under
a formal cashless exercise program approved by the Company in connection with
the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised until such
------------------------
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during
-3-
<PAGE>
the lifetime of Optionee only by Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the date
-----------------
of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
----------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise .
(b) Exercise of ISO. If this Option qualifies as an ISO, there
---------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant,
-4-
<PAGE>
or (2) the date one year after the date of exercise, the Optionee shall
immediately notify the Company in writing of such disposition. Optionee agrees
that Optionee may be subject to income tax withholding by the Company on the
compensation income recognized by the Optionee.
10. Entire Agreement; Governing Law. The Plan is incorporated
-------------------------------
herein by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws but not the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
---------------------------------
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
________________________________ ___________________________________
Signature By
________________________________ ___________________________________
Print Name Title
-5-
<PAGE>
________________________________
________________________________
Residence Address
-6-
<PAGE>
EXHIBIT A
1999 STOCK OPTION PLAN
EXERCISE NOTICE
Digital Broadcast Network Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Digital Broadcast Network
Corporation (the "Company") under and pursuant to the 1999 Stock Option Plan
(the "Plan") and the Stock Option Agreement dated ________, 19 (the "Option
Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company
-------------------
the full purchase price of the Shares, as set forth in the Option Agreement, and
any and all withholding taxes due in connection with the exercise of the Option.
3. Representations of Optionee. Optionee acknowledges that
---------------------------
Optionee has received, read and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as
---------------------
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares shall be issued to
the Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by
--------------------------------
Optionee or any transferee (either being sometimes referred to herein as the
"Holder") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares
---------------------------
shall deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee
<PAGE>
("Proposed Transferee"); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the "Offered Price"), and
the Holder shall offer the Shares at the Offered Price to the Company or its
assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall
be the Offered Price. If the Offered Price includes consideration other than
cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the 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 Section, then the Holder may
sell or otherwise transfer such 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, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the
--------------------------------------
contrary contained in this Section notwithstanding, the transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's immediate family or a trust for the benefit of
the Optionee's immediate family shall be exempt from the provisions of this
Section. "Immediate Family" as used herein shall mean spouse, lineal descendant
or antecedent, father, mother, brother or sister. In such case, the transferee
or other recipient shall receive and hold the Shares so transferred subject to
the provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
-2-
<PAGE>
(g) Termination of Right of First Refusal. The Right of First
-------------------------------------
Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR
ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE
NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER
OF THIS SECURITY, OR ANY INTEREST THEREIN, OR
TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER"S
RULES.
-3-
<PAGE>
Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy which is attached to Exhibit B, the Investment Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
10. Governing Law; Severability. This Exercise Notice is governed by the
---------------------------
internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
[Remainder of page intentionally left blank.]
-4-
<PAGE>
Submitted by: Accepted by:
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
_______________________________ ____________________________________
Signature By
_______________________________ ____________________________________
Print Name Title
Address: Address:
- ------- -------
_______________________________ ____________________________________
_______________________________ ____________________________________
____________________________________
Date Received
-5-
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: DIGITAL BROADCAST NETWORK CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company"s business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee"s own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee"s investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee"s representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely, and Optionee will bear the economic risk of holding such
Securities for that indefinite period of time, unless and until the Securities
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California, and any
other legend required under applicable state securities laws.
<PAGE>
(c) Optionee is familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. If the Securities are resold in reliance on Rule 144,
certain conditions specified by Rule 144 must be satisfied, including (without
limitation): (1) the resale occurring not less than one year after the later of
the date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; (2) the
resale being made through a broker in an unsolicited "broker"s transaction" or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (3) the
availability of certain public information about the Company, (4) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (5) the timely filing of a Form 144,
if applicable.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
(e) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend that prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
____________________________
Date:______________, 19_____
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<PAGE>
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
----------------------------------------------------
Title 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: Restriction on Transfer.
---------- -----------------------
(a) The issuer of any security upon which a restriction on transfer has
been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security at the time the certificate evidencing the security is delivered to the
issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section
25102 of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or
any custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112,
25113 or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
<PAGE>
(12) by way of an exchange qualified under Section 25111,
25112 or 25113 of the Code, provided that no order under Section 25140 or
subdivision (a) of Section 25143 is in effect with respect to such
qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in
an issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by
subdivision (f) of Section 25102; provided that any such transfer is on the
condition that any certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to such
a restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
-2-
<PAGE>
GA
DIGITAL BROADCAST NETWORK CORPORATION
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1999 Stock Option
Plan shall have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Date of Grant _________________________________
Vesting Commencement Date _________________________________
Exercise Price per Share $________________________________
Total Number of Shares Granted _________________________________
Total Exercise Price $________________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
6.25% of the Shares subject to the Option shall vest three months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to Optionee's continuing to be a Service Provider on
such dates.
<PAGE>
Termination Period:
------------------
This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or Disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during
-----------------
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by
------------------
delivery of an exercise notice in the form attached as Exhibit A (the "Exercise
---------
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
-2-
<PAGE>
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
-------
B.
- -
4. Lock-Up Period. Optionee hereby agrees that, if so requested by
--------------
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the 180-
day period (or such other period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market Standoff
Period") following the effective date of a registration statement of the Company
filed under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall
-----------------
be by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company from a brokerage firm
under a formal cashless exercise program approved by the Company in connection
with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised until
------------------------
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be
-----------------------------
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
-3-
<PAGE>
8. Term of Option. This Option may be exercised only within the
--------------
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
----------------
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
---------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(b) Exercise of ISO. If this Option qualifies as an ISO, there
---------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
-4-
<PAGE>
10. Entire Agreement; Governing Law. The Plan is incorporated herein
-------------------------------
by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws but not the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
---------------------------------
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
_________________________________ _________________________________
Signature By
_________________________________ _________________________________
Print Name Title
_________________________________
_________________________________
Residence Address
-5-
<PAGE>
EXHIBIT A
---------
1999 STOCK OPTION PLAN
EXERCISE NOTICE
Digital Broadcast Network Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Digital Broadcast Network
Corporation (the "Company") under and pursuant to the 1999 Stock Option Plan
(the "Plan") and the Stock Option Agreement dated ________, 19______ (the
"Option Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full purchase price of the Shares, as set forth in the Option Agreement, and any
and all withholding taxes due in connection with the exercise of the Option.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or
<PAGE>
otherwise transfer such Shares; (ii) the name of each proposed purchaser or
other transferee ("Proposed Transferee"); (iii) the number of Shares to be
transferred to each Proposed Transferee; and (iv) the bona fide cash price or
other consideration for which the Holder proposes to transfer the Shares (the
"Offered Price"), and the Holder shall offer the Shares at the Offered Price to
the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the 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 Section, then the Holder may
sell or otherwise transfer such 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, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
-2-
<PAGE>
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
PARAGRAPH (13) OF THE CODE SECTION 10-5-9 OF THE 'GEORGIA
SECURITIES ACT OF 1973,' AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER
SUCH ACT.
-3-
<PAGE>
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its rights
----------------------
under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
10. Governing Law; Severability. This Exercise Notice is governed by the
---------------------------
internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
[Remainder of page intentionally left blank.]
-4-
<PAGE>
Submitted by: Accepted by:
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
_________________________________ _________________________________
Signature By
_________________________________ _________________________________
Print Name Title
Address: Address:
- ------- -------
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________
Date Received
-5-
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: DIGITAL BROADCAST NETWORK CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely, and Optionee will bear the economic risk of holding such
Securities for that indefinite period of time, unless and until the Securities
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and with any other legend required under applicable
state securities laws.
<PAGE>
(c) Optionee is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions. If the Securities are resold in reliance on Rule 144, certain
conditions specified by Rule 144 must be satisfied, including (without
limitation): (1) the resale occurring not less than one year after the later of
the date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; (2) the
resale being made through a broker in an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (3) the
availability of certain public information about the Company, (4) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (5) the timely filing of a Form 144,
if applicable.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Optionee:
__________________________________
Date:_______________________, 19__
-2-
<PAGE>
EXHIBIT 10.3
DIGITAL BROADCAST NETWORK CORPORATION
1999 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this 1999 Equity Incentive
--------------------
Plan are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants and to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Administrator" means the Board or any of its Committees as
-------------
shall be administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the
---------
Board in accordance with Section 4 hereof.
(f) "Common Stock" means the Common Stock of the Company.
------------
(g) "Company" means Digital Broadcast Network Corporation, a
-------
Missouri corporation.
(h) "Consultant" means any natural person who is engaged by the
----------
Company or any Parent or Subsidiary to render consulting or advisory services to
such entity and who satisfies the requirements of subsection (c)(1) of Rule 701
under the Securities Act of 1933, as amended.
(i) "Director" means a member of the Board of Directors of the
--------
Company.
(j) "Disability" means total and permanent disability as defined
----------
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be
<PAGE>
an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. For purposes of Incentive Stock
Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the 91st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option. Neither service as a Director nor payment of a director's fee by
the Company shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify
----------------------
as an incentive stock option within the meaning of Section 422 of the Code.
(o) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(p) "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.
(q) "Option" means a stock option granted pursuant to the Plan.
------
(r) "Option Agreement" means a written or electronic agreement
----------------
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
-2-
<PAGE>
(s) "Option Exchange Program" means a program whereby outstanding
-----------------------
Options are exchanged for Options with a lower exercise price.
(t) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(u) "Optionee" means the holder of an outstanding Option granted
--------
under the Plan.
(v) "Parent" means a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 1999 Equity Incentive Plan.
----
(x) "Service Provider" means an Employee, Director or Consultant.
----------------
(y) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 below.
(z) "Subsidiary" means any corporation (other than the Company),
----------
whether now or hereafter existing, in an unbroken chain of corporations
beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
3. Stock Subject to the Plan. Subject to the provisions of Section
-------------------------
11 of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 1,280,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan upon exercise of an Option shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if unvested Shares are repurchased by
the Company at their original purchase price, such Shares shall become available
for future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) Administrator. The Plan shall be administered by the Board
-------------
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
-3-
<PAGE>
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may
from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options may be exercised (which may
be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred treatment under foreign
laws;
(x) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to (or less than) the minimum amount required to be withheld. The
Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined. All elections by
Optionees to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
and
(xi) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
-4-
<PAGE>
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees. Service
Providers who are eligible to receive awards under this Plan shall not be
eligible to receive awards under the Company's 1999 Executive Stock Option Plan.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate such relationship at any time, with or
without cause.
6. Term of Plan. The Plan shall become effective upon its adoption
------------
by the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be stated in the
--------------
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.
-5-
<PAGE>
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.
(B) granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
from a brokerage firm under a cashless exercise program approved by the Company
in connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder to Officers and Directors shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
-6-
<PAGE>
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
-------------------------------------------------
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
-----------------
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (of at least six (6) months) to the extent that the
Option is vested on the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) by the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, at the time of death, the Optionee is not vested
-7-
<PAGE>
as to the entire Option, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. Non-Transferability of Options. The Options may not be sold,
------------------------------
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by
-------------------------
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding
-8-
<PAGE>
Option shall be assumed or an equivalent option or right substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation refuses to assume or substitute for the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would
not otherwise be vested or exercisable. If an Option becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Administrator shall notify the Optionee in writing or
electronically that the Option shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option shall terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option or right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
12. Time of Granting Options. The date of grant of an Option shall,
------------------------
for all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Board shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
-9-
<PAGE>
14. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of
--------------------------
an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
15. Inability to Obtain Authority. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. Reservation of Shares. The Company, during the term of this Plan,
---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
18. Information to Optionees and Purchasers. The Company shall
---------------------------------------
provide to each Optionee and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options outstanding, and, in the case of an individual
who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.
-10-
<PAGE>
DIGITAL BROADCAST NETWORK CORPORATION
1999 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1999 Equity
Incentive Plan shall have the same defined meanings in this Stock Option
Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Date of Grant ________________________________
Vesting Commencement Date ________________________________
Exercise Price per Share $_______________________________
Total Number of Shares Granted ________________________________
Total Exercise Price $_______________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ________________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
6.25% of the Shares subject to the Option shall vest three months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to Optionee's continuing to be a Service Provider on
such dates.
<PAGE>
Termination Period:
------------------
This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or Disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during
-----------------
its term in accordance with the Vesting Schedule set out in the Notice of Grant
and with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by
------------------
delivery of an exercise notice in the form attached as Exhibit A (the "Exercise
---------
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
-2-
<PAGE>
3. Optionee's Representations. In the event the Shares have not been
--------------------------
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
-------
B.
- -
4. Lock-Up Period. Optionee hereby agrees that, if so requested by
--------------
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the 180-
day period (or such other period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market Standoff
Period") following the effective date of a registration statement of the Company
filed under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall
-----------------
be by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company from a brokerage firm
under a formal cashless exercise program approved by the Company in connection
with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised until
------------------------
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be
-----------------------------
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
-3-
<PAGE>
8. Term of Option. This Option may be exercised only within the
--------------
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
----------------
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
---------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(b) Exercise of ISO. If this Option qualifies as an ISO, there
---------------
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are
---------------------
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes. In the
case of an ISO, if Shares transferred pursuant to the Option are held for at
least one year after exercise and of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
-4-
<PAGE>
10. Entire Agreement; Governing Law. The Plan is incorporated herein
-------------------------------
by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws but not the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
---------------------------------
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
________________________________ ________________________________
Signature By
________________________________ ________________________________
Print Name Title
________________________________
________________________________
Residence Address
-5-
<PAGE>
EXHIBIT A
---------
1999 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Digital Broadcast Network Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Digital Broadcast Network
Corporation (the "Company") under and pursuant to the 1999 Equity Incentive Plan
(the "Plan") and the Stock Option Agreement dated ________, 19______ (the
"Option Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full purchase price of the Shares, as set forth in the Option Agreement, and any
and all withholding taxes due in connection with the exercise of the Option.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee;
-6-
<PAGE>
and (iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the 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 Section, then the Holder may
sell or otherwise transfer such 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, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
-7-
<PAGE>
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
-8-
<PAGE>
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
10. Governing Law; Severability. This Exercise Notice is governed by the
---------------------------
internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
Submitted by: Accepted by:
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
_________________________________ _________________________________
Signature By
_________________________________ _________________________________
Print Name Title
Address: Address:
- ------- -------
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________
Date Received
-9-
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: DIGITAL BROADCAST NETWORK CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely, and Optionee
will bear the economic risk of holding such Securities for that indefinite
period of time, unless and until the Securities are subsequently registered
under the Securities Act or an exemption from such registration is available.
Optionee further acknowledges and understands that the Company is under no
obligation to register the Securities. Optionee understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities laws.
<PAGE>
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at
the time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.
Signature of Optionee:
_____________________________________
Date:__________________________, 19__
-2-
<PAGE>
EXHIBIT 10.4
DIGITAL BROADCAST NETWORK CORPORATION
1999 EXECUTIVE STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this 1999 Executive Stock
--------------------
Option Plan are to attract and retain the best available personnel for positions
of substantial responsibility, to provide sufficient incentive to key Employees
and Directors and to promote the long-term growth and success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Administrator" means the Board or any of its Committees as
-------------
shall be administering the Plan in accordance with Section 4 hereof.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the
---------
Board in accordance with Section 4 hereof.
(f) "Common Stock" means the common stock of the Company.
------------
(g) "Company" means Digital Broadcast Network Corporation, a
-------
Missouri corporation.
(h) "Consultant" means any person who is engaged by the Company
----------
or any Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "Director" means a member of the Board.
--------
(j) "Employee" means any person, including officers and
--------
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three (3) months following the 91st day of
such leave any Incentive Stock Option held by the Optionee
<PAGE>
shall cease to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(l) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(m) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code.
(n) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(o) "Option" means a stock option granted pursuant to the Plan.
------
(p) "Option Agreement" means a written or electronic agreement
----------------
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(q) "Option Exchange Program" means a program whereby outstanding
-----------------------
Options are exchanged for Options with a lower exercise price.
(r) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(s) "Optionee" means the holder of an outstanding Option granted
--------
under the Plan.
(t) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(u) "Plan" means this 1999 Executive Stock Option Plan.
----
-2-
<PAGE>
(v) "Service Provider" means an Employee, Director or Consultant.
----------------
(w) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 11 below.
(x) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section
-------------------------
11 of the Plan, the maximum aggregate number of Shares that may be subject to
option and sold under the Plan is 720,000 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, upon exercise of an Option shall
not be returned to the Plan and shall not become available for future
distribution under the Plan, except that if unvested Shares are repurchased by
the Company at their original purchase price, such Shares shall become available
for future grant under the Plan.
4. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board or a Committee
appointed by the Board, which Committee shall be constituted to comply with
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the key Employees and Directors to whom Options
may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each such
award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option granted
hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options may be exercised (which may be
based on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option of the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
-3-
<PAGE>
(vi) to determine whether and under what circumstances an Option
may be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred treatment under foreign
laws;
(x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to (or less
than) the minimum amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) Effect of Administrator's Decision. All decisions,
----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to key Employees and
Directors. Incentive Stock Options may be granted only to key Employees. Key
Employees and Directors who are eligible to receive awards under this Plan shall
not be eligible to receive awards under the Company's 1999 Equity Incentive
Plan.
(b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate such relationship at any time, with or
without cause.
-4-
<PAGE>
6. Term of Plan. Subject to Section 17 of the Plan, the Plan shall
------------
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 13 of the Plan.
7. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
from a brokerage firm under a cashless exercise program approved by the Company
in connection with the Plan, or (6) any combination of the foregoing methods of
payment. In making its determination as to the type of consideration to accept,
the Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
-5-
<PAGE>
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting
of Options granted hereunder shall be tolled during any unpaid leave of absence.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 12 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
-------------------------------------------------
ceases to be a Service Provider, such Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement (of at least
thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's total and permanent disability, as
defined in Section 22(e)(3) of the Code, the Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the
-6-
<PAGE>
Plan. If, after termination, the Optionee does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
10. Limited-Transferability of Options. Unless determined otherwise by
----------------------------------
the Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option or Stock Purchase Right shall contain such additional
terms and conditions as the Administrator deems appropriate.
11. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may
-7-
<PAGE>
provide for an Optionee to have the right to exercise his or her Option until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company
repurchase option applicable to any Shares purchased upon exercise of an Option
shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
12. Time of Granting Options and Stock Purchase Rights. The date of grant
--------------------------------------------------
of an Option shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Service Provider to whom an Option is so granted within a reasonable time
after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Board shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
-8-
<PAGE>
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
14. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
15. Inability to Obtain Authority. The inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
16. Reservation of Shares. The Company, during the term of this Plan,
---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. Shareholder Approval. The Plan shall be subject to approval by the
--------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
-9-
<PAGE>
DIGITAL BROADCAST NETWORK CORPORATION
1999 EXECUTIVE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1999 Executive
Stock Option Plan shall have the same defined meanings in this Stock Option
Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Date of Grant ________________________________
Vesting Commencement Date ________________________________
Exercise Price per Share $_______________________________
Total Number of Shares Granted ________________________________
Total Exercise Price $_______________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ________________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
12.5% of the Shares subject to the Option shall vest three months after the
Vesting Commencement Date, and 1/24 of the Shares subject to the Option shall
vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to Optionee's continuing to be a Service Provider on
such dates.
<PAGE>
Termination Period:
------------------
This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or Disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby
---------------
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 13(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option shall be exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by delivery
------------------
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
---------
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.
No Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
-2-
<PAGE>
3. Optionee's Representations. In the event the Shares have not
--------------------------
been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B and shall read the applicable rules of the Commissioner of
---------
Corporations attached to such Investment Representation Statement.
4. Lock-Up Period. Optionee hereby agrees that, if so requested by
--------------
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the 180-
day period (or such other period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market Standoff
Period") following the effective date of a registration statement of the Company
filed under the Securities Act. Such restriction shall apply only to the first
registration statement of the Company to become effective under the Securities
Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. Optionee agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price shall
-----------------
be by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash or check;
(b) consideration received by the Company from a brokerage firm
under a formal cashless exercise program approved by the Company in connection
with the Plan; or
(c) surrender of other Shares which, (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised until
------------------------
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. Non-Transferability of Option. This Option may not be
-----------------------------
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
-3-
<PAGE>
8. Term of Option. This Option may be exercised only within the
--------------
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
----------------
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of NSO. There may be a regular federal income tax
---------------
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. If Optionee is an Employee or a former Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(b) Exercise of ISO. If this Option qualifies as an ISO, there will
---------------
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
(c) Disposition of Shares. In the case of an NSO, if Shares are held
---------------------
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.
(d) Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
-4-
<PAGE>
10. Entire Agreement; Governing Law. The Plan is incorporated herein
-------------------------------
by reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.
11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
---------------------------------
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE DIGITAL BROADCAST NETWORK
CORPORATION
______________________________ ______________________________________
Signature By
______________________________ ______________________________________
Print Name Title
______________________________
______________________________
Residence Address
-5-
<PAGE>
EXHIBIT A
---------
1999 EXECUTIVE STOCK OPTION PLAN
EXERCISE NOTICE
Digital Broadcast Network Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ___________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee"s option to purchase
_________ shares of the Common Stock (the "Shares") of Digital Broadcast Network
Corporation (the "Company") under and pursuant to the 1999 Executive Stock
Option Plan (the "Plan") and the Stock Option Agreement dated ________, 19______
(the "Option Agreement").
2. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
full purchase price of the Shares, as set forth in the Option Agreement, and any
and all withholding taxes due in connection with the exercise of the Option.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
---------------------
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 11 of the Plan.
5. Company's Right of First Refusal. Before any Shares held by Optionee
--------------------------------
or any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
---------------------------
deliver to the Company a written notice (the "Notice") stating: (i) the
Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the
name of each proposed purchaser or other transferee ("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed Transferee;
<PAGE>
and (iv) the bona fide cash price or other consideration for which the Holder
proposes to transfer the Shares (the "Offered Price"), and the Holder shall
offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
----------------------------------
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
--------------
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
-------
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the 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 Section, then the Holder may
sell or otherwise transfer such 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, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.
-2-
<PAGE>
(g) Termination of Right of First Refusal. The Right of First Refusal
-------------------------------------
shall terminate as to any Shares upon the first sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
6. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company shall
-------
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
-3-
<PAGE>
Optionee understands that transfer of the Shares may be restricted by
Section 260.141.11 of the Rules of the California Corporations Commissioner, a
copy which is attached to Exhibit B, the Investment Representation Statement.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
8. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this
--------------
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
10. Governing Law; Severability. This Exercise Notice is governed by the
---------------------------
internal substantive laws but not the choice of law rules, of California.
11. Entire Agreement. The Plan and Option Agreement are incorporated
----------------
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.
[Remainder of page intentionally left blank.]
-4-
<PAGE>
Submitted by: Accepted by:
OPTIONEE DIGITAL BROADCAST NETWORK CORPORATION
______________________________ ______________________________________
Signature By
______________________________ ______________________________________
Print Name Title
Address: Address:
- ------- -------
______________________________ ______________________________
______________________________ ______________________________
______________________________
Date Received
-5-
<PAGE>
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: DIGITAL BROADCAST NETWORK CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the
undersigned Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely, and Optionee will bear the economic risk of holding such
Securities for that indefinite period of time, unless and until the Securities
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California, and with
any other legend required under applicable state securities laws.
<PAGE>
(c) Optionee is familiar with the provisions of Rule 144, promulgated
under the Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions. If the Securities are resold in reliance on Rule 144, certain
conditions specified by Rule 144 must be satisfied, including (without
limitation): (1) the resale occurring not less than one year after the later of
the date the Securities were sold by the Company or the date the Securities were
sold by an affiliate of the Company, within the meaning of Rule 144; (2) the
resale being made through a broker in an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934); and, in the case of an affiliate, (3) the
availability of certain public information about the Company, (4) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (5) the timely filing of a Form 144,
if applicable.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the Securities and Exchange Commission has expressed
its opinion that persons proposing to sell private placement securities other
than in a registered offering and otherwise than pursuant to Rule 144 will have
a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
(e) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend that prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
California. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
_____________________________________
Date:_____________________, 19______
-2-
<PAGE>
ATTACHMENT 1
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
Title 10. Investment - Chapter 3. Commissioner of Corporations
26.141.11: Restriction on Transfer.
(a) The issuer of any security upon which a restriction on transfer has
been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 shall cause a
copy of this section to be delivered to each issuee or transferee of such
security at the time the certificate evidencing the security is delivered to the
issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of
the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the broker
dealer, nor actually present in this state if the sale of such securities is not
in violation of any securities law of the foreign state, territory or country
concerned;
(8) to a broker dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not required;
<PAGE>
(10) by way of a sale qualified under Sections 25111, 25112,
25113, or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or subdivision (a) of Section 25143 is in effect
with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or subdivision
(a) of Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign state, territories or countries
who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102; provided that any such transfer is on the condition that
any certificate evidencing the security issued to such transferee shall contain
the legend required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
-2-
<PAGE>
EXHIBIT 10.5
INTIRA CORPORATION
2000 STOCK PLAN
1. Purposes of the Plan. The purposes of this 2000 Stock Plan are:
--------------------
. to attract and retain the best available personnel for positions
of substantial responsibility,
. to provide additional incentive to Employees, Directors and
Consultants, and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a committee of Directors appointed by the Board
---------
in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
------------
(g) "Company" means Intira Corporation, a Delaware corporation.
-------
(h) "Consultant" means any natural person, including an advisor,
----------
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
(i) "Director" means a member of the Board.
--------
(j) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
<PAGE>
(k) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three (3) months following the 91/st/ day of
such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Inside Director" means a Director who is an Employee.
---------------
(p) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written or electronic notice evidencing
---------------
certain terms and conditions of an individual Option grant. The Notice of Grant
is part of the Option Agreement.
-2-
<PAGE>
(r) "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.
(s) "Option" means a stock option granted pursuant to the Plan.
------
(t) "Option Agreement" means an agreement between the Company and an
----------------
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(u) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(v) "Optionee" means the holder of an outstanding Option granted
--------
under the Plan.
(w) "Outside Director" means a Director who is not an Employee.
----------------
(x) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 2000 Stock Plan.
----
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(aa) "Section 16(b) " means Section 16(b) of the Exchange Act.
-------------
(bb) "Service Provider" means an Employee, Director or Consultant.
----------------
(cc) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 13 of the Plan.
(dd) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 2,500,000 Shares plus an annual increase to be added on
the first day of the Company's fiscal year, beginning fiscal year 2001, equal to
the lesser of (i) 3,000,000 Shares, (ii) 4% of the outstanding shares of Common
Stock on such date or (iii) an amount determined by the Board. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
--------
the Plan upon exercise of an Option shall not be returned to the Plan and shall
not become available for future distribution under the Plan, except that if
unvested Shares are repurchased by the Company at their original purchase price,
such Shares shall become available for future grant under the Plan.
-3-
<PAGE>
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Multiple Administrative Bodies. Different Committees
------------------------------
with respect to different groups of Service Providers may administer the Plan.
(ii) Section 162(m). To the extent that the Administrator
--------------
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
----------
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
--------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be
granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;
-4-
<PAGE>
(viii) to modify or amend each Option (subject to Section 15(c)
of the Plan), including the discretionary authority to extend the post-
termination exercisability period of Options longer than is otherwise provided
for in the Plan;
(ix) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld. The Fair Market Value of the Shares
to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xi) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Shares issued under the Plan.
5. Eligibility. Nonstatutory Stock Options may be granted to Service
-----------
Providers. Incentive Stock Options may be granted only to Employees.
6. Limitations.
-----------
(a) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 250,000 Shares.
-5-
<PAGE>
(ii) In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 300,000
Shares, which shall not count against the limit set forth in subsection (i)
above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 13.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
------------
become effective upon its adoption by the Board. It shall continue in effect
for a term of ten (10) years unless terminated earlier under Section 15 of the
Plan.
8. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
---------------------------------------
(a) Exercise Price. The per share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.
-6-
<PAGE>
(b) Waiting Period and Exercise Dates. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which, in the case of Shares acquired
directly or indirectly from the Company, (A) have been owned by the Optionee for
more than six (6) months on the date of surrender, and (B) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
Notwithstanding the foregoing, the Administrator may permit an Option to be
exercised by delivery of a full-recourse promissory note secured by the
purchased shares. All other terms of such promissory note shall be determined
by the Administrator in its sole discretion.
10. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is
-7-
<PAGE>
exercised. Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Option Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
Shares are issued, except as provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
-------------------------------------------------
ceases to be a Service Provider, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
----------------------
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider, the
-----------------
Option may be exercised following Optionee's death within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of death (but in no event may the option be exercised later
than the expiration of the term of such Option as set forth in the Option
Agreement) by the Optionee's designated beneficiary, provided such beneficiary
has been designated prior to Optionee's death in a form acceptable by the
Administrator. If no such beneficiary has been designated by the Optionee, then
such Option may be exercised by the personal representative of the Optionee's
estate or by the person(s) to whom the Option is transferred pursuant to the
Optionee's
-8-
<PAGE>
will or in accordance with the laws of descent and distribution. In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable
for twelve (12) months following Optionee's death. If, at the time of death, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
11. Formula Option Grants to Outside Directors. Outside Directors shall
------------------------------------------
automatically be granted Options in accordance with the following provisions:
(a) All Options granted pursuant to this Section shall be Nonstatutory
Stock Options and, except as otherwise provided herein, shall be subject to the
other terms and conditions of the Plan.
(b) Each Outside Director shall be automatically granted an Option to
purchase 26,667 Shares (the "First Option") on the date on which the later of
the following events occurs: (A) the date of the underwriting agreement is
executed and priced in connection with the Company's initial public offering of
the Common Stock pursuant to an effective registration statement filed with the
Securities and Exchange Commission, or (B) the date on which such person first
becomes an Outside Director, whether through election by the stockholders of the
Company or appointment by the Board to fill a vacancy; provided, however, that
an Inside Director who ceases to be an Inside Director but who remains a
Director shall not receive a First Option.
(c) Each Outside Director shall be automatically granted an Option to
purchase 26,667 Shares (a "Subsequent Option") on the four (4) year anniversary
of the date of grant of the First Option, and on each fourth anniversary
thereafter, provided the Optionee is an Outside Director on each such grant
date.
(d) Notwithstanding the provisions of subsections (b) and (c) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 19 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
19 hereof.
(e) The terms of a First Option granted pursuant to this Section shall
be as follows:
(i) the term of the First Option shall be ten (10) years.
(ii) the First Option shall be exercisable only while the Outside
Director remains a Director of the Company.
(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.
(iv) subject to Section 13, the First Option shall become
exercisable as to one forty-eighth (1/48) of the Shares subject thereto each
month after the date of grant, provided that the Optionee continues to serve as
a Director on such dates.
-9-
<PAGE>
(f) The terms of a Subsequent Option granted hereunder shall be as
follows:
(i) the term of the Subsequent Option shall be ten (10) years.
(ii) the Subsequent Option shall be exercisable only while the
Outside Director remains a Director of the Company.
(iii) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.
Subject to Section 13 hereof, the Subsequent Option shall become
exercisable as to one forty-eighth (1/48) of the Shares subject to the
Subsequent Option each month after date of grant, provided Optionee continues to
serve as a Director on such dates.
12. Limited Transferability of Options. Unless determined otherwise by
----------------------------------
the Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
------------------------------------------------------------------
Asset Sale.
- ----------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, the number of Shares that may be added annually to the
Plan pursuant to Section 3(i), the number of shares subject to First Options and
Subsequent Options under Section 11, and the number of shares of Common Stock
covered by each outstanding Option as well as the price per share of Common
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any
-10-
<PAGE>
Company repurchase option applicable to any Shares purchased upon exercise of an
Option shall lapse as to all such Shares, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised, an Option will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the option or right confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
14. Date of Grant. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to
-11-
<PAGE>
exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.
16. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
17. Inability to Obtain Authority. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this
---------------------
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
19. Stockholder Approval. The Plan shall be subject to approval by
--------------------
the stockholders of the Company within twelve (12) months after the date the
Plan is adopted. Such stockholder approval shall be obtained in the manner and
to the degree required under Applicable Laws.
-12-
<PAGE>
INTIRA CORPORATION
2000 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _______________________________
Date of Grant _______________________________
Vesting Commencement Date _______________________________
Exercise Price per Share $______________________________
Total Number of Shares Granted _______________________________
Total Exercise Price $______________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _______________________________
Vesting Schedule:
----------------
This Option shall be exercisable, in whole or in part, in accordance with
the following schedule:
6.25% of the Shares subject to the Option shall vest three months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter on the monthly anniversary date of the Vesting
Commencement Date, subject to the Optionee continuing to be a Service Provider
on such dates.
-2-
<PAGE>
Termination Period:
------------------
This Option may be exercised for three months after Optionee ceases to be a
Service Provider. Upon the death or Disability of the Optionee, this Option may
be exercised for twelve months after Optionee ceases to be a Service Provider.
In no event shall this Option be exercised later than the Term/Expiration Date
as provided above.
II. AGREEMENT
---------
A. Grant of Option.
------------------
The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per Share set forth in the
Notice of Grant (the "Exercise Price"), subject to the terms and conditions of
the Plan, which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
B. Exercise of Option.
-------------------
(a) Right to Exercise. This Option shall be exercisable during its
-----------------
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by
------------------
delivery of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
-2-
<PAGE>
C. Method of Payment.
------------------
Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
1. cash; or
2. check; or
3. consideration received by the Company from a brokerage firm under
a formal cashless exercise program approved by the Company in connection with
the Plan; or
4. surrender of other Shares which (i) in the case of Shares
acquired from the Company, either directly or indirectly, have been owned by the
Optionee for more than six (6) months on the date of surrender, and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
D. Non-Transferability of Option.
------------------------------
This Option may not be transferred in any manner otherwise than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by the Optionee. The terms of the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
E. Term of Option.
---------------
This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with
the Plan and the terms of this Option Agreement.
F. Tax Obligations.
------------------
1. Withholding Taxes. Optionee agrees to make appropriate
-----------------
arrangements with the Company (or the Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state, local and
foreign income and employment tax withholding requirements applicable to the
Option exercise. Optionee acknowledges and agrees that the Company may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are
not delivered at the time of exercise.
2. Notice of Disqualifying Disposition of ISO Shares. If the Option
-------------------------------------------------
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
-3-
<PAGE>
G. Entire Agreement; Governing Law.
--------------------------------
The Plan is incorporated herein by reference. The Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee's interest except by
means of a writing signed by the Company and Optionee. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
H. NO GUARANTEE OF CONTINUED SERVICE.
----------------------------------
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THIS OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS
A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: INTIRA CORPORATION
______________________________ ______________________________
Signature By
______________________________ ______________________________
Print Name Title
______________________________
Residence Address
______________________________
-4-
<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
______________________________
Spouse of Optionee
<PAGE>
EXHIBIT A
---------
INTIRA CORPORATION
2000 STOCK OPTION PLAN
EXERCISE NOTICE
Intira Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Stock Plan Administrator
1. Exercise of Option. Effective as of today, ________________, _____,
------------------
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Intira Corporation (the "Company") under
and pursuant to the 2000 Stock Plan (the "Plan") and the Stock Option Agreement
dated, _____ (the "Option Agreement"). The purchase price for the Shares shall
be $_____, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares, and any and all withholding taxes due in
connection with the exercise of the Option.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE>
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Exercise Notice Agreement, the Plan and
the Option Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the
subject matter hereof, and may not be modified adversely to the Purchaser's
interest except by means of a writing signed by the Company and Purchaser. This
agreement is governed by the internal substantive laws, but not the choice of
law rules, of California.
Submitted by: Accepted by:
PURCHASER: INTIRA CORPORATION
______________________________ ______________________________
Signature By
______________________________ ______________________________
Print Name Its
Address: Address:
- ------- -------
______________________________ INTIRA CORPORATION
______________________________ [address]
______________________________
Date Received
-2-
<PAGE>
EXHIBIT B
---------
SECURITY AGREEMENT
This Security Agreement is made as of __________, _____ between Intira
Corporation, a Delaware corporation ("Pledgee"), and _________________________
("Pledgor").
Recitals
--------
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 2000 Stock Plan, and Pledgor's election under the terms of the Option
to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased _________ shares of Pledgee's Common Stock (the "Shares") at a price
of $________ per share, for a total purchase price of $__________. The Note and
the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
---------------------------------------------
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, duly endorsed in blank or with executed stock powers, and
herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"),
who shall hold said certificate subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment
for use in transferring all or a portion of the Shares to Pledgee if, as and
when required pursuant to this Security Agreement) shall be held by the
Pledgeholder as security for the repayment of the Note, and any extensions or
renewals thereof, to be executed by Pledgor pursuant to the terms of the Option,
and the Pledgeholder shall not encumber or dispose of such Shares except in
accordance with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
---------------------------------------
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
(a) Payment of Indebtedness. Pledgor will pay the principal sum of
-----------------------
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
(b) Encumbrances. The Shares are free of all other encumbrances,
------------
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
<PAGE>
(c) Margin Regulations. In the event that Pledgee's Common Stock is
------------------
now or later becomes margin-listed by the Federal Reserve Board and Pledgee is
classified as a "lender" within the meaning of the regulations under Part 221 of
Title 12 of the Code of Federal Regulations ("Regulation U"), Pledgor agrees to
cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
-------------
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
-----------------
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
------------------
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
-------
this Security Agreement in the event:
(a) Payment of principal or interest on the Note shall be delinquent
for a period of 10 days or more; or
(b) Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules under
---------------------
Regulation U, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
-2-
<PAGE>
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
----------------------------------------
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment of
----
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
----------
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
----------------------
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
-----------------------------------
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
---------------------
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
-------------
governed under the internal substantive laws, but not the choice of law rules,
of California.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"PLEDGOR" _______________________________
Signature
________________________________
Print Name
Address: ____________________
____________________
"PLEDGEE" INTIRA CORPORATION
a Delaware corporation
_______________________________
Signature
_______________________________
Print Name
_______________________________
Title
"PLEDGEHOLDER" _______________________________
Secretary of Intira Corporation
-4-
<PAGE>
EXHIBIT C
---------
NOTE
$_______________ [City, State]
__________________, _____
FOR VALUE RECEIVED, _____________________ promises to pay to Intira
Corporation, a Delaware corporation (the "Company"), or order, the principal sum
of _______________________ ($_____________), together with interest on the
unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on _______________, _____.
Payment of principal and interest shall be made in lawful money of the United
States of America.
The undersigned may at any time prepay all or any portion of the principal
or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned,
and shall not be required to proceed against the collateral securing this Note
in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
____________________________________
____________________________________
<PAGE>
Exhibit 10.6
INTIRA CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock
Purchase Plan of Intira Corporation
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the Company or
-----
any committee thereof designated by the Board of Directors of the Company in
accordance with Section 14 of the Plan.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
----
amended.
(c) "Common Stock" shall mean the common stock of the Company.
------------
(d) "Company" shall mean Intira Corporation and any Designated
-------
Subsidiary of the Company.
(e) ["Compensation" shall mean all base straight time gross
------------
earnings and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and other compensation.]
(f) "Designated Subsidiary" shall mean any Subsidiary that has
---------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
--------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first Trading Day of each
---------------
Offering Period.
(i) "Exercise Date" shall mean the first Trading Day on or after
-------------
May 1st and November 1st of each year.
<PAGE>
(j) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board; or
(iv) For purposes of the Enrollment Date of the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement in Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock (the "Registration
Statement").
(k) "Offering Periods" shall mean the periods of approximately
----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1st and
November 1st of each year and terminating on the first Trading Day on or after
the May 1st and November 1st Offering Period commencement date approximately
twenty-four months later; provided, however, that the first Offering Period
under the Plan shall commence with the first Trading Day on or after the date on
which the Securities and Exchange Commission declares the Company's Registration
Statement effective and ending on the first Trading Day on or after May 1,
2002. The duration and timing of Offering Periods may be changed pursuant to
Section 4 of this Plan.
(l) "Plan" shall mean this 2000 Employee Stock Purchase Plan.
----
(m) "Purchase Period" shall mean the approximately six month period
---------------
commencing on one Exercise Date and ending with the next Exercise Date, except
that the first Purchase Period of any Offering Period shall commence on the
Enrollment Date and end with the next Exercise Date.
(n) "Purchase Price" shall mean 85% of the Fair Market Value of a
--------------
share of Common Stock on the Enrollment Date or on the Exercise Date, whichever
is lower; provided however, that the Purchase Price may be adjusted by the Board
pursuant to Section 20.
(o) "Reserves" shall mean the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
-2-
<PAGE>
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
-----------
and the Nasdaq System are open for trading.
3. Eligibility.
-----------
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. Offering Periods. The Plan shall be implemented by consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1st and November 1st each year, or on such other
date as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the first Trading Day on or after
May 1, 2002. The Board shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to future
offerings without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Offering Period to be
affected thereafter.
5. Participation.
-------------
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
-3-
<PAGE>
6. Payroll Deductions.
------------------
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen (15%) of the
Compensation which he or she receives on each pay day during the Offering
Period; provided, however, that should a pay day occur on an Exercise Date, a
participant shall have the payroll deductions made on such day applied to his or
her account under the new Offering Period or Purchase Period, as the case may
be.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Company may, in its discretion, limit the nature
and/or number of participation rate changes during any Offering Period, and may
establish such other conditions or limitations as it deems appropriate for Plan
administration. The change in rate shall be effective with the first full
payroll period following five (5) business days after the Company's receipt of
the new subscription agreement unless the Company elects to process a given
change in participation more quickly. A participant's subscription agreement
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
---------------
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than
7,500 shares of the Company's Common
-4-
<PAGE>
Stock (subject to any adjustment pursuant to Section 19), and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. The Board may, for future Offering Periods, increase or
decrease, in its absolute discretion, the maximum number of shares of the
Company's Common Stock an Employee may purchase during each Purchase Period of
such Offering Period. Exercise of the option shall occur as provided in Section
8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof.
The option shall expire on the last day of the Offering Period.
8. Exercise of Option.
------------------
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under the
Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall
be practicable and as it shall determine in its sole discretion to be equitable
among all participants exercising options to purchase Common Stock on such
Exercise Date, and continue all Offering Periods then in effect, or (y) provide
that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase
Common Stock on such Exercise Date, and terminate any or all Offering Periods
then in effect pursuant to Section 20 hereof. The Company may make pro rata
allocation of the shares available on the Enrollment Date of any applicable
Offering Period pursuant to the preceding sentence, notwithstanding any
authorization of additional shares for issuance under the Plan by the Company's
stockholders subsequent to such Enrollment Date.
9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
-5-
<PAGE>
10. Withdrawal.
----------
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Termination of Employment.
-------------------------
Upon a participant's ceasing to be an Employee, for any reason, he or
she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant's account during the Offering Period but
not yet used to exercise the option shall be returned to such participant or, in
the case of his or her death, to the person or persons entitled thereto under
Section 15 hereof, and such participant's option shall be automatically
terminated. The preceding sentence notwithstanding, a participant who receives
payment in lieu of notice of termination of employment shall be treated as
continuing to be an Employee for the participant's customary number of hours per
week of employment during the period in which the participant is subject to such
payment in lieu of notice.
12. Interest. No interest shall accrue on the payroll deductions of
--------
a participant in the Plan.
13. Stock.
-----
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 750,000 shares, plus an annual increase to be added on the first day of
the Company's fiscal year, beginning in 2001, equal to the lesser of (i) 500,000
shares, (ii) 1% of the outstanding shares on such date, or (iii) a lesser amount
determined by the Board.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
-6-
<PAGE>
14. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
16. Transferability. Neither payroll deductions credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
17. Use of Funds. All payroll deductions received or held by the Company
------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. Reports. Individual accounts shall be maintained for each participant
-------
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
-7-
<PAGE>
19 Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
---------------------------------------------------------------------
Merger or Asset Sale.
- --------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the Reserves (including the number of shares
automatically added annually to the Plan pursuant to Section 13(a)(i)), the
maximum number of shares each participant may purchase each Purchase Period
(pursuant to Section 7), as well as the price per share and the number of shares
of Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the "New Exercise Date"), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, any Purchase Periods
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date") and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the participant's option has been changed to the New Exercise Date and
that the participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the participant has withdrawn from the
Offering Period as provided in Section 10 hereof.
-8-
<PAGE>
20. Amendment or Termination.
------------------------
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as
provided in Section 19 and this Section 20 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Section 423 of the Code
(or any successor rule or provision or any other applicable law, regulation or
stock exchange rule), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(i) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(ii) shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.
21. Notices. All notices or other communications by a participant to
-------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
22. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant
-9-
<PAGE>
thereto shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
23. Term of Plan. The Plan shall become effective upon the earlier
------------
to occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
-----------------------------------------------
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such Offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period.
-10-
<PAGE>
EXHIBIT A
---------
INTIRA CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date:___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ____________________ hereby elects to participate in the Intira Corporation
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in accordance
with this Subscription Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (from 0 to _____%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that my
ability to exercise the option under this Subscription Agreement is subject
to stockholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only).
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess of the fair market value of the shares at the time such
shares were purchased by me over the price which I paid for the shares. I
-
hereby agree to notify the Company in writing within 30 days after the date
---------------------------------------------------------------------------
of any disposition of my shares and I will make adequate provision for
----------------------------------------------------------------------
Federal, state or other tax withholding obligations, if any, which arise
------------------------------------------------------------------------
upon the
--------
<PAGE>
disposition of the Common Stock. The Company may, but will not be
-------------------------------
obligated to, withhold from my compensation the amount necessary to meet
any applicable withholding obligation including any withholding necessary
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to
the extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 15% of the fair market
value of the shares on the first day of the Offering Period. The remainder
of the gain, if any, recognized on such disposition will be taxed as
capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)_____________________________________________________
(First) (Middle) (Last)
_________________________ ___________________________________________
Relationship
___________________________________________
(Address)
-2-
<PAGE>
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ____________________________________
Signature of Employee
____________________________________
Spouse's Signature (If beneficiary other than
spouse)
-3-
<PAGE>
EXHIBIT B
---------
INTIRA CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Intira
Corporation Employee Stock Purchase Plan which began on ____________, ______
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date:____________________________
<PAGE>
EXHIBIT 10.8
LEASE
THIS LEASE AGREEMENT (this "Lease") is entered into as
of APRIL 16, 1998, between CHARTER COMMUNICATIONS
ENTERTAINMENT I, L.P. a Delaware limited partnership
("Landlord"), and DIGITAL BROADCAST NETWORK
CORPORATION, a Missouri corporation ("Tenant").
DEFINITIONS 1. The definitions and basic provisions set forth
AND BASIC in the Basic Lease Information (the "Basic Lease
PROVISIONS Information") executed by Landlord and Tenant
contemporaneously herewith are incorporated herein by
reference for all purposes.
LEASE GRANT 2. Subject to the terms of this Lease, Landlord
leases to Tenant, and Tenant leases from Landlord, the
Premises.
TERM 3. If the Commencement Date is not the first day
of a calendar month, then the Term shall be extended by
the time between the Commencement Date and the first
day of the next month. If this Lease is executed before
the Premises become vacant or otherwise available and
ready for occupancy by Tenant, or if any present
occupant of the Premises holds over and Landlord cannot
acquire possession of the Premises before the
Commencement Date, then (a) Tenant's obligation to pay
Rent hereunder shall, unless any delay is caused by
Tenant, be waived until the date Landlord tenders
possession of the Premises to Tenant, (b) the Term
shall be extended by the time between the scheduled
Commencement Date and the date on which Landlord
tenders possession of the Premises to Tenant, (c)
Landlord shall not be in default hereunder or be liable
for damages therefor, and (d) Tenant shall accept
possession of the Premises when Landlord tenders
possession thereof to Tenant. By occupying the
Premises, Tenant shall be deemed to have accepted the
Premises when Landlord tenders possession thereof to
Tenant. By occupying the Premises, Tenant shall be
deemed to have accepted the Premises in their condition
as of the date of such occupancy, subject to the
performance of punch-list items or other obligations
that remain to be performed by Landlord, if any. Tenant
shall execute and deliver to Landlord, within ten days
after Landlord has requested same, a letter confirming
(i) the Commencement Date, (ii) that Tenant has
accepted the Premises, and (iii) that Landlord has
performed all of its obligations with respect to the
Premises (except for punch-list items specified in such
letter).
RENT 4. a. Payment. Tenant shall timely pay to Landlord
-------
the Basic Rental and all additional sums to be paid by
Tenant to Landlord under this Lease, including the
amounts set forth in Section 4.b., without deduction or
set off, at Landlord's Address (or such other address
as Landlord may from time to time designate in writing
to Tenant). Basic Rental shall be payable monthly in
advance. The first monthly installment of Basic Rental
shall be payable contemporaneously with the execution
of this Lease; thereafter, monthly installments of
Basic Rental shall be due on the first day of the
second full calendar month after the Commencement Date
and continuing on the first day of each succeeding
calendar month during the Term. Basic Rental for
any fractional month at the beginning of the Term
<PAGE>
shall be prorated based on 1/365 of the current annual
Basic Rental for each day of the partial month this
Lease is in effect, and shall be due on the
Commencement Date.
b. Excess. Tenant shall pay an amount (per each
------
rentable square foot in the Premises) equal to the
excess ("Excess") from time to time of actual Basic
Cost per rentable square foot in the Building over the
actual Basic Cost per rentable square foot in the
Building incurred during the 1998 calendar year (the
"Base Year"). Landlord may collect such amount in a
lump sum, to be due within 15 days after Landlord
furnishes to Tenant the Annual Cost Statement (defined
below); provided, however that no Excess over Basic
Cost shall be due from Tenant for calendar year 1998.
Alternatively, Landlord may make a good faith estimate
of the Excess to be due by Tenant for any calendar year
or part thereof during the Term, and, unless Landlord
delivers to Tenant a revision of the estimated Excess,
Tenant shall pay to Landlord, on January 1, 1999 and on
the first day of each calendar month thereafter, an
amount equal to the estimated Excess for such calendar
year or part thereof divided by the number of months in
such calendar year during the Term. From time to time
during any calendar year, Landlord may estimate and re-
estimate the Excess to be due by Tenant for that
calendar year and deliver a copy of the estimate or re-
estimate to Tenant. Thereafter, the monthly
installments of Excess payable by Tenant shall be
appropriately adjusted in accordance with the
estimations so that, by the end of the calendar year in
question, Tenant shall have paid all of the Excess as
estimated by Landlord. Any amounts paid based on such
an estimate shall be subject to adjustment pursuant to
Section 4.e. when actual Basic Cost is available for
each calendar year.
c. Basic Cost Definition. For the purposes of this
---------------------
Lease, the term "Basic Cost" shall mean all expenses
and disbursements of every kind (subject to the
limitations set forth below) which Landlord incurs,
pays or becomes obligated to pay in connection with the
ownership, operation, and maintenance of the Building
(including the associated parking facilities),
determined in accordance with generally accepted
accounting principles consistently applied, including
but not limited to the following:
(i) Wages and salaries (inc1uding management
fees) of all employees engaged in the operation,
repair, replacement, maintenance, and security of
the Building, including taxes, insurance and
benefits relating thereto;
(ii) All supplies and materials used in the
operation, maintenance, repair, replacement, and
security of the Building;
(iii) The amortized yearly cost of all capital
improvements made to the Building which although
capital in nature can reasonably be expected to
reduce the normal operating costs of the Building,
as well as the amortized yearly capital
improvements made in order to comply with any law
promulgated by any governmental authority, as
amortized over the useful economic life of
2
<PAGE>
such improvements in accordance with generally
accepted accounting principles, consistently
applied.
(iv) Cost of all electricity, water and other
utilities, other than the cost of utilities
directly reimbursed to Landlord (i.e., through
submeters or comparable devices) by the Building's
tenant (including Tenant) provided, however, that
in the event Tenant's electric usage can be
separately metered, Tenant agrees to promptly
arrange for the installation of such separate
meter at Tenant's sole cost and expense. After
Tenant's separate meter is installed, Landlord
shall credit Tenant Eighty Cents ($0.80) per
square foot which is the cost of non-Excess
electric usage which is built into the Base Rent.
Landlord acknowledges that Tenant requires
continuous electrical usage and other utility
services seven days per week. Tenant shall be
permitted to install outside generators and
batteries (collectively, "Tenant Generators") at
Tenant's sole cost and expense; provided, however
that installation of Tenant Generators shall
require Landlord's prior written consent for the
size, location and construction thereof and
landscaping of the surrounding area of the Tenant
Generators. Tenant agrees to comply with all
federal, state and local laws and to obtain all
governmental approvals and appropriate permits
with respect to the installation and maintenance
of the Tenant Generators. Tenant further agrees to
pay all cost and expense in maintaining Tenant
Generators and shall maintain Tenant Generators in
compliance with all laws. Upon termination of this
Lease or any extension thereof, Tenant shall
remove Tenant Generators from the Premises in
compliance with all applicable laws and restore
the Premises as nearly as practicable to the
surrounding area as determined by Landlord.
(v) Cost of any insurance or insurance
related expense applicable to the Building and
Landlord's personal property used in connection
therewith;
(vi) All taxes and assessments and
governmental charges whether federal, state,
county or municipal, and whether they be by taxing
or management districts or authorities presently
taxing or by others, subsequently created
otherwise, and any other taxes and assessments
attributable to the Building (or its operation),
and the grounds, parking areas, driveways, and
alleys around the Building, excluding, however,
federal and state taxes on income (collectively,
"Taxes"); if the present method of taxation
changes so that in lieu of the whole or any part
of any Taxes levied on the Land or Building, there
is levied on Landlord a capital tax directly on
the rents received therefrom or a franchise tax,
assessment, or charge based, in whole or in part,
upon such rents for the Building, then all such
taxes, assessment, or charges, or the part thereof
so based, shall be deemed to be included within
the term "Taxes" for the purposes hereof;
3
<PAGE>
(vii) Cost of repairs, replacements, and
general maintenance of the Building, other than
repair, replacement, and general maintenance of
the roof, foundation and exterior walls of the
Building;
(viii) Cost of service or maintenance
contracts with independent contractors for the
operation, maintenance, repair, replacement, or
security of the Building (including, without
limitation, alarm service, window cleaning, and
elevator maintenance); and
There are specifically excluded from the definition of
the term "Basic Cost" costs (1) for capital
improvements made to the Building, other than capital
improvements described in subparagraph (iii) above, and
except for items which, though capital for accounting
purposes, are properly considered maintenance and
repair items, such as painting of common areas,
replacement of carpet in elevator lobbies, and the
like; (2) for repair, replacements and general
maintenance paid by proceeds of insurance or by Tenant
or other third parties, and alterations attributable
solely to tenants of the Building other than Tenant;
(3) for interest, amortization or other payments on
loans to Landlord; (4) for depreciation of the
Building; (5) for leasing commissions; (6) for legal
expenses, other than those incurred for the general
benefit of the Building's tenants (e.g., tax disputes);
(7) for renovating or otherwise improving space for
occupants of the Building or vacant space in the
Building; and (8) for federal income taxes imposed on
or measured by the income of Landlord from the
operation of the Building.
d. Annual Cost Statement. By April 1 of each
---------------------
calendar year, or as soon thereafter as practicable,
Landlord shall furnish to Tenant a statement of
Landlord's actual Basic Cost (the "Annual Cost
Statement") for the previous year adjusted as provided
in Section 4.c. If the Annual Cost Statement reveals
that Tenant paid more for Basic Cost than the actual
Excess in the year for which such statement was
prepared, then Landlord shall promptly credit or
reimburse Tenant such excess; likewise, if Tenant paid
less than the actual Excess, then Tenant shall promptly
pay Landlord such deficiency.
e. Adjustments to Basic Cost. With respect to any
-------------------------
calendar year or partial calendar year in which the
Building is not occupied to the extent of one hundred
percent (100%) of the rentable area thereof, the Basic
Cost for such period shall, for the purposes hereof, be
increased to the amount which would have been incurred
had the Building been occupied to the extent of one
hundred percent (100%) of the rentable area thereof.
DELINQUENT 5. All payments required of Tenant hereunder shall
PAYMENT; bear interest from the date due until paid at the maximum
HANDLING lawful rate. Alternatively, Landlord may charge Tenant a fee
equal to 1.5% of the delinquent payment to reimburse
Landlord for its cost and inconvenience incurred as a
consequence of Tenants delinquency. In no event, however,
shall the charges permitted under this Section 5 or
elsewhere in this Lease, to the extent
4
<PAGE>
the same are considered to be interest under applicable
law, exceed the maximum lawful rate of interest.
S E C U R I T Y 6. Letter of Credit Security Deposit. Tenant
DEPOSIT ---------------------------------
shall, upon its execution of this Lease, deliver to
Landlord an irrevocable letter of credit in the amount
of One Hundred Eighty Thousand Dollars ($180,000)
("Letter of Credit Security Deposit") issued in favor
of Landlord by a financial institution acceptable to
Landlord and in form and content acceptable to
Landlord. Subject to Reduction (as hereafter defined),
Tenant shall cause the Letter of Credit Security
Deposit to continuously remain in full force and effect
(by virtue of extension, renewal or replacement) in
accordance with this Lease for the Term of this Lease,
and in the event that the Letter of Credit Security
Deposit will expire prior to expiration of the term of
this Lease, Tenant shall deliver an extension, renewal
or replacement thereof to Landlord not less than thirty
(30) days prior to the expiration date of the Letter of
Credit Security Deposit. Any failure of Tenant to
provide the Letter of Credit Security Deposit or to
cause the Letter of Credit Security Deposit to
continuously remain in full force and effect shall be
an Event of Default and shall entitle Landlord to
immediately draw on the Letter of Credit up to the full
amount and to add the proceeds thereof to the Cash
Security Deposit. This Letter of Credit Security
Deposit is not an advance payment of Rent or a measure
or limit of Landlord's damages upon an Event of Default
(defined below). Effective as of the first (lst)
anniversary of the Rental Commencement Date and for
each of the next four (4) anniversary dates thereafter,
the Letter of Credit Security Deposit may be reduced by
$36,000 (the "Reduction"). Notwithstanding anything to
the contrary, this Reduction shall not be permitted if
there is an Event of Default (defined below) under any
provision of this Lease. Immediately upon, and at any
time or from time to time after, the occurrence of a
Event of Default, Landlord shall have the unconditional
right to draw on the Letter of Credit in the full
amount thereof or in any lesser amount or amounts as
Landlord may determine, it its sole and absolute
discretion and to use all or a part thereof (without
prejudice to any other remedy) to pay or perform any
obligation which Tenant was obligated, but failed, to
perform hereunder. Upon demand by Landlord, Tenant
shall caused the Letter of Credit Security Deposit to
be restored to such amount immediately before any draw
by Landlord. Notwithstanding the foregoing, Landlord
agrees to determine, in its sole and absolute
discretion, on an annual basis whether the Letter of
Credit shall be required at the request of Tenant and a
review of Tenant's financial records.
LANDLORD'S 7. a. Services. Provided no Event of Default
--------
OBLIGATIONS exists, Landlord shall use all reasonable efforts to
furnish to Tenant (i) water (hot and cold) at those
points of supply provided for general use of tenants of
the Building seven (7) days per week; (ii) heated and
refrigerated air conditioning as appropriate, seven (7)
days per week and at such temperatures and in such
amounts as are reasonably considered by Landlord to be
standard, but in no event shall the Landlord provide
heat and air conditioning below the current ASHRAE and
BOCA Mechanical Code; (iii) Janitorial service to the
Premises five (5)
5
<PAGE>
days per week other than holidays for Building-standard
installations (Landlord reserves the right to bill
Tenant separately for extra janitorial service required
for non-standard installations) and such window washing
as may from time to time in Landlord's judgment be
reasonably required; (iv) replacement of Building-
standard light bulbs and fluorescent tubes, provided
that Landlord's standard charge for such bulbs and
tubes shall be paid by Tenant; and (v) if not
separately metered, electricity to the Premises for
building standard lay-in lighting, initially calculated
at 1.4 watts per leased square foot, plus service of
electricity through floor and wall outlets at the
allowance of one (1) watt of power, per leased square
foot, per hour, during "normal business hours" defined
as Monday thru Friday from 8:00 a.m. to 6:00 p.m.,
Saturdays from 8:00 a.m. to 12:00 noon, Sundays and
holidays excepted. Landlord shall maintain the common
areas of the Building in reasonably good order and
condition, except for damage occasioned by Tenant, or
its employees, agents or invitees. Tenant agrees to pay
$2.40 per hour for wear and tear on the HVAC system for
Tenant's use of air conditioning end heat for the
period in excess of "normal business hours".
b. Excess Utility Use. (i) In the event Tenant
------------------
installs lighting in excess of building standards or in
the event the total electric energy usage through floor
outlets for the Premises exceeds the aforesaid
allowance, Landlord may determine the amount of such
additional consumption and potential consumption by
either or both; a survey of standard or average tenant
usage of electricity in the Building performed by a
reputable consultant selected by Landlord and paid for
by Tenant; or a separate meter in the Premises
installed, maintained, and read by Landlord, at
Tenant's expense. (ii) Landlord shall provide heat and
air conditioning to the Premises and to the common
areas of the Property at temperatures for normal
occupancy and general office use during normal business
hours. In the event Tenant requests heating or air
conditioning at times other than during normal business
hours, Tenant shall pay for such usage, as Additional
Rent, at rates to be determined by Landlord from time
to time. In the event Tenant utilizes any heat
generating machines or equipment with the Premises, or
in the event Tenant installs lighting in excess of
building standards, Landlord reserves the right to
invoice Tenant for any additional air conditioning
usage, or install supplementary air conditioning units
to the Premises; and the cost of installation,
operation and maintenance thereof shall be payable by
Tenant as Additional Rent. In the event the premises
contain or are serviced by any heating or air
conditioned equipment which is above building standard,
and which Landlord allows Tenant to use, Tenant shall
accept equipment in its present "AS IS" condition, and
thereafter be wholly liable for all costs in connection
with the operation, maintenance, repair and replacement
of such equipment. (iii) Tenant shall not install any
electrical equipment requiring special wiring or
requiring voltage in excess of 110 volts or otherwise
exceeding Building capacity unless approved in advance
by Landlord. The use of electricity in the Premises
shall not exceed the capacity of existing feeders and
risers to or wiring in the Premises. Any risers or
wiring required to meet Tenant's excess electrical
requirements shall, upon Tenant's
6
<PAGE>
written request, be installed by Landlord, at Tenant's
cost, if, in Landlord's sole and absolute judgment, the
same are necessary and shall not cause permanent damage
or injury to the Building or the Premises, cause or
create a dangerous or hazardous condition, entail
excessive or unreasonable alterations, repairs, or
expenses, or interfere with or disturb other tenants of
the Building. If Tenant uses machines or equipment
(other than general office machines, excluding
computers and electronic data processing equipment) in
the Premises which affect the temperature otherwise
maintained by the air conditioning system or otherwise
overload any utility, Landlord may install supplemental
air conditioning units or other supplemental equipment
in the Premises, and the cost thereof, including the
cost of installation, operation, use, and maintenance,
shall be paid by Tenant to Landlord within ten days
after Landlord has delivered to Tenant an invoice
therefor. In the event any of Tenant's utility use is
separately metered, the respective provisions of this
subsection shall not apply.
c. Discontinuance. Landlord's obligation to
--------------
furnish services under Section 7.a. shall be subject to
the rules and regulations of the supplier of such
services and governmental rules and regulations.
Landlord may, upon not less than 5-days' prior written
notice to Tenant, discontinue any such service to the
Premises, provided Landlord first arranges for a direct
connection thereof through the supplier of such
service. Tenant shall, however, be responsible for
contracting with the supplier of such service and for
paying all deposits for, and costs relating to, such
service.
d. Restoration of Services; Abatement. Landlord
----------------------------------
shall use reasonable efforts to restore any service
that becomes unavailable; however, such unavailability
shall not render Landlord liable for any damages
caused thereby, be a constructive eviction of Tenant,
constitute a breach of any implied warranty, or, except
as provided in the next sentence, entitle Tenant to any
abatement of Tenant's obligations hereunder. However,
if Tenant is prevented from making reasonable use of
the Premises for more than 30 consecutive days because
of the unavailability of any such service, Tenant
shall, as its exclusive remedy therefor, be entitled_
to a reasonable abatement of Rent for each consecutive
day (after such 30-day period) that Tenant is so
prevented from making reasonable use of the Premises.
IMPROVE- 8. a. Improvements; Alterations. Tenant's final
MENTS; -------------------------
ALTERATIONS; improvements as depicted in the plans (the "Final
REPAIRS; Plans") to be approved by Landlord and Tenant, such
MAINTENANCE approval not to be unreasonably withheld, shall be
completed by Tenant; provided, however, that the Fixed
Construction allowance shall be paid to Tenant upon
completion of its leasehold improvements as provided in
Exhibit D attached hereto. Improvements to the Premises
shall be installed at the expense of Tenant only in
accordance with plans and specifications which have
been previously submitted to and approved in writing by
Landlord. After the initial Tenant improvements are
made, no material alterations or physical additions in
or to the Premises may be made without Landlord's prior
written consent. Tenant shall not install signs, window
or door lettering, or advertising media
7
<PAGE>
of any type on or about the Premises without the prior
written consent of Landlord. All alterations,
additions, or improvements (whether temporary or
permanent in character, and including without
limitation all air-conditioning equipment and all other
equipment that is in any manner connected to the
Building's plumbing system) made in or upon the
Premises, either by Landlord or Tenant, shall be
Landlord's property at the end of the Term and shall
remain on the Premises without compensation to Tenant
unless Landlord has given prior written consent for
removal in the Final Plans. Approval by Landlord of any
of Tenant's drawings and plans and specifications
prepared in connection with any improvements in the
Premises shall not constitute a representation or
warranty of Landlord as to the adequacy or sufficiency
of such drawings, plans and specifications, or the
improvements to which they relate, for any use,
purpose, or condition, but such approval shall merely
be the consent of Landlord as required hereunder.
Notwithstanding anything in this Lease to the contrary,
Tenant shall be responsible for the cost of all work
required to bring the interior of the Premises into
compliance with the retrofit requirements of the
Americans with Disabilities Act of 1990, and all rules,
regulations, and guidelines promulgated thereunder, as
the same may be amended from time to time, necessitated
by any installations, additions, or alterations made in
or to the Premises at the request of or by Tenant or by
Tenant's use of the Premises (other than retrofit work
whose cost has been particularly identified as being
payable by Landlord in an instrument signed by Landlord
and Tenant), regardless of whether such cost is
incurred in connection with retrofit work required in
the Premises (including the Work described in Exhibit
D) or in other areas of the Building.
b. Repairs: Maintenance. Tenant shall maintain the
--------------------
Premises in a clean, safe, operable, attractive
condition, and shall not permit or allow to remain any
waste or damage to any portion of the Premises. Tenant
shall repair or replace, subject to Landlord's
direction and supervision, any damage to the Building
caused by Tenant or Tenant's agents, contractors, or
invitees. If Tenant fails to make such repairs or
replacements within 15 days after the occurrence of
such damage, then Landlord may make the same at
Tenant's cost. In lieu of having Tenant repair any such
damage outside of the Premises, Landlord may repair
such damage at Tenant's cost. The cost of any repair or
replacement work performed by Landlord under this
Section 8 shall be paid by Tenant to Landlord within
ten days after Landlord has delivered to Tenant an
invoice therefor.
c. Performance of Work. All work described in this
-------------------
Section 8 shall be performed by contractors and
subcontractors subject to the prior reasonable approval
by Landlord in writing. Tenant shall cause all
contractors and subcontractors to procure and maintain
insurance coverage against such risks, in such amounts,
and with such companies as Landlord may reasonably
require, and to procure payment and performance bonds
reasonably satisfactory to Landlord covering the cost
of the work. All such work shall be performed in
accordance with all legal requirements and in a good
and workmanlike manner so as not to damage the
Premises, the primary structure or
8
<PAGE>
structural qualities of the Building, or
plumbing, electrical lines, or other utility
transmission facility. All such work which
may affect the HVAC, electrical system, or
plumbing must be approved by the Building's
engineer of record. Tenant agrees to the
exclusive use of Landlord's HVAC contractor
for all maintenance, repair, additions to or
substitutions of the HVAC system.
d. Mechanic's Liens. Tenant shall not
----------------
permit any mechanic's liens to be filed
against the Premises or the Building for any
work performed, materials furnished, or
obligation incurred by or at the request of
Tenant. If such a lien is filed, then Tenant
shall, within ten days after Landlord has
delivered notice of the filing to Tenant,
either pay the amount of the lien or
diligently contest such lien and deliver to
Landlord a bond or other security reasonably
satisfactory to Landlord. If Tenant fails to
timely take either such action, then Landlord
may in good faith pay the lien claim and any
amounts so paid; including expenses and
interest, shall be paid by Tenant to Landlord
within ten days after Landlord has delivered
to Tenant an invoice therefor.
USE 9. Tenant shall continuously occupy and
use the Premises only for the Permitted Use
and shall comply with all laws, orders,
rules, and regulations relating to the use,
condition, and occupancy of the Premises. The
Premises shall not be used for any use which
is disreputable or creates extraordinary fire
hazards or results in an increased rate of
insurance on the Building or its contents or
the storage of any hazardous materials or
substances. If, because of Tenant's acts, the
rate of insurance on the Building or its
contents increases, then such acts shall be
an Event of Default, Tenant shall pay to
Landlord the amount of such increase on
demand, and acceptance of such payment shall
not constitute a waiver of any of Landlord's
other rights. Tenant shall conduct its
business and control its agents, employees,
and invitees in such a manner as not to
create any nuisance or interfere with other
tenants or Landlord in its management of the
Building.
ASSIGNMENT 10. a. Transfers: Consent. Tenant shall
------------------
AND not, without the prior written consent of
SUBLETING Landlord (which shall not be unreasonably
withheld) (i) advertise that any portion of
the Premises is available for lease, (ii)
assign, transfer, or encumber this Lease or
any estate or interest herein, whether
directly or by operation of law, (iii) permit
any other entity to become Tenant hereunder
by merger, consolidation, or other
reorganization, (iv) if Tenant is an entity
other than a corporation whose stock is
publicly traded, permit the transfer of an
ownership interest in Tenant so as to result
in a change in the current control of Tenant,
(v) sublet any portion of the Premises, (vi)
grant any license, concession, or other right
of occupancy of any portion of the Premises,
or (vii) permit the use of the Premises by
any parties other than Tenant (any of the
events listed in clauses (i) through (vii)
being a "Transfer"). If Tenant requests
Landlord's consent to a Transfer, then Tenant
shall provide Landlord with a written
description of all terms and conditions of
the proposed Transfer, copies of the proposed
documentation, and the following information
about the proposed transferee: name and
address; reasonably
9
<PAGE>
satisfactory information about its business
and business history; its proposed use of the
Premises; banking, financial, and other
credit information; and general references
sufficient to enable Landlord to determine
the proposed transferee's credit worthiness
and character. Tenant shall reimburse
Landlord for its reasonable attorneys' fees
and other expenses incurred in connection
with considering any request for its consent
to a Transfer. If Landlord consents to a
proposed Transfer, then the proposed
transferee shall deliver to Landlord a
written agreement whereby it expressly
assumes the Tenant's obligations hereunder;
however, any transferee of less than all of
the space in the Premises shall be liable
only for obligations under this Lease that
are properly allocable to the space subject
to the Transfer, and only to the extent of
the rent it has agreed to pay Tenant
therefor. Landlord's consent to a Transfer
shall not release Tenant from performing its
obligations under this Lease, but rather
Tenant and its transferee shall be jointly
and severally liable therefor. Landlord's
consent to any Transfer shall not waive
Landlord's rights as to any subsequent
Transfers. If an Event of Default occurs
while the Premises or any part thereof are
subject to a Transfer, then Landlord, in
addition to its other remedies, may collect
directly from such transferee all rents
becoming due to Tenant and apply such rents
against Rent. Tenant authorizes its
transferees to make payments of rent directly
to Landlord upon receipt of notice from
Landlord to do so.
b. Additional Compensation. Tenant
-----------------------
shall pay to Landlord, immediately upon
receipt thereof, fifty percent (50%) of all
compensation received by Tenant for a
Transfer for any portion of the Premises
greater than 2,500 square feet that exceeds
the Basic Rental and Tenant's share of Excess
allocable to the portion of the Premises
covered thereby.
INSURANCE 11. a. Insurance. Tenant shall at its
---------
expense procure and maintain throughout the
WAIVERS; Term the following insurance policies: (i)
SUBROGATION; comprehensive general liability insurance in
INDEMNITY amounts of not less than a combined single
limit of $ 3,000,000 (the "Initial Liability
Insurance Amount") or such other amounts as
Landlord may from time to time reasonably
require, insuring Tenant, Landlord, and
Landlord's agents against all liability for
injury to or death of a person or persons or
damage to property arising from the use and
occupancy of the Premises, (ii) contractual
liability insurance coverage sufficient to
cover Tenant's indemnity obligations
hereunder, (iii) insurance covering the full
value of Tenant's property and improvements,
and other property (including property of
others), in the Premises, and (iv) business
interruption insurance. Tenant's insurance
shall provide primary coverage to Landlord
when any policy issued to Landlord provides
duplicate or similar coverage, and in such
circumstance Landlord's policy will be excess
over Tenant's policy. Tenant shall furnish
certificates of such insurance and such other
evidence satisfactory to Landlord of the
maintenance of all insurance coverages
required hereunder, and Tenant shall obtain a
written obligation on the part of each
insurance company to notify Landlord at least
30 days before cancellation or a material
change of any such insurance. All such
insurance policies shall be in form, and
issued by companies, reasonably satisfactory
to Landlord.
10
<PAGE>
b. Waiver: No Subrogation. Landlord shall
----------------------
not be liable to Tenant or those claiming by,
through, or under Tenant for any injury to or
death of any person or persons or the damage to or
theft, destruction, loss, or loss of use of any
property (a "Loss") caused by casualty, theft,
fire, third parties, or any other matter beyond
the control of Landlord, or for any injury or
damage or inconvenience which may arise through
repair or alteration of any part of the Building,
or failure to make repairs, or from any other
cause, except if such Loss is caused by Landlord's
gross negligence or misconduct. Landlord and
Tenant each waives any claim it might have against
the other for any damage to or theft, destruction,
loss, or loss of use of any property, to the
extent the same is insured against under any
insurance policy that covers the Building, the
Premises, Landlord's or Tenant's fixtures,
personal property, leasehold improvements, or
business, or, in the case of Tenant's waiver, is
required to be insured against under the terms
hereof, regardless of whether the negligence or
fault of the other party caused such loss;
however, Landlord's waiver shall not include any
deductible amounts on insurance policies carried
by Landlord or to any coinsurance penalty which
Landlord might sustain. Each party shall cause its
insurance carrier to endorse all applicable
policies waiving the carrier's rights of recovery
under subrogation or otherwise against the other
party.
c. Indemnity. Subject to Section 11.b.,
---------
Tenant shall defend, indemnify, and hold harmless
Landlord and its agents from and against all
claims, demands, liabilities, causes of action,
suits, judgments, and expenses (including
attorneys' fees) for any Loss arising from any
occurrence on the Premises or from Tenant's
failure to perform its obligations under this
Lease (other than a Loss arising from the sole or
gross negligence of Landlord or its agents), even
though caused or alleged to he caused by the
joint, comparative, or concurrent negligence or
fault of Landlord or its agents, and even though
any such claim, cause of action, or suit is based
upon or alleged to be based upon the strict
liability of Landlord or its agents. This
indemnity provision is intended to indemnify
Landlord and its agents against the consequences
of their own negligence or fault as provided above
when Landlord or its agents are jointly,
comparatively, or concurrently negligent with
Tenant. This indemnity provision shall survive
termination or expiration of this Lease.
SUBORDINA- 12. a. Subordination. This Lease shall be
-------------
TION ATTORN- subordinate to any deed of trust, mortgage, or
MENT; NOTICE other security instrument (a "Mortgage"), or any
TO ground lease, master lease, or primary lease (a
LANDLORD'S "Primary Lease"), that now or hereafter covers all
MORTGAGEE or any part of the Premises (the mortgagee under
any Mortgage or the lessor under any Primary Lease
Is referred to herein as "Landlord's Mortgagee").
Landlord's Mortgagee may at any time, without
notice to or consent of Tenant, elect to
subordinate any such Mortgage or Primary Lease to
this Lease; provided, however, any subordination
shall be conditioned upon the non-disturbance of
Tenant's occupancy so long as Tenant is not in
default.
b. Attornment. Tenant shall attorn to any party
----------
succeeding to Landlord's interest in the Premises,
whether by
11
<PAGE>
purchase, foreclosure, deed in lieu of
foreclosure, power of sale, termination of lease,
or otherwise, upon such party's request, and shall
execute such agreements confirming such attornment
as such party may reasonably request.
c. Notice to Landlord's Mortgagee. Tenant
------------------------------
shall not seek to enforce any remedy it may have
for any default on the part of the Landlord
without first giving written notice by certified
mail, return receipt requested, specifying the
default in reasonable detail, to any Landlord's
Mortgagee whose address has been given to Tenant,
and affording such Landlord's Mortgagee a
reasonable opportunity to perform Landlord's
obligations hereunder.
RULES AND 13. Tenant shall comply with the rules and
REGULATIONS regulations of the Building which are attached
hereto as Exhibit B. Landlord may, from time to
time, change such rules and regulations for the
safety, care, or cleanliness of the Building and
related facilities, provided that such changes are
applicable to all tenants of the Building and will
not unreasonably interfere with Tenant's use of
the Premises. Tenant shall be responsible for the
compliance with such rules and regulations by its
employees, agents, and invitees.
CONDEM- 14. a. Taking - Landlord's and Tenant's
--------------------------------
NATION Rights. If any part of the Building is taken by
------
right of eminent domain or conveyed in lieu
thereof (a "Taking"), and such Taking prevents
Tenant from conducting its business in the
Premises in a manner reasonably comparable to that
conducted immediately before such Taking, Tenant
may terminate this Lease as of the data of such
Taking by giving written notice to Landlord within
90 days after the Taking, and Rent shall be
apportioned as of the date of such Taking. If
Tenant does not terminate this Lease, then Rent
shall be abated on a reasonable basis as to that
portion of the Premises rendered untenantable by
the Taking.
b. Taking - Landlord's Rights. If any
--------------------------
material portion, but less than all, of the
Building becomes subject to a Taking, or if
Landlord is required to pay any of the proceeds
received for a Taking to Landlord's Mortgagee,
then this Lease, at the option of Landlord,
exercised by written notice to Tenant within 120
days after such Taking, shall terminate and Rent
shall be apportioned as of the date of such
Taking. If Landlord does not so terminate this
Lease then this Lease will continue, but if any
portion of the Premises has been taken, Basic
Rental shall abate as provided in the last
sentence of Section 14.a.
c. Award. If any Taking occurs, then
-----
Landlord shall receive the entire award or other
compensation for the Land, the Building, and other
improvements taken, and Tenant may separately
pursue a claim against the condemnor for the value
of Tenant's personal property which Tenant is
entitled to remove under this Lease, moving costs,
loss of business, and other claims it may have.
F I R E OR 15. a. Repair Estimate. If the Premises or
---------------
OTHER the building are damaged by fire or other
CASUALTY casualty (a Casualty"), Landlord shall, within 100
days after such Casualty, deliver to Tenant a
12
<PAGE>
good faith estimate (the "Damage Notice") of the time
needed to repair the damage caused by such Casualty.
b. Landlord's and Tenant's Rights. If a material
------------------------------
portion of the Premises or the Building is damaged by
Casualty such that Tenant is prevented from conducting
its business in the Premises in a manner reasonably
comparable to that conducted immediately before such
Casualty and Landlord estimates that the damage caused
thereby cannot be repaired within 120 days after the
commencement of repair, Tenant may terminate this Lease
by delivering written notice to Landlord of its
election to terminate within 30 days after the Damage
Notice has been delivered to Tenant. If Tenant does not
terminate this Lease, then (subject to Landlord's
rights under Section 15.c.) Landlord shall repair the
Building or the Premises, as the case may be, as
provided below, and Rent for the portion of the
Premises rendered untenantable by the damage shall be
abated on a reasonable basis from the date of damage
until the completion of the repair, unless Tenant
caused such damage, in which case, Tenant shall
continue to pay Rent without abatement.
c. Landlord's Rights. If a Casualty damages a
-----------------
material portion of the Building, and Landlord makes a
good faith determination that restoring the Premises
would be uneconomical, or if Landlord is required to
pay any insurance proceeds arising out of the Casualty
to Landlord's Mortgagee, then Landlord may terminate
this Lease by giving written notice of its election to
terminate within 120 days after the Damage Notice has
been delivered to Tenant, and Basic Rental hereunder
shall be abated as of the date of the Casualty.
d. Repair Obligation. If neither party elects to
-----------------
terminate this Lease following a Casualty, then
Landlord shall, within a reasonable time after such
Casualty, commence to repair the Building and the
Premises and shall proceed with reasonable diligence to
restore the Building and Premises to substantially the
same condition as they existed immediately before such
Casualty; however, Landlord shall not be required to
repair or replace any part of the furniture,
equipment, fixtures, and other improvements which may
have been placed by, or at the request of, Tenant or
other occupants in the Building or the Premises, and
Landlord's obligation to repair or restore the Building
or Premises shall be limited to the extent of the
insurance proceeds actually received by Landlord for
the Casualty in question.
TAXES 16. Tenant shall be liable for all taxes levied or
assessed against personal property, furniture, or
fixtures placed by Tenant in the Premises. If any taxes
for which Tenant is liable are levied or assessed
against Landlord or Landlord's property and Landlord
elects to pay the same, or if the assessed value of
Landlord's property is increased by inclusion of such
personal property, furniture or fixtures and Landlord
elects to pay the taxes based on such increase, then
Tenant shall pay to Landlord, upon demand, that part of
such taxes for which Tenant is primarily liable
hereunder.
EVENT OF 17. Each of the following occurrences shall
DEFAULT constitute an "Event of Default":
13
<PAGE>
a. Tenant's failure to pay Rent, or any other sums
due from Tenant to Landlord under the Lease (or any
other lease executed by Tenant for space in the
Building), when due and the continuance of such failure
for a period of fifteen (15) days following the date
of written notice from Landlord, provided that Landlord
shall not be required to deliver nor shall Tenant be
entitled to receive more than two (2) such notices
during any twelve (12) month period or a total of five
(5) such notices during the Term of this Lease;
b. Tenant's failure to perform, comply with, or
observe any other agreement or obligation of Tenant
under this Lease (or any other lease executed by Tenant
for space in the Building) and the continuance of such
failure for a period of thirty (30) days following the
date of written notice from Landlord;
c. The filing of a petition by or against Tenant
(the term "Tenant" shall include, for the purpose of
this Section 17.c., any guarantor of the Tenant's
obligations hereunder) (i) in any bankruptcy or other
insolvency proceeding; (ii) seeking any relief under
any state or federal debtor relief law; (iii) for the
appointment of a liquidator or receiver for all or
substantially all of Tenant's property or for Tenant's
interest in this Lease; or (iv) for the reorganization
or modification of Tenant's capital structure;
d. Tenant shall desert or vacate any portion of
the Premises; and
e. The admission by Tenant that it cannot meet its
obligations as they become due or the making by Tenant
of an assignment for the benefit of its creditors.
REMEDIES 18. Upon any Event of Default, Landlord may, in
addition to all other rights and remedies afforded
Landlord hereunder or by law or equity, take any of the
following actions:
a. Terminate this Lease by giving Tenant written
notice thereof, in which event, Tenant shall pay to
Landlord the sum of (i) all Rent accrued hereunder
through the date of termination, (ii) all amounts due
under Section 19.a., and (iii) an amount equal to (A)
the total Rent that Tenant would have been required
to pay for the remainder of the Term discounted to
present value at a per annum rate equal to the "Prime
Rate" as published on the date this Lease is
terminated by The Wall Street Journal, Midwest
Edition, in its listing of "Money Rates", minus (B)
the then present fair rental value of the Premises
for such period, similarly discounted; or
b. Terminate Tenant's right to possession of the
Premises without terminating this Lease by giving
written notice thereof to Tenant, in which event
Tenant shall pay to Landlord (i) all Rent and other
amounts accrued hereunder to the date of termination
of possession, (ii) all amounts due from time to time
under Section 19.a., and (iii) all Rent and other
sums required hereunder to be paid by Tenant during
14
<PAGE>
the remainder of the Term, diminished by any net sums
thereafter received by Landlord through reletting the
Premises during such period. Landlord shall use
reasonable efforts to relet the Premises on such
terms and conditions as Landlord in its sole
discretion may determine (including a term different
from the Term, rental concessions, and alterations
to, and improvement of, the Premises); however,
Landlord shall not be obligated to relet the Premises
before leasing other portions of the Building.
Landlord shall not be liable for, nor shall Tenant's
obligations hereunder be diminished because of,
Landlord's failure to relet the Premises or to
collect rent due for such reletting. Tenant shall not
be entitled to the excess of any consideration
obtained by reletting over the Rent due hereunder.
Reentry by Landlord in the Premises shall not affect
Tenant's obligations hereunder for the unexpired
Term; rather, amounts due by Tenant, without the
necessity of Landlord's waiting until the expiration
of the Term. Unless Landlord delivers written notice
to Tenant expressly stating that it has elected to
terminate this Lease, all actions taken by Landlord
to exclude or dispossess Tenant of the Premises shall
be deemed to be taken under this Section 18.b. If
Landlord elects to proceed under this Section 18.b.,
it may at any time elect to terminate this Lease
under Section 18.a.
c. Additionally, without notice, Landlord may
alter locks or other security devices at the Premises
to deprive Tenant of access thereto, and Landlord
shall not be required to provide a new key or right
of access to Tenant.
PAYMENT BY 19. a. Payment by Tenant. Upon any Event of
-----------------
TENANT; Default, Tenant shall pay to Landlord all costs
NON-WAIVER incurred by Landlord (including court costs and
reasonable attorneys' fees and expenses) in (i)
obtaining possession of the Premises, (ii) removing
and storing Tenant's or any other occupant's
property, (iii) repairing, restoring, altering,
remodeling, or otherwise putting the Premises into
condition acceptable to a new tenant, (iv) if Tenant
is dispossessed of the Premises (including brokerage
commissions, cost of tenant finish work, and other
costs incidental to such reletting), (v) performing
Tenant's obligations which Tenant failed to perform,
and (vi) enforcing, or advising Landlord if, its
rights, remedies, and recourses arising our of the
Event of Default.
b. No Waiver. Landlord's acceptance of Rent
---------
following an Event of Default shall not waive
Landlord's rights regarding such Event of Default. No
waiver by Landlord of any violation or breach of any of
the terms contained herein shall waive Landlord's
rights regarding any future violation of such term or
violation of any other term.
SURRENDER 20. No act by Landlord shall be deemed an
OF PREMISES acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall
be valid unless the same is made in writing and signed
by Landlord. At the expiration or termination of this
Lease, Tenant shall deliver to Landlord the Premises
with all improvements located thereon in good repair
and condition, reasonable wear and tear (and
condemnation and fire or other casualty damage not
caused by Tenant, as to
15
<PAGE>
which Sections 14 and 15 shall control) excepted, and
shall deliver to Landlord all keys to the Premises.
Provided that Tenant has performed all of its
obligations hereunder, Tenant may remove all unattached
trade fixtures, furniture, the special floor in the
Secured Computer Area and personal property placed in
the Premises by Tenant (but Tenant shall not remove any
such item which was paid for, in whole or in part, by
Landlord) but only as permitted in the Final Plans.
Additionally, Tenant shall remove such alterations,
additions, improvements, trade fixtures, equipment,
wiring and furniture as Landlord may request. Tenant
shall repair all damage caused by such removal and,
with respect to the special floor in the Secured
Computer Area, return such area in good condition and
ready for installation of carpet. All items not so
removed shall be deemed to have been abandoned by
Tenant and may be appropriated, sold, stored,
destroyed, or otherwise disposed of by Landlord without
notice to Tenant and without any obligation to account
for such items. The provisions of this Section 20 shall
survive the end of the Term.
HOLDING 21. If Tenant fails to vacate the Premises at
OVER the end of the Term, then Tenant shall be a
tenant at will and, in addition to all other damages
and remedies to which Landlord may be entitled for such
holding over, Tenant shall pay, in addition to the
other Rent, a daily Basic Rental equal to the greater
of (a) 200% of the daily Basic Rental payable during
the last month of the Term, or (b) the prevailing
rental rate in the Building for similar space.
CERTAIN 22. Provided that the exercise of such rights does
RIGHTS not unreasonably interfere with Tenant's occupancy of
RESERVED BY the Premises, Landlord shall have the following rights:
LANDLORD
a. To decorate and to make inspections, repairs,
alterations, additions, changes, or improvements,
whether structural or otherwise, in and about the
Building, or any part thereof; for such purposes, to
enter upon the Premises and, during the continuance
of any such work, to temporarily close doors,
entryways, public space, and corridors in the
Building; to interrupt or temporarily suspend
Building services and facilities; and to change the
arrangement and location of entrances or passageways,
doors and doorways, corridors, elevators, stairs,
restrooms, or other public parts of the Building;
provided, however, that Landlord shall be permitted
to enter the raised floor secured computer area (the
"Secured Computer Area") only in an emergency.
b. To take such reasonable measures as Landlord
deems advisable for the security of the Building and
its occupants, including without limitation searching
all persons entering or leaving the Building;
evacuating the Building for cause, suspected cause,
or for drill purposes; temporarily denying access to
the Building in emergency situations; subject,
however, to Tenant's right to enter when the Building
is closed after normal business hours under such
reasonable regulations as Landlord may prescribe from
time to time which may include by way of example, but
not of limitation, that persons entering or leaving
the Building, whether or not during normal business
hours, identify themselves to a
16
<PAGE>
security officer by registration or otherwise and
that such persons establish their right to enter or
leave the Building;
c. To change the name by which the Building is
designated; and
d. Upon 24 hours notice to enter the Premises to
show the Premises to prospective purchasers, lenders,
or tenants
e. Landlord and Tenant acknowledge that Landlord
shall have access to the Secured Computer Area only
in an emergency as determined by Landlord in its sole
discretion. Landlord agrees to designate to Tenant
one on-site maintenance representative and one
supervisor for security screening by Tenant for such
access to the Secured Computer Area. Tenant agrees to
approve such individuals or such substitutes and
successors mutually agreeable to Landlord and Tenant
and provide such individuals with the necessary
security clearances for access.
MISCELLAN- 23. a. Landlord Transfer. Landlord may transfer,
-----------------
EOUS in whole or in part, the Building and any of its rights
under this Lease. If Landlord assigns its rights under
this Lease, then Landlord shall thereby be released
from any further obligations hereunder.
b. Landlord's Liability. The liability of
--------------------
Landlord to Tenant for any default by Landlord under
the terms of this Lease shall be limited to Tenant's
actual direct, but not consequential, damages therefor
and shall be recoverable from the interest of Landlord
in the Building and the Land, and Landlord shall not be
personally liable for any deficiency. This section
shall not be deemed to limit or deny any remedies which
Tenant may have in the event of default by Landlord
hereunder which do not involve the personal liability
of Landlord.
c. Force Majeure. Other than for Tenant's
-------------
monetary obligations under this Lease and obligations
which can be cured by the payment of money (e.g.,
maintaining insurance, whenever a period of time is
herein prescribed for action to be taken by either
party hereto, such party shall not be liable or
responsible for, and there shall be excluded from the
computation for any such period of time, any delays due
to strikes, riots, acts of God, shortages of labor or
materials, war, governmental laws, regulations or
restrictions, or any other causes of any kind
whatsoever which are beyond the control of such party.
d. Brokerage. Landlord and Tenant each warrant
---------
to the other that it has not dealt with any broker or
agent in connection with the negotiation or execution
of this Lease except The Sansone Group, Inc.
("Broker"). Landlord will pay all commissions due
Broker pursuant to a separate written agreement with
Broker. Tenant and Landlord shall each indemnify the
other against all costs, expenses, attorneys' fees, and
other liability for commissions or other compensation
claimed by any broker or agent claiming the same by,
through, or under the indemnifying party.
17
<PAGE>
e. Estoppel Certificates. From time to time,
---------------------
either party shall furnish to any party designated by
the other, within ten days after request therefor, a
certificate confirming and containing such factual
certifications and representations as to this Lease as
reasonably requested.
f. Notices. All notices and other communications
-------
given pursuant to this Lease shall be in writing and
shall be (i) mailed by first class, United States Mail,
postage prepaid, certified, with return receipt
requested, and addressed to the parties hereto at the
address specified in the Basic Lease Information, (ii)
hand delivered to the intended address, or (iii) sent
by prepaid telegram, cable, facsimile transmission, or
telex followed by a confirmatory letter. Notice sent
by certified mail, postage prepaid, shall be effective
three business days after being deposited in the
United States Mail; all other notices shall be
effective upon delivery to the address of the
addressee. The parties hereto may change their
addresses by giving notice thereof to the other in
conformity with this provision.
g. Separability. If any clause or provision of
------------
this Lease is illegal, invalid, or unenforceable under
present or future laws, then the remainder of this
Lease shall not be affected thereby and in lieu of such
clause or provision, there shall be added as a part of
this Lease a clause or provision as similar in terms to
such illegal, invalid, or unenforceable clause or
provision as may be possible and be legal, valid, and
enforceable.
h. Amendments: and Binding Effect. This Lease may
------------------------------
not be amended except by instrument in writing signed
by Landlord and Tenant. No provision of this Lease
shall be deemed to have been waived by Landlord unless
such waiver is in writing signed by Landlord, and no
custom or practice which may evolve between the parties
in the administration of the terms hereof shall waive
or diminish the right of Landlord to insist upon the
performance by Tenant in strict accordance with the
terms hereof. The terms and conditions contained in
this Lease shall inure to the benefit of and be binding
upon the parties hereto, and upon their respective
successors in interest and legal representatives,
except as otherwise herein expressly provided. This
Lease is for the sole benefit of Landlord and Tenant,
and, other than Landlord's Mortgagee, no third party
shall be deemed a third party beneficiary hereof.
i. Quiet Enjoyment. Provided Tenant has performed
---------------
all of the terms and conditions of this Lease to be
performed by Tenant, Tenant shall peaceably and quietly
hold and enjoy the Premises for the Term, without
hindrance from Landlord or any party claiming by,
through, or under Landlord, subject to the terms and
conditions of this Lease.
j. Joint and Several Liability. If there is more
---------------------------
than one Tenant, then the obligations hereunder imposed
upon Tenant shall be joint and several. If there is a
guarantor of Tenant's obligations hereunder, then the
obligations hereunder imposed upon Tenant shall be the
joint and several obligations of Tenant and such
guarantor, and Landlord need not first proceed against
Tenant before proceeding against such guarantor nor
shall any
18
<PAGE>
such guarantor be released from its guaranty, for any
reason whatsoever.
k. Captions. The captions in this Lease are for
--------
convenience of reference only, and do not limit or
enlarge the terms and conditions of this Lease.
l. No Merger. There shall he no merger of the
---------
leasehold estate hereby created with the fee estate in
the Premises or any part thereof if the same person
acquires or holds, directly or indirectly, this Lease
or any interest in this Lease and the fee estate in the
leasehold Premises or any interest in such fee estate.
m. No Offer. The submission of this Lease to
--------
Tenant shall not be construed as an offer, nor shall
Tenant have any rights under this Lease unless Landlord
executes a copy of this Lease and delivers it to
Tenant.
n. Exhibits. All exhibits and attachments attached
--------
hereto are incorporated herein by this reference.
Exhibit A - Outline of Premises
Exhibit B - Building Rules and Regulations
Exhibit C - Parking
Exhibit D - Tenant Finish Work: Allowance
Exhibit E - Extension Option
o. Entire Agreement. This Lease constitutes the
----------------
entire agreement between Landlord and Tenant regarding
the subject matter hereof and supersedes all oral
statements and prior writings relating thereto. Except
for those set forth in this Lease, no representations
warranties, or agreements have been made by Landlord or
Tenant to the other with respect to this Lease or the
obligations of Landlord or Tenant in connection
therewith.
p. Consent of Lender. This Lease is contingent
-----------------
upon the written approval of the provisions of this
Lease by the holder of the first deed of trust secured
by the Property, said approval to be given within ten
(10) days of Landlord's execution of this Lease. If the
approval is not given within the ten (10) day period,
then this Lease shall be deemed null and void with
neither party having further obligation hereunder.
LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S
INTENDED COMMERCIAL PURPOSE, AND TENANT'S OBLIGATION TO
PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION
OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS
OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED HEREIN, TENANT SHALL CONTINUE TO PAY
THE RENT, WITHOUT ABATEMENT, SETOFF, DEDUCTION,
NOTWITHSTANDING ANY BREACH BY LANDLORD OF
19
<PAGE>
ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR
IMPLIED.
DATED as of the date first above written.
LANDLORD TENANT
Charter Communications DIGITAL BROADCAST NETWORK
Entertainment I, L.P., a Delaware CORPORATION, a Missouri corporation
limited partnership
By: CCA Acquisition Corp.,
general partner
By: /s/ M. Celeste Vossmeyer
-------------------------------
Printed Name: M. Celeste Vossmeyer
---------------------
Title: Vice President Sr. Counsel
---------------------------- By: /s/ Timothy M. Roberts
-----------------------------
Printed Name: Timothy M. Roberts
-------------------
Title: President
--------------------------
20
<PAGE>
EXHIBIT "A"
OUTLINE OF PREMISES
[FLOOR PLAN APPEARS HERE]
<PAGE>
EXHIBIT B
BUILDING RULES AND REGULATIONS
------------------------------
The following rules and regulations shall apply to the Premises, the
Building, the parking garage associated therewith, the Land and the
appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways, and other
similar areas shall not be obstructed by tenants or used by any tenant for
purposes other than ingress and egress to and from their respective leased
premises and for going from one to another part of the Building.
2. Plumbing, fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other
unsuitable material shall be thrown or deposited therein. Damage resulting
to any such fixtures or appliances from misuse by a tenant or its agents,
employees or invitees, shall be paid by such tenant.
3. No signs, advertisements or notices shall be painted or affixed on
or to any windows or doors or other part of the Building without the prior
written consent of Landlord. No nails, hooks or screws shall be driven or
inserted in any part of the Building except by Building maintenance
personnel. No curtains or other window treatments shall be placed between
the glass and the Building standard window treatments.
4. Landlord shall provide all door locks in each tenant's leased
premises, at the cost of such tenant, and no tenant shall place any
additional door locks in its leased premises without Landlord's prior
written consent. Landlord shall furnish to each tenant a reasonable number
of keys to such tenant's leased premises, at such tenant's cost, and no
tenant shall make a duplicate thereof. See Lease Section 22(e).
5. Landlord may prescribe weight limitations and determine the
locations for safes and other heavy equipment or items, which shall in all
cases be placed in the Building so as to distribute weight in a manner
acceptable to Landlord which may include the use of such supporting devices
as Landlord may require. The current floor load limits are 75/lbs. per
square foot. All damages to the Building caused by the installation or
removal of any property of a tenant, or done by a tenant's property while
in the Building, shall be repaired at the expense of such tenant.
6. Corridor doors, when not in use, shall be kept closed. Nothing
shall be swept or thrown into the corridors, halls, elevator shafts or
stairways. No birds or animals shall be brought into or kept in, on or
about any tenant's leased premises. No portion of any tenant's leased
premises shall at any time be used or occupied as sleeping or lodging
quarters.
7. Tenant shall cooperate with Landlord's employees in keeping its
leased premises neat and clean. Tenants shall not employ any person for the
purpose of such cleaning other than the Building's cleaning and maintenance
personnel.
8. To ensure orderly operation of the Building, no ice, mineral or
other water, towels, newspapers, etc. shall be delivered to any leased area
except by persons approved by Landlord.
9. Tenant shall not make or permit any improper, objectionable or
unpleasant noises or odors in the Building or otherwise interfere in any
way with other tenants or persons having business with them.
10. Other than Tenant Generators as set forth in Lease Section
4(c)(iv), no machinery of any kind (other than normal office equipment)
shall be operated by any
Exhibit B - Page 1 of 2
<PAGE>
tenant on its leased area without Landlord's prior written consent, nor
shall any tenant use or keep in the Building any flammable or explosive
fluid or substance.
11. Landlord will not be responsible for lost or stolen personal
property, money or jewelry from tenant's leased premises or public or
common areas regardless of whether such loss occurs when the area is locked
against entry or not.
12. No vending or dispensing machines, of any kind may be maintained
in any leased premises without the prior written permission of Landlord.
13. AR mail chutes located in the Building shall be available for use
by Landlord and all tenants of the Building according to the rules of the
United States Postal Service.
Exhibit B - Page 2 of 2
<PAGE>
EXHIBIT C
PARKING
-------
Tenant be permitted to use 105 undesignated vehicular parking spaces
in the parking lot or other parking facilities associated with the Building
(the "Parking Facility"). The Tenant agrees to comply with the parking
rules and regulations that the Landlord provides to the Tenant. The rules
and regulations are subject to adjustment by the Landlord.
Exhibit C - Page 1 of 1
<PAGE>
EXHIBIT D
TENANT FINISH-WORK ALLOWANCE
----------------------------
1. Tenant will have prepared the Working Drawings for the Premises.
Landlord will review and approve the Working Drawings within seven (7) days
following receipt thereof. As used herein, "Working Drawings" shall mean
the final working drawings approved by Landlord, as amended from time to
time by any approved changes thereto, and "Work" shall mean all
improvements to be constructed in accordance with and as indicated on the
Working Drawings. Approval by Landlord of the Working Drawings shall not be
a representation or warranty of Landlord that such drawings are adequate
for any use, purpose, or condition, or that such drawings comply with any
applicable law or code, but shall merely be the consent of Landlord to the
performance of the Work. Tenant and Landlord shall sign the Working
Drawings to evidence their review and approval thereof. All changes in the
Work must receive the prior written approval of Landlord, and in the event
of any such approved change Tenant shall, upon completion of the Work,
furnish Landlord with an accurate, reproducible "as-built" plan (e.g.,
sepia) of the improvements as constructed, which plan shall be incorporated
into this Lease by this reference for all purposes.
2. Tenant will cause the Work to be performed by contractors and
subcontractors approved in writing by Landlord.
3. If a delay in the performance of the Work occurs (a) because Tenant
does not timely approve the Working Drawings; (b) because of any change by
Tenant to the Working Drawings, (c) because of any specification by Tenant
of materials or installations in addition to or other than Landlord's
standard finish-out materials, or (d) if Tenant, any contractor or
subcontractor, or Tenant's agents otherwise delays completion of the Work,
then, notwithstanding any provision to the contrary in this Lease, Tenant's
obligation to pay Basic Rental and Tenant's share of Excess shall commence
on the scheduled Commencement Date.
4. Tenant shall bear the entire cost of performing the Work
(including, without limitation, space planning and construction document
fees, design of the Work and preparation of the Working Drawings, costs of
construction labor and materials, electrical usage during construction,
additional janitorial services, approved signage, related taxes and
insurance costs, all of which costs are herein collectively called the
"Total Construction Costs") in excess of the Construction Allowance
(hereinafter defined). Upon approval of the Working Drawings and selection
of a contractor, Tenant shall promptly (a) execute a work order agreement
prepared by Landlord which identifies such drawings, itemizes the Total
Construction Costs and sets forth the Construction Allowance, and (b) pay
to Landlord 50% of the amount by which the estimated Total Construction
Costs exceed the Construction Allowance. Tenant shall pay to Landlord,
within 10 days after Landlord's delivery to Tenant of an appropriate
invoice, an amount equal to the Total Construction Costs (as adjusted for
any approved changes to the Work), less (i) the amount of the payments
already made by Tenant, (H) the amount of the Construction Allowance, and
(iii) the cost reasonably estimated by Landlord for completing all "punch
list" items; finally, upon completion of the punch list items, Tenant shall
pay to Landlord the costs incurred in completing the same.
5. Landlord shall provide to Tenant a construction allowance (the
"Construction Allowance") equal to $377,100; however, if Tenant or its
agent is managing the performance of the Work, then Tenant shall not become
entitled to full credit for the Construction Allowance until the Work has
been substantially completed and Tenant has caused to be delivered to
Landlord (i) all invoices from contractors, subcontractors, and suppliers
evidencing the cost of performing the Work, together with lien waivers from
such parties, and a consent of the surety to the finished Work (if
applicable) and (if) a certificate of occupancy from the appropriate
governmental authority, if applicable to the Work, or evidence of
governmental inspection and approval of the Work.
Exhibit D - Page 1 of 2
<PAGE>
6. Landlord or its affiliate shall supervise the Work, make disbursements
required to be made to the contractor, and act as a liaison between the
contractor and Tenant and coordinate the relationship between the Work, the
Building, and the Building's systems. In consideration for Landlord's
construction supervision services, Tenant shall pay to Landlord a construction
supervision fee equal to three percent (3%) of the Total Construction Casts -
which may be deducted from the Construction Allowance.
7. To the extent not inconsistent with this Exhibit, Section 8a. of this
Lease shall govern the performance of the Work and the Landlord's and Tenant's
respective rights and obligations regarding the improvements installed pursuant
thereto.
8. Notwithstanding anything on this Exhibit to the contrary, the
Construction Allowance shall be made available to the Tenant in two (2) stages,
the first stage shall involve the disbursement of twenty percent (20%) of the
total allowance upon completion of Phase I as defined in the Final Plans, and
the remaining eighty percent (80%) shall be disbursed upon completion of Phase
II as certified by Tenant and upon delivery to Landlord of a detailed breakdown
of the parties to receive such funds and the delivery of appropriate lien
waivers therefor.
Exhibit D - Page 2 of 2
<PAGE>
EXHIBIT E
EXTENSION OPTION
----------------
1. Provided no Event of Default exists at the time of such election, Tenant
may renew this Lease for one (1) additional period of five (5) years on the same
terms provided in this Lease (except as set forth below), by delivering written
notice of ("Tenant's Notice") the exercise thereof to Landlord not later than
six (6) months prior to the end of the initial Term. On or before the
commencement date of the extended Term, Landlord and Tenant shall execute an
amendment to this Lease extending the Term on the same terms provided in this
Lease, except as follows:
(a) The Basic Rental payable for each month during each such extended Term
shall be the greater of (a) the prevailing rental rate in the Building and other
comparable buildings in the metropolitan area in which the Building is located
at the commencement of such extended Term, for space of equivalent quality,
size, utility and location, with tile length of the extended Term to be taken
into account, or (b) the Basic Rental which would otherwise be payable hereunder
for the first full calendar month of such extended Term;
(b) Tenant shall have no further renewal options unless expressly granted
by Landlord in writing; and
(c) Landlord shall lease to Tenant the Premises in their then-current
condition, and Landlord shall not provide to Tenant any allowances (e.g., moving
allowance, construction allowance, and the like) or other tenant inducements.
2. Within thirty (30) days following delivery of Tenant's Notice, Landlord
shall deliver to Tenant a written notice ("Landlord's Notice") specifying the
Basic Rental rate per square foot per annum for the applicable additional term
of five (5) years. Tenant shall have fifteen (15) days following delivery of
Landlord's Notice to notify Landlord in writing ("Tenant's Renewal Notice") of
(i) Tenant's exercise of its right to renew the Lease at the Basic Rental rate
proposed by Landlord, or (ii) Tenant's election not to exercise its right to
renew the Lease. Tenant's failure to timely deliver Tenant's Renewal Notice
shall be deemed acceptance by Tenant of the Basic Rental rate proposed by
Landlord.
3. Tenant's rights under this Exhibit shall terminate if (i) this Lease or
Tenant's right to possession of the Premises is terminated, (ii) Tenant assigns
any of its interest in this Lease or sublets any portion of the Premises, or
(iii) Tenant falls to timely exercise its option under this Exhibit, time being
of the essence with respect to Tenant's exercise thereof.
Exhibit E - Page 1 of 1
<PAGE>
EXHIBIT 10.9
STANDARD FORM OF OFFICE LEASE
-----------------------------
AGREEMENT OF LEASE, made as of this 24th day of March, 1999 between 67
--
BROAD STREET LLC, a New York limited liability company, having an office at 152
- ----------------
West 57th Street, 60th Floor, New York, New York, party of the first part,
hereinafter referred to as LANDLORD, and DIGITAL BROADCAST NETWORK CORPORATION,
-------------------------------------
a Missouri corporation having an office at 977 Charter Commons, Chesterfield,
Missouri 63017, qualified to transact business in New York State, party of the
second part, hereinafter referred to as TENANT.
WITNESSETH: Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, the entire 6/th/ floor and portion of the 5/th/ floor as shown on
the floor plans annexed hereto and made a part hereof as Exhibit A (the "Demised
Premises" or "demised premises", whether capitalized or not) in the building
known as 67 a/k/a 75 Broad Street in the Borough of Manhattan, City of New York
(the "Building" or "Building", whether capitalized or not), for the term of
approximately fifteen (15) years and seven (7) months (or until such term shall
sooner cease and expire as hereinafter provided) to commence as provided in
Article 52 (the "Commencement Date") and shall expire nevertheless on the last
day of the 187/th/ calendar month following the Commencement Date (the
"Expiration Date"), both dates inclusive, at annual rental rates, as provided in
the Rent Schedule annexed hereto and made a part hereof as Exhibit B (the "fixed
rent" or "Fixed Rent" or "Fixed Annual Rent," whether capitalized or not), which
Tenant agrees to pay in lawful money of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, in equal monthly installments in advance on the first day of each month
during said term, at the office of Landlord or such other place as Landlord may
designate, without any set off, counterclaim or deduction whatsoever unless
expressly provided for in this lease. The first (1st) monthly installment of
fixed rent shall be paid upon execution of this Lease by Tenant.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
1. Rent. Tenant shall pay the rent as above and as hereinafter
provided.
2. Occupancy. Tenant shall use and occupy the Demised Premises for
telecommunications and other communications equipment (Including, but not
limited to, switching gear) and executive, general, and administrative offices,
and for all lawful incidental or ancillary uses in connection with the
foregoing, and for no other purpose.
3. Alterations: Tenant shall make no structural changes in or to the
Demised Premises of any nature without Landlord's prior written consent
provided, however, that Tenant shall be permitted without the prior written
consent of Landlord to make non-structural alterations to the Demised Premises,
the cost of which, individually, do not exceed, $25,000.00 and which, when taken
in any one-year period, do not exceed $75,000.00 in the aggregate, provided that
such alterations do not adversely affect the exterior or interior of the
Building, the Certificate of Occupancy of the Building, or the structure or
working systems of the Building or adversely affect other Building tenants.
Furthermore, as to any non-structural alterations which exceed the initial
amounts or any adjusted amounts, Tenant shall not perform such non-structural
alterations without the prior written consent of the Landlord, which consent
shall not be unreasonably withheld, delayed or conditioned. It is understood by
the parties that Landlord shall be deemed to approve any request for consent by
Tenant under this Article 3 if Landlord fails to give Tenant written notice
approving, denying or requesting additional information within twenty (20) days
from the date Tenant has submitted plans to Landlord. Notwithstanding the
foregoing, Tenant may, at its sole cost, install floor coverings, objects of
art, wall and ceiling coverings, paneling, building standard window blinds and
trims regardless of cost without Landlord's consent. Also notwithstanding
Article 3, Tenant shall have no obligation to remove from the Demises Premises
any fixtures, paneling, partitions, railings or like installations, solely to
the extent installed by Landlord.
With regards to Tenant's initial work, the plans and
specifications in respect of which shall be responded to in writing by Landlord
within ten (10) business days after Tenant submits a request for approval of the
same to Landlord. If Landlord shall not respond to Tenant's requested approval
of its plans and specifications within such ten (10) business day period, then
Landlord shall be deemed to have approved such plans and specifications.
Notwithstanding the foregoing, Tenant must use Landlord's base building
contractor for any electrical work in and to or from any base building
electrical service rooms, provided Landlord's contractor provides its service at
competitive market rates and quality. Tenant shall, at its expense, before
making any alterations, additions, installations or improvements obtain all
permits, approval and
<PAGE>
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Landlord. Landlord
hereby agrees, at no cost and expense to it, to cooperate reasonably with Tenant
and agrees to execute all documents necessary for the procuring of any
governmental consents, permits, etc. Tenant agrees to carry and will cause
Tenant's contractors and sub-contractors to carry such workman's compensation,
general liability, personal and property damage insurance as Landlord may
reasonably require. If any mechanic's lien is filed against the Demised Premises
or the Building for work claimed to have been done for, or materials furnished
to, Tenant, whether or not done pursuant to this Article, the same shall be
discharged by Tenant within thirty (30) days after Tenant receives written
notice of the filing thereof at Tenant's expense, by either payment, the posting
of a statutory bond required by law or otherwise (e.g., by summary judgment for
a facial irregularity). Notwithstanding the foregoing, Tenant may remove any of
the fixtures and equipment delineated on Exhibit E provided it repairs any
damage occasioned by said removal. The foregoing notwithstanding Landlord
reserves the right at any time sixty (60) days prior to the Expiration Date to
require Tenant to remove any non-Building Standard installations. Nothing in
this Article shall be construed to give Landlord title to or to prevent Tenant's
removal of any fixtures, office furniture, equipment and like installations,
installed in the Demised Premises from time to time by Tenant, but upon removal
of any such furniture, fixtures and equipment from the Demised Premises or upon
removal of other installations as may be permitted hereunder, Tenant shall
immediately and at its expense, repair and restore the Demised Premises to the
condition existing prior to the installation, ordinary wear and tear,
obsolescence and damage by casualty, pursuant to Article 9, excepted, and repair
any damage to the Demised Premises or the Building due to such removal.
With respect to any proposed work, Tenant shall, submit (a) "load
letter" evidencing Tenant's proposed floor and electrical loads and (b) final
"as built" plans.
4. Repairs: Landlord shall maintain and repair the exterior of the
Building and the structural portions of the Building, and all Building systems
servicing the Demised Premises including the structural portions of the Demised
Premises, provided such repair is not occasioned by Tenant's negligence or its
alterations; and the public portions of the Building and all Building systems
servicing the Demised Premises, (including, but not limited to, all plumbing,
electrical, heating and ventilating systems but expressly not Tenant's internal
system pursuant to Article 54 hereof). In addition to the foregoing, Landlord
shall maintain and keep in working condition and repair, only if supplied or
installed by Landlord, the radiators, central air conditioning equipment and
ducting, electrical conduit and risers, lighting fixtures, water columns and
pipes, serving the Demised Premises, provided such need for repair is not caused
by Tenant, its agents, employees or contractors. Tenant shall, throughout the
term of this lease, take good care of the Demised Premises including the windows
and window frames and, the fixtures and appurtenances therein and at Tenant's
sole cost and expense promptly make all repairs thereto and to the Building,
whether structural or non-structural in nature, caused by or resulting from the
carelessness, omission, neglect or improper conduct of Tenant, Tenant's
servants, employees, invitees, or licensees. In no event shall Tenant be
obligated to make any repairs (structural or non-structural) or replacements
necessitated by, or to repair damage due, in whole or in part, to any act,
omission or negligence of Landlord or Landlord's agents, employees, invitees,
licensees, servants and contractors. Tenant shall also repair all damage to the
Building and the Demised Premises caused by the moving of Tenant's fixtures,
furniture or equipment. All the aforesaid repairs shall be of quality or class
equal to the condition existing prior to the damage, ordinary wear and tear,
obsolescence and damage by casualty excepted. If Tenant fails, after ten (10)
days written notice from Landlord, to proceed with due diligence to make repairs
required to be made by Tenant under this Article 4, the same may be made by the
Landlord at the expense of Tenant, and the actual reasonable expenses thereof
incurred by Landlord shall be collectible, as additional rent within thirty (30)
days, after rendition of a bill or statement therefor. If the Demised Premises
be or become infested with vermin by reason of Tenant's actions or omissions,
Tenant shall, at its expense, cause the same to be exterminated. Tenant shall
give Landlord prompt notice of any defective condition in the Demised Premises
for which Landlord may be responsible hereunder (including but not limited to
plumbing, heating system or electrical lines located in the Demised Premises).
Notwithstanding the foregoing, Tenant's failure to give such notice to Landlord
shall not be deemed a waiver by Tenant or Tenant's rights or a discharge of
Landlord's obligations hereunder (provided Tenant gives notice of the same
within the three (3) month period immediately following the occurrence of the
defective condition). Landlord shall, at its sole cost and expense, remedy the
condition with due diligence, but at the expense of Tenant, if repairs are
necessitated by damage or injury attributable to Tenant, Tenant's servants,
agents, employees, invitees or licensees as aforesaid. There shall be no
allowance to the Tenant for a diminution of rental value and no liability on the
part of Landlord by reason of inconvenience, annoyance or injury to business
arising from Landlord, Tenant or others making or failing to make any repairs,
alterations, additions or improvements in or to any portion of the Building or
the Demised Premises or in and to the fixtures, appurtenances or equipment
thereof. The provisions of this Article 4 with respect to the making of repairs
shall not apply in the case of fire or other casualty with regard to which
Article 9 shall apply.
Landlord agrees to substantially complete the following common area or
public portion upgrades within six (6) months from the date of execution of this
Lease:
1. Lobby - Periodic restoration of marble floors, wall and
ceiling murals; installation of a "Dignified First Class"
lobby kiosk directory;
-2-
<PAGE>
2. Bathrooms - All existing bathrooms to be periodically
renovated.
3. Elevator Cabs - Remodeled "State of the Art" controls and
new elevator cabs.
4. Risers - Building will be providing a secure riser
management system. Riser space is available as per
building's rate schedule (as outlined in the Generator
Article of this lease). There shall be no charge for Tenant
to run conduit between Tenant's contiguous floors as long as
it is within the space occupied by Tenant, i.e. within the
Demised Premises; and
5. Upgrade Class "E" System.
5. Window Cleaning: Tenant will not clean nor require, permit,
suffer or allow any window in the Demised Premises to be cleaned from the
outside in violation of Section 202 of the New York State Labor Law or any other
---------------------------
applicable law or of the Rules of the Board of Standards and Appeals, or of any
other Board or body having or asserting jurisdiction.
6. Requirements of Law, Fire Insurance, Floor Loads: Prior to the
commencement of the lease term, if Tenant is then in possession, and at all
times thereafter, Tenant shall, at Tenant's sole cost and expense, promptly
comply with all present and future laws, orders and regulations of all state,
federal, municipal and local governments, departments, commissions and boards
and any direction of any public officer pursuant to law, and all orders, rules
and regulations of the New York Board of Fire Underwriters, or the Insurance
Services Office, or any similar body which shall impose any violation, order or
duty upon Landlord or Tenant with respect to the Demised Premises, as a direct
consequence of Tenant's specific manner of use thereof (including any Tenant
alterations), or, with respect to the Building, if as a direct consequence of
Tenant's acts or omissions in connection with its specific manner of use of the
Demised Premises or the Building (other than the use permitted under the lease).
Nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the Demised Premises or method of
operation therein, violated any such laws, ordinances, orders, rules,
regulations or requirements with respect thereto. In no event shall Tenant be
required to make any structural repairs to the Demised Premises in order to
comply with laws, unless the necessity for same shall be due to Tenant's
negligence or willful misconduct or its specific manner of use including
Tenant's alterations. Tenant may, after securing Landlord to Landlord's
satisfaction against all damages, interest, penalties and expenses, including,
but not limited to, reasonable attorney's fees, by cash deposit or by surety
bond in an amount and in a company satisfactory to Landlord, contest and appeal
any such laws, ordinances, orders, rules, regulations or requirements provided
same is done with all reasonable promptness and provided such appeal shall not
subject Landlord to prosecution for a criminal offense, or cause the Demised
Premises or any part thereof to be condemned or vacated. Tenant shall not do or
permit any act or thing to be done in or to the Demised Premises which is
contrary to law, or which will invalidate or be in conflict with public
liability, fire or other policies of insurance at any time carried by or for the
benefit of Landlord. Tenant shall not keep anything in the Demised Premises
except as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization and other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the Building, nor use the
Demised Premises in a manner which will increase the insurance rate for the
Building or any property located therein over that in effect immediately prior
to the commencement of Tenant's occupancy, following thirty (30) days notice to
Tenant, accompanied by adequate evidence of such increase in fire rates
attributable solely to Tenant's use or misuse hereunder. If by reason of such
failure to comply with the foregoing the fire insurance rate shall, at the
beginning of this lease or at any time thereafter, be higher than it otherwise
would be, then Tenant shall reimburse Landlord, as additional rent hereunder,
for that portion of all fire insurance premiums thereafter paid by Landlord
which shall have been charged because of such failure by Tenant, provided that
Landlord shall have given Tenant thirty (30) days prior written notice that such
failure would cause the rate of fire insurance for the Building to increase. In
any action or proceeding wherein Landlord and Tenant are parties, a schedule of
"make-up" or rate for the Building or Demised Premises issued by the New York
Fire Insurance Exchange or a body making fire insurance rates applicable to said
Demised Premises, shall be prima facie evidence of the facts therein stated and
of the items and changes in the fire insurance rates applicable to the Demised
Premises. Tenant shall not place a load upon any floor of the Demised Premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law provided, however, that Landlord shall have previously
delivered to Tenant a copy of the present Certificate of Occupancy for the
Building or otherwise notified Tenant in writing as to the permitted floor loads
of the Demised Premises. Tenant's equipment shall not exceed the floor load,
which floor load is shown on the annexed Certificate of Occupancy. Tenant agrees
that if as a result of the Tenant's use of the Demised Premises the Tenant
becomes obligated to pay for any increases in the Landlord's fire insurance
premiums pursuant to the provisions of Article 6 of this Lease and provided that
similar action or usage of other tenants in the Building have caused (or
contributed to) an increase in Landlord's fire insurance premiums, Tenant shall
only be responsible for its proportionate share of such increase.
Landlord represents that the use permitted under Article 2 of
this Lease and equipment to be installed and/or operated by Tenant in the
Demised Premises will not invalidate (or be in
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conflict with) any insurance policy carried by Landlord on the date of this
Lease, nor cause an increase in premium under any such insurance policy.
7. Subordination: This lease is subject and subordinate to all
ground or underlying leases and to all mortgages which may now or hereafter
affect such leases or the real property of which the Demised Premises form a
part thereof, and to all renewals, modifications, consolidations, replacements
and extensions of any such underlying leases and mortgages. This clause shall be
self-operative and no further instrument or subordination shall be required by
any ground or underlying lessor or by any mortgagee, affecting any lease or the
real property of which the Demised Premises are a part. In confirmation of such
subordination, Tenant shall execute promptly any certificate that Landlord may
reasonably request.
Landlord agrees that it shall use best efforts (at no cost or
expense to Landlord) to obtain and deliver to Tenant, as to the existing
mortgage covering the real property of which the Demised Premises form a part,
and/or any renewal, modification, consolidation, replacement and extension of
the existing mortgage, non-disturbance agreements in recordable form (or such
agreement shall be contained in such mortgage or any renewal, modification,
consolidation, extension or replacement thereof) from the holder of any such
existing mortgage, providing in substance that provided Tenant shall have
entered into possession and occupancy of the Demised Premises and commenced
payment of fixed rent and additional rent hereunder, and so long as Tenant is
not in default in its obligations for the payment of fixed rent and additional
rent and in the performance of the other terms, covenants and conditions to be
performed on its part under this Lease beyond applicable notice and cure
periods, its possession of the Demised Premises will not be disturbed during the
term hereof, notwithstanding the foreclosure of any such mortgage, and Tenant
will not be named as a party defendant in any foreclosure proceedings brought
for the recovery of possession, it being hereby covenanted and agreed to by
Tenant that the holder of any existing such mortgage, or anyone claiming by,
through or under said holder shall not be: (a) liable for any act or omission
for any prior landlord (including Landlord), (b) subject to any offsets or
defenses which Tenant might have against any prior landlord (including
Landlord), (c) bound by any fixed rent or additional rent or other charges which
Tenant might have paid for more than the current month to a prior landlord
(including Landlord), or (d) bound by any modification of this Lease made
without the consent of such mortgagee.
The inability of Landlord to obtain such agreement shall not be
deemed a default on Landlord's part of its obligations hereunder, or impose any
claim in favor of Tenant against Landlord by reason thereof, or affect the
validity of this Lease. Tenant agrees to (i) execute and deliver to such
mortgagee a nondisturbance and attornment agreement in form and substance
customarily adopted by such mortgagee and (ii) reimburse Landlord for all
reasonable expenses incurred by Landlord in connection therewith, including
legal expenses.
Landlord agrees that it shall obtain and deliver to Tenant, as to
all future mortgages hereafter made covering the real property of which the
Demised Premises form a part, and/or any renewal, modification, consolidation,
replacement and extension of such future mortgage, non-disturbance agreements in
recordable form (or such agreement shall be contained in such future mortgage or
any renewal, modification, consolidation, extension or replacement thereof) from
the holder of any such mortgage, providing in substance that provided Tenant is
not in default in its obligations for the payment of fixed rent and additional
rent and in the performance of the other terms, covenants and conditions to be
performed on its part under this Lease beyond applicable notice and cure
periods, its possession of the Demised Premises will not be disturbed during the
term hereof, notwithstanding the foreclosure of any such mortgage, and Tenant
will not be named as a party defendant in any foreclosure proceedings brought
for the recovery of possession, it being hereby covenanted and agreed to by
Tenant that the holder of any such mortgage, or anyone claiming by, through or
under said holder shall not be:
(a) liable for any act or omission for any prior landlord (including
Landlord), or
(b) subject to any offsets or defenses which Tenant might have against any
prior landlord (including Landlord), or
(c) bound by any fixed rent or additional rent or other charges which
Tenant might have paid for more than the current month to a prior
landlord (including Landlord), or
(d) bound by any modification of this Lease made without the consent of
such mortgagee.
8. Property - Loss, Damage, Reimbursement, Indemnity: Landlord
or its agents shall not be liable for any damage to property of Tenant or of
others entrusted to employees of the Building, nor for loss of or damage to any
property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence or wilful acts of Landlord, its agents, servants or
employees. Landlord or its agents shall not be liable for any damage caused by
other tenants or persons in, upon or about said Building or caused by operations
in connection of any private, public or quasi public work. If at any time any
windows of the Demised Premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by law) for any
reason whatsoever including, but not limited to Landlord's own acts, Landlord
shall not be liable
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for any damage Tenant may sustain thereby and Tenant shall not be entitled to
any compensation therefor nor any abatement or diminution of rent nor shall the
same release Tenant from its obligations hereunder nor constitute an actual or
constructive eviction. Tenant shall indemnify and save harmless Landlord against
and from all liabilities, obligations, damages, penalties, claims, costs and
expenses for which Landlord shall not be reimbursed by insurance, including
reasonable attorney's fees, paid, suffered or incurred as a result of any breach
by Tenant, Tenant's agents, contractors, employees, invitees, or licensees, of
any covenant or condition of this lease, or the carelessness, negligence or
improper conduct of the Tenant, Tenant's agents, contractors, employees,
invitees or licensees. Landlord shall indemnify and save harmless Tenant against
and from all liabilities, obligations, damages, penalties, claims, costs and
expenses for which Tenant shall not be reimbursed by insurance, including
reasonable attorney's fees, paid, suffered or incurred as a result of any breach
by Landlord, Landlord's agents, contractors, employees, invitees, or licensees,
of any covenant or condition of this lease, or the carelessness, negligence or
improper conduct of the Tenant, Tenant's agents, contractors, employees,
invitees or licensees.
Notwithstanding anything contained hereinabove to the contrary, each
party hereby releases the other party (which term as used in this paragraph
includes the employees, agents, shareholders, officers and directors of the
other party) from all liability whether for negligence or otherwise, in
connection with any loss covered by any insurance policies which the releasor
carries with respect to the Demised Premises or any interest or property therein
or, thereon (whether or not such insurance is required to be carried under this
Lease), but only to the extent that such loss is collected under said insurance
policies. Such release is also conditioned upon the inclusion in the policy or
policies of a provision whereby any such release shall not adversely affect said
policies or prejudice any right of the releasor to recover thereunder. Each
party agrees that its insurance policies, aforesaid, will include such a
provision so long as the same shall be obtainable without extra cost, or if
extra cost shall be charged therefor, each party shall advise the other thereof
of the amount of the extra cost, and the other party, at its election, may pay
the same, but shall not be obligated to do so.
9. Destruction, Fire and Other Casualty: (a) If the Demised Premises
or any part thereof shall be damaged by fire or other casualty, Tenant shall
give immediate notice thereof to Landlord and this lease shall continue in full
force and effect except as hereinafter set forth. (b) If the Demised Premises
are partially damaged or rendered partially unusable for Tenant's purposes as
permitted pursuant to Article 2 by fire or other casualty, the damages thereto
shall be repaired by and at the expense of Landlord and the rent and additional
rent, until such repair shall be substantially completed, shall be apportioned
from the day following the casualty according to the portion of the Demised
Premises which is usable, (c) If the Demised Premises are totally damaged or
rendered wholly unusable for Tenant's purposes as permitted pursuant to Article
2 by fire or other casualty, then the rent and additional rent shall be
proportionately paid up to the time of the casualty and thenceforth shall cease
until the date when the Demised Premises shall have been repaired and restored
by Landlord, subject to Landlord's right to elect not to restore the same as
hereinafter provided. (d) If the Demised Premises are rendered wholly unusable
for Tenant's purposes as permitted pursuant to Article 2 or (whether or not the
Demised Premises are damaged in whole or in part) if the Building shall be so
damaged that Landlord shall decide to demolish it or to rebuild it, then, in any
such events, Landlord may elect to terminate this lease by written notice to
Tenant, given within 90 days after such fire or casualty, specifying a date for
the expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as if such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the Demised Premises without prejudice however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant. Unless Landlord shall serve
a termination notice as provided for herein, Landlord shall make the repairs and
restorations under the conditions of (b) and (c) hereof, with all reasonable
expedition, subject to reasonable delays due to adjustment of insurance claims,
labor troubles and causes beyond Landlord's control. After any such casualty,
Tenant shall cooperate with Landlord's restoration by removing from the Demised
Premises as promptly as reasonably possible, all of Tenant's salvageable
inventory and movable equipment, furniture, and other property. Tenant's
liability for rent shall resume upon the earlier to occur of (x) Tenant's
resuming full use and occupancy of the Demised Premises, or (y) twenty (20) days
after written notice from Landlord that the Demised Premises are substantially
ready for Tenant's occupancy. (e) Nothing contained hereinabove shall relieve
Tenant from liability that may exist as a result of damage from fire or other
casualty. Notwithstanding the foregoing, each party shall look first to any
insurance in its favor before making any claim against the other party for
recovery for loss or damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible and to the extent
permitted by law, Landlord and Tenant each hereby releases and waives all right
of recovery against the other or any one claiming through or under each of them
by way of subrogation or otherwise. The foregoing release and waiver shall be in
force only if both releasors' insurance policies contain a clause providing that
such a release or waiver shall not invalidate the insurance. If, and to the
extent, that such waiver can be obtained only by the payment of additional
premiums, then the party benefitting from the waiver shall pay such premium
within ten (10) days after written demand or shall be deemed to have agreed that
the party obtaining insurance coverage shall be free of any further obligation
under the provisions hereof with respect to waiver of subrogation. Tenant
acknowledges that Landlord will not carry insurance on Tenant's furniture and or
furnishing or any fixtures or equipment, improvements, or appurtenances
removable by
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Tenant and agrees that Landlord will not be obligated to repair any damage
thereto or replace the same, (f) Tenant hereby waives the provisions of Section
227 of the Real Property Law and agrees that the provisions of this Article
-----------------
shall govern and control in lieu thereof.
If the building or the Demised Premises shall be so damaged by
fire or other casualty so as to interfere substantially with the use of or
access to the Demised Premises by Tenant, or it shall have been mutually
determined by Landlord and Tenant, no later than thirty (30) days from the
occurrence of the event, that such damage cannot be repaired within four (4)
months from the date of the occurrence of the event then Tenant shall have the
right, by giving written notice to Landlord to such effect within fifteen (15)
days after it has been determined that the damage can not be restored or
repaired within the aforesaid period, to terminate this Lease and its
obligations hereunder, in which event the fixed rent and additional rent shall
be prorated to the date of the occurrence of such damage. If Tenant shall fail
to serve such notice as aforesaid, then this Lease shall continue in full force
and effect subject, however, to Landlord's right of termination as set forth in
this Article 9.
10. Eminent Domain: If the whole or more than fifty (50%) percent of
the Demised Premises shall be acquired or condemned by eminent domain for any
public or quasi public use or purpose, or in the event of any condemnation in
respect of the Building which renders the Demised Premises wholly untenantable,
then and in that event, the term of this lease shall cease and terminate from
the date of title vesting in such proceeding and Tenant shall have no claim for
the value of any unexpired term of said lease.
Nothing contained in Article 10 hereof shall prohibit Tenant from
making a separate claim with the condemning authority for (a) the value of
property owned by Tenant, (b) any moving expenses incurred by Tenant as a result
of such condemnation and (c) any other separate claim which Tenant may hereafter
be permitted to make provided, however, that such separate claim shall not
reduce or adversely affect the amount of Landlord's award.
11. Assignment, Mortgage, Etc.: Tenant, for itself, its heirs,
distributees, executors, administrators, legal representatives, successors and
assigns, expressly covenants that it shall not assign, mortgage or encumber this
Lease, nor underlet, or suffer or permit the Demised Premises or any part
thereof to be used by others without the prior written consent of Landlord
(which consent shall not be unreasonably withheld, delayed or conditioned) in
each instance except as otherwise set forth in Article 42. Transfer of the
majority of the stock of a corporate Tenant shall be deemed an assignment of
this lease except as set forth in Article 42. If this lease be assigned, or if
the Demised Premises or any part thereof be underlet or occupied by anybody
other than Tenant, Landlord may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant, and apply the net amount collected to the
rent herein reserved, but no such assignment, underletting, occupancy or
collection shall be deemed a waiver of this covenant, or the acceptance of the
assignee, under-tenant or occupant as tenant, or a release of Tenant from the
further performance by Tenant of covenants on the part of Tenant herein
contained. The consent by Landlord to an assignment or underletting shall not in
anyway be constructed to relieve Tenant from obtaining the express consent in
writing of Landlord to any further assignment or underletting.
12. Electric Current: See Article 46.
13. Access to Premises: Landlord or Landlord's agents shall
have the right (but shall not be obligated) to enter the Demised Premises in any
emergency at any time, and, at other reasonable times upon reasonable advance
notice to Tenant, to examine the same and to make such repairs, replacements and
improvements as Landlord may deem necessary and reasonably desirable to any
portion of the Building or which Landlord may elect to perform in the Demised
Premises after Tenant's failure to make repairs or perform any work which Tenant
is obligated to perform under this lease, or for the purpose of complying with
laws, regulations and other directions of governmental authorities. Except in
emergency cases, Landlord will not enter or access the sixth (6/th/) floor of
the Building and/or the mechanical areas servicing the Demised Premises without
a representative of Tenant present. Landlord shall perform any work using all
reasonable efforts to minimize interference and interruption with Tenant's
occupancy and the conduct of its business in the Demised Premises. Tenant shall
permit Landlord to use and maintain and replace pipes and conduits in and
through the Demised Premises and to erect new pipes and conduits therein
provided, that (a) such pipes and conduits are concealed in the walls, floors,
columns or ceiling of the executive and administrative portions of the Demised
Premises if practical and/or legal, (b) the work is performed at such times and
by such methods as will not unreasonably interfere with Tenant's use and
occupancy of the Demised Premises (c) damage the appearance of the Demised
Premises or (d) materially and adversely affect the layout of the Demises
Premises. Landlord at its sole cost and expense, shall promptly repair any
damage caused by any such work. Landlord may, during the progress of any work in
the Demised Premises, take all necessary materials and equipment into the
Demised Premises, provided Landlord does not unreasonably interfere with
Tenant's use and occupancy of the Demised Premises without the same constituting
an actual or constructive eviction nor shall the Tenant be entitled to any
abatement of rent while such work is in progress nor to any damages by reason of
loss or interruption of business or otherwise. Throughout the term hereof,
Landlord shall have the right to enter the Demised Premises at reasonable hours
upon reasonable advance notice to Tenant for the purpose of showing the same to
prospective purchasers or mortgagees of the Building, and upon reasonable
advance notice to Tenant during the last six (6) months of the term for the
purpose of
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showing the same to prospective tenants and may, during said six (6) months
period, place upon the Building the usual notices "To Let" and "For Sale" which
notices Tenant shall permit to remain thereon without molestation. If Tenant is
not present to open and permit an entry into the Demised Premises, Landlord or
Landlord's agents may enter the same by master key or forcibly in an event of an
emergency only and provided reasonable care is exercised to safeguard Tenant's
property, such entry shall not render Landlord or its agents liable therefor,
nor in any event shall the obligations of Tenant hereunder be affected. If
during the last month of the term Tenant shall have removed all or substantially
all of Tenant's property therefrom, Landlord may immediately enter, alter,
renovate or redecorate the Demised Premises without limitation or abatement of
rent, or incurring liability to Tenant for any compensation and such act shall
have no effect on this lease or Tenant's obligations hereunder, except that
Tenant shall have no obligations to repair or restore any portion of the Demised
Premises which Landlord alters, decorates or renovates. Notwithstanding anything
to the contrary contained in Article 13, the Rider hereto or any other provision
contained in this Lease, Landlord acknowledges that it shall not have the right
to enter into (w) any portion of the Demised Premises designated on Exhibit A as
the "Shared Area"; (x) any other portion of the Demised Premises designated on
Exhibit A as a "Secure Area" or hereinafter designated as such by Tenant in
writing for any reason whatsoever; (y) the sixth (6/th/) floor or any part of
the Demised Premises in which a "data center" is located; and (z) any mechanical
areas servicing the Demised Premises (collectively, the "Restricted Area"),
without the prior consent of Tenant in each instance, except in the case of an
emergency.
14. Vault, Vault Space, Area: No Vaults, vault space or area, whether
or not enclosed or covered, not within the property line of the Building is
leased hereunder, anything contained in or indicated on any sketch, blue print
or plan, or anything contained elsewhere in this lease to the contrary
notwithstanding. Landlord makes no representation as to the location of the
property line of the Building. All vaults and vault space and all such areas not
within the property line of the Building, which Tenant may be permitted to use
and/or occupy, is to be used and/or occupied under a revocable license, and if
any such license be revoked or if the amount of such space or area be diminished
or required by any federal, state or municipal authority or public utility,
Landlord shall not be subject to any liability nor shall Tenant be entitled to
any compensation or diminution or abatement of rent, nor shall such revocation,
diminution or requisition be deemed an actual or constructive eviction. Any tax,
fee or charge of municipal authorities for such vault or area shall be paid
Tenant, if used by Tenant, whether or not specifically leased hereunder.
15. Occupancy: Tenant will not at any time use or occupy the Demised
Premises in violation of the Certificate of Occupancy issued for the Building.
Tenant has inspected the Demised Premises and accepts them as is, subject to any
Riders annexed hereto with respect to Landlord's Work, if any. In any event,
Landlord makes no representation as to the condition of the Demised Premises and
Tenant agrees to accept the same subject to violations, whether or not of
record. To the best of Landlord's knowledge, there are no health, safety or fire
law violations affecting the Demised Premises and that the Demised Premises will
be delivered in compliance with all local laws other than local laws whose
compliance with is conditioned upon Tenant completing its initial work. Landlord
represents and warrants to Tenant that the existing Certificate of Occupancy for
the Building is in full force and effect, and is annexed hereto and made a part
hereof as Exhibit D.
16. Bankruptcy: (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Landlord by sending of a written
notice to Tenant within a reasonable time after the happening of any one or more
of the following events: (1) the commencement of a case in bankruptcy or under
the laws of any state naming Tenant as the debtor, which, in the case of an
involuntary bankruptcy, is not dismissed or stayed within ninety (90) days after
the commencement thereof or (2) the making by Tenant of an assignment or any
other arrangement for the benefit of creditors under any state statute. Neither
Tenant nor any person claiming through or under Tenant, or by reason of any
statute or order of court, shall thereafter be entitled to possession of the
Demised Premises but shall forthwith quit and surrender the Demised Premises. If
this lease shall be assigned in accordance with its terms, the provisions of
this Article 16 shall be applicable only to the party then owning Tenant's
interest in this lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Landlord shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rental reserved hereunder for the unexpired portion of
the term and the fair and reasonable rental value of the Demised Premises for
the same period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the Demised Premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of ten percent (10%) per annum. If the Demised Premises
or any part thereof be relet by Landlord for the unexpired term of said lease,
or any part thereof, before presentation of proof of such liquidated damages to
any court, commission or tribunal, the amount of rent reserved upon such
reletting shall be deemed to be the fair and reasonable rental value for the
part or the whole of the Demised Premises so re-let during the term of the re-
letting. Nothing herein contained shall limit or prejudice the right of the
Landlord to prove for and obtain as liquidated damages by reason of such
termination, an amount equal to the maximum allowed by any statute or rule of
law in effect at the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be greater, equal to, or
less than the amount of the difference referred to above.
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17. Default: A. If Tenant defaults in fulfilling any of the covenants
of this lease other than the covenants for the payment of rent or additional
rent; or if the Demised Premises becomes vacant or deserted; or if any execution
or attachment shall be issued against Tenant or any of Tenant's property
whereupon the Demised Premises shall be taken or occupied by someone other than
Tenant; or if this lease be rejected under Section 235 of Title 11 of the U.S.
Code (bankruptcy code); then, in any one or more of such events, upon Landlord
serving a written thirty (30) days notice upon Tenant specifying the nature of
said default and upon the expiration of said thirty (30) days if Tenant shall
have failed to comply with or remedy such default, or if the said default or
omission complained of shall be of a nature that the same cannot be completely
cured or remedied within said thirty (30) day period, and if Tenant shall not
have diligently commenced curing such default within such thirty (30) day
period, and shall not thereafter with reasonable diligence and in good faith,
proceed to remedy or cure such default, then Landlord may serve a written ten
(10) days' notice of cancellation of this lease upon Tenant, and upon the
expiration of said ten (10) days this lease and the term thereunder shall end
and expire as fully and completely as if the expiration of such ten (10) day
period were the day herein definitely fixed for the end and expiration of this
lease and the term thereof and Tenant shall then quit and surrender the Demised
Premises to Landlord but Tenant shall remain liable as hereinafter provided.
B. If the notice provided for in (1) hereof shall have been given and the
term shall expire as aforesaid; or if after ten (10) days written notice from
Landlord Tenant shall make default in the payment of any item of rent reserved
herein or any item of additional rent herein mentioned or any part of either or
in making any other payment herein required: then and in any of such events,
Landlord may dispossess Tenant by summary proceedings or otherwise, and the
legal representative of Tenant or other occupant of the Demised Premises and
remove their effects and hold the Demised Premises as if this lease had not been
made, and Tenant hereby waives the service of notice of intention to re-enter or
to institute legal proceedings to that end. If Tenant shall make default
hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Landlord may cancel and terminate such renewal or
extension agreement by written notice.
18. Remedies of Landlord and Waiver of Redemption: In case of any
such default, expiration and/or dispossess by summary proceedings or otherwise,
(a) the rent, and additional rent, shall become due thereupon and be paid up to
the time of such re-entry, dispossess and/or expiration, (b) Landlord may re-let
the Demised Premises or any part or parts thereof, in the name of Landlord, for
a term or terms, which may at Landlord's option be less than or exceed the
period which would otherwise have constituted the balance of the term of this
lease and may grant then customary and reasonable concessions or free rent or
charge a higher rental than that in this lease, (c) Tenant or the legal
representatives of Tenant shall also pay Landlord as liquidated damages for the
failure of Tenant to observe and perform said Tenant's covenants herein
contained, any deficiency between the rent hereby reserved and or covenanted to
be paid and the net amount, if any, of the rents collected on account of the
subsequent lease or leases of the Demised Premises for each month of the period
which would otherwise have constituted the balance of the term of this lease.
The failure of Landlord to re-let the Demised Premises or any part or parts
thereof shall not release or affect Tenant's liability for damages hereunder,
subject to Landlord's obligations to mitigate damages under New York law, if
any. Landlord shall, if required by law, use good faith efforts to (i) relet the
Demised Premises at fair market rents and (ii) upon sub-reletting, to collect
all rents due thereunder and to otherwise mitigate its damages hereunder. In
computing such liquidated damages there shall be added to the said deficiency
such reasonable expenses as Landlord may incur in connection with re-letting,
such as legal expenses, attorneys' fees, brokerage, advertising and for keeping
the Demised Premises in good order or for preparing the same for subject to
Landlord's re-letting. Any such liquidated damages shall be paid in monthly
installments by Tenant on the rent day specified in this lease and any suit
brought to collect the amount of the deficiency for any month shall not
prejudice in any way the rights of Landlord to collect the deficiency for any
subsequent month by a similar proceeding. Landlord, in putting the Demised
Premises in good order or preparing the same for re-rental may, at Landlord's
option, make such alterations, repairs, replacements, and/or decorations in the
Demised Premises as Landlord, in Landlord's sole reasonable judgment, considers
advisable and necessary for the purpose of re-letting the Demised Premises, and
the making of such alterations, repairs, replacements, and/or decorations shall
not operate or be construed to release Tenant from liability hereunder as
aforesaid. Landlord shall in no event be liable in any way whatsoever for
failure to re-let the Demised Premises, or in the event that the Demised
Premises are re-let, for failure to collect the rent thereof under such re-
letting subject to Landlord's obligation to mitigate damages, if any, and in no
event shall Tenant be entitled to receive any excess, if any, of such net rents
collected over the sums payable by Tenant to Landlord hereunder. In the event of
a breach or threatened breach by Tenant of any of the covenants or provisions
hereof, Landlord and Tenant shall have the right of injunction and the right to
invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Landlord or Tenant from any
other remedy, in law or in equity. Tenant hereby expressly waives any and all
rights of redemption granted by or under any present or future laws in the event
of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of Demised Premises, by reason of the violation by
Tenant of any of the covenants and conditions of this lease, or otherwise.
19. Fees and Expenses: If Tenant shall default beyond applicable
notice and cure periods in the observance or performance of any term or covenant
on Tenants part to be observed or
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performed under or by virtue of any of the terms or provisions in any Article of
this lease, then, unless otherwise provided elsewhere in this lease, Landlord
may immediately in the case of an emergency or at any time after ten (10) days
written notice perform the obligations of Tenant hereunder. If Landlord, in
connection with the foregoing or in connection with any default by Tenant in the
covenant to pay rent hereunder, makes any expenditures or incurs any reasonable
obligations for the payment of money, including but not limited to attorney's
fees, in instituting, prosecuting or defending any action or proceedings and
Landlord prevails, then Tenant will reimburse Landlord for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Landlord within twenty (20) days after rendition of
any bill or statement to Tenant therefor. If Tenant's lease term shall have
expired at the time of making of such expenditures or incurring of such
obligations, such sums shall be recoverable by Landlord as damages.
20. Building Alterations and Management: Subject to the provisions of
Article 13 above, and more particularly, the restrictions set forth therein in
respect of Restricted Areas, Landlord shall have the right at any time, upon
reasonable notice to Tenant, without the same constituting an eviction and
without incurring liability to Tenant therefor to run pipes and conduits through
the Demised Premises and other building areas, make other repairs and to change
the arrangement and or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets or other public parts of the
Building and to change the name, number or designation by which the Building may
be known, provided that any such changes do not in no more than a de-minimis
manner change the location and size of the Demised Premises, or in no more than
a de-minimis manner interfere with ingress and egress to and from the Demised
Premises or Tenant's use and occupancy thereof. Landlord shall endeavor to
perform such repairs and relocations in the walls, columns and ceilings or
below finished surfaces. Notwithstanding anything to the contrary contained in
this Lease, Landlord shall not make any repairs to the Restricted Areas without
prior written approval of Tenant's engineers, except in the case of an
emergency. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Landlord by reason of inconvenience, annoyance
or injury to business arising from Landlord or other Tenants making any repairs
in the Building or any such alterations, additions and improvements provided
such work does not in more than a deminimus manner interfere with Tenant's use
and occupancy of the Demised Premises. Furthermore, Tenant shall not have any
claim against Landlord by reason of Landlord's imposition of any controls of the
manner of access to the Building by Tenant's invitees as the Landlord may deem
necessary for the security of the Building and its occupants.
21. No Representations by Landlord: Neither Landlord nor Landlord's
agents have made any representations or promises with respect to the physical
condition of the Building (except for the completion of Landlord's Work, as
hereinafter defined), the land upon which it is erected or the Demised Premises,
the rents, leases, expenses of operation or any other matter or thing affecting
or related to the Demised Premises or the Building except as herein expressly
set forth and no rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth in the provisions of this
lease. Tenant has inspected the Building and the Demised Premises and is
thoroughly acquainted with their condition and agrees to take the same "as is"
on the date possession is tendered and acknowledges that the taking of
possession of the Demised Premises by Tenant shall be conclusive evidence that
the said Demised Premises and the Building of which the same form a part were in
good and satisfactory condition at the time such possession was so taken. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Landlord and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
22. End of Term: Upon the expiration or sooner termination of the
term of this lease, Tenant shall quit and surrender to Landlord the Demised
Premises, broom clean, in good order and condition, ordinary wear and damages
which Tenant is not required to repair as provided elsewhere in this lease
excepted, and Tenant shall remove all its property from the Demised Premises.
Tenant's obligation to observe or perform its covenant shall survive the
expiration or other termination of its lease. If the last day of the term of
this Lease or any renewal thereof, falls on Sunday, this lease shall expire at
noon on the preceding Saturday unless it be a legal holiday in which case it
shall expire at noon on the preceding business day.
23. Quiet Enjoyment: Landlord covenants and agrees with Tenant that
upon Tenant paying the rent and additional rent and observing and performing all
the terms, covenants and conditions, on Tenant's part to be observed and
performed, Tenant may peaceably and quietly enjoy the Demised Premises hereby
demised, subject, nevertheless, to the terms and conditions of this lease.
24. Failure to Give Possession: If Landlord is unable to give
possession of the Demised Premises on the date of the commencement of the term
hereof, because of the holding-over or retention of possession of any tenant,
undertenant or occupants, or if Landlord has not completed any work required to
be performed by Landlord, or for any other reason, Landlord shall not be subject
to any liability, except as provided below, for failure to give possession on
said date and the validity of the lease shall not be
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impaired under such circumstances, nor shall the same be construed in any manner
to extend the term of this lease, but the rent payable hereunder shall be
abated until after Landlord shall have given Tenant notice that the Demised
Premises are substantially ready for Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the Demised Premises or to occupy any
space in the Building other than the Demised Premises prior to the date
specified as the commencement of the term of this lease, Tenant covenants and
agrees that such occupancy shall be deemed to be under all the terms, covenants,
conditions and provisions of this lease, except as to the covenant to pay rent.
The provisions of this Article are intended to constitute "an express provision
to the contrary" within the meaning of Section 223-a of the New York Real
-------------
Property Law.
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Notwithstanding the foregoing provisions of this Lease, in the
event that Landlord fails to deliver possession of the Demised Premises with
Landlord's Work substantially complete on or prior to the date which is forty
five (45) days from the date of lease execution, Tenant shall be entitled to an
additional day for day abatement of fixed rent for each day past forty five (45)
days that Landlord's Work is not substantially complete. Tenant may have access
to the Demised Premises during performance of Landlord's Work and each party and
their contractors shall cooperate with each other so as to minimize interference
with Landlord's Work and Tenant's Work respectively.
Notwithstanding the foregoing provisions of this Lease, in the
event that Landlord fails to deliver possession of the Demised Premises with
Landlord's Work substantially complete (as defined below) on or prior to the
date which is six (6) months from the date of execution of this Lease, Tenant
shall have the right to terminate this Lease within the following ten (10)
business days by giving notice thereof to Landlord. Upon receipt of such notice
by Landlord, all liability between the parties hereto shall be extinguished,
except that Landlord shall return to Tenant any monies deposited with Landlord
pursuant to this Lease. The foregoing right of termination shall be Tenant's
exclusive remedy with respect to the failure to deliver possession.
25. No Waiver: The failure of Landlord or Tenant to seek redress for
violation of, or to insist upon the strict performance of any covenant or
condition of this lease or of any of the Rules or Regulations, set forth or
hereafter adopted by Landlord, shall not prevent a subsequent act which would
have originally constituted a violation from having all the force and effect of
an original violation. The receipt by Landlord or payment by Tenant of rent with
knowledge of the breach of any covenant of this lease shall not be deemed a
waiver of such breach and no provision of this lease shall be deemed to have
been waived by Landlord unless such waiver be in writing signed by the party
against whom such waiver is sought to be enforced. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated rent, nor
shall any endorsement or statement of any check, any letter accompanying any
check or payment of rent be deemed an accord and satisfaction and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such rent or pursue any other remedy in this lease provided. All
checks tendered to Landlord as and for the rent of the Demised Premises shall be
deemed payments for the account of Tenant. Acceptance by Landlord of rent from
anyone other than Tenant shall not be deemed to operate as an attornment to
Landlord by the payor of such rent or as a consent by Landlord to an assignment
or subletting by Tenant of the Demised Premises to such payor, or as a
modification of the provisions of this lease. No act or thing done by Landlord
or Landlord's agents during the term hereby demised shall be deemed an
acceptance of a surrender of said Demised Premises and no agreement to accept
such surrender shall be valid unless in writing signed by Landlord. No employee
of Landlord or Landlord's agent shall have any power to accept the keys of said
Demised Premises prior to termination of the lease and the delivery of keys to
any such agent or employee shall not operate as a termination of the lease or a
surrender of the Demised Premises.
26. Waiver of Trial by Jury: It is mutually agreed by and between
Landlord and Tenant that the respective parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other (except for personal injury or property
damage) on any matters whatsoever arising out of or in any way connected with
this lease, the relationship of Landlord and Tenant, Tenant's use of or
occupancy of the Demised Premises, and any emergency statutory or any other
statutory remedy. It is further mutually agreed that in the event Landlord
commences any summary proceeding for possession of the Demised Premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding except for mandatory counterclaims which would otherwise be
waived.
27. Inability to Perform: Except as otherwise expressly set forth in
the Lease, this Lease and the obligation of Tenant to pay rent hereunder and
perform all of the other covenants and agreements hereunder on part of Tenant to
be performed shall in no manner be affected, impaired or excused because
Landlord is unable to fulfill any of its obligations under this lease or to
supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment or fixtures if Landlord is prevented or delayed from so doing by
reason of strike or labor troubles or any cause whatsoever beyond Landlord's
reasonable control including, but not limited to, government preemption in
connection with a National Emergency or by reason of any rule, order or
regulation of any department or
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<PAGE>
subdivision thereof of any government agency or by reason of the condition of
supply and demand which have been or are affected by war or other emergency.
Notwithstanding anything contained in this Lease to the contrary,
if due to any work or installation performed by Landlord under the Lease or
failure by Landlord to perform its obligations under the Lease, (i) Tenant shall
be unable for at least seven (7) consecutive business days to operate its
business in the Demised Premises in substantially the same manner as such
business was operated prior to the performance of such work or installation or
such failure, and (ii) such interruption shall occur during business hours, the
Fixed Rent and the Additional Rent shall be reduced on a per diem basis in the
proportion in which the area of the part of the Demised Premises which is
unusable bears to the total area of the Demised Premises for each day subsequent
to the aforesaid seven (7) consecutive business day period that such portion of
the Demised Premises remains unusable.
28. Notices: Except as otherwise expressly provided in this Lease or
by any Legal Requirement, every notice, demand, consent, approval, request or
other communication (collectively, "notices") which may be or is required to be
given under this Lease or by law shall be in writing and shall be sent by United
States certified or registered mail, postage prepaid, return receipt requested
and shall be addressed:
A. If to Landlord, to Landlord's address set forth on the cover page
hereof with a copy to Landlord's managing agent and attorney, respectively;
Newmark & Company Real Estate Co., Inc.
125 Park Avenue
New York, New York 10017
and to: Robert J. Oppenheimer, P.C.
c/o Olshan Grundman Frome & Rosenzweig LLP
505 Park Avenue
New York, New York 10022
B. If to Tenant, to Tenant's address set forth on the cover page
hereto.
with a copy to Tenant and Tenant's attorney, respectively:
Digital Broadcast Network Corporation
977 Charter Commons
Chesterfield, Missouri 63017
Attention: Lawrence Beilenson, General Counsel
Garden Altman Butowsky Weltzen Shalov & Wein
114 West 47/th/ Street
New York, New York 10036
Attention: Mitchell S. Berkey, Esq.
Notices shall be deemed delivered five (5) business days after
being deposited in the United States Mail. A notice given by counsel for either
party shall be deemed a valid notice if addressed and sent in accordance with
the provisions of this Paragraph. Either party may designate, by similar written
notice to the other party, any other address for such purposes. Each of the
parties hereto waives personal or any other service other than as provided for
in this Paragraph. Notwithstanding the foregoing, either party hereto may give
the other party telefax notice of the need of emergency repairs. If there occurs
any interruption of certified and registered mail service, lasting more than
five (5) consecutive business days, notices may be given by telefax or personal
delivery, but shall not be effective until personally received by an executive
officer of a party which is a corporation, or a member of a party which is a
partnership or joint venture, or a principal of any other entity.
29. Services Provided By Landlord: As long as this lease is in full
force and effect, Landlord shall provide the following services:
A. Elevator Service.
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(i) Passenger Elevator Service. Landlord shall provide necessary
--------------------------
passenger elevator facilities twenty-four (24) hours a day, three hundred, sixty
five (365) days a year.
(ii) Freight Elevator Service. Landlord shall provide freight
------------------------
elevator service to the Demised Premises on a first-come, first-served basis
(i.e., no advance scheduling) on business days from 8:00 a.m. to 4:30 p.m.
Freight elevator service shall, provided same is available, be provided on a
reserved basis at all other times, upon the payment of Landlord's then
established charges therefor which shall constitute additional rent hereunder.
Notwithstanding anything contained hereinabove to the contrary, Tenant shall
have the right
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to use the freight elevator free of charge during Tenant's initial construction
and/or initial move-in, subject to scheduling and the then Building Rules and
Regulations then in effect.
B. Cleaning Services
-----------------
(i) Provided Tenant shall keep the Demised Premises in good order,
Landlord, at Landlord's expense, shall cause the executive and administrative
portions of the Demised premises only and the common areas of the fifth (5/th/)
floor of the Building to be cleaned. Tenant shall pay to Landlord within twenty
(20) days after receipt of a bill therefor, Landlord's charges for cleaning work
in the executive and administrative portions of the Demised Premises or the
Building required because of (i) misuse or neglect on the part of Tenant or its
employees or visitors, (ii) use of portions of the executive and administrative
portions of the Demised Premises for preparation, serving, or consumption of
food or beverages, reproducing operations, private lavatories or toilets or
other special purposes requiring greater or more difficult cleaning work than
office areas, (iii) interior partitioning glass surfaces, (iv) non-Building
standard materials or finishes installed by Tenant or at its request. Landlord
and/or its cleaning contractor and their employees shall have after hours access
to the executive and administrative portions of the Demised Premises and the use
of Tenant's light, power and water in the executive and administrative portions
of the Demised Premises as may be reasonably required for the purpose of
cleaning the executive and administrative portions of the Demised Premises.
Landlord and/or its cleaning contractor and its employees shall comply with
Tenant's security requirements with respect to the Demised Premises of which
Tenant shall notify Landlord from time to time.
(ii) Tenant, at Tenant's expense, shall cause all portions of the
Demised Premises used for the storage, preparation, service or consumption of
food or beverages to be cleaned daily in a manner satisfactory to Landlord, and
to be exterminated against infestation by vermin, roaches or rodents regularly
and, in addition, whenever there shall be evidence of any infestation.
(iii) Only Landlord or any one or more persons, firms or corporations
authorized in writing by Landlord shall be permitted to act as maintenance
contractor for any waxing, polishing, cleaning and maintenance work in the
Demised Premises. Nothing herein contained shall prohibit Tenant from performing
such work for itself by use of its regular employees. Landlord may fix, in its
absolute discretion, at any time and from time to time, the hours during which
and regulations under which such services are to be furnished. Landlord
expressly reserves the right to act as or to designate, at any time and from
time to time, an exclusive contractor for all or any one or more of such
services, provided that the quality thereof and the charges therefor are
reasonably comparable to that of other contractors, and Landlord expressly
reserves the right to exclude from the Building any person, firm or corporation
attempting to furnish any of such services.
C. Water. Landlord shall provide water for ordinary lavatory and
-----
drinking purposes only, but if Tenant uses or consumes water for any other
purposes or in unusual quantities, Landlord may install a water meter at
Tenant's expense which Tenant shall thereafter maintain at Tenant's expense in
good working order and repair to register such water consumption and Tenant
shall pay for water consumed as shown on said meter as additional rent within
twenty (20) days after receipt of a bill therefor.
D. Heat. See Article 54.
----
E. Subject to the abatement provisions contained in the last paragraph of
Article 27 hereof, Landlord reserves the right, without same constituting an
actual or constructive eviction or entitling Tenant to any abatement and/or
diminution of fixed rent and/or additional rent, to temporarily stop services of
the heating, elevators, plumbing, air-conditioning, power systems or cleaning or
other services, if any, when necessary by reason of accident or for repairs,
alterations, replacements or improvements necessary or desirable in the judgment
of Landlord for as long as may be reasonably required by reason thereof. If the
Building of which the Demised Premises are a part supplies manually-operated
elevator service, Landlord at any time may substitute automatic-control elevator
service and upon ten days' written notice to Tenant, proceed with alterations
necessary therefor without in any manner affecting this lease or the obligation
of Tenant hereunder. The same shall be done with a minimum of inconvenience to
Tenant and Landlord shall pursue the alteration with due diligence.
30. Captions: The Captions are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of this lease nor the intent of any provision thereof.
31. Definitions: The term "Landlord" as used in this lease means only
the Landlord of the fee or of the leasehold of the Building, or the mortgagee in
possession, for the time being of the land and Building (or the Landlord of a
lease of the Building or of the land and Building) of which the Demised Premises
form a part, so that in the event of any sale or sales of said land and Building
or of said lease, or in the event of a lease of said Building, or of the land
and Building, Landlord shall be and hereby is entirely freed and relieved of all
covenants and obligations of Landlord hereunder accruing after the effective
date of such sale, and it shall be deemed and construed without further
agreement between the parties or their successors in interest, or between the
parties and the purchaser, at any such sale, of the said lessee of the Building,
or of the land and Building, that the purchaser or the lessee of the Building
has assumed and agreed to carry out any and all covenants and obligations of
Landlord hereunder. Notwithstanding the provisions of this Article
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31 or of Article 34, no sale, assignment or transfer by Landlord of Tenant's
security deposit (in connection with the sale, transfer or assignment by
Landlord of its rights and obligations under this Lease and/or in the Building)
shall operate to release Landlord from its responsibility and liability to
Tenant for said security deposit, unless and until the party to whom such
security deposit has been assigned or transferred has acknowledged to Tenant its
receipt of such security deposit, and has assumed all of the obligations of
Landlord with respect thereto. The words "re-enter" and "re-entry" as used in
this lease are not restricted to their technical legal meaning. The term
"business days" as used in this lease, shall exclude Saturdays, Sundays and all
days observed by term State or Federal Government as legal holidays and those
designated as holidays by the applicable Building service union employees
service contract or by the applicable Operating Engineers contract with respect
to HVAC service.
32. Estoppel Certificate: Tenant and Landlord shall execute,
acknowledge and deliver to each other, within ten (10) business days after
Landlord's or Tenant's request, a certificate stating: (a) that this lease is
unmodified and in full force and effect (or, if there have been modifications,
that this lease is in full force and effect, as modified, and identifying the
modifications); (b) the commencement and expiration dates of the term of this
lease; (c) the dates through which fixed rent and additional rent have been
paid; (d) whether or not there is any existing default by Landlord or Tenant
with respect to which a notice of default has been delivered, and if there is
any such default, specifying the nature and extent thereof; (e) that this lease
is subordinate to any existing or future mortgage placed by Landlord on the
Building; and (f) whether or not there are any setoffs, defenses or
counterclaims against the enforcement of any of the agreements, terms, covenants
or conditions of this lease to be paid, complied with or performed by Tenant.
Any such certificate may be relied upon by Landlord and any mortgagee, purchaser
or other person with whom Landlord may deal. In the event that Tenant fails to
deliver the certificate required under this Article 32, same shall be deemed a
default hereunder. Tenant's only liability under this Article 32 is to be
estopped from any claim contrary to the certificate executed therein.
33. Rules and Regulations: Tenant and Tenant's servants, employees,
agents, visitors, and licensees shall observe faithfully, and comply strictly
with, the Rules and Regulations annexed hereto and made a part hereof as Exhibit
C and such other and further reasonable Rules and Regulations as Landlord or
Landlord's agents may from time to time adopt, provided, however, that Landlord
shall give Tenant at least ten business (10) days prior written notice of any
such other or further Rules or Regulations. In case Tenant disputes the
reasonableness of any additional Rule or Regulation hereafter made or adopted by
Landlord or Landlord's agents, the parties hereto agree to submit the question
of the reasonableness of such Rule or Regulation for decision to the New York
office of the American Arbitration Association, whose determination shall be
final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing upon Landlord within fifteen (15) days after the giving of notice
thereof. Landlord shall apply all Rules and Regulations without discrimination
against or among any tenants of the Building. Moreover, the terms, covenants,
conditions and provisions of this Lease shall govern in the event of any
conflict or inconsistency between this Lease and any Rules and Regulations.
34. Security. Tenant shall, upon execution of this lease, deposit
with Landlord the sum of FIVE HUNDRED THOUSAND AND 00/100 ($500,000.00) DOLLARS
security for the faithful performance and observance by Tenant of the terms,
provisions and conditions of this lease; it is agreed that in the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
lease, including, but not limited to, the payment of rent and additional rent,
and fails to cure the same within any applicable grace and/or notice periods,
then, Landlord may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any rent and additional rent
or any other sum as to which tenant is in default or for any sum which Landlord
may expend or may be required to expend by reason of Tenant's default in respect
of any of the terms, covenants and conditions of this lease, including but not
limited to, any damages or deficiency in the re-letting of the Demised Premises,
whether such damages or deficiency accrued before or after summary proceedings
or other re-entry by Landlord. In the event that Tenant shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this lease, the security shall be promptly returned to Tenant. In the event of a
sale of the land and Building or leasing of the Building, of which the Demised
Premises form a part, Landlord shall have the right to transfer the security to
the vandee or lessee and Landlord shall thereupon be released by Tenant from all
liability for the return of such security; and Tenant agrees to look to the new
Landlord solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Landlord. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
In lieu of the cash security provided for in Article 34 hereof, Tenant
may deliver to Landlord, as security pursuant to said Article 34, an
irrevocable, clean, "Evergreen" commercial letter of credit in the amount of
$500,000.00 (the "Letter"), issued by a bank which is authorized by the State of
New York or has a branch office or corresponding bank which enables Landlord to
draw upon the Letter in the State of New York and which shall permit Landlord
(a) to draw thereon up to the full amount of the credit evidenced thereby in the
event of any default by Tenant in the terms, provisions, covenants or conditions
of this Lease beyond any applicable notice and cure periods or (b) to draw the
full amount thereof to be held as cash security
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<PAGE>
pursuant to Article 34 hereof if for any reason the Letter is not renewed within
forty-five (45) days prior to its expiration date. The Letter (and each renewal
thereof) shall (i) be for a term of not less than one (1) year (except that the
last Letter shall be for a term expiring forty-five (45) days after the
Expiration Date), (ii) expressly provide for the issuing bank to notify Landlord
in writing not less than forty-five (45) days prior to its expiration as to its
renewal or non-renewal, as the case may be, and (iii) if not so renewed each
year (or later period of expiration) shall be immediately available for Landlord
to draw up to the full amount of such credit (to be held as cash security
pursuant to said Article 34). Not less than forty-five (45) days prior to the
expiration date of each Letter (and every renewal thereof), Tenant shall deliver
to Landlord a renewal or new Letter subject to all of the conditions aforesaid,
all to the intent and purposes, that a Letter in the sum of $500,000.00 shall be
in effect for the remainder of the term of this Lease.
After the third (3/rd/) year of the term of the Lease, Landlord and
Tenant will seek to mutually agree to a reduction in the Security if Tenant
effectuates a public offering of its stock and materially increases its net
worth and meets other reasonable qualifications as Landlord may reasonably
request.
35. Adjacent Excavation - Shoring: If an excavation shall be made
upon land adjacent to the Demised Premises, or shall be authorized to be made,
Tenant shall afford to the person causing or authorized to cause such
excavation, provided, that such person compiles with all applicable requirements
of law, a license to enter upon the demises Demised Premises for the purpose of
doing such work as said person shall deem necessary to preserve the wall or the
Building of which Demised premises form a part from injury or damage and to
support the same by proper foundations without any claim for damages or
indemnity against Landlord, or diminution or abatement of rent.
36. Successors and Assigns: The covenants, conditions and agreements
contained in this lease shall bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributees, executors, administrators,
successors, and except as otherwise provided in this lease, their assigns.
SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF.
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<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
LANDLORD:
67 BROAD STREET LLC
-------------------
By: /s/ [ILLEGIBLE]^^
---------------------------
Name:
Title: A Member
TENANT:
DIGITAL BROADCAST NETWORK CORPORATION
-------------------------------------
By: /s/ [ILLEGIBLE]^^
---------------------------
Name:
Title: Executive Vice President
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RIDER ANNEXED TO
LEASE FOR 67 A/K/A 75 BROAD STREET, NEW YORK, NEW YORK
TENANT: DIGITAL BROADCAST NETWORK CORPORATION
-------------------------------------
SPACE: ENTIRE 6/TH/ FLOOR PORTION OF 5/TH/ FLOOR
-----------------------------------------
- --------------------------------------------------------------------------------
37. RIDER PROVISIONS PREVAIL:
-------------------------
If and to the extent that any of the provisions of this Rider conflict or
are otherwise inconsistent with any of the preceding printed provisions of this
Lease, or of the Rules and Regulations attached to this Lease, whether or not
such inconsistency is expressly noted in this Rider, the provisions of this
Rider shall prevail, and in case of inconsistency with said Rules and
Regulations, the Rider shall govern and control.
38. ADDITIONAL DEFINITION
---------------------
For the purposes of this Lease and all agreements supplemental to this
Lease, and all communications with respect thereto, unless the context otherwise
requires:
1. The term "fixed rent' or "Fixed Rent" shall mean rent at the annual
rental rate or rates provided for in Schedule B annexed hereto and made a part
hereof,
2. The term "additional rent" shall mean all sums of money, other than
fixed rent and which become due and payable from Tenant to Landlord hereunder,
and Landlord shall have the same remedies therefor as for a default in payment
of fixed rent.
3. The term "rent" and "rents" shall mean and include fixed rent and/or
additional rent hereunder.
4. The terms "Commencement Date" shall mean the date of substantial
completion of Landlord's Work and the "Expiration Date" shall mean the Jest last
of 187th calendar month following the Commencement Date.
5. The term "Lease Year" shall mean the twelve (12) month period
commencing on the Commencement Date and each successive twelve (12) month period
thereafter.
6. The term "Superior Lessee" or "Superior Mortgagee" shall mean any
party then holding a ground lease or mortgage encumbering the land and/or
Building.
7. The term "Rent Commencement Date" shall mean the date which is seven
(7) months following the Commencement Date, but Tenant shall receive an
additional fixed rent credit pursuant to Article 41.
8. The term "Substantial Completion" or "Substantially Complete" shall
mean the date when Landlord's Work then remaining to be done, if any, consists
of minor "punch list items" and shall have reached that stage of completion such
that Tenant could either use or occupy the Demised Premises or Tenant could then
proceed to complete Tenant's Work without interference in mere than a deminimus
manner by reason of those items still required to complete Landlord's Work as
reasonably determined by Tenant's architect. Further, the taking of possession
of the Demised Premises or any portion or portions thereof by Tenant following
Tenant's receipt of notice from Landlord of substantial completion of Landlord's
Work in respect thereof, or otherwise, shall be conclusive evidence that
substantial completion was, in fact, achieved, but Tenant shall have thirty (30)
days after Tenant's receipt of Landlord's notice of substantial completion to
give Landlord notice of any "punch list" items remaining to be completed, in
which event such "punch list items" shall be completed within forty-five (45)
days of Tenants notice of the existence of such items.
39. ESCALATION FOR INCREASE IN REAL ESTATE TAXES:
--------------------------------------------
A. As used herein:
1. "Taxes" shall mean real estate taxes payable (adjusted after
protest or litigation, if any) for any part of the term of this lease, on the
Building and/or the land (the "Land"), (i) any taxes which shall be levied in
lieu of any such taxes or which shall be levied on the gross rentals of the
Building and/or the Land, (ii) any special assessments against the Building
and/or the Land which shall be required to be paid during the fiscal year in
respect to which taxes are being determined, and (iii) the reasonable expense of
contesting the amount or validity of any such taxes, charges or assessments,
such reasonable expense to be applicable
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to the period of the item contested; but "Taxes" shall not include (a) any
interest or penalties incurred by Landlord solely as a result of Landlord's late
payment of Taxes, (b) any assessments, bonds or other fees in connection with
the remodeling or renovation of the Building, or (c) any franchise, estate,
succession, unincorporated business, income or inheritance taxes.
2. "Tax Year" shall mean each period of twelve (12) months,
commencing on the first day of July of each such period, in which occurs any
part of the term of this Lease or such other period of twelve(12) months
occurring during the term of this Lease as hereafter may be duly adopted as the
fiscal year for real estate tax purposes of the City of New York.
3. "Base Tax" shall mean the Taxes for the 1999 calendar year i.e.,
the sum of Taxes payable for the second half 1998/1999 fiscal tax year and first
half 1999/2000 fiscal tax year (the "Base Tax Year"),
4. "Tenant's proportionate Share' shall mean 7.10%. If at any time
additional floors and rentable area shall be added to the Building, Tenant's
Proportionate Share shall be ratably reduced upon such addition.
5. "Landlord's Statement" shall mean any instrument containing a
computation of additional rent due pursuant to the provisions of this Article 39
furnished by Landlord to Tenant.
B. If the Taxes far any Tax Year shall be greater than the Base Tax, then
Tenant shall pay as additional rent for such Tax Year, a sum equal to Tenant's
Proportionate Share of the amount by which the Taxes for such Tax Year are
greater than the Base Tax (which amount is hereinafter called the "Tax
Payment"). If the Rent Commencement Date or the Expiration Date shall occur on a
date other than July 1 or June 30 respectively, any additional rent due under
this Article 39 for the Tax Year in which the Rent Commencement Date or
Expiration Date shall occur shall be apportioned in that percentage which the
number of days in the period from the Rent Commencement Date to June 30 or from
July 1 to the Expiration Date, as the case may be, both inclusive, shall bear to
the total number of days in such Tax Year. Tenant's obligation to pay such
additional rent and Landlord's obligation to refund pursuant to Paragraph C
below, as the case may be, shall survive the termination of this Lease. If the
Taxes for any Tax Year subsequent to the Base Tax Year, or an installment
thereof, shall be reduced before such Taxes or such installment shall be paid,
the amount of Landlord's reasonable costs and expenses of obtaining such
reduction (but not exceeding the amount of such reduction) shall be added to and
be deemed part of the Taxes for such Tax Year. Payment of additional rent for
any Tax Payment due from Tenant shall be made as and subject to the conditions
hereinafter provided in this Article.
C. Only Landlord shall be eligible to Institute proceedings to contest
the Taxes or reduce the assessed valuation of the Land and Building. Landlord
shall be under no obligation to contest the Taxes or the assessed valuation of
the Land and the Building for any Tax Year and may settle any such contest on
such terms as Landlord in its reasonable judgment considers proper. If Landlord
shall receive a refund for any Tax Year for which a Tax Payment shall have been
made by Tenant pursuant to Paragraph B above, Landlord shall pay to Tenant,
Tenant's Proportionate Share of such refund amount within ten (10) business days
after Landlord's receipt thereof, Tenant's Proportionate Share of such refund
(including experts' and attorneys' fees) of obtaining such refund. If the
assessment for the Base Tax Year shall be reduced from the comparative statement
(as provided in Paragraph D below) to Tenant with respect to a Tax Year, the
amount of the Tax Payment shall be adjusted in accordance with such change and
Tenant, on Landlord's demand, shall pay any increase in additional rent
resulting from such adjustment.
D. Landlord shall furnish to Tenant, prior to the commencement of any Tax
Year, a Landlord's Statement setting forth Landlord's estimate of Tenant's Tax
Payment, which shall include a reasonably detailed calculation of Tenant's Tax
Payment together with a copy of the real estate tax bill for the Building in
respect of such Tax Year ("Tenant's Estimated Tax Payment"). Tenant shall pay to
Landlord on the first day of each month during such Tax Year an amount equal to
one-twelfth (1/12th) of Tenant's Estimated Tax Payment for such Tax Year. If,
however, Landlord shall furnish any such statement for a Tax year subsequent to
the commencement thereof, then (i) until the first day of the month following
the month in which such statement is furnished to Tenant, Tenant shall pay to
Landlord on the first day of each month an amount equal to the monthly sum
payable by Tenant to Landlord under this Paragraph in respect of the last month
of the immediately preceding Tax year; (ii) promptly after such statement is
furnished to Tenant, Landlord shall give notice to Tenant stating whether the
installments of the Tax Payment previously made for such Tax Year were greater
or less than the installments of the Tax Payment to be made for such Tax Year in
accordance with such statement, and (a) if there shall be a deficiency, Tenant
shall pay the amount thereof within fifteen (15) days after demand therefor, or
(b) if there shall have been an overpayment, Landlord shall promptly either
refund to Tenant the amount thereof within fifteen (15) days after Tenant's
receipt of such notice, or permit Tenant to credit the amount thereof against
subsequent payments under this Article; and (iii) on the first day of the month
following the month in which such statement is furnished to Tenant, and monthly
thereafter throughout the remainder of such Tax Year, Tenant shall pay to
Landlord an amount equal to one-twelfth (1/12th) of the Tax Payment shown on
such statement.
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E. Tenant shall have the right to request that Landlord deliver a copy of
the real estate tax bill for the Building in respect of any Tax Year.
F. Landlord's failure during the lease term to prepare and deliver any
Landlord's Statement, or Landlord's failure to make a demand under this Article
or under any other provision of this Lease shall not in any way waive Landlord's
right to collect any such amounts due hereunder (provided such Landlord's
Statement shall be delivered within twelve (12) months after the expiration of
the Tax Year to which it is applicable). Tenant's liability for the additional
rent due under this Article shall survive the expiration or sooner termination
of this Lease.
G. In no event shall any adjustment of Tax Payments hereunder result in a
decrease in the fixed rent or additional rent payable pursuant to any other
provision of the lease, it being agreed that the payment of additional rent
under this Article 39 is an obligation supplemental to Tenant's obligation to
pay fixed rent.
40. INTENTIONALLY OMITTED.
41 FREE RENT:
----------
Provided Tenant is not in default under the terms, covenants and conditions
of this lease beyond applicable grace, notice and cure periods, Tenant shall
have the right to use and occupy the Demised Premises free of fixed rent for the
first seven (7) months following the Commencement Date, and Tenant shall receive
a monthly fixed rent credit of TWENTY-SEVEN THOUSAND SEVEN HUNDRED SEVENTY EIGHT
AND 78/100 ($27,778.78) DOLLARS per month during months 13 through 48 of the
Term of this Lease; except that Tenant shall pay to Landlord all sums due under
Article 46 hereof representing reimbursement to Landlord for the furnishing to
Tenant of electric current during said periods. Except for the free fixed rent
allowance as herein provided, Tenant shall use and occupy the Demised Premises
pursuant to all of the other terms, covenants and conditions of this lease.
42. AMENDING ARTICLE 11:
--------------------
Notwithstanding the provisions of Article 11, and in modification and
amplification thereof:
A. If Tenant shall desire to assign this Lease or to sublet all or a
portion of the Demised Premises, Tenant shall submit to Landlord a written
request for Landlord's consent to such assignment or subletting, which request
shall contain or be accompanied by the following information: (i) the name and
address of the proposed assignee or subtenant; (ii) a duplicate original or
photocopy of the proposed assignment agreement or sublease or a true and correct
photocopy of the offer from the proposed assignee or subtenant signed by such
proposed assignee or subtenant; (iii) the nature and character of the business
of the proposed assignee or subtenant and its proposed use of the Demised
Premises; and (iv) banking, financial and other credit information with respect
to the proposed assignee or subtenant reasonably sufficient to enable Landlord
to determine the financial responsibility of the proposed assignee or subtenant.
Landlord shall then have the option to be exercised by written notice
given to Tenant within fifteen (15) days after receipt of Tenant's request for
consent to require a surrender of the Demised Premises if Tenant has requested
consent to an assignment of this lease or a subletting of all or substantially
all of the Demised Premises, or to require a surrender of a portion of the
Demised Premises which Tenant proposes to sublet, upon the terms and conditions
hereinafter provided.
B. If Landlord shall exercise its option to require a surrender of the
Demised Premises or portion thereof as provided above, then upon the proposed
commencement date of the subletting specified in Tenant's notice to Landlord,
the Demised Premises or portion intended to be sublet, as the case may be, shall
be surrendered to Landlord in accordance with the provisions of the Lease
pertinent to surrender, and this Lease shall cease and terminate insofar as the
Demised Premises or portion thereof, as the case may be, with the same force and
effect as though such proposed commencement date were the Expiration Date. If
only a portion of the Demised Promises is involved, the terms and conditions of
the Lease shall remain in full force and effect, except that the Fixed Rent and
additional rent shall be proportionately reduced based upon the number of square
feet of the portion of the Demised Premise surrendered. In addition, in the
event that less than all of the Demised Premises is surrendered:
1. Landlord shall cause to be constructed, at Landlord's sole cost
and expense, such alterations and connections as may be required in order to
physically separate such surrendered the portion of the Demised Premises from
the balance of the Demised Premises; and
2. After the proposed commencement date specified above, Landlord
shall, subject to Article 13 herein, have free access to enter to the Demised
Premises in order to complete the construction referred to in Subparagraph B1
above.
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C. If Landlord does not exercise its option specified above, then
Landlord's consent to a subletting of all or a portion of the Demised Premises
or an assignment of Tenant's interest in this lease shall not be unreasonably
withheld or delayed on further condition that:
1. The proposed subtenant or assignee shall not be a school of any kind,
or an employment or placement agency or governmental or quasi governmental
agency, medical office or executive recruitment office;
2. The subletting or assignment shall be to a tenant whose occupancy will
be in keeping with the dignity and character of the then use and occupancy of
the Building and whose occupancy will not be more objectionable or more
hazardous than that of Tenant herein or impose any additional burden upon
Landlord in the operation of the Building;
3. No space shall be advertised or openly promoted to the general public
utilizing the name of the Landlord or any principal or partner thereof, or
stating or otherwise characterizing a rental rate;
4. The proposed sublessee or assignee shall not be an occupant of any
space in the Building or a party who dealt with Landlord or Landlord's agent
(directly or through a broker) with respect to space in the Building during the
six (6) months immediately preceding Tenant's request for Landlord's consent;
5. Tenant shall reimburse Landlord on demand for any reasonable costs
that may be incurred in connection with any assignment or sublease, including,
without limitation, the reasonable costs of making investigations as to the
acceptability of the proposed assignee or subtenant, and reasonable legal costs
incurred in connection with the granting of any requested consent, provided such
costs do not exceed $2,000.00 per each consent;
6. In case of a subletting, it shall be expressly subject to all of the
obligations of Tenant under this Lease and the further condition and restriction
that the subleased Demised Premises shall not be further sublet by the sublessee
in whole or in part, or any part thereof suffered or permitted by the sublessee
to be used or occupied by others, without the prior written consent of Landlord
in each instance;
7. Tenant, at Tenant's expense, shall provide and permit reasonably
appropriate means of ingress to and egress from the space sublet by Tenant; and
8. Tenant is not then in default under the terms, covenants and
conditions of this lease on Tenant's part to be observed and performed beyond
applicable notice and cure periods.
D. No permitted or consented to assignment or subletting shall be
effective or valid for any purpose whatsoever unless and until a counterpart of
the assignment or a counterpart or reproduced copy of the sublease shall have
been first delivered to the Landlord, and, in the event of an assignment, the
Tenant shall deliver to Landlord a written agreement executed and acknowledged
by the Tenant and such assignee wherein such assignee shall assume the due
performance of this Lease on Tenant's part to be performed for the balance of
the term of this Lease notwithstanding any other or further assignment.
E. Any transfer by operation of law or otherwise, of Tenant's interest in
this Lease or of a fifty (50%) percent or greater interest in Tenant (whether
stock, partnership interest or otherwise) shall be deemed an assignment of this
Lease for purposes of this Article except that the transfer of the outstanding
capital stock of any corporate tenant shall be deemed not to include any initial
public offering of Tenant's stock or the sale of such stock by persons or
parties through the "over-the-counter-market" or through any recognized stock
exchange, other than those deemed "insiders" within the meaning of the
Securities Exchange Act of 1934, as amended.
Notwithstanding the provisions of this Article 42, the following
transfers shall not constitute an assignment for purposes hereof and shall be
permitted without Landlord's consent, even where effective control of Tenant may
shift as a result thereof: (i) the public offering or trading of Tenant's or
Tenant's parent's stock on a nationally recognized exchange or on the NASDAQ
over-the-counter or "small cap issues" markets, (ii) gifts, bequeaths,
inheritance or other devices between and among Tenant's shareholders (or
partners, as the case may be) and their families, or (iii) private placements
pursuant to which the proceeds are invested directly in Tenant or a related
entity of Tenant.
F. Landlord acknowledges and agrees that Tenant may enter into agreements
with Tenant's customers and users of voice, video, data, computer, telco, and
other communication equipment and systems ("Collocation Agreements") that
provide for the physical location of such equipment within the Demised Premises.
Such Collocation Agreements shall not be deemed a subletting or assignment under
this lease and Landlord shall not be entitled to any fee or additional rental
therefore. Landlord further acknowledges that Tenant shall be allowed to
interconnect such equipment to Tenant's equipment within the Demised Premises
and shall also be allowed to interconnect such equipment with telco services
provided by other third party local telephone providers at no additional charge
or cost.
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G. Neither any assignment of Tenant's interest in this Lease nor any
subletting, occupancy or use of the Demised Premises or any part thereof by any
person other than Tenant, nor any collection of rent by Landlord from any person
other than Tenant as provided in Article 11 hereof, nor any application of any
such rent as provided in said Article 11 shall, in any circumstances, relieve
Tenant of its obligations fully to observe and perform the terms, covenants and
conditions of this Lease on Tenant's part to be observed and performed.
H. Notwithstanding anything to the contrary contained herein, if Landlord
shall consent to any assignment or subletting (other than in respect of an
assignment or subletting permitted under paragraph I below), then (i) in the
case of an assignment, if Tenant shall receive any consideration from its
assignee in connection with the assignment of this Lease, Tenant shall pay over
to Landlord, as additional rent, a sum equal to fifty (50%) percent of any such
consideration (including sums designated by the assignee as paid for the
purchase of Tenant's property in the Demised Premises, less the then net
unamortized or undepreciated cost of Tenant's property as determined on the
basis of the amortization schedule therefore utilized by Tenant in Tenant's
federal income tax returns, as shall exceed the brokerage commissions,
alterations expenses and attorneys' fees and disbursements (including, without
limitation, actual up-front, out-of-pocket payments for improvement allowances
or other concessions paid at or prior to the effective date of such assignment)
reasonably incurred by Tenant for such assignment or (ii) if Tenant shall sublet
the Demised Premises or any portion thereof to anyone for rents, additional
charges or other consideration which for any period shall exceed the rents
payable for the subleased space under this Lease for the same period, Tenant
shall pay Landlord, as additional rent, a sum equal to fifty (50%) percent of
any such excess less brokerage commissions, and attorneys' fees and
disbursements reasonably incurred by Tenant for such subletting (including,
without limitation, actual up-front, out-of-pocket payments for improvement
allowances or other concessions paid at or prior to the effective date of such
sublease) and all sums payable to Landlord pursuant to subdivision (ii) of this
Paragraph H shall be paid on the effective date of such assignment or on such
later date when, and to the extent, any such payments are made to Tenant by the
subtenant or assignee.
I. Tenant may, without Landlord's prior written consent, but upon prior
written notice to Landlord, assign or transfer its entire interest in this Lease
and the leasehold estate hereby created or sublet the whole or any portion of
the Demised premises to a related entity of Tenant (as hereinafter defined) or
an entity (1) to which substantially all of Tenant's assets are transferred or
(2) to which all of the capital stock of Tenant is transferred or into with or
with which Tenant is otherwise merged or consolidated; provided, however, that
(i) Tenant shall not be in default in any of the terms of this Lease beyond
applicable notice and cure periods, (ii) the proposed occupancy shall not
increase the office cleaning requirements (if any) or impose an unreasonable
extra burden upon the building equipment or building services and (iii) the
proposed subtenant or assignee shall not be entitled, directly or indirectly, to
diplomatic or sovereign immunity and shall be subject to the service of process
in, and the jurisdiction of the courts of, New York State. A "related entity",
as used in this Section shall mean with respect to an entity to which reference
is made, an entity which controls, is controlled by or is under common control
with such entity. For the purposes hereof, "control" shall be deemed to mean
ownership of not less than fifty (50%) percent of all of the voting stock of
such corporation or not less than fifty (50%) percent of all of the legal and
equitable interest in any other business entities or the ability to control the
business decision of such corporation or entity. Any such subletting shall not
be deemed to vest in any such related entity any right or interest in this Lease
or the Demised Premises nor shall it relieve, release, impair or discharge any
of Tenant's obligations hereunder.
J. Each sublease shall provide that it is subject and subordinate to this
Lease and to the matters to which this Lease is or shall be subordinate, and
that in the event of default by Tenant under this Lease, Landlord may, at its
option, take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, and such sublessee shall, at Landlord's option, attorn to
Landlord pursuant to the then executory provisions of such sublease, except that
Landlord shall not (i) be liable for any previous act or omission of Tenant
under such sublease or, (ii) be subject to any offset not expressly provided in
such sublease which theretofore accrued to such sublease to which Landlord has
not specifically consented in writing or by any previous prepayment of more than
one month's rent.
43. ADDENDUM TO ARTICLE 3:
----------------------
In connection with Landlord's mechanical and structural engineers' review,
modification, approval, supervisor and/or coordination of plans and
specifications for any structural or mechanical work to be performed by Tenant,
Tenant shall pay for such mechanical and structural review work, not to exceed
$5,000.00 in the aggregate.
In performing any alterations or installations within the Demised Premises
Tenant shall be responsible for the cost of compliance with all applicable
governmental rules and regulations including without limitation The Americans
With Disabilities Act of 1990 (the "ADA"), Public Law 101-336 42 U.S.C. Secs.
12101 et seq., (other than the fifth (5th) floor bathroom which shall be made
ADA compliant by Landlord), together with all amendments thereto which may be
adopted from time to time, and all regulations and rules promulgated thereunder,
it being understood and agreed that Landlord shall, at its sole cost and
expense, be responsible for compliance with all applicable governmental rules
and regulations (including, without limitation, the ADA) with respect to the
public portions of the Building.
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Landlord shall comply, at Landlord's sole cost and expense, with all
present and future laws, orders, requirements and regulations of all state,
federal, municipal and local governments,' departments, commissions and boards
with respect to the Demised Premises other than those obligations which are the
responsibility of Tenant in accordance with this Lease or the non-compliance
with which is caused by the negligence or manner of use of the Demised Premises
(including alterations) by Tenant, its agents, employees and contractors.
Landlord represents, warrants and covenants to Tenant that on the Commencement
Date the Demised Premises shall be in full compliance with all applicable
federal, state and local laws, rules, orders, regulations and requirement,
including, without limitation, the Americans with Disabilities Act and all
environmental, pollution, health, safety, fire and building code laws.
Notwithstanding anything to the contrary in this Lease, Tenant shall not be
required to comply with any law or to cure any illegal condition (including, but
not limited to, any condition constituting a violation of any Building code) if
the illegality or necessity to comply existed or arose before Tenant took
possession of the Demised Premises or at any time by reason of any act or
omission of Landlord, its employees, agents, contractors, licensees or Invitees,
or any tenant of the Building.
44. LIMITATION OF LIABILITY:
------------------------
Tenant agrees that the liability of Landlord under this Lease and all
matters pertaining to or arising out of the tenancy and the use and occupancy of
the Demised Premises, shall be limited to Landlord's interest in the Building.
In no event shall Tenant make any claim based upon a judgement obtained against
the entity comprising Landlord or seek to impose any personal liability upon any
general or limited partner of Landlord, or any principal of any firm or
corporation that may hereafter be or become the Landlord.
45. INDEMNIFICATION AND INSURANCE:
------------------------------
A. Tenant shall indemnify and save harmless Landlord and its agents
against and from any and all claims arising from any work or thing whatsoever
done, or any condition created in or about the Demised Premises during the term
hereof or arising from any negligent or wrongful acts or omission of Tenant or
any of its subtenants or licensees or its or their employees, agents visitors,
invitees or contractors or subcontractors unless due to the negligence or
willful misconduct of Landlord or Landlord's agents, employees, licensees,
invitees, contractors or subcontractors.
B. Landlord shall indemnify and save harmless Tenant and its agents
against and from any and all claims arising from any work or thing whatsoever
done, or any condition created in or about the Demised Premises during the term
hereof or arising from any negligent or wrongful acts or omission of Landlord or
any of its subtenants or licensees or its or their employees, agents visitors,
invitees or contractors or subcontractors unless due to the negligence or
willful misconduct of Tenant or Tenant's agents, employees, licensees, Invitees,
contractors or subcontractors.
C. Tenant covenants to provide on or before the Commencement Date and to
keep in force during the term hereof the following insurance coverage:
(i) For the benefit of Landlord, Tenant, and all Superior
Mortgagees and Superior Lessees, a comprehensive policy of liability insurance
protecting and indemnifying Landlord, Tenant all Superior Mortgagees and
Superior Lessees against claims for personal injury, death or property damage
occurring upon, in or about the Demised Premises, and the public portions of the
Building used by Tenant, its employees, agents, contractors, customers, invitees
and visitors including, without limitation, personal injury, death or property
damage resulting from any work performed by or on behalf of Tenant, with
coverage of not less than Two Million ($2,000,000.00) Dollars combined single
limit for personal injury, death and property damage. The paid liability
insurance shall include a broad form contractual liability endorsement
protecting Tenant against loss arising out of liabilities assumed by Tenant by
indemnify or otherwise.
(ii) Fire and extended coverage in an amount adequate to cover
the cost of replacement of all personal property, fixtures, furnishing and
equipment, including Tenant's work, located in the Demised Premises.
On or before the Commencement Date, Tenant shall deliver
to Landlord duplicate originals of the aforesaid policies or certificates
evidencing the aforesaid insurance coverage, and renewal policies or
certificates shall be delivered to Landlord at least thirty (30) days prior to
the expiration date of each policy with proof of payment of the premiums
thereof.
D. All policies of insurance procured by Tenant shall be issued in form
reasonably acceptable to Landlord by insurance companies with general policy
holder's ratings of not less than A- and in a Financial Size Category of not
less than VII, as rated in the most current available "Best's" insurance
reports, and licensed to do business in the State of New York and authorized to
issue such policy or policies;
E. All insurance procured by Tenant shall be issued in the names and for
the benefit of Landlord (and each member thereof in the event Landlord is a
partnership or joint venture), Landlord's managing agent, Tenant, and, unless
Landlord otherwise requests, any Superior Lessee and the Superior Mortgagee, as
their
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respective interests may appear, and shall contain an endorsement that each of
Landlord, the Superior Lessee and Superior Mortgagee, although named as an
insured, nevertheless shall be entitled to recover under said policies for any
loss or damage occasioned to it, its agents, employees, contractors, directors,
shareholders, partners and principals (disclosed and undisclosed) by reason of
the negligence of Tenant, its servants, agents, employees, and contractors. In
the case of insurance against damage by fire or other casualty, the policy or
policies shall provide that loss shall be adjusted with Landlord, and shall be
payable to Landlord and/or the Superior Mortgagee and/or Superior Lessee as
directed by the Landlord, to be held and disbursed by Landlord and/or the
Superior Mortgagee under a standard mortgage clause;
F. All policies of insurance procured by Tenant shall contain
endorsements providing as follows: (i) that such policies may not be materially
changed, amended, reduced, canceled (including for non-payment of premium) or
allowed to lapse with respect to Landlord or the Superior Lessor or the Superior
Mortgagee except after thirty (30) days' prior notice from the insurance company
to each, sent by registered mail; and (ii) that Tenant shall be solely
responsible for the payment of all premiums under such policies and that
Landlord or any other party named therein shall have no obligation for the
payment thereof notwithstanding that Landlord or certain other parties may be
named as an insured.
46. ELECTRIC CURRENT:
-----------------
A. Definitions
-----------
For purposes of this Article 46, the following term shall have the
following meanings:
The term "Landlord's Cost", shall mean, the then going cost per
kilowatt hour and kilowatt to Landlord of purchasing electricity, from the
Electricity Providers (herein defined) as adjusted from time to time for fuel
adjustment charges, rate adjustment charges, sales tax, and/or any other
factors.
The term "Electricity Provider" shall mean any utility and any other
energy services company or companies, whether or not affiliated with Landlord,
that is supplying electric energy and capacity including but not limited to
generation, transmission, distribution and other ancillary services, to the
building and the Demised Premises, or directly to Tenant, regardless of whether
such Electricity Provider generates its own electricity at or near the building
or delivers such electricity over transmission and distribution equipment owned
by the Electricity Provider, the local utility or any other Electricity
Provider. Landlord may purchase such services from more than one Electricity
Provider.
B. Method of Furnishing Electric Current to the Demised Premises
-------------------------------------------------------------
Tenant agrees that Landlord, that subject to Paragraph 5 hereof,
shall furnish electricity to Tenant on a "submetering" basis.
1. Submetering: Landlord shall, at Tenant's sole cost and expense
pursuant to Article 52, install and maintain a meter or meters
(collectively, the "Submeter") at a location designated by Landlord to
measure Tenant's consumption of electricity in the Demised Premises
only. If and so long as electric current is supplied by Landlord to
the Demised Premises or other Tenant controlled areas to service
Tenant's equipment and the air conditioning units and other
appurtenant equipment contained therein or elsewhere in the Building,
Tenant will pay Landlord or Landlord's designated agent, as additional
rent for such service, the amounts applying to Tenant's measured
electrical demand and consumption (as determined by such Submeter)
Landlord's Cost, plus a fee (the "Overhead Charge") equal to nine (9%)
percent of such charge to Landlord, representing
administrative/overhead costs to Landlord. The amounts computed from
the Submeter together with the Overhead Charge are herein collectively
called the "Electricity Additional Rent". Landlord may from time to
time, increase the Electricity Additional Rent based upon any
increase in Landlord's Cost. Where more than one meter measures the
electric service to Tenant (including such electric energy as is
consumed in connection with the operation of the ventilation and air
conditioning equipment servicing the Demised Premises), the electric
service rendered through each meter may be computed and billed
separately as above set forth. Bills for the Electricity Additional
Rent (the "Bills") shall be rendered to Tenant at such time as
Landlord may elect. In the event that such Bills are not paid within
thirty (30) days after the same are rendered, Landlord may, after an
additional thirty (30) days written notice and Tenant's failure to
cure such default within such aggregate sixty (60) day period,
discontinue the service of electric current to the Demised Premises
without releasing Tenant from any liability under this Lease and
without Landlord or Electrical Providers incurring any liability for
any damage or loss sustained by Tenant as the result of such
discontinuance. If any tax is imposed upon Landlord's receipts from
the sale or resale of electric current to Tenant by any Federal, state
or municipal authority, Tenant agrees that, unless prohibited by law,
Tenant's Percentage of such taxes shall be passed on to, and included
in the bill of, and paid by Tenant to Landlord as additional rent.
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2. Subject to Article 46, Subparagraph B1, Tenant agrees not to connect
any additional electrical equipment of any type to the building
electric distribution system, without Landlord's prior written
consent, which consent shall not be unreasonably withheld. Except as
hereinafter provided, any additional risers, feeders, or other
equipment proper or necessary to supply Tenant's electrical
requirements, upon written request of Tenant, will be installed by
Landlord, at the sole cost and expense of Tenant, if, in Landlord's
reasonable judgment, the same are necessary and will not cause
permanent damage or injury to the building or the Demised Premises, or
cause or create a dangerous or hazardous condition or entail excessive
or unreasonable alterations, repair or expense or interfere with or
disturb other tenants or occupants.
3. Tenant's use of electric current in the Demised Premises shall not at
any time exceed the capacity of any of the electrical conductors and
equipment in or otherwise serving the Demised Premises, which is
presently 208 three phase service (upgradable to a 480 three phase
service by the installation of a 480 volt transformer, at Tenant's
expense which shall be based on Landlord's actual cost for said
installation of transformer without additional mark-up) with 20 watts
per usable square foot available to the Demised Premises. At Tenant's
expense, Landlord shall provide, at a rental rate of $15.00 per
rentable square foot, space in the basement or sub-basement of the
Building, for installation of Tenant's transformers. Subject to
availability, Landlord and Tenant will determine the location of the
480 volt transformer and any other equipment used in connection
therewith. At Tenant's expense, Landlord shall provide additional
amperage, up to a maximum full service of 4,000 amps, at an additional
charge of $350.00 per additional amp for a total additional amperage
cost of $ ___________(the "Additional Amperage Cost"). Within ten (10)
business days from Lease execution, Landlord shall notify Tenant as to
the location of the 4,000 amp service and that same shall be "live"
(i.e., ready for Tenant's connections). The location of the 4,000 amp
service shall be designated as "stab 6", which shall be exclusively
designated for Tenant. Tenant shall pay Landlord the first $250,000.00
of the Additional Amperage Cost in cash and any remaining balance
thereof shall be paid by way of a reduction in Tenant's Free Rent (as
provided in Article 41) ratably spread during months 13 through 48 of
the Term of this Lease.
4. Subject to the provisions of paragraph 27 above, Landlord shall not be
liable in any way to Tenant (other than for gross negligence or
willful misconduct) for any failure or defect in the supply or
character of electric energy furnished to the Demised Premises by
reason of any requirement, act or omission of the utility serving the
building with electricity or for any other reason.
5. Landlord reserves the right to discontinue furnishing electric energy
to Tenant at any time upon sixty (60) days prior written notice to
Tenant, provided that (i) Landlord discontinues the furnishing of
electric energy to substantially all tenants in the Building and (ii)
electric energy can be supplied by the Electricity Provider directly
to Tenant, from and after the effective date of such termination,
Landlord shall no longer be obligated to furnish Tenant with electric
energy, provided, however, that such termination date may be extended
for a time reasonably necessary for Tenant to make arrangements to
obtain electric services directly from the Electrical Provider
approved by Landlord. In the event Landlord discontinues furnishing
electric energy to Tenant and Tenant must upgrade its equipment to
obtain electric energy from another source, then Landlord shall pay
Tenant's reasonable expenses in connection with such upgrade. If
Landlord exercises such right of termination, this Lease shall remain
unaffected thereby and shall continue in full force and effect; and
thereafter Tenant shall diligently arrange to obtain electric service
directly from the Electrical Provider approved by Landlord servicing
the building, and may at Landlord's cost utilize the then existing
electric feeders, risers and wiring serving the Demised Premises to
the extent available and safely capable of being used for such purpose
and only to the extent of Tenant's then authorized connected lead.
Landlord shall not be obligated to pay any part of any cost required
for Tenant's direct electric service, unless Landlord elects to
terminate service of electricity as hereinbefore provided,
6. Notwithstanding any provisions of this Article 46, in no event shall
(a) the fixed rent under this Lease be reduced by virtue of this
Article 46 and (b) the cost to Tenant for electric energy be less than
109% of Landlord's Cost.
7. Landlord will not unreasonably withhold or delay its consent to
Tenant's request for additional electrical power and Landlord shall
make a prompt and appropriate request to the Electricity Provider for
such additional electrical power. Such additional electrical power
shall be provided, subject to availability, at Tenant's expense at
Landlord's then Building standard rates.
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47. BROKER:
-------
Landlord and Tenant represent and warrant to the other that neither
consulted nor negotiated with any broker or finder with regard to the rental of
the Demised Premises from Landlord other then Newmark & Company Real Estate,
Inc. and Grubb & Ellis New York, Inc. (the "Broker"). Landlord and Tenant agree
to indemnify and hold the other harmless from any claims, suits; damages, costs
and expenses suffered by the other by reason of any breach of the foregoing
representation. Landlord shall pay any commission due either broker in
accordance with Landlord's separate agreement with said brokers. The
representation and warranties contained in this Article 47 shall survive the
termination of this lease.
48. BINDING EFFECT:
--------------
It is specifically understood and agreed that this Lease may be offered to
Tenant for signature by the leasing or managing agent and is subject to
Landlord's acceptance and approval, and that Tenant shall have affixed its
signature hereto with the understanding that such act shall not, in any way,
bind Landlord or its agent until such time as this Lease shall have been
approved and executed by Landlord and delivered to Tenant.
49. MISCELLANEOUS:
--------------
A. Subject to Article 13 herein, without incurring any liability to
Tenant, Landlord may permit access to the Demised Premises and open the same,
whether or not Tenant shall be present, upon demand of any receiver, trustee,
assignee for the benefit of creditors, sheriff, marshall or court officer
entitled to, or reasonably purporting to be entitled to, such access for the
purpose of taking possession of, or removing, Tenant's property or for any other
lawful purpose (but this provision and any action by Landlord hereunder shall
not be deemed a recognition by Landlord that the person or official making such
demand has any right or interest in or to this Lease, or in or to the Demised
Premises), or upon demand of any representative of the fire, police, Building,
sanitation or other department of the city, state or federal governments.
B. No receipt of monies by Landlord from Tenant, after any reentry or
after the cancellation or termination of this Lease in any lawful manner, shall
reinstate the lease; and after the service of notice to terminate this Lease, or
after the commencement of any action, proceeding or other remedy, Landlord may
demand, receive and collect any monies due, and apply them on account of
Tenant's obligations under this Lease but without in any respect affecting such
notice, action, proceeding or remedy, except that if a money judgment is being
sought in any such action or proceeding, the amount of such judgment shall be
reduced by such payment.
C. If Tenant is in arrears in the payment of fixed rent or additional
rent, Tenant waives its right, if any, to designate the items in arrears against
which any payments made by Tenant are to be credited and Landlord may apply any
of such payments to any such items in arrears as Landlord, in its sole
discretion, shall determine, irrespective of any designation or request by
Tenant as to the items against which any such payments shall be credited.
D. No payment by Tenant nor receipt by Landlord of a lesser amount than
may be required to be paid hereunder shall be deemed to be other than on account
of any such payment, nor shall any endorsement or statement on any check or any
letter accompanying any check tendered as payment be deemed an accord and
satisfaction and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such payment due or pursue any other
remedy in this Lease provided.
E. If in this Lease it is provided that Landlord's consent or approval as
to any matter will not be unreasonably withheld, and it is established by a
court or body having final jurisdiction thereover that Landlord has been
unreasonable the only effect of such finding shall be that Landlord shall be
deemed to have given its consent or approval; but Landlord shall not be liable
to Tenant in any respect for money damages by reason of withholding its consent.
F. If payment of any Fixed Rent or Additional Rent shall not have been
paid by the tenth (10th) day after the date on which such amount was due and
payable, then, in addition to and without waiving or releasing any other
remedies of Landlord, a late charge of four cents ($.04) for each dollar overdue
shall be payable on demand by Tenant to Landlord as damages for Tenant's failure
to make prompt payment, in default of payment of any late charges, Landlord
shall have (in addition to all other remedies) the same rights as provided in
this Lease for nonpayment of Fixed Rent. Nothing in this Section contained and
no acceptance of late charges by Landlord shall be deemed to extend or change
the time for payment of Fixed Rent or Additional Rent.
G. If the Expiration Date or the date of sooner termination of this Lease
shall fall on a day which is not a business day, then Tenant's obligations
pursuant to Article 22 hereof shall be performed on or prior to the next
succeeding business day, Tenant expressly waives, for itself and for any person
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claiming through or under Tenant, any rights which Tenant or any such person may
have under the provisions of Section 2201 of the New York Civil Practice Law and
Rules and of any similar or successor law of same import then in force, in
connection with any holdover proceedings which Landlord may institute to enforce
the provisions of this Lease. If the Demised Premises are not surrendered upon
the termination of this Lease, Tenant hereby indemnifies Landlord against
liability resulting from delay by Tenant in so surrendering the Demised
Premises, including any claims made by any succeeding tenant or prospective
tenant founded upon such delay. In the event Tenant remains in possession of the
Demised Premises after the termination of this Lease without the execution of a
new lease, Tenant, at the option of Landlord, shall be deemed to be occupying
the Demised Premises as a tenant from month to month, at a monthly rental equal
to 200% times the fixed rent and additional rent payable during the last month
of the term, subject to all of the other terms of this Lease insofar as the same
are applicable to a month-to-month tenancy. Tenant's obligations under this
Paragraph shall survive the expiration or sooner termination of this Lease.
H. This Lease shall be governed in all respects by the laws of the State
of New York. Tenant and Landlord hereby specifically consent to jurisdiction in
the State of New York in any action or proceeding arising out of this Lease
and/or the use and occupation of the Demised Premises.
I. Tenant shall not cause or permit any Hazardous Materials (hereinafter
defined) to be used, stored, transported, released, handled, produced or
installed in, on or from the Demised Premises or the Building in violation of
applicable law; provided, that nothing herein shall prevent Tenant's use of
such reasonable amounts of Hazardous Materials (including, without limitation,
diesel fuel used in any fuel system in the Building) customarily used in the
ordinary course of operation of Tenant's business in the Demised Premises in
accordance with this Lease, provided such use is for such ordinary course of
such operation and is in accordance with all laws and insurance requirements
applicable to the Building and/or the Demised Premises or any part thereof, to
Tenant's use thereof or to Tenant's observance of any provision of this lease.
"Hazardous Materials", as used herein, shall mean any flammables, explosives,
radioactive materials, hazardous wastes, hazardous and toxic substances or
related materials, asbestos or any material containing asbestos, or any other
substance or material included in the definition of "hazardous substances",
hazardous wastes", "hazard materials", "toxic substances", "contaminants" or any
other pollutant, or otherwise regulated by any Federal, state or local
environmental laws, ordinance, rule or regulation including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended, the Hazardous Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, and in the regulations adopted and
publications promulgated pursuant to each of the foregoing. In the event of a
violation of any of the foregoing provisions of this Paragraph, Landlord may,
upon thirty (30) days notice and Tenant's failure to cure same within such
thirty (30) day period, take all remedial action deemed necessary by Landlord to
correct such condition and Tenant shall reimburse Landlord for the cost thereof,
upon demand, as additional rent.
Landlord represents and warrants to Tenant that (i) the Demised Premises
contain no Hazardous Materials, and (ii) Landlord has not received any notice of
any claims, suit or other action or investigation with respect to the violation
of any laws, due to the presence of Hazardous Materials in or about the Demised
Premises, the Building, or otherwise, and Landlord knows of no facts or
circumstances that may give rise to any future violation.
J. The Individual signatories to this lease each represent that they are
duly authorized to execute this document. Upon Landlord's request, Tenant will
execute and deliver to Landlord a Secretary's Certificate setting forth the
authority of the officer executing the lease by and on Tenant's behalf.
K. Any representations made by any other party other than Landlord itself
shall not be binding upon Landlord.
L. To the extent that Tenant required use of any riser space i.e. the
running of vertical or horizontal piping, conduit, wire or fiber optics (whether
or not encased in conduit) outside of the Demised Premises (i.e. no charge shall
apply for risers within the Demised Premises) the following charges (subject to
adjustment) shall apply.
1. $2.00 per linear foot per annum for 2" Conduits.
2. $4.00 per linear foot per annum for 4" Conduits.
3. $6.00 per linear foot per annum for 6" conduits.
The aforesaid charges shall increase 3% per annum.
M. Landlord, at its expense, and on Tenant's request, shall maintain
no more than twenty (20) listings on the building directory of the name of
Tenant and the names of its partners and associates.
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N. Other than and except for the Electricity Provider, Tenant may obtain
services directly from telecommunications and fiber service providers, subject
to Landlord's prior approval (which approval shall not be unreasonably withheld
or delayed) of entry points and Building standard conduit rates.
50. DOWNTOWN TAX APPLICATION:
-------------------------
Landlord and Tenant hereby acknowledge and agree that Tenant, at Tenant's
sole cost and expense, may make application (the "Application") after the
Commencement Date of this Lease to the appropriate governmental authority in
order to receive certain tax abatements (the "Tax Abatement") for the Building
pursuant to "The Lower Manhattan Commercial Revitalization Program") (the
"Program") created by Title 4 of Article 4 of the real Property Tax Law,
(S)(S)499.a et. seq. (the "Law"); provided, however, Tenant shall not make the
-- ---
Application (nor continue with its being processed) unless all of the following
are and remain true and correct, (and all of which are in any event hereby
agreed to and acknowledged by Tenant), (whereby, if all of the following are and
remain true and correct, Landlord shall cooperate with Tenant in Tenant's
attempt to obtain the Tax Abatement for the Building by joining in the
Application): (i) Tenant shall file the Application, and all related
documentation in accordance with all time frames and schedules as may be
required by the law (and all related rules and regulations) and the Program;
(ii) Tenant meets all eligibility requirements for the Program with respect to
the Premises (and, in this regard, upon request, Tenant shall deliver to
Landlord upon demand all information and documentation reasonably requested by
Landlord with respect to the Program, and Tenant's eligibility thereunder, with
respect to the Premises); (iii) Landlord shall incur no cost or expense in
connection with the Application or the Tax Abatement (as well as in connection
with its being obtained); (iv) Tenant shall reimburse Landlord for all of
Landlord's actual reasonable costs and expenses incurred in connection with the
Application (and related documentation) and the Tax Abatement and its being
obtained) (including, without limitation, all of Landlord's reasonable
attorneys' and consultants' costs, expenses and fees in connection with the
review of any documentation concerning the Application (and related
documentation) and the Tax Abatement, the amount of all administrative charges
or fees which may be imposed by the Department of Finance of the City of New
York in connection with the Application (and all related documentation), and in
connection with ongoing compliance related to the Program, as well as all such
costs, expenses and fees which may incurred in attending any and all hearings
and/or meetings), which reimbursement shall be payable to Landlord by Tenant on
demand, (v) Landlord has not made, nor will Landlord be making, any
representations or warranties whatsoever regarding the feasibility of obtaining
the Tax Abatement (or any facts or circumstances related thereto), or whether
any Tax Abatement which may be received will subsequently be reduced or
eliminated, or regarding Tenant's eligibility for receiving the Tax Abatement,
or whether this Lease property conforms with requirements imposed by the
Program, or whether the appropriate expenditures as may be imposed by the
Program will be made at the Premises and the Building (and Landlord is not
required to perform any other work other than as may expressly be set forth in
this Lease; (vi) all information which may be or is set forth on the Application
as well as on all related documentation shall be true and correct in all
respects and, in this regard. Tenant and Landlord shall indemnify and hold each
other harmless from any and all claims, losses, expenses or liabilities in
connection with any inaccuracy; (vii) Landlord shall incur no liability
whatsoever in connection with the Application, or any other related
documentation, the Program, or the Tax Abatement (or in connection with its
being obtained) and, in this regard, Tenant and Landlord shall indemnify and
hold each other harmless from any and all claims, losses, expenses or
liabilities in connection therewith.
Notwithstanding the above, Landlord, upon written request made by Tenant,
agrees to join with Tenant in signing the Application (to the extent Landlord is
required by the Program to do so), provided, however, Landlord shall not be
required to join in if any of the terms or conditions set forth above are untrue
in any respect, or if Tenant is in default under this Lease beyond applicable
notice and cure periods (and, in this regard, to the extent Landlord does so
join in it shall not be deemed to be an acknowledgment by Landlord that any of
the applicable provisions or requirements set forth above are necessarily true,
nor shall the joining in ever be deemed to be a waiver of any such provisions or
requirements).
Provided all of the terms and conditions set forth above in this Article
are fully complied with by Tenant and Tenant is not otherwise in default under
this Lease beyond applicable notice and cure periods (including, without
limitation, as provided in this Paragraph above), the, in such event, Landlord
shall provide Tenant with a credit (the "Tax Credit") against the Tax Amount
payable by Tenant under this Lease in an amount for any applicable Tax Year
occurring during the Term which equals (but does not exceed) the full amount of
such particular Tax Year of the Tax Abatement which is exclusively attributable
to the Premises pursuant to the Program and which is actually received by
Landlord (with such amount being called the "Actual Benefits").
Tenant shall pay to Landlord within fifteen (15) days after demand
therefor, as Additional Rent, the amount of the Actual Benefits that have been
credited against the Tax Amount becoming due hereunder if such Tax Abatement
related to the Actual Benefit is thereafter revoked solely by reason of Tenant's
acts or omissions, and in no event if such revocation is due to the nature of
Tenant's business in the Demised Premises or its use and occupancy thereof, and
only to the extent Landlord shall have refunded any
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Actual Benefit it received (such as, for example, and without otherwise
limiting, as a result of the exercise by Tenant of a right to terminate this
Lease, or assignment of this Lease, or subleasing of the Premises, or for
Tenant's failure to meet and continue to meet any of the eligibility
requirements under the Program, or Tenant's breach under this Lease), together
with any interest at the highest rate allowed by law commencing upon the date
such payment is to be made, along with all penalties which may be imposed
against Landlord in connection with such Actual Benefits.
landlord will pay the Taxes, as defined in this Lease, in a timely manner
so as to avoid forfeiture of Tenant's benefits hereunder.
The provisions of this Article shall survive the expiration or earlier
termination of this Lease.
Pursuant to the provisions of the Law, Landlord and Tenant agree to the
following:
(1) Borough of Manhattan
Black 29
Lot 70
(2) Floor Number____________.
(3) Lease execution dote as of:________________, 1999.
(4) Lease commencement date: As provided in Article 52.
(5) Rent commencement date: Seven (7) months after Commencement
Date.
(6) Lease expiration date: last day of the 187/th/ calendar
month following the Commencement Date.
(7) Tenant's Proportionate Share: 7.10%.
Landlord hereby informs the Tenant that:
(1) An application for abatement of real property taxes will be
made for the premises;
(2) The rent including amounts payable by the Tenant for real
property taxes will accurately reflect any abatement of real property taxes;
(3) Certain stipulated sums must be spent on improvements to the
Demised Premises and the common areas, the amount being dependent upon the
length of the lease and whether it is a new, renewal or expansion lease.
(4) All abatements granted will be revoked if, during the
benefit period, real estate taxes, water or sewer charges or other lienable
charges are unpaid for more than one (1) year, unless such delinquent amounts
are paid as provided in the relevant law.
Notwithstanding anything set forth herein to the contrary, nothing set
forth in this Article 50 shall impose any obligation on Landlord to make any
alterations or improvements to the Demised Premises, common areas, or any other
part of the Building.
51. INTENTIONALLY OMITTED.
---------------------
52. LANDLORD'S WORK:
---------------
Tenant acknowledges and agrees that Landlord shall have no obligation to
prepare the Demised Premises for Tenant's occupancy except for those items set
forth below ("Landlord's Work"). Landlord shall perform Landlord's Work in
compliance with all applicable laws.
1. Deliver the Demised Premises demolished and in broom clean condition
ready for Tenant's construction;
2. Provide demising walls for the fifth (5/th/) floor;
3. Provide tie-ins to Building Class E System;
4. Landlord shall deliver the Demised Premises in compliance with New
York City ACP-5 Requirements and deliver to Tenant an ACP-5
certificate;
5. Remove existing ACM containing floor tiles, if any;
6. Patch columns and exterior walls; and
7. Windows of the Demised Premises shall be operational on the
Commencement Date.
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Notwithstanding anything contained hereinabove to the contrary,
Landlord's Work shall be substantially completed within forty five (45) days
from the date of execution of this Lease by Tenant and payment of the first
month's rent and security deposit.
53. GENERATOR USE:
--------------
Tenant shall purchase two (2) generators in the basement of the Building
(collectively the "Generators") from Landlord for a cost of $40,000.00, which
said amount shall be paid by Tenant upon execution of this Lease. Landlord shall
lease to Tenant the space occupied by the Generators (the "Generator Space") at
an annual license fee of _____________ Dollars per annum (based on $15.00 per
square foot per annum) increasing 3% per annum annually after the first (1/st/)
year of the term (coterminous with the term of this Lease), for Tenant's
Generators and supplemental electrical gear utilized in connection with the
Generators. The Generators will be serviced by the main fuel system which shall
be kept full by Landlord, it being agreed that Tenant shall purchase such fuel
from Landlord at the then Building standard rates. Landlord shall further lease
to Tenant at an annual license fee of ___________ Dollars per annum (based on
$30.00 per square foot per annum) escalating at three (3%) percent per annum
annually, after the first (1/st/) year of the term of this Lease, certain space
as delineated as "C" on the attached 5/th/ (fifth) floor plan (Exhibit A) for
Tenant's mechanical equipment. To the extent Tenant requires additional space
for its mechanical equipment, such space will be provided in Landlord's
discretion, subject to availability, at the then applicable Building standard
rates. To the extent that Tenant elects to or must run conduit risers to the
Generators, then, the conduit charges shall be consistent with the Building's
then published payment schedule (i.e., presently as follows: $2.00 per linear
foot per annum for 2" conduits $4.00 per linear foot per annum for 4" conduits
and $6.00 per linear foot for 8" conduits).
1. Landlord shall provide an area around the Generators (to be subject to
the payment of the license fee hereinbefore provided) to include code required
and maintenance clearances around equipment, controls, electrical boxes,
conduit, piping, fuel system components, etc.;
2. Steel dunnage or reinforcement to be installed by Tenant and may be
attached to structural supports spanning from base building structural members
as necessary to support the Generators system;
3. Landlord to allow Tenant to install Generators support steal as
required, fasten to structural members of roof and to perform waterproofing. If
necessary, Tenant shall not be responsible for leaks in roof due to age of
existing roof and/or ability of existing roofing to accept new waterproofing
repair;
4. Landlord will designate shaft ways for Tenant's connection to
Generators at Landlord's then Building standard rates;
5. All maintenance and repairs to the Generators shall be performed by
Tenant at Tenant's sole cost and expense and in furtherance thereof, the
Generators shall be surrendered at the expiration or sooner termination of this
Lease in good working order; and
6. Tenant, at its sole expense, may move the Generators currently located
in the basement of the Building to the 17/th/ floor, or such other area if
available at the time of re-location, and add a third generator if Tenant
expands its space, at the then Building standard rates. To the extent Tenant
adds a third generator and requires additional space for the same, Landlord
shall lease to Tenant such additional space at the then applicable Building
rates. If Tenant adds an additional generator, the term "Generators" shall
include the additional generator.
54. HEATING, VENTILATION AND AIR CONDITIONING:
------------------------------------------
Subject to Article 3 hereof, Tenant may install its own internal HVAC
system in the Demised Premises, and not on any other portion of the Building, it
being agreed that Landlord shall have no responsibility to furnish any HVAC to
the Demised Premises. Furthermore, Landlord shall have no responsibility
regarding repair, maintenance or replacement of Tenant's internal HVAC unit, all
such repairs, maintenance and service being Tenant's sole responsibility. At the
Tenant's option, Tenant may have system fully enclosed by partition walls.
Tenant's HVAC system shall be placed in a space outside the Demised Premises as
approved by Landlord. Tenant shall pay Landlord the then Building Standard
rental charges for such space. However, Tenant shall be allowed to use the Base
Building HVAC system solely for the office portions of the Demised Premises
subject to Building Rules and Regulations and standard hours of operation i.e.,
on normal business hours and normal business days only.
55. TENANT'S RIGHT OF FIRST REFUSAL:
--------------------------------
For purposes hereof, the term "Refusal Space" shall mean any space
contiguous to the Demised Premises in the Building and/or the twelfth (12th)
floor and/or the thirteenth (13th) floor of the Building, not subject to either
any renewal, extension, expansion or additional space option held by any third
(3/rd/) party.
-28-
<PAGE>
Provided that this Lease continues in full force and effect, without
default by Tenant after the expiration of all applicable grace, notice and/or
cure periods. Tenant shall have, during the initial term and the Extension Term,
an ongoing right of first refusal to lease the Refusal Space, as hereinafter
provided.
If Landlord receives, or is prepared to deliver for a third party Tenant's
acceptance, a proposal acceptable to landlord, pursuant to the terms of which
Landlord intends to lease the Refusal Space, Landlord shall communicate, in
writing, the terms and conditions of such proposal to Tenant ("Landlord's
Notice"), which Landlord's Notice shall set Fixed Rent and Additional Rent equal
to the greater of (a) rent specified in the third party offer or (b) 95% of
Tenant's then fully escalated rent, but in no event greater than the Fixed Rent
as fully escalated. Tenant shall (i) have a period of five (5) business days
after receipt of Landlord's Notice within which to exercise, by delivery of
written notice thereof to Landlord, the Right of First Refusal to lease the
Refusal Space on the identical terms and conditions set forth in Landlord's
Notice without variance, and (ii) within an additional five (5) business days
following Tenant's exercise of the right of first refusal, execute an
appropriate amendment to this Lease in form and substance satisfactory to
Landlord, Tenant and their respective counsel, reflecting the terms and
conditions contained in Landlord's Notice. Tenant's failure to timely exercise
the Right of First Refusal, or Tenant's failure to timely execute an appropriate
amendment to this Lease, as required by the preceding sentence, shall release
Landlord from any restriction on Landlord's entering into a lease on the terms
and conditions set forth in the corresponding Landlord's Notice.
56. OPTION TO RENEW:
----------------
A. Subject to the provisions of sub-paragraph E hereof, Tenant shall have
the right to extend the Term of the Lease for one (1) additional term of five
(5) years commencing on the day following the Expiration Date (hereinafter
called the "Commencement Date of the First Extension Term" and such additional
term is hereinafter called the "First Extension Term") provided that;
1. Tenant shall give Landlord notice (hereinafter called the
"Extension Notice") of its election to extend the term of this Lease
at least nine (9) months prior to the expiration of the term of this
Lease; and
2. Tenant is not in default (after the expiration of applicable
notice and grace periods, if any) under this Lease as of the time of
the giving of the Extension Notice and the Commencement Date of the
First Extension Term.
B. The Fixed Rent payable by Tenant to Landlord during the First
Extension Term shall be a sum equal to the fair market rent for the Demised
Premises as determined as of the date occurring three (3) months prior to the
Commencement Date of the First Extension Term (such date is hereinafter called
the "Determination Date") and which determination shall be made within a
reasonable period of time after the occurrence of the Determination Date
pursuant to the provisions of Paragraph C hereof, but such Fixed Rent shall in
no event be less than the aggregate Fixed Rent in effect under the Lease for
the entire Demised Premises for the last month of the Term hereof (without
giving effect to any temporary abatement of Fixed Rent under the provisions of
this Lease).
C. 1. Landlord and Tenant shall endeavor to agree as to the amount of
the fair market rent for the Demised Premises pursuant to the provisions of
Paragraph B hereof, during the fifteen (15) day period following the
Determination Date. In the event that Landlord and Tenant can not agree as to
the amount of the fair market rent within such fifteen (15) day period following
the Determination Date, then Landlord or Tenant may initiate the appraisal
process provided for herein by giving notice to that effect to the other, and
the party so initiating the appraisal process (such party hereinafter called the
"Initiating Party") shall specify in such notice the name and address of the
person designated to act as an arbitrator on its behalf. Within fifteen (15)
days after the designation of such arbitrator, the other party (hereinafter
called the "Other Party") shall give notice to the Initiating Party specifying
the name and address of the person designated to act as an arbitrator on its
behalf. If the Other Party fails to notify the Initiating Party of the
appointment of its arbitrator within the time above specified, then the
Initiating Party may apply to the American Arbitration Association or any
organization which is a successor thereto (the "AAA") for appointment of the
Other Party's arbitrator, which appointment shall be made by the AAA with ten
(10) days after such application. The two arbitrators so chosen shall meet
within ten (10) days after the second arbitrator is appointed and if, within
fifteen (15) days after the second arbitrator is appointed, the two arbitrators
shall not agree, they shall together appoint, by written instrument delivered to
both Landlord and Tenant, a third arbitrator (the "Arbitrator"), which
instrument shall be so delivered with such Arbitrator's retention agreement
which shall provide, inter alia, that (x) each of Landlord and Tenant agree to
----- ----
pay fifty (50%) percent of all the Arbitrator's fees and expenses (including,
without limitation, witness fees and other similar expenses) at its standard
rates, and (y) the Arbitrator shall deliver to Landlord and Tenant its written
announcement as to its selection of either Tenant's determination of fair market
value rent or Landlord's determination of fair market value rent. In the event
of their being unable to agree upon such appointment within thirty (30) days
after the appointment of the second arbitrator, then either Landlord or Tenant
may apply for the appointment of the Arbitrator (with a copy of such application
delivered to the other party by certified mail) to the AAA. Within five (5) days
of receipt of such retention
-29-
<PAGE>
agreement and such instrument, each of Landlord and Tenant shall execute such
agreements and return it by overnight mail to the Arbitrator with a check for
50% of the Arbitrator's fees and simultaneously deliver to the other party a
copy of such signed agreement and check. If either party shall fail to do so,
then in the case of Tenant, Landlord's determination of fair market value rent
shall prevail; and in the case of Landlord, Tenant's determination of fair
market value rent shall prevail.
2. Each party shall pay the fees and expenses of their respective
original arbitrators appointed by or for such party, and half the fees and
expenses of the third arbitrator and all other expenses (not including the
attorneys fees, witness fees and similar expenses of the parties which shall be
borne separately by each of the parties) of the arbitration shall be borne by
the parties equally.
3. The Arbitrator shall determine the fair market rent of the
Demised Premises and render a written certified report of its determination to
both Landlord and Tenant within thirty (30) days of the appointment of the first
two arbitrators or fifteen (15) days from the appointment of the third
arbitrator if such Arbitrator is appointed pursuant to this Paragraph; and the
fair market rent, so determined, shall be applied to determine the Fixed Rent
pursuant to Paragraph B hereof.
4. Each of the arbitrators selected as herein provided shall be a
qualified member of the American Institute of Real Estate Appraisers (or any
successor of such institute, or if such organization or successor shall no
longer be in existence, a recognized national association or institute of
appraisers), possess a valid and current MAI designation, and have at least ten
(10) years experience in the leasing and renting of office space in first class
office buildings in New York City, New York.
5. If Landlord notifies Tenant that the Fixed Rent for the First
Extension Term shall be equal to the aggregate Fixed Rent in effect under this
Lease for the last month of the Term (without giving effect to any temporary
abatement thereof), then the provisions of Subsections 1, 2, 3 and 4 of this
Paragraph C shall be inapplicable and have no force or effect.
6. In the event Landlord or Tenant initiates the appraisal process
and as of the Commencement Date of the First Extension Term the amount of the
fair market rent has not been determined, Tenant shall continue to pay the Fixed
Rent in effect under this Lease for the last month of the Term and when such
determination has been made, an appropriate retroactive adjustment shall be made
as of the Commencement Date of the First Extension Term.
D. Except as provided in Paragraphs A and B hereof, Tenant's occupancy of
the Demised Premises during the First Extension Term shall be on the same terms
and conditions as are in effect immediately prior to the expiration of the Term
of this Lease, provided, however, Tenant shall have no further right to extend
the term of this Lease pursuant to this Article 55.
E. If Tenant does not send the Extension Notice pursuant to the
provisions of Paragraph A hereof, this Article 55 shall have no force or effect
and shall be deemed deleted from this Lease.
F. If this Lease is renewed for the First Extension Term, then Landlord
or Tenant can request the other party hereto to execute an instrument setting
forth the exercise of Tenant's right to extend the term of this Lease and the
last day of the First Extension Term.
G. If Tenant exercises its right to extend the term of the Lease for the
First Extension Term pursuant to this Article 55, the phrases "the term of this
Lease" or "the term hereof" as used in the Lease, shall be construed to include,
when practicable, the First Extension Term.
57. TENANT'S INSTALLATION RIGHTS:
----------------------------
Tenant, at its sole cost and expense, but subject to Articles 3 and 6
hereof, may install an internal interconnecting stairway between the floors of
the Demised Premises at a location selected by Tenant's architect, subject to
Landlord's approval. Landlord hereby requires Tenant to remove the stairway at
the Expiration Date and seal the opening caused by such removal.
58. YEAR 2000 COMPLIANCE:
---------------------
(a) Landlord represents and warrants the following to Tenant:
(i) Landlord has tested the Internal components (as hereinafter
defined) of all the Building systems (including, but not limited to,
any plumbing, electrical and heating systems), components and services
(collectively, the "Tested Systems) to determine which are Y2K-
Compliant (as hereinafter defined); and
(ii) The Internal Components of the Tested Systems have been
determined to be Y2K Compliant and any century date change and date
handling deficiencies found within such Tested Systems have since been
remediated.
-30-
<PAGE>
(b) (i) A Building system, component or service shall be deemed "Y2K
---
Compliant" if, when used in accordance with its documentation, and provided that
- ---------
all other Building systems, components and services used with such Building
system, component or service shall property exchange accurate date data with it,
it:
(A) Is capable of correctly and accurately processing, providing
and/or receiving date data from, into, and between the file
20/th/ and 21/st/ centuries and the years 1999 and 2000 and
beyond, including recognizing that the year 2000 is a leap
year, and
(B) Does not operate abnormally or inaccurately or cease to
operate as a result of the inability to correctly and
accurately process, provide and/or receive date data from,
into, and between the 20/th/ and 21/st/ centuries and the
years 1999 and 2000 and beyond.
(ii) The term "Internal Component" shall mean any portion of a
------------------
Building system, component or service that is located within the Building and is
exclusively within Landlord's control.
[SIGNATURES ON NEXT PAGE]
-31-
<PAGE>
LANDLORD:
67 BROAD STREET LLC
-------------------
By: /s/ [ILLEGIBLE]^^
------------------------
Name:
Title: A Member
TENANT:
DIGITAL BROADCAST NETWORK CORPORATION
-------------------------------------
By: /s/ [ILLEGIBLE]^^
------------------------
Name:
Title: Executive Vice President
-32-
<PAGE>
EXHIBIT A
FLOOR PLANS
-33-
<PAGE>
75 BROAD STREET
FIFTH FLOOR PLAN
<PAGE>
[DRAWING OF "SECURE AREA" APPEARS HERE]
<PAGE>
EXHIBIT B
FIXED RENT SCHEDULE
Tenant shall pay Fixed Rent at the following annual rates;
For the period from the Rent Commencement Date to the end of the first
(1st) Lease Year: ONE MILLION FOUR HUNDRED TWENTY-THREE THOUSAND SIX HUNDRED
THIRTY AND 00/100 ($1,423,630.00) DOLLARS
For the second (2nd) Lease Year: ONE MILLION FOUR HUNDRED SIXTY-THREE
THOUSAND ONE HUNDRED THIRTY-EIGHT AND 90/100 ($1,463,138.90) DOLLARS
For the third (3rd) Lease Year: ONE MILLION FIVE HUNDRED FOUR
THOUSAND THIRTEEN AND 00/07 ($1,504,013.07) DOLLARS
For the fourth (4th) Lease Year: ONE MILLION FIVE HUNDRED FORTY-FIVE
THOUSAND EIGHT HUNDRED FIFTY-SEVEN AND 46/100 ($1,545,857,46) DOLLARS
For the fifth (5th) Lease Year: ONE MILLION FIVE HUNDRED EIGHTY-EIGHT
THOUSAND SIX HUNDRED SEVENTY-SEVEN AND 16/100 ($1,588,677,18) DOLLARS
For the sixth (6th) Lease Year: ONE MILLION SEVEN HUNDRED FIFTY-FIVE
THOUSAND EIGHT HUNDRED SEVENTY-SEVEN AND 50/100 ($1,755,877,50) DOLLARS
For the seventh (7th) Lease Year: ONE MILLION EIGHT HUNDRED FIVE
THOUSAND TWO HUNDRED SIXTY-THREE AND 82/100 ($1,805,263.82) DOLLARS
For the eighth (8th) Lease Year: ONE MILLION EIGHT HUNDRED FIFTY-FOUR
THOUSAND EIGHT HUNDRED FORTY-ONE AND 74/100 ($1,854,841.74) DOLLARS
For the ninth (9th) Lease Year: ONE MILLION NINE HUNDRED SEVEN
THOUSAND SEVENTEEN 00/100 ($1,907,017.00) DOLLARS
For the tenth (10th) Lease Year: ONE MILLION NINE HUNDRED FIFTY-NINE
THOUSAND NINE HUNDRED NINETY-FIVE AND 50/100 ($1,950,995,50) DOLLARS
For the eleventh (11th) Lease Year: TWO MILLION NINETY-SIX THOUSAND
SEVEN HUNDRED EIGHTY-THREE AND 36/100 ($2,096,783.36) DOLLARS
For the twelfth (12th) Lease Year: TWO MILLION ONE HUNDRED FIFTY-FOUR
THOUSAND NINE HUNDRED EIGHTY-SIX AND 87/100 ($2,154,986,87) DOLLARS
For the thirteenth (13th) Lease Year: TWO MILLION TWO HUNDRED FIFTEEN
THOUSAND TWELVE AND 47/100 ($2,215,012.47) DOLLARS
For the fourteenth (14th) Lease Year: TWO MILLION TWO HUNDRED SEVENTY-
SIX THOUSAND FOUR HUNDRED SIXTY-SIX AND 85/100 ($2,276,466,85) DOLLARS
For the balance of the term: TWO MILLION THREE HUNDRED THIRTY-NINE
THOUSAND SEVEN HUNDRED FIFTY-SIX AND 86/100 ($2,339,756.85) DOLLARS
All fixed rent shall be payable in equal monthly Installments as
heretofore provided, without offset, deduction or counterclaim, except as
expressly set forth herein.
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the Demised Premises and for delivery of merchandise and equipment in a prompt
and effluent manner using elevators and passageways designated for such delivery
by Landlord. There shall not be used in any space, or in the public hall of the
Building, either by any tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks except those equipped with rubber tires
and side guards.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or ether substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be home by the tenant who, or whose clerks, agents,
employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window
of the Building; and no tenant shall sweep or throw or permit to be swept or
thrown from the Demised Premises any dirt or other substances into any of the
corridors or halls, elevators, or out of the doors or windows or stairways of
the Building and Tenant shall not use, keep or permit to be used or kept any
foul or noxious gas or substance in the Demised Premises, or permit or suffer
the Demised Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Building by reason of noise,
odors, and/or vibrations or interfere in any way with other tenants or those
having business therein, nor shall any animals or birds be kept in or about the
Building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the Building is prohibited.
4. No awnings or other projections shall be attached to the outside waits of
the Building without the prior whiten consent of Landlord.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside of the
Demised Premises or the Building or on the inside of the Demised Premises if the
same is visible from the outside of the Demised Premises without the prior
written consent of Landlord, except that the name of Tenant may appear on the
entrance doer of the Demised Premises. In the event of the violation of the
foregoing by any tenant, Landlord may remove same without any liability, and may
charge the expense incurred by such removal to Tenant or any other tenants
violating this rule. Interior signs on doors and directory tablet shall be
inscribed, painted or affixed for each tenant by Landlord at the expense of such
tenant, and shall be of a size, color and style reasonably acceptable to
Landlord.
6. Subject to Article 3 herein no tenant shall mark, paint, drill into, or in
any way deface any part of the Building of which they form a part and no boring,
cutting or stringing of wires shaft be permitted, except with the prior written
consent of Landlord, and as Landlord may direct. No tenant shall lay linoleum,
or other similar floor covering, so that the same shall come in direct contact
with the floor of the Demised Premises, and, if linoleum or other similar floor
covering is desired to be used as interlining of builder's deadening felt shall
be first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any tenant, nor shall any changes be made in existing locks
or mechanism thereof without the prior consent of the Landlord, which consent
shall not be unreasonably withheld, delayed or conditioned. In the event the
existing locks are changed, Tenant shall deliver the keys to the same to
Landlord. Each tenant must, upon the termination of his Tenancy, restore to
Landlord all keys of stores, offices and toilet rooms, either furnished to, or
otherwise procured by, such tenant, and in the event of the loss of any keys, so
furnished, such tenant shall pay to Landlord the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the Demised Premises only on
the freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Landlord. Landlord reserves the right
to inspect all freight to be brought into the Building and to exclude from the
Building all freight which violates any of these Rules and Regulations.
9. Canvassing, soliciting and peddling in the Building is prohibited and each
tenant shall cooperate to prevent the same.
10. Landlord reserves the right to exclude from the Building between the hours
of 6 P.M. and 8 A.M. and at all hours on Sundays, and legal holidays all persons
who do not present a pass to the Building. Landlord will furnish passes to
persons for whom any tenant requests same in writing. Each tenant shall
<PAGE>
be responsible for all persons far whom he requests such pass and shall be
liable to Landlord for all acts of such persons.
11. Landlord shall have the right to prohibit any advertising by any tenant
which in Landlord's reasonable opinion, tends to impair the reputation of the
Building or its desirability as a Building for offices, and upon written notice
from Landlord, tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the Demised
Premises, any inflammable, combustible or explosive fluid, material, chemical or
substance, or cause or permit any odors of cooking or other processes, or any
unusual or other objectionable odors to permeate in or emanate from the Demised
Premises.
13. If the Building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by the Landlord with respect to such services. If Tenant
requests air conditioning or ventilation after the usual hours, Tenant shall
give reasonable prior notice to the Building superintendent.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the Building without Landlord's prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. If such safe, machinery, equipment, bulky matter or fixtures
requires special handling, allow work in connection therewith shall comply with
the Administrative Code of the City of New York and all other laws and
regulations applicable thereto and shall be done during such hours as Landlord
may designate.
15. Any louvers shall be installed as Building standard and only with
Landlord's prior approval end otherwise in accordance with the standard quantity
and quality adopted by Landlord for the Building.
<PAGE>
EXHIBIT D
CERTIFICATE OF OCCUPANCY
<PAGE>
[TEXT ILLEGIBLE]
[GRAPHIC OMITTED]
<PAGE>
EXHIBIT E
EQUIPMENT TENANT MAY REMOVE
1. UPS
2. Bypass Switches
3. Transfer Switches
4. Generators
5. FM200
6. Alarm and Card Key System
7. Projectors and Plasma Screens (Multimedia Equipment)
8. Air Conditioning Units and Chillers
9. NOC Furniture
10. Office Furniture
11. Relay Racks and Cable Trays
12. Communications and Computer Equipment
<PAGE>
EXHIBIT 10.10
. GIBRALTAR CENTER .
. OFFICE BUILDING NET LEASE .
BASIC LEASE INFORMATION
Date of Lease: August 26, 1999
Landlord: CEP GIBRALTAR LLC
Landlord's Address: c/o Ellis Partners, Inc.
433 California Street, Suite 610
San Francisco, California 94104
Attn.: James F. Ellis
Tenant: DIGITAL BROADCAST NETWORK CORPORATION
Tenant's Address: 977 Charter Commons
Chesterfield, MO 63017
Attn.: General Counsel
With a copy, after the Commencement Date, to the
Premises, Attention:
_______________
Building: 5667 Gibraltar Drive, Pleasanton, California (Gibraltar
Center II) and 5731 W. Las Positas Drive, Pleasanton,
California (Gibraltar Center I)
Leased Premises: Approximately 101,675 rentable square feet consisting
of the entire Gibraltar Center II building
(approximately 59,445 rentable square feet) and the
entire Gibraltar Center I building (approximately
42,230 rentable square feet)
Rentable Area: Approximately 101,675 rentable square feet
Gibralter I Term Commencement Date: February 1, 2000
Gibraltar II Term Commencement Date: The earlier of: (i) February 1, 2000, or
(ii) the date Tenant achieves
Substantial Completion as defined in
Section 1.21 (excluding temporary office
use by not more than 20 employees)
Term Expiration Date: January 31, 2010
<PAGE>
Option to Extend: Number of Extension Periods: Two (2)
Months per Extension Period: Sixty (60)
Base Rent: Month Amount (per square foot per month/NNN)
----- --------------------------------------
1-12 $1.37
Beginning in the second (2/nd/) year of the Lease, Base
Rent shall increase two percent (2%) annually
Tenant's Proportionate Share (Building): 100%
Tenant's Proportionate Share (Project): 100%
Parking Spaces: Four hundred six (406) spaces (based on four (4)
parking spaces per one thousand (1000) rentable square
feet) subject to reductions attributable to Tenant's
buildout and improvements
Security Deposit: $4,418,000.00 (as more particularly described in
Section 5.14 of the Lease)
Guarantor: None
Landlord's Broker: CB Richard Ellis
Tenant's Broker: Grubb & Ellis
[Remainder of page intentionally left blank; signature page to follow.]
ii
<PAGE>
The foregoing BASIC LEASE INFORMATION is incorporated herein and made a
part of the LEASE to which it is attached. If there is any conflict between the
BASIC LEASE INFORMATION and the LEASE, the BASIC LEASE INFORMATION shall
control.
"LANDLORD":
CEP GIBRALTAR LLC, a Delaware limited liability company
By: CEP INVESTORS XI LLC,
a Delaware limited liability company,
its sole Member
By: EPI INVESTORS XI LLC,
a California limited liability company,
its Manager
By: Ellis Partners, Inc.,
a California corporation,
its Manager
By: /s/ James F. Ellis
----------------------------------
Name: JAMES F. ELLIS
----------------------------------
Title: Vice President
----------------------------------
"TENANT":
DIGITAL BROADCAST NETWORK CORPORATION,
a Missouri corporation
By: /s/ Bernard Schneider
-----------------------------------------
Typed Name: Bernard Schneider
---------------------------------
Title: President & Chief Executive Officer
--------------------------------------
By: /s/ Mark Ivis
-----------------------------------------
Typed Name: Mark Ivis
---------------------------------
Title: Vice President
--------------------------------------
iii
<PAGE>
OFFICE BUILDING LEASE
THIS LEASE, made as of the date specified in the BASIC LEASE INFORMATION
sheet, by and between the landlord specified in the BASIC LEASE INFORMATION
sheet ("Landlord") and the tenant specified in the BASIC LEASE INFORMATION sheet
("Tenant").
Article 1.
Definitions
1.01. Definitions: Terms used herein shall have the following meanings:
1.02. "Additional Rent" shall mean all monetary obligations of Tenant
under this Lease other than the obligation for payment of Net Rent.
1.03. [Intentionally deleted.]
1.04. "Base Rent" shall mean the sums due from time to time as rental for
the Leased Premises.
1.05. [Intentionally deleted.]
1.06. "Basic Operating Cost" shall have the meaning given in Section 3.05.
-------------
1.07. "Building" shall mean the two buildings and other improvements
associated therewith identified on the Basic Lease Information sheet. Building
shall also include, if applicable, all structural elements of the Building,
elevator system, washrooms, fire exit stairways, electrical risers, telephone
risers, plumbing risers, sprinkler systems, air distribution system and air
handling loop, including VAV boxes, janitorial closets, telephone closets, and
electrical closets.
1.08. [Intentionally deleted.]
1.09. "Common Areas" shall mean (a) the areas on individual floors of the
Building devoted to non-exclusive uses such as common corridors, lobbies, fire
vestibules, elevator foyers, stairways, elevators, electric and telephone
closets, restrooms, mechanical closets, janitor closets and other similar
facilities for the benefit of all tenants (and invitees) on the particular floor
and other floors, and (b) other areas of the Project available for the use and
benefit of all tenants (and invitees).
1.10. "Computation Year" shall mean a fiscal year consisting of the
calendar year commencing January 1st of each year during the Term, commencing in
the year 2000 and continuing through the Term with a short or stub fiscal year
in (i) the year 2000 for the period between the Term Commencement 'Date and
December 31 of such year and (ii) any partial fiscal year in which the Lease
expires or is terminated for the period between January 1 of such year and the
date of lease termination or expiration.
1.11. "Gibraltar I" shall mean the building located at 5731 W. Las Positas
Drive, Pleasanton, California and commonly known as Gibraltar Center I.
1.12. "Gibraltar II" shall mean the building located at 5667 Gibraltar
Drive, Pleasanton, California and commonly known as Gibraltar Center II.
1
<PAGE>
1.13. "Gibraltar I Term Commencement Date" shall mean the date set forth
in the Basic Lease Information sheet and shall apply with respect to Gibraltar
I.
1.14. "Gibraltar II Term Commencement Date" shall mean the date set forth
in the Basic Lease Information sheet and shall apply with respect to Gibraltar
II.
1.15. "Landlord's Broker" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Landlord.
1.16. "Landlord's Contribution" shall have the meaning given in Exhibit B.
---------
1.17. "Landlord's Improvements" shall have the meaning given in Exhibit B.
---------
1.18. "Leased Premises" shall mean the floor area more particularly shown
on the floor plan attached hereto as Exhibit A, containing the Rentable Area (as
---------
such term is defined in Section 1.18 below) specified on the Basic Lease
------------
Information sheet, together with all ancillary additions.
1.19. "Net Rent" shall mean the total of Base Rent and Tenant's
Proportionate Share of Basic Operating Cost.
1.20. "Permitted Use" shall mean: (1) multi-media, data center,
telecommunications business, including general office and administrative use;
(2) the installation and maintenance of its multi-media, telecommunications
systems and equipment; and, (3) the collocation of hardware and applications
systems belonging to Tenant's customers, wherein said equipment is physically
located in an area within the Leased Premises housing such equipment and
application belonging to third parties. Tenant's use of the Premises shall be
seven (7) days per week, twenty four (24) hours per day. Permitted Use shall not
include (a) offices or agencies of any foreign government or political
subdivision thereof,(b)offices any agency or bureau of any state, county or city
government; (c) offices of any health care professionals; (d) schools or other
training facilities which are not ancillary to corporate, executive or
professional office use; or (e) retail or restaurant uses.
1.21. "Project" shall mean the two buildings located at 5667 Gibraltar
Drive, Pleasanton, California (Gibraltar Center II) and 5731 W. Las Positas
Drive, Pleasanton, California (Gibraltar Center I), the parking and common areas
affiliated therewith, and the real property on which the buildings and the
parking and common areas are located.
1.22. "Rent" shall mean Net Rent plus Additional Rent.
1.23. "Rentable Area" The Rentable Area of the Leased Premises is agreed
for all purposes of this Lease to be the amount stated on the Basic Lease
Information.
1.24. "Security Deposit" shall mean the amount specified on the Basic
Lease Information sheet and more particularly described in Section 5.14.
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1.25. "Substantial Completion" shall mean (and the Leased Premises shall
be deemed "Substantially Complete") when (i) installation and testing of Tenant
Improvements and Landlord's Improvements has occurred; (ii) Tenant has access to
Leased Premises; (iii) basic services (as described in Section 4.01) are
------------
available to the Leased Premises; (iv) Tenant's architect has issued a
certificate of
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Substantial Completion with respect to the Leased Premises; and (v) a
certificate of occupancy or its equivalent or a temporary occupancy permit for
the Leased Premises has been issued by appropriate governmental
authorities(excluding any temporary occupancy permit issued for the temporary
offices during the construction of Tenant' Improvements described herein).
Substantial Completion shall be deemed to have occurred notwithstanding a
requirement to complete "punchlist" items or similar corrective work. For
purposes of the Gibralter II Term Commencement Date, the term Substantial
Completion shall mean when Tenant obtains a certificate of occupancy or its
equivalent or a temporary occupancy permit for that portion of the Gibralter II
used as Tenant's service management center and approximately I 0,000 square feet
of data center space currently described as "Tenant's Phase II Buildout" plans
has been issued by appropriate governmental authorities (excluding any temporary
occupancy permit issued for the temporary offices during the construction of
Tenant Improvements described herein).
1.26. [Intentionally deleted.]
1.27. "Tenant Improvements" shall have the meaning given in Exhibit B.
---------
1.28. "Tenant's Broker" shall mean the individual or corporate broker
identified on the Basic Lease Information sheet as the broker for Tenant.
1.29. "Tenant's Physical Possession Date" shall mean the execution date of
this Lease with respect to Gibralter II, and no later than October 15, 1999 with
respect to Gibralter I. If possession of Gibralter I has not been delivered by
Landlord to Tenant by October 15, 1999, then the Gibralter I Term Commencement
Date shall be increased by an equal number of days. Tenant will have access to
Gibralter I prior to Tenant's Physical Possession Date for Gibralter, upon
reasonable notice to Landlord, for sitework.
1.30. "Tenant's Proportionate Share" is specified on the Basic Lease
Information sheet and is based on the percentage which the Rentable Area of the
Leased Premises bears to the total Rentable Area of the Project.
1.31. "Term" shall mean the period commencing with the Term Commencement
Date and ending at midnight on the Term Expiration Date.
1.32. "Term Commencement Date" shall mean the Gibralter I Term
Commencement Date with respect to Gibralter I, and the Gibralter II Term
Commencement Date with respect to Gibralter II.
1.33. "Term Expiration Date" shall mean the date set forth in the Basic
Lease Information sheet, unless sooner terminated pursuant to the terms of this
Lease or unless extended pursuant to the provisions of Section 8.01.
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1.34. Other Terms. Other terms used in this Lease and on the Basic Lease
Information sheet shall have the meanings given to them herein and thereon.
Article 2.
Leased Premises
2.01. Lease. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Leased Premises upon all of the terms, covenants and
conditions set forth in this Lease.
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2.02. Acceptance of Leased Premises. Tenant acknowledges that: (a) it has
been advised by Landlord, Landlord's Broker and Tenant's Broker, if any, to
satisfy itself with respect to the condition of the Leased Premises (including,
without limitation, the HVAC, electrical, plumbing and other mechanical
installations, fire sprinkler systems, security, environmental aspects, and
compliance with applicable laws, ordinances, rules and regulations) and the
present and future suitability of the Leased Premises for Tenant's intended use;
(b) Tenant has made such inspection and investigation as it deems necessary with
reference to such matters arid assumes all responsibility therefor, except as
otherwise specifically provided in this Lease, as the same relate to Tenants
occupancy of the Leased Premises and the term of this Lease; and (c) neither
Landlord nor Landlord's Broker nor Tenant's Broker nor any of Landlord's agents
has made any oral or written representations or warranties with respect to the
condition, suitability or fitness of the Leased Premises other than as may be
specifically set forth in this Lease. Tenant accepts the Leased Premises in its
AS IS condition existing on the date Tenant executes this Lease, subject to all
matters of record and applicable laws, ordinances, rules and regulations, and
subject to Landlord's warranties and representations contained herein, and
subject to Landlord's Shell Improvement obligations as set forth in Exhibit B
---------
Schedule B(1) hereto. Tenant acknowledges that neither Landlord nor Landlords
- -------------
Broker nor any of Landlord's agents has agreed to undertake any alterations or
additions or to perform any maintenance or repair of the Leased Premises except
for the routine maintenance and janitorial work specified herein and except as
may be expressly set forth in Exhibit B.
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2.03. [Intentionally Deleted.]
2.04. Reservation of Rights. Landlord reserves the right from time to time,
so long as reasonable access and basic services to the Leased Premises remain
available, to install, use, maintain, repair, relocate and/or replace pipes,
conduits, wires and equipment within and around the Building and to do and
perform such other acts and make such other changes in, to or with respect to
the Building or the Project (including without limitation with respect to the
driveways, parking areas, walkways and entrances to the Project) as Landlord
may, in the exercise of sound business judgment, deem to be appropriate. In
connection therewith, Landlord shall have the right to close temporarily any of
the Common Areas so long as reasonable access to the Leased Premises remains
available. All such Landlord work described above shall be done only with the
prior approval (which shall not be unreasonable withheld) and coordination with
Tenant so as not to unreasonably interfere with Tenant's business, reasonable
security procedures or to cause any posed threat to the design or use of
Tenant's data center or collocation facilities.
2.05. Associated Rights Granted to Tenant.
(a) Tenant shall have the right (collectively, the "Associated
Rights") to do the following or install at Tenant's cost the following equipment
in the areas (the "Associated Rights Area") located within the Project as
designated by Landlord, in the exercise of its discretion as provided below:
(1) Core Drilling. Subject to Landlord's reasonable approval,
-------------
Tenant shall have the right to core drill or otherwise penetrate the concrete
stab floor of the Leased Premises and/or Building in order: (i) to install
conduits and fiber/wire/cable therein; (ii) to make necessary electrical
connections; (iii) to make necessary HVAC connections; and, (iv) to bolt and/or
anchor Tenant's computer hardware and telecommunications racks and equipment.
(2) Dry Coolers / Condensing Units. Subject to Landlord's
------------------------------
reasonable approval, and that of the Hacienda Owners Association arid the City
Of Pleasanton, Tenant shall have the right to install dry coolers/ condensing
units, necessary for Tenant's RVAC system in a location within reasonably
4
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close proximity to the Leased Premises, in a mutually acceptable location,
either at ground level or on the roof of the Building.
(3) Fiber Optic Connectivity. Landlord shall cooperate with
------------------------
Tenant in granting selected by Tenant, for the purpose of providing Tenant with
such connectivity; however, the cost of providing such fiber optic access to the
Building shall be home by Tenant. Tenant shall require at least four (4) points
of diverse entry at opposing ends of the Building with not less that fifty (50)
foot separation. To the extent available for use and if desirable by Tenant,
Tenant shall have the right to use existing fiber ducts installed by Landlord.
(4) Intra-Building Risers. Tenant shall have the right to access
---------------------
the Building's risers for vertical and horizontal telecommunications wire/cable
distribution to the Leased Premises, and for mechanical distribution and for
electrical distribution; however, the cost of providing additional riser access
to the Building shall be home solely by Tenant. If desired by Tenant, Landlord
shall cooperate, at no expense to Landlord, with Tenant in creating a separate
and secure MPOE (minimum point of entry) on the ground floor of the Building, in
a location mutually agreed upon by Landlord and Tenant, with the square footage
of such area, and the rent applicable thereto, to be part of the Leased
Premises.
(5) Satellite Dish/Antennae. Subject to the approval by the
-----------------------
Hacienda Owners' Association and the City of Pleasanton, which, if required,
shall be obtained by Tenant at its expense, Tenant may, at its own expense,
install on the roof of the Building such antennae, satellite dish or similar
equipment as may be required to conduct its business, at such locations and in
such quantities as are reasonably approved by Landlord. Tenant shall adhere to
industry standards for installation and workmanship, all work to be completed to
Landlord's reasonable satisfaction. All engineering and design work shall be
undertaken by Tenant, at its sole expense. Upon termination of the Lease, Tenant
shall, if so requested by Landlord, remove all of Tenant's equipment and shall
repair, to Landlord's reasonable satisfaction, any damage caused by the
installation or removal of such equipment. To maintain any roof warranty of the
Building, Tenant shall use such roofing contractors as directed by Landlord.
(6) Emergency Generators. Landlord shall grant Tenant the right
-------------------
to install upon the Leased Premises, within close proximity to the Building and
to Tenant's main electrical panel, in a mutually acceptable location, three (3)
emergency generators, sized between 800 and 1250 KVA, with accompanying fuel
capacities to totaling approximately 15,000 gallons. Any fuel tank(s) shall be
located above ground and designed to the specifications of applicable
governmental authorities. Said generators shall be properly screened. Aside from
Landlord's cooperation, all costs to install the foregoing shall be at Tenant's
expense.
(7) Underground Boring. Tenant shall have the right to lay four
------------------
separate, distinct routes of underground fiber optic cable to the Leased
Premises, originating and entering either or both of the two buildings that
constitute the Building at opposing sides of each of such buildings, with a
separation of not less that fifty feet. The exact location of these routes are
yet undetermined. Tenant shall utilize computer driven underground directional
boring equipment to "trench" for its cable installation without disturbing the
sidewalk, landscape areas or the parking area with the possible exception of a
small "insertion" areas. Tenant will utilize expert underground detection
services to locate and avoid any utility or similar lines or structures located
below the driveway surface. Further, Tenant shall indemnify, defend and hold the
Landlord harmless from any potential liability from Tenant's underground boring
activities. Tenant shall submit to Landlord, for Landlord's prior approval, the
desired route of all underground boring.
5
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(8) Fire Protection & Life Safety. Because of the nature of the
-----------------------------
costly computer and telecommunications equipment that Tenant will locate within
the Leased Premises, a water-based fire sprinkler system would cause extensive
damage to Tenant's equipment in the event of a discharge. As a result, within a
portion of the Leased Premises, Tenant intends to install and shall have the
right to install an additional fire suppression system and intends to take steps
to modify any existing fire sprinkler system within the Leased Premises to avoid
a water discharge unless a real fire threat exists- Said modifications may
include the installation of high temperature sprinkler heads and the
modification of the sprinkler control system affecting the Leased Premises such
that the sprinkler system will be a "dry-pipe", "pre-action" system controlled
by a fire sensor that will not pressurize the pipes with water until the sensor
"reads" a fire. Tenant will comply with the requirements of the local fire
protection authorities. Landlord will cooperate fully with Tenant in Tenant's
efforts to install a fire suppression system, including redundant fire
suppression systems, such as FM-200 or such other similar fire suppression
agent. Tenant shall be responsible for the restoration of the main sprinkler
distribution system.
(b) Tenant shall, at its cost, immediately repair and restore to its
prior condition any damage to the Leased Premises, the Building or the Project
caused by any of the foregoing and caused by the installation, operation or
maintenance of any equipment, fixtures and cables pursuant to this Section 2.05.
------------
If Tenant fails to repair and restore damage caused to the Leased Premises, the
Building or the Project within a reasonable time to effect such repair or
restoration, Landlord shall have the right to repair and restore such damage and
receive reimbursement from Tenant of all costs incurred by Landlord.
(c) No installation of equipment, fixtures or cables pursuant to
Tenant's Associated Rights, alterations, additions, or improvements shall be
made by Tenant without the prior written consent of Landlord, which shall not be
unreasonably withheld. Tenant shall obtain all necessary governmental permits
required for any installation, alteration, addition, or improvement approved by
Landlord and shall comply with all applicable governmental law, regulations,
ordinances, and codes.
Article 3.
Term, Use and Rent
3.01. Term. Except as otherwise provided in this Lease, the Term shall
commence upon the Term Commencement Date, and shall continue in full force for
the Tenn. Tenant shall be given access to the Leased Premises starting on the
Tenant's Physical Possession Date in order for Tenant, its agents, employees and
contractors to make site evaluations, and to install, if any, furniture,
telephone networks, computer networks and other improvements and subject to the
prior reasonable approval by Landlord. From the Tenants Physical Possession Date
through the Term Commencement Date, Tenant shall be subject to all of the
covenants in this Lease, except that Tenants obligation to pay Net Rent shall
commence in accordance with Section 3.03 below. From Tenant's Physical
------------
Possession Date through the Gibralter II Term Commencement Date and the
Gibraltar I Term Commencement Date respectively, Landlord shall make available
site services, including temporary utilities, at no expense to Tenant; however,
Tenant shall be responsible for any refuse disposal and any operating expenses
related to any temporary office use by Tenant. Notwithstanding any other
provision of this Lease to the contrary, if access to the Gibralter II Leased
Premises is not given to Tenant within fifteen (15) days of the Tenants Physical
Possession Date, then Tenant may, at its option, by notice in writing to
Landlord within fifteen (15) days thereafter, cancel this Lease in which event
neither Landlord nor Tenant shall have any further obligations hereunder. If
written notice of cancellation is riot received by Landlord within such fifteen
(15) day period, Tenant's right to cancel this Lease shall terminate and be of
no further force or effect. Notwithstanding any other provision of this Lease to
the contrary, if access to the Gibralter I Leased Premises is not given to
Tenant on or before
6
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November 15, 1999, Landlord shall be responsible and shall immediately pay
Tenant all costs incurred or to be incurred by Tenant to rectify Tenant's
construction delays to bring the construction schedule back to the original
schedule, which costs may include but not be limited to overtime work.
Throughout the Term of this Lease, Tenant shall have access to the Leased
Premises at all hours on all days of the year, subject to situations beyond the
control of Landlord. When the Term Commencement Date and the Term Expiration
Date have been ascertained, the parties shall promptly execute a Confirmation of
Term of Lease substantially in the form attached as Exhibit C.
---------
3.02. Use. Tenant shall use the Leased Premises solely for the Permitted
Use and for no other use or purpose, except as permitted by Landlord pursuant to
Landlord's written consent, which consent will not be unreasonably withheld,
conditioned or delayed. It shall not be deemed unreasonable for Landlord to
withhold its consent to a proposed change of use if the proposed use is one set
forth in Section 1.16 (a) through (e).
---------------- ---
3.03. Base Rent.
(a) Tenant shall pay the Base Rent to Landlord in accordance with the
schedule set forth on the Basic Lease Information sheet and in the manner
described below. Commencing with the first day of the first calendar month of
the Term, Tenant shall pay the Net Rent (consisting of Base Rent plus, when
applicable in accordance with Section 3.04 below, Tenants Proportionate Share of
------------
Basic Operating Cost) in monthly installments on or before the first day of each
calendar month during the Term and any extensions or renewals thereof, in
advance without demand and without any reduction, abatement, counterclaim or
setoff, unless otherwise specifically provided in this Lease, in lawful money of
the United States at Landlord's address specified on the Basic Lease Information
sheet or at such other address as may be designated by Landlord in the manner
provided for giving notice under Section 9.11 hereof.
------------
(b) If the Term commences on other than the first day of a month,
then the Base Rent provided for such partial month shall be prorated based upon
a thirty (30)-day month and the prorated installment shall be paid on the first
day of the calendar month next succeeding the Term Commencement Date together
with the other amounts payable on that day. If the Term terminates on other than
the last day of a calendar month, then the Net Rent provided for such partial
month shall be prorated based upon a thirty (30)-day month and the prorated
installment shall be paid on the first day of the calendar month in which the
date of termination occurs.
3.04. Tenant's Proportionate Share of Basic Operating Cost.
(a) Commencing on the Term Commencement Date and continuing through
the remainder of the Term, Tenant shall pay to Landlord Tenant's Proportionate
Share of the Basic Operating Cost attributable to each Computation Year.
(b) During the first Computation Year, on or before the flat day of
each month during such Computation Year, Tenant shall pay to Landlord one-
twelfth (1/12th) of Landlord's estimate of the amount payable by Tenant under
Section 3.04(a) as set forth in Landlord's written notice to Tenant delivered on
- ---------------
or before the Term Commencement Date. During the last month of each Computation
Year (or as soon thereafter as practicable), Landlord shall give Tenant notice
of Landlord's estimate of the amount payable by Tenant under Section 3.04(a) for
---------------
the following Computation Year. On or before the first day of each month during
the following Computation Year, Tenant shall pay to Landlord one-twelfth (1/12)
of such estimated amount, provided that if Landlord fails to give such notice in
the last month of the prior year, then
7
<PAGE>
Tenant shall continue to pay on the basis of the prior year's estimate until the
first day of the calendar month next succeeding the date such notice is given by
Landlord; and from the first day of the calendar month following the date such
notice is given, Tenant's payments shall be adjusted so that the estimated
amount for that Computation Year will be fully paid by the end of that
Computation Year. If at any time or times Landlord determines that the amount
payable under Section 3.04(a) for the current Computation Year will vary from
---------------
its estimate given to Tenant, Landlord, by not less than ten (10) business days'
notice to Tenant, may revise its estimate for such Computation Year, but not
more frequently that twice for any Computation Year, and subsequent payments by
Tenant for such Computation Year shall be based upon such revised estimate.
(c) Within sixty (60) days following the end of each Computation
Year, Landlord shall deliver to Tenant a statement of amounts payable under
Section 3.04(a) for such Computation Year prepared by Landlord's agent. If such
- ---------------
statement shows an amount owing by Tenant that is less than the payments for
such Computation Year previously made by Tenant, Landlord shall credit such
amount to the next payment(s) of Net Rent falling due under this Lease. If such
statement shows an amount owing by Tenant that is more than the estimated
payments for such Computation Year previously made by Tenant, Tenant shall pay
the deficiency to Landlord within ten (I 0) business days after delivery of such
statement. If, within two (2) years of Tenant s receipt of Landlord's statement,
Tenant notifies Landlord that Tenant desires to audit or review Landlord's
statement, Landlord shall cooperate with Tenant to permit such audit or review
during normal business hours. Landlord shall make available in the San Francisco
Bay Area at Landlord's, or at Landlord's election at Landlord's property
manager's, place of business, such books and records as are reasonably necessary
for Tenant to conduct and complete such audit. Tenant shall have the right to
make copies of such books and records at Tenant's sole cost and expense. Tenant
shall bear all other costs and expenses associated with Tenant's audit
(including fees of Tenant's auditor). Upon completion of the audit, Tenant shall
provide Landlord with a copy of the auditor's report. Within thirty (30) days of
completion of the audit, if Tenant desires to challenge Landlord's statement,
then Tenant shall provide Landlord with notice of challenge via called mail.
Within thirty (30) days of Landlord's receipt of Tenant's notice of challenge,
Landlord shall notify Tenant as to whether Landlord agrees or disagrees with the
conclusions reached in Tenant's auditor's report. Landlord's failure to respond
shall be deemed to constitute an agreement with the Tenant's auditor's report.
After Landlord's notice, Landlord and Tenant shall endeavor to resolve any
disagreements regarding Tenant's auditor's report. In the event such audit
reveals a discrepancy in Tenant's favor, and Landlord agrees with the
conclusions of Tenant's auditor, then Landlord shall credit the amount of such
discrepancy to the next payment(s) of Net Rent falling due under this Lease. In
the event such audit reveals a discrepancy in Landlord's favor, Tenant shall pay
the amount of the discrepancy to Landlord within ten (10) business days of
Landlord's acceptance of Tenant's auditor's report If the discrepancy in
Tenant's favor, as agreed to by Landlord, or determined by the arbitrator, is
greater than three percent (3%) of Tenant's Proportionate Share of Basic
Operating Cost paid by Tenant for the Computation Year being audited, Landlord
shall reimburse Tenant for all reasonable costs and expenses associated with
Tenant's audit (including fees of Tenant's auditor). Any such audit may only be
conducted by an independent nationally recognized accounting firm or a
nationally recognized real estate management or consulting firm that is not
being compensated by Tenant on a contingency fee basis. The failure of Tenant to
notify Landlord that Tenant desires an audit within one (1) year of Tenant's
receipt of Landlord's statement under this Section 3.04(c) shall constitute an
---------------
acceptance by Tenant of Landlord's statement and a waiver by Tenant of its right
to audit for such Computation Year. If Tenant commences an audit in accordance
with this Section 3.04(c), then such audit and the Tenant s auditor's report
---------------
must be completed within one hundred twenty (120) days of Tenant s notice to
Landlord of Tenant's desire to audit. Failure of Tenant to complete the audit
within such one hundred twenty (120) day period shall constitute an acceptance
by Tenant of Landlord's statement for such Computation Year. The respective
obligations of Landlord and Tenant under this Section 3.04(c) shall survive the
---------------
Term Expiration Date, and, if the Term Expiration Date is a day other
8
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than the last day of a Computation Year, the adjustment in Tenant's
Proportionate Share of Basic Operating Cost pursuant to this Section 3.04(c) for
---------------
the Computation Year in which the Term Expiration Date occurs shall be prorated
in the proportion that the number of days in such Computation Year preceding the
Term Expiration Date bears to three hundred sixty-five (365).
(d) Landlord shall have the same remedies for a default in the
payment of Tenant's Proportionate Share of Basic Operating Cost as for a default
in the payment of Base Rent.
(e) If the parties cannot agree on the results of Tenant's audit
within sixty (60) days following delivery of Tenant's auditor's report to
Landlord, then either party may commence arbitration with respect to the matters
disputed in Tenant's audit by notice to the other party ("Arbitration Notice").
The failure of Tenant to provide an Arbitration Notice within one hundred twenty
(120) days of Tenant's delivery of the Tenant's auditor's report to Landlord
shall constitute a waiver by Tenant of its right to arbitrate hereunder, and
except 'for such adjustments as have been agreed to by Landlord, Landlord's
statement provided under Section 3.04(c) shall be conclusive, and binding to
---------------
Tenant. Within thirty (30) days of the Arbitration Notice, Landlord and Tenant
shall jointly select an arbitrator, who shall be unaffiliated in any manner with
either Landlord or Tenant and shall have been active over the five (5) year
period ending on the date of such appointment in the management of comparable
commercial properties within the San Francisco Bay Area and shall have held the
designation of Certified Property Manager for an equivalent period of time.
Neither Landlord nor Tenant shall consult with such arbitrator as to his or her
opinion as to the disputed matters prior to the appointment. The determination
of the arbitrator shall be limited solely to issues raised by Tenant's auditor's
report or by Landlord's response to Tenant's auditors report. Such arbitrator
may hold hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within five (5) business days
after the appointment of the arbitrator any data and additional information that
such party deems relevant to the determination by the arbitrator and the other
party may submit a reply in writing within five (5) business days after receipt
of such data and additional information. The arbitrator shall conduct such
evidentiary hearings as the arbitrator deems necessary or appropriate.
(1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to the disputed matters in Tenant' s auditor's
report, and shall notify Landlord and Tenant of such determination.
(2) The decision of the arbitrator shall be binding upon
Landlord and Tenant.
(3) If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbitrator shall be made by the American
Arbitration Association.
(4) If Landlord and Tenant fail to agree upon other matters
relating to the arbitration, then the rules of the American Arbitration
Association shall govern such arbitration.
(5) The cost of arbitration shall be paid by the substantially
unsuccessful party.
(6) The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all parties.
(7) Judgment upon the award rendered by the arbitrator may be
entered by either party into any court having jurisdiction, or application may
be made to such court for a judicial recognition of the award or an order of
enforcement thereof, as the case may be.
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3.05. Basic Operating Cost.
(a) Basic Operating Cost shall mean all expenses and costs (but not
specific costs which are separately billed to or paid by particular tenants of
the Project of every kind and nature which Landlord shall pay or become
obligated to pay because of or in connection with the management, ownership,
maintenance, repair, preservation and operation of the Project and its
supporting facilities directly servicing the Project (determined in accordance
with generally accepted accounting principles, consistently applied) including,
but not limited to, the following:
(1) Wages, salaries and related expenses and benefits of all on-
site and off-site employees and personnel engaged in the operation, maintenance,
repair and security of the Project, to the extent such charges are directly
allocable to services rendered by the employees and personnel for the benefit of
the Project.
(2) [Intentionally deleted.]
(3) All supplies, materials, equipment and equipment rental used
in the operation, maintenance, repair and preservation of the Project.
(4) Utilities, including water, sewer and power, telephone,
communication and cable television facilities, lighting, heating, air
conditioning and ventilating the entire Project to the extent not billed
directly to Tenant.
(5) All exterior maintenance, janitorial, alarm and security
service, elevator and service agreements for the Project and the equipment
therein, including, without limitation, window cleaning, sidewalks, landscaping,
Building exterior and service areas, to the extent not billed to Tenant.
(6) A management cost recovery in an amount not to exceed a
commercially reasonable management cost recovery fee competitive in the
immediate market but in no events greater than three percent (3%) of all Rent
(excluding such management cost recovery) derived from the Project.
(7) Day-to-day ordinary and reasonable legal and accounting
services incurred to the extent attributable to the normal operation of the
Project, excluding those expenses incurred in lease negotiations, termination of
leases, extension of leases or legal costs incurred in proceedings by or against
any specific tenant.
(8) All insurance costs, including, but not limited to, the cost
of all risk property and liability coverage and rental income and earthquake
insurance applicable to the Project and Landlord's personal property used in
connection therewith, as well as commercially reasonable deductible amounts
applicable to such insurance; provided, however, that Landlord may, but shall
not be obligated to" carry earthquake insurance.
(9) Repairs, replacements and general maintenance (except for
repairs paid by proceeds of insurance or by Tenant or other tenants of the
Project or third parties, and alterations attributable solely to tenants of the
Project other than Tenant).
(10) All real estate or personal property taxes, possessory
interest taxes, business or license taxes or fees, service payments in lieu of
such taxes or fees, annual or periodic license or use fees,
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excises, transit charges, housing fund assessments, open space charges,
assessments, bonds, levies, fees or charges, general and special, ordinary and
extraordinary, unforeseen as well as foreseen, of any kind which are assessed,
levied, charged, confirmed or imposed by any public authority upon the Project
(or any portion or component thereof), its operations, this Lease, or the Rent
due hereunder (or any portion or component thereof), except: (i) inheritance or
estate taxes imposed upon or assessed against the Project, or any part thereof
or interest therein, and (ii) Landlord's personal or corporate income, gift or
franchise taxes.
(11) Amortization over the useful life (together with reasonable
financing charges) of capital improvements made to the Project subsequent to the
Term Commencement Date which are designed to improve the operating efficiency of
the Project, or which may be required by governmental authorities, including
those improvements required for energy conservation and for the benefit of
individuals with disabilities ("ADA Improvements").
(b) With respect to Section 3.05(a)(11) above, to the best of
-------------------
Landlord's knowledge, the Project is in compliance with the Americans with
Disabilities Act ("ADA"). ADA Improvements, as defined in Section 3.05(a)(11)
-------------------
above, includes ADA compliance work in any part of the Project required by
governmental authorities due to changes in law, rules or regulations after the
date of this Lease. ADA Improvements, for the purposes of Section 3.05(a)(11)
-------------------
shall not include any ADA compliance work in other tenant's spaces in the
Project which is triggered by virtue of tenant improvement work in such space.
Tenant shall be responsible for one hundred percent (100%) of the cost of ADA
compliance work triggered by any tenant improvements (or any subsequent
alterations or additions made by Tenant) subsequent to the Commencement Date;
however, prior to the Term Commencement Date, Landlord shall cause, at
landlord's sole cost and expense, ADA path of travel compliance outside of the
Building and provided further Landlord and not Tenant shall be responsible for
ADA compliance work exterior to the building triggered by the Tenant
Improvements which Landlord was obligated to comply with on the Commencement
Date. Tenant shall promptly reimburse Landlord for any costs incurred by
Landlord with respect thereto. If not otherwise paid for by Tenant, Landlord
shall be entitled to deduct from Landlord's Contribution any amount incurred by
Landlord with respect to ADA compliance work triggered by the Tenant
Improvements.
(c) In the event any of the Basic Operating Costs are riot allocable
solely to the Building or are not provided on a uniform basis, Landlord shall
make an appropriate and equitable adjustment, in Landlord's sole and absolute
discretion, to the relevant cost allocations to the Building and Tenant shall
pay its proportionate share of such Basic Operating Costs allocable solely to
the Building and 100% of such Basic Operating Costs allocable solely to the
Leased Premises.
(d) [Intentionally deleted.]
(e) The following items shall be excluded from Basic Operating Costs:
(i) depreciation on the Building and the Project; (ii) [intentionally deleted] ;
(iii) [intentionally deleted] ; (iv) [intentionally deleted] ; (v) the cost of
any improvements or equipment which would be properly classified as capital
expenditures under generally accepted accounting principles (except for any
capital expenditures expressly included in Section 3.05(a), including, without
---------------
limitation, Section 3.05(a)(11)); (vi) [intentionally deleted]; (vii)
---------------------
[intentionally deleted]; (viii) [intentionally deleted]; (ix) interest,
principal, points and fees, amortization or other costs associated with any debt
and rent payable under any lease to which this Lease is subject and all costs
and expenses associated with any such debt or lease and ground lease rent,
irrespective of whether this Lease is subject or subordinate thereto; (x)
depreciation or amortization, other than as specifically enumerated above in the
definition of Basic Operating Costs; (xi) expenses for any item or service which
Tenant pays directly to a third party or separately reimburses Landlord and
expenses incurred by Landlord to the extent the same are reimbursed from any
other tenants, occupants of the property, or third parties;
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(xii) costs of any item, service or other benefit of a type which are not
available to Tenant but which are available to other tenants or occupants, and
costs for which Landlord is reimbursed by other tenants of the Building other
than through payment of tenants' shares of Basic Operating Costs; (xiii) costs
of special services rendered to individual tenants (including tenant) for which
a special charge is made; (xiv) expenses incurred by Landlord to prepare,
renovate, repaint, improve, redecorate or perform any other work in any space
leased to an existing tenant or prospective tenant of the Building; (xv)
expenses incurred by Landlord to lease space to new tenants or to retain
existing tenants including leasing commissions, advertising and promotional
expenditures; (xvi) increases in real property taxes of the Property to the
extent that they constitute real property taxes assessed on improvements to the
Property for other tenants or for construction of new buildings; (xiii) costs
and expenses related to the operation of any commercial concession at the
Building when such commercial concessions are not for the benefit of the
Building; (xiv) charges, including applicable taxes, for electricity, steam,
water and other utilities for which Landlord is entitled to separate
reimbursement from any third party, including without limitation, any other
tenant of the Building; (xx) costs for which Landlord has been directly
compensated from other sources; (xxi) any expenses for repairs or maintenance
which are reimbursed from third parties through warranties or service contracts
or otherwise; (xxii) expenses for the replacement of any item installed by
Landlord covered under warranty; (xxiii) Landlord's general overhead and general
administrative expenses, including without limitation, the salaries of any
officer of Landlord other than as provided in Section 3.05(a): (xxiv) salaries
---------------
of (i) employees above the grade of building superintendent or building manager,
and (ii) that portion of employee expenses for employees whose time is not spent
directly and solely in the operation of the Property; (xxv) the cost of supplies
and services provided by subsidiaries and affiliates of Landlord in excess of
those provided by independent suppliers and contractors of comparable buildings
within in the vicinity of the Property; (xxvi) any portion of any cost which
represents a profit to or a surcharge by Landlord; (xxvii) costs incurred by
Landlord to perform or correct any repairs, capital additions, alterations,
replacements or other costs of correcting latent or patent defects in the
design, materials, equipment, workmanship or construction of the Building,
excluding Tenant Improvements; (xxviii) the costs of any items (including but
not limited to, costs of repair or reconstruction of any portion of the
Building) for which Landlord is entitled to reimbursement from insurance carried
by Landlord; (xxix) expenses incurred by Landlord for repairs or other work
occasioned by fire, windstorm, or other insurable casualty or condemnation for
which Landlord is required to maintain insurance hereunder excluding any
deductible; (xxx) costs necessitated by or resulting from the negligence or
willful misconduct of Landlord, its vendors, agents, employees and/or
independent contractors; (xxxi) any and all costs incurred by Landlord to comply
with state, federal, local law, regulation and/or ordinance, except as otherwise
provided in this Lease; (xxxii) costs, fines, interest or penalties incurred due
to Landlords violation of any law or governmental regulation; (xxxiii)
Landlord's incremental costs incurred by reason of Landlord's breach of any
leases in the Building and any costs incurred by reason of the breach by other
tenants in the Building; (xxxiv) leasing commissions, incurred by Landlord to
resolve disputes, enforce or negotiate lease terms with other tenants,
prospective tenants or occupants of the Property, or in connection with the
enforcement or violation by Landlord or such tenant or occupant of any lease;
(xxxv) attorneys' fees, brokerage fees and other expenses, incurred in
connection with any financing, sale or syndication of the Property; (xxxvi) the
operating expenses incurred by Landlord relative to retail stores, hotels and
any specialty service in the Building or on the Property; (xxxvii) advertising
and promotional expenditures and costs of signs in or on the Building
identifying the owner of the Building or other tenant's signs; (xxxviii) costs
arising from Landlord's charitable or political contributions; (xxxix) reserves;
(xxxx) any costs incurred in connection with any "year 2000" glitches; and,
(xxxxi) other items not customarily included as operating expenses for similar
buildings. The determination of Basic Operating Costs shall be in accordance
with generally accepted accounting principles consistently applied.
12
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Article 4.
Landlord's Covenants
4.01. Basic Services. Landlord shall operate the Project to a standard of
quality consistent with that of other similar-class office projects in the
immediate geographical area, and shall:
(a) Timely administer improvement of the Leased Premises in
accordance with Exhibit B (if any).
---------
(b) Furnish Tenant during Tenant's occupancy of the Leased Premises
the following basic services:
(i) Hot and cold water at those points of supply provided for
general use of other tenants in the Project; central heat and air conditioning
in season, during the Building hours of operation specified in the rules and
regulations for the Project adopted pursuant to Section 5.17 and at such
------------
temperatures and in such amounts as are considered by Landlord to be standard
for the comfortable use and occupancy of the Leased Premises or, in all events,
as may be permitted or controlled by applicable laws, ordinances, rules and
regulations.
(ii) Structural and exterior maintenance (including exterior
glass and glazing) and routine maintenance, repairs and electric lighting
service for all public areas and service areas of the Project in the manner and
to the extent deemed by Landlord to be standard.
(iii) [Intentionally deleted.]
(iv) [Intentionally deleted.]
(v) Exterior Building Standard lamps, bulbs, starters and
ballasts used in the Leased Premises.
(vi) Elevator service.
(c) Landlord shall not be liable for damages to either person or
property, nor shall Landlord be deemed to have evicted Tenant, nor shall there
be any abatement of Rent, nor shall Tenant be relieved from performance of any
covenant on its part to be performed under this Lease by reason of any (i)
deficiency in the provision of basic services; (ii) breakdown of equipment or
machinery utilized in supplying services; or (iii) curtailment or cessation of
services due to causes or circumstances beyond the reasonable control of
Landlord or by the making of the necessary repairs or improvements, unless such
deficiency, breakdown, curtailment or cessation is due to the negligence or
willful misconduct of Landlord. Landlord shall use reasonable diligence to make
such repairs as may be required to machinery or equipment within the Project to
provide restoration of services and, where the cessation or interruption of
service has occurred due to circumstances or conditions beyond Project
boundaries, to cause the same to be restored, by diligent application or request
to the provider thereof Due to the unique nature of Tenant's business, Landlord
acknowledges that time is of the essence in providing the above services.
(d) Notwithstanding anything in this Lease to the contrary, Tenant
may contract directly for all utilities with the respective local utility
company and Tenant may contract directly for janitorial services with Basic
Operating Costs being adjusted accordingly.
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<PAGE>
(e) Landlord warrants arid represents to Tenant that on the Term
Commencement Date the Leased Premises shall be in full compliance with all
applicable federal, state, and local laws, rules, regulations and orders
including environmental laws and building codes. With respect to the American
With Disabilities Act, as of the Term Commencement Date, Landlord shall cause
the path of travel outside the Leased Premises to be ADA compliant with all such
costs of compliance to be home by Landlord. The foregoing notwithstanding, this
representation and warranty shall terminate upon the sale of the Project in an
arm's-length transaction between unrelated parties unless the purchaser(s)
acquires the Project with knowledge of any dispute between Tenant and Landlord
regarding the above representation and warranty but in no event shall it
terminate sooner than completion of the initial Tenant Improvements.
4.02. Extra Services. Landlord shall provide to Tenant at Tenant's sole
cost and expense (and subject to the limitations hereinafter set forth) the
following extra services:
(a) Such extra, cleaning and janitorial services required if Tenant
Improvements necessitate extra cleaning efforts;
(b) Additional air conditioning and ventilating capacity required by
reason of any electrical, data processing or other equipment, facilities or
services required to support the same, in excess of that which would be required
for Building Standard Improvements, when prearranged with Landlord;
(e) Heating, ventilation, air conditioning, lighting or extra
electrical service provided by Landlord to Tenant during hours other than the
Building hours of operation specified in the rules and regulations for the
Project adopted pursuant to Section 5.17, which shall provide for Building hours
------------
of operation of 7:00 am. to 7:00 p.m., Monday through Friday (excluding
holidays);
(d) Maintaining and replacing non-Building Standard lamps, bulbs,
starters and ballasts (whether or not the light fixtures were installed as part
of the Tenant Improvements) which Tenant requests Landlord to replace;
(e) Repair and maintenance service which is the obligation of Tenant
under this Lease which Tenant fails to repair after prior notice;
(f) Repair, maintenance or janitorial service to the Leased Premises,
the Common Areas or the Project parking area which is required as a result of
the acts or omissions of tenant, its agents, employees, contractors, invitees or
licensees; and
(g) Any basic service in amounts reasonably determined by Landlord to
exceed the amounts required to be provided under Section 4.01(b), but only if
---------------
Landlord elects to provide such additional or excess service and notifies Tenant
of such additional charges in advance of Tenant's use.
The cost chargeable to Tenant for all extra services shall constitute
Additional Rent and shall include a management fee payable to Landlord to be
negotiated in advance by Landlord and Tenant. Additional Rent shall be paid
monthly by Tenant to Landlord concurrently with the payment of Base Rent.
4.03. Window Coverings. Tenant shall not place or maintain any exterior
window coverings, blinds, curtains or drapes without Landlord's prior written
approval, which consent shall not be unreasonably withheld; conditioned or
delayed that are not otherwise specified in Tenant's Plans.
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<PAGE>
4.04. Graphics and Signage. Tenant shall have the right, at Tenant's sole
expense, to Building parapet and/or "eyebrow" signage for corporate
identification and/or monument signage (on either or both of the monuments along
Gibraltar Drive and West Las Positas Drive). The location, design, content and
size of such signage shall be subject to Landlord's reasonable approval and be
consistent with the development agreement, if any, exiting between Landlord, the
City of Pleasanton and the Hacienda Business Park Owners Association or such
other preexisting signage criteria. Landlord shall cooperate fully with Tenant
in securing such signage rights; however, the costs of design, fabrication,
installation, permitting and restoration shall be home by Tenant. Tenant shall
have the right to use its standard corporate logo/graphics at the entrance to
the Leased Premises and in each of the building lobbies, subject to Landlord's
reasonable approval. All other signs, notices, advertisements and graphics of
every kind or character, visible in or from the exterior of the Leased Premises
shall be subject to Landlord's prior written approval, which shall not be
unreasonably withheld. Landlord may remove, without notice to and at the expense
of Tenant, any sign, notice, advertisement or graphic of any kind inscribed,
displayed or affixed in violation of the foregoing requirement if Tenant fails
to removal such nonconforming signage after notice. Landlord shall be entitled
to revise the Project graphics and signage standards at any time, at Landlord's
sole expense.
4.05. [Intentionally deleted.]
4.06. Repair Obligation. Landlord shall maintain the Building in good
condition and repair comparable to other buildings in Hacienda Business Park and
shall not unreasonably defer any repair, maintenance or replacement expenses.
Landlord's obligation with respect to maintenance and repair shall be limited to
(i) the structural portions of the Building; (ii) the exterior walls of the
Building, including exterior glass and glazing; (iii) the exterior roof; (iv)
Landlord mechanical, electrical, plumbing and life safety systems; (v) the
Common Areas; (vi) the Project parking area; and (vii) landscaped areas.
However, Landlord shall not have any obligation to repair damage caused by
Tenant, its agents, employees, contractors, invitees or licensees. Landlord
shall have the right, but not the obligation, to undertake work of repair which
Tenant is required to perform under this Lease and which Tenant fails or refuses
to perform in a timely and efficient manner after notice from Landlord. Tenant
shall reimburse Landlord upon demand, as Additional Rent, for all costs incurred
by Landlord in performing any such repair for the account of Tenant, together
with an amount equal to fifteen percent (15%) of such costs to reimburse
Landlord for its administration and managerial effort Except as specifically set
forth in this Lease, Landlord shall have no obligation whatsoever to maintain or
repair the Leased Premises or the Project. The parties intend that the terms of
this Lease govern their respective maintenance and repair obligations. Tenant
expressly waives the benefit of any statute now or hereafter in effect to the
extent it is inconsistent with the terms of this Lease with respect to such
obligations or which affords Tenant the right to make repairs at the expense of
Landlord or terminate this Lease by reason of the condition of the Leased
Premises or any needed repairs.
4.07. Peaceful Enjoyment. Landlord covenants with Tenant that upon Tenant
paying the Rent and all other charges required under this Lease and performing
all of Tenant's material covenants and agreements herein contained, Tenant shall
peacefully have, hold and enjoy the Leased Premises subject to all of the terms
of this Lease and to any deed of trust, mortgage, ground lease or other
agreement to which this Lease may be subordinate. This covenant and the other
covenants of Landlord contained in this Lease shall be binding upon Landlord and
its successors only with respect to breaches occurring during its or their
respective ownerships of Landlord's interest hereunder and binding on those
successors who have knowledge of the prior Landlord's breaches.
15
<PAGE>
Article 5.
Tenant's Covenants
5.01. Payments by Tenant. Tenant shall pay Rent at the times and in the
manner provided in this Lease. All obligations of Tenant hereunder to make
payments to Landlord shall constitute Rent and failure to pay the same when due
shall give rise to the rights and remedies provided for in Section 7.08. If
------------
there is more than one Tenant, the obligations imposed under this Lease upon
Tenant shall be joint and several.
5.02. Tenant Improvements. The Tenant Improvements shall be installed and
constructed by Tenant pursuant to Exhibit B. All Tenant Improvements, other than
---------
all furniture, equipment, trade fixtures, such items that are easily removable
by Tenant and the items specifically described on Exhibit B Schedule 3 which
--------------------
Landlord and Tenant specifically agree and covenant shall belong to Tenant,
shall become the property of Landlord upon installation and shall be surrendered
to Landlord without compensation to Tenant upon termination of this Lease by
lapse of time or otherwise, subject to Landlord's right to require their removal
in the same manner as provided in Section 5.07.
------------
5.03. Taxes on Personal Property. In addition to, and wholly apart from its
obligation to pay Tenant's Proportionate Share of Basic Operating Costs, Tenant
shall be responsible for, and shall pay prior to delinquency, all taxes or
governmental service fees, possessory interest taxes, fees or charges in lieu of
any such taxes, capital levies, and any other charges imposed upon, levied with
respect to, or assessed against Tenant's personal property and on its interest
pursuant to this Lease. To the extent that any such taxes are not separately
assessed or billed to Tenant, Tenant shall pay the amount thereof as invoiced to
Tenant by Landlord.
5.04. Repairs by Tenant. Tenant shall be obligated to maintain and repair
the Leased Premises, to keep the same at all times in good order, condition and
repair, and, upon expiration of the Term, to surrender the same to Landlord in
the same condition as on the Term Commencement Date, reasonable wear and tear,
taking by condemnation, and damage that is Landlord's responsibility under
Section 7.07 not caused by Tenant, its agents, employees, contractors, invitees
- ------------
and licensees excepted. Tenant's obligations shall include, without limitation,
the obligation to maintain and repair all walls, floors, ceilings and fixtures
and to repair all damage caused by Tenant, its agents, employees, contractors,
invitees and others using the Leased Premises with Tenant's expressed or implied
permission. In no event shall Tenant be obligated to make any repairs
necessitated by, or to repair damage due, in whole or in part, to any act,
omission or negligence of Landlord or Landlord's agents, employees, licensees or
contractors. At the written request of Tenant, Landlord shall perform the work
of maintenance and repair constituting Tenant's obligation under this Section
-------
5.04 at Tenant's sole cost and expense and as an extra service to be rendered
- ----
pursuant to Section 4.02(e). Any work of repair and maintenance performed by or
---------------
for the account of Tenant by persons other than Landlord shall be performed by
contractors approved by Landlord and in accordance with procedures Landlord
shall from time to time establish, which approval shall not be unreasonably
withheld. Tenant shall give Landlord prompt notice of any damage to or defective
condition in any part of the Building's mechanical, electrical, plumbing, life
safety or other system servicing, located in or passing through the Leased
Premises. Tenant shall have the right, but not the obligation, to undertake work
of repair which Landlord is required to perform under this Lease and which
Landlord fails or refuses to perform in a timely and efficient manner after
notice from Tenant. Landlord shall reimburse Tenant upon demand unless Landlord
disputes Landlord's obligation. In the event of such dispute, then such dispute
shall be submitted to arbitration in accordance with the terms of Exhibit F
---------
attached hereto. In the event the arbitrator finds in its written decision in
Tenant's favor and Landlord fails to pay Tenant, then Tenant may offset Rent up
to the amount of the arbitrator's award, together with an amount equal to
fifteen percent (15%) of such costs to reimburse Tenant for its administration
and managerial effort.
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<PAGE>
5.05. Waste. Tenant shall not commit or allow any waste or damage to be
committed in any portion of the Leased Premises or the Project.
5.06. Assignment or Sublease.
(a) Tenant shall not voluntarily or by operation of law assign,
transfer or encumber (collectively "Assign") or sublet all or any part of
Tenant's interest in this Lease or in the Leased Premises without Landlord's
prior written consent given under and subject to the terms of this Section 5.06.
------------
Notwithstanding the foregoing, the Tenant may, upon notice to the Landlord, in
whole or in part, sublet the Leased Premises, or Assign this Lease to (i) an
affiliate or subsidiary of the Tenant, or (ii) an entity arising as a result of
merger, acquisition or consolidation, so long as Tenant shall remain responsible
in case of default, and, provided, further, no such permitted subletting or
assignment shall relieve the Tenant of liability under this Lease.
(b) Except as permitted in Section 5.06(a), if tenant desires to
---------------
Assign this Lease or any interest herein or sublet the Leased Premises or any
part thereof, Tenant shall give Landlord written notice of such intent. Tenant's
notice shall specify the date the proposed assignment or sublease would be
effective and be accompanied by information pertinent to Landlord's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or subtenant, including, without
limitation, its name, business and financial condition, financial details of the
proposed transfer, the intended use (including any modification) of the Leased
Premises, and exact copies of all of the proposed agreement(s) between Tenant
and the proposed assignee or subtenant. Tenant shall promptly provide Landlord
with (i) such other or additional information or documents reasonably requested
(within ten (10) days after receiving Tenant's notice) by Landlord, and (ii) an
opportunity to meet and interview the proposed assignee or subtenant, if
requested by Landlord.
(c) Landlord shall have a period of ten (10) days following such
interview and receipt of such additional information (or fifteen (15) days from
the date of Tenant's original notice if Landlord does not request additional
information or an interview) within which to notify Tenant in writing whether or
not Landlord consents to the request by Tenant to Assign this Lease or sublet
such space, such consent not to be unreasonably withheld, conditioned or
delayed, so long as the use of the Leased Premises by such proposed assignee or
sublessee would be a Permitted Use, the proposed assignee or sublessee is of
sound financial condition as determined by Landlord in its reasonable
discretion, the proposed assignee or sublessee executes such reasonable
assumption documentation as Landlord shall require, and the proposed assignee or
sublessee is not (x) already a tenant in the Building or (y) a party with whom
Landlord has been actively discussing the leasing of space in the Building.
Failure by Landlord to approve a proposed subtenant or assignee shall not cause
a termination of this Lease.
(d) In the event Tenant shall request the consent of Landlord to any
assignment or subletting hereunder, Tenant shall pay Landlord a processing fee
of $250.00 and shall reimburse Landlord for Landlord's reasonable attorneys'
fees incurred in connection therewith. All such fees shall be deemed Additional
Rent under this Lease.
(e) Any rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the (i) the Rent for the space being sublet
or assigned; (ii) tenant improvement costs incurred in connection with the
sublease and the remaining unamortized tenant improvement costs remaining at the
time of the sublease or assignment; (iii) brokerage commissions; (iv) reasonable
sublease marketing
17
<PAGE>
expenses; and (v) reasonable legal fees associated with such assignment or
sublease, shall be divided and paid as follows: forty percent (40%) to Tenant
and sixty percent (60%) to Landlord.
(f) [Intentionally deleted.]
(g) The consent of Landlord to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Tenant or to
any subsequent or successive assignment or subletting by the assignee or
subtenant. However, Landlord may consent to subsequent assignments and
sublettings of the Lease or sublease or amendments or modifications thereto,
without notifying Tenant or any other party liable on the Lease or sublease and
without obtaining their consent. Such action shall not relieve Tenant or any
such other party from liability under this Lease or a sublease.
(h) No assignment or subletting by Tenant shall relieve Tenant of any
obligation under this Lease. In the event of default by an assignee or subtenant
of Tenant or any successor of Tenant in the performance of any of the terms
hereof, Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee, subtenant or successor. Any
assignment or subletting which conflicts with the provisions hereof shall be
void and, at Landlord's option, shall constitute a default under this Lease.
5.07. Alterations, Additions and Improvements.
(a) Tenant shall not make or allow to be made any alterations or
additions in or to the Leased Premises without first obtaining the written
consent of Landlord, except for such alterations or additions for which a
building permit is not required or are not material in mature. Landlord's
consent will not be unreasonably withheld, conditioned or delayed with respect
to proposed alterations and additions which (i) comply with all applicable laws,
ordinances, rules and regulations; (ii) are compatible with and does not
adversely affect the Building and its mechanical, electrical, HVAC and life
safety systems; (iii) will not adversely affect the structural portions of the
Building; (iv) will not interfere with the use and occupancy of any other
portion of the Building by any other tenant, its employees or invitees; and (v)
will not trigger any additional costs to Landlord. Specifically, but without
limiting the generality of the foregoing, Landlord's right of consent shall
encompass plans and specifications for the proposed alterations or additions,
construction means and methods, the identity of any contractor or subcontractor
to be employed on the work of alterations or additions, and the time for
performance of such work. Tenant shall supply to Landlord any additional
documents and information reasonably requested by Landlord in connection with
Tenant's request for consent hereunder.
(b) Any consent given by Landlord under this Section 5.07 shall be
------------
deemed conditioned upon: (i) Tenant's acquiring all applicable permits required
by governmental authorities; (ii) Tenant's furnishing to Landlord copies of such
permits, together with copies of the approved plans and specifications, prior to
commencement of the work thereon; and (iii) the compliance by Tenant with the
conditions of all applicable permits and approvals in a prompt and expeditious
manner.
(c) Tenant shall provide Landlord with not less than five (5)
business days prior written notice of the work, unless in the event of an
emergency then Tenant shall use its best efforts to provide prior notice (and
shall provide notice thereafter as soon as practical) to Landlord, so as to
enable Landlord to post and record appropriate notices of non-responsibility.
All alterations and additions permitted hereunder shall be made and performed by
Tenant without cost or expense to Landlord. Tenant shall pay the contractors and
suppliers all amounts due to them when due and keep the Leased Premises and the
Project free from any and all mechanics', materialmen's and other liens and
claims arising out of any
18
<PAGE>
work performed, materials furnished or obligations incurred by or for Tenant. In
the event that the estimated cost of such alterations or additions exceed One
Million Dollars ($1,000,000) (excluding those improvements to be made by Tenant
prior to the Term Commencement Date) or in the event that Tenant is in monetary
default hereunder, Landlord may require, at its sole option, that Tenant provide
to Landlord, at Tenant's expense, a lien and completion bond in an amount equal
to at least one and one half (1 1/2) times the total estimated cost of any
alterations, additions or improvements to be made in or to the Leased Premises,
to protect Landlord against any liability for mechanics', materialmen's and
other liens and claims, and to ensure timely completion of the work and Landlord
is given the opportunity to post a notice of non responsibility. In the event
any alterations or additions to the Leased Premises are performed by Landlord
hereunder other than the initial Tenant Improvements, whether by prearrangement
or otherwise, Landlord shall be entitled to charge Tenant a five percent (5%)
administration fee in addition to the actual costs of labor and materials
provided. Such costs and fees shall be deemed Additional Rent under this Lease,
and may be charged and payable prior to commencement of the work.
(d) Any and all alterations, additions or improvements made to the
Leased Premises by Tenant and owned by Tenant, but excluding Tenant's furniture,
trade fixtures, equipment, personal property, telecommunications equipment,
property leased to Tenant and such other property listed on any attachment to
this Lease shall become the property of Landlord upon installation and shall be
surrendered to Landlord without compensation to Tenant upon the termination of
this Lease by lapse of time or otherwise unless (i) Landlord conditioned its
approval of such alterations, additions or improvements on Tenant's agreement to
remove them, or (ii) Landlord notifies Tenant in writing at lease six (6) months
prior to the Term Expiration Date that the alterations, additions and/or
improvements must be removed, in which case Tenant shall, by the Term Expiration
Date (or promptly thereafter), remove such alterations, additions and
improvements, repair any damage resulting from such removal and restore the
Leased Premises to their condition existing prior to the date of installation of
such alterations, additions and improvements. Notwithstanding anything to the
contrary set forth above, this clause shall not apply to movable equipment,
trade fixtures or furniture owned by Tenant. Tenant shall repair at its sole
cost and expense all damage caused to the Leased Premises and the Project by
removal of Tenant's movable equipment, trade fixtures or furniture and such
other alterations, additions and improvements as Tenant shall be required or
allowed by Landlord to remove from the Leased Premises.
(e) All alterations, additions and improvements permitted under this
Section 5.07 shall be constructed diligently, in a good and workmanlike manner
- ------------
with good and sufficient materials and in compliance with all applicable laws,
ordinances, rules and regulations (including, without limitation, building codes
and those related to accessibility and use by individuals with disabilities).
Tenant shall, promptly upon completion of the work and when same are available
to Tenant, furnish Landlord with "as built" drawings for any alterations,
additions or improvements performed under this Section 5.07.
------------
5.08. Compliance With Laws and Insurance Standards. Tenant shall not
occupy or use, or permit any portion of the Leased Premises to be occupied or
used in a manner that violates any applicable law, ordinance, rule, regulation,
order, permit, covenant, easement or restriction of record, relating in any
manner to the Project, or for any business or purpose which is disreputable,
objectionable or productive of fire hazard. Tenant shall not do or permit
anything to be done which would result in the cancellation, or in any way
increase the cost, of the all risk property insurance coverage on the Project
and/or its contents. Landlord represents that, as of the date of the Lease,
Tenant's intended uses of the Project as described in this Lease will not result
in the cancellation or in any way increase the cost of the all risk property
insurance described above greater than what is commercially reasonable. If
Tenant does or permits, after notice and reasonable opportunity to cure,
anything to be done which increases the cost of any insurance covering or
affecting the Project, then Tenant shall reimburse Landlord, upon demand, as
Additional Rent, for such
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additional costs. Landlord shall deliver to Tenant a written statement setting
forth the amount of any such insurance cost increase and showing in reasonable
detail the manner in which it has been computed. Tenant shall, at Tenant's sole
cost and expense, except as otherwise provided hereunder, comply with all laws,
ordinances, rules, regulations and orders (state, federal, municipal or
promulgated by other agencies or bodies having or claiming jurisdiction) related
to the use, condition or occupancy of the Leased Premises now in effect or which
may hereafter come into effect including, but not limited to, (a) accessibility
and use by individuals with disabilities, and (b) environmental conditions in,
on or about the Leased Premises as same relate to Tenant's use and property and
are not subject to Landlord's obligations hereunder. If anything done by Tenant
in its use or occupancy of the Leased Premises shall create, require or cause
imposition of any requirement by any public authority for structural or other
upgrading of or alteration or improvement to the Project, Tenant shall, at
Landlord's option, either perform the upgrade, alteration or improvement at
Tenant's sole cost and expense or reimburse Landlord upon demand, as Additional
Rent, for the cost to Landlord of performing such work, or decide not to
undertake such alteration, if such option is available. With respect only to the
Tenant's initial Tenant Improvements, in the event that significant structural
upgrades in addition to any such upgrades described in Tenant's plans and
specifications are required, that are financially and structurally unreasonable
to complete and no work around can be designed, then Tenant shall have the
option to terminate this Lease. In any event, this right to terminate this Lease
expires on the Gibralter II Term Commencement Date. The final non-appealable
judgment of any court of competent jurisdiction or the admission by Tenant in
any action against Tenant, whether Landlord is a party thereto or not, that
Tenant has violated any law, ordinance, rule, regulation, order, permit,
covenant, easement or restriction shall be conclusive of that fact as between
Landlord and Tenant. Landlord shall be responsible for any path of travel, as
that term is used in Title 24 and the Americans With Disabilities Act
(collectively "ADA"), which is compliant with the requirements of the ADA
outside of the Building and Tenant shall be responsible for any path of travel
inside the Building.
5.09. No Nuisance; No Overloading. Tenant shall use and occupy the
Leased Premises, and control its agents, employees, contractors, invitees and
visitors in such manner so as not to create any nuisance, or interfere with,
annoy or disturb (whether by noise, odor, vibration or otherwise) any other
tenant or occupant of the Project or Landlord in its operation of the Project.
Tenant shall not place or permit to be placed any loads upon the floors, walls
or ceilings in excess of the maximum designed load specified by Landlord or
which might damage the Leased Premises, the Building, or any portion thereof,
except as otherwise disclosed in Tenant's plans and specifications (where Tenant
has taken steps to address the loading issue) and which have been approved by
Landlord and which approval shall not be unreasonably withheld.
5.10. Furnishing of Financial Statements; Tenant's Representations.
In order to induce Landlord to enter into this Lease, Tenant agrees that it
shall promptly furnish Landlord, from time to time, as long as they are
available and the recipient executes and delivers to Tenant reasonable
assurances of confidentiality and if Tenant is publicly traded, only such
financial information which is publicly available, within ten (10) business days
of receipt of Landlord's written request therefor, with financial statements in
form and substance reasonably satisfactory to Landlord reflecting Tenant's
current financial condition. Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all material
respects.
5.11. Entry by Landlord. Landlord, its employees, agents and
consultants, shall have the right to enter the Leased Premises at any time, in
cases of an emergency, and otherwise at reasonable times with reasonable advance
notice to inspect the same, to perform such work as may be permitted or required
under this Lease, to make repairs to or alterations of the Leased Premises or
other portions of the Project or other tenant spaces therein, to deal with
emergencies, to post such notices as may be permitted or required by law to
prevent the perfection of liens against Landlord's interest in the Project or to
show the Leased Premises
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to prospective tenants (during the last nine (9) months of the Term),
purchasers, encumbrancers or others, or for any other purpose as Landlord may
deem necessary or desirable; provided, however, that Landlord shall use its best
efforts to minimize interference with Tenant's business operations in the Leased
Premises. Tenant shall not be entitled to any abatement of Rent or damages by
reason of the exercise of any such right of entry. Notwithstanding the
foregoing, except in cases of an emergency, Landlord, its employees, agents and
consultants, shall not enter the Leased Premises unless accompanied by a
representative of Tenant and Landlord shall cooperate with any reasonable
security procedures of Tenant.
5.12. Nondisturbance and Attornment.
(a) This Lease and the rights of Tenant hereunder shall be subject
and subordinate to the lien of any deed of trust, mortgage or other
hypothecation or security instrument affecting the Landlord's property
(collectively, "Security Device") now or hereafter placed upon, affecting or
encumbering the Project or any part thereof or interest therein, and to any and
all advances made thereunder, interest thereon or costs incurred and any
modifications, renewals, supplements, consolidations, replacements and
extensions thereof. With respect to any Security Device entered into by Landlord
after execution of this Lease, such subordination is conditioned on Landlord
obtaining and delivering to Tenant assurance in a commercially reasonable form
(a "nondisturbance agreement") from the holder of or beneficiary under such
encumbrance that Tenant's possession will not be disturbed, that Tenant will
continue to enjoy all rights and privileges of whatsoever kind granted to Tenant
under this Lease and that such new holder or beneficiary shall abide by the
terms of this Lease so long as Tenant is not in material default under this
Lease and attorns to the record owner of the Leased Premises. Landlord shall
obtain and deliver to Tenant a nondisturbance agreement from Fleet National Bank
in the form attached hereto as Exhibit E within ten (10) business days of full
---------
execution of this Lease, and if not delivered within 20 days Tenant has the
right to terminate the Lease. Without the consent of Tenant, the holder of any
such Security Device or the beneficiary thereunder shall have the right to elect
to be subject and subordinate to this Lease, such subordination to be effective
upon such terms and conditions as such holder or beneficiary may direct which
are not inconsistent with the provisions hereof. Tenant agrees to attorn to and
recognize as the Landlord under this Lease the holder or beneficiary under a
Security Device or any other party that acquires ownership of the Leased
Premises by reason of a foreclosure or sale under any Security Device (or deed
in lieu thereof). The new owner following such foreclosure, sale or deed shall
not be (i) liable for any act or omission of any prior landlord or with respect
to events occurring prior to acquisition of ownership; (ii) subject to any
offsets or defenses which Tenant might have against any prior landlord; (iii)
bound by prepayment of more than one (1) month's Rent; or (iv) liable to Tenant
for any security deposit not actually received by such new owner.
(b) Tenant shall not unreasonably withhold its consent to reasonable
changes or amendments to this Lease requested by the holder of a Security Device
so long as these changes do not alter the basic business terms of this Lease or
otherwise materially diminish any rights or materially increase any obligations
of Tenant hereunder. If, within fifteen (15) days after notice from Landlord,
Tenant fails or unreasonably refuses to execute with Landlord the amendment(s)
to this Lease accomplishing the reasonable change(s) or amendment(s) which are
requested by such holder such amendments shall be deemed accepted and shall be
enforceable by Landlord and such lender and binding upon Tenant, its successors
and assigns as if agreed to in writing, without need of further action or
documentation unless Tenant is disputing the reasonableness of such amendments
in which case the Landlord and Tenant shall negotiate in good faith to agree
upon such changes.
5.13. Estoppel Certificate. Within ten (10) business days following
Landlord's request, Tenant shall execute, acknowledge and deliver written
estoppel certificates addressed to (i) any mortgagee or prospective mortgagee of
Landlord, or (ii) any purchaser or prospective purchaser of all or any portion
of,
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or interest in, the Project, on a form specified by Landlord, certifying as to
such facts (if true) and agreeing to such notice provisions and other matters as
such mortgagee(s) or purchaser(s) may reasonably require, including, without
limitation, the following: (a) that this Lease is unmodified and in full force
and effect (or in full force and effect as modified, and stating the
modifications); (b) the amount of, and date to which Rent and other charges have
been paid in advance; (c) the amount of any Security Deposit; and (d)
acknowledging that Landlord is not in default under this Lease (or, if Landlord
is claimed to be in default, stating the nature of the alleged default).
However, in no event shall any such estoppel certificate require an amendment of
the provisions of this Lease or otherwise affect or abridge Tenant's rights
hereunder. Any such estoppel certificate may be relied upon by any such
mortgagee or purchaser. Failure by Tenant to execute and deliver any such
estoppel certificate within the time requested shall, at Landlord's election, be
conclusive upon Tenant that (1) this Lease is in full force and effect and has
not been modified except as represented by Landlord; (2) not more than one
month's Rent has been paid in advance; and (3) Landlord is not in default under
this Lease. Within ten (10) business days following Tenant's request, Landlord
shall execute, acknowledge and deliver written estoppel certificates addressed
to (i) any mortgagee or prospective mortgagee of Tenant, or (ii) any purchaser
or prospective purchaser of all or any portion of, or interest in Tenant, on a
form specified by Tenant, certifying as to such facts (if true) and agreeing to
such notice provisions and other matters as such mortgagee(s) or purchasers) may
reasonably require, including, without limitation, the following: (a) that this
Lease is unmodified and in full force and effect (or in full force and effect as
modified, and stating the modifications); (b) the amount of, and date to which
Rent and other charges have been paid in advance; (c) the amount of any Security
Deposit; and (d) acknowledging that Tenant is not in default under this Lease
(or, if Tenant is claimed to be in default, stating the nature of the alleged
default). However, in no event shall any such estoppel certificate require an
amendment of the provisions of this Lease or otherwise affect or abridge
Landlord's rights hereunder. Any such estoppel certificate may be relied upon by
any such mortgagee or purchaser. Failure by Landlord to execute and deliver any
such estoppel certificate within the time requested shall, at Tenant's election,
be conclusive upon Landlord that (1) this Lease is in full force and effect and
has not been modified except as represented by Tenant; (2) not more than one
month's Rent has been paid in advance; and (3) Tenant is not in default under
this Lease.
5.14. Security Deposit.
(a) As security for the full and faithful performance of Tenant's
obligations under this Lease, Tenant shall provide Landlord with a security
deposit (the "Security Deposit"), which shall consist of the cash payment
described in Section 5.14(b) below (the "Temporary Security Deposit"), and the
---------------
letter of credit (the "Letter of Credit") described in Section 5.14(d) and (e)
--------------- ---
below.
(b) On or before the Commencement Date, Tenant shall, as security for
the full and faithful performance of Tenant's obligations under this Lease,
deliver to Landlord the Temporary Security Deposit which shall consist of a cash
payment equal to $418,000. Provided that Tenant has timely paid, as required
under the Lease, Landlord the Base Rent due during the first thirteen (13)
months of the term of the Lease, Landlord shall, within five (5) days following
the payment by Tenant of the thirteenth (13/th/) month's rent, refund to Tenant,
in cash, without demand by Tenant, fifty percent (50%) of the Temporary Security
Deposit; and, provided that Tenant has timely paid Landlord the Base Rent due
during the first twenty-five (25) months of the term of the Lease, within five
(5) days following the payment by Tenant of the twenty-fifth (25/th/) month's
rent, refund to Tenant, in cash, without demand by Tenant, the balance of the
Temporary Security Deposit.
(c) If at any time during the Term, Tenant shall be in a monetary
default in the payment of Rent, Landlord may use, apply or retain all or part of
the Security Deposit for payment of any amount due
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<PAGE>
Landlord or to cure such default or to reimburse or compensate Landlord for any
liability, loss, cost, expense or damage (including attorneys' fees) which
Landlord may suffer or incur by reason of Tenant's defaults. If Landlord uses or
applies all or any part of the Security Deposit, Tenant shall, on demand, pay to
Landlord a sum sufficient to restore the Security Deposit to the full amount
required by this Lease. Upon expiration of the Term or earlier termination of
this Lease and after Tenant has vacated the Leased Premises, Landlord shall
return the Security Deposit to Tenant, reduced by such amounts as may be
required by Landlord to remedy defaults on the part of Tenant in the payment of
Rent, to repair damages to the Leased Premises caused by Tenant and to clean the
Leased Premises. The portion of the deposit not so required shall be paid over
to Tenant (or, at Landlord's option, to the last assignee of Tenant's interest
in this Lease) within thirty (30) days after expiration of the Term or earlier
termination hereof. Landlord shall hold the Security Deposit for the foregoing
purposes; provided, however, that Landlord shall have no obligation to segregate
the Security Deposit from its general funds or to pay interest in respect
thereof. No part of the Security Deposit shall be considered to be held in
trust, or to be prepayment of any monies to be paid by Tenant under this Lease.
(d) Within ten (10) days following the full execution of this Lease,
Tenant shall deliver to Landlord a clean and irrevocable Letter of Credit (the
"Letter of Credit") issued by and drawable upon (said issuer being referred to
as the "Issuing Bank") a financial institution which is approved by Landlord in
its sole discretion, provided that Landlord shall not unreasonably withhold its
consent to an Issuing Bank which has outstanding unsecured, uninsured and
unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for any outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as "+" or
"-" or numerical notation, "Aa" or better by Moody's Investors Service and "AA"
or better by Standard & Poor's Rating Service, and has combined capital, surplus
and undivided profits of not less than One Hundred Million Dollars
($100,000,000). Such Letter of Credit shall (a) name Landlord as beneficiary,
(b) be in the amounts specified hereinafter, (c) have a term of not less than
one year, (d) permit multiple drawings, (e) be fully transferable by Landlord,
and (f) otherwise be in form and content reasonably satisfactory to Landlord. If
upon any transfer of the Letter of Credit, any fees or charges shall be so
imposed, then such fees or charges shall be payable solely by Tenant on no more
than two (2) transfers and the Letter of Credit shall so specify. Except as
otherwise provided hereinafter, the Letter of Credit shall provide that it shall
be deemed automatically renewed, without amendment, for consecutive periods of
one year each thereafter during the Term unless the Issuing Bank sends a notice
(the "Non-Renewal Notice") to Landlord by certified mail, return receipt
requested, not less than 45 days next preceding the then expiration date of the
Letter of Credit stating that the Issuing Bank has elected not to renew the
Letter of Credit. Landlord shall have the right, upon receipt of the Non-Renewal
Notice (unless such Non-Renewal Notice is for a period after the Term Expiration
Date), to draw the full amount of the Letter of Credit, by sight draft on the
Issuing Bank, and shall thereafter hold or apply the cash proceeds of the Letter
of Credit pursuant to the terms of this Article. The Issuing Bank shall agree
with all drawers, endorsers and bona fide holders that drafts drawn under and in
compliance with the terms of the Letter of Credit will be duly honored upon
presentation to the Issuing Bank at an office location in San Francisco. The
Letter of Credit shall be subject in all respects to the Uniform Customs and
Practice for Documentary Credits (1993 revision), International Chamber of
Commerce Publication No. 500.
(e) The Letter of Credit shall initially be in the amount of One
Million Dollars ($1,000,000), but on or before October 1, 1999, Tenant shall
increase the amount of the Letter of Credit by Three Million Dollars
($3,000,000), for a total of Four Million Dollars ($4,000,000). In the event of
a monetary default by Tenant, following the expiration of any applicable cure
periods as set forth in the Lease, Landlord may make a demand upon the Letter of
Credit to cure said monetary default. The Letter of Credit shall be renewed
annually by Tenant, at Tenant's sole expense. Tenant shall maintain the Letter
of Credit
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<PAGE>
in the amount of Four Million Dollars ($4,000,000) for the first two years of
the term of the Lease; the amount shall be reduced to Three Million Fifty
Thousand Dollars ($3,050,000) for the third year of the term of the Lease, to
Two Million One Hundred Thousand Dollars ($2,100,000) for the fourth year of the
term of the Lease, and to One Million One Hundred Fifty Thousand Dollars
($1,150,000) for the fifth year of the term of the Lease; and Tenant shall
maintain the Letter of Credit in the amount of Two Hundred Thousand Dollars
($200,000) for the balance of the initial term of the Lease. In the event of any
extension of the term of the Lease beyond the initial term, no Letter of Credit
shall be required of Tenant.
5.15. Surrender.
(a) Subject to the provisions of Section 5.07 hereof, on the Term
------------
Expiration Date (or earlier termination of this Lease), Tenant shall quit and
surrender possession of the Leased Premises to Landlord in as good order and
condition as they were in on the Term Commencement Date, reasonable wear and
tear, damage by casualty, taking by condemnation and repairs which are
Landlord's responsibility excepted. Reasonable wear and tear shall not include
any damage or deterioration that reasonably could have been prevented by good
maintenance practice or by Tenant performing all of its obligations under this
Lease. Tenant shall, without cost to Landlord, remove all furniture, equipment,
trade fixtures, debris and articles of personal property owned by Tenant in the
Leased Premises, and shall repair any damage to the Project resulting from such
removal. Any such property not removed by Tenant, or are not actively in the
process of being removed by the Term Expiration Date (or earlier termination of
this Lease) shall be considered abandoned, and Landlord may remove any or all of
such items and dispose of same in any lawful manner or store same in a public
warehouse or elsewhere for the account and at the expense and risk of Tenant. If
Tenant shall fail to pay the cost of storing any such property after storage for
thirty (30) days or more, Landlord may sell any or all of such property at
public or private sale, in such manner and at such times and places as Landlord
may deem proper, without notice to or demand upon Tenant. Landlord shall apply
the proceeds of any such sale as follows: first, to the costs of such sale;
second, to the costs of storing any such property; third, to the payment of any
other sums of money which may then or thereafter be due to Landlord from Tenant
under any of the terms of this Lease; and fourth, the balance, if any, to
Tenant.
(b) On the Term Expiration Date (or earlier termination of this
Lease), all equipment, fixtures and cables installed by Tenant pursuant to
Section 2.05(a) shall be removed by Tenant and all areas used for cables and
- ---------------
equipment and trade fixtures serving the foregoing location shall be repaired or
restored by Tenant in as good order and condition as they were in on the Term
Commencement Date, reasonable wear and tear excepted. Reasonable wear and tear
shall not include any damage or deterioration that would have been prevented by
good maintenance practice if required to be maintained by Tenant under this
Lease or by Tenant performing all of its obligations under this Lease. Tenant
shall repair any damage to the Leased Premises, the Building or the Project
resulting from such removal.
5.16. Tenant's Remedies. Landlord shall not be deemed in breach of this
Lease unless Landlord fails within a reasonable time to perform an obligation
required to be performed by Landlord, except as otherwise specifically provided
for in the Lease. For purposes of this Section 5.16, a reasonable time shall in
------------
no event, be less than fifteen (15) business days after receipt by Landlord, and
by the holders of any ground lease, deed of trust or mortgage covering the
Leased Premises whose name and address shall have been furnished Tenant in
writing for such purpose, of written notice specifying wherein such obligation
of Landlord has not been performed; provided, however, that if the nature of
Landlord's obligation is such that more than fifteen (15) days after such notice
are reasonably required for its performance, then Landlord shall not be in
breach of this Lease if performance is commenced within said fifteen (15) -day
period and thereafter diligently pursued to completion. If Landlord fails to
cure such default within the time provided for in this Lease, the holder of any
such ground lease, deed of trust or mortgage shall have an additional
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thirty (30) days to cure such default; provided that if such default cannot
reasonably be cured within that thirty (30) day period, then such holder shall
have such additional time to cure the default as is reasonably necessary under
the circumstances. Tenant shall look solely to Landlord's interest in the
Project for recovery of any judgment from Landlord. Neither Landlord nor any of
its trustees, directors, officers, agents, employees or representatives (or, if
Landlord is a partnership, its partners, whether general or limited) shall ever
be personally liable for any such judgment against the Landlord. Any lien
obtained to enforce any such judgment and any levy of execution thereon shall be
subject and subordinate to any lien, deed of trust or mortgage to which Section
-------
5.12 applies or may apply. Tenant shall not have the right to terminate this
- ----
Lease or withhold, reduce or offset any amount against any payments of Rent due
and payable under this Lease by reason of a breach of this Lease by Landlord,
other than amounts set forth in any judgment or order in favor of Tenant.
Provided however, that if as a result of the foregoing, the Leased Premises or
any portion thereof subsequently shall become untenantable by Tenant for the
purposes set forth herein as determined by the final decision of the court or
arbitrator, all Rent payable for such affected space shall abate for the period
of such untenantability.
5.17. Rules and Regulations. Tenant shall comply with the rules and
regulations for the Project attached as Exhibit D and such reasonable amendments
---------
thereto as Landlord may adopt from time to time with prior notice to Tenant
which shall not materially adversely affect Tenant's intended use of the Leased
Premises. To the extent that the rules and regulations are inconsistent with the
provisions or intent of this Lease, the terms of this Lease shall control.
Article 6.
Environmental Matters
6.01. Hazardous Materials Prohibited.
(a) Tenant shall not cause or permit any Hazardous Material (as
defined in Section 6.01(c) below) to be brought, kept, used, generated, released
---------------
or disposed in, on, under or about the Leased Premises or the Project by Tenant,
its agents, employees, contractors or invitees; provided, however, that Tenant
may use, store and dispose of, in accordance with applicable Laws, limited
quantities of standard office and janitorial supplies, but only to the extent
reasonably necessary for Tenant's operations in the Leased Premises, except as
allowed by Landlord in writing. Tenant hereby indemnities Landlord from and
against (i) any breach by Tenant of the obligations stated in the preceding
sentence, (ii) any breach of the obligations stated in Section 6.01 (b) below,
----------------
or (iii) any claims or liability resulting from Tenant's use of Hazardous
Materials. Tenant hereby agrees to defend and hold Landlord harmless from and
against any and all claims, liability, losses, damages, costs and/or expenses
(including, without limitation, diminution in value of the Project, or any
portion thereof, damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Project, damages arising from any adverse
impact on marketing of space in the Project, and sums paid in settlement of
claims, fines, penalties, attorneys' fees, consultants' fees and experts' fees)
which arise during or after the Term as a result of any breach by Tenant of the
obligations stated in Sections 6.01 (a) or 6.01(b) or otherwise resulting from
----------------- -------
Tenant's use of Hazardous Materials;, nothing contained in this section shall
require Tenant to indemnify Landlord for any such liability or condition that
was in existence on or before the date Tenant took possession of the Leased
Premises or otherwise disclosed in the Environmental Reports. This
indemnification of Landlord by Tenant includes, without limitation, death of or
injury to person, damage to any property or the environment and costs incurred
in connection with any investigation of site conditions or any cleanup,
remedial, removal, or restoration work required by any federal, state or local
governmental agency or political subdivision because of any Hazardous Material
present in, on, under or about the Leased Premises or the Project (including
soil
25
<PAGE>
and ground water contamination) which results from and is attributable to such a
breach. Without limiting the foregoing, if the presence of any Hazardous
Material in, on, under or about the Leased Premises or the Project caused or
permitted by Tenant results in any contamination of the Leased Premises or the
Project, Tenant shall promptly take all actions at its sole expense as are
necessary to return the same to the condition existing prior to the introduction
of such Hazardous Material; provided that Landlord's approval of such actions,
and the contractors to be used by Tenant in connection therewith, shall first be
obtained. This indemnification of Landlord by Tenant shall survive the
expiration or sooner termination of this Lease.
(b) Tenant covenants and agrees that Tenant shall at all times be
responsible and liable for, and be in compliance with, all federal, state, local
and regional laws, ordinances, rules, codes and regulations, as amended from
time to time ("Governmental Requirements"), relating to health and safety and
environmental matters, arising, directly or indirectly, out of Tenant's use of
Hazardous Materials (as defined in Section 6.01 (c) below) in the Project.
----------------
Health and safety and environmental matters for which Tenant is responsible
under this paragraph include, without limitation (i) notification and reporting
to governmental agencies, (ii) the provision of warnings of potential exposure
to Hazardous Materials to Landlord and Tenant's agents, employees, licensees,
contractors and others, (iii) the payment of taxes and fees, (iv) the proper
off-site transportation and disposal of Hazardous Materials, and (v) all
requirements, including training, relating to the use of equipment. Immediately
upon discovery of a release of Hazardous Materials associated with Tenant's
activities, Tenant shall give written notice to Landlord, whether or not such
release is subject to reporting under Governmental Requirements. The notice
shall include information on the nature and conditions of the release and
Tenant's planned response. Tenant shall be liable for the cost of any clean-up
of the release of any Hazardous Materials by Tenant on the Project.
(c) As used in this Lease, the term "Hazardous Material" means any
hazardous or toxic substance, material or waste which is or becomes regulated by
any local governmental authority, the State of California or the United States
Government. The term "Hazardous Material" includes, without limitation, any
substance, material or waste which is (i) defined as a "hazardous waste" or
similar term under the laws of the jurisdiction where the Project is located;
(ii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. (S) 1317); (iii) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource, Conservation
and Recovery Act, 42 U.S.C. (S) 6901 et. seq. (42 U.S.C. (S) 6903); (iv) defined
-- ---
as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et.
---
seq. (42 U.S.C. (S) 9601); (v) hydrocarbons, petroleum, gasoline, crude oil or
- ---
any products, by-products or fractions thereof; or (vi) asbestos in any form or
condition.
(d) As used in this Article 6, the term "Laws" means any applicable
federal, state or local laws, ordinances, rules or regulations relating to any
Hazardous Material affecting the Project, including, without limitation, the
specific laws, ordinances and regulations referred to in Section 6.01(c) above.
---------------
References to specific Laws shall also be references to any amendments thereto
and to any applicable successor Laws.
(e) Landlord represents and warrants that, to the best of Landlord's
actual knowledge, except as disclosed in the environmental reports (the
"Environmental Reports") provided to Tenant by Landlord (i) no portion of the
Leased Premises, Building or the Project, contain any Hazardous Materials; (ii)
the soil and ground water on or under the Project are free of Hazardous
Materials in amounts that would violate any Laws; (iii) there is no pending or
threatened litigation, nor any settlement applicable to the Project concerning
Hazardous Materials; and (iv) there has been no notice or alleged violations of
hazardous Materials in connection with the Project. Tenant acknowledges its
receipt and review of the Environmental Reports prior to entering into this
Lease. Landlord hereby agrees to indemnify Tenant from any breach by
26
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Landlord of its representations and warranties in this Section 6.01(e) in the
---------------
same manner as required of Tenant pursuant to Section 6.01(a) and for any
---------------
liability or condition from the use or existence of any Hazardous Materials on
or within the Project as of the date of this Lease.
6.02. Limitations on Assignment and Subletting. It shall not be
unreasonable for Landlord to withhold its consent to any proposed assignment or
subletting of the Leased Premises if (i) the proposed transferee's anticipated
use of the Leased Premises involves the generation, storage, use, treatment, or
disposal of Hazardous Material (excluding standard office and janitorial
supplies; in limited quantities as hereinabove provided); (ii) the proposed
transferee has been required by any prior landlord, lender or governmental
authority to take remedial action in connection with Hazardous Material
contaminating a property if the contamination resulted from such transferee's
actions or use of the property in question and the Leased Premises are intended
to be used in a similar manner; or (iii) the proposed transferee is subject to
an enforcement order issued by any governmental authority in connection with the
generation, storage, use, treatment or disposal of a Hazardous Material.
6.03. Right of Entry. Landlord, its employees, agents and consultants,
shall have the right to enter the Leased Premises at any time, in case of an
emergency, and otherwise during reasonable hours and upon reasonable notice to
Tenant, in order to conduct periodic environmental inspections and tests to
determine whether any Hazardous Materials are present. The costs and expenses of
such inspections shall be paid by Landlord unless a default or breach of this
Lease, violation of Laws or contamination caused or permitted by Tenant is found
to exist. In such event, Tenant shall reimburse Landlord upon demand, as
Additional Rent, for the costs and expenses of such inspections. Notwithstanding
the foregoing, except in cases of an emergency, Landlord, its employees, agents
and consultants shall not enter the Leased Premises unless accompanied by a
representative of Tenant and Landlord shall cooperate with any reasonable
security procedures of Tenant and shall not unreasonably interfere with Tenant's
operations and use of the Leased Premises.
6.04. Notice to Landlord. Tenant shall immediately notify Landlord in
writing of: (i) any enforcement, clean-up, removal or other governmental or
regulatory action instituted or threatened regarding the Leased Premises or the
Project pursuant to any Laws; (ii) any claim made or threatened by any person
against Tenant or the Leased Premises relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from or claimed to result from
any Hazardous Material; and (iii) any reports made to or received from any
governmental agency arising out of or in connection with any Hazardous Material
in or removed from the Leased Premises or the Project, including any complaints,
notices, warnings or asserted violations in connection therewith. Tenant shall
also supply to Landlord as promptly as possible, and in any event within ten
(10) business days after Tenant first receives or sends the same, copies of all
claims, reports, complaints, notices, warnings, asserted violations or other
communications relating in any way to the Leased Premises or Tenant's use
thereof.
6.05. Notice to Tenant. Landlord shall immediately notify Tenant in writing
of: (i) any enforcement, clean-up, removal or other governmental or regulatory
action instituted or threatened regarding the Leased Premises or the Project
pursuant to any Laws; (ii) any claim made or threatened by any person against
Landlord or the Leased Premises relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from any
Hazardous Material; and (iii) any reports made to or received from any
governmental agency arising out of or in connection with any Hazardous Material
in or removed from the Leased Premises or the Project, including any complaints,
notices, warnings or asserted violations in connection therewith. Landlord shall
also supply to Tenant as promptly as possible, and in any event within ten (10)
business days after Landlord first receives or sends the same, copies of all
claims,
27
<PAGE>
reports, complaints, notices, warnings, asserted violations or other
communications relating in any way to the Leased Premises.
Article 7.
Insurance, Indemnity, Condemnation, Damage and Default
7.01. Landlord's Insurance. Landlord shall secure and maintain policies of
insurance for the Project (including the Leased Premises) covering loss of or
damage to the Project, including Landlord's Contribution, as specified in
Exhibit B hereto, but excluding the Tenant Improvements provided by Tenant at
- ---------
Tenant's expense and excluding all subsequent alterations, additions and
improvements to the Leased Premises, with loss payable to Landlord and to the
holders of any deeds of trust, mortgages or ground leases on the Project.
Landlord shall not be obligated to obtain insurance for Tenant's trade fixtures,
equipment, furnishings, machinery or other property. Such policies shall
provide protection against fire and extended coverage perils and such additional
perils as Landlord deems suitable, and with such commercially reasonable
deductible(s) as Landlord shall deem reasonably appropriate. Landlord shall
further secure and maintain commercial general liability insurance with respect
to the Project in such amount as Landlord shall determine, such insurance to be
in addition to, and not in lieu of, the liability insurance required to be
maintained by Tenant. In addition, Landlord may secure and maintain rental
income insurance. If the annual cost to Landlord for any such insurance exceeds
the standard rates because of the nature of Tenant's operations, Tenant shall,
upon receipt of appropriate invoices, reimburse Landlord for such increases in
cost, which amounts shall be deemed Additional Rent hereunder provided that
Landlord notifies Tenant prior to the execution of this Lease of any material
cost increases. Tenant shall not be named as an additional insured on any policy
of insurance maintained by Landlord. Landlord shall use best efforts to provide
Tenant with a certificate of insurance evidencing all such insurance coverage,
with an endorsement that the insurer agrees not to cancel, non-renew or
materially alter the policy without at least thirty (30) days prior written
notice to Tenant.
7.02. Tenant's Liability Insurance.
(a) Tenant (with respect to both the Leased Premises and the Project)
shall secure and maintain, at its own expense, at all times during the Term, a
policy or policies of commercial general liability insurance with the premiums
thereon fully paid in advance, protecting Tenant and naming Landlord, the
holders of any deeds of trust, mortgages or ground leases on the Project, of
whom Tenant has received written notice as additional insureds against claims
for bodily injury, personal injury, advertising injury and property damage
(including attorneys' fees) based upon, involving or arising out of Tenant's
operations, assumed liabilities or Tenant's use, occupancy or maintenance of the
Leased Premises and the Common Areas of the Project. Such insurance shall
provide for a minimum amount of Two Million Dollars ($2,000,000.00) for property
damage or injury to or death of one or more than one person in any one accident
or occurrence, with an annual aggregate limit of at least Four Million Dollars
($4,000,000.00), inclusive of any umbrella coverage. The coverage required to be
carried shall include fire legal liability, blanket contractual liability,
personal injury liability (libel, slander, false arrest and wrongful eviction),
broad form property damage liability, products liability and completed
operations coverage (as well as owned, non-owned and hired automobile liability
if an exposure exists) and the policy shall contain an exception to any
pollution exclusion which insures damage or injury arising out of heat, smoke or
fumes from a hostile fire. Such insurance shall be written on an occurrence
basis and contain a separation of insureds provision or cross-liability
endorsement reasonably acceptable to Landlord. Tenant shall provide Landlord
with a certificate evidencing such insurance coverage. The certificate shall
indicate that the insurance provided specifically recognizes the liability
assumed by Tenant under this Lease (including without limitation
28
<PAGE>
performance by Tenant under Section 7.04) and that Tenant's insurance is primary
------------
to and not contributory with any other insurance maintained by Landlord, whose
insurance shall be considered excess insurance only. Not more frequently than
every two (2) years, if, in the opinion of any mortgagee of Landlord or of the
insurance broker retained by Landlord, the amount of liability insurance
coverage at that time is not adequate, then Tenant shall increase its liability
insurance coverage as reasonably required by either any mortgagee of Landlord or
Landlord's insurance broker, but in no event more than a twenty percent (20%)
increase.
(b) Tenant shall, at Tenant's expense, comply with (i) all insurance
company requirements pertaining to the use of the Leased Premises and (ii) all
rules, orders, regulations or requirements of the American Insurance Association
(formerly the National Board of Fire Underwriters) and with any similar body.
7.03. Tenant's Additional Insurance Requirements.
(a) Tenant shall secure and maintain, at Tenant's expense, at all
times during the Term, a policy of physical damage insurance on all of Tenant's
fixtures, furnishings, equipment, machinery, merchandise and personal property
in the Leased Premises and alterations, additions or improvements made by or for
Tenant upon the Leased Premises, all for eighty percent (80%) of the full
replacement cost thereof without deduction for depreciation of the covered items
and in amounts that meet any co-insurance clauses of the policies of insurance.
Such insurance shall insure against those risks customarily covered in an "all
risk" policy of insurance covering physical loss or damage. Tenant shall use the
proceeds from such insurance for the replacement of fixtures, furnishings,
equipment and personal property and for the restoration of alterations,
additions or improvements to the Leased Premises. In addition, Tenant shall
secure and maintain, at all times during the Term, loss of income, business
interruption and extra expense insurance in such amounts as will reimburse
Tenant for direct or indirect loss of earnings and incurred costs attributable
to all perils commonly insured against by prudent tenants or attributable to
prevention of access to the Leased Premises or to the Building as a result of
such perils; such insurance shall be maintained with Tenant's property insurance
carrier. Further, Tenant shall secure and maintain at all times during the Term
workers' compensation insurance in such amounts as are required by law,
employer's liability insurance in the amount of One Million Dollars
($1,000,000.00) per occurrence, and all such other insurance as may be required
by applicable law or as may be reasonably required by Landlord. The property
insurance certificate shall confirm that the waiver of subrogation required to
be obtained pursuant to Section 7.05 is permitted by the insurer. Tenant shall,
------------
at least thirty (30) days prior to the expiration of any policy of insurance
required to be maintained by Tenant under this Lease, furnish Landlord with an
"insurance binder" or other satisfactory evidence of renewal thereof.
(b) All policies required to be carried by Tenant under this Lease
shall be issued by and binding upon a reputable insurance company of good
financial standing licensed to do business in the State of California with a
rating of at least A-VII, or such other rating as may be required by a lender
having a lien on the Project, as set forth in the most current issue of "Best's
Insurance Reports." Tenant shall not do or permit anything to be done that would
invalidate the insurance policies referred to in this Article 7. Evidence of
insurance provided to Landlord shall include an endorsement showing that
Landlord, its representatives and the holders of any deeds of trust, mortgages
or ground leases on the Project are included as additional insureds on general
liability insurance, and as loss payees for property insurance, to the extent
required hereunder, and an endorsement whereby the insurer agrees not to cancel,
non-renew or materially alter the policy without at least thirty (30) days prior
written notice to Landlord, its representatives and any mortgagee of Landlord.
29
<PAGE>
(c) In the event that Tenant fails to provide evidence of insurance
required to be provided by Tenant under this Lease, prior to commencement of the
Term, and thereafter during the Term, within ten (10) days following Landlord's
request therefor, and thirty (30) days prior to the expiration date of any such
coverage, Landlord shall be authorized (but not required) to procure such
coverage in the amounts stated with all costs thereof (plus a five percent (5%)
administrative fee) to be chargeable to Tenant and payable upon written invoice
therefor, which amounts shall be deemed Additional Rent hereunder.
(d) The minimum limits of insurance required by this Lease, or as
carried by Tenant, shall not limit the liability of Tenant nor relieve Tenant of
any obligation hereunder.
7.04. Indemnity and Exoneration.
(a) To the extent not prohibited by law, Landlord and Landlord's
representatives shall not be liable for any loss, injury or damage to person or
property of Tenant, Tenant's agents, employees, contractors, invitees or any
other person, whether caused by theft, fire, act of God, acts of the public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority or which may arise through repair, alteration or
maintenance of any part of the Project or failure to make any such repair or
from any other cause whatsoever, except as expressly otherwise provided in
Sections 7.06 and 7.07. Landlord shall not be liable for any loss, injury or
- ------------- ----
damage arising from any act or omission of any other tenant or occupant of the
Project. Landlord shall indemnify, protect, defend and hold Tenant and Tenant's
representatives, harmless from any and all claims, liability, costs, penalties,
fines, damages, injury, judgments, forfeiture, losses or expenses (including
without limitation attorneys' fees, consultant fees, testing and investigation
fees, expert fees and court costs) arising out of or in any way related to or
resulting directly or indirectly from (i) the negligent activities of Landlord,
its agents, employees, contractors or invitees in or about the Leased Premises
or the Project (where not covered by Landlord's insurance), (ii) any failure to
comply with any applicable law, and (iii) any default or breach by Landlord in
the performance of any obligation of Landlord under this Lease; provided,
however, that the foregoing indemnity shall not be applicable to claims arising
by reason of the gross negligence or willful misconduct of Tenant. The foregoing
notwithstanding, the Landlord shall not be liable for consequential damages,
loss of profit or income therefrom.
(b) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from (i)
Tenant's use or occupancy of the Leased Premises, (ii) the negligent activities
of Tenant, its agents, employees, contractors or invitees in or about the Leased
Premises or the Project (where not covered by Landlord's insurance), (iii) any
failure to comply with any applicable law, and (iv) any default or breach by
Tenant in the performance of any obligation of Tenant under this Lease;
provided, however, that the foregoing indemnity shall not be applicable to
claims arising by reason of the gross negligence or willful misconduct of
Landlord.
(c) Tenant shall indemnify, protect, defend and hold the Project,
Landlord and its representatives, harmless of and from any and all claims,
liability, costs, penalties, fines, damages, injury, judgments, forfeiture,
losses (including without limitation diminution in the value of the Leased
Premises) or expenses (including without limitation attorneys' fees, consultant
fees, testing and investigation fees, expert fees and court costs) arising out
of or in any way related to or resulting directly or indirectly from work or
labor performed, materials or supplies furnished to or at the request of Tenant
or in connection with
30
<PAGE>
obligations incurred by or performance of any work done for the account of
Tenant in the Leased Premises or the Project.
(d) The provisions of this Section 7.04 shall survive the expiration
------------
or sooner termination of this Lease. BY SIGNING ITS INITIALS BELOW, TENANT
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THE PROVISIONS SET FORTH IN THIS SECTION 7.04 AND FURTHER ACKNOWLEDGES THAT SUCH
------------
PROVISIONS WERE SPECIFICALLY NEGOTIATED.
/s/ [ILLEGIBLE]^^
- ------------------------
Tenant's Initials
7.05. Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, and employees, for any
loss or damage that may occur to the Leased Premises, or any improvements
thereto, or the Project or any personal property of such party therein, by
reason of any cause required to be insured against under this Lease to the
extent of the coverage required, regardless of cause or origin, including
negligence of the other party hereto, provided that such party's insurance is
not invalidated thereby; and each party covenants that, to the fullest extent
permitted by law, no insurer shall hold any right of subrogation against such
other party. Tenant shall advise its insurers of the foregoing and such waiver
shall be a part of each policy maintained by Tenant which applies to the Leased
Premises, any part of the Project or Tenant's use and occupancy of any part
thereof.
7.06. Condemnation.
(a) If the Leased Premises are taken under the power of eminent
domain or sold under the threat of the exercise of such power (all of which are
referred to herein as "condemnation"), this Lease shall terminate as to the part
so taken as of the date the condemning authority takes title or possession,
whichever first occurs (the "date of taking"). If the Leased Premises or any
portion of the Project is taken by condemnation to such an extent as to render
the Leased Premises untenantable as reasonably determined by Landlord or Tenant,
this Lease shall, at the option of either party to be exercised in writing
within thirty (30) days after receipt of written notice of such taking,
forthwith cease and terminate as of the date of taking. All proceeds from any
condemnation of the Leased Premises shall belong and be paid to Landlord,
subject to the rights of any mortgagee of Landlord's interest in the Project or
the beneficiary of any deed of trust which constitutes an encumbrance thereon;
provided that Tenant shall be entitled to any compensation separately awarded to
Tenant for Tenant's relocation expenses or, loss of Tenant's trade fixtures, or
for the loss of the value of Tenant's leasehold estate, or for the lost of
Tenant's alterations and additions made by Tenant at Tenant's expense, both
prior to and subsequent to the Commencement Date. If this Lease continues in
effect after the date of taking pursuant to the provisions of this Section
-------
7.06(a), Landlord shall proceed with reasonable diligence to repair, at its
- -------
expense, the remaining parts of the Project and the Leased Premises to
substantially their former condition to the extent that the same is feasible
(subject to reasonable changes which Landlord shall deem desirable) and so as to
constitute a complete and tenantable Project and Leased Premises. Net Rent shall
abate to the extent appropriate during the period of restoration, and Net Rent
shall thereafter be equitably adjusted according to the remaining Rentable Area
of the Leased Premises and the Building.
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7.07. Damage or Destruction. In the event of a fire or other casualty in
the Leased Premises, Tenant shall immediately give notice thereof to Landlord.
The following provisions shall then apply:
(a) If the damage is limited solely to the Leased Premises and the
Leased Premises can, in the reasonable good faith opinion of both Landlord and
Tenant to be made within 10 days of such casualty, be made tenantable with all
damage repaired within four and one half (4 1/2) months from the date of damage,
then Landlord shall be obligated to rebuild the same to substantially their
former condition to the extent that the same is feasible (subject to reasonable
changes which Landlord shall deem desirable and such changes as may be required
by applicable law) and shall proceed with reasonable diligence to do so and this
Lease shall remain in full force and effect; however, if forty percent (40%) or
more of the Leased Premises is damaged or destroyed rendering the Leased
Premises untenantable in the reasonable good faith opinion of Tenant, then this
Lease shall, at the election of Tenant, terminate as of the date of such
casualty if such casualty in the reasonable good faith opinion of both Landlord
and Tenant to be made within ten (10) days of such casualty, cannot be made
tenantable with all damage repaired within four and one-half (4 1/2) months from
the date of damage. Tenant shall notify Landlord of its intent to terminate this
Lease within five (5) days after the expiration of the ten (10) day period
described above.
(b) If portions of the Project outside the boundaries of the Leased
Premises are damaged or destroyed (whether or not the Leased Premises are also
damaged or destroyed) and the Leased Premises and the Project can, in Landlord's
opinion, both be made tenantable with all damage repaired within six (6) months
from the date of damage or destruction, and provided that Landlord determines
that it is economically feasible, then Landlord shall be obligated to rebuild
the same to substantially their former condition to the extent that the same is
feasible (subject to reasonable changes which Landlord shall deem desirable and
such changes as may be required by applicable law) and shall proceed with
reasonable diligence to do so within such six (6) month period and this Lease
shall remain in full force and effect
(c) Notwithstanding anything to the contrary contained in Sections
--------
7.07(a) or 7.07(b) above, Landlord shall not have any obligation whatsoever to
- ------- -------
repair, reconstruct or restore the Leased Premises when any damage thereto or to
the Project occurs during the last eighteen (18) months of the Term and Tenant
has not effectively exercised any option granted to Tenant to extend the Term.
Under such circumstances, Landlord shall promptly notify Tenant of its decision
not to rebuild within thirty (30) days of the date of such casualty, whereupon
the Lease shall terminate as of the date of such notice.
(d) If neither Section 7.07(a) nor 7.07(b) above applies, Landlord
--------------- -------
shall so notify Tenant within thirty (30) days after the date of the damage or
destruction and either Tenant or Landlord may terminate this Lease within thirty
(30) days after the date of such notice, such termination notice to be
immediately effective; provided, however, that Landlord shall have the right to
elect to reconstruct the Project and the Leased Premises, in which event (i)
Landlord shall notify Tenant of such election within said thirty (30) day period
and Tenant shall thereupon have no right to terminate this Lease, and (ii)
Landlord shall proceed with reasonable diligence to rebuild the Project and the
Leased Premises to substantially their former condition to the extent that the
same is feasible (subject to reasonable changes which Landlord shall deem
desirable and such changes as may be required by applicable law.
(e) During any period when Tenant's use of the Leased Premises is
significantly impaired by damage or destruction, Net Rent shall abate in
proportion to the degree to which Tenant's use of the Leased Premises is
impaired until such time as the Leased Premises are made tenantable, or usable
for Tenant's intended business use if later, as reasonably determined by
Landlord; provided that no such rental abatement shall be permitted if the
casualty is the result of the negligence or willful misconduct of
32
<PAGE>
Tenant or Tenant's employees, agents, contractors or invitees; provided however,
to the extent that Landlord receives any loss of rental insurance proceeds Net
Rent shall abate.
(f) The proceeds from any insurance paid under Landlord's Insurance
by reason of damage to or destruction of the Project or any part thereof insured
by Landlord shall belong to and be paid to Landlord, subject to the rights of
any mortgagee of Landlord's interest in the Project or the beneficiary of any
deed of trust which constitutes an encumbrance thereon. Tenant shall be
responsible at its sole cost and expense for the repair, restoration and
replacement of (i) its fixtures, furnishings, equipment, machinery, merchandise
and personal property in the Leased Premises, and (ii) its alteration, additions
and improvements.
(g) Landlord's repair and restoration obligations under this Section
-------
7.07 shall not impair or otherwise affect the rights and obligations of the
- ----
parties set forth elsewhere in this Lease. Subject to Section 7.07(e), Landlord
---------------
shall not be liable for any inconvenience or annoyance to Tenant, its employees,
agents, contractors or invitees, or injury to Tenant's business resulting in any
way from such damage or the repair thereof. Landlord and Tenant agree that the
terms of this Lease shall govern the effect of any damage to or destruction of
the Leased Premises or the Project with respect to the termination of this Lease
and hereby waive the provisions of any present statute or law to the extent
inconsistent therewith.
7.08. Default by Tenant.
(a) Events of Default. The occurrence of any of the following shall
constitute an event of default (a "default") on the part of Tenant:
(1) Abandonment. Vacating the Leased Premises without the
intention to reoccupy same, or abandonment of the Leased Premises and such
vacation or abandonment continues for a continuous period of six (6) months
provided Tenant is actively pursuing releting of the Leased Premises during such
period;
(2) Nonpayment of Rent. Failure to pay any installment of Rent
due and payable hereunder within five (5) days of the date when payment is due,
such failure continuing for a period of three (3) business days after written
notice of such failure; provided, however, that Landlord shall not be required
to provide such notice more than ten (10) times during the Term and no more than
two (2) times in any 12 month period with respect to non-payment of Net Rent or
Additional Rent, the third such non-payment constituting default without
requirement of notice; furthermore, if Tenant shall be served with a demand for
the payment of past due Rent, any payment(s) tendered thereafter to cure any
default by Tenant shall be made only by cashier's check, wire-transfer or direct
deposit of immediately available funds;
(3) Other Obligations. Failure to perform any obligation,
agreement or covenant under this Lease other than those matters specified in
Sections 7.08(a)(1) and 7.0 8(a)(2), such failure continuing for a period of
- ------------------- -----------
thirty (30) days after written notice of such failure (or such longer period as
is reasonably necessary to remedy such default, provided that Tenant commences
the remedy within such thirty (30)-day period and continuously and diligently
pursues such remedy at all times until such default is cured);
(4) General Assignment. Any general arrangement or assignment by
Tenant for the benefit of creditors;
(5) Bankruptcy. The filing of any voluntary petition in
bankruptcy by Tenant, or the filing of an involuntary petition against Tenant,
which involuntary petition remains undischarged or
33
<PAGE>
is not stayed for a period of ninety (90) days or such longer period if Tenant
is diligently pursuing such dismissal. In the event that under applicable law
the trustee in bankruptcy or Tenant has the right to affirm this Lease and
continue to perform the obligations of Tenant hereunder, such trustee or Tenant
shall, within such time period as may be permitted by the bankruptcy court
having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the
date of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant's obligations under this Lease;
(6) Receivership. The appointment of a trustee or receiver to
take possession of all or substantially all of Tenant's assets or the Leased
Premises, where possession is not restored to Tenant within ten (10) business
days or actively contested by Tenant within such 10 day period;
(7) Attachment. The attachment, execution or other judicial
seizure of all or substantially all of Tenant's assets or the Leased Premises,
if such attachment or other seizure remains undismissed or undischarged for a
period of ten (10) business days after the levy thereof;
(8) Insolvency. The admission by Tenant in writing of its
inability to pay its debts as they become due; the filing by Tenant of a
petition seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation; the filing by Tenant of an answer admitting or failing timely
to contest a material allegation of a petition filed against Tenant in any such
proceeding; or, if within sixty (60) days after the commencement of any
proceeding against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed;
(9) [Intentionally deleted.]
(10) [Intentionally deleted.]
(11) Misrepresentation. The discovery by Landlord that any
material representation, warranty or financial statement given to Landlord by
Tenant was materially false or misleading.
(b) Remedies Upon Default:
(1) Termination. If an event of default occurs, Landlord shall
have the right, with or without notice or demand, except as otherwise provided
in this Lease, immediately (after expiration of any applicable grace period
specified herein) to terminate this Lease, and at any time thereafter recover
possession of the Leased Premises or any part thereof and expel and remove
therefrom Tenant and any other person occupying the same, by any lawful means,
and again repossess and enjoy the Leased Premises without prejudice to any of
the remedies that Landlord may have under this Lease, or at law or in equity by
reason of Tenant's default or of such termination.
(2) Continuation After Default. Even though Tenant has breached
this Lease and/or abandoned the Leased Premises, this Lease shall continue in
effect for so long as Landlord does not terminate Tenant's right to possession
under Section 7.08(b)(1) hereof in writing, and Landlord may enforce all of its
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rights and remedies under this Lease, including (but without limitation) the
right to recover Rent as it becomes due, and Landlord, without terminating this
Lease, may exercise all of the rights and remedies of a landlord under Section
1951.4 of the Civil Code of the State of California or any amended or successor
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code section. Acts of maintenance or preservation, efforts to relet the Leased
Premises or the appointment of a receiver upon application of Landlord to
protect Landlord's interest under this Lease shall not constitute an election to
terminate Tenant's right to possession. If Landlord elects to relet the Leased
Premises for the account of Tenant, the rent received by Landlord from such
reletting shall be applied as follows: first, to the payment of any indebtedness
other than Rent due hereunder from Tenant to Landlord; second, to the payment of
any costs of such reletting; third, to the payment of the cost of any
alterations or repairs to the Leased Premises; fourth, to the payment of Rent
due and unpaid hereunder and the balance, if any, shall be held by Landlord and
applied in payment of future Rent as it becomes due. If that portion of rent
received from the resetting which is applied against the Rent due hereunder is
less than the amount of the Rent due, Tenant shall pay the deficiency to
Landlord promptly upon demand by Landlord. Such deficiency shall be calculated
and paid monthly. Tenant shall also pay to Landlord, as soon as determined, any
costs and expenses incurred by Landlord in connection with such reletting or in
making alterations and repairs to the Leased Premises, which are not covered by
the rent received from the reletting.
(c) Damages Upon Termination. Should Landlord terminate this Lease
pursuant to the provisions of Section 7.08(b)(1) hereof, Landlord shall have all
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the rights and remedies of a landlord provided by Section 1951.2 of the Civil
Code of the State of California. Upon such termination, in addition to any other
rights and remedies to which Landlord may be entitled under applicable law,
Landlord shall be entitled to recover from Tenant: (i) the worth at the time of
award of the unpaid Rent and other amounts which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such Rent loss that Tenant proves could have been
reasonably avoided; (iii) the worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such Rent loss that Tenant proves could be reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result
therefrom. The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) shall be computed with interest at the lesser of Prime (as
defined in the following sentence), plus five percent (5%) per annum or the
maximum rate then allowed by law (the "Default Rate"). The term Prime Rate shall
be that rate designated as such by Bank America as its Prime Rate to its most
credit worthy customers. The "worth at the time of award" of the amount referred
to in clause (iii) shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of the award plus
one percent (1%). The foregoing notwithstanding, Landlord shall use commercially
reasonable efforts to relet the Leased Premises at fair market rents.
(d) Computation of Rent for Purposes of Default. For purposes of
computing unpaid Rent which would have accrued and become payable under this
Lease pursuant to the provisions of Section 7.08(c), unpaid Rent shall consist
of the sum of:
(1) the total Base Rent for the balance of the Term, plus
(2) a computation of Tenant's Proportionate Share of Basic
Operating Cost for the balance of the Term, the assumed amount for the
Computation Year of the default and each future Computation Year in the Term to
be equal to Tenant's Proportionate Share of Basic Operating Cost for the
Computation Year immediately prior to the year in which default occurs,
compounded at a per annum rate equal to the mean average rate of inflation for
the preceding five (5) calendar years as determined by the United States
Department of Labor, Bureau of Labor Statistics Consumer Price Index (All Urban
Consumers, All items (1982-84=100)) for the Metropolitan Area or Region in which
the Project is located. If such Index
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is discontinued or revised, the average rate of inflation shall be determined by
reference to the index designated as the successor or substitute index by the
government of the United States.
(e) Late Charge. If any payment required to be made by Tenant under
this Lease is not received by Landlord on or within five (5) days of the date
the same is due, Tenant shall pay to Landlord an amount equal to four percent
(4%) of the delinquency. The parties agree that Landlord would incur costs not
contemplated by this Lease by virtue of such delinquencies, including without
limitation administrative, collection, processing and accounting expenses, the
amount of which would be extremely difficult to compute, and the amount stated
herein represents a reasonable estimate thereof. Acceptance of such late charge
by Landlord shall in no event constitute a waiver of Tenant's breach or default
with respect to such delinquency, or prevent Landlord from exercising any of
Landlord's other rights and remedies.
(f) Interest on Past-Due Obligations. Except as expressly otherwise
provided in this Lease, any Rent due Landlord hereunder, other than late
charges, which is not received by Landlord on the date on which it was due,
shall bear interest from the day after it was due at the Default Rate, in
addition to the late charge provided for in Section 7.08(e).
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(g) Landlord's Right to Perform. Notwithstanding anything to the
contrary set forth elsewhere in this Lease, in the event Tenant fails to perform
any affirmative duty or obligation of Tenant under this Lease, then within five
(5) business days after written notice to Tenant (and without notice in case of
an emergency) Landlord may (but shall not be obligated to) perform such duty or
obligation on Tenant's behalf, including, without limitation, the obtaining of
insurance policies or governmental licenses, permits or approvals. Tenant shall
reimburse Landlord upon demand for the costs and expenses of any such
performance (including penalties, interest and attorneys' fees incurred in
connection therewith). Such costs and expenses incurred by Landlord shall be
deemed Additional Rent hereunder.
(h) Remedies Cumulative. All rights, privileges and elections or
remedies of Landlord are cumulative and not alternative with all other rights
and remedies at law or in equity to the fullest extent permitted by law.
(i) Waiver. Tenant waives any right of redemption or relief from
forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or
under any other present or future law in the event Tenant is evicted and
Landlord takes possession of the Leased Premises by reason of a default.
Article 8.
Options to Renew
8.01. Option to Renew.
(a) Landlord hereby grants to Tenant two (2) options (respectively,
the "First Option" and "Second Option", individually an "Option")) to extend the
Term of this Lease, each for an additional period of five (5) years (the "Option
Term"), all on the following terms and conditions:
(1) The Option must be exercised, if at all, by written notice
irrevocably exercising the Option ("Option Notice") delivered by Tenant to
Landlord not later than twelve (12) months prior to the Term Expiration Date
with respect to the First Option and not later than twelve (12) months prior to
the expiration date of the First Option Term ("First Option Expiration Date")
with respect to the Second Option. Further, the First Option or the Second
Option, as the case may be, shall not be deemed to be
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properly exercised if, as of the date of the Option Notice or at the expiration
date of the Term or at the First Option Expiration Date, as the case may be, (i)
Tenant is in default under this Lease, (ii) Tenant has assigned this Lease or
its interest therein (other than to an affiliate or subsidiary of Tenant or as
otherwise provided in this Lease), or (iii) Tenant, or Tenant's affiliate or
subsidiary, is in possession of less than forty percent (40%) of the square
footage of the Premises. Provided Tenant has properly and timely exercised the
First Option (or the Second Option), the term of this Lease shall be extended
for the period of the First Option Term (or the Second Option Term), and all
terms, covenants and conditions of this Lease shall remain unmodified and in
full force and effect, except that the Leased Premises may be modified as
provided below and Base Rent shall be modified as set forth in Section
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8.01(a)(2) below. Tenant may exercise the Option for all, or a portion of the
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Leased Premises; however, if Tenant elects to exercise the Option for less than
the entirety of the Leased Premises, Tenant must either (i) exercise the Option
to lease the entire two-story Gibraltar Center II building or (ii) exercise the
Option to lease the entire one-story Gibraltar Center I building.
(2) The Base Rent payable for the First Option Term and the
Second Option Term shall be the then-current rental rate per rentable square
foot (as further defined below, "FMRR") being agreed to in new leases and
renewal leases by the Landlord and other landlords of buildings in the
Pleasanton, California area which are comparable in quality, location and
prestige to the Building ("Comparable Buildings") and tenants leasing space in
the Building or Comparable Buildings. Annual increases in Base Rent for the
First Option Term and the Second Option Term shall be the percentage that is
being agreed to at the time by Landlord and other landlords of Comparable
Buildings and tenants leasing space in the Building or Comparable Buildings. As
used herein, "FMRR" shall mean the rental rate per rentable square foot for
which Landlord and other landlords are entering into new leases and renewal
leases within the time period of fifteen (15) to twelve (12) months prior to the
Term Expiration Date or the First Option Expiration Date, as the case may be
("Market Determination Period"), with new tenants leasing from Landlord and/or
other landlords office space in the Building and/or Comparable Buildings taking
into account free rent; brokerage fees; tenant improvements; the location,
quality and age of the building; the use, location, size and/or floor levels of
the space in question; term or length of the lease; relocation/moving
allowances; space planning allowances; refurbishment and painting allowances;
extent of building operating expense services provided or to be provided; and
other concessions being made to tenants ("Comparative Transactions"). To the
extent such other Comparable Buildings have historically received lower or
higher rents from the rents in the Building, then for the purpose of arriving at
the FMRR, such rates when used to establish the FMRR in the Building shall be
increased or decreased as appropriate to reflect such historical differences.
Landlord shall provide its determination of the FMRR to Tenant within twenty
(20) days after Landlord receives the Option Notice. Tenant shall have fifteen
(15) days ("Tenant's Review Period") after receipt of Landlord's notice of the
FMRR within which to accept such FMRR or to reasonably object thereto in
writing. In the event Tenant objects to the FMRR submitted by Landlord, Landlord
and Tenant shall attempt to agree upon such FMRR. If Landlord and Tenant fail to
reach agreement on such FMRR within fifteen (15) days following Tenant's Review
Period (the "Outside Agreement Date"), then each party shall place in a separate
sealed envelope its final proposal as to FMRR and such determination shall be
submitted to arbitration in accordance with subparagraph 8.01(b) below.
(b) Landlord and Tenant shall meet with each other with in five (5)
business days of the Outside Agreement Date and exchange the sealed envelopes
and then open such envelopes in each other's presence. If Landlord and Tenant do
not mutually agree upon the FMRR within one (1) business day of the exchange and
opening of envelopes, then, within ten (10) business days of the exchange and
opening of envelopes, Landlord and Tenant shall agree upon and jointly appoint
one arbitrator who shall be by profession be a real estate appraiser or broker
who shall have been active over the five (5) year period ending on the date of
such appointment in the leasing of comparable commercial properties in the
vicinity of the
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Building. Neither Landlord nor Tenant shall consult with such broker or
appraiser as to his or her opinion as to FMRR prior to the appointment. The
determination of the arbitrator shall be limited solely to the issue of whether
Landlord's or Tenant's submitted FMRR for the Premises is the closer to the
actual rental rate per rentable square foot for new leases within the Market
Determination Period for Comparative Transactions. Such arbitrator may hold such
hearings and require such briefs as the arbitrator, in his or her sole
discretion, determines is necessary. In addition, Landlord or Tenant may submit
to the arbitrator with a copy to the other party within five (5) business days
after the appointment of the arbitrator any data and additional information that
such party deems relevant to the determination by the arbitrator ("Data") and
the other party may submit a reply in writing within five (5) business days
after receipt of such Data.
(1) The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to whether the parties shall use Landlord's or
Tenant's submitted FMRR, and shall notify Landlord and Tenant of such
determination.
(2) The decision of the arbitrator shall be binding upon
Landlord and Tenant.
(3) If Landlord and Tenant fail to agree upon and appoint such
arbitrator, then the appointment of the arbitrator shall be made by the American
Arbitration Association.
(4) The cost of arbitration shall be paid by Landlord and
Tenant equally.
(5) The arbitration proceeding and all evidence given or
discovered pursuant thereto shall be maintained in confidence by all parties.
Article 9.
Miscellaneous Matters
9.01. Parking.
(a) Provided Tenant is not in default of any term or provision of
this Lease, Landlord agrees to provide Tenant for use by the employees, agents,
customers and invitees of Tenant the number of parking spaces designated on the
Basic Lease Information sheet on an unreserved and unassigned basis on those
portions of the Project designated by Landlord for parking. Tenant shall not use
more parking spaces than said number of parking spaces. The parking spaces will
not be separately identified and Landlord shall have no obligation to monitor
the use of the parking area. If a parking density problem occurs during the
Term, Landlord may address the problem, in its discretion, which solution may
include initiating a parking permit system or a reserved parking system and any
costs associated therewith (including, without limitation, costs of patrolling
the parking lot for compliance with the parking system) shall constitute a Basic
Operating Cost. All parking shall be subject to any and all rules and
regulations adopted by Landlord in its discretion from time to time. Only
automobiles no larger than full size passenger automobiles or pick-up trucks or
standard business use vehicles (which do not require parking spaces larger than
full size passenger automobiles) may be parked in the Project parking area.
Tenant shall not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, agents, customers or invitees to be loaded,
unloaded or parked in areas other than those reasonably designated by Landlord
for such activities. A failure by Tenant or any of its employees, agents,
customers or invitees to comply with the foregoing provisions shall afford
Landlord the right, but not the obligation, without notice, in addition to any
other rights and remedies available under this Lease, to remove and to tow away
the vehicles involved and to charge the cost to Tenant, which cost shall be
immediately due and payable within ten (10) days of demand by Landlord.
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If Tenant relinquishes in writing (or by nonpayment, if a parking fee is
charged) any of such parking rights during the Term, Tenant shall no longer have
a right to the parking relinquished and may obtain future parking solely on a
space-available basis.
(b) Landlord reserves the right to charge a per-car parking fee
during the Term if such parking fees are mandated or otherwise imposed by
applicable law.
9.02. Brokers. Landlord has been represented in this transaction by
Landlord's Broker. Tenant has been represented in this transaction by Tenant's
Broker. Upon full execution of this Lease by both parties, Landlord shall pay to
Landlord's Broker and Tenant's Broker a fee for brokerage services rendered by
it in this transaction provided for in separate written agreements between
Landlord and Landlord's Broker and Landlord and Tenant's Broker.
Tenant represents and warrants to Landlord that the brokers named in the
Basic Lease Information sheet are the only agents, brokers, finders or other
similar parties with whom Tenant has had any dealings in connection with the
negotiation of this Lease and the consummation of the transaction contemplated
hereby. Tenant hereby agrees to indemnify, defend and hold Landlord free and
harmless from and against liability for compensation or charges which may be
claimed by any agent, broker, finder or other similar party by reason of any
dealings with or actions of Tenant in connection with the negotiation of this
Lease and the consummation of this transaction, including any costs, expenses
and attorneys' fees incurred with respect thereto.
9.03. No Waiver. No waiver by either party of the default or breach of any
term, covenant or condition of this Lease by the other shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent default or
breach by the other of the same or of any other term, covenant or condition
hereof. Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to, or approval of, any
subsequent or similar act by Tenant, or be construed as the basis of an estoppel
to enforce the provision or provisions of this Lease requiring such consent.
Regardless of Landlord's knowledge of a default or breach at the time of
accepting Rent, the acceptance of Rent by Landlord shall not be a waiver of any
preceding default or breach by Tenant of any provision hereof, other than the
failure of Tenant to pay the particular Rent so accepted. Any payment given
Landlord by Tenant may be accepted by Landlord on account of monies or damages
due Landlord, notwithstanding any qualifying statements or conditions made by
Tenant in connection therewith, which statements and/or conditions shall be of
no force or effect whatsoever unless specifically agreed to in writing by
Landlord at or before the time of deposit of such payment.
9.04. Recording. Either Landlord or Tenant shall, upon request of the
other, execute, acknowledge and deliver to the other a short form memorandum of
this Lease for recording purposes in a form reasonably acceptable to both Tenant
and Landlord.
9.05. Holding Over. If Tenant holds over after expiration or termination of
this Lease without the written consent of Landlord, Tenant shall pay for each
month of hold-over tenancy one hundred fifty percent (150%) of the Net Rent
which Tenant was obligated to pay for the month immediately preceding the end of
the Term for each month or any part thereof of any such hold-over period,
together with such other amounts as may become due hereunder. No holding over by
Tenant after the Term shall operate to extend the Term. In the event of any
unauthorized holding over, Tenant shall indemnify, defend and hold Landlord
harmless from and against all claims, demands, liabilities, losses, costs,
expenses (including attorneys'fees), injury and damages incurred by Landlord as
a result of Tenant's delay in vacating the Leased Premises. Any holding over
with the consent of Landlord in writing shall thereafter constitute this Lease a
lease from
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month-to-month, terminable upon thirty (30) days' notice from either party, at a
monthly rental rate of twice the Net Rent which Tenant was obligated to pay for
the month immediately preceding the end of the Term, together with such other
amounts as may become due hereunder.
9.06. Transfers by Landlord. The term "Landlord" as used in this Lease
shall mean the owner(s) at the time in question of the fee title to the Leased
Premises or, if this is a sublease, of the Tenant's interest in the master
lease. If Landlord transfers, in whole, its rights and obligations under this
Lease or in the Project, upon its transferee's assumption of all of Landlord's
obligations and indemnities hereunder and delivery to such transferee of any
unused Security Deposit then held by Landlord, no further liability or
obligations shall thereafter accrue against the transferring or assigning person
as Landlord hereunder. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Landlord shall be binding only
upon the Landlord as defined in this Section 9.06.
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9.07. Attorneys' Fees. In the event either party places the enforcement of
this Lease, or any part of it, or the collection of any Rent due, or to become
due, hereunder, or recovery of the possession of the Leased Premises, in the
hands of an attorney, or files suit upon the same, the prevailing party shall
recover its reasonable attorneys' fees, costs and expenses, including those
which may be incurred on appeal. Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not suit is filed or any suit that may
be filed is pursued to decision or judgment. The term "prevailing party" shall
include, without limitation, a party who substantially obtains or defeats the
relief sought, as the case may be, whether by compromise, settlement, judgment,
or the abandonment by the other party of its claim or defense. The attorneys'
fee award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys' fees reasonably incurred.
9.08. Termination; Merger. No act or conduct of Landlord, including,
without limitation, the acceptance of keys to the Leased Premises, shall
constitute an acceptance of the surrender of the Leased Premises by Tenant
before the scheduled Term Expiration Date. Only a written notice from Landlord
to Tenant shall constitute acceptance of the surrender of the Leased Premises
and accomplish a termination of this Lease. Unless specifically stated otherwise
in writing by Landlord, the voluntary or other surrender of this Lease by
Tenant, the mutual termination or cancellation hereof, or a termination hereof
by Landlord for default by Tenant, shall automatically terminate any sublease or
lesser estate in the Leased Premises; provided, however, Landlord shall, in the
event of any such surrender, termination or cancellation, have the option to
continue any one or all of any existing subtenancies, but without any continuing
obligation by Tenant to such sublessee or lessor estate. Landlord's failure
within thirty (30) days following any such event to make any written election to
the contrary by written notice to the holder of any such lesser interest, shall
constitute Landlord's election to have such event constitute the termination of
such interest.
9.09. Amendments; Interpretation. This Lease may not be altered, changed or
amended, except by an instrument in writing signed by the parties in interest at
the time of the modification. The captions of this Lease are for convenience
only and shall not be used to define or limit any of its provisions.
9.10. Severability. If any term in or provision of this Lease, or the
application thereof to any person or circumstances, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected thereby, and each provision of
this Lease shall be valid and shall be enforceable to the fullest extent
permitted by law.
9.11. Notices. All notices, demands, consents and approvals which are
required or permitted by this Lease to be given by either party to the other
shall be in writing and shall be deemed to have been fully
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given by personal delivery or by recognized overnight courier service or when
deposited in the United States mail, certified or registered, with postage
prepaid, and addressed to the party to be notified at the address for such party
specified on the Basic Lease Information sheet, or to such other place as the
party to be notified may from time to time designate by at least fifteen (15)
days' notice to the notifying party given in accordance with this Section 9.11,
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except that upon Tenant's taking possession of the Leased Premises, the Leased
Premises shall constitute Tenant's address for notice purposes. A copy of all
notices given to Landlord under this Lease shall be concurrently transmitted to
such party or parties at such addresses as Landlord may from time to time
hereafter designate by notice to Tenant.
Any notice sent by registered or certified mail, return receipt requested,
shall be deemed given on the date of delivery shown on the receipt card, or if
no delivery date is shown, the postmark thereon. Notices delivered by recognized
overnight courier shall be deemed given twenty-four (24) hours after delivery of
the same to the courier. If notice is received on a Saturday, Sunday or legal
holiday, it shall be deemed received on the next business day. Tenant hereby
appoints as its agent to receive the service of all default notices and notice
of commencement of unlawful detainer proceedings the person in charge of or
apparently in charge of or occupying the Leased Premises at the time, and, if
there is no such person, then such service may be made by attaching the same on
the main entrance of the Leased Premises.
9.12. Force Majeure. Any prevention, delay or stoppage of work to be
performed by Landlord or Tenant which is due to strikes, labor disputes,
inability to obtain labor, materials, equipment or reasonable substitutes
therefor, acts of God, governmental restrictions or regulations or controls,
judicial orders, enemy or hostile government actions, civil commotion, or other
causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period equal
to the duration of that prevention, delay or stoppage. Nothing in this Section
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9.12 shall excuse or delay Tenants obligation to pay Rent or other charges due
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under this Lease.
9.13. Guarantor. [Intentionally deleted.]
9.14. Successors and Assigns. This Lease shall be binding upon and inure to
the benefit of Landlord, its successors and assigns (subject to the provisions
hereof, including, without limitation, Section 5.15), and shall be binding upon
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and inure to the benefit of Tenant, its successors, and to the extent assignment
or subletting, may be approved by Landlord hereunder, Tenant's assigns or
subtenants.
9.15. Further Assurances. Landlord and Tenant each agree to promptly sign
all documents reasonably requested to give effect to the provisions of this
Lease.
9.16. Incorporation of Prior Agreements. This Lease, including the exhibits
and addenda attached to it, contains all agreements of Landlord and Tenant with
respect to any matter referred to herein. No prior agreement or understanding
pertaining to such matters shall be effective.
9.17. Applicable Law. This Lease shall be governed by, construed and
enforced in accordance with the laws of the State of California.
9.18. Time of the Essence. Time is of the essence of each and every
covenant of this Lease. Each and every covenant, agreement or other provision of
this Lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease or on any other covenant or agreement set forth herein.
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9.19. No Joint Venture. This Lease shall not be deemed or construed to
create or establish any relationship of partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.
9.20. Authority. If Tenant is a corporation, trust or general or limited
partnership, each individual executing this Lease on behalf of Tenant represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on Tenant's behalf and that this Lease is binding upon Tenant in accordance with
its terms. If Tenant is a corporation, trust or partnership, Tenant shall,
within ten (10) business days after request by Landlord, deliver to Landlord
evidence satisfactory to Landlord of such authority.
9.21. Declaration of Covenants, Conditions and Restrictions. Tenant
acknowledges that it has received and read the CC&Rs for the Project and agrees
to comply with and be bound by all terms, conditions and provisions thereof.
Tenant further acknowledges and agrees that a default by Tenant under the CC&Rs
shall constitute a default hereunder. All obligations of Landlord hereunder
shall be limited to the extent performance of same is prohibited, restricted or
limited under the CC&Rs.
9.22. Offer. Preparation of this Lease by Landlord or Landlord's agent
and submission of same to Tenant shall not be deemed an offer to lease to
Tenant. This Lease is not intended to be binding and shall not be effective
until fully executed by both Landlord and Tenant.
9.23. Waiver and Consent. Landlord shall reasonably waive any rights to
furniture, trade fixtures or equipment installed by Tenant in the Leased
Premises which is collateral under a loan agreement for such furniture, trade
fixtures or equipment.
9.24. Collocation Agreements. Landlord acknowledges and agrees that
Tenant may enter into agreements with end users of voice, video, data, computer,
telco, and telephone systems and equipment ("Collocation Agreements") provided
for physical location of such equipment within the Premises, provided that such
Collocation Agreements shall be subject and subordinate to the Lease and to any
mortgages, deeds of trust, or land sale contracts (hereinafter collectively
referred to as "encumbrances") now or in the future, against the Building. All
Collocation Agreements shall contain provisions: (i) unconditionally
acknowledging and agreeing to such subordination; (ii) requiring the parties
thereto to execute such documents as may reasonably be requested by Landlord or
the holder of the encumbrance to evidence the subordination; (iii) disclaiming
any right or interest in the Premises or the Lease; (iv) affirming that the
rights to locate such equipment and other items in the Premises shall terminate
as and when the Lease expires or is sooner terminated; (v) requiring,
notwithstanding any provision of the Collation Agreement, that the parties
thereto comply with the Lease, including without limitation, the rules and
regulations, from time to time in effect under the Lease; and (vi) having the
Tenant and other parties to such Collocation Agreement agreeing to indemnify,
defend and hold Landlord harmless from and against any claims, loss or damages
arising out of or relating to the Collocation Agreements. Tenant may enter into
Collocation Agreements with third parties, for the use of the Leased Premises in
the manner set forth above, at the sole discretion of Tenant; and, any provision
of the subletting and assignment provisions of the lease to the contrary
notwithstanding, such Collation Agreements shall not be construed as an
assignment or sublet.
9.25. Year 2000 Warranty. With respect to all Building systems, Landlord
represents and warrants to the best of Landlord's knowledge that:
(a) the functionality of such systems, including, but not limited
to, any operating software, will not be affected by the change from the year
1999 to the year 2000 or by the existence of a leap year;
42
<PAGE>
(b) any software operating any such systems will correctly input,
store, process, sort and output all date information for dates before, on any
after January 1, 2000; and,
(c) all dates that are input, stored, processed, sorted or output
by any software operating any such system will be in formats that preserve
century, decade and year information.
If any essential services (such as HVAC, passenger elevators, electricity,
water) supplied by Landlord are interrupted, and the interruption is due to an
operating software failure caused by the change from the year 1999 to the year
2000 regardless of Landlord knowledge, Tenant shall be entitled to an abatement
of Rent and Additional Rent for the period of such interruption. The abatement
shall begin on the day of the interruption or when Tenant stops using the
Premises because of the interruption, whichever is later. The abatement shall
end when the services are fully restored. Tenant shall have the option to cancel
the Lease if the interruption unreasonably and materially interferes with
Tenant's use of or access to the Premises such that the Premises are rendered
untenantable or at lease thirty (30) consecutive days and Landlord is not
exercising its best efforts to restore the services. To exercise this option,
Tenant must give Landlord notice of the cancellation within ten (10) days from
the end of the thirty (30) day period.
9.26. Consents by Landlord or Tenant. Whenever any provision in the Lease
requires either party's consent, Landlord and Tenant agree that such consent
shall not be unreasonably conditioned, withheld or delayed in light of the
party's unique business needs.
9.27. Exhibits; Addenda. The following Exhibits and addenda are attached
to, incorporated in and made a part of this Lease: Exhibit A Floor Plan of the
---------
Leased Premises; Exhibit B Initial Improvement of the Leased Premises; Exhibit C
--------- ---------
Confirmation of Term of Lease; Exhibit D Building Rules and Regulations; Exhibit
--------- -------
E Form of Fleet National Bank's Lease Subordination, Non-Disturbance and
- -
Attornment Agreement; and Exhibit F Arbitration Procedure.
---------
[Remainder of page Intentionally left blank; signature page to follow.]
43
<PAGE>
9.28. Tenant and Landlord agree that in the event that Tenant only
occupies one of the two buildings, than tenant and Landlord shall revise this
Lease to reflect the proper allocation of costs and uses of a multitenant
facility.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first written above.
"LANDLORD":
CEP GIBRALTAR LLC, a Delaware limited liability
company
By: CEP INVESTORS XI LLC,
a Delaware limited liability company,
its sole Member
By: EPI INVESTORS XI LLC,
a California limited liability company,
its Manager
By: Ellis Partners, Inc.,
a California corporation,
its Manager
By: /s/ James F. Ellis
-------------------------------
Name: JAMES F. ELLIS
-------------------------------
Title: Vice President
-------------------------------
"TENANT":
DIGITAL BROADCAST NETWORK CORPORATION,
a Missouri corporation
By: /s/ Bernard Schneider
------------------------------------------
Typed Name: Bernard Schneider
----------------------------------
Title: President & Chief Executive Officer
---------------------------------------
By: /s/ Mark Ivis
------------------------------------------
Typed Name: Mark Ivis
----------------------------------
Title: Vice President
---------------------------------------
44
<PAGE>
EXHIBIT A
FLOOR PLAN
OF THE
LEASED PREMISES
45
<PAGE>
[GRAPHIC OMITTED]
EXHIBIT "A"
46
<PAGE>
EXHIBIT B
INITIAL IMPROVEMENT OF THE LEASED PREMISES
1. Tenant Improvements and Landlord Improvements. (The term "Landlord
---------------------------------------------
Shell Improvements" and the term "Landlord Improvements" shall have the same
meaning.) Tenant shall select a qualified specialty general contractor (the
"Contractor") and qualified subcontractors to construct and install the Tenant
Improvements (as defined below). The Contractor selected shall be subject to the
prior approval of Landlord, which approval Landlord shall not unreasonably
withhold, condition or delay. The Contractor shall construct and install the
tenant improvements (the "Tenant Improvements") in the Leased Premises,
substantially in accordance with plans, working drawings and specifications
("Tenant's Plans") prepared by Tenant's architects and approved by Landlord and
Tenant, which approval shall not be unreasonably withheld, conditioned or
delayed by either party. Landlord in its sole and absolute discretion, shall
perform, or may enter into a contract with one or more contractor(s) or
subcontractor(s) to perform, all or a portion of Landlord Shell Improvements in
accordance with Schedule B(1); however, any resulting coordination of site
construction shall be at the reasonable discretion of Tenant's Contractor. In
the event that such coordination results in additional costs to either Landlord
or Tenant, each shall absorb its own additional costs. The costs of preparing
Tenant's Plans and performing the Tenant Improvements and Landlord Improvements
shall be allocated between, and paid by, Landlord and Tenant as set forth in
this Exhibit B and Schedule B(1) and Schedule B(2) attached hereto.
---------
2. Landlord's Provision of Existing As-Built Drawings. To the extent in
--------------------------------------------------
Landlord's possession, Landlord had provided Tenant with a set of base building
drawings and documentation including architectural, mechanical, plumbing,
engineering, electrical and life-safety drawings, together with similar drawings
for the Premises, and with said drawings in "soft" (CAD) form. No
representations are made by Landlord that such plans represent the current "as-
built" condition of the Premises ("Existing As-Built Drawings").
3. Tenant's Plans. Tenant and Landlord shall mutually approve Tenant's
--------------
Plans in writing; each party's approval shall not be unreasonably withheld,
conditioned or delayed. The architectural and engineering drawings portion of
Tenant's Plans shall be completed and submitted to Landlord for approval. If
Landlord shall not respond to Tenant's requested approval within such five (5)
business day period, then Landlord shall be deemed to have approved such plans
and specifications. If Landlord reasonably disapproves of Tenant's Plans, and
Tenant and Landlord are unable to agree upon such Plans or revised Plans within
five (5) additional days, then Tenant shall have the right to terminate this
Lease five (5) business days thereafter and Tenant's security deposit shall be
immediately returned. Tenant's architects, engineers and/or the Contractor shall
submit the architectural and engineering drawings portion of Tenant's Plans to
the City of Pleasanton. Once the City of Pleasanton delivers its comments to the
architectural and engineering drawings portion of Tenant's Plans, Tenant's
architects shall promptly prepare a response to the comments and submit the
response to the City of Pleasanton Such architectural and engineering drawings,
as approved by Tenant, Landlord and all government agencies with jurisdictional
authority thereover, shall be referred to herein as the "Approved Working
Drawings". The Approved Working Drawings shall be incorporated in Tenant's
Plans. Tenant's Plans shall comply with all applicable codes, laws, ordinances,
rules and regulations, including without limitation all Laws, as such term is
defined in Article 6 of the Lease (collectively, "Applicable Laws"), shall not
adversely affect a Building shell or core or any systems, components or elements
of a Building, except as specifically provided herein or therein, shall be in a
form sufficient to secure the approval of all government authorities with
jurisdiction over such Building, and shall be otherwise satisfactory to Landlord
in Landlord's reasonable discretion. Tenant's Plans shall be complete plans,
working drawings and specifications for the layout, improvement and finish of
the Leased Premises consistent with the design and construction of the
47
<PAGE>
Building, including mechanical and electrical drawings and decorating plans,
showing as many of the following as possible:
(1) Location and type of all partitions;
(2) Location and type of all doors, with hardware and keying
schedule;
(3) Ceiling plans, including light fixtures;
(4) Location of telephone equipment room, with all special
electrical and cooling requirements;
(5) Location and type of all electrical outlets, switches, telephone
outlets, and lights;
(6) Location of all sprinklers (on a design build basis or in
consultation with a sprinkler engineer);
(7) Location and type of all equipment requiring special electrical
requirements;
(8) Location, weight per square foot and description of any heavy
equipment or filing system exceeding fifty (50) pounds per square foot live and
dead load;
(9) Requirements for air conditioning or special ventilation;
(10) Type and color of floor covering;
(11) Location, type and color of wall covering;
(12) Location, type and color of paint or finishes;
(13) Location and type of plumbing,
(14) Location and type of kitchen equipment;
(15) Indicate critical dimensions necessary for construction;
(16) Details showing all millwork with verified dimensions and
dimensions of all equipment to be built in, corridor entrances, bracing or
support of special walls or glass partitions, and any other items or information
requested by Landlord; and
(17) Location of all cabling relating to Tenant's base Tenant
Improvements.
4. Landlord Disclaimer of Tenant Plans. Landlord's review and approval
-----------------------------------
of Tenant's Plans shall not constitute, and Landlord shall not be deemed to have
made, any representation or warranty as to the compliance of the Tenant
Improvements with any laws or as to the suitability of the Leased Premises or
the Tenant Improvements for Tenant's needs.
48
<PAGE>
5. Construction.
------------
(1) The Tenant Improvements in the Leased Premises shall be completed
substantially in accordance with Tenant's Plans by Contractor in a good and
workmanlike manner, using all new materials except where otherwise approved by
Landlord and Tenant, in compliance with all Applicable Laws. Landlord shall have
no liability to Tenant if the Leased Premises is not suitable for Tenant's
occupancy or if Landlord or Tenant has not obtained all or any necessary permits
required for Tenant to occupy the Leased Premises by the Term Commencement Date
unless such delay is caused by Landlord's unreasonable delay in review and
approval of Tenant's plans or Landlord's breach of its obligations under this
Lease.
(2) Notwithstanding Tenant's obligations pursuant to Section 4(a)
above, Landlord shall be responsible for the following (collectively "Landlord's
Improvements"):
(1) Landlord shall provide or construct the Landlord Shell
Improvements, as defined in Schedule B(1) attached hereto, in the Leased
-------------
Premises at its sole cost and expense, including Landlord's direct hard and soft
costs for architectural, design, engineering services, and reimbursable expenses
in connection therewith, and permit and application fees, in connection with the
construction of the Shell Improvements and Landlord's obligations with respect
to the Facility Requirements ("Landlord's Costs");
(2) Landlord shall cooperate in the provision of, provide or
construct the Facility Requirements as defined in Schedule B(2) Facility
-------------
Requirements, at Landlord's sole cost and expense, except as specifically
provided otherwise in such Schedule B(2). Landlord's direct hard and soft costs
-------------
for architectural, design, engineering services and reimbursable expenses, as
well as permit and application fees, incurred in performing its obligations with
respect to the Facility Requirements, shall be included in Landlord's Costs; and
(3) Landlord shall provide temporary power and lighting (277/480
volt and 120/208 volt) and water to the Leased Premises twenty four (24) hours
per day, seven (7) days per week, during the construction period at no cost to
Tenant.
(3) Within ten (10) days after Substantial Completion, Tenant shall
cause a Notice of Completion to be recorded in the office of the Recorder of the
County of Alameda in accordance with Section 3093 of the Civil Code of the State
of California or any successor statute, and shall furnish a copy thereof to
Landlord upon such recordation. If Tenant fails to do so, Landlord may execute
and file the same on behalf of Tenant as Tenant's agent for such purpose, at
Tenant's sole cost and expense. At the conclusion of construction, Tenant shall
cause the architect, engineers and Contractor (i) to update the Approved Working
Drawings as necessary to reflect all changes made to the Approved Working
Drawings during the course of construction, (ii) to certify to the best of their
knowledge that the "record-set" of mylar as-built drawings are true and correct
as of the date completed, which certification shall survive the expiration or
termination of this Lease, and (iii) to deliver to Landlord two (2) sets of
copies of such record set of drawings within ninety (90) days following
issuance of a certificate of occupancy for the Leased Premises. Within ninety
(90) days after Substantial Completion, Tenant shall deliver to Landlord a copy
of all warranties, guaranties, and operating manuals and information relating to
the improvements, equipment, and systems in the Leased Premises that are
Landlord Improvements completed by Tenant.
49
<PAGE>
6. Landlord's Contribution.
-----------------------
(1) Subject to the condition precedent that Landlord has approved the
Tenant Plans, which approval shall not be unreasonably withheld; conditioned or
delayed, Landlord shall provide Tenant an allowance not to exceed a maximum
amount of THIRTY DOLLARS ($30.00) per square foot of Rentable Area, calculated
as THREE MILLION FIFTY THOUSAND TWO HUNDRED FIFTY DOLLARS ($3,050,250.00) based
upon a Rentable Area of 101,675 square feet ("Landlord's Contribution"), to
apply to Tenant Improvement Costs. Tenant Improvement Costs shall include the
following:
(1) the cost of Tenant Plans, including without limitation
reimbursable expenses by Tenant's architects;
(2) Landlord's direct hard and soft costs to review Tenant Plans
and supervise construction of Tenant Improvements, including without limitation
Landlord's internal costs, architects', engineers' and other consultants'
services, fees and reimbursable expenses in connection therewith ("Landlord's
Review and Supervision Costs") subject to the limitations described below;
(3) the cost to construct Facility Requirements which are not
allocated specifically to Landlord pursuant to Schedule B(1); and
-------------
(4) the direct costs of constructing Tenant Improvements other
than the Landlord's Improvements.
Notwithstanding the foregoing, Landlord may only offset up to an aggregate
amount of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) ("Review Expense Cap") of
Landlord's Contribution to reimburse Landlord for Landlord's review and
Supervision Costs as and when the same are incurred. Landlord's Review and
Supervision Costs in excess of the Review Expense Cap shall be borne and paid by
Landlord.
(2) Landlord shall pay Landlord's Contribution directly to Tenant
within ten days after the occurrence of the following: (i) Substantial
Completion; and (ii) receipt by Landlord of paid invoices and unconditional lien
releases for all work done by Tenant's architect(s), engineer(s) and Tenant's
Agents with respect to the Tenant Improvements; (iii) Term Commencement. Tenant
shall indemnify and protect Landlord against any liability for mechanics,
materialmen's and other liens or claims with respect to the Tenant Improvements
and shall obtain releases to liens as payments are made relating to such liens.
(3) Tenant Improvement Costs and any other costs (other than
Landlord's Costs) of preparing Tenant's Plans and constructing the Tenant
Improvements in excess of Landlord's Contribution shall be paid by Tenant.
7. Changes. Except for minor, immaterial or nonstructural changes, if
-------
Tenant requests any change in Tenant's Plans, Tenant shall request such change
in a written notice to Landlord. All changes in Tenant's Plans (except for minor
and immaterial changes) shall be subject to the prior written approval of
Landlord which shall be given within three (3) business days (which shall not be
unreasonably withheld) or shorter period of time if time is of the essence.
<PAGE>
8. Other Work by Tenant. All work not within the scope of the normal
--------------------
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring,
shall be furnished and installed by Tenant at Tenant's expense.
9. Requirements for Other Work Performed by Tenant. All other work
-----------------------------------------------
performed at the Buildings or in the Project by Tenant or Tenant's contractor or
subcontractors shall be subject to the following additional requirements:
(1) Such work shall not proceed until Landlord has approved in
writing which approval shall not be unreasonably withheld: (i) Tenant's
contractor, (ii) the amount and coverage of public liability and property damage
insurance, with Landlord named as an additional insured, carried by Tenant's
contractor, (iii) reasonably complete and detailed plans and specifications for
such work, and (iv) an anticipated schedule for the work.
(2) All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work is
commenced. In any case, all such work shall be performed in accordance with all
applicable laws. Notwithstanding any failure by Landlord to object to any such
work, Landlord shall have no responsibility for Tenant's failure to comply with
applicable laws.
(3) This section has been intentionally left blank.
(4) All subcontractors, laborers, materialmen and suppliers retained
directly by Tenant shall conduct their activities in and around the Leased
Premises, the Buildings and the Project in a harmonious relationship with all
other subcontractors, laborers, materialmen and suppliers at the Leased
premises, the Buildings and the Project, and, if necessary, Tenant shall employ
all reasonable efforts to achieve such harmonious relations.
(5) Tenant shall be responsible for cleaning the Leased Premises, the
Building and the Project and removing all debris in connection with the its
work. All completed work shall be subject to inspection and acceptance by
Landlord. Tenant shall reimburse Landlord for the cost all extra expense
incurred by Landlord by reason of faulty work done by Tenant or Tenant's
contractor or by reason of inadequate cleanup by Tenant or Tenant's contractor
which Landlord incurs after notice to Tenant and Tenant fails to complete.
Landlord will provide Tenant with copies of third party consultant invoices
within five (5) business days of Tenant's request for such invoices.
10. Tenant Delay. If the completion of the Tenant Improvements, including
------------
without limitation Landlord's Improvements, is delayed (i) at the request of
Tenant, (ii) by Tenant's failure to comply with the foregoing provisions
(including failure to pay any sums payable by Tenant within the time periods
specified herein), (iii) by changes in the Tenant's Plans ordered by Tenant or
by extra work ordered by Tenant, (iv) because Tenant chooses to have additional
work performed by Landlord, or (v) because of any other act or omission of
Tenant (collectively, "Tenant Delay"), then Tenant shall be responsible for all
costs and any expenses occasioned by such Tenant Delay including, without
limitation, any costs and expenses attributable to increases in labor or
materials; and, if such delay actually delays Substantial Completion beyond the
Term Commencement Date, then Tenant shall pay Lessor the Base Rent for the
entire period of such delay occuring after the Term Commencement Date.
<PAGE>
11. Delivery of Leased Premises for Occupancy. Prior to occupancy,
-----------------------------------------
Landlord shall, at Landlord's cost and without demand upon Landlord's
Contribution, deliver the Building clean and free of debris, with all
electrical, mechanical and plumbing systems in good working order.
12. Tenant's Warranties. Tenant represents, covenants and warrants, and
-------------------
acknowledges that Landlord is relying upon such covenants, representations and
warranties as a condition to Landlord's warranties under this Lease, as follows:
(1) Subject to Landlord's representation and warranty pursuant to
Section 16(1) of this Exhibit B, the Tenant Plans shall provide for, and upon
---------
Substantial Completion of the Tenant Improvements and the Facility Requirements
pursuant to the Tenant Plans, Building I and Building II shall have seismic
ratings no less than their respective ratings as of the effective date of this
Lease.
(2) Tenant Plans shall comply with all Applicable Laws and shall
provide for the design, engineering and construction of the Tenant Improvements,
including without limitation those Facility Requirements which are the
responsibility of Tenant to perform pursuant to Schedule B(2) hereof, in
-------------
compliance with (i) Applicable Laws, (ii) applicable standards of the American
Insurance Association (formerly the National Board of Fire Underwriters) and any
other similar body, and the National Electrical Code, and (iii) all building
material manufacturer's specifications.
(3) Subject to Landlord's representations and warranties with respect
to Landlord's Improvements specifically provided in the Lease and Section 16 of
this Exhibit B, Tenant Improvements and all of the Facility Requirements which
---------
are the responsibility of Tenant to perform pursuant to Schedule B(2) hereof,
-------------
including those Shell Improvements and Facilities Requirements performed by
Tenant hereunder at Landlord's cost, and all other work performed by Tenant
hereunder, shall be completed in a good and workmanlike manner, using new
materials, and in accordance with Applicable Laws, and, as of Substantial
Completion, shall be in compliance with (i) all Applicable Laws, except that
with respect to compliance with ADA Requirements, such representations and
warranty shall be limited to compliance of interior access and interior space of
the Leased Premises, (ii) applicable standards of the American Insurance
Association (formerly the National Board of Fire Underwriters) and any other
similar body, and the National Electrical Code, and (iii) all building material
manufacturer's specifications.
13. Tenant Warranties With Respect to Tenant's Agents: Contractor
-------------------------------------------------------------
Warranties. Tenant warrants that the Contractor (collectively, "Tenant's
- ----------
Agents") shall guarantee to Tenant and for the benefit of Landlord that the
portion of the Tenant Improvements for which it is responsible shall be free
from any defects in workmanship and materials for a period of not less than one
(1) year from the date of completion thereof or the period warranted by such
Tenant's Agent, whichever is longer. Each of Tenant's Agents shall be
responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion of the
work performed by such contractor or subcontractors and (ii) the Lease
Commencement Date. The correction of such work shall include, without additional
charge, all additional expenses and damages incurred in connection with such
removal or replacement of all or any part of the Tenant Improvements, and/or the
Building and/or common areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
the Tenant Improvements shall be contained in the contract with the Contractor
or subcontract with any subcontractor, as appropriate, and shall be written such
that such guarantees or warranties shall inure to the benefit of both Landlord
and Tenant, as their respective interests may appear, and can be directly
enforced by either. Tenant covenants to give to
<PAGE>
Landlord any assignment or other assurances which may be necessary to effect
such right of direct enforcement.
14. Tenant's Insurance Requirements. From the time Tenant accesses either
-------------------------------
of the Buildings and at all times through the date of Substantial Completion for
both Buildings, Tenant shall 1 maintain the following insurance coverage:
(1) General Coverages. All of Tenant's Agents shall carry worker's
-----------------
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in Article 7 of this Lease.
(2) Coverage Required by Lease. Tenant shall maintain the insurance
--------------------------
policies and coverage required by Section 7.02 and Section 7.03 of the Lease.
(3) Special Coverages. Landlord.
-----------------
(4) General Terms. Certificates for all insurance carried pursuant to
-------------
this Section 15 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor's equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days' prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance. In the event that the Tenant
Improvements are damaged by any cause during the course of the construction
thereof, Tenant shall immediately repair the same at Tenant's sole cost and
expense. Tenant's Agents shall maintain all of the foregoing insurance coverage
in force until the Tenant Improvements are fully completed and accepted by
Landlord. All policies carried under this Section 14 shall insure Landlord and
Tenant, as their interests may appear, as well as Contractor and Tenant's
Agents. All insurance, except Workers' Compensation, maintained by Tenant's
Agents shall preclude subrogation claims by the insurer against anyone insured
thereunder. Such insurance shall provide that it is primary insurance as
respects the Landlord and that any other insurance maintained by Landlord is
excess and noncontributing with the insurance required hereunder. The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under Section 15 of this Exhibit B.
---------
15. Tenant's Indemnification of Landlord. Tenant's indemnity of Landlord
------------------------------------
as set forth in Section 7.04 of this Lease shall also apply with respect to any
and all costs, losses, damages, injuries and liabilities related in any way to
any act or omission of Tenant or Tenant's Agents, or anyone directly or
indirectly employed by any of them, or in connection with Tenant's non-payment
of any amount arising out of the Tenant Improvements and/or Tenant's disapproval
of all or any portion of any request for payment. Such indemnity by Tenant, as
set forth in Section 7.04 of this Lease, shall also apply with respect to any
and all costs, losses, damages, injuries and liabilities related in any way to
Landlord's performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to
obtain any building permit or certificate of occupancy for the Premises.
53
<PAGE>
EXHIBIT B
INITIAL IMPROVEMENTS OF THE LEASED PREMISES
Schedule B(1)
-------------
Shell Improvements
------------------
Without demand upon the Improvement Allowance, at Landlord's sole expense,
prior to the Commencement Date, except as otherwise noted below, Landlord shall
cause the following "Shell Improvements":
(1) Painting of Building Exteriors. Landlord shall cause, or increase
------------------------------
Landlord's Contribution by the amount of an allowance for, the re-
painting of portions of the exterior of the Buildings in a color
scheme determined by Tenant and reasonably acceptable to Landlord and
subject to the approval of the Hacienda Owners' Association and the
City of Pleasanton;
(2) Gibraltar Center II Building Interior Alterations. With respect to the
-------------------------------------------------
two-story Gibraltar Center II Building, promptly following the
execution hereof, Landlord shall cause the removal of the existing
interior improvements including partition walls (but, excluding the
core area restrooms, elevator equipment room, base building mechanical
rooms, phone room, janitor closet and electrical rooms), any remaining
ceiling assembly, raised floor computer room including removal of
raised floor assembly, ceiling, mechanical systems, halon, etc., (but
excluding any restoration of the depressed slab), data/telecom wiring,
and such other items as Landlord and Tenant may mutual agree.
(3) Roof. Landlord shall cause, or increase Landlord's Contribution by the
----
amount of an allowance for, the replacement of the existing roof with
a bonded ten-year roof assembly (unless the existing roof has a
remaining useful life in excess of three (3) years);
(4) HVAC. Landlord shall cause, or increase Landlord's Contribution by the
----
amount of an allowance for, the replacement of the existing HVAC,
mechanical equipment, that does not have an estimated remaining useful
life, based on normal office use, in excess of three (3) years;
(5) Floors. Landlord shall, except for the depressed slab area of the two-
------
story Gibraltar Center I Building, complete any material floor
leveling required to the Building's floors that can not be reasonably
worked around by Tenant;
(6) Hardscape. Landlord shall cause the replacement of any damaged
---------
hardscape that has cracked, lifted or presents a tripping hazard;
(7) Parking Surfaces. Landlord shall cause any damaged sections of the
----------------
parking area to be removed and replaced and to cause the entire
asphalt surface to be slurry-sealed and to be striped in accordance
with first-class commercial standards;
(8) Lighting and Landscaping. Landlord shall ensure that all exterior
------------------------
lighting and landscaping systems are in good operable condition and
that the grounds are in first-class condition; and
54
<PAGE>
(9) Permits and Fees. Landlord shall pay all permits and fees associated
----------------
with Landlord's Shell Improvements.
(10) Landlord shall cause the base Building and all base building systems
to be in compliance with all Applicable Laws as of the Term
Commencement Date; however, any code compliance required by reason of
Tenant's specific use of the Premises, in excess of general office
use, shall be the responsibility of Tenant. With respect to compliance
costs applicable to the Americans With Disabilities Act, Landlord
shall cause, at Landlord's sole cost and expense, the path of travel
outside the Buildings to be ADA compliant as of the Term Commencement
Date.
55
<PAGE>
EXHIBIT B
Initial Improvements of the Leased Premises
Schedule B(2)
-------------
Facility Requirements
---------------------
Landlord and Tenant shall allocate responsibility for construction of the
following improvements as provided below ("Facility Requirements"):
(1) Electrical Service. Landlord shall, at Landlord's expense, except for
------------------
utility fees associated with the inadequate utility demand
requirements of Tenant, increase the existing 2,000 amp 480/277 volts
service of one of the Buildings, the actual building to be determined
by Tenant prior to the Commencement Date, to 4,000 amps, 480/277
volts, 3-phase, 4-wire. Additionally, Landlord shall provide Tenant
the right to upgrade, at Tenant's expense, the existing service to
either or both of the Buildings as Tenant may reasonably require.
(2) HVAC. Tenant anticipates a dedicated HVAC requirement of .5 tons per
----
100 square feet of demised area, sized between 75 and 100 tons, for
primary and redundant cooling needs. Aside from Landlord's
cooperation, all costs to install the foregoing shall be at Tenant's
expense.
(3) Emergency Generators. Landlord shall cooperate with Tenant in the
--------------------
installation of the three (3) emergency generators, sized between 800
and 1250 KVA, with accompanying fuel capacities totaling approximately
15,000 gallons, approved under the terms of the Lease. Aside from
Landlord's cooperation, all costs to install the foregoing shall be at
Tenant's expense.
(4) Core Drilling. Subject to Landlord's reasonably approval, Landlord
-------------
shall grant Tenant, at its sole cost and expense, the right to core
drill or otherwise penetrate the concrete slab floor of the Premises
and/or Building in order to: (1) to install conduits and
fiber/wire/cable therein; (2) to make necessary electrical
connections; (3) to make necessary HVAC connections; and, (4) to bolt
and/or anchor its computer hardware and telecommunications racks and
equipment.
(5) Dry Coolers/Condensing Units. Subject to Landlord's reasonable
------------------------------
approval, and that of the Hacienda Owners Association and the City Of
Pleasanton, Landlord shall grant Tenant, at its sole cost and expense,
the right to install dry coolers/condensing units necessary to
Tenant's HVAC system in a location within reasonably close proximity
to the Premises, and either at ground level or on the roof of the
Building, as such location and placement may be mutually acceptable to
Landlord and Tenant.
(6) Fiber Optic Connectivity. Landlord shall agree to cooperate, at its
------------------------
expense, with Tenant in granting redundant fiber optic access to the
Building, by a vendor selected by Tenant, for the purpose of providing
Tenant with such connectivity; however, the cost of providing such
fiber optic access to the Building shall be borne solely by Tenant.
Tenant shall require at least four (4) points of diverse entry at
opposing ends of the Building with not less that fifty (50) foot
separation. To the extent available for use and if desirable by
Tenant, Landlord shall grant Tenant the right to use, at its sole cost
and expense, existing fiber ducts installed by Landlord.
<PAGE>
EXHIBIT C
CONFIRMATION OF TERM OF LEASE
This Confirmation of Term of Lease is made by and between __________, a
_________, as Landlord, and ________________, a ____________, as Tenant, who
agree as follows:
1. Landlord and Tenant entered into a Lease dated _______________, 19___
(the "Lease"), in which Landlord leased to Tenant and Tenant leased from
Landlord the Leased Premises described in the Basic Lease Information sheet of
the Lease (the "Leased Premises").
2. Pursuant to Section 3.01 of the Lease, Landlord and Tenant agree to
------------
confirm the commencement date and expiration date of the Term of the Lease as
follows:
a. ____________________________, 19____, is the Term Commencement
Date;
b. ____________________________, 19____, is the Term Expiration
Date;
c. ____________________________, 19____, is the commencement date of
Rent under the Lease.
3. Tenant hereby confirms that the Lease is in full force and effect and:
a. It has accepted possession of the Leased Premises as provided in
the Lease;
b. The improvements and space required to be furnished by Landlord
under the Lease have been furnished,
c. Landlord has fulfilled all its duties of an inducement nature;
d. The Lease has not been modified, altered or amended, except as
follows:
_________________________________________________________________
________________; and
e. There are no setoffs or credits against Rent and no security
deposit has been paid except as expressly provided by the Lease.
[Remainder of page Intentionally left blank; signature page to follow.]
<PAGE>
4. The provisions of this Confirmation of Term of Lease shall inure to
the benefit of, or bind, as the case may require, the parties and their
respective successors, subject to the restrictions on assignment and subleasing
contained in the Lease.
DATED: ___________________________, 19____.
"LANDLORD": "TENANT".
__________ __________
a ________ a ________
By:___________________________ By:_______________________
Typed Name:___________________ Name:_____________________
Title:________________________ Title:____________________
<PAGE>
EXHIBIT D
BUILDING RULES AND REGULATIONS
1. The sidewalks, doorways, halls, stairways, vestibules and other
similar areas shall not be obstructed by Tenant or used by it for any purpose
other than ingress to and egress from the Leased Premises, and for going from
one part of the Building to another part. Corridor doors, when not in use, shall
be kept closed. Before leaving the Building, Tenant shall ensure that all doors
to the Leased Premises are securely locked and all water faucets are shut off.
2. Plumbing fixtures shall be used only for their designated purpose, and
no foreign substances of any kind shall be deposited therein. Damage to any such
fixtures resulting from misuse by Tenant or any employee or invitee of Tenant
shall be repaired at the expense of Tenant.
3. Tenant shall not mar or deface the Leased Premises in any way. Tenant
shall not place anything on or near the glass of any window, door or wall which
may appear unsightly from outside the Leased Premises.
4. Tenant shall assume all risks of damage and pay the cost of repairing
or providing compensation for damage to the Building, to articles moved and
injury to persons or property resulting from such moves. Landlord shall not be
liable for any acts or damages resulting from any such activity.
5. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways. No birds, fish or animals of any kind shall be brought into
or kept in, an or about the Leased Premises, with the exception of guide dogs
where necessary.
6. No cooking shall be done in the Leased Premises except in connection
with a convenience lunch room for the sole use of employees and guests (on a
non-commercial basis) in a manner which complies with all of the provisions of
the Lease and which does not produce fumes or odors.
7. Tenant shall not install or operate on the Leased Premises any
electric heater, stove or similar equipment without Landlord's prior written
consent. Tenant shall not use or keep on the Leased Premises any kerosene,
gasoline, or inflammable or combustible fluid or material other than limited
quantities reasonably necessary for the operation and maintenance of office
equipment utilized at the Leased Premises. No explosives shall be brought onto
the Project at any time.
8. Tenant shall not waste electricity, water or air conditioning and
agrees to cooperate fully with Landlord to assure the most effective operation
of the Building's heating and air conditioning and to comply with any
governmental energy-saving rules, laws or regulations of which Tenant has actual
notice.
9. Landlord retains the right at any time, without liability to Tenant,
to change the name of the Building, except as otherwise expressly provided in
the Lease with respect to signage.
10. No smoking shall be permitted in the Building.
11. Landlord reserves the right to rescind any of these rules and
regulations and to make future rules and regulations required for the safety,
protection and maintenance of the Project, the operation and preservation of the
good order thereof, and the protection and comfort of the tenants and their
employees and visitors; provided however, in no event shall any such
modifications to these rules and regulations either
<PAGE>
EXHIBIT F
---------
ARBITRATION PROCEDURE
---------------------
If a Dispute (as hereinafter defined) arises, then either party may
commence arbitration with respect to the Dispute by notice to the other party
("Arbitration Notice"). As used in this Exhibit F, the term "Dispute" shall be
limited to a dispute arising (i) under Section 5.04 of the Lease with respect to
Landlord's obligation to reimburse Tenant, (ii) under Section 4.06 of the Lease,
and/or (iii) with respect to whether a consent which, under the Lease, may be
denied only on a "reasonable basis" has in fact been denied on such a basis;
provided, however, that the term "Dispute" shall not, under any circumstances,
include disputes with respect to the payment of Rent (other than to the extent
that a dispute covered by the preceding clauses (i) and/or (ii) might affect
Tenant's obligation to pay Additional Rent). Within thirty (30) days of the
Arbitration Notice, Landlord and Tenant shall jointly select an arbitrator, or
if they are unable to reach agreement on the arbitrator, in accordance with the
then current arbitration rules and procedures (the "Rules") of JAMS-Endispute
("JAMS") from a list of qualified people maintained by JAMS. Neither Landlord
nor Tenant shall consult with such arbitrator as to his or her opinion as to the
Dispute prior to the appointment. The determination of the arbitrator shall be
limited solely to the Dispute. The arbitration shall take place in San
Francisco, California and all expedited procedures prescribed by the Rules shall
apply. Such arbitrator may hold hearings and require such briefs as the
arbitrator, in his or her sole discretion, determines is necessary. In addition,
Landlord or Tenant may submit to the arbitrator, with a copy to the other party,
within five (5) business days after the appointment of the arbitrator any data
and additional information that such party deems relevant to the determination
by the arbitrator and the other party may submit a reply in writing within five
(5) business days after receipt of such data and additional information. The
arbitrator shall conduct such evidentiary hearings as the arbitrator deems
necessary or appropriate.
1. The arbitrator shall, within thirty (30) days of his or her
appointment, reach a decision as to the Dispute, and shall notify Landlord and
Tenant of such determination.
2. The decision of the arbitrator shall be binding upon Landlord and
Tenant.
3. If Landlord and Tenant fail to agree upon other matters relating to
the arbitration, then the Rules shall govern such arbitration.
4. The cost of arbitration shall be paid by the substantially
unsuccessful party.
5. The arbitration proceeding and all evidence given or discovered
pursuant thereto shall be maintained in confidence by all parties.
6. Judgment upon the award rendered by the arbitrator may be entered by
either party in any court having jurisdiction, or application may be made to
such court for a judicial recognition of the award or an order of enforcement
thereof, as the case may be.
60
<PAGE>
(7) Intra-Building Risers. At no additional expense to Tenant, Tenant
---------------------
shall have the right to access the Buildings' risers for vertical and
horizontal telecommunications wire/cable distribution to the Premises
for mechanical distribution and for electrical distribution; however,
the cost of providing additional riser access to the Buildings shall
be borne solely by Tenant. If desired by Tenant and at no expense to
Landlord, Tenant may create a separate and secure MPOE (minimum point
of entry) on the ground floor of the Buildings, in a location mutually
agreed upon by Landlord and Tenant, with the square footage of such
area, and the rent applicable thereto, to be part of the Leased
Premises.
(8) Satellite Dish/Antennae. Subject to the approval by the Hacienda
-----------------------
Owners' Association and the City of Pleasanton, which, if required,
shall be obtained by Tenant at its expense, Tenant may, at its own
expense, install on the roof of the Buildings such antennae, satellite
dish or similar equipment as may be required to conduct its business,
at such locations and in such quantities as are reasonably approved by
Landlord. Tenant shall adhere to industry standards for installation
and workmanship, all work to be completed to Landlord's reasonable
satisfaction. All engineering and design work shall be undertaken by
Tenant, at its sole expense. Upon termination of the lease, Tenant
shall, if so requested by Landlord, remove all of Tenant's equipment
and shall repair, to Landlord's reasonable satisfaction, any damage
caused by the installation or removal of such equipment. To maintain
any roof warranty of the Buildings, Tenant shall use such roofing
contractors as directed by Landlord.
(9) Underground Boring. Tenant may lay four separate, distinct routes of
------------------
underground fiber optic cable to the Leased Premises, originating and
entering either or both of the buildings at opposing sides of each
building, with a separation of not less that fifty feet, as such
location may be agreed upon by Landlord and Tenant as provided below.
Tenant shall utilize computer driven underground directional boring
equipment to "trench" for its cable installation without disturbing
the sidewalk, landscape areas or the parking area with the possible
exception of a small "insertion" areas. Tenant will utilize expert
underground detection services to locate and avoid any utility or
similar lines or structures located below the driveway surface.
Further, Tenant shall indemnify and hold the Landlord harmless from
any potential liability from Tenant's underground boring activities.
Tenant shall submit to Landlord, for Landlord's prior approval, the
desired route of all underground boring.
(10) Fire Protection & Life Safety. Within a portion of the Leased
-----------------------------
Premises, Tenant, at its cost and expense, may install an additional
fire suppression system and modify any existing fire sprinkler system
within the Leased Premises to avoid a water discharge unless a real
fire threat exists. Said modifications may include the installation of
high temperature sprinkler heads and the modification of the sprinkler
control system effecting the Leased Premises such that the sprinkler
system will be a "dry-pipe", "pre-action" system controlled by a fire
sensor that will not pressurize the pipes with water until the sensor
"reads" a fire. Tenant will comply with the requirements of the local
fire protection authorities. Landlord, at Tenant's sole cost and
expense, will cooperate fully with Tenant in Tenant's efforts to
install a fire suppression system, including redundant fire
suppression systems, such as FM-200 or such other similar fire
suppression agent. Tenant, at its cost and expense, shall be
responsible for the restoration of the main sprinkler distribution.
61
<PAGE>
EXHIBIT B
INITIAL IMPROVEMENTS OF THE LEASED PREMISES
SCHEDULE 3
FM200
UPS
Transfer Switches
HVAC/Chillers installed by Tenant
DC Power Plant
Raised Access Flooring
Telecommunications Equipment
Security Systems
Plasma Screens and the like
Generators
62
<PAGE>
Exhibit 10.11
================================================================================
$25,000,000
CREDIT AGREEMENT
among
DIGITAL BROADCAST NETWORK CORPORATION,
(D/B/A INTIRA CORPORATION),
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of December 30, 1999
================================================================================
CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
SECTION 1. DEFINITIONS 1
1.1 Defined Terms 1
-------------
1.2 Other Definitional Provisions 18
-----------------------------
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 19
2.1 Revolving Commitments 19
---------------------
2.2 Procedure for Revolving Loan Borrowing 19
--------------------------------------
2.3 Swingline Commitment 20
--------------------
2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans 20
---------------------------------------------------------------
2.5 Commitment Fees, etc. 22
---------------------
2.6 Termination or Reduction of Revolving Commitments 22
-------------------------------------------------
2.7 Optional Prepayments 22
--------------------
2.8 Mandatory Prepayments and Revolving Commitment Reductions 23
---------------------------------------------------------
2.9 Conversion and Continuation Options 23
-----------------------------------
2.10 Limitations on Eurodollar Tranches 24
----------------------------------
2.11 Interest Rates and Payment Dates 24
--------------------------------
2.12 Computation of Interest and Fees 25
--------------------------------
2.13 Inability to Determine Interest Rate 25
------------------------------------
2.14 Pro Rata Treatment and Payments 26
-------------------------------
2.15 Requirements of Law 27
-------------------
2.16 Taxes 28
-----
2.17 Indemnity 30
---------
2.18 Change of Lending Office 30
------------------------
2.19 Replacement of Lenders 30
----------------------
SECTION 3. LETTERS OF CREDIT 31
3.1 L/C Commitment 31
--------------
3.2 Procedure for Issuance of Letter of Credit 31
------------------------------------------
3.3 Fees and Other Charges 32
----------------------
3.4 L/C Participations 32
------------------
3.5 Reimbursement Obligation of the Borrower 33
----------------------------------------
3.6 Obligations Absolute 33
--------------------
3.7 Letter of Credit Payments 34
-------------------------
3.8 Applications 34
------------
SECTION 4. REPRESENTATIONS AND WARRANTIES 34
4.1 Financial Condition 34
-------------------
4.2 No Change 35
---------
4.3 Corporate Existence; Compliance with Law 35
----------------------------------------
4.4 Corporate Power; Authorization; Enforceable Obligations 35
-------------------------------------------------------
4.5 No Legal Bar 36
------------
4.6 Litigation 36
----------
4.7 No Default 36
----------
4.8 Ownership of Property; Liens 36
----------------------------
4.9 Intellectual Property 36
---------------------
4.10 Taxes 36
-----
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.11 Federal Regulations 37
-------------------
4.12 Labor Matters 37
-------------
4.13 ERISA 37
-----
4.14 Investment Company Act; Other Regulations 37
-----------------------------------------
4.15 Subsidiaries 38
------------
4.16 Use of Proceeds 38
---------------
4.18 Accuracy of Information, etc 39
----------------------------
4.19 Security Documents 39
------------------
4.20 Solvency 40
--------
4.21 Year 2000 Matters 40
-----------------
SECTION 5. CONDITIONS PRECEDENT 40
5.1 Conditions to Initial Extension of Credit 40
-----------------------------------------
5.2 Conditions to Each Extension of Credit 42
--------------------------------------
SECTION 6. AFFIRMATIVE COVENANTS 43
6.1 Financial Statements 43
--------------------
6.2 Certificates; Other Information 44
-------------------------------
6.3 Payment of Obligations 45
----------------------
6.4 Maintenance of Existence; Compliance 45
------------------------------------
6.5 Maintenance of Property; Insurance 45
----------------------------------
6.6 Inspection of Property; Books and Records; Discussions 45
------------------------------------------------------
6.7 Notices 45
-------
6.8 Environmental Laws 46
------------------
6.9 Additional Collateral, etc 46
--------------------------
6.10 San Francisco Data Center 48
-------------------------
6.11 Nortel UCC-3s 48
-------------
SECTION 7. NEGATIVE COVENANTS 49
7.1 Financial Condition Covenants 49
-----------------------------
7.2 Indebtedness 50
------------
7.3 Liens 51
-----
7.4 Fundamental Changes 52
-------------------
7.5 Disposition of Property 52
-----------------------
7.6 Restricted Payments 52
-------------------
7.7 Capital Expenditures 53
--------------------
7.8 Investments 53
-----------
7.9 Optional Payments and Modifications of Certain Debt Instruments. 53
---------------------------------------------------------------
7.10 Transactions with Affiliates 54
----------------------------
7.11 Sales and Leasebacks 54
--------------------
7.12 Changes in Fiscal Periods 54
-------------------------
7.13 Negative Pledge Clauses 54
-----------------------
7.14 Lines of Business 54
-----------------
SECTION 8. EVENTS OF DEFAULT 54
SECTION 9. THE ADMINISTRATIVE AGENT 58
9.1 Appointment 58
-----------
9.2 Delegation of Duties 58
--------------------
9.3 Exculpatory Provisions 58
----------------------
9.4 Reliance by Administrative Agent 59
--------------------------------
9.5 Notice of Default 59
-----------------
9.6 Non-Reliance on the Administrative Agent and Other Lenders 60
----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
9.7 Indemnification 60
---------------
9.8 Administrative Agent in Its Individual Capacity 61
-----------------------------------------------
9.9 Successor Administrative Agent 61
------------------------------
SECTION 10. MISCELLANEOUS 62
10.1 Amendments and Waivers 63
----------------------
10.2 Notices 64
-------
10.3 No Waiver; Cumulative Remedies 65
------------------------------
10.4 Survival of Representations and Warranties 65
------------------------------------------
10.5 Payment of Expenses and Taxes 65
-----------------------------
10.6 Successors and Assigns; Participations and Assignments 66
------------------------------------------------------
10.7 Adjustments; Set-off 69
--------------------
10.8 Counterparts 69
------------
10.9 Severability 69
------------
10.10 Integration 70
-----------
10.11 GOVERNING LAW 70
-------------
10.12 Submission To Jurisdiction; Waivers 70
-----------------------------------
10.13 Acknowledgements 70
----------------
10.14 Releases of Guarantees and Liens 71
--------------------------------
10.15 Confidentiality 71
---------------
10.16 WAIVERS OF JURY TRIAL 72
---------------------
</TABLE>
<PAGE>
SCHEDULES:
- ---------
1.1A Revolving Commitments
4.1 Disposition
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries
4.17 Environmental
4.19 UCC Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
- --------
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E-1 Form of Legal Opinion of Wilson Sonsini Goodrich & Rosati
E-2 Form of Legal Opinion of Larry Beilenson, Esq.
E-3 Form of Legal Opinion of Thompson Coburn
F Form of Prepayment Option Notice
G Form of Exemption Certificate
<PAGE>
CREDIT AGREEMENT, dated as of December 30, 1999, among DIGITAL
BROADCAST NETWORK CORPORATION (D/B/A INTIRA CORPORATION), a Missouri corporation
(the "Borrower"), THE CHASE MANHATTAN BANK, as Administrative Agent and the
--------
several banks and other financial institutions or entities from time to time
parties to this Agreement (the "Lenders").
-------
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
-------------
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
---
to the next 1/16 of 1.0%) equal to the greatest of (a) the Prime Rate in effect
on such day, (b) the Base CD Rate in effect on such day plus 1.0% and (c) the
Federal Funds Effective Rate in effect on such day plus 2 of 1.0%. For purposes
hereof: "Prime Rate" shall mean the rate of interest per annum publicly
----------
announced from time to time by the Reference Lender as its prime rate in effect
at its principal office in New York City (the Prime Rate not being intended to
be the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a)
------------
the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the C/D
Reserve Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary
---------------------
CD Rate" shall mean, for any day, the secondary market rate for three-month
- -------
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Reference Lender from three New York City negotiable certificate of deposit
dealers of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is
---------
based upon the ABR.
"Administrative Agent": Chase, together with its affiliates, as the
--------------------
arranger of the Revolving Commitments and as the administrative agent for the
Lenders under this Agreement and the other Loan Documents, together with any of
its successors.
<PAGE>
"Affiliate": as to any Person, any other Person that, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Aggregate Exposure": with respect to any Lender at any time, an
------------------
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Revolving Commitments at such time and (b) thereafter, the amount of
such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
-----------------------------
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum
-----------------
set forth under the relevant column heading below:
ABR Loans Eurodollar Loans
--------- ----------------
Revolving Loans and
Swingline Loans 3.0% 4.0%
"Application": an application, in such form as the Issuing Lender may
-----------
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"Approved Fund": with respect to any Lender that is a fund that
-------------
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Asset Sale": any Disposition of property or series of related
----------
Dispositions of property (excluding any such Disposition permitted by clause
(a), (b), (c) or (d) of Section 7.5) that yields gross proceeds to the Borrower
or any of its Subsidiaries (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash proceeds) in excess of
$250,000.
"Assignee": as defined in Section 10.6(c).
--------
<PAGE>
"Assignment and Acceptance": an Assignment and Acceptance,
-------------------------
substantially in the form of Exhibit D.
"Assignor": as defined in Section 10.6(c).
--------
"Available Revolving Commitment": as to any Revolving Lender at any
------------------------------
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment then in effect over (b) such Lender's Revolving Extensions of Credit
----
then outstanding; provided, that in calculating any Lender's Revolving
--------
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Commitment pursuant to Section 2.5(a), the aggregate principal amount
of Swingline Loans then outstanding shall be deemed to be zero.
"Benefitted Lender": as defined in Section 10.7(a).
-----------------
"Board": the Board of Governors of the Federal Reserve System of the
-----
United States (or any successor).
"Borrower": as defined in the preamble hereto.
--------
"Borrowing Date": any Business Day specified by the Borrower as a
--------------
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17(b).
--------
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City are authorized or required by law to
close, provided, that with respect to notices and determinations in connection
--------
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, with respect to any Person,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
<PAGE>
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
----------------
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
---
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
-------
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition; or (h) investments in instruments described in a corporate
investment policy which has been approved in writing by the Required Lenders.
"C/D Assessment Rate": for any day as applied to any ABR Loan, the
-------------------
annual assessment rate in effect on such day that is payable by a member of the
Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
----
comparable successor assessment risk classification) within the meaning of 12
C.F.R. (S) 327.4 (or any successor provision) to the FDIC (or any successor) for
the FDIC's (or such successor's) insuring time deposits at offices of such
institution in the United States.
"C/D Reserve Percentage": for any day as applied to any ABR Loan,
----------------------
that percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board as in effect
from time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.
<PAGE>
"Chase": The Chase Manhattan Bank.
-----
"Closing Date": the date on which the conditions precedent set forth
------------
in Section 5.1 shall have been satisfied, which date is December 30, 1999.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Commitment Fee Rate": 1.0% per annum.
-------------------
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
that is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group that includes the Borrower and that is
treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
----------------------
Responsible Officer substantially in the form of Exhibit B.
"Conduit Lender": any special purpose corporation organized and
--------------
administered by any Lender for the purpose of making Loans hereunder otherwise
required to be made by such Lender and designated by such Lender in a written
instrument, subject to the consent of the Administrative Agent and the Borrower;
provided, that the designation by any Lender of a Conduit Lender shall not
- --------
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
--------
further, that no Conduit Lender shall (a) be entitled to receive any greater
- -------
amount pursuant to Section 2.15, 2.16, 2.17 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) be deemed to have any Revolving Commitment
hereunder.
"Consolidated EBITDA": for any period, Consolidated Net Income for
-------------------
such period plus, without duplication and to the extent reflected as a charge in
----
the statement of such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or writeoff of debt
discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring non-cash expenses or losses (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, non-cash losses on sales of assets outside of the ordinary
course of business), provided, that the amounts referred to in this clause
--------
<PAGE>
(e) shall not, in the aggregate, exceed $1,000,000 for any fiscal year of the
Borrower, and (f) any other non-cash charges, and minus, to the extent included
-----
in the statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business) and (c) any other non-cash
income, all as determined on a consolidated basis.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Revenue": for any period, the consolidated revenue of
--------------------
the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, provided that the revenue recording policies used for such
--------
determination shall be substantially the same as the revenue recording policies
of the Borrower in effect on the Closing Date.
"Continuing Directors": the directors of the Borrower on the Closing
--------------------
Date, after giving effect to the transactions contemplated hereby, and each
other director, if, in each case, such other director's nomination for election
to the board of directors of the Borrower is recommended by a majority of the
then Continuing Directors or such other director receives the vote of the
Permitted Investors in his or her election by the shareholders of the Borrower.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSI": Chase Securities Inc.
---
"Customer Contract": any agreement entered into in the ordinary
-----------------
course of business between the Borrower and a customer whereby the Borrower
agrees to provide netsourcing services to such customer and such customer agrees
to pay for such netsourcing services, including without limitation, the
obligation to purchase the computer and communications equipment dedicated to
the exclusive use of such customer in connection with the netsourcing services
and/or the obligation to pay a termination fee in certain circumstances.
<PAGE>
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Disposition": with respect to any property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition thereof.
The terms "Dispose" and "Disposed of" shall have correlative meanings.
------- -----------
"Dollars" and "$": dollars in lawful currency of the United States.
------- -
"Domestic Subsidiary": any Subsidiary of the Borrower organized under
-------------------
the laws of any jurisdiction within the United States.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such
rate does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise
on such screen), the "Eurodollar Base Rate" shall be determined by reference to
--------------------
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
<PAGE>
"Eurodollar Loans": Loans the rate of interest applicable to which is
----------------
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1.0%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar the then
------------------
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day).
"Event of Default": any of the events specified in Section 8,
----------------
provided that any requirement for the giving of notice, the lapse of time, or
- --------
both, has been satisfied.
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of
---------------------------
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
------------------
Domestic Subsidiary.
"Funding Office": the office of the Administrative Agent specified in
--------------
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
----
as in effect from time to time, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1(b). In the event that any
"Accounting Change" (as defined below) shall occur and such change results in a
change in the method of calculation of financial covenants, standards or terms
in this Agreement, then the Borrower and the Administrative Agent agree to enter
into negotiations in order to
<PAGE>
amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
-------------------
of any other third Person (the "primary obligor") in any manner, whether
---------------
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be
<PAGE>
such guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
"Hedge Agreements": all interest rate swaps, caps or collar
----------------
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of such Person's business aged not more
than 360 days), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person which is mandatorily
redeemable at the option of the holder thereof prior to the maturity of the
Loans, (h) all Guarantee Obligations of such Person in respect of obligations of
the kind referred to in clauses (a) through (g) above, (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for which
the holder of such obligation has an existing right, contingent or otherwise, to
be secured by) any Lien on property (including accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become liable
for the payment of such obligation, but only to the extent of the fair market
value of such property, and (j) for the purposes of Sections 7.2 and 8(e) only,
all obligations of such Person in respect of Hedge Agreements. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
copyrights, copyright licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to sue at law or in
equity for any infringement or other impairment thereof, including the right to
receive all proceeds and damages therefrom.
<PAGE>
"Interest Payment Date": (a) as to any ABR Loan, the last day of each
---------------------
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period and
(d) as to any Loan (other than any Revolving Loan that is an ABR Loan and any
Swingline Loan), the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
---------------
period commencing on the borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
--------
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would
extend beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
"Investments": as defined in Section 7.8.
-----------
"Issuing Lender": Chase, in its capacity as issuer of any Letter of
--------------
Credit.
"KPMG": KPMG LLP.
----
"L/C Commitment": $5,000,000.
--------------
<PAGE>
"L/C Fee Payment Date": the last day of each March, June, September
--------------------
and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
----------------
Lenders other than the Issuing Lender.
"Lenders": as defined in the preamble hereto; provided, that unless
------- --------
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents and the
--------------
Notes.
"Loan Parties": the Borrower and each Subsidiary of the Borrower that
------------
is a party to a Loan Document.
"Majority Lenders": the holders of more than 50% of the aggregate
----------------
unpaid principal amount of the Total Revolving Extensions of Credit outstanding
at any time (or, prior to any termination of the Revolving Commitments, the
holders of more than 50% of the Total Revolving Commitments).
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, property, operations or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances,
<PAGE>
materials or wastes, defined or regulated as such in or under any Environmental
Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Minimum Cash Balance": the cash balance held in Chase Account Number
--------------------
323884555 in the name of the Borrower (including any amount representing an
overnight or short-term investment of such cash balance where such investment is
arranged by Chase and upon liquidation or sale the proceeds thereof are to be
returned to such account), which cash balance shall be held in cash or Cash
Equivalents.
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness secured by
a Lien expressly permitted hereunder on any asset that is the subject of such
Asset Sale or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash
proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 2.16(a).
------------------
"Non-U.S. Lender": as defined in Section 2.16(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Loans.
"Obligations": the unpaid principal of and interest on (including
-----------
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to the Administrative Agent or to any Lender (or, in
the case of Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Hedge Agreement
entered into with any Lender or any affiliate of any Lender or any other
document made, delivered or
<PAGE>
given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of counsel to the Administrative
Agent or to any Lender that are required to be paid by the Borrower pursuant
hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document.
"Participant": as defined in Section 10.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Investors": the collective reference to Bernard Schneider,
-------------------
Ascend Communications, Inc., New Enterprise Associates, VIII, Limited
Partnership, NEA Ventures 1999, Limited Partnership, NEA Presidents Fund, L.P.,
Mayfield X, L.P., Mayfield Associates Fund IV, L.P., Mayfield Principals Fund,
L.L.C., Spectrum Equity Investors III, L.P., SEI III Entrepreneurs' Fund, L.P.,
and Spectrum III Investment Managers' Fund, L.P.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
-----------------------
"Projections": a detailed consolidated budget for the following
-----------
fiscal year (including a projected consolidated balance sheet of the Borrower
and its Subsidiaries as of the end of the following fiscal year, the related
consolidated statements of projected cash flow, projected changes in financial
position and projected income and a description of the underlying assumptions
applicable thereto), and, as soon as available, significant revisions, if any,
of such budget and projections with respect to such financial year.
"Properties": as defined in Section 4.17(a).
----------
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding relating to
any asset of the Borrower or any of its Subsidiaries.
<PAGE>
"Reference Lender": Chase.
----------------
"Refunded Swingline Loans": as defined in Section 2.7.
------------------------
"Refunding Date": as defined in Section 2.7.
--------------
"Register": as defined in Section 10.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection therewith that are not applied to reduce the
Revolving Commitments pursuant to Section 2.8(a) as a result of the delivery of
a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through a Subsidiary) intends and expects
to use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring six months after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire or repair assets useful in the
Borrower's business with all or any portion of the relevant Reinvestment
Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
<PAGE>
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
(S) 4043.
"Required Lenders": at any time, the holders of more than 50% of the
----------------
Total Revolving Commitments then in effect or, if the Revolving Commitments have
been terminated, the Total Revolving Extensions of Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": the chief executive officer, president or
-------------------
chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
-------------------
"Revolving Commitment": as to any Lender, the obligation of such
--------------------
Lender, if any, to make Revolving Loans and participate in Swingline Loans and
Letters of Credit in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Commitment" opposite such Lender's
name on Schedule 1.1A or in the Assignment and Acceptance pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original amount of the Total Revolving
Commitments is $25,000,000.
"Revolving Commitment Period": the period from and including the
---------------------------
Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any
------------------------------
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender's Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.
"Revolving Lender": each Lender that has a Revolving Commitment or
----------------
that holds Revolving Loans.
"Revolving Loans": as defined in Section 2.1(a).
---------------
"Revolving Percentage": as to any Revolving Lender at any time, the
--------------------
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving
<PAGE>
Commitments (or, at any time after the Revolving Commitments shall have expired
or terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Loans then outstanding constitutes of the aggregate principal
amount of the Revolving Loans then outstanding).
"Revolving Termination Date": the date which is 364 days from the
--------------------------
Closing Date and if such date is not a Business Day, the next preceding Business
Day.
"San Francisco Data Center": the computer and communications
-------------------------
equipment operations center located at 5667 Gibraltar Drive, Pleasanton, CA
94588 and 5731 West Los Positas Drive, Pleasanton, CA 94588.
"SEC": the Securities and Exchange Commission, any successor thereto
---
and any analogous Governmental Authority.
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Single Employer Plan": any Plan that is covered by Title IV of
--------------------
ERISA, but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
<PAGE>
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than
--------------------
any Excluded Foreign Subsidiary.
"Swingline Commitment": the obligation of the Swingline Lender to
--------------------
make Swingline Loans pursuant to Section 2.6 in an aggregate principal amount at
any one time outstanding not to exceed $1,000,000.
"Swingline Lender": Chase, in its capacity as the lender of Swingline
----------------
Loans.
"Swingline Loans": as defined in Section 2.3.
---------------
"Swingline Participation Amount": as defined in Section 2.4.
------------------------------
"Total Revolving Commitments": at any time, the aggregate amount of
---------------------------
the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
------------------------------------
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"Transferee": any Assignee or Participant.
----------
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
----
Loan.
"United States": the United States of America.
-------------
"Warrant": the Warrant dated as of December 30, 1999, between Chase
-------
and the Company.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
---------------------------------
a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
<PAGE>
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP, (ii)
the words "include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation", (iii) the word "incur" shall be construed to
mean incur, create, issue, assume, become liable in respect of or suffer to
exist (and the words "incurred" and "incurrence" shall have correlative
meanings), and (iv) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, Capital Stock, securities, revenues,
accounts, leasehold interests and contract rights.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Revolving Commitments. (a) Subject to the terms and conditions
---------------------
hereof, each Revolving Lender severally agrees to make revolving credit loans
("Revolving Loans") to the Borrower from time to time during the Revolving
---------------
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender's Revolving Percentage of the sum of (i) the
L/C Obligations then outstanding and (ii) the aggregate principal amount of the
Swingline Loans then outstanding, does not exceed the amount of such Lender's
Revolving Commitment. During the Revolving Commitment Period the Borrower may
use the Revolving Commitments by borrowing, prepaying the Revolving Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be Eurodollar
Loans or ABR Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.9.
(b) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.2 Procedure for Revolving Loan Borrowing. The Borrower may borrow
--------------------------------------
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
--------
irrevocable notice (which notice must be received by the Administrative Agent
prior to 12:00 Noon, New York City time, (a) three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, or (b) one Business
Day prior to the requested Borrowing Date, in the case of ABR Loans), specifying
(i) the amount and Type of Revolving Loans to be borrowed, (ii) the requested
<PAGE>
Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts
of each such Type of Loan and the respective lengths of the initial Interest
Period therefor. Any Revolving Loans made on the Closing Date shall initially
be ABR Loans. Each borrowing under the Revolving Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple
thereof (or, if the then aggregate Available Revolving Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$5,000,000 or a whole multiple of $1,000,000 in excess thereof; provided, that
--------
the Swingline Lender may request, on behalf of the Borrower, borrowings under
the Revolving Commitments that are ABR Loans in other amounts pursuant to
Section 2.4. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Lender thereof. Each
Revolving Lender will make the amount of its pro rata share of each borrowing
--- ----
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Lenders and in like funds as received by the
Administrative Agent.
2.3 Swingline Commitment. (a) Subject to the terms and conditions
--------------------
hereof, the Swingline Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Revolving Commitments from time to time
during the Revolving Commitment Period by making swing line loans ("Swingline
---------
Loans") to the Borrower; provided that (i) the aggregate principal amount of
- ----- --------
Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding
at any time, when aggregated with the Swingline Lender's other outstanding
Revolving Loans hereunder, may exceed the Swingline Commitment then in effect)
and (ii) the Borrower shall not request, and the Swingline Lender shall not
make, any Swingline Loan if, after giving effect to the making of such Swingline
Loan, the aggregate amount of the Available Revolving Commitments would be less
than zero. During the Revolving Commitment Period, the Borrower may use the
Swingline Commitment by borrowing, repaying and reborrowing, all in accordance
with the terms and conditions hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay all outstanding Swingline Loans on the
Revolving Termination Date.
2.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
---------------------------------------------------------------
(a) Whenever the Borrower desires that the Swingline Lender make Swingline
Loans it shall give the Swingline Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice must be received by the Swingline
Lender not later than 1:00 P.M., New York City time, on the proposed Borrowing
Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing
Date (which shall be a Business Day during the Revolving Commitment Period).
Each borrowing under the Swingline Commitment shall be in an amount equal to
$500,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00
P.M.,
<PAGE>
New York City time, on the Borrowing Date specified in a notice in respect
of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swingline Loan to be made by the Swingline
Lender. The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the account of the Borrower with the Administrative Agent on such Borrowing Date
in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one Business
Day's notice given by the Swingline Lender no later than 12:00 Noon, New York
City time, request each Revolving Lender to make, and each Revolving Lender
hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving
Lender's Revolving Percentage of the aggregate amount of the Swingline Loans
(the "Refunded Swingline Loans") outstanding on the date of such notice, to
------------------------
repay the Swingline Lender. Each Revolving Lender shall make the amount of such
Revolving Loan available to the Administrative Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City time, one
Business Day after the date of such notice. The proceeds of such Revolving
Loans shall be immediately made available by the Administrative Agent to the
Swingline Lender for application by the Swingline Lender to the repayment of the
Refunded Swingline Loans. The Borrower irrevocably authorizes the Swingline
Lender to charge the Borrower's accounts with the Administrative Agent (up to
the amount available in each such account) in order to immediately pay the
amount of such Refunded Swingline Loans to the extent amounts received from the
Revolving Lenders are not sufficient to repay in full such Refunded Swingline
Loans.
(c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 2.4(b), one of the events described in Section 8(f)
shall have occurred and be continuing with respect to the Borrower or if for any
other reason, as determined by the Swingline Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 2.4(b), each
Revolving Lender shall, on the date such Revolving Loan was to have been made
pursuant to the notice referred to in Section 2.4(b) (the "Refunding Date"),
--------------
purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the "Swingline
---------
Participation Amount") equal to (i) such Revolving Lender's Revolving Percentage
- --------------------
times (ii) the sum of the aggregate principal amount of Swingline Loans then
- -----
outstanding that were to have been repaid with such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received
from any Revolving Lender such Lender's Swingline Participation Amount, the
Swingline Lender receives any payment on account of the Swingline Loans, the
Swingline Lender will distribute to such Lender its Swingline Participation
Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender's participating interest was outstanding
and funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
--- ----
pay the principal of
<PAGE>
and interest on all Swingline Loans then due); provided, however, that in the
-------- -------
event that such payment received by the Swingline Lender is required to be
returned, such Revolving Lender will return to the Swingline Lender any portion
thereof previously distributed to it by the Swingline Lender.
(e) Each Revolving Lender's obligation to make the Loans referred to
in Section 2.4(b) and to purchase participating interests pursuant to Section
2.4(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Revolving Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 5; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower; (iv)
any breach of this Agreement or any other Loan Document by the Borrower, any
other Loan Party or any other Revolving Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
2.5 Commitment Fees, etc. (a) The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Revolving Lender a commitment fee
for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the last day
of each March, June, September and December and on the Revolving Termination
Date, commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates previously agreed to in writing by the Borrower
and the Administrative Agent.
2.6 Termination or Reduction of Revolving Commitments. The Borrower
-------------------------------------------------
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
--------
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans and
Swingline Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Commitments. Any such
reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Commitments then in effect.
2.7 Optional Prepayments. The Borrower may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent at least three Business
Days prior thereto in the case of Eurodollar Loans and at least one Business Day
prior thereto in the case of ABR Loans, which notice shall specify the date and
amount of prepayment and whether the prepayment is of
<PAGE>
Eurodollar Loans or ABR Loans; provided, that if a Eurodollar Loan is prepaid on
--------
any day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 2.17. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (except in
the case of Revolving Loans that are ABR Loans and Swingline Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Revolving
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof. Partial prepayments of Swingline Loans shall be in an
aggregate principal amount of $100,000 or a whole multiple thereof.
2.8 Mandatory Prepayments and Revolving Commitment Reductions. (a)
---------------------------------------------------------
If on any date the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof within four (4) days following such
date, such Net Cash Proceeds shall be applied within four (4) days after such
date toward the reduction of the Revolving Commitments as set forth in Section
2.8(b); provided, that, notwithstanding the foregoing, on each Reinvestment
--------
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the reduction
of the Revolving Commitments as set forth in Section 2.8(b); provided further,
-------- -------
that, the foregoing shall not apply to the sale of inventory by the Borrower or
any of its Subsidiaries in the ordinary course of business.
(b) Amounts to be applied in connection with prepayments and
Revolving Commitment reductions made pursuant to Section 2.8 shall be applied to
reduce permanently the Revolving Commitments. Any such reduction of the
Revolving Commitments shall be accompanied by prepayment of the Revolving Loans
and/or Swingline Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Loans and
--------
Swingline Loans then outstanding is less than the amount of such excess (because
L/C Obligations constitute a portion thereof), the Borrower shall, to the extent
of the balance of such excess, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. The application of any prepayment
pursuant to Section 2.8 shall be made, first, to ABR Loans and, second, to
----- ------
Eurodollar Loans. Each prepayment of the Loans under Section 2.8 (except in the
case of Revolving Loans that are ABR Loans and Swingline Loans) shall be
accompanied by accrued interest to the date of such prepayment on the amount
prepaid.
2.9 Conversion and Continuation Options. (a) The Borrower may elect
-----------------------------------
from time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
--------
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election
<PAGE>
(which notice shall specify the length of the initial Interest Period therefor),
provided that no ABR Loan may be converted into a Eurodollar Loan when any Event
- --------
of Default has occurred and is continuing and the Administrative Agent has
determined in its sole discretion not to permit such conversions. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
--------
that no Eurodollar Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has determined in its
sole discretion not to permit such continuations, and provided, further, that if
-------- -------
the Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.10 Limitations on Eurodollar Tranches. Notwithstanding anything to
----------------------------------
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than five Eurodollar
Tranches shall be outstanding at any one time.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
----
applicable to ABR Loans plus 2%, and (ii) if all or a portion of any interest
----
payable on any Loan or Reimbursement Obligation or any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to ABR Loans plus 2%, in
----
each case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
<PAGE>
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.12 Computation of Interest and Fees. (a) Interest and fees
--------------------------------
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.11(a).
2.13 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the last day of the then-current Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans shall be
<PAGE>
made or continued as such, nor shall the Borrower have the right to convert
Loans to Eurodollar Loans.
2.14 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments of the Lenders
shall be made pro rata according to the Revolving Percentages, of the relevant
--- ----
Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
- ----
Loans then held by the Revolving Lenders.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this paragraph shall be
conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans, on demand, from the Borrower.
<PAGE>
(e) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- ----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.15 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(v) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.16 and changes in the rate of tax on the overall net income of
such Lender);
(vi) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(vii) shall impose on such Lender any other condition; and the result
of any of the foregoing is to increase the cost to such Lender, by an amount
that such Lender deems to be material, of making, converting into, continuing or
maintaining Eurodollar Loans or issuing or participating in Letters of Credit,
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
<PAGE>
Governmental Authority made subsequent to the date hereof shall have the effect
of reducing the rate of return on such Lender's or such corporation's capital as
a consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
provided that the Borrower shall not be required to compensate a Lender pursuant
- --------
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and provided further that, if the circumstances giving
-------- -------
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.16 Taxes. (a) All payments made by the Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
------------------
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required to
-------- -------
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was
<PAGE>
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrower showing payment thereof. If the Borrower fails to pay
any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent or any Lender as a
result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
---------------
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a statement substantially in the form of
Exhibit G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete,
<PAGE>
execute and deliver such documentation and in such Lender's judgment such
completion, execution or submission would not materially prejudice the legal
position of such Lender.
(f) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.17 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal
to the excess, if any, of (i) the amount of interest that would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
----
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.18 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.15 or 2.16(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
-------- -------
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.15 or 2.16(a).
2.19 Replacement of Lenders. The Borrower shall be permitted to
----------------------
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.15 or 2.16(a) or (b) defaults in its obligation to make Loans
hereunder, with a replacement financial institution; provided that (i) such
--------
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 2.18 so as to
<PAGE>
eliminate the continued need for payment of amounts owing pursuant to Section
2.15 or 2.16(a), (iv) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (v) the Borrower shall be liable to such replaced
Lender under Section 2.17 if any Eurodollar Loan owing to such replaced Lender
shall be purchased other than on the last day of the Interest Period relating
thereto, (vi) the replacement financial institution, if not already a Lender,
shall be reasonably satisfactory to the Administrative Agent, (vii) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 10.6 (provided that the Borrower shall be obligated to pay
the registration and processing fee referred to therein), (viii) until such time
as such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.15 or 2.16(a), as the case may
be, and (ix) any such replacement shall not be deemed to be a waiver of any
rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Revolving Lenders
set forth in Section 3.4(a), agrees to issue letters of credit ("Letters of
----------
Credit") for the account of the Borrower on any Business Day during the
- ------
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
--------
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars, (ii) have a face amount of at least
$100,000 (unless otherwise agreed by the Issuing Lender) and (iii) expire no
later than the date that is five Business Days prior to the Revolving
Termination Date.
(b) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
------------------------------------------
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall
<PAGE>
furnish a copy of such Letter of Credit to the Borrower promptly following the
issuance thereof. The Issuing Lender shall promptly furnish to the
Administrative Agent, which shall in turn promptly furnish to the Lenders,
notice of the issuance of each Letter of Credit (including the amount thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on all
----------------------
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans, shared ratably among the
Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date
after the issuance date. In addition, the Borrower shall pay to the Issuing
Lender for its own account a fronting fee of .25% per annum on the face amount
of each Letter of Credit, payable quarterly in arrears on each L/C Fee Payment
Date after the Issuance Date, provided that so long as the Issuing Lender is the
--------
sole Lender hereunder, the sum of such fronting fee and the fee described in the
preceding sentence shall not exceed a per annum rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions set forth below, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Percentage in the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
<PAGE>
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans. A certificate of the Issuing Lender submitted to any
L/C Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
- ----
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however, that in the event that any such payment received by the
- -------- -------
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
----------------------------------------
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its address for notices specified herein in lawful
money of the United States and in immediately available funds. Interest shall
be payable on any and all amounts remaining unpaid by the Borrower under this
Section from the date such amounts become payable (whether at stated maturity,
by acceleration or otherwise) until payment in full at the rate set forth in (i)
until the second Business Day following the date of the applicable drawing,
Section 2.11(b) and (ii) thereafter, Section 2.11(c).
3.6 Obligations Absolute. The Borrower's obligations under this
--------------------
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in
<PAGE>
connection with any Letter of Credit or the related drafts or documents, if done
in the absence of gross negligence or willful misconduct and in accordance with
the standards of care specified in the Uniform Commercial Code of the State of
New York, shall be binding on the Borrower and shall not result in any liability
of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
------------
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit and the Borrower hereby jointly and severally represent and warrant to
the Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of the Borrower and its consolidated Subsidiaries as at the
Closing Date, (including the notes thereto) (the "Pro Forma Balance Sheet"),
-----------------------
copies of which have heretofore been furnished to each Lender, has been prepared
giving effect (as if such events had occurred on such date) to (i) the Loans to
be made on the Closing Date and the use of proceeds thereof and (ii) the payment
of fees and expenses in connection with the foregoing. The Pro Forma Balance
Sheet has been prepared based on the best information available to the Borrower
as of the date of delivery thereof, and presents fairly on a pro forma basis the
--- -----
estimated financial position of Borrower and its consolidated Subsidiaries as at
the Closing Date, assuming that the events specified in the preceding sentence
had actually occurred at such date.
(b) The audited consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 1998, and the related consolidated statements of
income and of cash flows for the fiscal years ended on such dates, reported on
by and accompanied by an unqualified report from KPMG, present fairly the
consolidated financial condition of the Borrower as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited interim consolidated balance
sheet of the Borrower and the related unaudited consolidated statements of
income and cash flows for the three-month period ended March 31, 1999, the six-
month period ended June 30, 1999 and the nine-month period ended September 30,
1999, present fairly the consolidated financial condition of the Borrower as at
such date, and the consolidated results of its operations and its consolidated
cash
<PAGE>
flows for the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). The Borrower and its Subsidiaries do not
have any material Guarantee Obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in this paragraph. Except as set forth
in Schedule 4.1, during the period from September 30, 1999 to and including the
date hereof there has been no Disposition by the Borrower of any material part
of its business or property.
4.2 No Change. Since September 30, 1999, there has been no
---------
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the Borrower
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each
-------------------------------------------------------
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to obtain extensions of credit hereunder. Each Loan Party has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents to which it is a party and, in the case of the
Borrower, to authorize the extensions of credit on the terms and conditions of
this Agreement. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the extensions of credit hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect and (ii) the
filings referred to in Section 4.19. Each Loan Document has been duly executed
and delivered on behalf of each Loan Party party thereto. This Agreement
constitutes, and each other Loan Document upon execution will constitute, a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
<PAGE>
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.6 Litigation. No litigation, investigation or proceeding of or
----------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) that could reasonably be expected to have a Material
Adverse Effect.
4.7 No Default. Except as set forth on Schedule 4.7, neither the
----------
Borrower nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect that could reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrower and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 7.3.
4.9 Intellectual Property. The Borrower and each of its Subsidiaries
---------------------
owns, or is licensed to use, or could obtain the right to use on terms not
materially adverse, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Borrower know of any valid basis for any such claim. The use of
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any respect that could reasonably be expected to
have a Material Adverse Effect.
4.10 Taxes. Each of the Borrower and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material tax returns
that are required to be filed and has paid all taxes shown to be due and payable
on said returns or on any assessments made against it or any of its property and
all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of that are
<PAGE>
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Borrower, no claim is being asserted,
with respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans, and
-------------------
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of Form G-3 or Form U-1, as applicable,
referred to in Regulation U.
4.12 Labor Matters. Except as, in the aggregate, could not
-------------
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against the Borrower or any of its Subsidiaries
pending or, to the knowledge of the Borrower, threatened; (b) hours worked by
and payment made to employees of the Borrower and its Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other applicable Requirement
of Law dealing with such matters; and (c) all payments due from the Borrower or
any of its Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of the Borrower or the relevant
Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to
<PAGE>
regulation under any Requirement of Law (other than Regulation X of the Board)
that limits its ability to incur Indebtedness.
4.15 Subsidiaries. Except as disclosed to the Administrative Agent
------------
by the Borrower in writing from time to time after the Closing Date, (a)
Schedule 4.15 sets forth the name and jurisdiction of incorporation of each
Subsidiary and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors' qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as created by the Loan Documents.
4.16 Use of Proceeds. The proceeds of the Revolving Loans and the
---------------
Swingline Loans, and the Letters of Credit, shall be used (a) to refinance the
existing working capital facility of the Borrower, (b) for the construction,
expansion, development or acquisition of telecommunication related assets and
(c) for working capital and general corporate purposes of the Borrower and its
Subsidiaries in the ordinary course of business.
4.17 Environmental Matters. Except as, in the aggregate, could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) To the best of the Borrower's knowledge, the facilities and
properties owned, leased or operated by the Borrower or any of its
Subsidiaries (the "Properties") do not contain, and have not previously
----------
contained during the time of Borrower's control and use thereof, any
Materials of Environmental Concern in amounts or concentrations or under
circumstances that constitute or constituted a violation of, or could give
rise to liability under, any Environmental Law;
(b) except as set forth on Schedule 4.17, neither the Borrower nor
any of its Subsidiaries has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business"), nor does the Borrower
--------
have knowledge or reason to believe that any such notice will be received
or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of by Borrower from the Properties in violation of, or in a manner
or to a location that could give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
<PAGE>
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws;
(f) to the best of the Borrower's knowledge, the Properties and all
operations at the Properties by Borrower are in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to
the Properties or the Business; and
(g) neither the Borrower nor any of its Subsidiaries has assumed any
liability of any other Person under Environmental Laws.
4.18 Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Loan Document, or any other document,
certificate or statement furnished by or on behalf of any Loan Party to the
Administrative Agent or the Lenders, or any of them, for use in connection with
the transactions contemplated by this Agreement or the other Loan Documents when
taken together with all other such statements and information furnished,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in
--- -----
the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time
made, it being recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents.
4.19 Security Documents. The Guarantee and Collateral Agreement is
------------------
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral (as
such security interest and such Collateral are described therein) and proceeds
thereof. In the case of the Pledged Stock described in the
<PAGE>
Guarantee and Collateral Agreement, when stock certificates representing such
Pledged Stock are delivered to the Administrative Agent, and in the case of the
other Collateral described in the Guarantee and Collateral Agreement, when
financing statements and other filings specified on Schedule 4.19 in appropriate
form are filed in the offices specified on Schedule 4.19, the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 7.3).
4.20 Solvency. Each Loan Party is, and after giving effect to the
--------
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.
4.21 Year 2000 Matters. Any reprogramming required to permit the
-----------------
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Borrower or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, have been
completed. The costs to the Borrower and its Subsidiaries for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. The computer systems of the Borrower and its
Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient for the conduct of
their business as currently conducted.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date (but in any event no later than December
30, 1999), of the following conditions precedent:
(a) Credit Agreement; Guarantee and Collateral Agreement. The
----------------------------------------------------
Administrative Agent shall have received (i) this Agreement, executed and
delivered by the Administrative Agent and the Borrower, (ii) the Guarantee
and Collateral Agreement, executed and delivered by the Borrower and each
Subsidiary Guarantor and (iii) an Acknowledgment and Consent in the form
attached to the Guarantee and Collateral
<PAGE>
Agreement, executed and delivered by each Issuer (as defined therein), if
any, that is not a Loan Party.
(b) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
---------------------------------------------
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of the Borrower for the 1998 fiscal years and (iii)
unaudited interim consolidated and consolidating (on a division-by-division
basis) financial statements of the Borrower for each fiscal month and
quarterly period ended subsequent to the date of the latest applicable
financial statements delivered pursuant to clause (ii) of this paragraph as
to which such financial statements are available, and such financial
statements shall not, in the reasonable judgment of the Lenders, reflect
any material adverse change in the consolidated financial condition of the
Borrower, as reflected in the financial statements or projections delivered
to the Administrative Agent prior to the Closing Date.
(c) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary in connection with the continuing
operations of the Borrower and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(d) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of the Borrower or its Subsidiaries except for liens
permitted by Section 7.3 or discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the Administrative Agent.
(e) Fees. The Administrative Agent shall have received all fees
----
required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on
or before the Closing Date. All such amounts will be paid with proceeds of
Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before
the Closing Date.
(f) Closing Certificate. The Administrative Agent shall have
-------------------
received a certificate of each Loan Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments.
(g) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Wilson Sonsini Goodrich & Rosati,
counsel to the Borrower and its Subsidiaries, substantially in the
form of Exhibit E-1; and
<PAGE>
(ii) the legal opinion of Larry Beilenson, Esq., general counsel
of the Borrower and its Subsidiaries, substantially in the form of
Exhibit E-2; and
(iii) the legal opinion of Thompson Coburn, Missouri counsel to
Borrower.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(h) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received within 30 days of the Closing Date (i) the
certificates representing the shares of Capital Stock pledged pursuant to
the Guarantee and Collateral Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof and (ii) each promissory note (if any)
pledged to the Administrative Agent pursuant to the Guarantee and
Collateral Agreement endorsed (without recourse) in blank (or accompanied
by an executed transfer form in blank) by the pledgor thereof.
(i) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(j) Insurance. The Administrative Agent shall have received
---------
insurance certificates satisfying the requirements of Section 5.2(b) of the
Guarantee and Collateral Agreement.
(k) Projections. The Administrative Agent shall have received
-----------
projections and a written analysis of the business and prospects of the
Borrower and its Subsidiaries, for the period from the Closing Date through
the Revolving Termination Date, each in form and substance satisfactory to
the Administrative Agent.
(l) Warrant. The Borrower shall have executed the Warrant,
-------
containing terms and conditions satisfactory to Chase.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
<PAGE>
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
--------------------
each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments and financial statement footnotes required by GAAP); and
(c) as soon as available, but in any event not later than 15 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of the Borrower and its Subsidiaries
as at the end of such month and the related unaudited consolidated
statements of income and of cash flows for such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all
<PAGE>
material respects (subject to normal year-end audit adjustments and
financial statement footnotes required by GAAP).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
-------------------------------
Agent and each Lender (or, in the case of clause (f), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of monthly, quarterly or
annual financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance by the
Borrower and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year
of the Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year;
(d) within seven days after the same are sent, copies of all
financial statements and reports that the Borrower sends to the holders of
any class of its debt securities or public equity securities and, within
seven days after the same are filed, copies of all
<PAGE>
financial statements and reports that the Borrower may make to, or file
with, the SEC; and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrower or its Subsidiaries, as the case may be, except if the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
6.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew
------------------------------------
and keep in full force and effect its corporate existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 7.4 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all property
----------------------------------
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.
6.6 Inspection of Property; Books and Records; Discussions. (a)
------------------------------------------------------
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties, subject to the Borrower's reasonable security
procedures and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
<PAGE>
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding that may exist at any time between the Borrower
or any of its Subsidiaries and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries (i) in which the amount involved is $1,000,000 or more and not
covered by insurance, (ii) in which injunctive or similar relief is sought
or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary proposes
to take with respect thereto but in no event is the Borrower required to provide
any information which is considered privileged information between the Borrower
and the Borrower's legal counsel.
6.8 Environmental Laws. (a) Comply in all material respects with,
------------------
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, except if the failure to do so is not reasonably expected to have a
Material Adverse Effect.
6.9 Additional Collateral, etc. (a) With respect to any property
--------------------------
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(other than (x) any property described in
<PAGE>
paragraph (b), (c) or (d) below, (y) any property subject to a Lien expressly
permitted by Section 7.3(g) and (z) property acquired by any Excluded Foreign
Subsidiary) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $250,000 acquired after
the Closing Date by the Borrower or any of its Subsidiaries (other than (x) any
such real property subject to a Lien expressly permitted by Section 7.3(g) and
(z) real property acquired by any Excluded Foreign Subsidiary), promptly (i)
execute and deliver a first priority mortgage, in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property, (ii) if
requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to LPBDBN Digital Canada, Inc. ("Digital Canada"),
--------------
the Borrower and Digital Canada, shall within 30 days of the Closing Date, (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in the Capital stock of Digital
Canada. (provided that in no event shall more than 65% of the total outstanding
Capital Stock of Digital Canada be required to be so pledged) and (ii) deliver
to the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Digital Canada and take such action as may be necessary
or, in the opinion of the Administrative Agent, desirable to perfect the
Administrative Agent's security interest therein.
(d) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by the Borrower
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign
<PAGE>
Subsidiary), the Borrower or any of its Subsidiaries, promptly (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
that is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the Borrower or such Subsidiary, as the case may be, (iii) cause such
new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement,
(B) to take such actions necessary or advisable to grant to the Administrative
Agent for the benefit of the Lenders a perfected first priority security
interest in the Collateral described in the Guarantee and Collateral Agreement
with respect to such new Subsidiary, including the filing of Uniform Commercial
Code financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement or by law or as may be requested by the
Administrative Agent and (C) to deliver to the Administrative Agent a
certificate of such Subsidiary, substantially in the form of Exhibit C, with
appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(e) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its Subsidiaries,
promptly (i) execute and deliver to the Administrative Agent such amendments to
the Guarantee and Collateral Agreement as the Administrative Agent deems
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first priority security interest in the Capital Stock
of such new Subsidiary that is owned by the Borrower or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding Capital
Stock of any such new Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be, and
take such other action as may be necessary or, in the opinion of the
Administrative Agent, desirable to perfect the Administrative Agent's security
interest therein, and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
6.10 San Francisco Data Center. Cause the San Francisco Data Center
-------------------------
to be operational and/or functional by February 28, 2000.
6.11 Nortel UCC-3s. Cause Nortel to execute and deliver by January
-------------
14, 2000 all UCC-3 financing statements or other documentation satisfactory to
the Administrative Agent to evidence the release of any security interest Nortel
had on any of the assets or properties of the Borrower or any of its
Subsidiaries.
<PAGE>
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
-----------------------------
(a) Minimum Cash Balance. Permit the Minimum Cash Balance to be less
--------------------
than $5,000,000 at any time prior to any initial public offering of the common
stock of the Borrower or permit the Minimum Cash Balance to be less than
$15,000,000 at any time after any initial public offering of the common stock of
the Borrower.
(b) Consolidated EBITDA. Permit the Consolidated EBITDA loss of the
-------------------
Borrower and its Subsidiaries for any period of six consecutive months to be
more than the amount set forth below opposite the last month in such period:
Month EBITDA Loss
----- -------------
1/00 ($24,000)
2/00 ($27,000)
3/00 ($28,000)
4/00 ($28,000)
5/00 ($28,000)
6/00 ($27,000)
7/00 ($26,000)
8/00 ($26,000)
9/00 ($26,000)
10/00 ($26,000)
11/00 ($25,000)
12/00 ($24,000)
(c) Consolidated Revenue. Permit the Consolidated Revenue of the
--------------------
Borrower and its Subsidiaries for any period of six consecutive months to be
less than the amount set forth below opposite the last month in such period:
Month Revenue
----- -------
1/00 $ 4,100
2/00 $ 4,600
3/00 $ 5,300
4/00 $ 5,600
5/00 $ 6,100
<PAGE>
6/00 $ 6,900
7/00 $ 7,700
8/00 $ 8,700
9/00 $ 9,700
10/00 $10,900
11/00 $12,200
12/00 $13,600
7.2 Indebtedness. Create, issue, incur, assume, become liable in
------------
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of any Wholly
Owned Subsidiary Guarantor;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without increasing, or shortening the maturity of, the principal
amount thereof);
(e) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $18,000,000 at any one time outstanding;
(f) Hedge Agreements in respect of Indebtedness otherwise permitted
hereby that bears interest at a floating rate, so long as such agreements
are not entered into for speculative purposes;
(g) Indebtedness incurred in connection with the senior discount
notes being arranged by CSI; and
(h) Indebtedness (including, without limitation, Capital Lease
Obligations) the proceeds of which are used solely to purchase computer,
communications, routers, servers, switches and related installation and/or
maintenance agreements, if any, to be used in connection with Borrower's
performance of netsourcing services to Borrower's customers, now or
hereafter existing, pursuant to Customer Contracts, provided that such
--------
equipment is acquired for customer specific purposes. The Indebtedness in
this Section 7.2(h) shall include indebtedness the proceeds of which are
used to purchase equipment not used exclusively for any particular customer
but dedicated to multiple customers as part of such netsourcing services.
<PAGE>
7.3 Liens. Create, incur, assume or suffer to exist any Lien upon
-----
any of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
--------
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such
--------
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(e) or 7.2(h) to finance the
acquisition of fixed or capital assets, provided that (i) such Liens shall
--------
be created substantially simultaneously or within 90 days after the
acquisition thereof with the acquisition of such fixed or capital assets,
(ii) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased;
<PAGE>
(j) Liens in favor of a trustee under any indenture securing amounts
due to the trustee in connection with its services under such indenture;
(k) Liens consisting of the rights of others under licensing
agreements for use of intellectual property entered into in the ordinary
course of its business; and
(l) Liens arising by virtue of any common law, statutory or
contractual provision relating to bankers' liens, rights of set-off or
similar rights and remedies as to deposit or securities accounts maintained
in the ordinary course of business.
7.4 Fundamental Changes. Enter into any merger, consolidation or
-------------------
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation except in connection with a reincorporation in the
State of Delaware) or with or into any Wholly Owned Subsidiary Guarantor
(provided that the Wholly Owned Subsidiary Guarantor shall be the
--------
continuing or surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor.
7.5 Disposition of Property. Dispose of any of its property, whether
-----------------------
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of unneeded, obsolete or worn out property in the
ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(e) the Disposition of other property having a fair market value not
to exceed $250,000 in the aggregate for any fiscal year of the Borrower.
7.6 Restricted Payments. Declare or pay any dividend (other than
-------------------
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase,
<PAGE>
redemption (provided Borrower shall retain the right to redeem any Capital Stock
owned by its employees after such employee discontinues employment with the
Borrower or any Subsidiary provided the aggregate amount of such Restricted
Payment shall not exceed $250,000 in any calendar year), defeasance, retirement
or other acquisition of, any Capital Stock of the Borrower or any Subsidiary,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Borrower or any Subsidiary (collectively, "Restricted
Payments"), except that any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor.
7.7 Capital Expenditures. Make or commit to make any Capital
--------------------
Expenditure in fiscal year 2000, except (a) Capital Expenditures of the Borrower
and its Subsidiaries in the ordinary course of business not exceeding
$28,000,000 and (b) Capital Expenditures made with the proceeds of any
Reinvestment Deferred Amount.
7.8 Investments. Make any advance, loan, extension of credit (by way
-----------
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) intercompany Investments by the Borrower or any of its
Subsidiaries in the Borrower or any Person that, prior to such investment,
is a Wholly Owned Subsidiary Guarantor; and
(e) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $250,000 during the term of
this Agreement.
7.9 Optional Payments and Modifications of Certain Debt Instruments.
---------------------------------------------------------------
Make any optional payment or prepayment on or redemption or purchase of any
Indebtedness (other than the Loans and any Indebtedness permitted under Section
7.2(b) and other than in connection with the refinancing of any such
Indebtedness to the extent such refinancing Indebtedness is permitted hereunder)
or amend, modify or change, or consent or agree to any amendment, modification
or change to any of the terms relating to the payment or prepayment or principal
of or interest on, any such Indebtedness (other than (i) any such amendment,
modification or change which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon and (ii) any optional payment or prepayment
of an obligation existing in connection with the financing
<PAGE>
equipment, which equipment is being replaced by other equipment being financed
by a different entity).
7.10 Transactions with Affiliates. Enter into any transaction,
----------------------------
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower or any Wholly Owned Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the Borrower or such Subsidiary, as the case
may be, and (c) upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person that is not an Affiliate.
7.11 Sales and Leasebacks. Enter into any arrangement with any
--------------------
Person providing for the leasing by the Borrower or any Subsidiary of real or
personal property that has been or is to be sold or transferred by the Borrower
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary.
7.12 Changes in Fiscal Periods. Permit the fiscal year of the
-------------------------
Borrower to end on a day other than December 31 or change the Borrower's method
of determining fiscal quarters.
7.13 Negative Pledge Clauses. Enter into or suffer to exist or
-----------------------
become effective any agreement that prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its obligations under the Loan Documents to which it is a
party other than (a) this Agreement and the other Loan Documents and (b) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby).
7.14 Lines of Business. Enter into any business, either directly or
-----------------
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related thereto.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within three days after any such interest or other amount becomes
due in accordance with the terms hereof; or
<PAGE>
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or performance of
any agreement contained in clause (i) or (ii) of Section 6.4(a) (with
respect to the Borrower only), Section 6.7(a) or Section 7 of this
Agreement or Sections 5.4 and 5.6(b) of the Guarantee and Collateral
Agreement; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after notice
to the Borrower from the Administrative Agent; or
(e) The Borrower or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including any
Guarantee Obligation, but excluding the Loans) on the scheduled or original
due date with respect thereto; or (ii) default in making any payment of any
interest on any such Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such
holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described in
--------
clause (i), (ii) or (iii) of this paragraph (e) shall not at any time
constitute an Event of Default unless, at such time, one or more defaults,
events or conditions of the type described in clauses (i), (ii) and (iii)
of this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $1,000,000; or
(f) (i) The Borrower or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other
<PAGE>
similar official for it or for all or any substantial part of its assets,
or the Borrower or any of its Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv) the
Borrower or any of its Subsidiaries shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower
or any of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected
to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any
<PAGE>
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) the Permitted Investors shall cease to own of record and
beneficially an amount of common stock of the Borrower equal to at least
33% of the amount of common stock of the Borrower owned by the Permitted
Investors of record and beneficially as of the Closing Date; (ii) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
excluding the Permitted Investors, shall become, or obtain rights (whether
by means or warrants, options or otherwise) to become, the "beneficial
owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act),
directly or indirectly, of more than the greater of (x) 20% or (y) the
percentage owned by the Permitted Investors referred to in clause (i), of
the outstanding common stock of the Borrower; or (iii) the board of
directors of the Borrower shall cease to consist of a majority of
Continuing Directors; or
(l) The Borrower shall (i) conduct, transact or otherwise engage in,
or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital
Stock of the Borrower, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (x)
nonconsensual obligations imposed by operation of law, (y) pursuant to the
Loan Documents to which it is a party and (z) obligations with respect to
its Capital Stock, or (iii) own, lease, manage or otherwise operate any
properties or assets (including cash (other than cash received in
connection with dividends made by the Borrower in accordance with Section
7.6 pending application in the manner contemplated by said Section) and
cash equivalents) other than the ownership of shares of Capital Stock of
the Borrower;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative
<PAGE>
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any
--------------------
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither The Administrative Agent nor any
----------------------
of its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable
<PAGE>
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or any other Loan Document (except to the
extent that any of the foregoing are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from its or such Person's
own gross negligence or willful misconduct) or (ii) responsible in any manner to
any of the Lenders for any recitals, statements, representations or warranties
made by any Loan Party or any officer thereof contained in this Agreement or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party a
party thereto to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
--------------------------------
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed
-----------------
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided that unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but
<PAGE>
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 Non-Reliance on the Administrative Agent and Other Lenders. Each
----------------------------------------------------------
Lender expressly acknowledges that neither the Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Administrative Agent hereafter taken, including any review of the affairs of
a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and made
its own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Loan Party or any affiliate of a Loan Party that may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Revolving Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against the Administrative Agent
in any way relating to or arising out of, the Revolving Commitments, this
Agreement, any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided that no Lender shall be liable
--------
for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
that are found by a final and nonappealable
<PAGE>
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
9.8 Administrative Agent in Its Individual Capacity. The
-----------------------------------------------
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent were not an Administrative Agent. With respect to its Loans
made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
<PAGE>
SECTION 10. MISCELLANEOUS
<PAGE>
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party to the relevant Loan Document may, or, with
the written consent of the Required Lenders, the Administrative Agent and each
Loan Party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
-------- -------
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, reduce the stated rate of any
interest or fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates, which waiver shall
be effective with the consent of the Majority Lenders) and (y) that any
amendment or modification of defined terms used in the financial covenants in
this Agreement shall not constitute a reduction in the rate of interest or fees
for purposes of this clause (i)) or extend the scheduled date of any payment
thereof, or extend the expiration date of any Lender's Revolving Commitment, in
each case without the written consent of each Lender directly affected thereby;
(ii) eliminate or reduce the voting rights of any Lender under this Section 10.1
without the written consent of such Lender; (iii) reduce any percentage
specified in the definition of Required Lenders, consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Subsidiary Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders; (iv) amend, modify or waive any
condition precedent to any extension of credit set forth in Section 5.2
(including in connection with any waiver of an existing Default or Event of
Default) without the written consent of the Majority Lenders; (v) amend, modify
or waive any provision of Section 2.14 without the written consent of the
Majority Lenders; (vi) reduce the amount of Net Cash Proceeds required to be
applied to prepay Loans under this Agreement without the written consent of the
Majority Lenders; (vii) reduce the percentage specified in the definition of
Majority Lenders without the written consent of all Lenders; (viii) amend,
modify or waive any provision of Section 9 without the written consent of the
Administrative Agent; (ix) amend, modify or waive any provision of Section 2.3
or 2.4 without the written consent of the Swingline Lender; or (x) amend, modify
or waive any provision of Section 3 without the written consent of the Issuing
Lender. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Loan Parties,
the Lenders, the Administrative Agent and all future holders of the Loans. In
the case of any waiver, the Loan Parties, the Lenders and the Administrative
Agent shall be restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
<PAGE>
For the avoidance of doubt, this Agreement may be amended (or amended
and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
-------------------------------
benefits of this Agreement and the other Loan Documents with the Revolving
Extensions of Credit and the accrued interest and fees in respect thereof and
(b) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders and Majority Lenders; provided, that no
--------
such amendment shall permit the Additional Extensions of Credit to share ratably
with or with preference to the Revolving Extensions of Credit without the
consent of the Majority Lenders.
10.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
The Borrower: Intira Corporation
5667 Gibraltar Drive
Pleasanton, CA 94588
Attention: Chief Financial Officer
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Andrew Hirsch
The Administrative Agent: The Chase Manhattan Bank
270 Park Avenue, 37/th/ Floor
New York, New York 10017
Attention: Edmond DeForest
Telecopy: (212) 270-4584
Telephone: (212) 270-9627
with a copy to: Chase Agency Services
One Chase Manhattan Plaza, 8/th/ Floor
New York, New York 10008
Attention: Gloria Javier
<PAGE>
Telecopy: (212) 552-5700
Telephone: (212) 552-7440
provided that any notice, request or demand to or upon the Administrative Agent
- --------
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
-----------------------------
or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees and disbursements
of counsel to the Administrative Agent and filing and recording fees and
expenses, with statements with respect to the foregoing to be submitted to the
Borrower prior to the Closing Date (in the case of amounts to be paid on the
Closing Date) and from time to time thereafter on a quarterly basis or such
other periodic basis as the Administrative Agent shall deem appropriate, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Administrative Agent, (c) to pay, indemnify, and hold each Lender and the
Administrative Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent and their
respective officers, directors, employees, affiliates, agents and controlling
persons (each, an "Indemnitee") harmless from and against any and all other
----------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
<PAGE>
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including any
of the foregoing relating to the use of proceeds of the Loans or the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower any of its Subsidiaries or any of the Properties
and the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Loan Party under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
-----------
Liabilities"), provided, that the Borrower shall have no obligation hereunder to
- ----------- --------
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 10.5 shall
be payable not later than 10 days after written demand therefor. Statements
payable by the Borrower pursuant to this Section 10.5 shall be submitted to the
Chief Financial Officer of the Borrower, at the address of the Borrower set
forth in Section 10.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Administrative Agent. The
agreements in this Section 10.5 shall survive repayment of the Loans and all
other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender other than any Conduit Lender may, without the consent
of the Borrower, in accordance with applicable law, at any time sell to one or
more banks, financial institutions or other entities (each, a "Participant")
-----------
participating interests in any Loan owing to such Lender, any Revolving
Commitment of such Lender or any other interest of such Lender hereunder and
under the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan for all purposes under this Agreement
and the other Loan Documents, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. In no event shall any Participant under any such participation have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Loans or any fees payable hereunder, or postpone the
<PAGE>
date of the final maturity of the Loans, in each case to the extent subject to
such participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.15, 2.16 and 2.17 with respect to its participation
in the Revolving Commitments and the Loans outstanding from time to time as if
it was a Lender; provided that, in the case of Section 2.16, such Participant
--------
shall have complied with the requirements of said Section and provided, further,
-------- -------
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
--------
accordance with applicable law, at any time and from time to time assign to any
Lender, any affiliate of any Lender or any Approved Fund or, with the consent of
the Borrower and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed), to an additional bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
--------
under this Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, executed by such Assignee, such Assignor and any other Person whose
consent is required pursuant to this paragraph, and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided
--------
that no such assignment to an Assignee (other than any Lender, any affiliate of
any Lender or any Approved Fund) shall be in an aggregate principal amount of
less than $5,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement), unless otherwise agreed by the
Borrower and the Administrative Agent. For purposes of the proviso contained in
the preceding sentence, the amount described therein shall be aggregated in
respect of each Lender and its related Approved Funds, if any. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Revolving Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto). Notwithstanding any provision of this Section 10.6, the consent of the
Borrower shall not be required for any assignment that occurs when an Event of
Default pursuant to Section 8(f) shall have occurred and be continuing with
respect to the Borrower. Notwithstanding the foregoing, any Conduit Lender may
assign at any time to its designating Lender hereunder without the
<PAGE>
consent of the Borrower or the Administrative Agent any or all of the Loans it
may have funded hereunder and pursuant to its designation agreement and without
regard to the limitations set forth in the first sentence of this Section
10.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
--------
recondition of the names and addresses of the Lenders and the Revolving
Commitment of, and the principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, each other Loan Party, the Administrative
Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Loans and any Notes evidencing the Loans recorded
therein for all purposes of this Agreement. Any assignment of any Loan, whether
or not evidenced by a Note, shall be effective only upon appropriate entries
with respect thereto being made in the Register (and each Note shall expressly
so provide). Any assignment or transfer of all or part of a Loan evidenced by a
Note shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a duly
executed Assignment and Acceptance, and thereupon one or more new Notes shall be
issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
10.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained therein
in the Register on the effective date determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 10.6 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law.
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
(h) Each of the Borrower, each Lender and the Administrative Agent
hereby confirms that it will not institute against a Conduit Lender or join any
other Person in instituting against a Conduit Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
state bankruptcy or similar law, for one year and one day after the payment in
full of the latest maturing commercial paper note issued by such Conduit Lender;
provided, however, that each Lender designating any Conduit Lender hereby agrees
- --------
to indemnify, save and hold harmless each other party hereto for any loss, cost,
damage or expense arising out of its
<PAGE>
inability to institute such a proceeding against such Conduit Lender during such
period of forbearance.
10.7 Adjustments; Set-off. (a) Except to the extent that this
--------------------
Agreement expressly provides for payments to be allocated to a particular
Lender, if any Lender (a "Benefitted Lender") shall, at any time after the Loans
-----------------
and other amounts payable hereunder shall immediately become due and payable
pursuant to Section 8, receive any payment of all or part of the Obligations
owing to it, or receive any collateral in respect thereof (whether voluntarily
or involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of the Obligations owing to such other Lender, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
--------
such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
<PAGE>
10.10 Integration. This Agreement and the other Loan Documents
-----------
represent the entire agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower, as the case may be at its address set forth in Section 10.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
<PAGE>
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
10.14 Releases of Guarantees and Liens. (a) Notwithstanding
--------------------------------
anything to the contrary contained herein or in any other Loan Document, the
Administrative Agent is hereby irrevocably authorized by each Lender (without
requirement of notice to or consent of any Lender except as expressly required
by Section 10.1) to take any action requested by the Borrower having the effect
of releasing any Collateral or guarantee obligations (i) to the extent necessary
to permit consummation of any transaction not prohibited by any Loan Document or
that has been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than obligations under or in
respect of Hedge Agreements) shall have been paid in full, the Revolving
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Loan Party under the Security Documents shall terminate, all without
delivery of any instrument or performance of any act by any Person.
10.15 Confidentiality. Each of the Administrative Agent and each
---------------
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
--------
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender, any affiliate of any Lender or any
Approved Fund, (b) to any actual or prospective Transferee or Hedge Agreement
counterparty that agrees to comply with the provisions of this Section, (c) to
its employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, (d) upon the request or demand of
any Governmental Authority, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection with any
litigation or similar proceeding, (g) that has been publicly disclosed, (h) to
the National Association of Insurance Commissioners or any similar organization
or any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect
<PAGE>
to such Lender, or (i) in connection with the exercise of any remedy hereunder
or under any other Loan Document.
10.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
---------------------
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DIGITAL BROADCAST NETWORK CORPORATION
By: /s/ David S. Boone
------------------------------------
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, as Administrative Agent
and as a Lender
By: [UNINTELLIGIBLE]
------------------------------------
Title: Vice President
<PAGE>
SCHEDULE 1.1A
-------------
REVOLVING COMMITMENTS
Lender Revolving Commitment
- ------ --------------------
The Chase Manhattan Bank $25,000,000
270 Park Avenue
New York, New York 10017
Attention: Edmond DeForest
<PAGE>
EXHIBIT 10.12
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
DIGITAL BROADCAST NETWORK CORPORATION,
(D/B/A INTIRA CORPORATION),
as Borrower
in favor of
THE CHASE MANHATTAN BANK,
as Administrative Agent
Dated as of December 30, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 DEFINED TERMS...................................................... 6
1.1 Definitions......................................................... 6
1.2 Other Definitional Provisions....................................... 10
SECTION 2. GUARANTEE.......................................................... 10
2.1 Guarantee........................................................... 10
2.2 Right of Contribution............................................... 11
2.3 No Subrogation...................................................... 11
2.4 Amendments, etc. with respect to the Borrower Obligations........... 12
2.5 Guarantee Absolute and Unconditional................................ 12
2.6 Reinstatement....................................................... 13
2.7 Payments............................................................ 13
SECTION 3. GRANT OF SECURITY INTEREST......................................... 13
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................... 14
4.1 Title; No Other Liens............................................... 15
4.2 Perfected First Priority Liens...................................... 15
4.3 Chief Executive Office.............................................. 15
4.4 Inventory and Equipment............................................. 15
4.5 Farm Products....................................................... 15
4.6 Investment Property................................................. 15
4.7 Receivables......................................................... 16
4.8 Contracts........................................................... 16
4.9 Intellectual Property............................................... 17
SECTION 5. COVENANTS.......................................................... 17
5.1 Delivery of Instruments, Certificated Securities and Chattel Paper.. 17
5.2 Maintenance of Insurance............................................ 18
5.3 Maintenance of Perfected Security Interest; Further Documentation... 18
5.4 Changes in Locations, Name, etc..................................... 18
5.5 Notices............................................................. 19
5.6 Investment Property................................................. 19
5.7 Receivables......................................................... 20
5.8 Contracts........................................................... 21
5.9 Intellectual Property............................................... 21
SECTION 6. REMEDIAL PROVISIONS................................................ 22
6.1 Certain Matters Relating to Receivables............................. 22
6.2 Communications with Obligors; Grantors Remain Liable................ 23
6.3 Pledged Stock....................................................... 23
6.4 Proceeds to be Turned Over To Administrative Agent.................. 24
6.5 Application of Proceeds............................................. 25
6.6 Code and Other Remedies............................................. 25
6.7 Registration Rights................................................. 26
</TABLE>
<PAGE>
<TABLE>
<S> <C>
6.8 Waiver; Deficiency................................................. 26
SECTION 7. THE ADMINISTRATIVE AGENT.......................................... 26
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 26
7.2 Duty of Administrative Agent....................................... 28
7.3 Execution of Financing Statements.................................. 28
7.4 Authority of Administrative Agent.................................. 29
SECTION 8. MISCELLANEOUS..................................................... 29
8.1 Amendments in Writing.............................................. 29
8.2 Notices............................................................ 29
8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 29
8.4 Enforcement Expenses; Indemnification.............................. 30
8.5 Successors and Assigns............................................. 30
8.6 Set-Off............................................................ 30
8.7 Counterparts....................................................... 31
8.8 Severability....................................................... 31
8.9 Section Headings................................................... 31
8.10 Integration........................................................ 31
8.11 GOVERNING LAW...................................................... 31
8.12 Submission To Jurisdiction; Waivers................................ 31
8.13 Acknowledgements................................................... 32
8.14 Additional Grantors................................................ 32
8.15 Releases........................................................... 32
8.16 WAIVER OF JURY TRIAL............................................... 33
</TABLE>
<PAGE>
SCHEDULES
- ---------
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Perfection Matters
Schedule 4 Jurisdictions of Organization and Chief Executive Offices
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
Exhibit A
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of December 30, 1999,
made by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of THE CHASE
--------
MANHATTAN BANK, as Administrative Agent (in such capacity, the "Administrative
--------------
Agent") for the banks and other financial institutions (the "Lenders") from time
- ----- -------
to time parties to the Credit Agreement, dated as of December 30, 1999 (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among DIGITAL BROADCAST NETWORK CORPORATION (D/B/A INTIRA
- ---------
CORPORATION), a Missouri corporation (the "Borrower"), the Lenders and the
--------
Administrative Agent.
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make
<PAGE>
their respective extensions of credit to the Borrower under the Credit Agreement
that the Grantors shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1 DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
New York UCC: Accounts, Certificated Security, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) to the Administrative Agent or any
Lender (or, in the case of any Lender Hedge Agreement, any Affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, the Credit Agreement, this Agreement, the
other Loan Documents, any Letter of Credit, any Lender Hedge Agreement or
any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Administrative Agent or to the Lenders that are required to be paid by
the Borrower pursuant to the terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
Administrative Agent as provided in Section 6.1 or 6.4.
<PAGE>
"Contracts": any contract or agreement, including, without
---------
limitation, (i) all rights of any Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights of
any Grantor to damages arising thereunder and (iii) all rights of any
Grantor to perform and to exercise all remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of the United
----------
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
----------
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
------------------
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
----------
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
---------------
applicable jurisdiction and, in any event, including, without limitation,
any demand, time, savings, passbook or like account maintained with a
depositary institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
------------------
jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
-------------------------------
Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the New York UCC and, in any event, including,
without limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it
<PAGE>
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); provided, that the foregoing limitation
--------
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any money
or other amounts due or to become due under any such contract, agreement,
instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, all
---------------------
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2)
or any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by such Guarantor
pursuant to the terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
----------
Borrower.
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
-----------------
Grantor to the Parent or any of its Subsidiaries.
"Investment Property": the collective reference to (i) all
-------------------
"investment property" as such term is defined in Section 9-115 of the New
York UCC (other than any Foreign Subsidiary Voting Stock excluded from the
definition of "Pledged Stock") and (ii) whether or not constituting
"investment property" as so defined, all Pledged Notes and all Pledged
Stock.
"Issuers": the collective reference to each issuer of any Investment
-------
Property.
"Lender Hedge Agreements": all interest rate swaps, caps or collar
-----------------------
agreements or similar arrangements entered into by the Borrower with any
Lender (or any Affiliate of any Lender) providing for protection against
fluctuations in interest rates or currency exchange rates or the exchange
of nominal interest obligations, either generally or under specific
contingencies, in each case to the extent required by the terms of the
Credit Agreement to be entered into by the Borrower.
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
<PAGE>
"Nortel": Northern Telecom, Inc. (d/b/a Nortel, Inc.).
------
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States, any other
-------
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in Schedule 6, (ii) all
----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
--------
6, and (iii) all rights to obtain any reissues or extensions of the
-
foregoing.
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
----------
"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ----------
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes issued in connection with extensions of trade credit by any Grantor
in the ordinary course of business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect; provided that in no event shall more than 65% of the total
--------
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends or other income from the Investment Property,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company names,
<PAGE>
business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations
and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-
law rights related thereto, including, without limitation, any of the
foregoing referred to in Schedule 6, and (ii) the right to obtain all
----------
renewals thereof.
"Trademark License": any agreement, whether written or oral,
-----------------
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 6.
----------
1.2 Other Definitional Provisions. (a) The words "hereof,"
-----------------------------
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the
<PAGE>
Administrative Agent or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any set-
off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees
---------------------
that to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be
subject to the terms and conditions of Section 2.3. The provisions of this
Section 2.2 shall in no respect limit the obligations and liabilities of any
Subsidiary Guarantor to the Administrative Agent and the Lenders, and each
Subsidiary Guarantor shall remain liable to the Administrative Agent and the
Lenders for the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of
<PAGE>
such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned
over to the Administrative Agent in the exact form received by such Guarantor
(duly indorsed by such Guarantor to the Administrative Agent, if required), to
be applied against the Borrower Obligations, whether matured or unmatured, in
such order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
---------------------------------------------------------
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest, demand for payment and
notice of default or nonpayment to or upon the Borrower or any of the Guarantors
with respect to the Borrower Obligations. Each Guarantor understands and agrees
that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity or enforceability of the Credit Agreement or any other Loan
Document, any of the Borrower Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower or any other Person against the Administrative Agent
<PAGE>
or any Lender, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the Borrower or such Guarantor) which constitutes, or might
be construed to constitute, an equitable or legal discharge of the Borrower for
the Borrower Obligations, or of such Guarantor under the guarantee contained in
this Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Administrative Agent or any Lender may, but shall be under no
obligation to, make a similar demand on or otherwise pursue such rights and
remedies as it may have against the Borrower, any other Guarantor or any other
Person or against any collateral security or guarantee for the Borrower
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to make any such demand, to pursue such other
rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Borrower, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against any Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at 270
Park Avenue, New York, New York 10017.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, a security interest in, all of the following
property now owned or at any time hereafter acquired by such Grantor or in which
such Grantor now has or at any time in the future may acquire any right, title
or interest (collectively, the "Collateral"), as collateral security for the
----------
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Grantor's Obligations,:
(a) all Accounts;
<PAGE>
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property;
(l) all other property not otherwise described above;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
Notwithstanding the foregoing, such grant of a security interest shall not
extend to, and term "Collateral" shall not include (i) any rights which are now
or hereafter held by a Grantor as licensee, lessee, contractor or otherwise to
the extent that such rights are not assignable or capable of being assigned as a
matter of law or under the written terms of the license, lease, contract, or
other agreement applicable thereto or (ii) any equipment, proceeds or other
property financed by a Capital Lease or loan agreement permitted under the terms
of the Credit Agreement, to the extent that such equipment, proceeds or other
property are prohibited from being pledged under the written terms of the
license, lease, contract or other agreement applicable thereto without the
consent of the other parties thereto, provided that upon the elimination of such
--------
disability or prohibition such grant of security interest shall automatically
extend to, and the definition of "Collateral" shall automatically include, such
excluded rights, equipment, proceeds or other property.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit
<PAGE>
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Administrative Agent and each Lender that:
4.1 Title; No Other Liens. Except for the security interest granted
---------------------
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others. No financing statement or other
public notice with respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Credit Agreement.
4.2 Perfected First Priority Liens. The security interests granted
------------------------------
pursuant to this Agreement (a) constitute upon completion of the filings and
other actions specified on Schedule 3 (which, in the case of all filings and
----------
other documents referred to on said Schedule, have been delivered to the
Administrative Agent in completed and duly executed form) will constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting to
purchase any Collateral from such Grantor and (b) are prior to all other Liens
on the Collateral in existence on the date hereof except for unrecorded Liens
permitted by the Credit Agreement, except for Liens in favor of Nortel, such
Liens to be released upon payment of Indebtedness owed by Grantor to Nortel as
set forth in the payoff letter delivered by Nortel to the Administrative Agent,
which have priority over the Liens on the Collateral by operation of law.
4.3 Chief Executive Office. On the date hereof, such Grantor's
----------------------
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
----------
4.4 Inventory and Equipment. On the date hereof, the Inventory and
-----------------------
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
- ----------
4.5 Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
4.6 Investment Property. (a) The shares of Pledged Stock pledged by
-------------------
such Grantor hereunder constitute all the issued and outstanding shares of all
classes of the Capital Stock of each Issuer owned by such Grantor or, in the
case of Foreign Subsidiary Voting Stock, if less, 65% of the outstanding Foreign
Subsidiary Voting Stock of each relevant Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
<PAGE>
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement.
4.7 Receivables. (a) No amount payable to such Grantor under or in
-----------
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent.
(b) On the date hereof, none of the obligors on any Receivables is a
Governmental Authority.
(c) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate.
4.8 Contracts. (a) No consent of any party (other than such
---------
Grantor) to any Contract is required, or purports to be required, in connection
with the execution, delivery and performance of this Agreement.
(b) Each Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the parties thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) On the date hereof, no consent or authorization of, filing with
or other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or enforceability
of any of the Contracts by any party thereto other than those which have been
duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature.
(d) Neither such Grantor nor (to the best of such Grantor's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof, except to the extent such
default could not reasonably be expected to have a Material Adverse Effect.
<PAGE>
(e) The right, title and interest of such Grantor in, to and under
the Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(f) No amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Administrative Agent.
(g) None of the parties to any Contract is a Governmental Authority.
4.9 Intellectual Property. (a) Schedule 6 lists all Intellectual
--------------------- ----------
Property which has been registered with the Patent and Trademark Office or the
Copyright Office owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property is valid,
subsisting, unexpired and enforceable, has not been abandoned.
(c) Except as set forth in Schedule 6, on the date hereof, none of
----------
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property or such Grantor's ownership interest
therein, or (ii) which, if adversely determined, would have a material adverse
effect on the value of any Intellectual Property.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 Delivery of Instruments, Certificated Securities and Chattel
------------------------------------------------------------
Paper. If any amount payable under or in connection with any of the Collateral
- -----
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be
immediately delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant to
this Agreement. Notwithstanding the foregoing, in no event shall any Grantor
be required to deliver
<PAGE>
a Certificated Security representing more than 65% of the issued and outstanding
shares of stock of any Issuer which is a Foreign Subsidiary.
5.2 Maintenance of Insurance. (a) Such Grantor will maintain, with
------------------------
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
(ii) to the extent requested by the Administrative Agent, insuring such Grantor,
the Administrative Agent and the Lenders against liability for personal injury
and property damage relating to such Inventory and Equipment, such policies to
be in such form and amounts and having such coverage as may be reasonably
satisfactory to the Administrative Agent and the Lenders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
5.3 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created
- -------------
by this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith as the Administrative Agent may reasonably request, all in
reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property and any other relevant Collateral,
taking any actions necessary to enable the Administrative Agent to obtain
"control" (within the meaning of the applicable Uniform Commercial Code) with
respect thereto.
5.4 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests
<PAGE>
provided for herein:
(i) change its jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
Section 4.3 (other than a reincorporation by the Borrower in Delaware,
provided that the Borrower shall give the Administrative Agent prior notice
--------
of such reincorporation); or
(ii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
Such Grantor will provide written quarterly supplements to Schedule 5 showing
----------
any additional location at which Inventory or Equipment shall be kept. Such
Grantor shall deliver all additional executed financing statements and other
documents reasonably requested by the Administrative Agent to obtain valid,
perfected security interests in such additional locations and with the priority
of such security interests to be as provided for herein.
5.5 Notices. Such Grantor will advise the Administrative Agent and
-------
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.6 Investment Property. (a) If such Grantor shall become entitled
-------------------
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor and with, if the Administrative Agent so requests, signature guaranteed,
to be held by the Administrative Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of the Investment Property upon the liquidation or dissolution of any
Issuer shall be paid over to the Administrative Agent to be held by it hereunder
as additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the
<PAGE>
Investment Property or any property shall be distributed upon or with respect to
the Investment Property pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Investment Property shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Lenders, segregated from other funds of such Grantor, as additional collateral
security for the Obligations. Notwithstanding the foregoing, in no event shall
more than 65% of the issued and outstanding shares of stock, or any property
distributed in respect thereof, of any Issuer which is a Foreign Subsidiary
constitute collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Investment Property or Proceeds thereof (except
pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Investment Property or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Investment Property or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.6(a) with respect to the Investment Property issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
------- --------
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Investment Property issued by it.
5.7 Receivables. (a) Other than in the ordinary course of business
-----------
consistent with prudent business practice, such Grantor will not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or
<PAGE>
enforceability of more than 5% of the aggregate amount of the then outstanding
Receivables.
5.8 Contracts. Such Grantor will perform and comply in all material
---------
respects with all its obligations under the Contracts except as permitted under
the Credit Agreement.
5.9 Intellectual Property. (a) Such Grantor (either itself or
---------------------
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i) will employ
each material Copyright and (ii) will not (and will not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired.
Such Grantor will not (either itself or through licensees) do any act whereby
any material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar
<PAGE>
office or agency in any other country or any political subdivision thereof, such
Grantor shall report such filing to the Administrative Agent within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Administrative Agent may request to evidence the Administrative
Agent's and the Lenders' security interest in any Copyright, Patent or Trademark
and the goodwill and general intangibles of such Grantor relating thereto or
represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution.
Notwithstanding anything contained in this Section 5.9, a Grantor shall have no
obligations under this Section 5.9 with respect to any Trademark, Patent,
Copyright, or other Intellectual Property to the extent the board of directors
of such Grantor determines it is in the best interests of such Grantor that such
Trademark, Patent, Copyright, or other Intellectual Property be forefeited,
abandoned, dedicated to the public or otherwise invalidated or impaired.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) The Administrative
---------------------------------------
Agent shall have the right to make test verifications at reasonable times on
reasonable notice of the Receivables in any manner and through any medium that
it reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may reasonably require in
connection with such test verifications. At any time and from time to time,
upon the Administrative Agent's reasonable request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Administrative Agent's
direction and control, and the
<PAGE>
Administrative Agent may curtail or terminate said authority at any time after
the occurrence and during the continuance of an Event of Default. If required by
the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by any Grantor, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed by
such Grantor to the Administrative Agent if required, in a Collateral Account
maintained under the sole dominion and control of the Administrative Agent,
subject to withdrawal by the Administrative Agent for the account of the Lenders
only as provided in Section 6.5, and (ii) until so turned over, shall be held by
such Grantor in trust for the Administrative Agent and the Lenders, segregated
from other funds of such Grantor. Each such deposit of Proceeds of Receivables
shall be accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables and parties to the Contracts to
verify with them to the Administrative Agent's satisfaction the existence,
amount and terms of any Receivables or Contracts.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and parties to the Contracts that the
Receivables and the Contracts have been assigned to the Administrative Agent for
the ratable benefit of the Lenders and that payments in respect thereof shall be
made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Contract by reason of or arising out of this Agreement or the
receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of
<PAGE>
business of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate
rights with respect to the Investment Property; provided, however, that no Vote
-------- -------
no vote shall be cast or corporate right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Investment Property shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its nominee
may thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Investment Property directly to the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In addition
--------------------------------------------------
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor
<PAGE>
to the Administrative Agent, if required). All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Collateral Account maintained under its sole dominion and control. All Proceeds
while held by the Administrative Agent in a Collateral Account (or by such
Grantor in trust for the Administrative Agent and the Lenders) shall continue to
be held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed upon
-----------------------
by the Borrower and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds held in
any Collateral Account in payment of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the
Administrative Agent to the Borrower or to whomsoever may be lawfully entitled
to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request, to assemble the
Collateral and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the
<PAGE>
rights of the Administrative Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Administrative Agent
may elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the New York UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.7 Registration Rights. Each Grantor recognizes that the
-------------------
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Stock, by reason of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities
for their own account for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges and agrees that any such private sale
may result in prices and other terms less favorable than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Administrative Agent shall be under no obligation to delay a sale
of any of the Pledged Stock for the period of time necessary to permit the
Issuer thereof to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would agree
to do so.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
------------------
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
-----------------------------------------------------------
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
<PAGE>
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or Contract or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or Contract
or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the
<PAGE>
Administrative Agent's option and such Grantor's expense, at any time, or
from time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the highest rate per annum at which
interest would then be payable on any category of past due ABR Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
----------------------------
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the New
<PAGE>
York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
---------------------------------
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with subsection 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
-------
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in subsection 10.2 of the Credit Agreement; provided that any such
--------
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
----------
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
---------------------------------------------------
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
<PAGE>
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
-------------------------------------
agrees to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement and the other Loan Documents to which such Guarantor is a
party, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to subsection 10.5 of
the Credit Agreement.
(d) The agreements in this Section 8.4 shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
--------
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
-------
Administrative Agent and each Lender at any time and from time to time while an
Event of Default pursuant to subsection 8(a) of the Credit Agreement shall have
occurred and be continuing, without notice to such Grantor or any other Grantor,
any such notice being expressly waived by each Grantor, to set-off and
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the
Administrative Agent or such Lender to or for the credit or the account of such
Grantor, or any part thereof in such amounts as the Administrative Agent or such
Lender may elect, against and on account of the obligations and liabilities of
such Grantor to the Administrative Agent or such Lender hereunder and claims of
every nature and description of the Administrative Agent or such Lender against
such Grantor, in any currency, whether arising hereunder, under the Credit
Agreement, any other Loan Document or otherwise, as the
<PAGE>
Administrative Agent or such Lender may elect, whether or not the Administrative
Agent or any Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent and each Lender shall notify such Grantor promptly of any
such set-off and the application made by the Administrative Agent or such Lender
of the proceeds thereof, provided that the failure to give such notice shall not
--------
affect the validity of such set-off and application. The rights of the
Administrative Agent and each Lender under this Section 8.6 are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which the Administrative Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such
<PAGE>
action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any Grantor arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
-------------------
required to become a party to this Agreement pursuant to subsection of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
8.15 Releases. (a) At such time as the Loans, the Reimbursement
--------
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At
the request and sole expense of any
<PAGE>
Grantor following any such termination, the Administrative Agent shall deliver
to such Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of the Borrower, a Subsidiary
Guarantor shall be released from its obligations hereunder in the event that all
the Capital Stock of such Subsidiary Guarantor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Credit Agreement;
provided that the Borrower shall have delivered to the Administrative Agent, at
- --------
least ten Business Days prior to the date of the proposed release, a written
request for release identifying the relevant Subsidiary Guarantor and the terms
of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by the Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
DIGITAL BROADCAST NETWORK
CORPORATION
By: _____________________________
Title:
<PAGE>
Schedule 1
----------
NOTICE ADDRESSES OF GUARANTORS
NONE
<PAGE>
Schedule 2
----------
DESCRIPTION OF INVESTMENT PROPERTY
Pledged Stock: (None)
<TABLE>
<CAPTION>
____________________________________ __________________ ________________________ _______________
Issuer Class of Stock Stock Certificate No. No. of Shares
------ -------------- --------------------- -------------
<S> <C> <C> <C>
</TABLE>
Pledged Notes: (None)
<TABLE>
<CAPTION>
____________________________________ __________________ ________________________
Issuer Payee Principal Amount
------ ----- ----------------
<S> <C> <C>
</TABLE>
Schedule 3
----------
<PAGE>
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
State / Central Filing Local Filings
- ---------------------- -------------
1. Arizona Maricopa County
2. California Los Angeles County
San Diego County
Santa Clara County
San Francisco County
3. Colorado Denver County
4. Florida Dade County
Hillsborough County
5. Georgia De Kalb County
6. Illinois Cook County
Peoria County
7. Kentucky Jefferson County
8. Massachusetts Cambridge County
9. Minnesota Hennepin County
10. Mississippi Oakland County
11. Missouri Jackson County
St. Louis City County
St. Louis County
12. New York Erie County
New York County
New York City
13. North Carolina Durham County
14. Ohio Cuyahoga County
<PAGE>
15. Oregon Multonomah County
16. Pennsylvania Philadelphia County
17. Tennessee Shelby County
Davidson County
18. Texas Travis County
Dallas County
Harris County
Bexar County
19. Utah Salt Lake County
20. Virginia Arlington County
21. Washington King County
Patent and Trademark Filings
----------------------------
1. Trademark Filing Number 75/509772 ("DBN Digital Broadcast Network") with
United States Patent & Trademark Office
<PAGE>
Schedule 4
----------
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Grantor Location
- ---------------------------------------------------------------------------------------------
<S> <C>
Digital Broadcast Network Corporation 977 Charters Commons, Chesterfield, Missouri
63017
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Grantor Location
- ---------------------------------------------------------------------------------------------
<S> <C>
Digital Broadcast Network Corporation 3220 North 3/rd/ Street, Phoenix AZ
- ---------------------------------------------------------------------------------------------
3700 Wilshire Blvd., Los Angeles, CA
- ---------------------------------------------------------------------------------------------
8929 Aero Drive, San Diego, CA
- ---------------------------------------------------------------------------------------------
529 Bryant Street, Palo Alto, CA
- ---------------------------------------------------------------------------------------------
501 2/nd/ Street, San Francisco, CA
- ---------------------------------------------------------------------------------------------
1850 Pearl Street, Denver, CO
- ---------------------------------------------------------------------------------------------
16563 NW. 15/th/ Ave., Miami, FL
---------------------------------------------------------------------------------------------
400 North Tampa Street, Tampa, FL
- ---------------------------------------------------------------------------------------------
64 Perimeter Center East, Atlanta, GA
- ---------------------------------------------------------------------------------------------
111 North Canal Street, Chicago, IL
- ---------------------------------------------------------------------------------------------
211B S.W. Adams Street, Peoria, IL
- ---------------------------------------------------------------------------------------------
Medinger Tower 462 S. 4/th/ Street, St.
Louis, KY
- ---------------------------------------------------------------------------------------------
300 Bent Street, Cambridge, MA
- ---------------------------------------------------------------------------------------------
625 Marquette Ave., Minneapolis, MN
- ---------------------------------------------------------------------------------------------
19675 West Ten Mile Road, Southfield, MS
- ---------------------------------------------------------------------------------------------
324 E. 11/th/ Street, Kansas City, MO
- ---------------------------------------------------------------------------------------------
977 Charter Commons, St. Louis, MO
- ---------------------------------------------------------------------------------------------
900 Walnut Street, St. Louis, MO
- ---------------------------------------------------------------------------------------------
157 Chesterfield Industrial Blvd.,
Chesterfield, MO
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Grantor Location
- ---------------------------------------------------------------------------------------------
<S> <C>
350 Maine Street, Buffalo, NY
- ---------------------------------------------------------------------------------------------
75 Broad Street, New York, NY
- ---------------------------------------------------------------------------------------------
25 Broadway, New York, NY
- ---------------------------------------------------------------------------------------------
520 S.W. 6/th/ Avenue, Portland, OR
- ---------------------------------------------------------------------------------------------
401 North Broad Street, Philadelphia, PA
- ---------------------------------------------------------------------------------------------
5127 Truse Road, Memphis, TN
- ---------------------------------------------------------------------------------------------
One American Center, Nashville, TN
- ---------------------------------------------------------------------------------------------
816 Congress Ave., Austin, TX
- ---------------------------------------------------------------------------------------------
215 Henry Street, Dallas, TX
- ---------------------------------------------------------------------------------------------
12001 North I-45, Houston, TX
- ---------------------------------------------------------------------------------------------
323 Broadway Street, San Antonio, TX
- ---------------------------------------------------------------------------------------------
501 2/nd/ Street, Salt Lake, UT
- ---------------------------------------------------------------------------------------------
1400 Key Blvd., Arlington, VA
- ---------------------------------------------------------------------------------------------
1000 Denny Way, Seattle, WA
- ---------------------------------------------------------------------------------------------
625 Rue Belmont, Montreal, Quebec, Canada
- ---------------------------------------------------------------------------------------------
495 Terminal Avenue, Ottawa, Ontario, Canada
- ---------------------------------------------------------------------------------------------
151 Front Street, Toronto, Ontario, Canada
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 6
----------
COPYRIGHTS AND COPYRIGHT LICENSES
NONE
PATENTS AND PATENT LICENSES
NONE
TRADEMARKS AND TRADEMARK LICENSES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Owner of Record Country of Trademark Application or
- ---------------- ---------- --------- --------------
Registration Registration No.
------------ ----------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Digital Broadcast Network USA "DBN Digital Broadcast 75/509772
Corporation, a Missouri Network"
Corporation
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of December 30, 1999 (the "Agreement"), made by
---------
the Grantors parties thereto for the benefit of The Chase Manhattan Bank, as
Administrative Agent. The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.6(a) of
the Agreement.
3. The terms of Sections 6.3(c) and 6.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
------- --------
pursuant to Section 6.3(c) or 6.7 of the Agreement.
[NAME OF ISSUER]
By_______________________________________
Name:
Title:
Address for Notices:
_________________________________________
_________________________________________
_________________________________________
Fax:
Annex 1 to
Guarantee and Collateral Agreement
----------------------------------
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by
______________________________, a ______________ corporation (the "Additional
----------
Grantor"), in favor of THE CHASE MANHATTAN BANK, as administrative agent (in
- -------
such capacity, the "Administrative Agent") for the banks and other financial
--------------------
institutions (the "Lenders") parties to the Credit Agreement referred to below.
-------
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
<PAGE>
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, DIGITAL BROADCAST NETWORK CORPORATION, (D/B/A INTIRA
CORPORATION) (the "Borrower"), the Lenders and the Administrative Agent have
--------
entered into a Credit Agreement, dated as of December 30, 1999 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, the Borrower has
entered into the Guarantee and Collateral Agreement, dated as of December 30,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Guarantee and Collateral Agreement") in favor of the Administrative Agent for
- -----------------------------------
the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Assumption Agreement, the Additional Grantor, as provided in Section 8.15
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in the Schedules to the
Guarantee and Collateral Agreement. The Additional Grantor hereby represents
and warrants that each of the representations and warranties contained in
Section 4 of the Guarantee and Collateral Agreement is true and correct on and
as the date hereof (after giving effect to this Assumption Agreement) as if made
on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
<PAGE>
[ADDITIONAL GRANTOR]
By:__________________
Name:
Title:
<PAGE>
Annex 1-A to
Assumption Agreement
--------------------
Supplement to Schedule 1
------------------------
Supplement to Schedule 2
------------------------
Supplement to Schedule 3
------------------------
Supplement to Schedule 4
------------------------
Supplement to Schedule 5
------------------------
Supplement to Schedule 6
------------------------
<PAGE>
EXHIBIT 10.13
================================================================================
PURCHASE AGREEMENT
among
INTIRA CORPORATION,
as Issuer,
and
THE PURCHASERS NAMED HEREIN
Dated as of January 31, 2000
Relating to:
$188,500,000 Aggregate Principal Amount at Maturity of
13% Senior Discount Notes Due 2010
Series A Warrants to purchase
3,114,160 shares of Common Stock
Series B Warrants to purchase
1,070,160 shares of Common Stock
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS.................................................................. 1
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.01. Definitions..................................................... 2
1.02. Computation of Time Periods..................................... 27
1.03. Accounting Terms................................................ 27
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES; REORGANIZATION
2.01. Authorization of Issue.......................................... 27
2.02. Sale............................................................ 27
2.03. Closing......................................................... 28
2.04. Allocation of Purchase Price.................................... 28
2.05. Reorganization.................................................. 28
SECTION 3
CONDITIONS TO CLOSING
3.01. Representations and Warranties.................................. 29
3.02. Performance; No Default Under Other Agreements.................. 29
3.03. Compliance Certificates......................................... 29
(a) Officers' Certificate..................................... 29
(b) Secretary's Certificate................................... 29
3.04. Opinions of Counsel............................................. 30
3.05. No Adverse Events; No Operations of the Issuer.................. 30
3.07. Proceedings and Documents....................................... 30
3.08. Purchase Permitted by Requirements of Law, etc.................. 30
3.09. Transaction Documents in Force and Effect....................... 30
3.10. No Violation; No Legal Constraints; Consents, Authorizations and
Filings, etc.................................................. 31
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
4.01. Financial Condition.............................................. 32
4.02. No Change........................................................ 33
4.03. Corporate Existence; Compliance with Law......................... 33
4.04. No Legal Bar..................................................... 33
4.05. Litigation....................................................... 33
4.06. No Default....................................................... 33
4.07. Ownership of Property; Liens..................................... 34
4.08. Intellectual Property............................................ 34
4.09. Taxes............................................................ 34
4.10. Federal Regulations.............................................. 34
4.11. Labor Matters.................................................... 34
4.12. ERISA............................................................ 34
4.13. Investment Company Act; Other Regulations........................ 35
4.14. Subsidiaries..................................................... 35
4.15. Use of Proceeds.................................................. 35
4.16. Environmental Matters............................................ 36
4.17. Accuracy of Information, etc..................................... 37
4.18. Solvency......................................................... 37
4.19. Year 2000 Matters................................................ 37
4.20. Capitalization................................................... 37
4.21. Due Authorization, Execution and Delivery........................ 39
(a) Agreement.................................................. 39
(b) Notes and Exchange Notes................................... 39
(c) Exchange and Registration Rights Agreement................. 39
(d) Warrants and Common Stock.................................. 39
(e) Stockholders Agreement..................................... 40
4.22. Private Offering; No Integration or General Solicitation......... 40
4.23. Eligibility for Resale Under Rule 144A........................... 40
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
5.01. Purchase for Investment.......................................... 41
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6
COVENANTS TO PROVIDE INFORMATION
6.01. Future Reports to Purchasers..................................... 42
(a) Quarterly Statements....................................... 42
(b) Annual Statements.......................................... 43
(c) Chief Financial Officer Certificates....................... 44
(d) Other Information.......................................... 44
(e) Notice of Default.......................................... 44
(f) Additional Information to Holders of Other Indebtedness.... 44
(g) Original Issue Discount Information........................ 45
(i) Credit Agreement........................................... 45
6.02. Information to be Provided Pursuant to Rule 144A(d)(4)........... 45
SECTION 7
OTHER AFFIRMATIVE COVENANTS
7.01. Payment of Principal, Premium and Interest....................... 45
7.02. Preservation of Corporate Existence and Franchises............... 45
7.03. Maintenance of Properties........................................ 46
7.04. Taxes............................................................ 46
(a) Payment of Taxes........................................... 46
(b) Tax Returns................................................ 46
7.05. Books, Records and Access........................................ 46
7.06. Compliance with Law.............................................. 46
7.07. Insurance........................................................ 46
7.08. Offer to Repurchase upon Change of Control....................... 47
7.09. Offer to Purchase by Application of Excess Proceeds.............. 48
SECTION 8
NEGATIVE COVENANTS
8.01. Stay, Extension and Usury Laws................................... 50
8.02. Restricted Payments.............................................. 50
8.03. Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries................................................... 54
8.04. Incurrence of Indebtedness and Issuance of Preferred Stock....... 56
8.05. Asset Sales...................................................... 59
8.06. Transactions with Affiliates..................................... 60
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.07. Ownership of Opco................................................ 62
8.08. Liens............................................................ 62
8.09. Payments for Consents............................................ 62
8.10. Merger, Consolidation and Sale of Assets......................... 63
8.11. Public Disclosures............................................... 64
8.12. Business Activities.............................................. 64
8.13. Limitations on Sale and Leaseback Transactions................... 64
8.14. Investment Company Act........................................... 64
SECTION 9
PROVISIONS RELATING TO RESALES OF SECURITIES
9.01. Private Offerings................................................ 64
(a) Offers and Sales Only to Institutional Accredited Investors
or Qualified Institutional Buyers.......................... 65
(b) No General Solicitation.................................... 65
(c) Purchases by Non-Bank Fiduciaries.......................... 65
(d) Restrictions on Transfer; Legend........................... 65
(e) No Future Liability........................................ 65
(f) Securities Act Restrictions................................ 66
9.02. Resale Offering Assistance....................................... 67
9.03. Blue Sky Compliance.............................................. 68
9.04. No Integration................................................... 68
9.05. Form of Legend for the Securities................................ 69
SECTION 10
THE NOTES
10.01. Form and Execution............................................... 69
10.02. Terms of the Notes............................................... 70
(a) Stated Maturity............................................ 70
(b) Interest................................................... 70
10.03. Denominations.................................................... 70
10.04. Payments and Computations........................................ 70
10.05. Registration; Registration of Transfer and Exchange.............. 70
(a) Security Register.......................................... 70
(b) Registration of Transfer................................... 71
(c) Exchange................................................... 71
(d) Effect of Registration of Transfer or Exchange............. 71
(e) Requirements; Charges...................................... 71
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
(f) Certain Limitations........................................ 71
10.06. Mutilated, Destroyed, Lost and Stolen Notes...................... 71
10.07. Persons Deemed Owners............................................ 72
10.08. Cancellation..................................................... 72
10.09. Home Office Payment.............................................. 72
SECTION 11
EVENTS OF DEFAULT
11.01. Events of Default................................................ 73
11.02. Remedies......................................................... 75
11.03. Waiver of Past Defaults.......................................... 76
SECTION 12
REDEMPTION
12.01. Right of Redemption.............................................. 76
12.02. Partial Redemptions.............................................. 76
12.03. Notice of Redemption............................................. 77
12.04. Deposit of Redemption Price...................................... 77
12.05. Notes Payable on Redemption Date................................. 77
12.06. Notes Redeemed in Part........................................... 78
SECTION 13
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION AND TERMINATION
13.01. Expenses......................................................... 78
13.02. Indemnification.................................................. 78
(a) Indemnification by the Issuer.............................. 78
(b) Indemnification by the Purchasers.......................... 79
(c) Notifications and Other Indemnification Procedures......... 79
13.03. Contribution..................................................... 80
13.04. Survival......................................................... 81
13.05. Termination...................................................... 82
</TABLE>
-v-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 14
MISCELLANEOUS
14.01. Notices.......................................................... 82
14.02. Benefit of Agreement; Assignments and Participations............. 83
14.03. No Waiver; Remedies Cumulative................................... 83
14.04. Amendments, Waivers and Consents................................. 83
14.05. Counterparts..................................................... 84
14.06. Reproduction..................................................... 84
14.07. Headings......................................................... 85
14.08. Governing Law; Submission to Jurisdiction; Venue................. 85
14.09. Severability..................................................... 86
14.10. Entirety......................................................... 86
14.11. Survival of Representations and Warranties....................... 86
14.12. Incorporation.................................................... 86
</TABLE>
EXHIBITS
- --------
Exhibit A - Form of Note
Exhibit B - Form of Series A Warrant
Exhibit C - Form of Series B Warrant
Exhibit D - Form of Exchange and Registration Rights Agreement
Exhibit E - Form of Registration Rights and Stockholders Agreement
Exhibit F - Form of Officers' Certificate
Exhibit G - Form of Secretary's Certificate
Exhibit H-1 - Form of Opinion of Cahill Gordon & Reindel,
Special New York counsel to the Issuer
Exhibit H-2 - Form of Opinion of Larry Beilenson, Esq., General Counsel
of the Issuer
Exhibit H-3 - Thompson Coburn LLC, Missouri counsel to the Issuer
Exhibit I - Certificate of Incorporation and Bylaws
Exhibit J-1 - Voting Agreement
Exhibit J-2 - Voting Agreement Amendment
SCHEDULES
- ---------
Schedule A - Information Relating to Purchasers
Schedule 4.01 - Existing Indebtedness
Schedule 4.04 - Environmental
Schedule 4.14 - Subsidiaries
Schedule 4.20 - Capitalization
-vi-
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of January 31, 2000, by and among INTIRA
CORPORATION, a Delaware corporation (the "Issuer"), and THE PURCHASERS NAMED ON
------
THE SIGNATURE PAGES HEREIN (each a "Purchaser" and, collectively, the
---------
"Purchasers").
----------
RECITALS
--------
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Issuer has agreed to sell to the Purchasers, and each
Purchaser, acting severally and not jointly, has agreed to purchase for
aggregate proceeds of $100,453,535 from the Issuer, an aggregate of (i)
$188,500,000 aggregate principal amount at maturity of the Issuer's 13% Senior
Discount Notes Due 2010 in the form of Exhibit A hereto (as defined herein),
---------
(ii) Series A Warrants to purchase 3,114,160 shares of Common Stock of the
Issuer (the "Series A Warrants") in the form of Exhibit B hereto and (iii)
----------------- ---------
Series B Warrants to purchase 1,070,160 shares of Common Stock of the Issuer
(the "Series B Warrants" and, together with the Series A Warrants, the
-----------------
"Warrants" and, together with the Notes, the "Securities") in the form of
-------- ----------
Exhibit C hereto.
- ---------
WHEREAS, the holders of the Notes from time to time will be entitled
to the benefits of an Exchange and Registration Rights Agreement, dated the date
hereof (the "Exchange and Registration Rights Agreement"), by and among the
------------------------------------------
Issuer and the Purchasers in the form of Exhibit D hereto.
---------
WHEREAS, the holders of Warrants from time to time will be entitled to
the benefits of the Registration Rights and Stockholders Agreement, dated the
date hereof (the "Stockholders Agreement"), by and among the Issuer, the
----------------------
Purchasers and certain stockholders of the Issuer in the form of Exhibit E
---------
hereto.
WHEREAS, the Issuer has duly authorized the creation and issuance of
the Notes and the Warrants and the execution and delivery of this Agreement and
the Exchange and Registration Rights Agreement.
WHEREAS, all things necessary to make this Agreement, the Notes (when
issued and delivered hereunder), the Warrants, the Exchange and Registration
Rights Agreement and the Stockholders Agreement valid and binding obligations of
the Issuer in accordance with their respective terms have been done.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.01. Definitions. As used herein, the following terms shall have the
-----------
meanings specified herein unless the context otherwise requires:
"Accredited Investor" means any Person that is an "accredited
-------------------
investor" within the meaning of Rule 501(a) under the Securities Act.
"Accreted Value" as of any date (the "Specified Date") means, with
-------------- --------------
respect to each $1,000 principal amount at maturity of Notes:
(i) if the Specified Date is one of the following dates (each a
"Semi-Annual Accreted Date"), the amount set forth opposite such date
-------------------------
below:
<TABLE>
<CAPTION>
Semi-Annual Accreted Date Accreted Value
------------------------- --------------
<S> <C>
Closing Time $ 532.91
---------
August 1, 2000 567.35
February 1, 2001 604.23
August 1, 2001 643.51
February 1, 2002 685.33
August 1, 2002 729.88
February 1, 2003 777.32
August 1, 2003 827.85
February 1, 2004 881.66
August 1, 2004 938.97
February 1, 2005 $1,000.00
</TABLE>
(ii) if the Specified Date occurs between two Semi-Annual Accreted
Dates, the sum of (A) the Accreted Value for the Semi-Annual Accreted Date
immediately preceding the Specified Date and (B) an amount equal to the
product of (i) the Accreted Value for the immediately following Semi-Annual
Accreted Date less the Accreted Value for the immediately preceding Semi-
Annual Accreted Date and (ii) a fraction, the numerator of which is the
number of days from the immediately preceding Semi-Annual Accreted Date to
the Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180.
"Acquired Debt" means, with respect to any specified Person,
-------------
Indebtedness or Preferred Stock of any other Person existing at the time such
other Person is merged with or into or becomes a Subsidiary of such specified
Person (including by Designation or Revoca-
-2-
<PAGE>
tion); provided such Indebtedness or Preferred Stock is not incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person.
"Affiliate" means, with respect to any specified Person: (i) any
---------
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person; (ii) any other Person
that owns, directly or indirectly, 10% or more of such specified Person's
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption no more remote than first
cousin; or (iii) any other Person 10% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. With respect to a Purchaser, an
Affiliate shall also include, without limitation, any Person managed or advised
by, or controlling or under common control with, such Purchaser or any of its
Affiliates.
"Affiliate Transaction" is defined in Section 8.06.
---------------------
"Asset Acquisition" means (i) any capital contribution (by means of
-----------------
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Issuer or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Issuer or any Restricted Subsidiary,
in either case pursuant to which such Person shall (a) become a Restricted
Subsidiary or (b) be merged with or into the Issuer or any Restricted
Subsidiary, or (ii) any acquisition by the Issuer or any Restricted Subsidiary
of the assets of any Person which constitute substantially all of an operating
unit or line of business of such Person or which is otherwise outside of the
ordinary course of business of the Issuer or any Restricted Subsidiary.
"Asset Sale" means (i) the sale, lease, transfer, conveyance or other
----------
disposition of any property, asset or right (including, without limitation, by
way of a sale and leaseback) of the Issuer or any Restricted Subsidiary, and
(ii) the issue or sale by the Issuer or any of the Restricted Subsidiaries of
Equity Interests of any Subsidiary. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) any disposition of
properties and assets of the Issuer subject to Section 8.10; provided that any
properties, assets or rights that are not included in any such dispositions
shall be deemed to have been sold in a transaction constituting an Asset Sale,
(ii) a transfer of properties, assets or rights by the Issuer to a Restricted
Subsidiary or by a Subsidiary to the Issuer or to a Restricted Subsidiary, (iii)
a disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of a Permitted Business of the Issuer and the Restricted
Subsidiaries, (iv) the surrender or
-3-
<PAGE>
waiver by the Issuer or any of the Restricted Subsidiaries of contract rights or
the settlement, release or surrender of contract, tort or other claims of any
kind by the Issuer or any of the Restricted Subsidiaries or the grant by the
Issuer or any of the Restricted Subsidiaries of a Lien not prohibited by this
Agreement and in the ordinary course of business, and (v) sales, transfers,
assignments and other dispositions of assets (or related assets in related
transactions) (x) in the ordinary course of business, (y) with an aggregate Fair
Market Value of less than $250,000 in any fiscal year or (z) constituting the
incurrence of a Capital Lease Obligation.
"Asset Sale Offer" is defined in Section 8.05(b).
----------------
"Asset Sale Offer Payment Date" is defined in Section 7.09(b).
-----------------------------
"Average Life to Stated Maturity" means, when applied to any
-------------------------------
Indebtedness at any date of determination, the number of years obtained by
dividing (a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the sum of the total of the products obtained by
multiplying (i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years (calculated to
the nearest one-twelfth) which will elapse between such date and the making of
such payment.
"Bankruptcy Law" means Title 11 of the United States Code, as amended
--------------
from time to time, or any similar federal, state or foreign bankruptcy,
insolvency, reorganization or other law for the relief of debtors.
"Board of Directors" means the board of directors or other governing
------------------
body of the Issuer or, if the Issuer is owned or managed by a single entity, the
board of directors or other governing body of such entity, or, in either case,
any committee thereof duly authorized to act on behalf of such board or
governing body.
"Board Resolution" means a duly authorized resolution of the Board of
----------------
Directors.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Lease Obligation" means, at the time any determination
------------------------
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
-------------
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited)
-4-
<PAGE>
and (iv) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) marketable
----------------
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within one year from the
date of acquisition; (iii) certificates of deposit, time deposits, eurodollar
time deposits or overnight bank deposits having maturities of six months or less
from the date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500 million; (iv) commercial
paper of an issuer related at least A-1 by Standard & Poor's Ratings Service
("S&P") or P-1 by Moody's Investors Service, Inc. ("Moody's"), or carrying an
--- -------
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of acquisition; (v)
repurchase obligations of any Lender or of any commercial bank satisfying the
requirements of clause (iii) of this definition, having a term of not more than
30 days, with respect to securities issued or fully guaranteed or insured by the
United States Government; (vi) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth, territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or a by Moody's; (vii) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any Lender under the Credit Agreement or any commercial bank
satisfying the requirements of clause (iii) of this definition; (viii) shares of
money market mutual or similar funds which invest in assets 95% of which satisfy
the requirements of clauses (i) through (vii) of this definition; or (ix)
investments in instruments described in a corporate investment policy which has
been approved in writing by the required lenders under the Credit Agreement, as
in effect at the Closing Time; provided that with respect to any Foreign
Subsidiary, Cash Equivalents shall also mean those investments that are
comparable to clauses (i) through (vii) above in such Foreign Subsidiary's
country of organization or country where it conducts business operations.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, as amended from time to time, 42 U.S.C. (S) 9601 et
seq.
"Change of Control" means the occurrence of any of the following: (i)
-----------------
any "person" or "group," other than any Permitted Holder, is or becomes the
"beneficial owner" (as such terms are used in Section 13(d)(3) of the Exchange
Act, except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 35% or more of the voting or economic power represented by all of
the
-5-
<PAGE>
outstanding Common Stock (treating convertible preferred stock as converted for
this purpose) of the Issuer, (ii) during any period of two consecutive years,
Continuing Directors cease for any reason to constitute a majority of the Board
of Directors of the Issuer, (iii) the Issuer consolidates or merges with or into
any other Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets to any other Person, other
than any Permitted Holder, other than a consolidation or merger or disposition
of assets (a) of or by the Issuer into, with or to a Restricted Subsidiary or
(b) pursuant to a transaction in which the outstanding Common Stock (treating
convertible preferred stock as converted for this purpose) of the Issuer is
changed into or exchanged for securities or other property with the effect that
the beneficial owners of such outstanding Equity Interests of the Issuer
immediately prior to such transaction, beneficially own, directly or indirectly,
at least a majority of the voting or economic power represented by all of the
outstanding Common Stock (treating convertible preferred stock as converted for
this purpose) of the surviving corporation or the Person to whom the Issuer's
assets are transferred immediately following such transaction, or (c) of or by
the Issuer into, with or to any Permitted Holder, or (iv) the adoption of a plan
relating to the liquidation or dissolution of the Issuer.
"Change of Control Offer" is defined in Section 7.08(a).
-----------------------
"Change of Control Payment" is defined in Section 7.08(a).
-------------------------
"Change of Control Payment Date" is defined in Section 7.08(b).
-------------------------------
"Closing Time" is defined in Section 2.03.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and the rules and regulations promulgated thereunder, as amended from
time to time.
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this Agreement such Commission is not existing and
performing the duties now assigned to it under the Exchange Act, the body
performing such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
------------
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock whether or not
outstanding at the Closing Time, and includes, without limitation, all series
and classes of such common stock.
"Commonly Controlled Entity" means an entity, whether or not
--------------------------
incorporated, that is under common control with the Issuer within the meaning of
Section 4001 of ERISA or is part of a group that includes the Issuer and that is
treated as a single employer under Section 414 of the Code.
-6-
<PAGE>
"Consolidated" or "consolidated" (including the correlative term
------------ ------------
"consolidating") or on a "consolidated basis," when used with reference to any
- -------------- ------------------
financial term in this Agreement (but not when used with respect to any Tax
Return or tax liability), means the aggregate for two or more Persons of the
amounts signified by such term for all such Persons, with intercompany items
eliminated and, with respect to net income or earnings, after eliminating the
portion of net income or earnings properly attributable to minority interests,
if any, in the Capital Stock of any such Person or attributable to shares of
preferred stock of any such Person not owned by any other such Person, in
accordance with GAAP.
"Consolidated Cash Flow" means, with respect to the Issuer for any
----------------------
period, the Consolidated Net Income of the Issuer and the Restricted
Subsidiaries for such period plus (A) to the extent that any of the following
items were deducted in computing such Consolidated Net Income, but without
duplication, (i) provision for taxes based on income or profits of the Issuer
and the Restricted Subsidiaries for such period, plus (ii) Consolidated Interest
Expense for such period, plus (iii) depreciation, amortization (including
amortization of goodwill and other intangibles, but excluding amortization of
prepaid cash expenses that were paid in a prior period), and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of the Issuer and the
Restricted Subsidiaries for such period, minus (B) non-cash items increasing
such Consolidated Net Income for such period (other than items that were accrued
in the ordinary course of business), in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
Issuer shall be added to Consolidated Net Income to compute Consolidated Cash
Flow of the Issuer only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended or otherwise distributed
to the Issuer by such Restricted Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees and Requirements of Law applicable to that Restricted Subsidiary or its
stockholders.
"Consolidated Interest Expense" means, for any period, without
-----------------------------
duplication, the sum of (a) the interest expense of the Issuer and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (i) any amortization of
debt discount attributable to such period, (ii) the net cost under or otherwise
associated with Hedging Obligations (in each case, including any amortization of
discounts), (iii) the interest portion of any deferred payment obligation, (iv)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and (v) all capitalized
interest and all accrued interest, (b) all but the principal component of
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by the Issuer and the Restricted Subsidiaries during such period and as
determined on a consolidated basis in accordance with GAAP and (c) all dividends
paid or scheduled to be
-7-
<PAGE>
paid on Disqualified Stock of the Issuer and all dividends paid, accrued and/or
scheduled to be paid or accrued on Disqualified Stock of any Restricted
Subsidiary during such period in accordance with GAAP.
"Consolidated Leverage Ratio" means, with respect to the Issuer, as of
---------------------------
any date, the ratio of (i) the aggregate consolidated amount of Indebtedness of
the Issuer and the Restricted Subsidiaries then outstanding to (ii) the
Consolidated Cash Flow of the Issuer and the Restricted Subsidiaries for the
most recently ended fiscal quarter multiplied by four. For purposes of
calculating "Consolidated Cash Flow" for any fiscal quarter for purposes of this
definition (i) any Subsidiary of the Issuer that is a Restricted Subsidiary on
the Transaction Date shall be deemed to have been a Restricted Subsidiary at all
times during such fiscal quarter and (ii) any Subsidiary of the Issuer that is
not a Restricted Subsidiary on the Transaction Date shall be deemed not to have
been a Restricted Subsidiary at any time during such fiscal quarter. In
addition to and without limitation of the foregoing, for purposes of this
definition, "Consolidated Cash Flow" shall be calculated after giving effect on
a pro forma basis for the applicable fiscal quarter to, without duplication, any
Asset Sale, Asset Acquisition or Restricted Investment (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Issuer or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Debt) occurring during the period commencing on the first day of such fiscal
quarter to and including the Transaction Date, as if such Asset Sale, Asset
Acquisition or Restricted Investment occurred on the first day of such fiscal
quarter.
"Consolidated Net Income" means, with respect to the Issuer for any
-----------------------
period, the aggregate of the Net Income of the Issuer and the Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
accounted for by the equity method of accounting shall be included only to the
extent of the amount of dividends or distributions paid in cash to the Issuer or
a Restricted Subsidiary thereof by such Person but not in excess of the Issuer's
Equity Interests in such Person, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, or Requirement of Law, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, except that the
Issuer's equity in the net income of any such Restricted Subsidiary for such
period may be included in such Consolidated Net Income (A) up to the aggregate
amount of cash that could have been distributed by such Restricted Subsidiary
during such period to the Issuer as a dividend or as a loan or other advance and
(B) if the only restriction on the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary is a restriction of the type
described in Section 8.03(B)(ii),
-8-
<PAGE>
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded, (iv) the equity of the Issuer or any Restricted Subsidiary in the Net
Income (if positive) of any Unrestricted Subsidiary shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Unrestricted Subsidiary during such period to the Issuer or such
Restricted Subsidiary as a dividend or other distribution (but not in excess of
the amount of the Net Income of such Unrestricted Subsidiary for such period),
(v) the cumulative effect of a change in accounting principles shall be
excluded, (vi) all extraordinary, unusual or nonrecurring gains or losses (net
of fees and expenses relating to the transaction giving rise thereto) shall be
excluded, (vii) any gain or loss, net of taxes, realized upon the termination of
any employee pension benefit plan shall be excluded, and (viii) gains or losses
in respect of any Asset Sales (net of fees and expenses relating to the
transaction giving rise thereto) shall be excluded.
"Consolidated Tangible Assets" of the Issuer as of any date means the
----------------------------
total amount of assets of the Issuer and the Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) unamortized debt and debt issuance expenses, deferred charges, goodwill,
patents, trademarks, copyrights, and all other items which would be treated as
intangibles on the consolidated balance sheet of the Issuer and the Restricted
Subsidiaries prepared in accordance with GAAP and (ii) appropriate adjustments
on account of minority interests of other Persons holding equity investments in
Restricted Subsidiaries, in the case of each of clauses (i) and (ii) above, as
reflected on the consolidated balance sheet of the Issuer and the Restricted
Subsidiaries.
"Continuing Directors" means individuals who at the beginning of the
--------------------
period of determination constituted the Board of Directors, together with any
new directors whose election by such Board of Directors or whose nomination for
election by the stockholders of the Issuer was approved by a vote of a majority
of the directors of the Issuer then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved or is the designee of any Permitted Holder or any
stockholder (or its affiliates) existing at the Closing Time or any combination
thereof or was nominated or elected by any Permitted Holder or any stockholder
(or its affiliates) existing at the Closing Time or any of its designees.
"Contractual Obligation" means as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Controlling Person" is defined in Section 13.02(a).
------------------
"Credit Agreement" means the Credit Agreement dated as of December 30,
----------------
1999 among Intira Corporation and certain subsidiaries of Intira Corporation, as
guarantors, The Chase Manhattan Bank, as administrative agent, and the other
financial institutions from
-9-
<PAGE>
time to time party thereto, together with the related documents (including
guarantees and security agreements), in each case as such agreements may be
amended, supplemented or modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent or group of
creditors.
"Cumulative Consolidated Cash Flow" means, as of any date of
---------------------------------
determination, the cumulative Consolidated Cash Flow realized during the period
commencing on January 1, 2000 and ending on the last day of the last fiscal
quarter for which reports have been filed with the Commission or provided to the
Purchasers pursuant to Section 6.01 preceding the date of the event requiring
such calculation to be made.
"Currency Agreement" means, with respect to any Person, any foreign
------------------
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or beneficiary.
"Customer Contract" means any agreement entered into in the ordinary
-----------------
course of business between the Issuer or any of the Restricted Subsidiaries and
a customer whereby the Issuer or the Restricted Subsidiary agrees to provide
netsourcing or similar ancillary or related services to such customer and such
customer agrees to pay for such services, including, without limitation, the
obligation to purchase the computer and communications equipment dedicated to
the exclusive use of such customer in connection with the netsourcing services
and/or the obligation to pay a termination fee in certain circumstances.
"Debt Securities" means any debt securities issued by the Issuer or
---------------
any Subsidiary or Affiliate of the Issuer in a public offering or a private
placement.
"Default" means an Event of Default or any event, act or condition
-------
that is, or with the giving of notice, lapse of time or both would constitute,
an Event of Default.
"Default Amount" means, with respect to a Note, (i) prior to February
--------------
1, 2005, the Accreted Value of such Note as of the payment date, and (ii) on or
after February 1, 2005, the principal amount at maturity of such Note, plus, in
the case of clause (ii), accrued and unpaid interest thereon, if any, to the
payment date and, in the case of clauses (i) and (ii), Special Interest, if any,
to the payment date.
"Demand Registration Statement" is defined in the Exchange and
-----------------------------
Registration Rights Agreement.
"Designation" is defined in Section 8.02(C).
-----------
"Designation Amount" is defined in Section 8.02(C).
------------------
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<PAGE>
"Disinterested Director" means, with respect to any transaction or
----------------------
series of related transactions, a member of the Board of Directors who does not
have any material direct or indirect financial interest in or with respect to
such transaction or series of related transactions.
"Disqualified Stock" means any Equity Interest that, by its terms (or
------------------
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to February 1, 2010; provided that any
Equity Interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Issuer to repurchase such Equity
Interest upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock if the terms of such Equity Interest provide that
the Issuer may not repurchase or redeem such Equity Interest pursuant to such
provisions unless such repurchase or redemption complies with Section 8.02.
"Enforceability Exceptions" means, with respect to any specified
-------------------------
obligation, any limitations on the enforceability of such obligation due to
bankruptcy, insolvency, reorganization, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights or general
equity principles (other than, in any such case, any Federal or state laws
relating to fraudulent transfers) and, in the case of any indemnity for
securities law obligations, to the extent such indemnity may not be enforceable
due to public policy considerations.
"Environmental Laws" means any and all foreign, Federal, state, local
------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating or imposing liability or standards
of conduct concerning protection of human health or the environment, as now or
may at any time hereafter be in effect.
"Equity Interests" means Capital Stock and all warrants, options or
----------------
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Event of Default" is defined in Section 11.01.
----------------
"Excess Proceeds" is defined in Section 8.05(a).
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the Commission thereunder.
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<PAGE>
"Exchange and Registration Rights Agreement" is defined in the second
------------------------------------------
recital to this Agreement.
"Exchange Notes" means the notes issued in the Exchange Offer.
--------------
"Exchange Offer" is defined in the Exchange and Registration Rights
--------------
Agreement.
"Exchange Offer Registration Statement" is defined in the Exchange and
-------------------------------------
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Issuer and the
---------------------
Restricted Subsidiaries in existence at the Closing Time.
"Fair Market Value" means, with respect to any asset or property, the
-----------------
price which could be negotiated in an arm's-length free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer
neither of which is under pressure or compulsion to buy. Fair Market Value
shall be determined conclusively by the Board of Directors acting in good faith
evidenced by a board resolution thereof.
"Foreign Subsidiary" means any Restricted Subsidiary of the Issuer
------------------
which is not organized under the laws of the United States, any state thereof or
the District of Columbia.
"GAAP" means, at any date of determination, generally accepted
----
accounting principles in effect in the United States which are applicable at the
date of determination and which are consistently applied for all applicable
periods.
"Governmental Authority" means (a) the government of the United States
----------------------
or any State or other political subdivision thereof, (b) any government or
political subdivision of any other jurisdiction in which the Issuer or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Issuer or any Subsidiary, or (c) any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any such government.
"guarantee" means any obligation, contingent or otherwise, of any
---------
Person directly or indirectly guaranteeing any Indebtedness of any other Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not
-12-
<PAGE>
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under any Interest Rate Agreement or Currency
Agreement.
"Holder" means a Person in whose name a Note is registered on the
------
Security Register.
"incur" is defined in Section 8.04(a).
-----
"Indebtedness" means, with respect to any Person, any indebtedness of
------------
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance of the deferred and
unpaid purchase price of any property or representing any Hedging Obligations or
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing (other than letters of credit (or reimbursement agreements in respect
thereof), banker's acceptances and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
as well as all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right to be secured by) a Lien on any asset
(including, without limitation, accounts and contract rights) of such Person
(whether or not such Indebtedness is assumed by such Person or is not otherwise
such Person's legal liability), Disqualified Stock of such Person and Preferred
Stock of such Person's Restricted Subsidiaries and, to the extent not otherwise
included, the guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be the accreted
value thereof, in the case of any Indebtedness issued with original issue
discount, but the accretion of original issue discount in accordance with the
original terms of Indebtedness issued with an original issue discount will not
be deemed to be an incurrence. Notwithstanding the foregoing, money borrowed
and set aside at the time of the incurrence of any Indebtedness in order to
prefund the payment of interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest.
"Indemnified Person" is defined in Section 13.02(c).
------------------
"Independent Financial Advisor" means an accounting, appraisal or
-----------------------------
investment banking firm which is nationally recognized within the United States
of America (i) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the Issuer or
any of its Subsidiaries or Affiliates and (ii) which, in the judgment of the
Board of Directors, is otherwise independent and qualified to perform the task
for which it is to be engaged.
-13-
<PAGE>
"Institutional Accredited Investors" is defined in Section 9.01(a).
----------------------------------
"Intellectual Property" means all rights, priorities and privileges
---------------------
relating to intellectual property, whether arising under United States,
multinational or foreign laws or otherwise, including copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark licenses, Internet
domain names, d/b/a's, logos, tradenames, technology, know-how and processes,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"interest," when used with respect to any Note, means the amount of
--------
all interest accruing on such Note, including Special Interest payable on the
Notes pursuant to the Exchange and Registration Rights Agreement and all
interest accruing subsequent to the occurrence of any events specified in
Sections 11.01(viii) and (ix) hereof or which would have accrued but for any
such event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" is defined in Exhibit A.
---------------------
"Interest Rate Agreements" means, with respect to any Person, any
------------------------
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Investment" means, with respect to any Person, all investments by
----------
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to directors, officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Issuer or any of the Restricted Subsidiaries sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary, the Issuer shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the Fair Market
Value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in Section 8.02(E). The issuance of
Equity Interests (other than Disqualified Stock) of the Issuer as consideration
for any interest that would otherwise constitute an Investment will not
constitute an "Investment."
"IPO Liquidity Event" means the consummation of an initial public
-------------------
offering of Common Stock of the Issuer (or of any parent company to the extent
the proceeds thereof are contributed to the Issuer as common equity) for gross
proceeds of $50.0 million or more.
-14-
<PAGE>
"Issuer" is defined in the preamble to this Agreement and its
------
successors and assigns.
"Issuer Indemnified Person" is defined in Section 13.02(b).
-------------------------
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
-------------
institutions in The City of New York or San Francisco, California or at a place
of payment are authorized by law, regulation or executive order to remain
closed. If any payment date in respect of the Notes is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in, and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Make-Whole Call Premium" means, with respect to each Note at any date
-----------------------
of redemption, the excess, if any, of (a) the present value of the sum of the
Accreted Value and premium that would be payable on such Note on February 1,
2005, discounted on a semi-annual bond equivalent basis from such date of
redemption to February 1, 2005 at a per annum interest rate equal to the sum of
the Treasury Yield (determined on the Business Day immediately preceding the
date of such redemption) plus 50 basis points, over (b) the Accreted Value of
the Note being redeemed.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, management, operations, condition (financial or otherwise) or assets
of the Issuer and its Subsidiaries taken as a whole, (b) the ability of the
Issuer or any Subsidiary to perform any of its material obligations under any of
the Transaction Documents, or (c) the validity or enforceability of any
Transaction Document, other than, in the case of clause (a), any effect arising
from any matter disclosed in writing to the Purchasers on or prior to the date
hereof.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Maturity" means, when used with respect to any Note, the date on
--------
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise (including in connection with any offer to purchase
that this Agreement requires the Issuer to make).
-15-
<PAGE>
"Multiemployer Plan" shall mean a multiemployer plan within the
------------------
meaning of Section 4001(a)(3) of ERISA (i) to which any Commonly Controlled
Entity is then making or accruing an obligation to make contributions, (ii) to
which any Commonly Controlled Entity has within the preceding five plan years
made contributions, including any Person which ceased to be an ERISA Entity
during such five year period, or (iii) with respect to which the Issuer or any
of its Subsidiaries could incur liability.
"Net Cash Proceeds" means the aggregate amount of cash or Cash
-----------------
Equivalents received by the Issuer in the case of a sale or capital contribution
in respect of Capital Stock and by the Issuer and the Restricted Subsidiaries in
respect of an Asset Sale plus, in the case of an issuance of Capital Stock upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Issuer that were issued for
cash on or after the Closing Time, the amount of cash originally received by the
Issuer upon the issuance of such securities (including options, warrants, rights
and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and reasonable and customary expenses (including,
without limitation, the fees and expenses of legal counsel and investment
banking fees and expenses) incurred in connection with such Asset Sale or sale
of Equity Interests, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by the Issuer) of income, franchise,
sales and other applicable federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability by the Issuer or any of its
respective Restricted Subsidiaries in connection with such Asset Sale in the
taxable year that such sale is consummated or in the immediately succeeding
taxable year, the computation of which shall take into account the reduction in
tax liability resulting from any available operating losses and net operating
loss carryovers, tax credits and tax credit carryforwards, and similar tax
attributes.
"Net Income" means, with respect to any Person, the net income (loss)
----------
of such Person, determined in accordance with GAAP and before any reduction with
respect to any preferred stock dividends.
"Note Liquidity Event" means the effectiveness of any registration
--------------------
with respect to the Notes or the Exchange Notes under the provisions of the
Exchange and Registration Rights Agreement.
"Notes" means the securities that are issued under this Agreement, as
-----
amended or supplemented from time to time pursuant to this Agreement.
"Obligations" means any principal, premium, interest, Special
-----------
Interest, charge, expense, fee, attorneys' fees and disbursements, indemnities
and other liabilities payable by the Issuer or any of the Restricted
Subsidiaries under or in respect of this Agreement or the Notes.
"Offer Amount" is defined in Section 7.09(b).
------------
-16-
<PAGE>
"Officer" means, with respect to any Person, the President, Chief
-------
Executive Officer or the Chief Financial Officer of such Person.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Officers of such Person; provided, however, that every
Officers' Certificate with respect to compliance with a covenant or condition
provided for in this Agreement shall include (i) a statement that the Officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such term or condition
has been satisfied or complied with or the certifications required to be made
therein are complete and accurate, (iii) a statement as to whether, in the
opinion of the signers, such condition has been complied with and (iv) all other
statements and determinations required by the related terms and conditions of
this Agreement giving rise to the delivery of such Officers' Certificate.
"Opco" is defined in the definition of "Reorganization."
----
"outstanding" means, when used with respect to the Notes as of the
-----------
date of determination, all Notes theretofore executed and delivered under this
Agreement, except:
(i) Notes theretofore canceled by the Issuer or delivered to the
Issuer for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore set aside by the Issuer with a third party in
trust for the holders of such Notes; provided that if such Notes are to be
redeemed, notice of such redemption has been duly given as provided in this
Agreement; and
(iii) Notes which have been paid pursuant to Section 10.08 or in
exchange for or in lieu of which other Notes have been executed and
delivered pursuant to this Agreement, other than any such Notes in respect
of which there shall have been presented to the Issuer proof satisfactory
to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Issuer;
provided that in determining whether the Holders of the requisite principal
amount at maturity of the outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Issuer or any other obligor upon the Notes or any Affiliate of the Issuer or
of such other obligor shall be disregarded and deemed not to be outstanding.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Required
Holders the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer or any other obligor upon the Notes or any Affiliate
of the Issuer or of such other obligor.
-17-
<PAGE>
"Pari Passu Indebtedness" means any Indebtedness of the Issuer which
-----------------------
ranks pari passu in right of payment with the Notes.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permits" means all licenses, permits, certificates of need, approvals
-------
and authorizations from all Governmental Authorities required to lawfully
conduct a business as presently conducted.
"Permitted Business" means the provision of netsourcing services which
------------------
include and are not limited to the selling, marketing and provision of data
management services using geographically located data centers, public and
private network services, security and monitoring services, streaming services,
e-commerce services, storage and disaster recovery services, professional
services, collocation services and hosting services (including, without
limitation, all business activities of the Issuer and its Subsidiaries as of the
Closing Time), together with any other activity reasonably related thereto.
"Permitted Credit Facility" means the Credit Agreement and any other
-------------------------
senior commercial term loan and/or revolving credit facility (including any
letter of credit subfacility) entered into principally with commercial banks
and/or other Persons typically party to commercial loan agreements.
"Permitted Holders" means Ascend Communications, Inc. and its
-----------------
Affiliates.
"Permitted Investments" means (a) any Investment in the Issuer or in a
---------------------
Restricted Subsidiary of the Issuer that is engaged entirely or substantially
entirely in a Permitted Business; (b) any Investment in Cash Equivalents; (c)
any Investment by the Issuer or any of the Restricted Subsidiaries in a Person,
if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Issuer or a Restricted Subsidiary; (d) loans or advances to
employees of the Issuer or any Subsidiary of the Issuer in an amount not to
exceed $1.0 million at any time outstanding for relocation or other matters
related to the business of the Issuer and the Restricted Subsidiaries; (e) loans
or advances to employees of the Issuer or any Subsidiary of the Issuer to
finance the purchase of Equity Interests in the Issuer to the extent the
proceeds thereof are not included in the calculation of amounts under Section
8.02(C); (f) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale made in compliance with Section 8.05; (g)
Investments in securities of trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement arising out of the bankruptcy
or insolvency of such trade creditors or customers; and (h) Investments in
Hedging Obligations entered into in compliance with Section 8.04(b)(viii).
-18-
<PAGE>
"Permitted Liens" means (i) Liens to secure Indebtedness (other than
---------------
Debt Securities) permitted by Sections 8.04(b)(iv) through (ix) and permitted
refinancings thereof; (ii) Liens on assets of any Restricted Subsidiary (or of
the Issuer to the extent that, following the holding company reorganization,
such Liens will extend solely to assets of a Restricted Subsidiary) to secure
Indebtedness (other than Debt Securities) permitted to be incurred by any
Restricted Subsidiary (or the Issuer to the extent that, following the holding
company reorganization, such Indebtedness will be retained solely by a
Restricted Subsidiary) under such covenant; (iii) Liens in favor of the Issuer
or any Restricted Subsidiary; (iv) Liens on property of a Person existing at the
time such Person is merged with or into or consolidated with the Issuer or any
of the Restricted Subsidiaries; provided that such Liens were in existence prior
to the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Issuer or such Restricted Subsidiary; (v) Liens on property existing at the time
of acquisition thereof by the Issuer or any of the Restricted Subsidiaries;
provided that such Liens were in existence prior to the contemplation of such
acquisition; (vi) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vii) Liens existing at the Closing
Time; (viii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; (ix) zoning restrictions, rights-of-way,
easements and similar charges or encumbrances incurred in the ordinary course
which in the aggregate do not detract from the value of the property thereof;
(x) Liens to secure Indebtedness to the extent on proceeds from the incurrence
of such Indebtedness and granted principally to secure the payment of interest
on such Indebtedness; and (xi) additional Liens incurred in the ordinary course
of business of the Issuer or any of the Restricted Subsidiaries with respect to
obligations that do not exceed 5% of the Issuer's Consolidated Tangible Assets
at any one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Issuer or such Restricted
Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
----------------------------------
Issuer or any of the Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund, other Indebtedness of the Issuer or any of the Restricted Subsidiaries
(including Indebtedness outstanding at the Closing Time, but other than
Indebtedness incurred pursuant to clause (iii), (iv), (viii) or (ix) of Section
8.04(b)); provided that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus accrued interest
on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of any premium required to be paid in
-19-
<PAGE>
connection with such refinancing pursuant to the terms of such Indebtedness or
otherwise reasonably determined by the Issuer to be necessary and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness is expressly subordinated in right of payment to the Notes on terms
at least as favorable to the Holders as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) if such Permitted Refinancing Indebtedness
refinances Indebtedness of the Issuer incurred under clause (i) of Section
8.04(b), such Permitted Refinancing Indebtedness is incurred by the Issuer.
"Person" means any individual, corporation (including, without
------
limitation, a business trust, professional corporation and insurance company),
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or any other legally recognizable entity.
"Plan" means, at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Issuer or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Predecessor Note" of any particular Note means every previous Note
----------------
evidencing all or a portion of the same debt as that evidenced by such
particular Note.
"Preferred Stock" means any Capital Stock of any class or classes of a
---------------
Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Capital Stock of
any other class of such Person.
"Private Offering" is any offering by any of the Purchasers of some or
----------------
all of the Securities that are Registrable Securities without registration under
the Securities Act.
"Properties" is defined in Section 4.16(a).
----------
"property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Public Equity Offering" means an underwritten public offering of
----------------------
Common Stock (other than Disqualified Stock) of the Issuer made pursuant to a
registration statement filed with the Commission under the Securities Act.
-20-
<PAGE>
"Purchase Money Indebtedness" means Indebtedness (including Acquired
---------------------------
Debt, in the case of Capital Lease Obligations, mortgage financings and purchase
money obligations) incurred for the purpose of financing all or any part of the
cost of the engineering, construction, installation, importation, acquisition,
lease, development or improvement of any assets used or to be used by the Issuer
or any Restricted Subsidiary, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as the same may be amended, supplemented, modified or restated from
time to time. The Issuer in its reasonable discretion shall determine whether
any item of Indebtedness or portion thereof meeting the foregoing criteria shall
be classified as Purchase Money Indebtedness for the purposes of Section 8.04.
"Purchase Price" is defined in Section 2.02.
--------------
"Purchaser Indemnified Person" is defined in Section 13.02(a).
----------------------------
"Purchasers" is defined in the preamble to this Agreement.
----------
"Qualified Consideration" means all assets, rights (contractual or
-----------------------
otherwise) and properties, whether tangible or intangible, used or intended for
use in a Permitted Business and the Equity Interests of a Person that will
become a Restricted Subsidiary engaged principally in a Permitted Business.
"Qualified Equity Interests" of any Person means any and all Equity
--------------------------
Interests of such Person other than Disqualified Stock.
"Qualified Institutional Buyer" means any Person that is a "qualified
-----------------------------
institutional buyer" within the meaning of Rule 144A.
"Redemption Date" means, when used with respect to any Note to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Agreement.
"Redemption Price," when used with respect to any Note to be redeemed,
----------------
means the price at which it is to be redeemed pursuant to this Agreement and the
Notes.
"Registrable Securities" means the Securities and any other securities
----------------------
issued or issuable in exchange for the Securities. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Issuer and
subsequent disposition of them shall not require registration or qualification
of
-21-
<PAGE>
them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.
"Registration Default" is defined in the Exchange and Registration
--------------------
Rights Agreement.
"Regular Record Date" is defined in Section 10.04.
-------------------
"Regulation S" means Regulation S under the Securities Act (or any
------------
successor provision), as it may be amended from time to time.
"Reorganization" means any transaction or series of transactions,
--------------
whether involving a merger, transfer of assets or other transaction, entered
into with purpose and with the effect of creating a holding company organized
under the laws of the United States or any state thereof to own 100% of the
issued and outstanding Equity Interests of a corporation ("Opco") that directly
----
or indirectly owns all of the businesses and assets of the Issuer immediately
preceding such transaction or series of transactions (other than any business or
assets retained by the new holding company); provided that the Issuer elects to
treat such transaction or series of transactions as the "Reorganization".
"Reportable Events" means any of the events set forth in Section
-----------------
4043(b) of ERISA, other than those events as to which the thirty day notice
period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. (S) 4043.
"Required Holders" means Holders of more than 50% of the aggregate
----------------
principal amount at maturity of outstanding Notes and Exchange Notes.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Resale Materials" is defined in Section 9.02(b).
----------------
"Resale Registration Statement" is defined in Exhibit A.
-----------------------------
"Restricted Investment" means any Investment that is not a Permitted
---------------------
Investment.
"Restricted Payments" is defined in Section 8.02(A).
-------------------
"Restricted Subsidiary" of a Person means any Subsidiary of the
---------------------
referent Person that is not an Unrestricted Subsidiary.
-22-
<PAGE>
"Revocation" is defined in Section 8.02(D).
----------
"Rule 144" means Rule 144 under the Securities Act (or any successor
--------
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
---------
provision), as it may be amended from time to time.
"San Francisco Data Center" means the computer and communications
-------------------------
equipment operations center expected to be located at 5667 Gibraltar Drive,
Pleasanton, CA 94588 and 5731 West Los Positas Drive, Pleasanton, CA 94588 and
other executive and employee office space to be located in or around the San
Francisco metropolitan area.
"Securities" is defined in the first recital to this Agreement.
----------
"Securities Act" mean the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the Commission thereunder.
"Security" means any of the Notes or the Warrants.
--------
"Security Register" has the meaning given to such term in Section
-----------------
10.05(a).
"Series A Preferred Stock" means the Series A Preferred Stock, no par
------------------------
value, of the Issuer outstanding as of the Closing Time, the terms of which are
reflected in Exhibit I.
---------
"Series A Warrants" is defined in the first recital to this Agreement.
-----------------
"Series B Warrants" is defined in the first recital to this Agreement.
-----------------
"Shelf Registration Statement" is defined in the Exchange and
----------------------------
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
----------------------
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect at
the Closing Time.
"Single Employer Plan" means any Plan that is covered by Title IV of
--------------------
ERISA, but that is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of the date of any
-------
determination, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (c) such Person is not
en-
-23-
<PAGE>
gaged in a business or a transaction, and is not about to engage in a business
or a transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed as the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Special Interest" is defined in the Exchange and Registration Rights
----------------
Agreement.
"Stated Maturity" means, with respect to any installment of interest
---------------
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stockholders Agreement" has the meaning specified in the third
----------------------
recital to this Agreement.
"Subordinated Indebtedness" means Indebtedness of the Issuer that is
-------------------------
subordinated in right of payment by its terms or the terms of any document or
instrument or instrument relating thereto to the Notes.
"Subsequent Purchaser" is defined in Section 4.22(a).
--------------------
"Subsidiary" means, with respect to any Person, (i) any corporation,
----------
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Tax Returns" means all returns, declarations, reports, estimates,
-----------
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges,
-----
fees, imposts, levies or other assessments, including, without limitation, all
net income, alternative minimum, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise,
-24-
<PAGE>
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or other
additional amounts imposed by any taxing authority in connection with any item
described in clause (i) and (iii) all transferee, successor, joint and several
or contractual liability (including, without limitation, liability pursuant to
Treas. Reg. (S) 1.1502-6 (or any similar state, local or foreign provision)) in
respect of any items described in clause (i) or (ii).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
---
77bbbb) as in effect on the date on which the indenture is qualified under the
TIA.
"Total Incremental Equity" means, at any date of determination, the
------------------------
sum of, without duplication, (a) the aggregate Net Cash Proceeds and Fair Market
Value of any other consideration received by the Issuer from the issue and sale
(other than to a Restricted Subsidiary) by the Issuer of its Qualified Equity
Interests after the Closing Time, plus (b) the aggregate Net Cash Proceeds and
Fair Market Value of any other consideration received by the Issuer or any
Restricted Subsidiary after the Closing Time from the issuance (other than to a
Restricted Subsidiary) from the issue or sale of Disqualified Stock or
Indebtedness of the Issuer or a Restricted Subsidiary that has been converted or
exchanged for Qualified Equity Interests (other than any such Disqualified Stock
or converted or exchanged Indebtedness sold to and held by a Restricted
Subsidiary) plus the amount of Net Cash Proceeds and Fair Market Value of any
other consideration received by the Issuer or any Restricted Subsidiary upon
such conversion or exchange of Disqualified Stock or Indebtedness, minus (c)
the aggregate amount of all Restricted Payments made on or after the Closing
Time and all Designation Amounts arising after the Closing Time, but only to the
extent the amount set forth in this clause (c) would exceed the amount
determined under subclause (i) of clause (c) of Section 8.02(A), plus (d) in the
case of the disposition or repayment of any Investment which has been deducted
pursuant to clause (c) of this definition, an amount equal to the lesser of the
return of capital with respect to such Investment and the amount of such
Investment which has been deducted pursuant to such clause (c), plus (e) in the
case of any Revocation with respect to any Subsidiary that was made the subject
of Designation after the Closing Time and as to which a Designation Amount has
been deducted pursuant to clause (c) of this definition, an amount equal to the
lesser of such Designation Amount or the Fair Market Value of the Investment of
the Issuer and the other Restricted Subsidiaries in such Subsidiary at the time
of Revocation.
"Transaction Date" means the date of the transaction giving rise to
----------------
the need to calculate the Consolidated Leverage Ratio.
"Transaction Documents" means, collectively, this Agreement, the
---------------------
Exchange and Registration Rights Agreement, the Stockholders Agreement, the
Notes, the Exchange
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<PAGE>
Notes, the Warrants and all certificates, instruments, financial and other
statements and other documents made or delivered in connection herewith and
therewith.
"Transactions" means, collectively, the transactions provided for in,
------------
or contemplated by, the Transaction Documents.
"Treasury Yield" means the yield to maturity at the time of
--------------
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the date fixed for redemption (or, if such Statistical Release is no longer
published, any publicly available source of similar data)) most nearly equal to
the then remaining average life of the Securities; provided, that if the average
life of the Securities is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Yield
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given, except that if the average life of the
Securities is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used.
"United States" shall have the meaning assigned to such term in
-------------
Regulation S.
"Unrestricted Subsidiary" means any Subsidiary of the Issuer that is
-----------------------
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution in accordance with the provisions of Section 8.02. Any such
Designation by the Board of Directors shall be evidenced by a Board Resolution
giving effect to such Designation and an Officers' Certificate certifying that
such Designation complied with the foregoing conditions and was permitted by
Section 8.02. The Board of Directors may at any time revoke the Designation of
a Subsidiary as an Unrestricted Subsidiary in accordance with the provisions of
Section 8.02.
"Voting Agreement" means the Voting Agreement dated as of June 30,
----------------
1999 among the Issuer and certain of its shareholders annexed hereto as Exhibit
-------
J-1, as amended on January 28, 2000 annexed hereto as Exhibit J-2 (the "Voting
- --- ----------- ------
Agreement Amendment").
- -------------------
"Voting Stock" of any Person as of any date means the Capital Stock of
------------
such Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"Warrants" is defined in the first recital to this Agreement.
--------
"Warrant Shares" shall, with respect to Series A Warrants, have the
--------------
meaning provided in the Series A Warrants, and, with respect to the Series B
Warrants, have the meaning provided in the Series B Warrants, collectively.
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<PAGE>
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
----------------------------------
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
1.02. Computation of Time Periods. For purposes of computation of
---------------------------
periods of time hereunder, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding."
1.03. Accounting Terms. Accounting terms used but not otherwise
----------------
defined herein shall have the meanings provided, and be construed in accordance
with, GAAP.
SECTION 2
AUTHORIZATION, ISSUANCE AND SALE OF SECURITIES; REORGANIZATION
--------------------------------------------------------------
2.01. Authorization of Issue. The Issuer has authorized the issue
----------------------
and sale of (i) $188,500,000 aggregate principal amount at maturity of Notes,
each Note to be in the form of Exhibit A hereto, (ii) Series A Warrants to
---------
purchase 3,114,160 shares of Common Stock, each Series A Warrant to be in the
form of Exhibit B hereto, and (iii) Series B Warrants to purchase 1,070,160
---------
shares of Common Stock, each Series B Warrant to be in the form of Exhibit C
---------
hereto.
2.02. Sale. On the basis of the representations and warranties herein
----
contained and subject to the terms and conditions herein set forth, the Issuer
agrees to sell to each Purchaser, and each Purchaser, acting severally and not
jointly, agrees to purchase from the Issuer, the aggregate principal amount at
maturity of Notes and the aggregate number of associated Warrants, in each case,
set forth in Schedule A opposite the name of such Purchaser or its nominee at a
----------
purchase price (the "Purchase Price") of 53.291% of the principal amount at
--------------
maturity of Notes so set forth together with accrued original issue discount to
the extent the Closing Time is after February 2, 2000. The Issuer shall not be
obligated to close in the event any Purchaser defaults in its obligations
hereunder. Each Purchaser's obligation to close is conditioned upon each of the
other Purchasers fulfilling its obligation to close.
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<PAGE>
2.03. Closing. The purchase and sale of Securities pursuant to this
-------
Agreement shall occur at the offices of Cahill Gordon & Reindel, 10:00 A.M. (New
York City time), on February 2, 2000, or such other time as shall be agreed upon
by the Purchasers and the Issuer (such time and date of payment and delivery
being herein called the "Closing Time"). At the Closing Time, the Issuer will
------------
deliver to each Purchaser certificates for the Securities to be purchased by
such Purchaser at the Closing Time, in such denominations (in the case of the
Notes any integral multiple of $1,000 principal amount at maturity) as such
Purchaser may request, dated the Closing Time and registered in such Purchaser's
name, against payment by such Purchaser to the Issuer by wire transfer of
immediately available funds in the amount of the Purchase Price to be paid by
such Purchaser therefor to such bank account or accounts as the Issuer may
request in writing at least two Business Days prior to the Closing Time.
2.04. Allocation of Purchase Price. For all income tax purposes, the
----------------------------
Issuer and the Purchasers agree that each $532.91 of the Purchase Price paid by
each Purchaser shall be allocable as follows: $453.65 to each $1,000 principal
amount at maturity of Notes, $79.26 to the portion of any Series A Warrant that
is associated with $1,000 principal amount at maturity of Notes and $0 to the
portion of any Series B Warrant that is associated with $1,000 principal amount
at maturity of Notes. The tax and reporting basis of the Securities under the
Code by the Issuer and the Purchasers shall be consistent with the foregoing.
2.05. Reorganization. Notwithstanding anything herein to the
--------------
contrary, the Issuer and its Subsidiaries will be permitted to undertake the
Reorganization at any time and, upon the effectiveness of such Reorganization,
Opco (if it is the Issuer) will be released from all of the Obligations
hereunder; provided that the holding company resulting from the Reorganization
shall have assumed all of the Obligations of the Issuer hereunder and under the
other Transaction Documents and shall be substituted for (so that from and after
the date of the Reorganization, the provisions of this Agreement referring to
the "Issuer" shall refer instead to the new holding company and not to the prior
issuer), and may exercise every right and power of, the Issuer under this
Agreement hereunder and under the other Transaction Documents with the same
effect as if it had been named herein as the issuer and the prior issuer shall
be released from the Obligations hereunder and under the other Transaction
Documents. The Warrants will become exercisable solely for shares of the new
holding company and will become obligations solely of the new holding company as
well in accordance with their terms.
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<PAGE>
SECTION 3
CONDITIONS TO CLOSING
---------------------
Each Purchaser's several obligation to purchase and pay for the
Securities to be purchased by it at the Closing Time is subject to the
satisfaction or waiver by each Purchaser prior to or at the Closing Time of each
of the conditions specified below in this Section 3:
3.01. Representations and Warranties. Each of the representations and
------------------------------
warranties of the Issuer in this Agreement and in each of the other Transaction
Documents shall be true and correct when made and at and as of the Closing Time
as if made on and as of the Closing Time (unless expressly stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date and, in any such case, there shall
not have occurred since such date and prior to the Closing Time any developments
with respect to the subject matter of any such representation and warranty which
would have a Material Adverse Effect as determined by the Purchasers in their
reasonable judgment).
3.02. Performance; No Default Under Other Agreements. The Issuer
----------------------------------------------
shall have performed and complied in all material respects with all agreements
and conditions contained in this Agreement and each of the other Transaction
Documents required to be performed or complied with by it prior to or at the
Closing Time, and after giving effect to the issue and sale of the Securities
and the other Transactions (and the application of the proceeds thereof as
contemplated by Section 4.15 hereof and the other Transaction Documents), no
Default shall have occurred and be continuing and no default or event of default
shall have occurred and be continuing under any of the other Transaction
Documents.
3.03. Compliance Certificates.
-----------------------
(a) Officers' Certificate. The Issuer shall have delivered to the
---------------------
Purchasers an Officers' Certificate, dated the Closing Time, in the form of
Exhibit F hereto, certifying that the conditions specified in Sections 3.01,
- ---------
3.02, 3.05, 3.07 and 3.09 have been fulfilled.
(b) Secretary's Certificate. The Issuer shall have delivered to the
-----------------------
Purchasers a certificate substantially in the form of Exhibit G hereto
---------
certifying as to the Issuer's certificate of incorporation, bylaws and
resolutions attached thereto, the incumbency and signatures of certain officers
of the Issuer and other corporate proceedings of the Issuer relating to the
authorization, execution and delivery of the Securities, this Agreement, the
Exchange and Registration Rights Agreement and the other Transaction Documents
to the extent the Issuer is a party thereto.
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<PAGE>
3.04. Opinions of Counsel. Such Purchaser shall have received the
-------------------
favorable opinions in form and substance satisfactory to it, dated the Closing
Time, from (i) Cahill Gordon & Reindel, special New York counsel for the Issuer,
(ii) Larry Beilenson, Esq., General Counsel of the Issuer and (iii) Thompson
Coburn LLC, Missouri counsel to the Issuer, substantially in the forms set forth
in Exhibits H-1, H-2 and H-3, respectively.
------------ --- ---
3.05. No Adverse Events; No Operations of the Issuer. (i) None of the
----------------------------------------------
Issuer or any of its Subsidiaries shall have sustained since September 30, 1999
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree and (ii) except for the
reincorporation transaction and the 2.5-for-one stock split effected on January
25, 2000 or as contemplated by Sections 3, 4.01 and 4.20, since September 30,
1999 there shall not have been any material change in the capital stock or long-
term debt of the Issuer or any of its Subsidiaries or any change, or any
development involving a prospective change, in or affecting the business,
management, operations, condition (financial or otherwise) or assets of the
Issuer and its Subsidiaries.
3.06. Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the Transactions and the other transactions contemplated by
this Agreement and the other Transaction Documents, and all documents and
instruments incident to such transactions and the terms thereof, shall be
reasonably satisfactory to such Purchaser and such Purchasers' special counsel,
and such Purchaser and the Purchasers' special counsel shall have received all
such counterpart originals or certified or other copies of such documents as it
or they may reasonably request. All identified fees owing to, and all expenses
reimbursable by, the Issuer and its Affiliates as of the Closing Time pursuant
to this Agreement shall have been paid in full.
3.07. Purchase Permitted by Requirements of Law, etc. At the Closing
----------------------------------------------
Time, such Purchaser's purchase of the Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which it is subject, (b) not violate any
Requirement of Law (including, without limitation, Regulation U, T or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any Requirement
of Law, which Requirement of Law was not in effect on the date hereof.
3.08. Transaction Documents in Force and Effect. The Exchange and
-----------------------------------------
Registration Rights Agreement in the form of Exhibit D and the Registration
---------
Rights and Stockholders Agreement in the form of Exhibit E shall have been duly
---------
executed and delivered by the parties thereto.
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<PAGE>
3.09. No Violation; No Legal Constraints; Consents, Authorizations
------------------------------------------------------------
and Filings, etc.
- ----------------
(a) The consummation by the Issuer and its Subsidiaries of the
Transactions shall not contravene, violate or conflict with any Requirement of
Law.
(b) The Issuer shall have received (i) a consent from holders of at
least 60% of the outstanding shares of Series A Preferred Stock of the Issuer
for an increase by, and designation contemplated by Section 3.2 of the
Stockholders Agreement of, one additional member to the Board of Directors, (ii)
the approval of at least one director representing the Series A Preferred Stock
to the effective waiver of the application of the anti-dilution adjustments in
the Series A Preferred Stock pursuant to Section 5.7(b)(i) of the Certificate of
Designations related thereto and (iii) a waiver from holders of at least a
majority of the outstanding shares of Series A Preferred Stock that no right of
first refusal shall exist under the Amended and Restated Investors' Rights
Agreement, dated June 30, 1999. The Voting Agreement shall have been amended by
stockholders of the Issuer representing a majority of the issued and outstanding
Voting Stock of the Issuer as of the Closing Time to provide that, subject to
the terms thereof, such stockholders will vote for the member designated under
Section 3.2 of the Stockholders Agreement. The foregoing amendment shall be in
the form of Exhibit J-2. All other consents, authorizations and filings, if
-----------
any, required in connection with the execution, delivery and performance by the
Issuer, and its Subsidiaries of the Transaction Documents to which it is a party
shall have been obtained or made and shall be in full force and effect, except,
in the case of the Exchange and Registration Rights Agreement and the
Stockholders Agreement, for such consents, authorizations and filings which are
required under federal or state securities laws.
(c) There shall be no inquiry, injunction, restraining order,
action, suit or proceeding pending or entered or any statute or rule proposed,
enacted or promulgated by any Governmental Authority or any other Person which,
in the opinion of the Purchasers, (i) individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect or which seeks
to enjoin or seek damages against the Issuer, or any of the Issuer's
Subsidiaries or any of the Purchasers as a result of the Transactions, including
the issuance of the Notes, (ii) relates to any of the Transactions and has or
will have a material adverse effect on any Purchaser, (iii) alleges liability on
the part of any Purchaser in connection with this Agreement, any other
Transaction Documents or the Transactions or any of the other transactions
contemplated hereby or thereby or (iv) would bar the issuance of the Securities
or the use of the proceeds thereof in accordance with the terms of this
Agreement and the other Transaction Documents.
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<PAGE>
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
--------------------------------------------
The Issuer represents and warrants to each of the Purchasers as of the
date hereof and as of the Closing Time that:
4.01. Financial Condition.
-------------------
(a) The unaudited pro forma consolidated balance sheet of the
Issuer and its consolidated Subsidiaries as of September 30, 1999 (the "Pro
---
Forma Balance Sheet"), copies of which have heretofore been furnished to each
- -------------------
Purchaser, has been prepared giving effect (as if such events had occurred on
such date) to (i) the Securities to be purchased at the Closing Time, (ii) the
execution, delivery and initial funding under the Credit Agreement and the use
of proceeds thereof and (ii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Issuer as of the date of delivery thereof, and
presents fairly on a pro forma basis the financial position of Issuer and its
consolidated Subsidiaries as of September 30, 1999, assuming that the events
specified in the preceding sentence had actually occurred at such time.
Schedule 4.01 sets forth the outstanding Indebtedness of the Issuer and its
- -------------
consolidated Subsidiaries as of the date hereof.
(b) The audited consolidated balance sheets of the Issuer and its
Subsidiaries as at December 31, 1998, and the related consolidated statements of
income and of cash flows for the fiscal years ended on such dates, reported on
by and accompanied by an unqualified report from KPMG, present fairly the
consolidated financial condition of the Issuer at such date, and the
consolidated results of its operations and its consolidated cash flows for the
respective fiscal years then ended. The unaudited interim consolidated balance
sheet of the Issuer and the related unaudited consolidated statements of income
and cash flows for the three-month period ended March 31, 1999, the six-month
period ended June 30, 1999 and the nine-month period ended September 30, 1999,
present fairly the consolidated financial condition of the Issuer as at such
date, and the consolidated results of its operations and its consolidated cash
flows for the three-month period then ended (subject to normal year-end audit
adjustments and the absence of footnotes); provided that, as previously
disclosed to the Purchasers, the financial information for the nine-month period
ended September 30, 1999 (and all periods included therein) are to be restated
as required by SAB 101 (relating to the recognition of installation fees over
the life of a customer contract), for bonus accruals for bonuses approved after
September 30, 1999 and for restructuring charges relating to the relocation to
the San Francisco Data Center. All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Issuer and its
Subsidiaries do not have any material guarantee obliga-
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<PAGE>
tions, contingent liabilities and liabilities for taxes, or any long-term leases
or unusual forward or long-term commitments, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph.
4.02. No Change. Since September 30, 1999, there has been no
---------
development or event that has had or could reasonably be expected to have a
Material Adverse Effect.
4.03. Corporate Existence; Compliance with Law. Each of the Issuer
----------------------------------------
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.04. No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Transaction Documents, the issuance of the Securities
and the use of the proceeds thereof will not violate any Requirement of Law or
any Contractual Obligation of the Issuer or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Credit Agreement).
4.05. Litigation. No litigation, investigation or proceeding of or
----------
before any arbitrator or Governmental Authority is pending or, to the knowledge
of the Issuer, threatened by or against the Issuer or any of its Subsidiaries or
against any of their respective properties or revenues (a) with respect to any
of the Transaction Documents or any of the Transactions contemplated hereby or
thereby or (b) that could reasonably be expected to be material to its business
or operations.
4.06. No Default. Neither the Issuer nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default has occurred and is continuing. The binding Memorandum of Understanding
dated January 19, 2000 between the Issuer and Viatal Corp. will require third
party consents and approvals for the Issuer to comply with its obligations
thereunder, and for the benefits of such arrangements, if any to be realized.
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<PAGE>
4.07. Ownership of Property; Liens. Each of the Issuer and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 8.08. All material leases under which the Issuer or any
Restricted Subsidiary is a lessor or lessee are in full force and effect.
4.08. Intellectual Property. The Issuer and each of its Subsidiaries
---------------------
owns, or is licensed to use, or could obtain the right to use on terms not
materially adverse, all Intellectual Property necessary for the conduct of its
business as currently conducted. No material claim has been asserted and is
pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Issuer know of any valid basis for any such claim. The use of Intellectual
Property by the Issuer and its Subsidiaries does not infringe on the rights of
any Person in any respect that could reasonably be expected to have a Material
Adverse Effect.
4.09. Taxes. Each of the Issuer and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material Tax Returns
that are required to be filed and has paid all taxes shown to be due and payable
on said Tax Returns or on any assessments made against it or any of its property
and all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any of the amount or validity that are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Issuer or its Subsidiaries, as the case may be); to the knowledge
of the Issuer no Lien for overdue Taxes has been filed, and no claim is being
asserted, with respect to any such tax, fee or other charge.
4.10. Federal Regulations. No part of the proceeds of the Securities
-------------------
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
regulations of the Board of Governors of the Federal Reserve System.
4.11. Labor Matters. Except as, in the aggregate, could not
-------------
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against the Issuer or any of its Subsidiaries
pending or, to the knowledge of the Issuer, threatened; (b) hours worked by and
payment made to employees of the Issuer and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters; and (c) all payments due from the Issuer or any
of its Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of the Issuer or the relevant
Subsidiary.
4.12. ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has oc-
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<PAGE>
curred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Issuer nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA, and neither the Issuer nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Issuer or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
reorganization within the meaning of Section 4241 of ERISA or insolvent within
the meaning of Section 4245 of ERISA.
4.13. Investment Company Act; Other Regulations. Neither the Issuer
-----------------------------------------
nor any of its Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended. Neither the Issuer nor any of its Subsidiaries
is subject to regulation under any Requirement of Law (other than Regulation X
of the Board) that limits its ability to incur Indebtedness.
4.14. Subsidiaries. (a) Schedule 4.14 sets forth the name and
------------ -------------
jurisdiction of incorporation of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by the Issuer
and/or its Subsidiaries and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than directors
and directors' qualifying shares) of any nature relating to any Capital Stock of
the Issuer or any Subsidiary, except as created by the Transaction Documents.
All of the outstanding shares of Capital Stock of each Subsidiary of the Issuer
shown on Schedule 4.14 as being owned by the Issuer and/or one or more of its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Issuer and/or one or more of its Subsidiaries, free and clear of
all Liens other than pursuant to the Credit Agreement.
4.15. Use of Proceeds. The net proceeds (after fees and expenses) of
---------------
the sale of the Securities shall be used (a) for the construction, expansion,
development or acquisition of assets to be used in a Permitted Business
including for the San Francisco Data Center and Asset Acquisitions and (b) for
working capital and general corporate purposes of the Issuer and its Restricted
Subsidiaries.
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<PAGE>
4.16. Environmental Matters. Except as, in the aggregate, could not
---------------------
reasonably be expected to have a Material Adverse Effect:
(a) to the best of the Issuer's knowledge, the facilities and
properties owned, leased or operated by the Issuer or any of its
Subsidiaries, including without limitation, the San Francisco Data Center
(the "Properties"), do not contain, and have not previously contained
----------
during the time of Issuer's control and use thereof, any Materials of
Environmental Concern in amounts or concentrations or under circumstances
that constitute or constituted a violation of, or could give rise to
liability under, any Environmental Law;
(b) except as set forth on Schedule 4.04, neither the Issuer nor
-------------
any of its Subsidiaries has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental
Laws with regard to any of the Properties or the business operated by the
Issuer or any of its Subsidiaries (the "Business"), nor does the Issuer
--------
have knowledge or reason to believe that any such notice will be received
or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of by Issuer from the Properties in violation of, or in a manner
or to a location that could give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Issuer, threatened, under any
Environmental Law to which the Issuer or any Subsidiary is or will be named
as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or
the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of the Issuer or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under
Environmental Laws;
(f) to the best of the Issuer's knowledge, the Properties and all
operations at the Properties by Issuer are in compliance, with all
applicable Environmental Laws,
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<PAGE>
and there is no contamination at, under or about the Properties or
violation of any Environmental Law with respect to the Properties or the
Business; and
(g) neither the Issuer nor any of its Subsidiaries has expressly
assumed any liability of any other Person under Environmental Laws.
4.17. Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Transaction Document, or any other
document, certificate or statement furnished by or on behalf of the Issuer or
any of its Subsidiaries to the Purchasers for use in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
when taken together with all other such statements and information furnished,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in
--- -----
the materials referenced in Section 4.01, as supplemented or modified from time
to time, are based upon good faith estimates and assumptions believed by
management of the Issuer to be reasonable at the time made, it being recognized
by the Purchasers that such financial information as it relates to future events
is not to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein by a material amount. There is no fact known to the Issuer or any
of its Subsidiaries that it presently believes in good faith could reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein or in the other Transaction Documents.
4.18. Solvency. The Issuer and any of its Subsidiaries is, and after
--------
giving effect to the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.19. Year 2000 Matters. Any reprogramming required to permit the
-----------------
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Issuer or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Issuer or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, have been
completed. The costs to the Issuer and its Subsidiaries for such reprogramming
and testing and for the other reasonably foreseeable consequences to them of any
improper functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 could not reasonably be
expected to result in a Default or to have a Material Adverse Effect.
4.20. Capitalization. As of the date of this Agreement, the
--------------
authorized Capital Stock of the Issuer consists of 100,000,000 shares of its
Common Stock, of which
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<PAGE>
14,659,524.00 shares were issued and outstanding and 5,760,352 shares were
subject to options and 378,448.375 shares were subject to a Class A Warrant
issued to The Chase Manhattan Bank, and 5,000,000 shares of its Series A
Preferred Stock, of which 4,275,701 shares were issued and outstanding and
convertible into 10,689,261 shares of Common Stock of the Issuer. All the issued
and outstanding shares of Common Stock (including all shares of Common Stock to
be issued upon the exercise of warrants, options or the Series A Preferred
Stock) have been duly authorized and are (or in the case of Common Stock issued
upon exercise of warrants or options or the Series A Preferred Stock, will be)
validly issued, fully paid and nonassessable and are (or in the case of Common
Stock issued upon exercise of warrants, options, the Series A Preferred Stock,
will be) free of preemptive rights. Except for the foregoing and as further
detailed on Schedule 4.20, there are no securities of the Issuer or any of its
-------------
Subsidiaries that are convertible into or exchangeable for shares of any Capital
Stock of the Issuer or any of its Subsidiaries, and no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Issuer or any of its Subsidiaries to issue,
transfer or sell any shares of Capital Stock of, or other interests in, the
Issuer or any of its Subsidiaries. No antidilution or other adjustments to the
number or type of shares of Common Stock issuable upon exercise, conversion or
exchange of any such securities or under any such agreements or arrangements
will be required by reason of the Transactions or any such adjustments have been
waived in writing. Except as set forth on Schedule 4.20, there are no
-------------
outstanding obligations of the Issuer or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Capital Stock of the Issuer or any of
its Subsidiaries and neither the Issuer nor any of its Subsidiaries has any
awards or options outstanding under any stock option plans or agreements or any
other outstanding stock-related awards. Except as annexed hereto as Exhibit J-1
-----------
and Exhibit J-2 and set forth on Schedule 4.20 and as reflected in the Issuer's
----------- -------------
Certificate of Incorporation, Certificate of Designations and Bylaws, there are
no voting trusts or other agreements or understandings to which the Issuer or
any of its Subsidiaries is a party with respect to the holding, voting or
disposing of Capital Stock of the Issuer or any of its Subsidiaries. As of the
date hereof, neither the Issuer nor any of its Subsidiaries has any outstanding
bonds, debentures, notes or other obligations or other securities (other than
the Common Stock) that entitle the holders thereof to vote with the stockholders
of the Issuer or any of its Subsidiaries on any matter or which are convertible
into or exercisable for securities having such a right to vote. The Series A
Warrants represent, as of the Closing Time, approximately 9% of the outstanding
Common Stock of the Issuer, determined on a fully diluted basis as though all
outstanding Equity Interests convertible, exchangeable or exercisable for Common
Stock other than the Series B Warrants, had been so converted, exchanged or
exercised and the Series B Warrants represent, as of the Closing Time,
approximately 3% of the outstanding Common Stock of the Issuer, determined on a
fully diluted basis as though all outstanding Equity Interests convertible,
exchangeable or exercisable for Common Stock had been so converted, exchanged or
exercised.
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<PAGE>
4.21. Due Authorization, Execution and Delivery.
-----------------------------------------
(a) Agreement. This Agreement has been duly authorized, executed
---------
and delivered by the Issuer and constitutes a valid and legally binding
obligation of the Issuer, enforceable against the Issuer in accordance with its
terms, subject to the Enforceability Exceptions.
(b) Notes and Exchange Notes. The Notes to be purchased by the
------------------------
Purchasers from the Issuer are in the form contemplated by this Agreement, have
been duly authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered by the Issuer at the Closing Time as provided herein, will
have been duly executed, issued and delivered by the Issuer, and will constitute
valid and legally binding obligations of the Issuer, enforceable against it in
accordance with their terms, subject to the Enforceability Exceptions. If and
when the Exchange Notes are issued pursuant to the Exchange and Registration
Rights Agreement and this Agreement in accordance with the terms thereof and
hereof, the Exchange Notes will have been duly authorized for issuance by the
Issuer, will have been duly executed, issued and delivered by the Issuer, and
will constitute valid and legally binding obligations of the Issuer, enforceable
against it in accordance with their terms, subject to the Enforceability
Exceptions.
(c) Exchange and Registration Rights Agreement. The Exchange and
------------------------------------------
Registration Rights Agreement has been duly authorized, executed and delivered
by the Issuer and constitutes a valid and legally binding obligation of the
Issuer, enforceable against the Issuer in accordance with its terms, subject to
the Enforceability Exceptions.
(d) Warrants and Common Stock. The Issuer has the requisite
-------------------------
corporate power and authority to execute, deliver and perform its obligations
under the Warrants. The Warrants have been duly and validly authorized by the
Issuer and, when executed and delivered by the Issuer (assuming the due
countersignature, execution and delivery by the Warrant Agent), will constitute
valid and legally binding obligations of the Issuer, enforceable against the
Issuer in accordance with their terms, except that the enforcement thereof may
be limited by the Enforceability Limitations. The Common Stock has been duly
reserved for issuance by the Issuer for issuance upon exercise of the Warrants
in sufficient number to cover the exercise of all of the Warrants, and the
issuance of the Common Stock upon exercise of the Warrants has been duly
authorized, and the Common Stock, when delivered upon exercise of and in
accordance with the terms of the Warrant Certificate, will be validly issued,
fully paid and non-assessable, free and clear of all Liens created by the Issuer
or any of its Subsidiaries and no holder of any securities of the Issuer has any
preemptive or other similar rights to subscribe for or to purchase any common
stock of the Issuer arising by operation of the General Corporation Law of the
State of Delaware or under the Certificate of Incorporation, Certificate of
Designations relating to the Series A Preferred Stock or bylaws of the Issuer,
copies of which
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<PAGE>
are attached as Exhibit I hereto, or pursuant to the terms of any agreement or
---------
instrument to which the Issuer is a party.
(e) Stockholders Agreement. The Stockholders Agreement has been
----------------------
duly authorized, executed and delivered by the Issuer and constitutes a valid
and legally binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, subject to the Enforceability Exceptions. It is
acknowledged that the ability of holders of Warrants and Warrant Shares to
secure the benefits of Section 3.2 of the Registration Rights and Stockholders
Agreement depends upon the ability of the holders of Warrants and Warrant Shares
to enforce the Voting Agreement and the Voting Agreement Amendment against
sufficient stockholders to elect the designee of the holders of Warrants and
Warrant Shares.
4.22. Private Offering; No Integration or General Solicitation.
--------------------------------------------------------
(a) Subject to compliance by the Purchasers with the
representations and warranties set forth in Section 5 hereof and with the
procedures set forth in Section 10 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Purchasers and to any
Person to whom any Purchaser sells any of such Securities (each, a "Subsequent
----------
Purchaser") in the manner contemplated by this Agreement to register the
- ---------
Securities under the Securities Act, or, in the case of the Notes, until such
time as the Exchange Notes are issued or the Notes or Exchange Notes are
otherwise registered pursuant to an effective registration statement under the
Securities Act, to qualify an indenture relating to the Notes or Exchange Notes
under the TIA.
(b) The Issuer has not, directly or indirectly, offered, sold or
solicited any offer to buy and will not, directly or indirectly, offer, sell or
solicit any offer to buy, any security of a type or in a manner which would be
integrated with the sale of the Securities and require the Securities to be
registered under the Securities Act. None of the Issuer or its Affiliates or
any Person acting on its or any of their behalf (other than the Purchasers, as
to whom the Issuer make no representation or warranty) has engaged or will
engage in any form of general solicitation or general advertising (within the
meaning of Rule 502(c) under the Securities Act) in connection with the offering
of the Securities. With respect to the Securities, if any, sold in reliance
upon the exemption afforded by Regulation S: (i) none of the Issuer, its
Affiliates or any Person acting on its or their behalf (other than the
Purchasers, as to whom the Issuer makes no representation or warranty) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S and (ii) each of the Issuer and its Affiliates and any Person
acting on its or their behalf (other than the Purchasers, as to whom the Issuer
make no representation or warranty) has complied and will comply with the
offering restrictions set forth in Regulation S.
4.23. Eligibility for Resale Under Rule 144A. The Securities are
--------------------------------------
eligible for resale pursuant to Rule 144A and will not, at the Closing Time, be
of the same class as secu-
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<PAGE>
rities listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted on a U.S. automated interdealer quotation system.
SECTION 5
REPRESENTATIONS OF THE PURCHASERS
Each Purchaser severally and not jointly represents and warrants to
the Issuer as of the date hereof and as of the Closing Time as follows:
5.01. Purchase for Investment.
-----------------------
(a) Such Purchaser is acquiring the Securities for its own account,
for investment and not with a view to any distribution thereof within the
meaning of the Securities Act.
(b) Such Purchaser understands that (i) the Securities have not
been registered under the Securities Act and are being issued by the Issuer in
transactions exempt from the registration requirements of the Securities Act and
(ii) the Securities may not be offered or sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from registration under the Securities Act.
(c) Such Purchaser further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to such
Purchaser) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Purchaser did not, and is not obligated to, pay any broker
or finder in connection with the transactions contemplated in this Agreement.
(e) Such Purchaser is a Qualified Institutional Buyer.
(f) Such Purchaser is aware of the Issuer's business affairs and
financial condition and has such knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Securities and such Purchaser is capable of bearing the
economic risks of such investment for an indefinite period of time.
(g) Such Purchaser understands the lack of liquidity and
restrictions on transfer of the Securities and that this investment is suitable
only for a person or entity of adequate financial means that has no need for
liquidity of this investment and that can afford a total loss of its investment.
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<PAGE>
(h) Such Purchaser has had the opportunity to make all inquiries of
the Issuer and its Subsidiaries and management for the purpose of evaluating its
investment in the Securities and the risk factors attendant to an investment
such as this and is satisfied with the scope and extent of its investigations
and the responses to such inquiries and requires no additional information to
make an informed decision. Such Purchaser acknowledges that it is not relying
upon any Person other than itself in making its investment decision and is fully
accountable therefor, subject to the accuracy of the representations and
warranties of the Issuer contained herein.
(i) In the case of Chase Securities, Chase Securities may resell
the Securities that it is acquiring hereunder to investors affiliated with
Caravelle and Sankaty Advisors and represents and warrants that such investors
have made the other representations in this Section 5.01 to it and that such
transfers will comply Section 9 hereof. The Issuer agrees that, for purposes of
any rights hereunder available solely to an original Purchaser, that Chase
Securities may assign such rights to such transferees.
SECTION 6
COVENANTS TO PROVIDE INFORMATION
--------------------------------
The Issuer covenants and agrees that until the principal amount of
(and premium, if any, on) all the Notes, and all interest, Special Interest and
other obligations hereunder in respect thereof, shall have been paid in full,
and while any Warrants or Warrant Shares shall remain outstanding:
6.01. Future Reports to Holders. The Issuer shall deliver to each
-------------------------
Holder:
(a) Quarterly Statements. As soon as available, but in any event
--------------------
within forty-five (45) days after the end of each quarter, duplicate copies
of:
(i) consolidated and consolidating balance sheets of the
Issuer and its Subsidiaries as at the end of such quarter, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Issuer and its
Subsidiaries, for such quarter and for the portion of the fiscal year
ending with such quarter,
in each case setting forth in comparative form the figures for the
corresponding periods in the prior fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to periodic financial
statements generally, and fairly presenting, in all material respects, the
financial position of the Persons being reported on and their results of
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<PAGE>
operations and cash flows, subject to changes resulting from normal year-
end adjustments that will not be material in amount or effect, and
accompanied by a certificate of the chief financial officer of the Issuer
to the foregoing effect; provided, that if the Issuer is then subject to
the reporting requirements under Section 13 or Section 15(d) of the
Exchange Act, the delivery by the Issuer to such Holder of a Quarterly
Report on Form 10-Q or any successor form within the time periods above
described shall satisfy the requirements of this Section 6.01(a). The
consolidating balance sheet and statements of income, stockholders' equity
and cash flows required by this paragraph may be in the form contained in
the notes to the financial statements included in a Form 10-Q.
(b) Annual Statements. As soon as available, but in any event
-----------------
within ninety (90) days after the end of each fiscal year of the Issuer,
duplicate copies of:
(i) consolidated and consolidating balance sheets of the
Issuer and its Subsidiaries as at the end of such year, and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Issuer and its Subsidiaries
for such year,
in each case setting forth in comparative form the figures for the prior
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
fairly presenting, in all material respects, the financial position of the
Persons being reported on and their results of operations and cash flows,
and accompanied by:
(A) an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state
that such financial statements (other than consolidating statements)
present fairly, in all material respects, the financial position of
the Persons being reported upon and their results of operations and
cash flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such financial
statements (other than consolidating statements) has been made in
accordance with generally accepted auditing standards in the United
States, and that such audit provides a reasonable basis for such
opinion in the circumstances, and
(B) a certificate of the chief financial officer of the
Issuer stating that such financial statements have been prepared in
accordance with GAAP applicable to periodic financial statements
generally and fairly present, in all material respects, the financial
position of the Persons being reported on and their results of
operations and cash flows;
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<PAGE>
provided, however, that if the Issuer is then subject to the reporting
requirements under Section 13 or Section 15(d) of the Exchange Act, the
delivery by the Issuer to such Holder of an Annual Report on Form 10-K or
any successor form within the time periods above described shall satisfy
the requirements of this Section 6.01(b). The consolidating balance sheet
and statements of income, stockholders' equity and cash flows required by
this paragraph may be in the form contained in the notes to the financial
statements included in a Form 10-K.
(c) Chief Financial Officer Certificates. Concurrently with the
------------------------------------
delivery of the financial statements referred to in subsections (a) and (b)
of this Section 6.01, an Officers' Certificate (of which one of the
signatories shall be the chief financial officer of the Issuer) (i) stating
that, to the best of such Officers' knowledge after due inquiry, each of
the Issuer and its Subsidiaries has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Transaction Documents to be observed,
performed or satisfied by it and that such Officer has obtained no
knowledge of any Default, except as specified in such Officers'
Certificate, and (ii) in the case of the certificate delivered to the
Holders, showing as of the end of the related fiscal period the figures and
calculations supporting such statement in respect of Sections 8.02 and 8.04
of this Agreement (but without the necessity of providing the identities of
customers under Section 8.04(b)(vi)).
(d) Other Information. Promptly upon their becoming available,
-----------------
copies of all financial statements, reports, notices and proxy statements
sent to its securityholders or made available generally by the Issuer or
any of its Subsidiaries and all regular and periodic reports and all
registration statements and final prospectuses, if any, filed by the Issuer
or any of its Subsidiaries with any securities exchange or with the
Commission or any Governmental Authority succeeding to any of its
functions.
(e) Notice of Default. Promptly, but in any event within three (3)
-----------------
Business Days, after any Officer of the Issuer becomes aware of the
existence of any Default or that any Person has given any notice or taken
any other action with respect to a claimed Default, a written notice
thereof to the Holders specifying the nature and existence thereof and what
action the Issuer is taking or proposes to take with respect thereto.
(f) Additional Information to Holders of Other Indebtedness.
-------------------------------------------------------
Simultaneously with the furnishing of such information to any other holder
of Debt Securities of the Issuer or any of its Subsidiaries, (i) copies of
all other financial statements, reports or projections with respect to the
Issuer or its Subsidiaries which are broader in scope or on a more frequent
basis than the Issuer is otherwise required to provide under this Agreement
and (ii) copies of all studies, reviews, reports or assessments relating to
environmental matters that reveal circumstances, events or other matters
that would reasonably be expected to have a Material Adverse Effect.
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<PAGE>
(g) Original Issue Discount Information. All original issue
-----------------------------------
discount information relating to the Notes as may be required by applicable
law.
(h) Credit Agreement. Promptly after the occurrence thereof, copies
----------------
of any amendment, waiver or other modification of the terms of the Credit
Agreement.
6.02. Information to be Provided Pursuant to Rule 144A(d)(4). As long
------------------------------------------------------
as the Securities are "restricted securities" (within Rule 144 of the Securities
Act), for the benefit of Holders and beneficial owners from time to time of such
Securities, the Issuer shall, upon the request of any such holder or beneficial
owner, furnish, at its expense, to holders and beneficial owners of such
Securities and prospective purchasers thereof information satisfying the
requirements of subsection (d)(4) of Rule 144A.
SECTION 7
OTHER AFFIRMATIVE COVENANTS
---------------------------
The Issuer further covenants and agrees with each Holder that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
7.01. Payment of Principal, Premium and Interest. The Issuer shall
------------------------------------------
duly and punctually pay the principal of (and premium, if any, on) and all
interest (including Special Interest) on the Notes in accordance with the terms
of the Notes and this Agreement.
The Issuer shall pay interest on overdue principal (including post-
petition interest during a proceeding involving the Issuer under any Bankruptcy
Law), and interest on overdue interest (including Special Interest), to the
extent lawful, at the rate specified in the Notes.
7.02. Preservation of Corporate Existence and Franchises. Subject to
--------------------------------------------------
Section 8 hereof, the Issuer shall do or cause to be done all things necessary
to preserve and keep in full force and effect (a) its corporate existence, and
the corporate, partnership or other existence of each of its Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Issuer or any such Subsidiary and (b) the
rights (charter and statutory), licenses and franchises of the Issuer and its
Subsidiaries; provided, however, that the Issuer shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Subsidiaries if (i) the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuer and its Subsidiaries, taken as a whole, and (ii) the
loss thereof would not result in a Material Adverse Effect.
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<PAGE>
7.03. Maintenance of Properties. The Issuer shall cause all
-------------------------
properties used or useful in the conduct of its business or the business of any
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Issuer may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that the foregoing shall not prevent
the Issuer from discontinuing the operation or maintenance of any of such
properties if (i) the Board of Directors determines that such discontinuance is
desirable in the conduct of its business or the business of any Subsidiary and
(ii) such discontinuance would not result in a Material Adverse Effect and would
not be adverse in any material respect to any Holder.
7.04. Taxes.
-----
(a) Payment of Taxes. The Issuer shall pay or discharge or cause to
----------------
be paid or discharged, before the same shall become delinquent, all Taxes levied
or imposed upon the Issuer or any of its Subsidiaries; provided, however, that
the Issuer shall not be required to pay or discharge or cause to be paid or
discharged any such Tax or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings provided that
appropriate reserves therefor are established in the Issuer's consolidated
financial statements in accordance with GAAP.
(b) Tax Returns. The Issuer and its Subsidiaries shall timely file
-----------
or cause to be filed when due (including extensions) all Tax Returns that are
required to be filed by or with respect to the Issuer or its Subsidiaries and
shall pay any Taxes due in respect of such Tax Returns, except to the extent any
such failure would not have a Material Adverse Effect.
7.05. Books and Records. The Issuer and its Subsidiaries shall keep
-----------------
complete and accurate books and records of their transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.06. Compliance with Law. The Issuer shall, and shall cause each of
-------------------
of its Subsidiaries to, comply with all Requirements of Law and shall obtain and
maintain, and shall cause each of its Subsidiaries to obtain and maintain, all
Permits necessary to the ownership of their respective properties or to the
conduct of their respective businesses, in each case to the extent necessary to
ensure that any such non-compliance with any Requirements of Law or any failure
to obtain or maintain such Permits, individually or in the aggregate, would not
have a Material Adverse Effect.
7.07. Insurance. The Issuer shall, and shall cause its Subsidiaries
---------
to, maintain, with financially sound and reputable insurers, insurance with
respect to their respective properties and business against such casualties and
contingencies, of such types, on such terms and
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<PAGE>
in such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated.
7.08. Offer to Repurchase upon Change of Control.
------------------------------------------
(a) Upon the occurrence of a Change of Control, the Issuer shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
-----------------------
any part of each Holder's Notes at an offer price in cash equal to 101% of the
Accreted Value thereof as of the Change of Control Payment Date, plus accrued
and unpaid interest and Special Interest, if any, thereon to the Change of
Control Payment Date (the "Change of Control Payment"). The Issuer shall comply
-------------------------
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control, and the Issuer shall not be in violation of this
Agreement by reason of any act required by such rule or other applicable law.
(b) Within 30 days following any Change of Control, the Issuer
shall send, by first-class mail, a notice to each Holder stating:
(i) that the Change of Control Offer is being made pursuant to this
Section 7.08 and that all Notes tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be at
least 30 but no more than 60 days from the date on which the Issuer mails
notice of the Change of Control (the "Change of Control Payment Date");
------------------------------
(iii) that any Notes not tendered will continue to accrue interest,
including Special Interest, if any;
(iv) that, unless the Issuer defaults in the payment of the Change
of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest, including Special
Interest, after the Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer shall be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, to the Issuer or its designated agent for such purpose at
the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date;
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(vi) that Holders will be entitled to withdraw their election if the
Issuer or its designated agent for such purpose receives, not later than
the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal
to $1,000 in principal amount at maturity or an integral multiple thereof.
(c) On the Change of Control Payment Date, the Issuer shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) mail to each Holder so
tendered the Change of Control Payment for such Notes plus all accrued and
unpaid interest, including any Special Interest, to the Change of Control
Payment Date, (iii) execute and mail (or cause to be transferred by book-entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided, however, that each such new Note
shall be in a principal amount at maturity of $1,000 or an integral multiple
thereof and (iv) execute and mail to the Holders an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Issuer in accordance with the terms of this Section 7.08. The Issuer shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
7.09. Offer to Purchase by Application of Excess Proceeds.
---------------------------------------------------
(a) In the event that, pursuant to Section 8.05 hereof, the Issuer
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified in this Section 7.09. The Issuer shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset
Sale Offer, and the Issuer shall not be in violation of this Agreement by reason
of any act required by such rule or other applicable law.
(b) Within 30 days following each date on which the Issuer's
obligation to make an Asset Sale Offer is triggered, the Issuer shall send, by
first-class mail, a notice to each Holder stating:
(i) that the Asset Sale Offer is being made pursuant to this
Section 7.09 and Section 8.05;
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(ii) that the Issuer shall purchase the aggregate Accreted Value of
Notes required to be purchased pursuant to Section 8.05 (the "Offer
-----
Amount"), the purchase price per Note and the purchase date, which shall be
------
at least 30 but no more than 60 days from the date on which the Issuer
mails notice of the Asset Sale Offer (the "Asset Sale Offer Payment Date");
-----------------------------
(iii) that any Notes not tendered will continue to accrue interest,
including Special Interest, if any;
(iv) that, unless the Issuer defaults in payment of the Offer Amount
on the Asset Sale Offer Payment Date, all Notes accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest, including
Special Interest, after the Asset Sale Offer Payment Date;
(v) that Holders electing to have any Notes purchased pursuant to
an Asset Sale Offer shall be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Issuer or its designated agent for such purpose at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Asset Sale Offer Payment Date;
(vi) that Holders will be entitled to withdraw their election if the
Issuer or its designated agent for such purpose receives, not later than
the close of business on the second Business Day preceding the Asset Sale
Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased;
(vii) that, if the Accreted Value of Notes surrendered by Holders
exceeds the Offer Amount, the Issuer shall select the Notes to be purchased
on a pro rata basis (with such adjustments as may be deemed appropriate by
the Issuer so that only Notes in denominations of $1,000, or integral
multiples thereof, shall be purchased); and
(viii) that Holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount at maturity or an integral multiple thereof.
On the Asset Sale Offer Payment Date, the Issuer shall, to the extent
lawful, (i) accept for payment, on a pro rata basis to the extent necessary, all
Notes or portions thereof properly tendered pursuant to the Asset Sale Offer up
to the principal amount of Notes equal to the Offer Amount, or, if less than the
Offer Amount has been tendered, all Notes tendered, (ii) mail to each Holder so
tendered the purchase price for such Notes, plus all accrued
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and unpaid interest, including any Special Interest, to the Asset Sale Offer
Payment Date, (iii) execute and mail (or cause to be transferred by book-entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any, and (iv) deliver to the Holders an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Issuer in accordance with the terms of this Section 7.09. The
Issuer shall publicly announce the results of the Asset Sale Offer on or as soon
as practicable after the Asset Sale Offer Payment Date.
SECTION 8
NEGATIVE COVENANTS
------------------
The Issuer hereby covenants and agrees with each Purchaser that until
the principal amount of (and premium, if any, on) all the Notes, and all
interest, Special Interest and other obligations hereunder in respect thereof,
shall have been paid in full:
8.01. Stay, Extension and Usury Laws. The Issuer covenants (to the
------------------------------
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of its
obligations under the Notes or this Agreement, and the Issuer hereby expressly
waives all benefit or advantage of any such law, and covenants that it shall
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Holders, but shall suffer and permit the execution
of every such power as though no such law has been enacted.
8.02. Restricted Payments.
-------------------
(A) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other payment or
distribution on account of the Issuer's or to the direct or indirect
holders of the Issuer's Equity Interests or to the direct or indirect
holders of the Issuer's Equity Interests in their capacity as stockholders
(other than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of the Issuer);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Issuer or any direct or indirect parent of the
Issuer (other than any such Equity Interests owned by the Issuer or any
Restricted Subsidiary);
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(iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Subordinated
Indebtedness, except for scheduled payments of interest or principal; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted
Payment, no Default shall have occurred and be continuing or would
occur as a consequence thereof;
(b) the Issuer would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted
Payment had been made at the beginning of the applicable period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 8.04(a); and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Issuer and the
Restricted Subsidiaries on or after the Closing Time, is less than the
sum, without duplication, of
(i) the amount of the Issuer's (x) Cumulative
Consolidated Cash Flow determined at the time of such
Restricted Payment less (y) 150% of the cumulative Consolidated
Interest Expense, determined for the period commencing on
January 1, 2000 and ending on the last day of the last fiscal
quarter preceding the date on which such Restricted Payment is
to be made for which financial statements are available, plus
(ii) 80% of the aggregate Net Cash Proceeds and Fair
Market Value of any other consideration received by the Issuer
or any Restricted Subsidiary on and after the Closing Time from
the issue or sale of Qualified Equity Interests of the Issuer
or from the issue or sale of Disqualified Stock or Indebtedness
of the Issuer or a Restricted Subsidiary that has been
converted or exchanged into such Equity Interests (other than
any such Disqualified Stock or converted or exchanged
Indebtedness sold to and held by a Restricted Subsidiary), plus
the amount of Net Cash Proceeds and Fair Market Value of any
other consideration received by the Issuer or any Restricted
Subsidiary upon such conversion or exchange, plus
(iii) the aggregate amount equal to the net reduction in
Restricted Investments in Unrestricted Subsidiaries on or after
the Closing
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Time resulting from (x) dividends, distributions, interest
payments, return of capital, repayments of Restricted
Investments or other transfers of assets to the Issuer or any
Restricted Subsidiary from any Unrestricted Subsidiary, (y)
proceeds realized by the Issuer or any Restricted Subsidiary
upon the sale of such Restricted Investment to a Person other
than the Issuer or any Subsidiary of the Issuer, or (z) the
redesignation of any Unrestricted Subsidiary as a Restricted
Subsidiary, not to exceed in the case of any of the immediately
preceding clauses (x), (y) or (z) the aggregate amount of
Restricted Investments made by the Issuer or any Restricted
Subsidiary in such Unrestricted Subsidiary on or after the
Closing Time, plus
(iv) to the extent that any Restricted Investment that
was made on or after the Closing Time is sold for cash or
otherwise liquidated or repaid for cash, the lesser of, to the
extent paid to the Issuer or a Restricted Subsidiary, (A) the
cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, minus
(v) 80% in the event of a Restricted Payment prior to
the occurrence of an IPO Liquidity Event or 64% in the event of
a Restricted Payment on or after the occurrence of an IPO
Liquidity Event of the aggregate principal amount of any
outstanding Indebtedness incurred and outstanding pursuant to
Section 8.04(b)(ii).
(B) The foregoing provisions shall not prohibit
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the foregoing provisions;
(ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Indebtedness or Equity Interests of the
Issuer in exchange for, or out of the Net Cash Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Issuer)
of, Qualified Equity Interests of the Issuer; provided that the amount of
any such Net Cash Proceeds that are utilized for, and the Equity Interests
issued or exchanged for, any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c) of
Section 8.02(A) and clause (v) of this Section 8.02(B);
(iii) the defeasance, redemption, retirement, repurchase or other
acquisition of Subordinated Indebtedness with the Net Cash Proceeds from,
or issued in exchange for, a substantially concurrent incurrence of
Permitted Refinancing Indebtedness; pro-
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<PAGE>
vided that the amount of any Net Cash Proceeds that are utilized for any
such defeasance, redemption, retirement, repurchase or other acquisition
shall be excluded from clause (c) of Section 8.02(A);
(iv) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Issuer held by any employee or
former employee (or his or her spouse or other immediate family, decedent,
estate, trust for the benefit of any member of his or her immediate family
or other legal representative) of the Issuer or a Restricted Subsidiary
upon such employee's death, disability or termination for cause or in
connection with the Issuer's relocation to the San Francisco Data Center;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $2.5 million in any
fiscal year; provided, further, amounts unutilized in any fiscal year may
be carried forward for up to two additional years;
(v) so long as no Default has occurred and is continuing,
Restricted Investments not to exceed an amount (measured on the date each
such Restricted Investment was made), when taken together with all other
Restricted Investments made pursuant to this clause (v) that are at the
time outstanding, the sum of (x) $5.0 million, plus (y) the amount then
available for the making of Restricted Payments pursuant to Section
8.02(A)(c) without giving effect to subclause (i) thereof and treating, for
this purpose, the 80% in subclause (ii) thereof as 100%, the 100% in
subclause (v) as 80% and the 80% in subclause (v) as 64%;
(vi) Restricted Investments in Persons engaged in a Permitted
Business or that will make investments in any such Persons not to exceed
$5.0 million outstanding at any time;
(vii) the repurchase of Equity Interests of the Issuer in accordance
with rights of appraisal under applicable law; and
(viii) payments of cash in lieu of fractional shares upon the exercise
of warrants, options and other rights to purchase Capital Stock of the
Issuer.
Each Restricted Payment permitted pursuant to clauses (i), (iv), (v) and (vi)
above shall be included, and each Restricted Payment permitted pursuant to
clauses (ii) and (iii) above shall be excluded (except as specifically set forth
in each such clause), for all purposes when performing the calculation set forth
in clause (c) of Section 8.02(A).
(C) The Board of Directors may not designate any Subsidiary of the
Issuer (other than a newly created Subsidiary in which no Investment has
previously been made (other than any de minimis amount not to exceed $25,000
required to capitalize such Subsidiary in connection with its organization)) as
an Unrestricted Subsidiary (a "Designation") un-
-----------
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<PAGE>
less: (i) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Designation and (ii) the Issuer
would not be prohibited under this Agreement from making a Restricted Investment
at the time of such Designation (assuming the effectiveness of such Designation
for purposes of this Section 8.02) in an amount equal to the Fair Market Value
of the net Investment of the Issuer and all Restricted Subsidiaries in such
Subsidiary on such date (the "Designation Amount").
------------------
(D) In the event of any such Designation, all outstanding
Investments owned by the Issuer and the Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be a Restricted Investment made as of
the time of such Designation in the Designation Amount and will reduce the
amount available for Restricted Payments under Section 8.02(A)(iv)(c) or (B) (v)
by the Designation Amount in accordance with the terms of such provisions. All
such outstanding Investments will be deemed to constitute Restricted Payments in
an amount equal to the Fair Market Value of such Investments at the time of such
Designation. A Designation may be revoked and an Unrestricted Subsidiary may
thus be redesignated as a Restricted Subsidiary (a "Revocation") by a resolution
----------
of the Board of Directors delivered to the Purchasers; provided that the Issuer
shall not make any Revocation unless: (i) no Default shall have occurred and be
continuing at the time of or after giving effect to such Revocation; and (ii)
all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if incurred at such time, have been
permitted to be incurred at such time for all purposes under this Agreement.
(E) The amount of all Restricted Payments (other than cash) shall
be the Fair Market Value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Issuer (or such
Restricted Subsidiary, as the case may be) pursuant to the Restricted Payment.
8.03. Dividend and Other Payment Restrictions Affecting Restricted
------------------------------------------------------------
Subsidiaries.
- ------------
(A) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary to:
(i) (a) pay dividends or make any other distributions to the Issuer
or any of the Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any Indebtedness owed to the Issuer or any of the
Restricted Subsidiaries,
(ii) make loans or advances to the Issuer or any of the Restricted
Subsidiaries, or
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(iii) transfer any of its properties or assets to the Issuer or any
of the Restricted Subsidiaries.
(B) The foregoing restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(i) any Indebtedness (other than under the Credit Agreement) as in
effect at the Closing Time;
(ii) any Indebtedness of a Restricted Subsidiary; provided that (i)
such restrictions do not prohibit payments, transfers, loans, advances or
distributions either (x) on or after the fifth anniversary of the Closing
Time or (y) otherwise necessary for the Issuer to make scheduled payments
of principal, interest and premium on Indebtedness of the Issuer absent a
payment default or event of default in respect of the Indebtedness of the
Restricted Subsidiary, and (ii) the chief financial officer of the Issuer
determines in good faith that (A) any such restrictions are commercially
reasonable for a borrower engaged in a business comparable to the Issuer
that has substantially comparable Indebtedness, and (B) any such
restrictions shall not materially affect the Issuer's ability to make
scheduled payments of principal, premium or interest payments on the Notes;
(iii) applicable law;
(iv) any instrument governing Indebtedness or Equity Interests of a
Person or assets acquired by the Issuer or any of the Restricted
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired;
provided, that in the case of Indebtedness, such Indebtedness was permitted
by the terms of this Agreement to be incurred;
(v) customary non-assignment provisions in leases entered into in
the ordinary course of business and consistent with past practices;
(vi) purchase money obligations for property acquired, constructed,
leased or improved in the ordinary course of business that impose customary
restrictions of the nature described in clause (A)(iii) above on the
property so acquired, constructed, leased or improved;
(vii) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition; provided that the consummation of
such transaction would not result in a Default, that such restriction
terminates if such transaction is not consummated and
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that the consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into;
(viii) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded;
(ix) Liens securing Indebtedness, which Liens are otherwise
permitted to be incurred pursuant to Section 8.08 and that limit the right
of the Issuer or any of the Restricted Subsidiaries to dispose of the
assets subject to such Lien; and
(x) customary provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other
similar agreements.
8.04. Incurrence of Indebtedness and Issuance of Preferred Stock.
----------------------------------------------------------
(a) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable for,
contingently or otherwise (including by way of merger, consolidation or
acquisition) (collectively, to "incur"), with respect to any Indebtedness and
-----
the Issuer shall not issue or incur any Disqualified Stock and shall not permit
any of the Restricted Subsidiaries to issue or incur any shares of Preferred
Stock unless the Consolidated Leverage Ratio at the end of the Issuer's most
recently ended fiscal quarter for which a consolidated balance sheet of the
Issuer has been filed with the Commission or provided to the Purchasers pursuant
to Section 6.01 would have been equal to or less than 6.0 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom).
(b) Notwithstanding the foregoing, the provisions of the paragraph
set forth immediately above shall not affect Indebtedness outstanding at the
Closing Time (other than under the Credit Agreement) or prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted
---------
Indebtedness"):
- ------------
(i) Indebtedness of the Issuer such that, after giving effect to
the incurrence thereof, the total aggregate principal amount of
Indebtedness incurred under this clause (i) and any refinancings thereof
otherwise incurred in compliance with this Agreement would not exceed 100%
of Total Incremental Equity if such incurrence is prior to an IPO Liquidity
Event or 125% of Total Incremental Equity if such incurrence is on or after
an IPO Liquidity Event;
(ii) the incurrence by the Issuer or any Restricted Subsidiary of
Indebtedness represented by the Notes and the Exchange Notes;
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(iii) the incurrence of Indebtedness by the Issuer owing to any
Restricted Subsidiary or Indebtedness of any Restricted Subsidiary owing to
the Issuer or any Restricted Subsidiary (but such Indebtedness shall be
deemed to be incurred upon such Indebtedness being held by any Person other
than the Issuer or such Restricted Subsidiary including upon Designation
and upon such Restricted Subsidiary otherwise no longer being a Restricted
Subsidiary); provided that in the case of Indebtedness of the Issuer, such
obligations shall be unsecured and subordinated in all respects to the
Issuer's obligations pursuant to the Notes;
(iv) the incurrence by the Issuer or a Restricted Subsidiary of
Indebtedness in an aggregate amount incurred and outstanding at any time
pursuant to this clause (iv) of up to $10 million;
(v) the incurrence by the Issuer or any Restricted Subsidiary of
Indebtedness pursuant to one or more Permitted Credit Facilities in an
aggregate amount incurred and outstanding at any time pursuant to this
clause (v) of up to $25.0 million;
(vi) the incurrence (including in connection with an Asset
Acquisition) by the Issuer or any Restricted Subsidiary of Indebtedness
(including Capital Lease Obligations) to the extent the proceeds thereof
are or were used to finance the acquisition of computer, communications,
routers, servers, switches and related installation and/or maintenance
agreements, if any, to be used in connection with the performance of
netsourcing services to customers of the Issuer or any Subsidiary pursuant
to one or more Customer Contracts; provided that (1) such equipment is
acquired for customer-specific purposes (whether one or multiple customers)
related to existing Customer Contracts and (2) the aggregate principal
amount at the time of incurrence of any Indebtedness used to finance the
acquisition of any such assets shall not exceed one-third of the aggregate
dollar backlog (i.e., the cumulative total payments provided for under
---
applicable Customer Contracts over the life of such contracts without any
discount for time value or a reserve of any kind) of all customers for whom
such assets are to be used under the related Customer Contracts (provided
that only three years of backlog under any one Customer Contract may be
taken account of in calculating availability under this clause (vi));
(vii) the incurrence by the Issuer or any Restricted Subsidiary of
Purchase Money Indebtedness (including Indebtedness incurred, acquired or
assumed in connection with an Asset Acquisition), equipment financing,
vendor financing or Capital Lease Obligations, including under a Permitted
Credit Facility; provided that in each case, such Indebtedness shall not
constitute more than 100% of the cost (determined in accordance with GAAP
in good faith by the Board of Directors of the Issuer, but excluding
goodwill in the case of an Asset Acquisition) to the Issuer or a Restricted
Subsidiary, as applicable, of the property so purchased, developed,
acquired, constructed,
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improved or leased together with services provided in connection therewith;
provided that the sum of the aggregate principal amount of Indebtedness
incurred and outstanding under this clause (vii) and clause (v) above will
not exceed at any time $45.0 million;
(viii) the incurrence by the Issuer or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest or foreign currency exchange rate risk with
respect to any floating rate Indebtedness or foreign currency based
Indebtedness, respectively, that is permitted to be outstanding; provided
that the notional amount of any such Hedging Obligation does not exceed the
amount of Indebtedness or other liability to which such Hedging Obligation
relates;
(ix) the Issuer and its Restricted Subsidiaries may incur
Indebtedness solely in respect of bankers acceptances, letters of credit
and performance bonds, all in the ordinary course of business; and
(x) Permitted Refinancing Indebtedness.
(c) Indebtedness or Preferred Stock of any Person which is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Issuer (including upon designation of any Subsidiary or other Person as a
Restricted Subsidiary or upon a Revocation such that such Subsidiary becomes a
Restricted Subsidiary) or is merged with or into or consolidated with the Issuer
or a Restricted Subsidiary of the Issuer shall be deemed to have been incurred
at the time such Person becomes such a Restricted Subsidiary of the Issuer or is
merged with or into or consolidated with the Issuer or a Restricted Subsidiary
of the Issuer, as applicable.
(d) Upon each incurrence, the Issuer may designate pursuant to
which provision of this Section 8.04 such Indebtedness is being incurred and
such Indebtedness shall not be deemed to have been incurred by the Issuer under
any other provision of this Section 8.04, except as stated otherwise in the
foregoing provisions or in the next sentence. For purposes of determining
compliance with this covenant, in the event that an item of Indebtedness meets
the criteria of more than one of the types of Indebtedness described in Section
8.04(b)(i) through (x) above, or is permitted under Section 8.04(a) and under
one or more of such Sections, the Issuer, in its sole discretion, may from time
to time reclassify such item of Indebtedness.
(e) The Issuer shall not permit any of the Restricted Subsidiaries
to incur any Indebtedness (including Permitted Indebtedness) representing Debt
Securities or a guarantee thereof without providing a senior guarantee of the
Notes and other obligations hereunder.
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8.05. Asset Sales.
-----------
(a) The Issuer shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, consummate any Asset Sale,
unless:
(i) the Issuer (or such Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets or Equity Interests issued or sold or
otherwise disposed of;
(ii) at least 80% of the consideration therefor is in the form of
cash and/or Cash Equivalents or Qualified Consideration; and
(iii) the Net Cash Proceeds received by the Issuer or such Restricted
Subsidiary, as the case may be, from such Asset Sale are applied within 180
days (or, following a Note Liquidity Event, 360 days) following the receipt
of such Net Cash Proceeds, to the extent the Issuer or such Restricted
Subsidiary, as the case may be, elects:
(1) to the permanent redemption or repurchase of outstanding
Indebtedness (which, in the case of a revolver or similar arrangement
that makes credit available, also permanently reduces the commitment
under such facility by the same amount), that is either (I) (A)
secured Indebtedness or (B) Indebtedness of the Issuer that ranks
equally with the Notes but has a maturity date that is prior to the
maturity date of the Notes, in either case other than Subordinated
Indebtedness, or (II) that is Indebtedness of a Restricted Subsidiary;
and/or
(2) to reinvest such Net Cash Proceeds (or any portion
thereof) in assets, rights (contractual or otherwise) and properties,
whether tangible or intangible, in a Permitted Business (including
Equity Interests of a Person that will become a Restricted Subsidiary
as a result of such investment and that is engaged principally in a
Permitted Business).
The balance of such Net Cash Proceeds, after the application of such Net Cash
Proceeds as described in the immediately preceding clauses (1) and (2) and the
passage of the applicable time period, shall constitute "Excess Proceeds."
---------------
(b) When the aggregate amount of Excess Proceeds equals or exceeds
$5 million (taking into account income earned on such Excess Proceeds), the
Issuer shall be required to make a pro rata offer to all Holders and all holders
of Pari Passu Indebtedness with comparable provisions requiring such
Indebtedness to be purchased with the proceeds of such Asset Sale (an "Asset
-----
Sale Offer") to purchase the maximum principal amount accreted value in the
- ----------
case of Indebtedness issued with an original issue discount of Notes and Pari
Passu Indebtedness that may be purchased out of the Excess Proceeds, at a
purchase price in
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cash in an amount equal to 100% of the Accreted Value in the case of the Notes
or the principal amount of or the accreted value thereof (as applicable) in
other cases, plus accrued and unpaid interest thereon to the date of purchase
(subject to the right of Holders as of the relevant record date to receive
interest due on the relevant interest payment date). To the extent that any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may
use such Excess Proceeds for any purpose not otherwise prohibited by this
Agreement. If the aggregate accreted value of Notes and principal amount or
accreted value of Pari Passu Indebtedness tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Purchasers shall select the Notes and any Pari Passu Indebtedness to be
purchased or retired on a pro rata basis in proportion to the respective
principal amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Notes and such other Indebtedness. Upon
completion of such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero for purposes of the first sentence of this paragraph.
(c) The amount of
(i) any liabilities (as shown on the Issuer's (or such Restricted
Subsidiary's, as the case may be) most recent balance sheet), other than
Subordinated Indebtedness, of the Issuer or any Restricted Subsidiary, that
are assumed by the transferee of any such assets pursuant to an agreement
that immediately releases the Issuer and all of the Restricted Subsidiaries
from all liability in respect thereof;
(ii) Indebtedness of any Restricted Subsidiary that is no longer a
Restricted Subsidiary as a result of such Asset Sale, if the Issuer and all
of the Restricted Subsidiaries immediately are released from payment of
such Indebtedness and such Indebtedness is no longer the liability of the
Issuer or any of the Restricted Subsidiaries; and
(iii) any securities, notes or other obligations received by the
Issuer (or such Restricted Subsidiary, as the case may be) from such
transferee that are converted by the Issuer (or such Restricted Subsidiary,
as the case may be) into cash and/or Cash Equivalents within 90 days of the
date of such Asset Sale (to the extent of the cash and/or Cash Equivalents
received)
will be deemed to be cash and/or Cash Equivalents for purposes of this
provision.
(d) Notwithstanding any provision of this Section 8.05, the
provisions of this Section 8.05 shall not apply to any transaction constituting
a Restricted Payment that is permitted by Section 8.02 or that otherwise
constitutes a Permitted Investment.
8.06. Transactions with Affiliates. The Issuer shall not, and shall
----------------------------
not permit any of the Restricted Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise
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dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
---------------------
(i) such Affiliate Transaction is on terms that are not materially
less favorable to the Issuer or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Issuer or such Restricted Subsidiary with an unrelated Person entered into
on an arm's-length basis; and
(ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration of $1.0 million or
more, the Issuer delivers to the Purchasers a resolution of the Board of
Directors set forth in an Officers' Certificate that such Affiliate
Transaction is approved by a majority of the Disinterested Directors and
certifying that such Affiliate Transaction complies with clause (i) above
and is in the best interests of the Issuer or such Restricted Subsidiary;
provided that if there are either no Disinterested Directors or the
Affiliate Transaction is occurring prior to a Note Liquidity Event and the
consideration therefor would equal $5.0 million or more, the Issuer must
deliver a favorable written opinion from an Independent Financial Advisor
as to the fairness to the Issuer or its Restricted Subsidiaries of such
Affiliate Transaction from a financial point of view.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
(i) (a) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit plan or
program, related trust agreement or any other similar arrangement for or
with any employee, officer or director heretofore or hereafter entered into
in the ordinary course of business, including vacation, health, insurance,
deferred compensation, retirement, savings or other similar plans or (b)
the payment of compensation, performance of indemnification or contribution
obligations, or an issuance, grant or award of stock, options, or other
equity-related interests or other securities, to employees, officers or
directors in the ordinary course of business;
(ii) transactions between or among the Issuer and/or the Restricted
Subsidiaries;
(iii) payment of reasonable director's fees;
(iv) any sale or other issuance of Equity Interests (other than
Disqualified Stock) of the Issuer;
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(v) Affiliate Transactions in effect on the Closing Time that would
otherwise be permitted under other provisions of this paragraph, including
any amendments thereto (provided that the terms of such amendments are not
materially less favorable to the Issuer or the Restricted Subsidiary than
the terms of such agreement prior to such amendment);
(vi) Restricted Payments that are permitted under Section 8.02 and
Permitted Investments described under clause (d) of the definition thereof;
(vii) transactions with Ascend Communications, Inc. and its
Affiliates in the ordinary course of business on terms no less favorable,
taken as a whole, than could be obtained on an arm's length basis; and
(viii) customary investment and commercial banking services from The
Chase Manhattan Bank and its Affiliates.
8.07. Ownership of Opco. After the Reorganization, the Issuer (a)
-----------------
shall not, and shall not permit Opco to, transfer, convey, sell, issue or
otherwise dispose of any Capital Stock of Opco to any Person (other than the
Issuer), unless such transfer, conveyance, sale, issue or other disposition is
pursuant to and in accordance with the provisions of Section 8.10; provided that
this provision shall not apply to any pledge of (but not foreclosure upon)
Capital Stock of Opco to secure Indebtedness under the Credit Agreement and (b)
shall not cause or permit Opco to issue any of its Capital Stock (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying shares
to the extent required by applicable law) to any Person other than to the
Issuer.
8.08. Liens. The Issuer shall not, and shall not permit any of the
-----
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
otherwise cause or suffer to exist or become effective any Lien of any kind
(other than Permitted Liens) to secure Indebtedness upon any of their property
or assets, now owned or hereafter acquired, unless all payments due in respect
of the Notes are secured (except as provided below) on an equal and ratable
basis with the obligations so secured and no Lien shall be granted or be allowed
to exist which secures Subordinated Indebtedness except with respect to Acquired
Debt, in which case, however, such Liens must be made junior and subordinate to
the Liens granted in favor of the Holders.
8.09. Payments for Consents. Neither the Issuer nor any of its
---------------------
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder in
consideration for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Agreement or the Notes unless such
consideration is concurrently offered to be paid or is concurrently paid to all
Holders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
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8.10. Merger, Consolidation and Sale of Assets.
----------------------------------------
(a) The Issuer may not, directly or indirectly, consolidate or
merge with or into (whether or not the Issuer is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person, unless:
(i) the Issuer is the surviving corporation or the Person formed by
or surviving any such consolidation or merger (if other than the Issuer )
or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; and
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Issuer) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all the Obligations of the Issuer; and
(iii) no Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; and
(iv) except in the case of a merger of the Issuer with or into a
Wholly Owned Restricted Subsidiary of the Issuer, the Issuer or the Person
formed by or surviving any such consolidation or merger (if other than the
Issuer), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made will immediately after such transaction
and after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to Section 8.04(a)(i); and
(v) if, as a result of any such transaction, property or assets of
the Issuer would become subject to a Lien subject to the provisions of this
Agreement described under Section 8.08, the Issuer or the successor entity
to the Issuer shall have secured the Notes as required by said Section.
(b) The provisions of this Section 8.10 will not be applicable to
the Reorganization in accordance with Section 2.05 or a transaction the purpose
of which is to reincorporate the Issuer (or its successor or assign) in another
U.S. jurisdiction.
(c) Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Issuer in accordance with Section 8.10(a)
hereof, the successor Person formed by such consolidation or into which the
Issuer is merged or to which such transfer is made shall succeed to and (except
in the case of a lease) be substituted for (so that from and
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<PAGE>
after the date of such consolidation, merger or transfer, the provisions of this
Agreement referring to the "Issuer" shall refer instead to the successor Person
and not to the prior issuer), and may exercise every right and power of, the
Issuer under this Agreement with the same effect as if such successor Person had
been named herein as the issuer, and (except in the case of a lease) the prior
issuer shall be released from the Obligations.
8.11. Public Disclosures. The Issuer shall not, and shall not permit
------------------
any of its Subsidiaries to, disclose the name or identity of any Holder as an
investor in the Issuer in any press release or other public announcement or in
any document or material filed with any Governmental Authority, unless such
disclosure is a Requirement of Law or in any Shelf Registration Statement, in
which case prior to making such disclosure the Issuer shall give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and shall permit such Holder to review and comment upon the form and
substance of such disclosure.
8.12. Business Activities. The Issuer and the Restricted Subsidiaries
-------------------
shall not collectively engage principally in any business other than a Permitted
Business.
8.13. Limitations on Sale and Leaseback Transactions. The Issuer
----------------------------------------------
shall not, and shall not permit any Restricted Subsidiary to, enter into any
sale and leaseback transaction unless (i) the consideration received in such
sale and leaseback transaction is at least equal to the Fair Market Value of the
property sold, (ii) if the sale and leaseback transaction would be a Capital
Lease Obligation, the Issuer could incur the Indebtedness, if any, attributable
to such sale and leaseback transaction in compliance with Section 8.04 and (iii)
if the sale and leaseback transaction would not be a Capital Lease Obligation
and would be subject to Section 8.05, such sale and leaseback transaction is
permitted by, and the proceeds thereof are applied in compliance with, Section
8.05 hereof.
8.14. Investment Company Act. The Issuer will not, and will not
----------------------
permit any of its Subsidiaries or controlled Affiliates to, conduct its business
in a fashion that would cause the Issuer or any of its Subsidiaries or
controlled Affiliates to be required to register as an "investment company" (as
that term is defined in the Investment Company Act of 1940), or otherwise to
become subject to regulation under the Investment Company Act of 1940 without
exemption.
SECTION 9
PROVISIONS RELATING TO RESALES OF SECURITIES
--------------------------------------------
9.01. Private Offerings. The Issuer and the Purchasers agree that the
-----------------
following provisions will apply to any Private Offerings:
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(a) Offers and Sales Only to Institutional Accredited Investors or
--------------------------------------------------------------
Qualified Institutional Buyers. Offers and sales of the Securities and the
------------------------------
Warrant Shares will be made only by the Purchasers or Affiliates thereof
qualified to do so in the jurisdictions in which such offers or sales are
made. Prior to the effectiveness of a registration statement with respect
to the Notes, the Exchange Notes, the Warrants or the Warrant Shares, each
such offer or sale shall only be made (i) to persons whom the offeror or
seller reasonably believes to be Qualified Institutional Buyers, (ii) to
other institutional accredited investors referred to in Rule 501(a)(1),
(2), (3) or (7) of Regulation D that the offeror or seller reasonably
believes to be and, with respect to sales and deliveries, that are
Accredited Investors ("Institutional Accredited Investors") or (iii)
----------------------------------
non-U.S. persons that are financial institutions, investment advisors or
affiliates of the foregoing or would otherwise be substantially equivalent
to an Institutional Accredited Investor outside the United States to whom
the offeror or seller reasonably believes offers and sales of the Notes may
be made in reliance upon Regulation S under the Securities Act.
(b) No General Solicitation. The Securities and the Warrant Shares
-----------------------
will be offered by approaching prospective Subsequent Purchasers on an
individual basis. No general solicitation or general advertising (within
the meaning of Rule 502(c) under the Securities Act) will be used in the
United States and no directed selling efforts (as defined in Regulation S)
will be used made outside the United States in connection with the offering
of the Securities.
(c) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of a Security or the Warrant Shares acting as a
fiduciary for one or more third parties, in connection with an offer and
sale to such purchaser pursuant to Section 9.01, each third party shall, in
the judgment of the applicable Purchaser, be an Institutional Accredited
Investor or a Qualified Institutional Buyer or a non-U.S. person outside
the United States.
(d) Restrictions on Transfer; Legend. Upon original issuance by the
--------------------------------
Issuer, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities and the
Warrant Shares (and all securities issued in exchange therefor or in
substitution thereof, other than, in the case of the Notes, the registered
Exchange Notes) shall bear such legend as is required under Section 9.05 of
this Agreement.
(e) No Future Liability. Following the sale of the Securities or
-------------------
the Warrant Shares by any Purchaser to Subsequent Purchasers in accordance
with the terms of this Section 9, such Purchaser shall not be liable or
responsible to the Issuer for any losses, damages or liabilities suffered
or incurred by the Issuer, including any losses, damages or liabilities
under the Securities Act, arising from or relating to any resale or
transfer
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<PAGE>
of any Security or the Warrant Shares previously sold by such Purchaser in
compliance with this Section 9.01.
(f) Securities Act Restrictions.
---------------------------
(i) A Holder selling Securities or the Warrant Shares in a Private
Offering to a transferee that is an Accredited Investor or a Qualified
Institutional Buyer must satisfy each of the following conditions:
(1) such Holder or transferee must represent that the
transferee is acquiring the Securities or the Warrant Shares for its
own account and that it is not acquiring such Securities or the
Warrant Shares with a view to, or for offer or sale in connection
with, any distribution thereof (within the meaning of the Securities
Act) that would be in violation of the securities laws of the United
States or any state thereof, but subject, nevertheless, to the
disposition of its property being at all times within its control; and
(2) such transferee must agree to be bound by the provisions
of this Section 9.01 with respect to any resale of the Securities or
the Warrant Shares.
(ii) A Holder may sell its Securities or the Warrant Shares to a
transferee in accordance with Regulation S under the Securities Act;
provided, however, that each of the following conditions is satisfied:
(1) the offer of Securities or the Warrant Shares must not be
made to a person in the United States;
(2) either:
(A) at the time the buy order is originated, the
transferee is outside the United States or the Holder and any
person acting on its behalf reasonably believes that the
transferee is outside the United States, or
(B) the transaction must be executed in, on or through
the facilities of a designated offshore securities market and
neither the Holder nor any person acting on its behalf knows
that the transaction was pre-arranged with a buyer in the
United States;
(3) no directed selling efforts may be made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S under the
Securities Act, as applicable; and
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<PAGE>
(4) the transaction must not be part of a plan or scheme to
evade the registration requirements of the Securities Act.
(iii) In the event of a proposed exercise or sale that does not
qualify under either subclause (i) or (ii) above, a Holder may sell its
Securities or the Warrant Shares only if:
(1) such Holder must give written notice to the Issuer of its
intention to exercise or effect such sale, which notice (A) shall
describe the manner and circumstances of the proposed transaction in
reasonable detail and (B) shall designate the counsel for such Holder,
which counsel shall be reasonably satisfactory to the Issuer;
(2) counsel for the Holder must render an opinion, to the
effect that such proposed sale may be effected without registration
under the Securities Act; and
(3) such Holder or transferee must comply with subclause
(i)(1) and (2) above.
9.02. Resale Offering Assistance.
--------------------------
(a) At any time following 24 months after the Closing Time
(provided that the Issuer (or its equivalent from a financial reporting
standpoint), is not then reporting on filings made with the SEC in accordance
with the requirements of Section 13 or 15(d) of the Exchange Act) (the
"Assistance Period"), the Issuer will, if reasonably requested by a Holder that
-----------------
is original Purchaser hereunder, assist the holders of Notes and Exchange Notes
in completing any private or public resale of any portion thereof (including any
such resales of the Notes pursuant to any Private Offering and any resales of
the Exchange Notes following the completion of the Exchange Offer) in accordance
with the Holders' intended method of distribution. Such assistance may, in each
case, include the following:
(i) direct contact between the Issuer's senior management and
advisors and prospective purchasers and hosting of one or more meetings of
prospective purchasers; and
(ii) responding to reasonable inquiries of, and providing answers
to, each prospective purchaser who so requests concerning the Issuer and
its Subsidiaries (to the extent such information is available or can be
acquired and made available to prospective purchasers without unreasonable
effort or expense and to the extent the provision thereof is not prohibited
by any Requirement of Law or applicable confidentiality restrictions) and
the terms and conditions of the applicable distribution.
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(b) During the Assistance Period, all materials supplied or
available under this Section 9.02 or under Section 6 by the Issuer (including
any materials referred to or incorporated by reference therein, "Resale
------
Materials") will not, as of its date, when taken as a whole, include an untrue
- ---------
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) If, prior to the completion of any sale of the Notes and
Exchange Notes, if applicable, by the selling holders (as evidenced by a notice
in writing from the holders to the Issuer), any event shall occur or condition
exist as a result of which the Resale Materials would contain a misstatement of
a material fact or an omission of a material fact required to make the
statements therein, in the light of the circumstances, not misleading, then the
Issuer agrees to promptly prepare and furnish at its own expense to the selling
holders, further information so that the statements in the Resale Materials,
taken as a whole, will not contain a misstatement of a material fact or an
omission of a material fact required to make the statements therein, in the
light of the circumstances, not misleading. The Issuer hereby expressly
acknowledges the indemnification and contribution provisions of Sections 13.02
and 13.03 hereof are specifically applicable and relate to Resale Materials.
9.03. Blue Sky Compliance. In connection with any Private Offering of
-------------------
the Notes by Holders that were original Purchasers hereunder, the Issuer shall
cooperate with the selling Holders and counsel for the selling Holders to
qualify or register the Notes for sale under (or to obtain exemptions from the
application of) the Blue Sky or state securities laws of those jurisdictions
designated by the selling Holders, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the Notes. The Issuer shall not be required to
qualify as a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where they are not then
qualified or to taxation as a foreign corporation. The Issuer will advise the
selling Holders promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Notes for offering, sale or trading
in any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Issuer shall, with the cooperation
of the selling Holders, use its best efforts to obtain the withdrawal thereof at
the earliest possible moment.
9.04. No Integration. The Issuer agrees that it shall not and (to the
--------------
extent within its control) it shall cause its Affiliates not to make any offer
or sale of securities of any class of the Issuer if, as a result of the doctrine
of "integration" referred to in Rule 502 under the Securities Act, such offer or
sale would render invalid (for the purpose of the sale of the Securities by the
Issuer to the Purchasers) any applicable exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof.
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9.05. Form of Legend for the Securities. Unless otherwise permitted
---------------------------------
by Section 9.01(f), every Note issued and delivered hereunder shall bear a
legend in substantially the following form:
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
--------------
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE APPLICABLE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000
(THE "PURCHASE AGREEMENT"), AMONG THE ISSUER AND THE PURCHASERS NAMED THEREIN.
------------------
A COPY OF SUCH PURCHASE AGREEMENT IS AVAILABLE AT THE OFFICES OF THE ISSUER.
Unless otherwise permitted by Section 9.01(f), each Warrant and the
Warrant Shares issued and delivered hereunder and under the Warrants shall bear
a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
--------------
OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE APPLICABLE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000,
AND THE REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT, DATED AS OF JANUARY 31,
2000. COPIES OF SUCH AGREEMENTS ARE AVAILABLE AT THE OFFICES OF THE ISSUER.
SECTION 10
THE NOTES
---------
10.01. Form and Execution. The Notes shall be in the form of Exhibit
------------------ -------
A hereto. The Notes shall be executed on behalf of the Issuer by its President,
- -
Chief Financial
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<PAGE>
Officer or one of its Vice Presidents. The signature of any of these officers on
the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
10.02. Terms of the Notes. The terms of the Notes shall be as set
------------------
forth in Exhibit A. Without limiting the foregoing:
---------
(a) Stated Maturity. The Stated Maturity of the principal of Notes
---------------
shall be as provided in Exhibit A.
---------
(b) Interest. The Notes shall not accrue cash interest prior to
--------
February 1, 2005. The Notes will otherwise bear interest and Special
Interest, if any, on their principal amount and overdue interest and
Special Interest as provided in Exhibit A.
---------
10.03. Denominations. The Notes shall be issuable only in registered
-------------
form without coupons and only in denominations of U.S. $1,000 principal amount
at maturity and any integral multiple thereof.
10.04. Payments and Computations. All payments of interest on the
-------------------------
Notes shall be paid to the persons in whose names such Notes are registered on
the Security Register at the close of business on the date fifteen days prior to
the related Interest Payment Date (the "Regular Record Date") and all payments
-------------------
of principal on the Notes shall be paid to the persons in whose names such Notes
are registered on the applicable Redemption Date or at Maturity, as applicable.
Principal on any Note shall be payable only against surrender therefor, while
payments of interest on Notes shall be made, in accordance with this Agreement
and subject to applicable laws and regulations, by check mailed on or before the
due date for such payment to the person entitled thereto at such person's
address appearing on the Security Register or, by wire transfer to such account
as any Holder shall designate by written instructions received by the Issuer no
less than 15 days prior to any applicable Interest Payment Date, which wire
instruction shall continue in effect until such time as the Holder otherwise
notifies the Issuer or such Holder no longer is the registered owner of such
Note or Notes.
Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
10.05. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
(a) Security Register. The Issuer shall maintain a register (the
-----------------
"Security Register") for the registration or transfer of the Notes. The name
-----------------
and address of the Holder of
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each Note, records of any transfers of the Notes and the name and address of any
transferee of a Note shall be entered in the Security Register and the Issuer
shall, promptly upon receipt thereof, update the Security Register to reflect
all information received from a Holder. There shall be no more than one Holder
for each Note, including all beneficial interests therein.
(b) Registration of Transfer. Upon surrender for registration of
------------------------
transfer of any Note at the office or agency of the Issuer, the Issuer shall
execute and deliver, in the name of the designated transferee or transferees,
one or more new Notes, of any authorized denominations and like aggregate
principal amount.
(c) Exchange. At the option of the Holder, Notes may be exchanged
--------
for other Notes, of any authorized denominations and of like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute and
deliver the Notes which the Holder making the exchange is entitled to receive.
(d) Effect of Registration of Transfer or Exchange. All Notes
----------------------------------------------
issued upon any registration of transfer of exchange or Notes shall be the valid
obligations of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Agreement, as the Notes surrendered upon such registration
of transfer or exchange.
(e) Requirements; Charges. Every Note presented or surrendered for
---------------------
registration of transfer or for exchange shall (if so required by the Issuer) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Issuer duly executed, by the Holder thereof or his attorney
duly authorized in writing. No service charge shall be made for any registration
of transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 8.10 not involving any transfer.
(f) Certain Limitations. If the Notes are to be redeemed in part,
-------------------
the Issuer shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of any such Notes
selected for redemption under Section 12.02 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
10.06. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated
-------------------------------------------
Note is surrendered to the Issuer, the Issuer shall execute and deliver in
exchange therefor a new Note of the same principal amount and bearing a number
not contemporaneously outstanding.
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If there shall be delivered to the Issuer (a) evidence to its
satisfaction of the destruction, loss or theft of any Note and (b) such security
or indemnity as may be required by then to save each of it and any agent
harmless, then, in the absence of notice that such Note has been acquired by a
bona fide purchaser, the Issuer shall execute and deliver, in lieu of any such
destroyed, lost or stolen Note, a new Note of a like principal amount and
bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Issuer in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note pursuant to this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Agreement equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
10.07. Persons Deemed Owners. Prior to due presentment of a Note for
---------------------
registration of transfer, the Issuer and any agent of the Issuer may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note be overdue and neither
the Issuer nor any agent of the Issuer shall be affected by notice to the
contrary.
10.08. Cancellation. All Notes surrendered for payment, redemption,
------------
registration of transfer or exchange shall, if surrendered to any Person other
than the Issuer, be delivered to the Issuer and shall be promptly canceled by
it. The Issuer shall cancel any Notes previously issued and delivered hereunder
which the Issuer may have reacquired.
10.09. Home Office Payment. So long as any Purchaser or its nominee
-------------------
shall be the Holder of any Note, and notwithstanding anything contained in this
Agreement or such Note to the contrary, the Issuer will pay all sums becoming
due on such Note for principal, premium, if any, and interest by such method and
at such address as such Purchaser shall have from time to time specified to the
Issuer in writing for such purpose, without the presentation or surrender of
such Note or the making of any notation thereon, except that upon written re-
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quest of the Issuer made concurrently with or reasonably promptly after payment
or prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation reasonably promptly after any such request, to the Issuer at its
principal executive office. Prior to any sale or other disposition of any Note
held by such Purchaser or its nominee such Purchaser will, at its election,
either endorse thereon the amount of principal paid thereon and the last date to
which interest has been paid thereon or surrender such Note to the Issuer in
exchange for a new Note or Notes pursuant to Section 10.05. The Issuer will
afford the benefits of this Section 10.09 to any direct or indirect transferee
of any Note purchased by such Purchaser under this Agreement and that has made
the same agreement relating to such Note as such Purchaser made in this Section
10.09.
SECTION 11
EVENTS OF DEFAULT
-----------------
11.01. Events of Default. An Event of Default in respect of the Notes
-----------------
shall exist upon the occurrence and continuation of any of the following
specified events (each an "Event of Default"):
----------------
(i) the Issuer defaults in the payment when due of interest or
Special Interest on the Notes and such default continues for a period of 30
days or more; or
(ii) the Issuer defaults in the payment when due of the principal
of, or premium, if any, on the Notes when the same becomes due and payable;
or
(iii) the Issuer fails to comply with the provisions described in
Section 7.08 or 8.05; or
(iv) the Issuer or any Restricted Subsidiary shall default in the
observance or performance of any other agreement contained in this
Agreement or the Notes (other than as provided in paragraphs (i) through
(iii) of this Section 11.01), and such default shall continue unremedied
for a period of 30 days after notice to the Issuer from any Holder, which
notice must specify the failure, demand that it be remedied and state that
the notice is a "Notice of Default";
(v) the Issuer or any Restricted Subsidiary shall (i) default in
making any payment of any principal of any Indebtedness on the scheduled or
original due date with respect thereto; or (ii) default in making any
payment of any interest on any such Indebtedness beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
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contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on behalf
of such holder or beneficiary) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
(in the case of any such Indebtedness constituting a guarantee) to become
payable; provided that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which equals or exceeds in
the aggregate $5.0 million; or
(vi) one or more judgments, orders or decrees for the payment of
money in excess of $5.0 million, individually or in the aggregate (net of
applicable insurance coverage which is acknowledged in writing by the
insurer), shall be entered against the Issuer or any Restricted Subsidiary
or any of their respective properties and shall not be discharged and there
shall have been a period of 60 days or more during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(vii) the Issuer or any of the Restricted Subsidiaries:
(A) commences a voluntary case under any Bankruptcy Law,
(B) consents to the entry of an order for relief against it in
an involuntary case under any Bankruptcy Law,
(C) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing under any Bankruptcy Law its inability
to pay its debts generally as such debts become due; or
(viii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Issuer or any of the Significant
Subsidiaries,
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(B) appoints a custodian of the Issuer or any of its
Significant Subsidiaries or for all or substantially all of the
property of the Issuer or any of its Significant Subsidiaries, or
(C) orders the liquidation of the Issuer or any of its
Significant Subsidiaries; and the order or decree remains unstayed and
in effect for 60 consecutive days.
11.02. Remedies. If an Event of Default (other than an Event of
--------
Default specified in Section 11.01(vii) or (viii) with respect to the Issuer)
occurs and is continuing, then and in every such case the Holders of 40% or more
in principal amount of the then outstanding Notes may declare the Default Amount
to be due and payable immediately, by a notice in writing to the Issuer, and
upon any such declaration such Default Amount shall become immediately due and
payable. For the avoidance of doubt, if any Payment Default or acceleration
that constitutes an Event of Default under Section 11.01(v) shall have occurred
and prior to any acceleration under this Section 11.02 such Payment Default
shall have been cured or waived or such acceleration shall have been rescinded,
then from and after such cure, waiver or rescission, such Event of Default shall
no longer be deemed to be continuing. If an Event of Default specified in
Section 11.01(vii) or (viii) with respect to the Issuer occurs and is
continuing, the Default Amount on the outstanding Notes shall automatically, and
without any declaration or other action on the part of any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained, the
Required Holders, by written notice to the Issuer, may rescind and annul such
declaration and its consequences if:
(a) the Issuer has paid a sum sufficient to pay:
(i) all overdue interest and Special Interest on all Notes;
(ii) the principal amount of (and premium, if any, on) any
Notes which have become due otherwise than by such declaration of
acceleration (including any Notes required to have been purchased
pursuant to an offer to purchase that the Issuer is required to make
hereunder) and any interest and Special Interest thereon at the rate
borne by the Notes; and
(iii) to the extent that payment of such interest is lawful,
interest upon overdue interest and overdue Special Interest at the
rate provided therefor in the Notes; and
(b) all Events of Default, other than the nonpayment of the
principal amount of (and premium, if any, on) Notes and interest and
Special Interest thereon
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which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 11.03.
Notwithstanding the foregoing, if the Issuer or any Restricted
Subsidiary intentionally takes action to cause or permit an Event of Default for
the purpose of repaying the Notes and avoiding the payment of any premium that
would be otherwise payable upon an optional redemption, the Issuer shall be
required, upon any acceleration provided hereunder to include in the Default
Amount such premium, as of the relevant payment date, as if the Issuer had
exercised its option to redeem such note pursuant to Section 12.
11.03. Waiver of Past Defaults. The Required Holders may on behalf of
-----------------------
the Holders of all the Notes waive any past default hereunder and its
consequences, except a default:
(a) in the payment of the principal (or premium, if any) or
interest or Special Interest on any Note (including any Note which is
required to have been purchased pursuant to an offer to purchase that the
Issuer is required to make hereunder), or
(b) in respect of a covenant or provision hereof which under
Section 16.04 cannot be modified or amended without the consent of the
Holder of each outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Agreement; provided, however, no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 12
REDEMPTION
----------
12.01. Right of Redemption. The Notes may be redeemed at the election
-------------------
of the Issuer upon such conditions, at such times, in such amounts and at the
Redemption Prices (together with accrued interest, if any) and any Special
Interest to the Redemption Date) specified in the form of Note attached as
Exhibit A hereto.
- ---------
12.02. Partial Redemptions. In case the Issuer is entitled to, and
-------------------
elects to, redeem less than all of the Notes, the Issuer shall redeem the Notes
pro rata from each Holder (or as nearly pro rata as practicable). For all
purposes of this Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Notes shall relate, in the case
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of any Notes redeemed or to be redeemed only in part, to the portion of the
principal amount of such Notes which has been or is to be redeemed.
12.03. Notice of Redemption. Notice of redemption shall be given by
--------------------
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder to be redeemed, at his address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the outstanding Notes are to be redeemed, the
portion of each Note to be redeemed,
(d) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest and
any Special Interest thereon will cease to accrue on and after said date,
and
(e) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Issuer shall be given by the Issuer and at the expense of the Issuer.
12.04. Deposit of Redemption Price. Prior to any Redemption Date, the
---------------------------
Issuer shall segregate and hold in trust an amount of money sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) any applicable accrued interest and Special Interest on, all the
Notes which are to be redeemed on that date.
12.05. Notes Payable on Redemption Date. If notice of redemption
--------------------------------
shall have been given as provided above, the Notes so to be redeemed shall, on
the Redemption Date, become due and payable at the Redemption Price therein
specified, and from and after such date (unless the Issuer shall default in the
payment of the Redemption Price and any applicable accrued interest and Special
Interest) such Notes shall not bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Issuer at the Redemption Price, together with any applicable accrued interest
and Special Interest to the Redemption Date; provided that installments of
interest or Special Interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Notes registered as such
at the close of business on the relevant Record Dates according to their terms
and the provisions of this Agreement.
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If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate provided by the Note.
12.06. Notes Redeemed in Part. Any Note which is to be redeemed only
----------------------
in part shall be surrendered at the principal offices of the Issuer (with, if
the Issuer so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Issuer duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Issuer shall execute and deliver
to the Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
SECTION 13
EXPENSES, INDEMNIFICATION AND
CONTRIBUTION AND TERMINATION
----------------------------
13.01. Expenses. Whether or not the transactions contemplated hereby
--------
are consummated, the Issuer will pay all reasonable costs and expenses
(including reasonable and documented attorneys' and accountants' fees and
disbursements) incurred by the Purchasers (and their Affiliates) in connection
with the Transactions, including, without limitation, the Purchasers' reasonable
and documented out-of-pocket expenses in connection with the Purchasers'
examinations and appraisals of the properties, books and records of the Issuer
and its Subsidiaries to the extent approved in advance by the Issuer, and (b)
the reasonable costs and expenses incurred in enforcing (or determining whether
or how to enforce) any rights under this Agreement or any Transaction Document
(to the extent the Purchasers and their Affiliates are entitled to so enforce)
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement, the other
Transaction Documents or the Securities, or by reason of being a holder of any
Securities, including, without limitation, costs and expenses incurred in any
bankruptcy case; provided that the Issuer will not be obligated to reimburse the
Purchasers for the fees and expenses of more than one legal counsel in
connection with the Transactions and then in an amount not to exceed $40,000.
The Issuer will pay, and will save the Purchasers and each other holder of a
Security harmless from, all claims in respect of any fees, costs or expenses if
any, of brokers and finders in relation to the Transactions.
13.02. Indemnification.
---------------
(a) Indemnification by the Issuer. The Issuer agrees to indemnify
-----------------------------
and hold harmless (i) each Purchaser, (ii) each Person, if any, who controls
(within the meaning of
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Section 15 of the Securities Act or Section 20 of the Exchange Act) any
Purchaser (any of the Persons referred to in this clause (ii) being referred to
herein as a "Controlling Person") and (iii) the respective officers, directors,
------------------
managing directors, stockholders, partners, employees, representatives,
trustees, fiduciaries, and agents of any Purchaser or any such Controlling
Person (any such Person referred to in clause (i), (ii) or (iii), a "Purchaser
---------
Indemnified Person") against any losses, claims, damages or liabilities, joint
- ------------------
or several, to which such Purchaser Indemnified Person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
in whole or in part any inaccuracy in any of the representations and warranties
of the Issuer contained herein, (ii) in whole or in part upon the failure of the
Issuer to perform its obligations hereunder or under Requirement of Law or (iii)
any change in the financial condition, operations, business or properties of the
Issuer and its Subsidiaries during the period from September 30, 1999 to the
Closing Time, inclusive, that, individually or in the aggregate, has had or
would have a Material Adverse Effect that has not been disclosed in writing to
the Purchasers; and will reimburse each such Purchaser Indemnified Person for
any reasonable legal and other expenses incurred by such Purchaser Indemnified
Person in connection with investigating or defending any such action or claims
as such expenses are incurred. The indemnity agreement set forth in this Section
13.02(a) shall be in addition to any liabilities that the Issuer may otherwise
have. The foregoing indemnification shall apply whether or not such losses,
claims, damages or liabilities are primarily caused, in whole or in part, by any
negligent act or omission of any kind by such Purchaser Indemnified Person.
(b) Indemnification by the Purchasers. Each Purchaser agrees,
---------------------------------
severally and not jointly, to indemnify and hold harmless (i) the Issuer and
(ii) each Controlling Person of an Issuer and (iii) the respective officers,
directors, employees, representatives and agents of each Issuer or any such
Controlling Person (any such Person referred to in clause (i), (ii) or (iii), an
"Issuer Indemnified Person") against any losses, claims, damages or liabilities,
-------------------------
joint or several, to which such Issuer Indemnified Person may become subject,
under the Securities Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
in whole or in part any inaccuracy of any of such Purchaser's representations
and warranties in Section 5 or (ii) in whole or in part the failure of such
Purchaser to perform its obligations in Section 9.01(f) or 9.06; and will
reimburse the Issuer Indemnified Persons for any legal and other expenses
reasonably incurred by the Issuer Indemnified Persons in connection with
investigating or defending any such actions or claims as such expenses are
incurred. The indemnity agreement set forth in this Section 13.02(b) shall be
in addition to any liabilities that each Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
--------------------------------------------------
after receipt by a Purchaser Indemnified Person or an Issuer Indemnified Person
(each, an "Indemnified Person") of notice of the commencement of any action,
------------------
such Indemnified Person shall, if a claim in respect thereof is to be made
against an indemnifying party under Section 13.02(a) or 13.02(b), as applicable,
notify such indemnifying party in writing of the commencement
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thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any Indemnified Person otherwise than
under Section 13.02(a) or 13.02(b), as applicable, or to the extent it is not
materially prejudiced as a proximate result of such failure. In case any such
action is brought against any Indemnified Person and it shall notify an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it shall elect within 30
days after receiving any such notification, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such Indemnified Person (who shall not, except with the consent
of the Indemnified Person, which consent shall not be unreasonably withheld, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such Indemnified Person of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such Indemnified Person
under such paragraph for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such Indemnified Person, in
connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding the foregoing, any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Person unless (i) the Indemnified Person shall have
been advised by counsel that representation of the Indemnified Person by counsel
provided by the indemnifying party would be inappropriate due to actual or
potential conflicting interests between the indemnifying party and the
Indemnified Person, including situations in which there are one or more legal
defenses available to the Indemnified Person that are different from or
additional to those available to the indemnifying party, (ii) the indemnifying
party shall have authorized in writing the employment of counsel for the
Indemnified Person at the expense of the indemnifying party or (iii) the
indemnifying party shall have failed to assume the defense or retain counsel
reasonably satisfactory to the Indemnified Person; provided, however, that the
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar actions or proceedings arising
out of the same general allegations, be liable for the fees and expenses of more
than one separate firm of attorneys at any time for all Indemnified Persons,
except to the extent that local or special counsel, in addition to their regular
counsel, is required in order to effectively defend against such action or
proceeding. No indemnifying party shall, without the written consent of the
Indemnified Person, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the Indemnified Person is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified Person from all liability arising out
of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
Indemnified Person.
13.03. Contribution. If the indemnification provided for in Section
------------
13.02 is unenforceable and accordingly unavailable to or insufficient to hold
harmless an Indemnified Person under paragraph (a), (b) or (c) of Section 13.02
in respect of any losses, claims, dam-
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ages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the (i) relative benefits received by the Issuer on the one hand and the
Purchasers on the other hand from the issuance and sale of the Securities; or
(ii) if the allocation provided in clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the related
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party on the one hand and the Indemnified Person on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Issuer on the one hand and the Purchasers on the other hand in connection with
the sale of the Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities pursuant to this Agreement (before deducting expenses) received
by the Issuer and the commitment fee payable to the Purchasers at the Closing
Time. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party on the one hand or the Indemnified Person on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties agree
that it would not be just and equitable if contributions pursuant to this
Section 13.03 were determined by pro rata allocation (even if the Indemnified
Persons were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 13.03. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 13.03 shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 13.03, no Purchaser shall be
required to contribute any amount which, when taken together with any amounts
paid by such Purchaser under Section 13.02(b) exceeds the commitment fee payable
to the Purchasers at the Closing Time. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The obligations of the Issuer and the Purchasers under this Section
13.03 shall be in addition to any liability which the Issuer and the respective
Purchasers may otherwise have.
13.04. Survival. The obligations of the Issuer under this Section 13
--------
will survive the payment or transfer of any Security or Exchange Note, the
enforcement, amendment or waiver of any provision of this Agreement and the
termination of this Agreement.
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13.05. Termination.
-----------
(a) The Purchasers may terminate this Agreement, by notice to the
Issuer, (1) at any time at or prior to March 1, 2000 if any of the conditions in
Section 3 are not satisfied or waived in writing by the Purchasers or are not
capable of being so satisfied or waived at or prior to March 1, 2000 if the
Closing has not occurred hereunder or (2) except as disclosed herein and in the
Schedules hereto, at any time at or prior to the Closing Time if there has been,
since the time of execution of this Agreement or since September 30, 1999, any
material adverse change in the business, management, operations, condition
(financial or otherwise) or assets of the Issuer and its Subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to this Section
13.05, such termination shall be without liability of any party to any other
party except as provided in Section 13.01 hereof, and provided further that
Sections 1, 13.02, 13.03, 13.04, 14.08 and 14.12 shall survive such termination
and remain in full force and effect.
SECTION 14
MISCELLANEOUS
-------------
14.01. Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy (or other
facsimile device) to the number set out below if the sender on the same day
sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), (c) the day following the day on which the same has
been delivered prepaid to a reputable national overnight air courier service or
(d) the third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to the respective
parties at the address set forth below, or at such other address as such party
may specify by written notice to the other party hereto:
(i) if to a Purchaser or its nominee, to the Purchaser or its
nominee at the address specified for such communications in Schedule A,
----------
with a copy to Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New
York 10022 attention: Michael R. Littenberg, Esq., or at such other
address as the Purchaser or its nominee shall have specified to the Issuer
in writing;
(ii) if to any other Holder to such Holder at the address of such
Holder appearing in the Security Register or such other address as such
other holder shall have specified to the Issuer in writing; or
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(iii) if to the Issuer at 5667 Gibraltar Drive, Pleasanton, CA
94588 and 977 Charter Commons, Chesterfield, Missouri 63017, Attention:
David Boone, Chief Financial Officer or at such other address as the Issuer
shall have specified to each Holder in writing, with a copy to Cahill
Gordon & Reindel, 80 Pine Street, New York, NY 10005, attention: Jonathan
A. Schaffzin, Esq.
14.02. Benefit of Agreement; Assignments and Participations. Except
----------------------------------------------------
as otherwise expressly provided herein, all covenants, agreements and other
provisions contained in this Agreement by or on behalf of any of the parties
hereto shall bind, inure to the benefit of and be enforceable by their
respective successors and assigns (including, without limitation, any subsequent
holder of a Security or Exchange Note) whether so expressed or not (other than
Section 9.09 as to Persons other than the Purchasers and their Affiliates);
provided, however, that the Issuer may not assign and transfer any of its rights
or obligations without the prior written consent of the other parties hereto and
each such holder.
Nothing in this Agreement or in the Securities or Exchange Notes,
express or implied, shall give to any Person other than the parties hereto,
their successors and assigns and the holders from time to time of the Securities
or Exchange Notes any benefit or any legal or equitable right, remedy or claim
under this Agreement.
14.03. No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of any party hereto or any Holder in exercising any right, power or
privilege hereunder or under the Securities or Exchange Notes and no course of
dealing between any Issuer and any other party or Holder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Securities or Exchange Notes preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided herein and
in the Securities and Exchange Notes are cumulative and not exclusive of any
rights or remedies which the parties or Holders would otherwise have. No notice
to or demand on the Issuer in any case shall entitle the Issuer to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the other parties hereto or the Holders to any other or
further action in any circumstances without notice or demand.
14.04. Amendments, Waivers and Consents. Except as provided below in
--------------------------------
this Section 14.04, the Issuer may amend or supplement this Agreement (including
Section 7.09 and 8.05 hereof) and the Notes or any supplemental agreement or
modify the rights of the Holders with the consent of the Required Holders
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes), and, subject to Section 11.03 hereof, any
existing Default (other than a Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Agreement or the Notes may be waived with the consent of the Required
Holders (including consents obtained
-83-
<PAGE>
in connection with a tender offer or exchange offer for, or purchase of, the
Notes); provided that no such modification may, without the consent of each
Holder affected thereby:
(i) reduce the Accreted Value, principal amount at maturity of,
change the fixed maturity of, or alter the redemption provisions of, the
Notes,
(ii) change the currency in which any Notes or amounts owing
thereon is payable,
(iii) reduce the percentage of the aggregate principal amount at
maturity outstanding of Notes which must consent to an amendment,
supplement or waiver or consent to take any action under this Agreement or
the Notes,
(iv) impair the right to institute suit for the enforcement of any
payment on or with respect to the Notes,
(v) waive a default in payment with respect to the Notes,
(vi) reduce the rate or change the time for payment of interest on
the Notes,
(vii) following the occurrence of a Change of Control or an Asset
Sale, alter the Issuer's obligation to purchase the Notes as a result of
any such Change of Control or Asset Sale in accordance with this Agreement
or waive any default in the performance thereof, or
(viii) affect the ranking of the Notes in a manner adverse to the
Holders.
No amendment or waiver of this Agreement will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or thereby impair any right consequent thereon. As used
herein, the terms this "Agreement" and references thereto shall mean this
---------
Agreement as it may from time to time be amended or supplemented.
14.05. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. Each counterpart may consist of a number of copies hereof,
each signed by less than all, but together signed by all, of the parties hereto.
14.06. Reproduction. This Agreement, the other Transaction Documents
------------
and all documents relating, hereto and thereto, including, without limitation,
(a) consents, waivers and modifications that may hereafter be executed, (b)
documents received by the Purchasers at the Closing Time (except the Notes
themselves), and (c) financial statements, certificates and
-84-
<PAGE>
other information previously or hereafter furnished in connection herewith, may
be reproduced by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and any original document so reproduced
may be destroyed. Each Issuer agrees and stipulates that, to the extent
permitted by Requirement of Law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 14.06 shall not prohibit the Issuer, any
other party hereto or any Holder from contesting any such reproduction to the
same extent that it could contest the original, or from introducing evidence to
demonstrate the inaccuracy of any such reproduction.
14.07. Headings. The headings of the sections and subsections hereof
--------
are provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
14.08. Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS AGREEMENT AND THE SECURITIES SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION
OTHER THAN SUCH STATE.
(b) If any action, proceeding or litigation shall be brought by
any Purchaser or any Holder in order to enforce any right or remedy under this
Agreement or any of the Securities, the Issuer hereby consents and will submit,
and will cause each of its Subsidiaries to submit, to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement. The
Issuer hereby irrevocably waives any objection, including, but not limited to,
any objection to the laying of venue or based on the grounds of forum non
----- ---
conveniens, which they may now or hereafter have to the bringing of any such
- ----------
action, proceeding or litigation in such jurisdiction. The Issuer further
agrees that it shall not, and shall cause its Subsidiaries not to, bring any
action, proceeding or litigation arising out of this Agreement, the Securities
or any other Transaction Document in any state or federal court other than any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this Agreement.
(c) The Issuer hereby irrevocably designates CT Corporation System
at an address in New York City designated at the Closing Time as the designee,
appointee and agent of the Issuer to receive, for and on behalf of the Issuer,
service of process in such jurisdiction in any action, proceeding or litigation
with respect to this Agreement, the Securities or
-85-
<PAGE>
any of the other Transaction Documents. It is understood that a copy of such
process served on such agent will be promptly forwarded by mail to the Issuer at
its address set forth opposite its signature below, but the failure of the
Issuer to have received such copy shall not affect in any way the service of
such process. The Issuer further irrevocably consents to the service of process
of any of the aforementioned courts in any such action, proceeding or litigation
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to the Issuer at its said address, such service to become effective
thirty (30) days after such mailing.
(d) Nothing herein shall affect the right of any holder of a Note
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Issuer in any other jurisdiction.
If service of process is made on a designated agent it should be made by either
(i) personal delivery or (ii) mailing a copy of summons and complaint to the
agent via registered or certified mail, return receipt requested.
(e) THE ISSUER HEREBY WAIVES ANY AND ALL RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE SECURITIES.
14.09. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
to the extent of such illegality, invalidity or unenforceability and the
remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
14.10. Entirety. This Agreement together with the other Transaction
--------
Documents represents the entire agreement of the parties hereto and thereto, and
supersedes all prior agreements and understandings, oral or written, if any,
relating to the Transaction Documents or the transactions contemplated herein or
therein.
14.11. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties and covenants and indemnities made by the Issuer
herein shall survive the execution and delivery of this Agreement, the issuance
and transfer of all or any portion of the Securities and Exchange Notes and the
payment of principal of the Notes and the Exchange Notes and any other
obligations hereunder, regardless of any investigation made at any time by or on
behalf of the Purchasers or any other holder that is Affiliated with the
Purchasers. All statements contained in any certificate delivered by or on
behalf of the Issuer pursuant to this Agreement shall be deemed representations
and warranties of the Issuer under this Agreement.
14.12. Incorporation. All Exhibits and Schedules attached hereto are
-------------
incorporated as part of this Agreement as if fully set forth herein.
-86-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
INTIRA CORPORATION
/s/ David S. Boone
By: ___________________________________
Name: David S. Boone
Title: Chief Financial Officer
<PAGE>
ARES LEVERAGED INVESTMENT
FUND, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
/s/ Eric Beckman
By: ___________________________________
Name: Eric Beckman
Title: Vice President
ARES LEVERAGED INVESTMENT
FUND II, L.P.
By: ARES MANAGEMENT, L.P., its
General Partner
/s/ Eric Beckman
By: ___________________________________
Name: Eric Beckman
Title: Vice President
MAGNETITE ASSET INVESTORS L.L.C.
By: BlackRock Financial Management, Inc.,
As Managing Member
/s/ Dennis M. Schaney
By: ___________________________________
Name: Dennis M. Schaney
Title: Managing Director
<PAGE>
CARLYLE HIGH YIELD PARTNERS, L.P.
By: TCG High Yield, L.L.C.,
its General Partner
[UNINTELLIGIBLE]
By: ___________________________________
Name:
Title:
CB CAPITAL INVESTORS, LLC
By: Chase Capital Partners, its Manager
/s/ Richard D. Waters
By: ___________________________________
Name: Richard D. Waters
Title: General Partner--Mezzanine
CONTINENTAL CASUALTY COMPANY
/s/ Richard W. Dubberke
By: ___________________________________
Name: Richard W. Dubberke
Title: Vice President
<PAGE>
GOLDMAN SACHS ASSET MANAGEMENT,
in its capacity as the investment adviser of
the Goldman Sachs High Yield Fund, a
separate series of the Goldman Sachs Trust
By: ___________________________________
Name:
Title:
GOLDMAN, SACHS & CO.,
as delegate of Goldman Sachs Asset
Management International, in its capacity as
the investment adviser of the Goldman Sachs
Global High Yield Portfolio, a separate
series of Goldman Sachs Funds, S.I.C.A.V.
By: ___________________________________
Name:
Title:
OZ MASTER FUND, LTD.
By: ___________________________________
Name:
Title:
<PAGE>
SANKATY HIGH YIELD PARTNERS II, L.P.
By: ___________________________________
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS, L.P.
By: ___________________________________
Name:
Title:
WAYLAND INVESTMENT FUND, LLC
By: CFSC Wayland Advisors, Inc.,
its Manager
By: [ILLEGIBLE]
------------------------------------
Name:
Title:
CHASE SECURITIES INC.
By: /s/ Jessica Laxman
--------------------------------
Name: Jessica Laxman
Title: Vice President
COINVESTMENT I, LLC
By Laurence D. Fink,
as Managing Member
By: /s/ Laurence D. Fink
--------------------------------
Name: Laurence D. Fink
Title: Managing Member
Sun America Inc.
-----------------------------------
Name of Purchaser
By: /s/ Rafael Fogel
--------------------------------
Name: Rafael Fogel
Title: Authorized
PUTNAM FIDUCIARY TRUST COMPANY on behalf of:
PUTNAM HIGH YIELD FIXED INCOME FUND, LLC
PUTNAM HIGH YIELD MANAGED TRUST
By: /s/ John R. Verani
-----------------------------
Name: John R. Verani
Title: Senior Vice President
PUTNAM INVESTMENT MANAGEMENT, INC. on behalf
of:
PUTNAM HIGH YIELD TRUST
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM VARIABLE TRUST-PVT HIGH YIELD FUND
PUTNAM MASTER INCOME TRUST
PUTNAM PREMIER INCOME TRUST
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM FUNDS TRUST-PUTNAM HIGH YIELD
PUTNAM STRATEGIC INCOME FUND
PUTNAM VARIABLE TRUST-PVT DIVERSIFIED
TRAVELERS SERIES FUND INC.-PUTNAM
DIVERSIFIED INCOME
By: /s/ John R. Verani
-----------------------------
Name: John R. Verani
Title: Senior Vice President
THE PUTNAM ADVISORY COMPANY, INC. on behalf
of:
ABBOT LABORATORIES ANNUITY RETIREMENT
PLAN
AMERITECH CORPORATION PENSION PLAN
NORTHROP GRUMMAN EMPLOYEE BENEFIT PLAN
By: /s/ John R. Verani
-----------------------------
Name: John R. Verani
Title: Senior Vice President
<PAGE>
EXHIBIT A
---------
[FORM OF NOTE]
------------
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
--------------
QUALIFIED UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT IS IN EFFECT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY IS SUBJECT TO
THE TERMS OF THE PURCHASE AGREEMENT, DATED AS OF JANUARY 31, 2000 (THE "PURCHASE
--------
AGREEMENT"), AMONG INTIRA CORPORATION (D/B/A INTIRA CORPORATION) (THE "ISSUER")
- --------- ------
AND THE PURCHASERS NAMED THEREIN. A COPY OF SUCH PURCHASE AGREEMENT IS
AVAILABLE AT THE OFFICES OF THE ISSUER.
THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTION 1271 ET SEQ. OF THE INTERNAL REVENUE CODE. FOR EACH $1,000 OF PRINCIPAL
AMOUNT AT MATURITY OF THIS SECURITY, THE ISSUE PRICE IS $ 453.65 AND THE AMOUNT
OF ORIGINAL ISSUE DISCOUNT IS $1,196.35. THE CLOSING TIME OF THIS SECURITY IS
JANUARY 31, 2000 AND THE YIELD TO MATURITY IS 14.9573%.
13% SENIOR DISCOUNT NOTES DUE 2010
No. __________ $ __________
INTIRA CORPORATION, a corporation duly organized and existing under
the laws of Delaware (herein called the "Issuer," which term includes any
------
successor Person under the Purchase Agreement), for value received, hereby
promises to pay to [ ], or registered assigns, the principal sum of
[ ] Dollars on February 1, 2010 (the "Stated Maturity Date"), and to
--------------------
pay interest thereon from February 1, 2005 or from the most recent Interest
Payment Date after February 1, 2005 to which interest has been paid or duly
provided for, semi-annually in arrears on February 1 and August 1 in each year,
commencing August 1, 2005 (each, an "Interest Payment Date") at the rate of 13%
---------------------
per annum, until the principal hereof is paid; provided, however, that (to the
extent that the payment of such interest shall be legally enforceable) any
principal of, or premium or installment of interest or Special Interest on, this
Note which is overdue shall bear interest at the rate of 2.00% per annum in
excess of the rate of interest then borne by the Notes from the date such
A-1
<PAGE>
amounts are due until they are paid, and such interest shall be payable on the
next Interest Payment Date. Interest shall accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance. To the extent lawful, the Issuer shall pay interest on overdue
principal at the rate of the then applicable interest rate on the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.
The rate of interest borne by this Note is subject to increase under
the circumstances described in the Exchange and Registration Rights Agreement,
dated January 31, 2000 (the "Exchange and Registration Rights Agreement"), among
------------------------------------------
the Issuer named therein and the Purchasers named therein. All interest
payable, on any Interest Payment Date will, as provided in the Purchase
Agreement, be paid to the Person in whose name this Note is registered at the
close of business on the "Regular Record Date" for such interest, which shall be
-------------------
the fifteenth calendar day (whether or not a Business Day) immediately preceding
such Interest Payment Date. Notwithstanding the foregoing if this Note is
issued after a Regular Record Date and prior to an Interest Payment Date, the
record date for such Interest Payment Date shall be the original Closing Time.
Principal on this Note shall be payable, and payments of interest on
this Note shall be made, in accordance with the Purchase Agreement and subject
to applicable laws and regulations, by check mailed on or before the due date
for such payment to the person entitled thereto at such person's address
appearing on the Security Register or, by wire transfer to such account as any
Holder shall designate by written instructions received by the Issuer no less
than 15 days prior to any applicable Interest Payment Date, which wire
instruction shall continue in effect until such time as the Holder otherwise
notifies the Issuer or such Holder no longer is the registered owner of this
Note.
Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
A-2
<PAGE>
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed.
Dated:
INTIRA CORPORATION
By: _____________________________________
Name:
Title:
A-3
<PAGE>
[Form of Reverse of Note]
-----------------------
This Note is one of a duly authorized issue of Notes of the Issuer
designated as its 13% Senior Discount Notes Due 2010 (herein called the "Notes")
-----
issued on January 31, 2000, pursuant to the Purchase Agreement, dated as of
January 31, 2000 (herein called the "Purchase Agreement"), among the Issuer and
------------------
the Purchasers named therein. Reference is hereby made to the Purchase
Agreement and all amendments thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Issuer and the
Holders and of the terms upon which the Notes are, and are to be, issued and
delivered.
The Notes are subject to redemption at the election of the Issuer,
upon not less than 30 nor more than 60 days notice by mail, in whole, but not in
part, either (x) from and after the Closing Time but prior to February 1, 2005,
at a Redemption Price equal to 100% of the then Accreted Value of the Notes
outstanding, plus the Make-Whole Call Premium, together with any Special
Interest to the Redemption Date or (y) from and after August 1, 2001 but prior
to February 1, 2005, out of the net cash proceeds of any issuance of Debt
Securities of the Issuer or any of its Subsidiaries or its parent holding
company in any underwritten public or Rule 144A offering at a Redemption Price
equal to 106.5% of the then Accreted Value of the Notes.
In addition, the Notes are subject to redemption, upon not less than
30 nor more than 60 days' notice by mail, as a whole or in part, at any time on
or after February 1 at the election of the Issuer, at the following Redemption
Prices (expressed as percentages of principal), if redeemed during the 12-month
period beginning February 1 of the years indicated,
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2005........................................... 106.500%
2006........................................... 104.333%
2007........................................... 102.167%
2008 and thereafter............................ 100.000%
</TABLE>
together in the case of any such redemption with accrued interest and any
Special Interest (as defined in the Exchange and Registration Rights Agreement)
to the Redemption Date.
Notwithstanding anything contained in this Note or in the Purchase
Agreement to the contrary, the amount of any Make-Whole Call Premium or
Redemption Price payable to a Holder in accordance with the foregoing or the
terms of the Purchase Agreement may be reduced by such Holder, in its sole
discretion.
A-4
<PAGE>
If less than all the Notes are to be redeemed pursuant to the third
paragraph above, the Notes shall be redeemed pro rata from each Holder.
The Notes do not have the benefit of any sinking fund obligations.
In the event of redemption or purchase pursuant to an offer to
purchase this Note in part only, a new Note or Notes for the unredeemed or
unpurchased portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the Default
Amount of all the Notes may be declared due and payable in the manner and with
the effect provided in the Purchase Agreement. Upon payment of (i) the
principal so declared due and payable and any overdue installment of interest,
(ii) any overdue principal and premium payable upon redemption or repurchase of
this Note, and (iii) as provided on the face hereof, interest on any overdue
principal of, and any premium, interest and Special Interest on, this Note (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Issuer's obligations in respect of the payment of the
principal of, and interest and Special Interest on, this Note shall terminate.
The Purchase Agreement provides that, subject to certain conditions,
if (i) certain Excess Proceeds are available to the Issuer as a result of Asset
Sales or (ii) a Change of Control occurs, the Issuer shall be required to make
an offer to purchase all or a specified portion of the Notes as provided for in
the Purchase Agreement.
The Purchase Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and certain rights of the Holders under the Purchase
Agreement at any time by the Issuer with the consent of the Holders of a
majority in aggregate principal amount at maturity of the Notes at the time
outstanding. The Purchase Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Notes at
the time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Agreement and certain
past defaults under the Agreement and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in the Purchase Agreement and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Security Register, upon surrender of this Note for registration of transfer at
the principal offices of the Issuer, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Issuer duly executed
by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one
A-5
<PAGE>
or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Purchase Agreement and subject to certain limitations therein set forth, Notes
are exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Issuer and any agent of the Issuer may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether or not this
Note be overdue, and neither the Issuer nor any such agent shall be affected by
notice to the contrary.
All terms used in this Note which are defined in the Purchase
Agreement shall have the meanings assigned to them in the Purchase Agreement.
THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
A-6
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased in its entirety by
the Issuer pursuant to Section 7.08 or 7.09 of the Agreement, check the box:
[_]
If you want to elect to have only a part of the principal amount of
this Note purchased by the Issuer pursuant to Section 7.08 or 7.09 of the
Agreement, state the portion of such amount: $_______________.
Dated: Your Signature: _______________________________________
(Sign exactly as name appears on the other side of this
Note)
Signature Guarantee: _______________________________________________________
(Signature must be guaranteed by a financial
institution that is a member of the Securities Transfer
Agent Medallion Program ("STAMP"), the Stock Exchange
-----
Medallion Program ("SEMP"), the New York Stock
----
Exchange, Inc. Medallion Signature Program ("MSP") or
---
such other signature guarantee program as may be
determined by the Security Registrar in addition to, or
in substitution for, STAMP, SEMP or MSP, all in
accordance with the Securities Exchange Act of 1934, as
amended.)
A-7
<PAGE>
EXHIBIT B - FORM OF EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
<PAGE>
EXHIBIT C - FORM OF REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT
------------------------------------------------------------------
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
----------------------------------
<TABLE>
<CAPTION>
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
<S> <C> <C>
Ares Leveraged Investment Fund, L.P. $9,500,000 principal $ 5,062,645.00
Ares Leveraged Investment Fund II, L.P. amount at maturity of
c/o Ares Management, L.P. Notes, 156,947.06
1999 Avenue of the Stars, Suite 1900 Series A Warrants and
Los Angeles, California 90067 53,933.79 Series B
Attention: Eric Beckman Warrants
Telephone: 310-201-4215
Telecopier: 310-201-4170/4171
Carlyle High Yield Partners, L.P. $3,000,000 principal $ 1,598,730.00
c/o TCG High Yield, L.L.C., its General Partner amount at maturity of
520 Madison Avenue Notes, 49,562.23 Series
41st Floor A Warrants and
New York, NY 10022 17,031.72 Series B
Attention: Jack Mann Warrants
Telephone: 212-381-4900
Telecopier: 212-381-4950
CB Capital Investors, LLC $18,750,000 principal $ 9,992,062.50
c/o Chase Capital Partners amount at maturity of
380 Madison Avenue Notes, 309,763.93
12th Floor Series A Warrants and
New York, NY 10017 106,448.28 Series B
Attention: Richard Waters Warrants
Telephone: 212-622-3096
Telecopier: 212-622-3950
</TABLE>
<PAGE>
-2-
<TABLE>
<CAPTION>
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
<S> <C> <C>
Chase Securities Inc. $13,250,000 principal $ 1,998,412.50
270 Park Avenue amount at maturity of
New York, NY 10017 Notes, 218,899.85
Attention: Jessica Laxman Series A Warrants and
Telephone: 212-270-3529 75,223.45 Series B
Telecopier: 212-270-0994 Warrants
Continental Casualty Company $9,500,000 principal $ 5,062,645.00
c/o CNA amount at maturity of
333 South Wabash Ave. Notes, 156,947.06
CNA Plaza - 23 South Series A Warrants and
Chicago, Illinois 60685 53,933.79 Series B
Attention: Investments Warrants
Telephone: 312-822-1337
Telecopier: 312-822-4392
Goldman Sachs High Yield Fund $3,000,000 principal $ 1,598,730.00
Goldman Sachs Global High Yield Portfolio amount at maturity of
32 Old Slip Notes, 49,562.23 Series
24th Floor A Warrants and
New York, NY 10005 17,031.72 Series B
Attention: Chris Testa Warrants
Telephone: 212-357-0729
Telecopier: 212-346-2810
Magnetite Asset Investors L.C. $7,500,000 principal $ 3,996,825.00
c/o BlackRock Financial Management, Inc., amount at maturity of
its Managing Member Notes, 123,905.57
Coinvestment I, LLC Series A Warrants and
345 Park Avenue 42,579.31 Series B
29th Floor Warrants
New York, NY 10154
Attention: Phil Berney
Telephone: 212-751-3939
Telecopier: 212-223-2379
</TABLE>
<PAGE>
-3-
<TABLE>
<CAPTION>
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
<S> <C> <C>
OZ Master Fund, Ltd. $42,750,000 principal $22,781,902.50
Citicorp Center amount at maturity of
153 East 53rd Street Notes, 706,261.75
New York, NY 10022 Series A Warrants and
Attention: Avi Katz 242,702.07 Series B
Telephone: 212-292-5931 Warrants
Telecopier: 212-292-5935
Putnam High Yield Trust $34,250,000 principal $18,252,167.50
Putnam High Yield Advantage amount at maturity of
Putnam Variable Trust - PVT High Yield Fund Notes, 565,835.44
Putnam Master Income Trust Series A Warrants and
Putnam Premier Income Trust 194,445.52 Series B
Putnam Master Intermediate Income Trust Warrants
Putnam Diversified Income Trust
Putnam Funds Trust - Putnam High Yield
Putnam Strategic Income Fund
Putnam Variable Trust - PVT Diversified
Travelers Series Fund Inc - Putnam Diversified
Income
Putnam High Yield Managed Trust
Putnam High Yield Fixed Income Fund, LLC
Abbot Laboratories Annuity Retirement Plan
Northrop Grumman Employee Benefit Plan
Ameritech Corporation Pension Plan
One Post Office Square
12th Floor
Boston, MA 02109
Attention: Jeff Bray
Telephone: 617-760-8857
Telecopier: 617-760-1676
</TABLE>
<PAGE>
-4-
<TABLE>
<CAPTION>
Securities Aggregate
Name and Address of Purchaser to be Purchased Purchase Price
----------------------------- --------------- --------------
<S> <C> <C>
SunAmerica Inc. $23,500,000 principal $12,523,385.00
SunAmerica Center amount at maturity of
Mail Stop 3805 Notes, 388,237.45
Century City Series A Warrants and
Los Angeles, CA 133,415.17 Series B
Attention: Rafe Fogel Warrants
Telephone: 310-772-6877
Telecopier: 310-772-6937
Wayland Investment Fund, LLC $23,500,000 principal $12,523,385.00
c/o CFSC Wayland Advisors, Inc. amount at maturity of
12700 Whitewater Drive Notes, 388,237.45
Minnetonka, MN Series A Warrants and
Attention: Joe Deignan 133,415.17 Series B
Telephone: 612-984-3709 Warrants
Telecopier: 612-984-3913
</TABLE>
<PAGE>
Schedule 4.01
Existing Indebtedness
See attachment.
<PAGE>
Schedule 4.04
Environmental Matters
See attached notification regarding asbestos removal by the landlord
of Borrower's New York data center facility prior to occupancy.
<PAGE>
Schedule 4.14
Subsidiary List
LPBDBN Digital Canada Inc., a wholly owned subsidiary of Borrower was
organized on July 9, 1999 under the Canada Business Corporations Act, as
amended.
A subsidiary is expected to be formed as contemplated by the
Memorandum of Understanding with Viatel Corp. referred to on Schedule 4.20.
<PAGE>
Schedule 4.20
Capitalization
4,275,701 shares of Series A Preferred Stock convertible into 10,689,252.5
shares of Common Stock
1999 Equity Incentive Plan (options for up to 3,200,000 shares of Common Stock
may be granted)
1999 Executive Stock Option Plan (options for up to 1,800,000 shares may be
granted)
1999 Stock Option Plan (options for approximately 3,200,000 shares have been
granted and no further options are authorized)
Class A Warrant dated December 30, 1999 for 378,448.375 shares of Common Stock
Binding Memorandum of Understanding dated January 19, 2000 with Viatel Corp.
relating to the issuance in the future of 4.99% of the outstanding Common Stock
of the Issuer as of the date thereof. Such shares are not presently outstanding.
<PAGE>
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated as of the 3/rd/ day of
December, 1998, by and between digital broadcast network corporation, a Missouri
corporation having its principle offices at 977 Charter Commons, St. Louis,
Missouri 63017 (hereinafter, the "Company"), and BERNARD SCHNEIDER an individual
residing at 2158 Las Trampas Rd., Alamo, California 94507 (hereinafter,
"Employee").
WITNESSETH:
WHEREAS, Company is in the business of developing and implementing systems
that provide high-speed network bandwidth and services in connection therewith
to connect media-rich providers ("Company's Business"); and
WHEREAS, Company wishes to hire Employee as its Chief Executive Officer,
and Company desires to obtain Employee's knowledge and expertise concerning the
management, implementation of corporate policies, budgets and raising operating
capital; and
WHEREAS, Employee wishes to become employed as Company's Chief Executive.
NOW, THEREFORE, in consideration of the sum of one dollar ($1.00), the
foregoing and of the covenants and agreements hereinafter set forth, and other
good and valuable consideration the receipt and sufficiency of which hereby are
acknowledged, the Parties hereby agree as follows:
Section 1. Employment, Duties and Acceptance. During the Employment Term (as
---------------------------------
defined in Section 2 of this Agreement), Company hereby agrees to employ
Employee as its Chief Executive Officer, to perform the duties set forth on the
attached Exhibit "A". During the Employment Term, and excluding any periods of
vacation and sick leave to which Employee is entitled, Employee agrees to devote
his full business time and attention to the business and affairs of Company and,
to the extent necessary to discharge the responsibilities assigned to Employee
hereunder, to perform faithfully, efficiently, diligently and competently such
responsibilities. In addition to the duties enumerated in this Agreement,
Employee shall perform such other duties as are reasonably commensurate with his
position and title, including, without limitation, exercising his best business
judgment, safeguarding and saving from waste the assets of Company, and
establishing, maintaining and implementing the business plans, budgets and
policies of Company, as modified or amended from time to time by the Board of
Directors. During the Employment Term it shall not be a violation of this
Agreement for Employee (a) to serve on civic or charitable boards or committees
that do not violate Company's conflict of interest policy then in effect and (b)
to manage his personal investments, in each case so long as such activities do
not materially interfere with the performance of Employee' responsibilities as
an employee. Company shall to the extent practicable (i) provide Employee with
the personnel and other resources reasonably required by him to perform his
assigned functions, and (ii) indemnify Employee to the full extent permitted by
law for any costs, expenses, claims, damages or liabilities he may incur in
connection with the performance of his duties hereunder for Company.
Section 2. Employment Term. The term of Employee's employment hereunder (the
---------------
<PAGE>
"Employment Term") shall continue for a period of three (3) years from January
4, 1999 the start date of employment, unless otherwise terminated in accordance
with the terms and conditions of this Agreement.
Section 3. Compensation, Expenses and Benefits. Company shall pay Employee
-----------------------------------
based on the compensation arrangement set forth on Exhibit "B". Employee agrees
that the Company's Board of Directors (excluding Employee if Employee is also a
director) may change the initial compensation arrangement with or without prior
notice to Employee.
Section 4. Ownership of Papers and Intellectual Property Rights.
----------------------------------------------------
(a) Papers and Property. Employee acknowledges Company's
exclusive right to ownership, possession and title to all papers, documents,
tapes, drawings, notebooks, formulas, customer lists, software, hardware,
trademarks, trade names, service marks, processes, data, intellectual property,
or other records, information, or products prepared by Employee during
employment with Company or provided by Company, or which otherwise come into
Employee's possession by reason of employment with Company. Employee agrees not
to make or permit to be made, except in pursuit of Employee's duties hereunder,
any copies of such items. Employee further agrees to deliver to the Company upon
request all such items in Employee's possession and without request to
immediately deliver such items upon the termination, voluntarily or
involuntarily, of Employee's employment.
(b) Inventions. The term "Inventions" means all ideas,
inventions, and discoveries, whether patentable, copyrightable, or not, relating
to any present or prospective business of the Company, including but not limited
to software, algorithms, designs, devices, processes, methods, formulae,
techniques, software, data storage systems, networks, servers, and any
improvements to the foregoing.
(i) Report. Employee agrees to promptly disclose all
Inventions made or conceived by the Employee, whether or not during the hours of
his employment or with the use of Company facilities, materials, or personnel,
either solely or jointly with others, during the term of his employment by the
Company. Employee shall inform the Company promptly and fully of such Inventions
by a written report, setting forth in detail the structures, procedures, and
methodology employed and the results achieved. A report shall also be submitted
by the Employee upon completion of any study or research project undertaken on
the Company's behalf, whether or not in the Employee's opinion a given study or
project has resulted in an Invention.
(ii) Assignment and Patent. Employee hereby assigns and
agrees to assign to the Company all of his rights to such Inventions and to all
proprietary rights therein, based thereon or related thereto, including, but not
limited to, applications for United States and foreign letters patent and
resulting letters patent. At the Company's request and expense, the Employee
shall execute such documents and provide such assistance as may be deemed
necessary by the Company of apply for, defend or enforce any United States and
foreign letters patent based on or
2
<PAGE>
related to such Inventions. Employee agrees to execute all documents reasonably
requested by Company to assist the Company in perfecting or protecting any or
all of its rights in the Inventions.
(iii) Copyright. Employee acknowledges that all
copyrightable Inventions are "works made for hire" and consequently that the
Company owns all copyrights thereto, including, but not limited to, 17 U.S.C.
Sections 101 and 210. The Company shall have the sole and exclusive right to
register the copyright(s), or its assignees, in all such work in its name as the
owner and author of such work and shall have the exclusive rights conveyed under
17 U.S.C. Sections 106 and 106A, including, but not limited to, the right to
make all uses of the works in which attribution or integrity rights may be
implicated. Additionally, without in any way limiting the foregoing, Employee
hereby assigns, transfers and conveys to Company, its successors, heirs and
assigns, any and all right, title or interest that Employee may now have, or may
acquire in the future, to his work for the Company including, but not limited
to, all ownership, patent (United States and foreign letters patent), trade
secret, trade names and trademarks, copyright moral, attribution and/or
integrity rights. Employee hereby expressly and forever waives any and all
rights that Employee may have arising under 17 U.S.C. Section 106A, and any
rights arising under any federal or state laws that convey rights which are
similar in nature to those conveyed under 17 U.S.C. Section 106A.
Notwithstanding any provision of the Copyright Act, any and all copyrightable
works, prepared either in whole or in part by Employee under this agreement,
are, shall be, or shall become, owned by the Company.
Section 5. Termination of Employment.
-------------------------
(a) Termination by Employee. During the first full year of
employment hereunder, Employee may only terminate this Employment Agreement for
"Good Reason". After the first full year of employment hereunder, Employee may,
with or without cause, terminate this Agreement upon thirty (30) days written
notice ("Required Notice") to Company. In the event Employee gives the Required
Notice, and the Company's Board of Directors (excluding Employee if Employee is
a director) wishes to accelerate termination of Employee's employment, Company
may elect to so accelerate, at the Company's Board of Directors (excluding
Employee if Employee is a director) sole discretion, and terminate Employee
immediately. Employee shall be entitled to compensation hereunder up until and
including his last date of employment; thereafter, Employee shall be entitled to
no further compensation from Company, under this Agreement or otherwise. For
purposes of this Section 5.(a) "Good Reason" shall have the following meaning:
1. Material breach of any of the terms and conditions of
this Agreement;
2. Dissolution of the Company.
(b) Termination by Company. The Company's Board of Directors
(excluding Employee if Employee is a director) may only terminate Employee's
employment for Good Cause. For purposes of this Agreement, "Good Cause" shall be
defined to include the following:
3
<PAGE>
1. Death of Employee.
2. Disability of Employee. For purposes of this Agreement,
the term "Disability" refers to a condition resulting from injury
or illness to Employee who is found to be Disabled as that term
is defined in any disability income insurance policies maintained
by Company. In the event that Company does not maintain any
disability income insurance policies, the term "Disability" shall
mean the earlier of (i) when Employee is physically and mentally
unable to substantially perform his required duties as an
employee of the Company, and said condition continues for thirty
(30) consecutive days in any ninety (90) day period or sixty (60)
consecutive days in any one hundred and eighty (180) day period;
or (ii) when a physician selected by Company and reasonably
acceptable to Employee or his legal representative (such
agreement as to acceptability not to be withheld unreasonably)
certifies to the existence of a Disability. Employee will submit
to such medical or psychiatric examinations and tests, as such
physician deems necessary to make any such Disability
determination.
3. Commitment of an intentional act of dishonesty,
conviction of a felony, fraud or deceit in the performance of
Employee's duties hereunder.
4. Material breach of any of the terms and conditions of
this Agreement.
5. Neglect or failure in any way to perform the duties
contemplated herein.
If the Company and/Employee proposes to terminate the employment relationship
for Good Cause or Good Reason as defined above, the Company and/or Employee, as
the case may be, shall give notice to the other party with sufficient
particularity that the other party will have an opportunity to correct the
situation to the reasonable satisfaction of the other party within the period of
time specified in the notice, which period shall not be less than fourteen (14)
days. If such correction is not so made, the Company and/or Employee as the case
may be, may terminate Employee's employment hereunder by giving written notice
to Employee and/or Company that the employment relationship is severed. Upon
termination the Company shall be released from any and all further obligations
under this Agreement, except for accrued salary and benefits owed to Employee
through the termination date. Employee obligations under paragraph 6 shall
continue under the terms and conditions of this Agreement.
Section 6. Confidentiality and Noncompetition.
----------------------------------
In order for Company to reasonably protect its interests against the
competitive use of any of Company's confidential information or business
relationships, Employee agrees to the following covenants.
4
<PAGE>
(a) Covenant Not to Compete. During the Period (as such term is
defined in Subsection (e) of this Section), Employee shall not, within the
continental United States, directly or indirectly, acting alone or with others,
voluntarily or involuntarily, own, operate, engage in, be interested in, control
through stock ownership or otherwise, or become employed by, work for, advise,
be connected with, consult with or represent in any capacity or in any manner
whatsoever in any role, an individual, firm, corporation, partnership,
association or other entity other than the Company who or which is engaged in a
business competitive with the Company or with the Company's Business. Provided,
however, the foregoing restriction shall not be construed to prevent Employee
from owning stock in a corporation engaged in a business competitive with the
Company or with Company's Business if (1) such stock is owned for investment
purposes only; (2) Employee does not, directly or indirectly, participate in the
management or operation of said corporation; and (3) such stock is publicly
traded and tradable on the New York Stock Exchange, NASDAQ, or another
established stock exchange.
(b) Confidentiality. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to Employee or
known by Employee as a consequence of or through his past, present or
prospective employment or business relationship with Company, not generally
known and available in Company's industry, which constitutes Company's
proprietary and non-public method(s) of doing business, including, but not
limited to, any information related to trade secrets, pricing formulas, know-
how, test data, customer lists, vendor lists, training and operating manuals,
software, and reporting systems. Company and Employee acknowledge that during
Employee's period of employment by Company, Company did and will furnish
Employee with Confidential Information. Employee agrees both during his
employment with the Company, whether under this Agreement or otherwise, and at
all times thereafter, that Employee, his officers, directors, partners,
employees, affiliates, agents, representatives, or assigns (collectively
"representatives") shall keep all Confidential Information in the strictest
confidence and shall not discuss, publish, communicate, transmit, reproduce, or
otherwise disclose such Confidential Information, in any manner whatsoever, in
whole or in part, without the prior written consent of Company, unless and until
such time as the Confidential Information becomes generally known in Company's
industry other than through breach of this Agreement. Employee may disclose
Confidential Information as is reasonably necessary and in the scope of
Employee's duties as the Chief Executive Officer of the Company. Any written
consent by Company to Employee's disclosure of Confidential Information, if
given, shall in no way operate as a waiver of Employee's obligation to maintain
the confidential nature of the material disclosed or to protect and preserve
that Confidential Information from disclosures so that it will receive
confidential treatment thereafter. Employee agrees to reimburse Company for any
damages sustained and costs and expenses, including attorneys' fees, incurred in
connection with an unauthorized disclosure of Confidential Information by
Employee, his representatives, or other any person or persons to whom Employee
or his representatives previously had disclosed Confidential Information.
(c) Non-Solicitation of Customers and Employees. During the
Period,
5
<PAGE>
Employee shall not, either directly or indirectly, approach or solicit customers
of the Company with a view towards diverting or attempting to divert from the
Company any business which the Company has enjoyed, to Employee or to any other
individual, firm, corporation, partnership, association or other entity other
than the Company who or which is competitive with the Company or engaged in a
business competitive with the Company's Business. During the Period, Employee
shall not, directly or indirectly, solicit any person or persons employed by or
otherwise associated with Company for the purpose of terminating said employee's
or person's employment relationship or association with Company.
(d) Reasonableness of Covenants. Employee acknowledges and
agrees that the covenants and agreements contained in this Section are
reasonable, and Employee agrees he shall not raise any issue of their
reasonableness in any proceeding to enforce such covenants and agreements.
Employee agrees that any violation or breach by Employee and/or his
representatives of this Agreement would cause immediate and irreparable harm to
Company, the exact amount of which will be impossible to ascertain, and for that
reason further agrees that Company shall be entitled, as a matter of right, to
an injunction out of any court of competent jurisdiction, restraining any
further violation or breach of this Agreement by Employee and/or his
representatives, either directly or indirectly, such right to an injunction
being cumulative and in addition to whatever remedies Company may have under
applicable law and/or this Agreement. Employee further agrees to reimburse
Company for all costs and expenses, including attorneys' fees, incurred by
Company in attempting to enforce the terms of this Agreement against Employee,
his representatives, or any other party.
(e) Period. For purposes of this Section 6, the "Period" shall
be defined to be the longer of (1) the period during which Employee is employed
by the Company, whether under this Agreement or otherwise, or (2) a period
commencing on the date of this Agreement and ending three (3) years thereafter;
provided however the Period for the application of Section 6.(a) shall not
extend longer than six (6) months after termination of Employee's employment.
Section 7. Arbitration. Any controversy or claim arising out of or relating to
------------
this Agreement, or any breach thereof, including any claim that this Agreement,
or any part hereof, is invalid, illegal or otherwise voidable or void, shall be
submitted to arbitration in accordance with the Commercial Rules of Arbitration
of the American Arbitration Association and judgment upon the award may be
entered in any court having jurisdiction thereof; provided, however, that this
clause shall not be construed to limit or to preclude Company from bringing any
action in any court of competent jurisdiction for injunctive or other
provisional relief against Employee for a violation of Section 6 of this
Agreement. All arbitration proceedings, including testimony and evidence at
hearings or otherwise submitted to the arbitrator(s), will be kept confidential.
The parties expressly agree that the Missouri Rules of Evidence shall be
applicable to such testimony evidence. The arbitration shall be held in St.
Louis, Missouri. The judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
6
<PAGE>
Section 8. Investment Representations. With respect to the shares issued to
--------------------------
Employee pursuant to paragraph G of Exhibit "A", attached hereto (the
"Securities"), Employee warrants and represents the following:
(A) The Securities are being received solely for investment and
Employee does not intend to, and will not, divide his participation with others
or to resell, hypothecate, transfer, assign or otherwise dispose of the State of
Missouri or otherwise within the United States unless the Securities are
registered under the Securities Act of 1933 (the "1933 Act") and/or the Missouri
Uniform Securities Act (the "Missouri Act"), or unless an exemption from
registration thereunder is available.
(B) The statutory exemptions of paragraphs (9) and (10), or
both, subsection 409.402(b), of the Missouri Act and under Sections 3(b) and
4(2) of the 1933 Act are being relied upon by the Employee and such exemptions
would not be available if, notwithstanding Employee's representations, Employee
has in mind merely acquiring the Securities for resale or intends to make a sale
or other disposition thereof upon the occurrence or non-occurrence of some
predetermined event.
(C) The investment is not a liquid investment and in particular
Employee represents that he is capable of holding the Securities for an
indefinite period of time.
(D) No commission or remuneration has been (or will be) paid, to
the knowledge of Employee, to anyone in connection with the purchase of the
Securities by Employee.
(E) There are no assurances that the Company will, if
profitable, make distributions to its shareholders.
(F) The certificates representing the Securities will have
endorsed thereon certain legends including the following:
The securities represented by this certificate have not been registered under
the Securities Act of 1933 and/or the Missouri Uniform Securities Act, and have
been sold to, and acquired by, the holder in a transaction exempt from the
registration provisions thereof. These securities may not be sold, transferred,
assigned, pledged, hypothecated, or otherwise disposed of in jurisdictions (or
in transactions) subject to the Securities Act of 1933 unless they have been
registered under that Act, or in Missouri (or to Missouri residents) in
transactions subject to the Missouri Uniform Securities Act unless they have
been registered under that Act, unless counsel for the company shall have given
an opinion that registration under any of said Acts is required, nor may they be
offered or sold in any other state without compliance with the laws of that
state.
Section 9. Miscellaneous.
-------------
(a) Conflict and Binding Effect. In case of any conflict or
ambiguity in connection with or between this Agreement and any policy manuals,
including but not limited to any employee manuals, employment applications,
management instructions or promises, etc., this Agreement shall control. This
Agreement shall inure to the benefit of and be binding upon the Parties hereto,
their successors and assigns. Company may assign this Agreement. Provided,
however, Employee's rights under this Agreement shall not be assignable, nor
shall Employee's
7
<PAGE>
obligations be delegable.
(b) Governing Law and Jurisdiction. This Agreement shall be
construed and enforced in accordance with the laws of the State of Missouri, and
the Parties hereby irrevocably and unequivocally consent to the jurisdiction of
the court sitting in the County of St. Louis, State of Missouri, and waive any
defense of an inconvenient forum to the maintenance of any action or proceeding
brought in such court in connection with this Agreement, any objection to venue
with respect to any such action, and any right of jurisdiction on account of the
place of residence or domicile of any party to such action.
(c) Severability. If any provision or part thereof of this
Agreement is declared invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions of this
Agreement, and any other application thereof, shall not in any way be affected
or impaired, and the Agreement shall be construed in all respects as if such
invalid, illegal or unenforceable provisions are omitted.
(d) Survival and Enforceability. All representations and
promises contained herein or made in writing by the parties in connection with
this Agreement, and this Agreement, shall survive the execution and delivery of
this Agreement, including but not limited to the representations and promises
set forth in Section 6 of this Agreement. The Parties expressly agree that the
terms and provisions of this Agreement are unique and that the parties hereto
shall be entitled to specifically enforce the same.
(e) Notices - Computation of Time. Any notice or other
communication required or which may be given to any party hereunder shall be in
writing and shall be delivered personally, sent by facsimile transmission, or
sent by certified, registered or express mail, postage prepaid, and shall be
deemed given when so delivered personally, sent by facsimile transmission, or if
mailed, two days after the date of mailing, to the address of such party set
forth on the first page hereof, or to such other address as the parties may
indicate in writing.
(f) Miscellaneous. This writing contains the agreement of the
parties with respect to the employment contemplated herein. No amendments or
variations of the terms or conditions of this Agreement shall be valid unless in
writing and signed by the parties hereto. The headings contained in this
Agreement are for convenience only and shall in no manner be construed as part
of the Agreement. The waiver by either Party of a breach or violation of any
provisions of this Agreement shall not operate as or be construed to be a waiver
of any subsequent breach hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed effective as of the day and year first above written.
8
<PAGE>
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
\S\ Timothy M. Roberts \S\ Bernard Schneider
- ------------------------------------ -----------------------------------
Timothy M. Roberts BERNARD SCHNEIDER
President
9
<PAGE>
EXHIBIT "A" TO EMPLOYMENT AGREEMENT
DUTIES
During Employee's employment, Employee shall perform such duties as the
Company's Board of Directors (excluding Employee if Employee is a director) may
assign from time to time, including but not limited to the duties set forth in
this Exhibit "A". In his capacity as Chief Executive Officer, Employee shall be
responsible for managing the operations of the Company, including but not
limited to, raising, at a minimum, Thirty Million Dollars ($30,000,000) of cash
or cash equivalents for equity in the form of common stock unless as otherwise
approved by the Company's Board of Directors (excluding Employee if Employee is
a director) ("Capital") on behalf of the Company for continued operations,
arranging and maintaining strategic business alliances and such other duties
incidental to the position of the Chief Executive Officer as may be assigned by
the Board of Directors of the Company (excluding Employee if Employee is a
director) of the Company from time to time. Employee acknowledges that his
performance of his duties as Chief Executive Officer, whether under this
Agreement or otherwise, shall be supervised by the Board of Directors, as may be
provided in the By-laws or other governing instrument of the Company, as same
may be amended from time to time.
Employee acknowledges that he is being hired by the Company on a full-time
basis, and that the Company shall expect him to devote his full business time to
the business affairs of the Company and the performance of his duties hereunder.
The parties expressly agree that Employee's failure to devote his full business
time to the business affairs of the Company and the performance of his duties
hereunder shall be considered a material breach of this Agreement, for purposes
of termination of Employee's employment under Section 5 of this Agreement.
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
\S\ Timothy M. Roberts \S\ Bernard Schneider
- ------------------------------------ -----------------------------------
Timothy M. Roberts BERNARD SCHNEIDER
President
10
<PAGE>
EXHIBIT "B" TO EMPLOYMENT AGREEMENT
COMPENSATION
A. Salary. The parties agree that Employee shall be entitled to a salary equal
-------
to One Hundred Seventy-Five Thousand Dollars ($175,000) per year, payable in
equal, bimonthly installments.
B. Benefits. Employee shall be entitled to participate in any health
---------
insurance, life insurance, or defined contribution or defined benefit plans that
the Company may offer to its employees, if any, on the same basis and under the
same terms as similarly situated employees, or that the Company may from time to
time offer to its executive officers.
C. Travel; Expenses. Company shall pay or reimburse Employee for all
-----------------
reasonable travel and other expenses actually incurred by Employee in the
performance of Employee's duties hereunder, upon presentation of expense
statements or vouchers or such other reasonable supporting information as is
generally required by Company in accordance with its expense account policies.
Company shall provide a monthly living allowance to Employee in the amount of
$2,500.00 for car, room and board, food and all other non-direct business
related expenses.
D. Bonuses. The Company's Board of Directors (excluding Employee if Employee
--------
is a director) may, from time to time and in its sole discretion, declare and
pay bonuses to some or all of its employees. Such bonuses may be payable in
cash, stock, stock options, or other property as the Company's Board of
Directors (excluding Employee if Employee is a director), in its sole
discretion, deems advisable and in such amounts as the Company, in its sole
discretion, deems advisable. The Company shall establish and maintain Management
Performance Objectives ("MPOs") for Employee for each year of Employee's
employment. Such MPOs shall be maintained in Employee's personnel file, and a
copy of such MPOs shall be transmitted to Employee. In the event Employee meets
or exceeds said MPOs for any given year, Employee shall become eligible for any
discretionary bonus or bonuses declared by the Company for that year.
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
\S\ Timothy M. Roberts \S\ Bernard Schneider
- ------------------------------------ -----------------------------------
Timothy M. Roberts BERNARD SCHNEIDER
President
11
<PAGE>
EXHIBIT "C" TO EMPLOYMENT AGREEMENT
STOCK PURCHASE RIGHTS
In consideration of Employee's employment hereunder and in reliance upon
Employee's ability to raise Thirty Million Dollars ($30,000,000) of Capital, as
that term is defined in Exhibit "A" to this Employment Agreement on behalf of
the Company for continued operations, Employee shall be issued Fifty Thousand
(50,000) shares of class A common stock in the Company subject to the terms of
this Employment Agreement ("Shares"). Upon the execution of the Employment
Agreement, Employee shall purchase Fifty Thousand (50,000) Shares of stock of
the Company at a purchase price of Ten Dollars ($10.00) per share payable in
cash. Forty Thousand of the Shares shall be subject to the Company's right to
repurchase said Shares from Employee upon the happening of any of the events
described below;
a. The Company shall have the right to purchase 20,000 Shares, for a cash
purchase price equal to Ten Dollars ($10.00) per share, in the event that the
Company's recorded value assigned to its common stock and additional paid in
capital, as determined by GAAP as interpreted by the Company's independent
public accountants, as a result of the raising of Capital as defined in Exhibit
"A" during Employee's employment hereunder, is not greater than Twenty Seven
Million Five Hundred Thousand Dollars ($27,500,000.00) (reduced by any stock
redemptions approved by the Company's Board of Directors, excluding Employee if
Employee is a director) by April 1, 1999. The Company's option described in this
paragraph shall continue indefinitely until such time as the Company's recorded
value assigned to its common stock and additional paid in capital is greater
than Twenty Seven Million Five Hundred Thousand Dollars ($27,500,000.).
b. The Company shall have the right to purchase 20,000 Shares, for a cash
purchase price equal to Ten Dollars ($10.00) per share, in the event that the
Company's recorded value assigned to its common stock and additional paid in
capital, as determined by GAAP as interpreted by the Company's independent
public accountants, as a result of the raising of Capital as defined in Exhibit
"A" during Employee's employment hereunder, is not greater than Forty Two
Million Five Hundred Thousand Dollars ($42,500,000.00) (reduced by any stock
redemptions approved by the Company's Board of Directors, excluding Employee if
Employee is a director) by July 1, 1999; said date to be reasonably extended in
light of any approved changes to the Company's business plans by the Board of
Directors (excluding Employee if Employee is a director). The Company's option
described in this paragraph shall continue indefinitely until such time as the
Company's recorded value assigned to its common stock and additional paid in
capital is greater than Forty Two Million Five Hundred Thousand Dollars
($42,500,000.).
c. The Company's options described in this Exhibit "C" above shall: (I)
so long as Employee is employed by Company continue in accordance with
paragraphs (a) and (b) above; and (II) if Employee is no longer employed by
Company, continue for a period of 5 years from the date Employee's employment
terminates regardless of the amount of Capital raised following termination. The
Company (by and through its Board of Directors, excluding Employee if Employee
is a director) and Employee shall in good faith discuss or consider whether
other
12
<PAGE>
reasonable financing alternatives shall be applied towards the Capital raising
requirements described above; provided however this provision does not require
or bind the Company to agree or authorize such alternate financing arrangements
and/or apply it towards the Capital raising requirements unless approved by the
its Board of Directors, excluding Employee if Employee is a director.
The closing for the purchase of the Shares pursuant to the options above shall
occur within 5 days after the Company provides written notice to Employee. At
said closing, the Company shall deliver in cash the purchase price for the
Shares and the Employee shall execute and deliver the certificate(s) evidencing
the Shares transferred hereunder, such certificate(s) to have stock powers
executed in blank by Employee attached thereto, and such other documents as may
be reasonably requested by the Company to effectuate the transaction
contemplated herein. By executing this Agreement and this Exhibit "C", Employee
specifically authorizes the Company, by and through this Agreement, to act as
its attorney in fact to endorse any and all shares of stock of the Company owned
by Employee on behalf of Employee that are transferred to the Company pursuant
to the Company's option described above. If an equivalent amount of Capital is
raised through other methods other than the issuance of the Company's common
stock, then such equivalent amount shall be considered above if first approved
by the Company's Board of Directors (excluding Employee if Employee is a
director).
All of the Shares shall be subject to a shareholders' Agreement the form of
which is attached hereto as Schedule C-1.
Employee represents and warrants to the Company as follows:
(a) The Shares are being acquired for Employee's own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
or the Missouri Law or other applicable state securities laws.
(b) Employee understands that the Shares have not been registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act pursuant
to Section 4(2) thereof, that the Company has no present intention of
registering the Shares, that the Shares must be held by Employee indefinitely,
and that Employee must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from registration. Employee further understands that
the Shares have not been qualified or registered under the Missouri Law or other
applicable state securities laws by reason of their issuance in a transaction
exempt from the qualification or registration requirements of such laws, which
exemption depends upon, among other things, the bona fide nature of Employee's
investment intent expressed above.
(c) During the negotiation of the transactions contemplated herein,
Employee and his representatives and legal counsel have been afforded full and
free access to corporate books, financial statements, records, contracts,
documents, and other information concerning the Company and to its offices and
facilities, have been afforded an opportunity to ask such
13
<PAGE>
questions of the Company's officers, employees, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the merits and risks of the prospective
investments contemplated herein.
(d) Employee and his representatives have been solely responsible for
Employee's own "due diligence" investigation of the Company and its management
and business, for his own analysis of the merits and risks of this investment,
and for his own analysis of the fairness and desirability of the terms of the
investment. Employee has such knowledge and experience in financial and business
matters that Employee is capable of evaluating the merits and risks of the
purchase of the Shares pursuant to the terms of this Agreement and of protecting
Employee's interests in connection therewith.
(e) Employee (i) is an "Accredited Investor" as that term is defined in
Rule 501 of Regulation D promulgated under the Securities Act or has knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of Employee's prospective investment in the Shares; (ii)
has the ability to bear the economic risks of Employee's prospective investment,
including a complete loss of Employee's investment in the Shares; (iii) has been
furnished with and has had access to such information as Employee has considered
necessary to make a determination as to the purchase of the Shares together with
such additional information as is necessary to verify the accuracy of the
information supplied; (iv) has had all question which have been asked by
Employee satisfactorily answered by the Company; and (v) has not been offered
the Shares by any form of advertisement, article, notice, or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any such media.
(f) Employee has the full right, power and authority to enter into and
perform its obligations under this Agreement and the Shareholders' Agreement.
(g) No consent, approval or authorization of or designation, declaration
or filing with any governmental authority on the part of Employee is required in
connection with the valid execution and delivery of this Agreement and the
Shareholders' Agreement.
Each certificate representing the Shares may be endorsed with the following
legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE
TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH
ACT OR THE
14
<PAGE>
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Any other legends required by Missouri law or other applicable state
securities laws. The Company need not register a transfer of any Shares and may
also instruct its transfer agent not to register the transfer of the Shares,
unless the conditions specified in the foregoing legends are satisfied.
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
/s/ Timothy M. Roberts /s/ Bernard Schneider
- ----------------------------------- -----------------------------------
Timothy M. Roberts Bernard Schneider
President
15
<PAGE>
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is by and between Intira
Corporation, a Missouri corporation, having its principle offices at 977 Charter
Commons, Chesterfield, Missouri 63017 ("Intira"), and David Boone, an individual
residing at 3810 Ortega Blvd, Jacksonville, FL 33210 ("Employee") and is
effective November 1, 1999 (fill in start date).
1. In consideration of your employment by Intira and other good and valuable
consideration, you agree to devote your full business time and attention to
the business and affairs of Intira and to faithfully perform the duties
enumerated in this Agreement or in any exhibit attached hereto.
2. Intira shall pay you an annual base salary of $200,000, payable in equal
bi-monthly installments of $8333.33, subject to customary withholding taxes
and other employment taxes as required. Intira will pay or reimburse you
for reasonable travel and other expenses incurred by you in the performance
of your duties, upon presentation of expense statements, vouchers or such
other reasonable supporting information as is generally required by Intira
in accordance with its expense account policies. Annual review and salary
adjustment
3. You shall be entitled to participate in any health insurance, life
insurance or benefit plans that Intira may offer to its employees on the
same basis and under the same terms as similarly situated employees
4. You understand and agree that your employment at Intira is not for any
specified term and that either Intira or you may terminate the employment
relationship with or without notice or cause at any time. The relationship
established hereunder is employment at will. If terminated for any reason
but cause standard severance will be provided.
5. In order for Intira to reasonably protect its interests against the
competitive use of any of Intira's Confidential Information, you agree both
during your employment with Intira and at all times thereafter, to keep all
Confidential Information in the strictest confidence and not to discuss,
publish, communicate, transmit, disclose reproduce, or otherwise use such
Confidential Information, in any manner whatsoever, in whole or in part,
without Intira's prior written consent. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to you or
known by you as a consequence of or through your past, present or
prospective employment or business relationship with Intira, not generally
known and available in Intira's industry, which constitutes Intira's
proprietary and non-public method(s) of doing business, including, but not
limited to, any information related to trade secrets, pricing formulas,
know-how, test data, customer lists, vendor lists, training and operating
manuals, software, and reporting systems.
6. In order for Intira to reasonably protect its interests against the
competitive use of any of Intira's Confidential Information or business
relationships, you agree that during your employment and for a period of
one year after the termination of employment, for whatever reason, you
shall not, within a 100 mile radius of any city where you provided or
marketed services to or on behalf of Intira or to or on behalf of any
customer or potential customer of Intira, engage directly or indirectly,
acting alone or with others, voluntarily or involuntarily in any of the
following conduct:
a. solicit or attempt to solicit customers or potential customers of
Intira with a view towards diverting or attempting to divert from
Intira any business which Intira has enjoyed, to you or to any other
individual, firm, corporation, partnership, association or other
entity other than Intira who or which is competitive with Intira or
engaged in a business competitive with Intira's Business.
b. solicit any person or persons employed by or otherwise associated with
Intira for the purpose of terminating said employee's or person's
employment relationship or association with Intira.
c. own, operate, engage in, be interested in, control through stock
ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any
manner whatsoever in any role, an individual, firm, corporation,
partnership, association or other entity other than Intira who or
which is engaged in a business competitive with Intira or with
Intira's Business.
7. You acknowledge Intira's exclusive right to ownership, possession and title
to all papers, documents, tapes, drawings, notebooks, formulas, customer
lists, software, hardware, trademarks, trade names, service marks,
processes, data, intellectual property, or other records, information, or
products prepared by you during your employment with Intira or provided by
Intira, or which otherwise come into your possession by reason of
employment with Intira. You agree not to make or permit to be made, except
in pursuit of your duties hereunder, any copies of such items. You further
agree to deliver to Intira upon request all such items in your possession
and without request to immediately deliver such items upon the termination,
voluntarily or involuntarily, of your employment. Palm Pilot, date book
excluded
8. You agrees to promptly disclose all ideas, inventions, and discoveries,
whether patentable, copyrightable, or not, relating to any present or
prospective business of Intira, including but not limited to software,
algorithms, designs, devices, processes, methods, formulae, techniques,
software, data storage systems, networks, servers, and any improvements to
the foregoing ("Inventions"). All Inventions made or conceived by you,
whether or not during the hours of your employment or with the use of
Intira facilities, materials, or personnel, either solely or jointly with
others, during the term of your employment by Intira shall be and remain
the sole and absolute property of Intira.
9. You hereby assign and agree to assign to Intira all of your rights to such
Inventions and to all proprietary rights therein, based thereon or related
thereto, including, but not limited to,
<PAGE>
applications for United States and foreign letters patent and resulting
letters patent. At the Intira's request and expense, you shall execute such
documents and provide such assistance as may be deemed necessary by Intira
to apply for, defend, protect or enforce any United States and foreign
letters patent based on or related to such Inventions.
10. You acknowledge and agree that all copyrightable Inventions are "works made
for hire" and consequently Intira owns all copyrights thereto. Intira shall
have the sole and exclusive right to register the copyright(s), or its
assignees, in all such work in its name as the owner and author of such
work and shall have the exclusive rights conveyed under all federal, state
and local laws including, but not limited to, the right to make all uses of
the works in which attribution or integrity rights may be implicated.
Additionally, without in any way limiting the foregoing, you hereby assign,
transfer and convey to Intira, its successors, heirs and assigns, any and
all right, title or interest that you may now have, or may acquire in the
future, to the work including, but not limited to, all ownership, patent
(United States and foreign letters patent), trade secret, trade names and
trademarks, copyright moral, attribution and/or integrity rights.
11. You acknowledge and agree that the covenants and agreements contained in
this Agreement are reasonable, and that you shall not raise any issue of
their reasonableness in any proceeding to enforce such covenants and
agreements. You further agree that any violation or breach by you and/or
your representatives of this Agreement would cause immediate and
irreparable harm to Intira, the exact amount of which will be impossible to
ascertain, and for that reason further agrees that Intira shall be
entitled, as a matter of right, to an injunction out of any court of
competent jurisdiction, restraining any further violation or breach of this
Agreement, such right to an injunction being cumulative and in addition to
whatever remedies Intira may have under applicable law and/or this
Agreement. You further agree to reimburse Intira for all costs and
expenses, including attorneys' fees, incurred by Intira in enforcing the
terms of this Agreement if Intira is the prevailing party.
12. Your execution and performance of this Agreement is not restricted or
prohibited by any agreement to which you are subject.
13. If the scope of any provision contained in this Agreement is deemed too
broad to permit enforcement of such provision to its full extent, then such
provision shall be enforced to the maximum extent permitted by law, and you
hereby consent that such provision may be reformed or modified accordingly,
and enforced as reformed or modified.
14. This Agreement shall be construed and enforced in accordance with the laws
of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the
County of St. Louis, State of Missouri, and waive any defense of an
inconvenient forum to the maintenance of any action or proceeding brought
in such court in connection with this Agreement, any objection to venue
with respect to any such action, and any right of jurisdiction on account
of the place of residence or domicile of any party to such action.
15. If any provision or part thereof of this Agreement is declared invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement, and any other
application thereof, shall not in any way be affected or impaired, and the
Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted.
16. This writing contains the agreement of the parties with respect to the
employment contemplated herein. No amendments or variations of the terms or
conditions of this Agreement shall be valid unless in writing and signed by
the parties hereto.
17. The waiver by either Party of a breach or violation of any provisions of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
18. This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their successors and assigns.
INTIRA CORPORATION:
By: /s/ Bernie Schneider /s/ David Boone
-------------------- -------------------
Name: Bernie Schneider David Boone
Title: CEO/President
Date: Date 10/15/99
--------------
<PAGE>
EXHIBIT 10.16
PROMISSORY NOTE
SECURED BY DEED OF TRUST AND PLEDGE AGREEMENT
---------------------------------------------
$400,000.00 Pleasanton, California
March 14, 2000
1. FOR VALUE RECEIVED, the undersigned, David S. Boone ("Maker"), hereby
promises to pay to Intira Corporation, a Delaware corporation ("Holder"), at
5667 Gibraltar, Pleasanton, California, or such other place as Holder may from
time to time designate by written notice to Maker, the sum of Four Hundred
Thousand Dollars ($400,000.00) together with interest on the unpaid principal
hereof from the date hereof at the rate of 0 percent (0%) per annum. Principal
shall be due and payable on March 14, 2005.
2. Should Maker's employment with Holder be terminated by Holder for
Cause (as defined herein) or should Maker voluntarily resign his employment with
Holder, the whole unpaid balance on this Note of principal and interest shall
become immediately due and payable in accordance with paragraph 6 of this
Promissory Note (the "Note"). In the event that Maker's employment with Holder
is terminated by Holder without Cause within twelve (12) months of the date
hereof, 100% of this Note shall immediately be forgiven by Holder and shall
cease to be an obligation of Maker. Maker acknowledges that any forgiveness of
principal or interest will be treated by Holder as wages for withholding tax
purposes. For purposes of this Note, the term "Cause" is defined as any one or
more of the following occurrences: (a) Maker's conviction by, or entry of a plea
of guilty or nolo contendre in, a court of competent and final jurisdiction for
any crime that constitutes a felony in the jurisdiction involved; (b) Maker's
commission of an act of fraud or misappropriation of material property, whether
prior to or subsequent to the date hereof, upon Holder, or any of its respective
affiliates; (c) gross negligence by Maker in the scope of Maker's services to
Holder, or any of its respective affiliates; (d) a material breach of any
agreement, including the confidentiality or proprietary agreement between Maker
and the Holder; or (e) Maker's failure to perform the material duties of his
position after receipt of a written warning from the Holder.
3. This Note may be prepaid in whole or in part at any time without
penalty. All amounts payable hereunder shall be payable in lawful money of the
United States of America.
4. This Note is subject to the terms of a Short-Form Pledge Agreement
(the "Pledge Agreement") attached hereto as Exhibit A, and is secured by: (i) a
pledge of all shares of Common Stock of Maker whether now owned or existing or
hereafter acquired (including by exercise of any option granted to you by the
Company) (the "Collateral") and (ii) a pledge by Maker of certain real property
commonly known as 142 Victoria Place, Danville, CA (the "Property"). Maker
hereby agrees to execute and deliver to Holder a deed of trust (the "Deed of
Trust") encumbering the Property in the amount of this Note. Maker hereby
covenants that such Deed of Trust will be subordinate only to a deed of trust
(the "First Deed of Trust") made by Maker, as trustor, for the benefit of an
institutional lender that loaned money to Maker for the purpose of financing the
original purchase price of the Property.
<PAGE>
5. Notwithstanding anything to the contrary contained in this Note, the
entire principal balance of this Note shall become immediately due and payable,
and shall begin accruing interest, upon the occurrence of any of the following:
(a) The failure of Maker to execute and deliver the Deed of Trust or the
Pledge Agreement to Holder;
(b) The date of any sale, conveyance, assignment, alienation or any other
form of transfer of the Property or the Collateral, or any part thereof or
interest therein, whether voluntary or involuntary;
(c) Default in the performance or observance of any of the covenants,
conditions, provisions or agreements contained in this Note, in the Deed of
Trust, or in the Pledge Agreement;
(d) Default in the performance or observance of any of the covenants,
conditions, provisions or agreements contained in any deed of trust ("Senior
Deed of Trust") which is or becomes a lien against the Property senior to the
lien of the Deed of Trust, or any promissory note or obligation secured by such
Senior Deed of Trust;
(e) The thirtieth (30th) day following (i) the termination of Maker's
employment with Holder for Cause, or (ii) Maker's voluntary termination of
Maker's employment with Holder; or
(f) The fifth anniversary of the date of this Note.
The failure of Holder to exercise any of the rights created by law or by
this Note, or to promptly enforce any of the provisions hereof, shall not
constitute a waiver of the right to exercise any such rights or to enforce any
such provisions.
6. Maker hereby waives demand and presentation for payment, notice of
non-payment and dishonor, protest and notice of protest, and the benefit of any
homestead exemption which may by law be waived as to this obligation, and agrees
to pay all costs and expenses incurred by Holder in connection with the
enforcement of the provisions of this Note, including, without limitation,
reasonable attorneys' fees in case of suit for enforcement or if this obligation
is placed in attorneys' hands for collection.
7. Maker hereby acknowledges that the Holder has made no representation
or warranty to Maker concerning the income tax consequences of the loan to
Maker, and Maker shall be solely responsible for ascertaining and bearing such
tax consequences.
-2-
<PAGE>
8. This Note shall be construed in accordance with and governed by the
laws of the State of California.
MAKER
/s/ David S. Boone
-------------------------------------
David S. Boone
Address: 3810 Ortega Blvd.
----------------------------
Jacksonville, FL 32210
-------------------------------------
-3-
<PAGE>
The undersigned spouse of Maker, Leslie C. Boone, hereby approves the terms
and conditions of this Note. The undersigned hereby agrees to be irrevocably
bound by the terms of the Note and the Short-Term Pledge Agreement attached as
Exhibit A hereto and further agrees that any community property interest shall
- ---------
be similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights or obligations hereunder.
/s/ Leslie C. Boone
-------------------------------------
Name:
-4-
<PAGE>
[Company Letterhead]
February 21, 2000
Mr. David Boone
3810 Ortega Blvd
Jacksonville, FL 32210
Dear David:
This letter will confirm our agreement regarding a loan by Intira
Corporation, a Delaware corporation, (the "Company") to you in the amount of
$400,000. As we discussed, the loan will be evidenced by a promissory note (the
"Note"), which is secured by a deed of trust to your primary residence and a
short-form pledge agreement. You agree to execute all documents necessary to
grant the Company a security interest in (i) your primary residence and (ii) any
shares that you may purchase (including by exercise of any option granted to you
by the Company). As we discussed, should you be terminated by the Company for
any reason other than Cause (as defined in the Note), 100% of all principal and
accrued interest shall be forgiven on the date of such termination. However,
should you voluntarily terminate your employment with the Company or should you
be terminated for Cause, the Note would become due and payable within thirty
(30) days of either event, as set forth in the Note. In the event there is any
inconsistency between this letter and the terms of the Note, the Note shall
control.
If the foregoing accurately sets forth your understanding of our agreement,
please sign the enclosed copy of this letter and return it to the Company.
Yours very truly,
Intira Corporation
By: /s/ Bernard Schneider
---------------------------------
Bernard Schneider
President and CEO
The foregoing is hereby agreed to and approved.
/s/ David S. Boone
-------------------------------------
David S. Boone
-5-
<PAGE>
EXHIBIT 10.17
THIS EMPLOYMENT AGREEMENT (the "Agreement") is by and between Digital Broadcast
Network Corporation, a Missouri corporation, having its principle offices at 977
Charter Commons, Chesterfield, Missouri 63017 ("dbn"), and John M. Kirkpatrick
an individual residing at 940 Adelante Avenue, Los Angeles, CA 90042
("Employee") and is effective October 11, 1999.
1. In consideration of your employment by dbn and other good and valuable
consideration, you agree to devote your full business time and attention to
the business and affairs of dbn and to faithfully perform the duties
enumerated in this Agreement or in any exhibit attached hereto.
2. dbn shall pay you an annual base salary of $ 180,000, payable in equal bi-
monthly installments of $7500.00, subject to customary withholding taxes
and other employment taxes as required. dbn will pay or reimburse you for
reasonable travel and other expenses incurred by you in the performance of
your duties, upon presentation of expense statements, vouchers or such
other reasonable supporting information as is generally required by dbn in
accordance with its expense account policies.
3. You shall be entitled to participate in any health insurance, life
insurance or benefit plans that dbn may offer to its employees on the same
basis and under the same terms as similarly situated employees
4. You understand and agree that your employment at dbn is not for any
specified term and that either dbn or you may terminate the employment
relationship with or without notice or cause at any time. The relationship
established hereunder is employment at will.
5. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information, you agree both
during your employment with dbn and at all times thereafter, to keep all
Confidential Information in the strictest confidence and not to discuss,
publish, communicate, transmit, disclose reproduce, or otherwise use such
Confidential Information, in any manner whatsoever, in whole or in part,
without dbn's prior written consent. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to you or
known by you as a consequence of or through your past, present or
prospective employment or business relationship with dbn, not generally
known and available in dbn's industry, which constitutes dbn's proprietary
and non-public method(s) of doing business, including, but not limited to,
any information related to trade secrets, pricing formulas, know-how, test
data, customer lists, vendor lists, training and operating manuals,
software, and reporting systems.
6. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information or business
relationships, you agree that during your employment and for a period of
one year after the termination of employment, for whatever reason, you
shall not, within a 100 mile radius of any city where you provided or
marketed services to or on behalf of dbn or to or on behalf of any customer
or potential customer of dbn, engage directly or indirectly, acting alone
or with others, voluntarily or involuntarily in any of the following
conduct:
a. solicit or attempt to solicit customers or potential customers of dbn
with a view towards diverting or attempting to divert from dbn any
business which dbn has enjoyed, to you or to any other individual,
firm, corporation, partnership, association or other entity other than
dbn who or which is competitive with dbn or engaged in a business
competitive with dbn's Business.
b. solicit any person or persons employed by or otherwise associated with
dbn for the purpose of terminating said employee's or person's
employment relationship or association with dbn.
c. own, operate, engage in, be interested in, control through stock
ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any
manner whatsoever in any role, an individual, firm, corporation,
partnership, association or other entity other than dbn who or which
is engaged in a business competitive with dbn or with dbn's Business.
7. You acknowledge dbn's exclusive right to ownership, possession and title to
all papers, documents, tapes, drawings, notebooks, formulas, customer
lists, software, hardware, trademarks, trade names, service marks,
processes, data, intellectual property, or other records, information, or
products prepared by you during your employment with dbn or provided by
dbn, or which otherwise come into your possession by reason of employment
with dbn. You agree not to make or permit to be made, except in pursuit of
your duties hereunder, any copies of such items. You further agree to
deliver to dbn upon request all such items in your possession and without
request to immediately deliver such items upon the termination, voluntarily
or involuntarily, of your employment.
8. You agrees to promptly disclose all ideas, inventions, and discoveries,
whether patentable, copyrightable, or not, relating to any present or
prospective business of dbn, including but not limited to software,
algorithms, designs, devices, processes, methods, formulae, techniques,
software, data storage systems, networks, servers, and any improvements to
the foregoing ("Inventions"). All Inventions made or conceived by you,
whether or not during the hours of your employment or with the use of dbn
facilities, materials, or personnel, either solely or jointly with others,
during the term of your employment by dbn shall be and remain the sole and
absolute property of dbn.
9. You hereby assign and agree to assign to dbn all of your rights to such
Inventions and to all proprietary rights therein, based thereon or related
thereto, including, but not limited to, applications for United States and
foreign letters patent and resulting letters patent. At the dbn's request
and expense, you shall execute such documents and provide such assistance
as may be deemed necessary by dbn to apply for, defend, propect or enforce
any United States and foreign letters patent based on or related to such
Inventions.
10. You acknowledge and agree that all copyrightable Inventions are "works made
for hire" and consequently dbn owns all copyrights thereto. dbn shall have
the sole and exclusive right to
<PAGE>
EMPLOYMENT AGREEMENT
register the copyright(s), or its assignees, in all such work in its name
as the owner and author of such work and shall have the exclusive rights
conveyed under all federal, state and local laws including, but not limited
to, the right to make all uses of the works in which attribution or
integrity rights may be implicated. Additionally, without in any way
limiting the foregoing, you hereby assign, transfer and convey to dbn, its
successors, heirs and assigns, any and all right, title or interest that
you may now have, or may acquire in the future, to the work including, but
not limited to, all ownership, patent (United States and foreign letters
patent), trade secret, trade names and trademarks, copyright moral,
attribution and/or integrity rights.
11. You acknowledge and agree that the covenants and agreements contained in
this Agreement are reasonable, and that you shall not raise any issue of
their reasonableness in any proceeding to enforce such covenants and
agreements. You further agree that any violation or breach by you and/or
your representatives of this Agreement would cause immediate and
irreparable harm to dbn, the exact amount of which will be impossible to
ascertain, and for that reason further agrees that dbn shall be entitled,
as a matter of right, to an injunction out of any court of competent
jurisdiction, restraining any further violation or breach of this
Agreement, such right to an injunction being cumulative and in addition to
whatever remedies dbn may have under applicable law and/or this Agreement.
You further agree to reimburse dbn for all costs and expenses, including
attorneys' fees, incurred by dbn in enforcing the terms of this Agreement
if dbn is the prevailing party.
12. Your execution and performance of this Agreement is not restricted or
prohibited by any agreement to which you are subject.
13. If the scope of any provision contained in this Agreement is deemed too
broad to permit enforcement of such provision to its full extent, then such
provision shall be enforced to the maximum extent permitted by law, and you
hereby consent that such provision may be reformed or modified accordingly,
and enforced as reformed or modified.
14. This Agreement shall be construed and enforced in accordance with the laws
of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the
County of St. Louis, State of Missouri, and waive any defense of an
inconvenient forum to the maintenance of any action or proceeding brought
in such court in connection with this Agreement, any objection to venue
with respect to any such action, and any right of jurisdiction on account
of the place of residence or domicile of any party to such action.
15. If any provision or part thereof of this Agreement is declared invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement, and any other
application thereof, shall not in any way be affected or impaired, and the
Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted.
16. This writing contains the agreement of the parties with respect to the
employment contemplated herein. No amendments or variations of the terms or
conditions of this Agreement shall be valid unless in writing and signed by
the parties hereto.
17. The waiver by either Party of a breach or violation of any provisions of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
18. This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their successors and assigns.
DIGITAL BROADCAST
NETWORK CORPORATION:
By: /S/ Bernie Schneider /S/ John M. Kirkpatrick
------------------------------ ------------------------------
Name: Bernie Schneider John M. Kirkpatrick
Title: CEO/President
Date: Date 10/1/99
-------------------------
<PAGE>
EXHIBIT 10.18
digital broadcast network corporation
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") is by and between digital
broadcast network corporation, a Missouri corporation having its principle
offices at 977 Charter Commons, Chesterfield, Missouri 63017 (hereinafter, the
"Company"), and DINA TOOTHMAN, an individual residing at 2963 Chardonnay,
Pleasanton, CA 94566 (hereinafter, "Employee").
WITNESSETH:
WHEREAS, Company is in the business of developing and implementing systems
that provide high-speed network bandwidth and services in connection therewith
to connect media-rich providers ("Company's Business"); and
WHEREAS, Company wishes to hire Employee as its Vice President of
Marketing, and Company desires to obtain Employee's knowledge and expertise
concerning marketing activities; and
WHEREAS, Employee wishes to become employed as Company's Vice President of
Marketing.
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, and other good and valuable consideration the
receipt and sufficiency of which hereby are acknowledged, the Parties hereby
agree as follows:
Section 1. Employment, Duties and Acceptance. During the Employment Term (as
---------------------------------
defined in Section 2 of this Agreement), Company hereby agrees to employ
Employee as its Vice President of Marketing, to perform the duties set forth on
the attached Exhibit "A". Exhibit "A" is incorporated hereunder and made a part
of this Agreement as if fully set forth. During the Employment Term, Employee
agrees to devote his full business time and attention to the business and
affairs of Company and, to the extent necessary to discharge the
responsibilities assigned to Employee hereunder, to perform faithfully,
efficiently, diligently and competently such responsibilities. In addition to
the duties enumerated in this Agreement, Employee shall perform such other
duties as are reasonably commensurate with his position and title.
Section 2. Employment Term. The term of Employee's employment hereunder (the
---------------
"Employment Term") shall commence on the date set forth on the date immediately
below the signature lines ("Effective Date") and shall continue for a period of
one (1) year after the Effective Date, unless otherwise terminated in accordance
with the sections of this Agreement. Employment shall automatically renew for
additional one (1) year periods, subject to Section 5, unless either party gives
the other party fourteen (14) days notice of termination.
Section 3. Compensation Arrangements. Company shall pay Employee based on the
-------------------------
Compensation Arrangement set forth on Exhibit "A". Employee agrees that Company
may change the Compensation Arrangement with notice to Employee and that no
amendments, assurances or understandings are effective unless in writing and
signed by the President of the Company, and that such changes shall not
constitute a breach of this Agreement by Company.
Section 4. Ownership of Papers and Intellectual Property Rights.
----------------------------------------------------
(a) Papers and Property. Employee acknowledges Company's
exclusive right to ownership, possession and title to all papers, documents,
tapes, drawings, notebooks, formulas, customer lists, software, hardware,
trademarks, trade names, service marks, processes, data, intellectual property,
or other records, information, or products prepared by Employee during
employment with Company or provided by Company, or which otherwise come into
Employee's possession by reason of employment with Company. Employee agrees not
to make or permit to be made, except in pursuit of Employee's duties hereunder,
any copies of such items. Employee further agrees to deliver to the Company upon
request all
<PAGE>
such items in Employee's possession and without request to immediately deliver
such items upon the termination, voluntarily or involuntarily, of Employee's
employment.
(b) Inventions. The term "Inventions" means all ideas,
inventions, and discoveries, whether patentable, copyrightable, or not, relating
to any present or prospective business of the Company, including but not limited
to software, algorithms, designs, devices, processes, methods, formulae,
techniques, software, data storage systems, networks, servers, and any
improvements to the foregoing.
(i) Report. Employee agrees to promptly disclose all
Inventions made or conceived by the Employee, whether or not during the hours of
his employment or with the use of Company facilities, materials, or personnel,
either solely or jointly with others, during the term of his employment by the
Company. Employee shall inform the Company promptly and fully of such Inventions
by a written report, setting forth in detail the structures, procedures, and
methodology employed and the results achieved. A report shall also be submitted
by the Employee upon completion of any study or research project undertaken on
the Company's behalf, whether or not in the Employee's opinion a given study or
project has resulted in an Invention.
(ii) Assignment and Patent. Employee hereby assigns and
agrees to assign to the Company all of his rights to such Inventions and to all
proprietary rights therein, based thereon or related thereto, including, but not
limited to, applications for United States and foreign letters patent and
resulting letters patent. At the Company's request and expense, the Employee
shall execute such documents and provide such assistance as may be deemed
necessary by the Company of apply for, defend or enforce any United States and
foreign letters patent based on or related to such Inventions. Employee agrees
to execute all documents reasonably requested by Company to assist the Company
in perfecting or protecting any or all of its rights in the Inventions.
(iii) Copyright. Employee acknowledges that all
copyrightable Inventions are "works made for hire" and consequently that the
Company owns all copyrights thereto, including, but not limited to, 17 U.S.C.
Sections 101 and 210. The Company shall have the sole and exclusive right to
register the copyright(s), or its assignees, in all such work in its name as the
owner and author of such work and shall have the exclusive rights conveyed under
17 U.S.C. Sections 106 and 106A, including, but not limited to, the right to
make all uses of the works in which attribution or integrity rights may be
implicated. Additionally, without in any way limiting the foregoing, Employee
hereby assigns, transfers and conveys to Company, its successors, heirs and
assigns, any and all right, title or interest that Employee may now have, or may
acquire in the future, to the work including, but not limited to, all ownership,
patent (United States and foreign letters patent), trade secret, trade names and
trademarks, copyright moral, attribution and/or integrity rights. Employee
hereby expressly and forever waives any and all rights that Employee may have
arising under 17 U.S.C. Section 106A, and any rights arising under any federal
or state laws that convey rights which are similar in nature to those conveyed
under 17 U.S.C. Section 106A. Notwithstanding any provision of the Copyright
Act, any and all copyrightable works, prepared either in whole or in part by
Employee under this agreement, are, shall be, or shall become, owned by the
Company.
Section 5. Termination of Employment.
-------------------------
(a) Subject to Section 5.(b), either party, with or without
cause, may terminate the employment relationship with fourteen (14) days written
notice ("Required Notice") to the other party. The relationship established
hereunder is employment at will. If Employee fails to give the Required Notice,
Employee shall waive any and all rights he may have to any accrued vacation due
him. In the event either Employee gives the Required Notice or Company gives the
Required Notice, but Company wishes to accelerate termination of Employee's
employment, Company may elect to so accelerate, in Company's sole discretion,
and terminate Employee immediately; provided, however, Company must in all
events pay the Employee for the fourteen (14) day notice period unless the cause
of the termination was for Employee's violation of
2
<PAGE>
Company's rules, regulations and policies, Employee misconduct, Employee neglect
of duties, or Employee's conviction of a felony. The death of Employee shall
automatically terminate this Agreement.
(b) The foregoing notwithstanding, in the event that Employee's
employment is terminated by Company other than for Good Cause and prior to the
Company's initial public offering, the Company shall pay to Employee an amount
equal to the Employee's annual compensation in 12 equal monthly installments and
if Employee's employment is terminated by Company other than for Good Cause and
after the Company's initial public offering, the Company shall only pay to
Employee an amount equal to one half (1/2) of the Employee's annual compensation
paid monthly for six months. The term "Good Cause" shall mean Employee's
commitment of an act of dishonesty, conviction of a felony, gross neglect or
material failure to perform Employee's duties hereunder. If the Company proposes
to terminate the employment relationship for Good Cause, the Company shall give
notice to Employee with sufficient particularity that the Employee will have an
opportunity to correct the situation to the reasonable satisfaction of the
Company within a reasonable period of time set forth in the Company notice which
shall not be less than 45 days, provided no notice and cure shall be required
for terminations attributable to dishonesty and conviction of a felony.
Section 6. Confidentiality and Noncompetition.
----------------------------------
In order for Company to reasonably protect its interests against the
competitive use of any of Company's confidential information or business
relationships, Employee agrees to the following covenants.
(a) Covenant Not to Compete. During Employee's employment, and
for a period of one (1) year after Employee's termination of employment, for
whatever reason, Employee shall not, within the continental United States,
directly or indirectly, acting alone or with others, voluntarily or
involuntarily, own, operate, engage in, be interested in, control through stock
ownership or otherwise, or become employed by, work for, advise, be connected
with, consult with or represent in any capacity or in any manner whatsoever in
any role, an individual, firm, corporation, partnership, association or other
entity other than the Company who or which is engaged in a business competitive
with the Company or with the Company's Business.
(b) Confidentiality. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to Employee or
known by Employee as a consequence of or through his past, present or
prospective employment or business relationship with Company, not generally
known and available in Company's industry, which constitutes Company's
proprietary and non-public method(s) of doing business, including, but not
limited to, any information related to trade secrets, pricing formulas, know-
how, test data, customer lists, vendor lists, training and operating manuals,
software, and reporting systems. Company and Employee acknowledge that during
Employee's period of employment by Company, Company will furnish Employee with
Confidential Information. Employee agrees both during his employment with the
Company, whether under this Agreement or otherwise, and at all times thereafter,
that Employee, his officers, directors, partners, employees, affiliates, agents,
representatives, or assigns (collectively "representatives") shall keep all
Confidential Information in the strictest confidence and shall not discuss,
publish, communicate, transmit, reproduce, or otherwise disclose such
Confidential Information, in any manner whatsoever, in whole or in part, without
the prior written consent of Company, unless and until such time as the
Confidential Information becomes generally known in Company's industry other
than through breach of this Agreement. Any written consent by Company to
Employee's disclosure of Confidential Information, if given, shall in no way
operate as a waiver of Employee's obligation to maintain the confidential nature
of the material disclosed or to protect and preserve that Confidential
Information from disclosures so that it will receive confidential treatment
thereafter. Employee agrees to reimburse Company for any damages sustained and
costs and expenses, including attorneys' fees, incurred in connection with an
unauthorized disclosure of Confidential Information by Employee, his
representatives, or other any person or persons to whom Employee or his
representatives previously had disclosed Confidential Information.
3
<PAGE>
(c) Non-Solicitation of Customers and Employees. During
Employee's employment and for a period of one (1) year after Employee's
termination of employment, for whatever reason, Employee shall not, either
directly or indirectly: 1) solicit any person or persons employed by or
otherwise associated with Company for the purpose of terminating said employee's
or person's employment relationship or association with Company.
4
<PAGE>
(d) Reasonableness of Covenants. Employee acknowledges and
agrees that the covenants and agreements contained in this Section are
reasonable, and Employee agrees he shall not raise any issue of their
reasonableness in any proceeding to enforce such covenants and agreements.
Employee agrees that any violation or breach by Employee and/or his
representatives of this Agreement would cause immediate and irreparable harm to
Company, the exact amount of which will be impossible to ascertain, and for that
reason further agrees that Company shall be entitled, as a matter of right, to
an injunction out of any court of competent jurisdiction, restraining any
further violation or breach of this Agreement by Employee and/or his
representatives, either directly or indirectly, such right to an injunction
being cumulative and in addition to whatever remedies Company may have under
applicable law and/or this Agreement. In the event of any litigation or
arbitration under this agreement, the prevailing party shall be entitled to an
award of all cost of the proceeding or suite, including reasonable attorney's
fees.
Section 7. Ability to Perform. Employee warrants that Employee's execution and
------------------
performance of this Agreement is not restricted or prohibited by any agreement
to which Employee is subject.
Section 8. Miscellaneous. In case of any conflict or ambiguity in connection
-------------
with or between this Agreement and any policy manuals, including but not limited
to any employee manuals, employment applications, management instructions or
promises, etc., this Agreement shall control. This Agreement shall inure to the
benefit of and be binding upon the Parties hereto, their successors and assigns.
Company may assign this Agreement. Provided, however, Employee's rights under
this Agreement shall not be assignable, nor shall Employee's obligations be
delegable. This Agreement shall be construed and enforced in accordance with the
laws of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the County of
St. Louis, State of Missouri, and waive any defense of an inconvenient forum to
the maintenance of any action or proceeding brought in such court in connection
with this Agreement, any objection to venue with respect to any such action, and
any right of jurisdiction on account of the place of residence or domicile of
any party to such action. If any provision or part thereof of this Agreement is
declared invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions of this Agreement, and
any other application thereof, shall not in any way be affected or impaired, and
the Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted. Any notice or other communication required
or which may be given to any party hereunder shall be in writing and shall be
delivered personally, sent by facsimile transmission, or sent by certified,
registered or express mail, postage prepaid, and shall be deemed given when so
delivered personally, sent by facsimile transmission, or if mailed, two days
after the date of mailing, to the address of such party set forth on the first
page hereof, or to such other address as the parties may indicate in writing.
This writing contains the agreement of the parties with respect to the
employment contemplated herein. No amendments or variations of the terms or
conditions of this Agreement shall be valid unless in writing and signed by the
parties hereto. The headings contained in this Agreement are for convenience
only and shall in no manner be construed as part of the Agreement. The waiver by
either Party of a breach or violation of any provisions of this Agreement shall
not operate as or be construed to be a waiver of any subsequent breach hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed effective as of the day and year first above written.
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
_______________________________ _________________________________
Bernard Schneider, Dina Toothman
President
<PAGE>
EFFECTIVE DATE
- --------------
April 1, 1999
<PAGE>
EXHIBIT "A" TO EMPLOYMENT AGREEMENT
DUTIES AND COMPENSATION ARRANGEMENT
A. Employee's Name Dina Toothman
---------------
B. Duties. In her capacity as Vice President of Marketing, Employee shall be
------
responsible for (1) establishing company as a premier provider of next
generation network services within the industry press and analyst community,
managing all related activities and resources connected therewith; (2)
developing a concise market message for the Company that is integrated into all
sales and marketing activities and collateral; (3) supporting the sales and
channel marketing efforts with all required marketing materials and activities,
to include all web-related activities; and (4) actively participate in the
overall planning, budgeting and prioritization of Company activities and
resources. Employee acknowledges that in the performance of her duties as Vice
President of Marketing, whether under this Agreement or otherwise, he shall be
supervised by the President and the Board of Directors, as may be provided in
the By-laws or other governing instrument of the Company, as same may be amended
from time to time.
C. Salary. Subject to Paragraph 3, during the Employment Term, the Company
------
shall pay Employee as salary for her services an annual base salary of One
Hundred Fifty thousand dollars ($150,000.00), payable in equal bi-monthly
installments of $6,250.00, subject to customary withholding taxes and other
employment taxes as required with respect thereto.
D. Benefits. Employee shall be entitled to participate in any health
--------
insurance, life insurance, or defined contribution or defined benefit plans that
the Company may offer to its employees on the same basis and under the same
terms as similarly situated employees.
E. Travel; Expenses. Company shall pay or reimburse Employee for all
----------------
reasonable travel and other expenses actually incurred by Employee in the
performance of Employee's duties hereunder, upon presentation of expense
statements or vouchers or such other reasonable supporting information as is
generally required by Company in accordance with its expense account policies.
Mileage shall be paid at $.31 per mile. Employee expenses must be submitted on
the customary expense report form no later than the 10th of the month following
the occurrence of the expense.
F. Discretionary Bonuses. The Company may, from time to time and in its sole
---------------------
discretion, declare and pay bonuses to some or all of its employees. Such
bonuses may be payable in cash, stock, stock options, or other property as the
Company, in its sole discretion, deems advisable and in such amounts as the
Company, in its sole discretion, deems advisable. The Company shall establish
and maintain Management Performance Objectives ("MPOs") for Employee for each
year of Employee's employment. Such MPOs shall be maintained in Employee's
personnel file, and a copy of such MPOs shall be transmitted to Employee. In
the event Employee meets or exceeds said MPOs for any given year, Employee shall
become eligible for any discretionary bonus or bonuses declared by the Company
for that year.
G. Stock. As compensation for Employee's continued service to the Company, the
-----
Company shall grant 17,500 options to acquire shares of common stock in Company,
in accordance with the Stock Option Plan between Company and Employee.
"Company" "Employee":
<PAGE>
DIGITAL BROADCAST
NETWORK CORPORATION:
/s/ Bernie Schneider /s/ Dina Toothman
- ------------------------------ ---------------------------------
Bernie Schneider Dina Toothman
CEO/President
<PAGE>
EXHIBIT 10.19
INTIRA CORPORATION
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED
--------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is by and
between Intira Corporation, a Delaware corporation formerly known as digital
broadcast network corporation, having its principle offices at 5667 Gibraltar
Drive, Pleasanton, California 94588 (hereinafter, the "Company"), and TOM
SWANSON, an individual residing at _________________________________
_______________________ (hereinafter, "Employee").
WHEREAS, the Company and Employee entered into that certain Employment
Agreement dated as of April 20, 1999 (the "Original Agreement") pursuant to
which Employee became Vice President of Sales; and
WHEREAS, the Company and Employee desire to amend the Original Agreement
and terminate any offer letters or other employment contracts and to make
certain corrections with respect to the grant of stock options to Employee.
WHEREAS, the Company and Employee agree that this Agreement shall replace
and supersede the Original Agreement.
NOW, THEREFORE, in consideration of Employee's continued employment by
Company and of the covenants and agreements hereinafter set forth, and other
good and valuable consideration the receipt and sufficiency of which hereby are
acknowledged, the Parties hereby agree as follows:
Section 1. Employment, Duties and Acceptance. Company hereby agrees to employ
---------------------------------
Employee as its Vice President of Sales, to perform the duties set forth on the
attached Exhibit "A". During the course of Employee's employment, Employee
agrees to devote his full business time and attention to the business and
affairs of Company and, to the extent necessary to discharge the
responsibilities assigned to Employee hereunder, to perform faithfully,
efficiently, diligently and competently such responsibilities. In addition to
the duties enumerated in this Agreement, Employee shall perform such other
duties as are reasonably commensurate with his position and title.
Section 2. Employment Term. The term of Employee's employment hereunder (the
---------------
"Employment Term") shall commence on April 20, 1999 ("Effective Date") and shall
continue for a period of one (1) year after the Effective Date, unless otherwise
terminated in accordance with the sections of this Agreement. Employment shall
automatically renew for additional one (1) year periods, subject to Section 5,
unless either party gives the other party fourteen (14) days notice of
termination.
Section 3. Compensation Arrangements. Company shall pay Employee based on the
-------------------------
Compensation Arrangement set forth on Exhibit "A". Attached hereto as Exhibit
"B" is the Stock Option Agreement evidencing the stock option grant referred to
in Exhibit "A". Employee agrees that Company may change the Compensation
Arrangement with notice to Employee and that no amendments, assurances or
understandings are effective unless in writing and signed by the President of
the Company, and that such changes shall not constitute a breach of this
Agreement by Company. Employee expressly acknowledges (i) that Exhibit "A"
contains a complete description of the equity compensation to be granted to
Employee in connection with Employee's employment with the Company and pursuant
to this Agreement, (ii) that the Stock Option Agreement attached hereto as
Exhibit "B" represents the definitive documentation of the equity compensation
referred to in Exhibit "A" and supercedes in its entirety any other
documentation, and (iii) that the Employee is not entitled to any additional
stock option grants or other equity interests in the Company.
1
<PAGE>
Section 4. Ownership of Papers and Intellectual Property Rights.
----------------------------------------------------
(a) Papers and Property. Employee acknowledges Company's exclusive
right to ownership, possession and title to all papers, documents, tapes,
drawings, notebooks, formulas, customer lists, software, hardware, trademarks,
trade names, service marks, processes, data, intellectual property, or other
records, information, or products prepared by Employee during employment with
Company or provided by Company, or which otherwise come into Employee's
possession by reason of employment with Company. Employee agrees not to make or
permit to be made, except in pursuit of Employee's duties hereunder, any copies
of such items. Employee further agrees to deliver to the Company upon request
all such items in Employee's possession and without request to immediately
deliver such items upon the termination, voluntarily or involuntarily, of
Employee's employment.
(b) Inventions. The term "Inventions" means all ideas, inventions,
and discoveries, whether patentable, copyrightable, or not, relating to any
present or prospective business of the Company, including but not limited to
software, algorithms, designs, devices, processes, methods, formulae,
techniques, software, data storage systems, networks, servers, and any
improvements to the foregoing.
(i) Report. Employee agrees to promptly disclose all Inventions
made or conceived by the Employee, whether or not during the hours of his
employment or with the use of Company facilities, materials, or personnel,
either solely or jointly with others, during the term of his employment by the
Company. Employee shall inform the Company promptly and fully of such Inventions
by a written report, setting forth in detail the structures, procedures, and
methodology employed and the results achieved. A report shall also be submitted
by the Employee upon completion of any study or research project undertaken on
the Company's behalf, whether or not in the Employee's opinion a given study or
project has resulted in an Invention.
(ii) Assignment and Patent. Employee hereby assigns and agrees
to assign to the Company all of his rights to such Inventions and to all
proprietary rights therein, based thereon or related thereto, including, but not
limited to, applications for United States and foreign letters patent and
resulting letters patent. At the Company's request and expense, the Employee
shall execute such documents and provide such assistance as may be deemed
necessary by the Company of apply for, defend or enforce any United States and
foreign letters patent based on or related to such Inventions. Employee agrees
to execute all documents reasonably requested by Company to assist the Company
in perfecting or protecting any or all of its rights in the Inventions.
(iii) Copyright. Employee acknowledges that all copyrightable
Inventions are "works made for hire" and consequently that the Company owns all
copyrights thereto, including, but not limited to, 17 U.S.C. Sections 101 and
210. The Company shall have the sole and exclusive right to register the
copyright(s), or its assignees, in all such work in its name as the owner and
author of such work and shall have the exclusive rights conveyed under 17 U.S.C.
Sections 106 and 106A, including, but not limited to, the right to make all uses
of the works in which attribution or integrity rights may be implicated.
Additionally, without in any way limiting the foregoing, Employee hereby
assigns, transfers and conveys to Company, its successors, heirs and assigns,
any and all right, title or interest that Employee may now have, or may acquire
in the future, to the work including, but not limited to, all ownership, patent
(United States and foreign letters patent), trade secret, trade names and
trademarks, copyright moral, attribution and/or integrity rights. Employee
hereby expressly and forever waives any and all rights that Employee may have
arising under 17 U.S.C. Section 106A, and any rights arising under any federal
or state laws that convey rights which are similar in nature to those conveyed
under 17 U.S.C. Section 106A. Notwithstanding any provision of the Copyright
Act, any and all copyrightable works, prepared either in whole or in part by
Employee under this agreement, are, shall be, or shall become, owned by the
Company.
2
<PAGE>
Section 5. Termination of Employment.
-------------------------
(a) Subject to Section 5(b), either party, with or without cause, may
terminate the employment relationship with fourteen (14) days written notice
("Required Notice") to the other party. The relationship established hereunder
is employment at will. If Employee fails to give the Required Notice, Employee
shall waive any and all rights he may have to any accrued vacation, draws and
commissions due him. In the event either Employee gives the Required Notice or
Company gives the Required Notice, but Company wishes to accelerate termination
of Employee's employment, Company may elect to so accelerate, in Company's sole
discretion, and terminate Employee immediately; provided, however, Company must
in all events pay the Employee for the fourteen (14) day notice period unless
the cause of the termination was for Employee's egregious violation of Company's
rules, regulations and policies, Employee misconduct, Employee's egregious
neglect of duties, or Employee's conviction of a felony ("Good Cause"). The
death of Employee shall automatically terminate this Agreement.
(b) The foregoing notwithstanding, in the event that Employee's
employment is terminated by Company other than for Good Cause, change in control
or acquisition and Employee's job is terminated for Good Cause, material adverse
change in job duties or if required to relocate to a city more than 50 miles
from Employee's current location, the Company shall pay to Employee an amount
equal to the Employee's base monthly compensation in equal monthly installments
until Employee has obtained other employment but in no event to exceed six (6)
months. Employee will continue to vest in any optioned shares for a period of
six months following such termination. If the Company proposes to terminate the
employment relationship for Good Cause, the Company shall give notice to
Employee with sufficient particularity that the Employee will have an
opportunity to correct the situation to the reasonable satisfaction of the
Company within a reasonable period of time set forth in the Company notice which
shall not be less than 20 days, provided no notice and cure shall be required
for terminations attributable to dishonesty and conviction of a felony.
Section 6. Confidentiality and Noncompetition.
----------------------------------
In order for Company to reasonably protect its interests against the
competitive use of any of Company's confidential information or business
relationships, Employee agrees to the following covenants.
(a) Covenant Not to Compete. During Employee's employment, and for a
period of one (1) year after Employee's termination of employment, for whatever
reason, Employee shall not, within the continental United States, directly or
indirectly, acting alone or with others, voluntarily or involuntarily, own,
operate, engage in, be interested in, control through stock ownership or
otherwise, or become employed by, work for, advise, be connected with, consult
with or represent in any capacity or in any manner whatsoever in any role, an
individual, firm, corporation, partnership, association or other entity other
than the Company who or which is engaged in a business directly competitive with
the Company or with the Company's Business. For purposes of this Agreement,
the Company is in the business of developing and implementing systems that
provide high-speed network bandwidth, data management and related services and
such other business as being provided to Company's customers ("Company's
Business").
(b) Confidentiality. For purposes of this Agreement, "Confidential
Information" shall mean any communication disclosed to Employee or known by
Employee as a consequence of or through his past, present or prospective
employment or business relationship with Company, not generally known and
available in Company's industry, which constitutes Company's proprietary and
non-public method(s) of doing business, including, but not limited to, any
information related to trade secrets, pricing formulas, know-how, test data,
customer lists, vendor lists, training and operating manuals, software, and
reporting systems. Company and Employee acknowledge that during Employee's
period of employment by Company, Company will furnish Employee with Confidential
Information. Employee agrees both during his employment with the Company,
whether under this Agreement or otherwise, and at all times thereafter, that
Employee, his officers, directors, partners, employees, affiliates, agents,
representatives, or assigns (collectively "representatives") shall keep all
Confidential Information in the strictest confidence and shall not discuss,
publish, communicate,
3
<PAGE>
transmit, reproduce, or otherwise disclose such Confidential Information, in any
manner whatsoever, in whole or in part, without the prior written consent of
Company, unless and until such time as the Confidential Information becomes
generally known in Company's industry other than through breach of this
Agreement. Any written consent by Company to Employee's disclosure of
Confidential Information, if given, shall in no way operate as a waiver of
Employee's obligation to maintain the confidential nature of the material
disclosed or to protect and preserve that Confidential Information from
disclosures so that it will receive confidential treatment thereafter. Employee
agrees to reimburse Company for any damages sustained and costs and expenses,
including attorneys' fees, incurred in connection with an unauthorized
disclosure of Confidential Information by Employee, his representatives, or
other any person or persons to whom Employee or his representatives previously
had disclosed Confidential Information.
(c) Non-Solicitation of Customers and Employees. During Employee's
employment and for a period of one (1) year after Employee's termination of
employment, for whatever reason, Employee shall not, either directly or
indirectly: 1) solicit any person or persons employed by or otherwise associated
with Company for the purpose of terminating said employee's or person's
employment relationship or association with Company; and 2) approach or solicit
customers of the Company with a view towards diverting or attempting to divert
from the Company any business which the Company has enjoyed, to Employee or to
any other individual, firm, corporation, partnership, association or other
entity other than the Company who or which is competitive with the Company or
engaged in a business competitive with the Company's Business.
(d) Reasonableness of Covenants. The parties acknowledge and agree
that the covenants and agreements contained in this Section are reasonable, and
shall not raise any issue of their reasonableness in any proceeding to enforce
such covenants and agreements. The parties further agree that any violation or
breach by a party of this Agreement would cause immediate and irreparable harm,
the exact amount of which will be impossible to ascertain, and for that reason
further agree that the party shall be entitled, as a matter of right, to an
injunction out of any court of competent jurisdiction, restraining any further
violation or breach of this Agreement by Employee and/or Company, either
directly or indirectly, such right to an injunction being cumulative and in
addition to whatever remedies each party may have under applicable law and/or
this Agreement. In the event of any litigation or arbitration under this
agreement, the prevailing party shall be entitled to an award of all cost of the
proceeding or suite, including reasonable attorney's fees.
Section 7. Ability to Perform. Employee warrants that Employee's execution and
------------------
performance of this Agreement is not restricted or prohibited by any agreement
to which Employee is subject.
Section 8. Miscellaneous. In case of any conflict or ambiguity in connection
-------------
with or between this Agreement and any policy manuals, including but not limited
to any employee manuals, employment applications, management instructions or
promises, etc., this Agreement shall control. This Agreement shall inure to the
benefit of and be binding upon the Parties hereto, their successors and assigns.
Company may assign this Agreement. Provided, however, Employee's rights under
this Agreement shall not be assignable, nor shall Employee's obligations be
delegable. This Agreement shall be construed and enforced in accordance with
the laws of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the County of
St. Louis, State of Missouri, and waive any defense of an inconvenient forum to
the maintenance of any action or proceeding brought in such court in connection
with this Agreement, any objection to venue with respect to any such action, and
any right of jurisdiction on account of the place of residence or domicile of
any party to such action. If any provision or part thereof of this Agreement is
declared invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions of this Agreement, and
any other application thereof, shall not in any way be affected or impaired, and
the Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted. Any notice or other communication
required or which may be given to any party hereunder shall be in writing and
shall be delivered personally, sent by facsimile transmission, or sent by
certified, registered or express mail, postage prepaid, and shall be deemed
given when so delivered personally, sent by facsimile transmission, or if
mailed, two days after the date of mailing, to the address of such party set
forth on the first
4
<PAGE>
page hereof, or to such other address as the parties may indicate in writing.
This writing, including Exhibits "A" and "B" which are hereby incorporated
herein by this reference, contains the complete agreement of the parties with
respect to the employment contemplated herein. Employee acknowledges that this
agreement supersedes the offer letter dated April 15, 1999. No amendments or
variations of the terms or conditions of this Agreement shall be valid unless in
writing and signed by the parties hereto. The waiver by either Party of a breach
or violation of any provisions of this Agreement shall not operate as or be
construed to be a waiver of any subsequent breach hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed effective as of the day and year first above written.
"Company" "Employee":
INTIRA CORPORATION:
/s/ Bernard Schneider /s/ Tom Swanson
- ----------------------------- ---------------------------
Bernard Schneider, Tom Swanson
President
5
<PAGE>
EXHIBIT "A" TO EMPLOYMENT AGREEMENT
DUTIES AND COMPENSATION ARRANGEMENT
A. Employee's Name Tom Swanson
---------------
B. Duties. In his capacity as Vice President of Sales, Employee shall be
------
responsible for:
Employee acknowledges that in the performance of his duties as Vice President of
Sales, whether under this Agreement or otherwise, he shall be supervised by the
President and the Board of Directors, as may be provided in the By-laws or other
governing instrument of the Company, as same may be amended from time to time.
C. Salary. Subject to Paragraph 3, during the Employment Term, the Company
------
shall pay Employee as salary for his services an annual base salary of Two
Hundred Thousand dollars ($200,000.00), payable in equal bi-monthly installments
of $8,333.33, subject to customary withholding taxes and other employment taxes
as required with respect thereto. Additionally, Employee shall eligible for
additional annual incentives of $200,000 based upon the Company's attaining and
exceeding certain revenue goals, a copy of which shall be attached to this
Exhibit "A" and signed by both the Company and Employee ("Revenue Goals"). For
a period of one year from the Effective Date and so long as Employee is employed
by Company, Employee will receive a monthly commission payment equal to 1.1% of
billed revenue or $8,333.34, whichever is greater. Billed revenue shall be
based on standard Company contracts and in the event of any special agreements,
then Employee and Company shall negotiate in good faith a reasonable commission
percentage. If after 45 days from the Effective Date, the current Company
revenue forecast needs revision to reflect more accurately Company's revenue
forecast, Employee and Company will negotiate in good faith to adjust the
Revenue Goals accordingly.
D. Benefits. Employee shall be entitled to participate in any health
--------
insurance, life insurance, or defined contribution or defined benefit plans that
the Company may offer to its employees on the same basis and under the same
terms as similarly situated employees.
E. Travel; Expenses. Company shall pay or reimburse Employee for all
----------------
reasonable travel and other expenses actually incurred by Employee in the
performance of Employee's duties hereunder, upon presentation of expense
statements or vouchers or such other reasonable supporting information as is
generally required by Company in accordance with its expense account policies.
Mileage shall be paid at $.31 per mile. Employee expenses must be submitted on
the customary expense report form no later than the 10th of the month following
the occurrence of the expense.
F. Discretionary Bonuses. The Company may, from time to time and in its sole
---------------------
discretion, declare and pay bonuses to some or all of its employees. Such
bonuses may be payable in cash, stock, stock options, or other property as the
Company, in its sole discretion, deems advisable and in such amounts as the
Company, in its sole discretion, deems advisable. The Company shall establish
and maintain Management Performance Objectives ("MPOs") for Employee for each
year of Employee's employment. Such MPOs shall be maintained in Employee's
personnel file, and a copy of such MPOs shall be transmitted to Employee. In
the event Employee meets or exceeds said MPOs for any given year, Employee shall
become eligible for any discretionary bonus or bonuses declared by the Company
for that year.
6
<PAGE>
G. Stock. The Company and Employee agree that compensation for Employee's
-----
entering service with the Company, the Company has granted employee an option to
acquire 23,750 shares of common stock in Company pursuant to the Stock Option
Agreement attached as Exhibit "B" and in accordance with and subject to the
terms and conditions of the Company's 1999 Stock Option Plan.
"Company" "Employee":
DIGITAL BROADCAST
NETWORK CORPORATION:
/s/ Bernard Schneider /s/ Tom Swanson
- ------------------------------- --------------------------------
Bernard Schneider Tom Swanson
CEO/President
7
<PAGE>
EXHIBIT B
STOCK OPTION AGREEMENT
<PAGE>
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is by and between Digital Broadcast
Network Corporation, a Missouri corporation, having its principle offices at 977
Charter Commons, Chesterfield, Missouri 63017 ("dbn"), and Steve Sidore, an
individual residing at PMB 344 Maple Ave West, Vienna, VA 22180 ("Employee")
and is effective August 23th.
1. In consideration of your employment by dbn and other good and valuable
consideration, you agree to devote your full business time and attention to
the business and affairs of dbn and to faithfully perform the duties
enumerated in this Agreement or in any exhibit attached hereto.
2. dbn shall pay you an annual base salary of $200,000.00, payable in equal
bi-monthly installments of $8333.33, subject to customary withholding taxes
and other employment taxes as required. dbn will pay or reimburse you for
reasonable travel and other expenses incurred by you in the performance of
your duties, upon presentation of expense statements, vouchers or such
other reasonable supporting information as is generally required by dbn in
accordance with its expense account policies.
3. You shall be entitled to participate in any health insurance, life
insurance or benefit plans that dbn may offer to its employees on the same
basis and under the same terms as similarly situated employees
4. You understand and agree that your employment at dbn is not for any
specified term and that either dbn or you may terminate the employment
relationship with or without notice or cause at any time. The relationship
established hereunder is employment at will.
5. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information, you agree both
during your employment with dbn and at all times thereafter, to keep all
Confidential Information in the strictest confidence and not to discuss,
publish, communicate, transmit, disclose reproduce, or otherwise use such
Confidential Information, in any manner whatsoever, in whole or in part,
without dbn's prior written consent. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to you or
known by you as a consequence of or through your past, present or
prospective employment or business relationship with dbn, not generally
known and available in dbn's industry, which constitutes dbn's proprietary
and non-public method(s) of doing business, including, but not limited to,
any information related to trade secrets, pricing formulas, know-how, test
data, customer lists, vendor lists, training and operating manuals,
software, and reporting systems.
6. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information or business
relationships, you agree that during your employment and for a period of
one year after the termination of employment, for whatever reason, you
shall not, within a 100 mile radius of any city where you provided or
marketed services to or on behalf of dbn or to or on behalf of any customer
or potential customer of dbn, engage directly or indirectly, acting alone
or with others, voluntarily or involuntarily in any of the following
conduct:
a. solicit or attempt to solicit customers or potential customers of dbn
with a view towards diverting or attempting to divert from dbn any
business which dbn has enjoyed, to you or to any other individual,
firm, corporation, partnership, association or other entity other than
dbn who or which is competitive with dbn or engaged in a business
competitive with dbn's Business.
b. solicit any person or persons employed by or otherwise associated with
dbn for the purpose of terminating said employee's or person's
employment relationship or association with dbn.
c. own, operate, engage in, be interested in, control through stock
ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any
manner whatsoever in any role, an individual, firm, corporation,
partnership, association or other entity other than dbn who or which
is engaged in a business competitive with dbn or with dbn's Business.
7. You acknowledge dbn's exclusive right to ownership, possession and title to
all papers, documents, tapes, drawings, notebooks, formulas, customer
lists, software, hardware, trademarks, trade names, service marks,
processes, data, intellectual property, or other records, information, or
products prepared by you during your employment with dbn or provided by
dbn, or which otherwise come into your possession by reason of employment
with dbn. You agree not to make or permit to be made, except in pursuit of
your duties hereunder, any copies of such items. You further agree to
deliver to dbn upon request all such items in your possession and without
request to immediately deliver such items upon the termination, voluntarily
or involuntarily, of your employment.
8. You agrees to promptly disclose all ideas, inventions, and discoveries,
whether patentable, copyrightable, or not, relating to any present or
prospective business of dbn, including but not limited to software,
algorithms, designs, devices, processes, methods, formulae, techniques,
software, data storage systems, networks, servers, and any improvements to
the foregoing ("Inventions"). All Inventions made or conceived by you,
whether or not during the hours of your employment or with the use of dbn
facilities, materials, or personnel, either solely or jointly with others,
during the term of your employment by dbn shall be and remain the sole and
absolute property of dbn.
9. You hereby assign and agree to assign to dbn all of your rights to such
Inventions and to all proprietary rights therein, based thereon or related
thereto, including, but not limited to, applications for United States and
foreign letters patent and resulting letters patent. At the dbn's request
and expense, you shall execute such documents and provide such assistance
as may be deemed necessary by dbn to apply for, defend, propect or enforce
any United States and foreign letters patent based on or related to such
Inventions.
<PAGE>
10. You acknowledge and agree that all copyrightable Inventions are "works made
for hire" and consequently dbn owns all copyrights thereto while employed
by dbn. dbn shall have the sole and exclusive right to register the
copyright(s), or its assignees, in all such work in its name as the owner
and author of such work and shall have the exclusive rights conveyed under
all federal, state and local laws including, but not limited to, the right
to make all uses of the works in which attribution or integrity rights may
be implicated. Additionally, without in any way limiting the foregoing, you
hereby assign, transfer and convey to dbn, its successors, heirs and
assigns, any and all right, title or interest that you may now have, or may
acquire in the future, to the work including, but not limited to, all
ownership, patent (United States and foreign letters patent), trade secret,
trade names and trademarks, copyright moral, attribution and/or integrity
rights.
11. You acknowledge and agree that the covenants and agreements contained in
this Agreement are reasonable, and that you shall not raise any issue of
their reasonableness in any proceeding to enforce such covenants and
agreements. You further agree that any violation or breach by you and/or
your representatives of this Agreement would cause immediate and
irreparable harm to dbn, the exact amount of which will be impossible to
ascertain, and for that reason further agrees that dbn shall be entitled,
as a matter of right, to an injunction out of any court of competent
jurisdiction, restraining any further violation or breach of this
Agreement, such right to an injunction being cumulative and in addition to
whatever remedies dbn may have under applicable law and/or this Agreement.
You further agree to reimburse dbn for all costs and expenses, including
attorneys' fees, incurred by dbn in enforcing the terms of this Agreement
if dbn is the prevailing party.
12. Your execution and performance of this Agreement is not restricted or
prohibited by any agreement to which you are subject.
13. If the scope of any provision contained in this Agreement is deemed too
broad to permit enforcement of such provision to its full extent, then such
provision shall be enforced to the maximum extent permitted by law, and you
hereby consent that such provision may be reformed or modified accordingly,
and enforced as reformed or modified.
14. This Agreement shall be construed and enforced in accordance with the laws
of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the
County of St. Louis, State of Missouri, and waive any defense of an
inconvenient forum to the maintenance of any action or proceeding brought
in such court in connection with this Agreement, any objection to venue
with respect to any such action, and any right of jurisdiction on account
of the place of residence or domicile of any party to such action.
15. If any provision or part thereof of this Agreement is declared invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement, and any other
application thereof, shall not in any way be affected or impaired, and the
Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted.
16. This writing contains the agreement of the parties with respect to the
employment contemplated herein. No amendments or variations of the terms or
conditions of this Agreement shall be valid unless in writing and signed by
the parties hereto.
17. The waiver by either Party of a breach or violation of any provisions of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
18. This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their successors and assigns.
DIGITAL BROADCAST
NETWORK CORPORATION:
By: /S/ Bernie Schneider /S/ Rich Skoba
--------------------------- ---------------------------
Name: Bernie Schneider Rich Skoba
Title: CEO/President
Date: Date 7/25/99
----------------------
<PAGE>
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is by and between Digital Broadcast
Network Corporation, a Missouri corporation, having its principle offices at 977
Charter Commons, Chesterfield, Missouri 63017 ("dbn"), and Jeffrey Condon, an
individual residing at 7204 Mint Wood Lane, Fayetteville, NY 13066 ("Employee")
and is effective July 6, 1999.
1. In consideration of your employment by dbn and other good and valuable
consideration, you agree to devote your full business time and attention to
the business and affairs of dbn and to faithfully perform the duties
enumerated in this Agreement or in any exhibit attached hereto.
2. dbn shall pay you an annual base salary of $150,000, payable in equal bi-
monthly installments of $6,250.00, subject to customary withholding taxes
and other employment taxes as required. dbn will pay or reimburse you for
reasonable travel and other expenses incurred by you in the performance of
your duties, upon presentation of expense statements, vouchers or such
other reasonable supporting information as is generally required by dbn in
accordance with its expense account policies.
3. You shall be entitled to participate in any health insurance, life
insurance or benefit plans that dbn may offer to its employees on the same
basis and under the same terms as similarly situated employees
4. You understand and agree that your employment at dbn is not for any
specified term and that either dbn or you may terminate the employment
relationship with or without notice or cause at any time. The relationship
established hereunder is employment at will.
5. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information, you agree both
during your employment with dbn and at all times thereafter, to keep all
Confidential Information in the strictest confidence and not to discuss,
publish, communicate, transmit, disclose reproduce, or otherwise use such
Confidential Information, in any manner whatsoever, in whole or in part,
without dbn's prior written consent. For purposes of this Agreement,
"Confidential Information" shall mean any communication disclosed to you or
known by you as a consequence of or through your past, present or
prospective employment or business relationship with dbn, not generally
known and available in dbn's industry, which constitutes dbn's proprietary
and non-public method(s) of doing business, including, but not limited to,
any information related to trade secrets, pricing formulas, know-how, test
data, customer lists, vendor lists, training and operating manuals,
software, and reporting systems.
6. In order for dbn to reasonably protect its interests against the
competitive use of any of dbn's Confidential Information or business
relationships, you agree that during your employment and for a period of
one year after the termination of employment, for whatever reason, you
shall not, within a 100 mile radius of any city where you provided or
marketed services to or on behalf of dbn or to or on behalf of any customer
or potential customer of dbn, engage directly or indirectly, acting alone
or with others, voluntarily or involuntarily in any of the following
conduct:
a. solicit or attempt to solicit customers or potential customers of dbn
with a view towards diverting or attempting to divert from dbn any
business which dbn has enjoyed, to you or to any other individual,
firm, corporation, partnership, association or other entity other than
dbn who or which is competitive with dbn or engaged in a business
competitive with dbn's Business.
b. solicit any person or persons employed by or otherwise associated with
dbn for the purpose of terminating said employee's or person's
employment relationship or association with dbn.
c. own, operate, engage in, be interested in, control through stock
ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any
manner whatsoever in any role, an individual, firm, corporation,
partnership, association or other entity other than dbn who or which
is engaged in a business competitive with dbn or with dbn's Business.
7. You acknowledge dbn's exclusive right to ownership, possession and title to
all papers, documents, tapes, drawings, notebooks, formulas, customer
lists, software, hardware, trademarks, trade names, service marks,
processes, data, intellectual property, or other records, information, or
products prepared by you during your employment with dbn or provided by
dbn, or which otherwise come into your possession by reason of employment
with dbn. You agree not to make or permit to be made, except in pursuit of
your duties hereunder, any copies of such items. You further agree to
deliver to dbn upon request all such items in your possession and without
request to immediately deliver such items upon the termination, voluntarily
or involuntarily, of your employment.
8. You agrees to promptly disclose all ideas, inventions, and discoveries,
whether patentable, copyrightable, or not, relating to any present or
prospective business of dbn, including but not limited to software,
algorithms, designs, devices, processes, methods, formulae, techniques,
software, data storage systems, networks, servers, and any improvements to
the foregoing ("Inventions"). All Inventions made or conceived by you,
whether or not during the hours of your employment or with the use of dbn
facilities, materials, or personnel, either solely or jointly with others,
during the term of your employment by dbn shall be and remain the sole and
absolute property of dbn.
9. You hereby assign and agree to assign to dbn all of your rights to such
Inventions and to all proprietary rights therein, based thereon or related
thereto, including, but not limited to, applications for United States and
foreign letters patent and resulting letters patent. At the dbn's request
and expense, you shall execute such documents and provide such assistance
as may be deemed necessary by dbn to apply for, defend, propect or enforce
any United States and foreign letters patent based on or related to such
Inventions.
<PAGE>
10. You acknowledge and agree that all copyrightable Inventions are "works made
for hire" and consequently dbn owns all copyrights thereto. dbn shall have
the sole and exclusive right to register the copyright(s), or its
assignees, in all such work in its name as the owner and author of such
work and shall have the exclusive rights conveyed under all federal, state
and local laws including, but not limited to, the right to make all uses of
the works in which attribution or integrity rights may be implicated.
Additionally, without in any way limiting the foregoing, you hereby assign,
transfer and convey to dbn, its successors, heirs and assigns, any and all
right, title or interest that you may now have, or may acquire in the
future, to the work including, but not limited to, all ownership, patent
(United States and foreign letters patent), trade secret, trade names and
trademarks, copyright moral, attribution and/or integrity rights.
11. You acknowledge and agree that the covenants and agreements contained in
this Agreement are reasonable, and that you shall not raise any issue of
their reasonableness in any proceeding to enforce such covenants and
agreements. You further agree that any violation or breach by you and/or
your representatives of this Agreement would cause immediate and
irreparable harm to dbn, the exact amount of which will be impossible to
ascertain, and for that reason further agrees that dbn shall be entitled,
as a matter of right, to an injunction out of any court of competent
jurisdiction, restraining any further violation or breach of this
Agreement, such right to an injunction being cumulative and in addition to
whatever remedies dbn may have under applicable law and/or this Agreement.
You further agree to reimburse dbn for all costs and expenses, including
attorneys' fees, incurred by dbn in enforcing the terms of this Agreement
if dbn is the prevailing party.
12. Your execution and performance of this Agreement is not restricted or
prohibited by any agreement to which you are subject.
13. If the scope of any provision contained in this Agreement is deemed too
broad to permit enforcement of such provision to its full extent, then such
provision shall be enforced to the maximum extent permitted by law, and you
hereby consent that such provision may be reformed or modified accordingly,
and enforced as reformed or modified.
14. This Agreement shall be construed and enforced in accordance with the laws
of the State of Missouri, and the Parties hereby irrevocably and
unequivocally consent to the jurisdiction of the court sitting in the
County of St. Louis, State of Missouri, and waive any defense of an
inconvenient forum to the maintenance of any action or proceeding brought
in such court in connection with this Agreement, any objection to venue
with respect to any such action, and any right of jurisdiction on account
of the place of residence or domicile of any party to such action.
15. If any provision or part thereof of this Agreement is declared invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions of this Agreement, and any other
application thereof, shall not in any way be affected or impaired, and the
Agreement shall be construed in all respects as if such invalid, illegal or
unenforceable provisions are omitted.
16. This writing contains the agreement of the parties with respect to the
employment contemplated herein. No amendments or variations of the terms or
conditions of this Agreement shall be valid unless in writing and signed by
the parties hereto.
17. The waiver by either Party of a breach or violation of any provisions of
this Agreement shall not operate as or be construed to be a waiver of any
subsequent breach hereof.
18. This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their successors and assigns.
DIGITAL BROADCAST
NETWORK CORPORATION:
By: /S/ Bernie Schneider /S/ Jeffrey Condon
-------------------------- --------------------------
Name: Bernie Schneider Jeffrey Condon
Title: CEO/President
Date: Date 8/3/99
---------------------
<PAGE>
EXHIBIT 10.23
SEPARATION AGREEMENT
--------------------
THIS SEPARATION AGREEMENT (this "Agreement") is made and entered into as of
this 11/th/ day of February 2000, by and between RICH SKOBA, a resident of St.
Louis County, Missouri ("Skoba"), and INTIRA CORPORATION, a Delaware corporation
("Intira").
RECITALS
--------
A. Skoba is one of the founders and executive officer of Intira.
B. Skoba and Intira are parties to that certain Employment Agreement,
dated as of March 3, 1998 (the "Employment Agreement"); Skoba and Intira are a
party to that certain Co-Sale Agreement dated the 30/th/ day of June, 1999 (the
"Co-Sale Agreement), Skoba and Intira are a party to that certain Voting
Agreement dated the 30/th/ day of June, 1999, and all amendments thereto (the
"Voting Agreement") and Skoba and Intira are a party to that certain Restricted
Common Stock Agreement dated the 3rd day of March, 1998 (the "Restricted Common
Stock Agreement") and that certain indemnification agreement dated June 15, 1998
("Indemnification Agreement").
C. Skoba desires to terminate his employment with Intira in order to
develop and pursue other business ventures.
D. Skoba and Intira desire to terminate the Employment Agreement and to
set forth herein the agreement between them regarding Skoba' separation from
employment with Intira.
E. For and in consideration of the covenants, agreements and
understandings set forth herein, and for other good and valuable consideration,
the receipt and adequacy of which is acknowledged by Skoba and Intira, Skoba and
Intira hereby agree as follows:
AGREEMENT
---------
1. Resignation. Skoba hereby resigns, effective as of the date hereof
-----------
which resignation shall be irrevocable and this Agreement shall constitute his
resignation, as an employee of Intira without any further action on the part of
Skoba or Intira. Intira shall pay and provide Skoba his current salary through
the date hereof, net of usual withholdings and Skoba shall provide such services
to Intira as requested by Intira through the date hereof. Skoba and Intira
hereby terminate the Employment Agreement effective as of the date hereof;
provided, however, that Section 4 of the Employment Agreement (but not any other
Sections of the Employment Agreement that could apply to such Section 4, such as
Section 8 of the Employment Agreement) shall survive and remain in full force
and effect as if republished and incorporated by reference herein.
2. Separation Payments and Other Benefits.
--------------------------------------
<PAGE>
a. In consideration of the covenants and agreements of Skoba set
forth in Section 3 hereof, Intira shall continue to pay Skoba, a bi-monthly
separation payment equal to Skoba's base gross bi-monthly income ($180,000),
minus applicable federal and state tax withholding) for 3 months beginning from
the date of this Agreement and continuing through and including May 11, 2000.
b. Intira shall continue to maintain, at the sole cost and expense
of Intira, health and dental insurance coverage, on the same terms, conditions
and coverage as exist on the date hereof, for Skoba and his eligible dependents
(which shall include those persons in Skoba' family currently covered under
Intira's health and insurance coverage) from the date hereof until August 11,
2000. Alternatively, Skoba may, at his option at any time between the date
hereof and August 11, 2000, obtain his own policy of health and dental insurance
coverage (on terms no less favorable than the terms under Intira's existing
coverage) for Skoba and his eligible dependents (which shall include those
persons in Skoba' family currently covered under Intira's health and insurance
coverage) and Intira shall pay the costs and expenses of such insurance coverage
until August 11, 2000 in an amount not to exceed the amount that Intira would be
responsible for under the first sentence of this Section 2.b.
c. Intira shall, in compliance with COBRA, offer Skoba and his
eligible dependents continuation coverage in compliance with COBRA from and
after August 11, 2000, at the sole cost and expense of Skoba.
d. The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts payable, or in any way diminish, Skoba'
rights under any benefit, 401(k), retirement, defined contribution, defined
benefit or other plan or arrangement as of the date of this Agreement.
e. As long as Skoba is in compliance with the additional terms of
this Agreement, Intira hereby irrevocably terminates and waives its Repurchase
Right and the corresponding right to assign such Repurchase Right as such terms
are defined in section 4.1 of the Restricted Stock Agreement and further agree
that all such shares owned by Skoba shall, for purposes of the Restricted Stock
Agreement, be deemed vested shares.
3. Non-Competition.
---------------
a. From the date hereof and for one (1) year thereafter (the
"Restricted Period"), Skoba shall not, within the continental United States,
directly or indirectly, acting alone or with others, voluntarily or
involuntarily, own, operate, engage in, have an interest in, control through
stock ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any manner
whatsoever in any role, any individual, firm, corporation, partnership,
association or other entity (other than Intira) who or which is engaged in
business as a "Netsourcing company" (as such terms are used and described in
Intira's current business plan, website or marketing materials which are
incorporated herein by this reference); provided, however, that the foregoing
restrictions shall not be construed or otherwise interpreted so as to prevent
Skoba from owning stock or other securities in a company
<PAGE>
EXHIBIT 10.24
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into as of
this 15th day of January, 2000, by and between JAMES ROBERTS, a resident of St.
Louis County, Missouri ("Roberts"), and DIGITAL BROADCAST NETWORK CORPORATION
d/b/a Intira Corporation, a Missouri corporation ("Intira").
RECITALS
--------
A. Roberts is one of the founders and officers of Intira.
B. Roberts and Intira are parties to that certain Employment Agreement,
dated as of March 3, 1998 (the "Employment Agreement"); Roberts and Intira are a
party to that certain Shareholders' Agreement dated as of March 3, 1999 (the
"Restricted Common Stock Agreement") and that certain indemnification agreement
dated June 15, 1998 ("Indemnification Agreement").
C. Roberts desires to terminate his employment with Intira in order to
develop and pursue other business ventures.
D. Roberts and Intira desire to terminate the Employment Agreement and to
set forth herein the agreement between them regarding Roberts' separation from
employment with Intira.
E. For and in consideration of the covenants, agreements and
understandings set forth herein, and for other good and valuable consideration,
the receipt and adequacy of which is acknowledged by Roberts and Intira, Roberts
and Intira hereby agree as follows:
AGREEMENT
---------
1. Resignation. Roberts hereby resigns, effective as of the 15th day of
-----------
January, 2000, which resignation shall be irrevocable and this Agreement shall
constitute his resignation, as an employee of Intira without any further action
on the part of Roberts or Intira. Intira shall pay and provide Roberts his
current base salary through January 15, 2000, net of usual withholdings and
Roberts shall provide such services to Intira as requested by Intira through
January 15, 2000. Roberts and Intira hereby terminate the Employment Agreement
effective as of January 15, 2000; provided, however, that Section 4 of the
Employment Agreement (but not any other Sections of the Employment Agreement
that could apply to such Section 4, such as Section 8 of the Employment
Agreement) shall survive and remain in full force and effect as if republished
and incorporated by reference herein.
2. Severance Payments and Other Benefits.
-------------------------------------
a. In consideration of the covenants and agreements of Roberts set
forth in Section 3 hereof, Intira shall continue to pay Roberts, a bi-monthly
severance payment equal to Roberts's base gross bi-monthly income, minus
applicable federal and state tax withholding) through and including July 15,
2000.
<PAGE>
b. Intira shall continue to maintain, at the sole cost and expense of
Intira, health and dental insurance coverage, on the same terms, conditions and
coverage as exist on the date hereof, for Roberts and his eligible dependents
(which shall include those persons in, Roberts' family currently covered under
Intira's health and insurance coverage) from the date hereof until January 14,
2001. Alternatively, Roberts may, at his option at any time between the date
hereof and January 14, 2001, obtain his own policy of health and dental
insurance coverage (on terms no less favorable than the terms under Intira's
existing coverage) for Roberts and his eligible dependents (which shall include
those persons in Roberts' family currently covered under Intira's health and
insurance coverage) and Intira shall pay the costs and expenses of such
insurance coverage until January 14, 2001 in an amount not to exceed the amount
that Intira would be responsible for under the first sentence of this Section
2.b.
c. Intira shall, in compliance with COBRA, offer Roberts and his
eligible dependents continuation coverage in compliance with COBRA from and
after January 14, 2001, at the sole cost and expense of Roberts.
d. The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts payable, or in any way diminish,
Roberts' rights under any benefit, 401(k), retirement, defined contribution,
defined benefit or other plan or arrangement as of the date of this Agreement.
3. Non-Competition.
---------------
a. From the date hereof and for one (1) year thereafter (the
"Restricted Period"), Roberts shall not, within the continental United States,
directly or indirectly, acting alone or with others, voluntarily or
involuntarily, own, operate, engage in, have an interest in, control through
stock ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any manner
whatsoever in any role, any individual, firm, corporation, partnership,
association or other entity (other than Intira) who or which is engaged in
business as a "Netsourcing company" (as such terms are used and described in
Intira's current business plan, website or marketing materials which are
incorporated herein by this reference); provided, however, that the foregoing
restrictions shall not be construed or otherwise interpreted so as to prevent
Roberts from owning stock or other securities in a company if (i) such stock or
securities are owned for investment purposes only, (ii) Roberts does not,
directly or indirectly, acting alone or with others, participate in the
management or operation of such company, and (iii) such company has a class of
stock publicly traded or tradeable on the New York Stock Exchange, The Nasdaq
National Market or any other recognized national stock exchange (no Internet
alternative trading system or order matching system shall be considered a
national stock exchange for this purpose).
b. During the Restricted Period, Roberts shall not, either directly or
indirectly, either on his own behalf or on behalf of any other individual, firm,
corporation, partnership, association or other entity, approach or solicit
customers of Intira as of the date hereof with a view towards diverting or
attempting to divert from Intira any business which Intira has enjoyed, to
Roberts or to any other individual, firm, corporation, partnership, association
or other entity. During the Restricted Period, Roberts shall not, directly or
indirectly, either on his own behalf or on behalf of any other individual, firm,
corporation, partnership, association or other entity, approach or solicit
-2-
<PAGE>
employees, consultants, or other associates of Intira with a view towards
terminating said employee's, consultant's or other associate's employment,
relationship or association with Intira; provided, however, that the foregoing
restrictions shall not apply to any person who shall have been terminated by
Intira.
c. Roberts shall keep all Confidential Information (as defined below
in this Section 3(c)) in the strictest confidence and shall not discuss,
publish, communicate, transmit, reproduce or otherwise disclose such
Confidential Information to anyone who is not a professional advisor of Roberts.
In the event that Roberts shall become legally compelled to disclose any of the
Confidential Information, Roberts shall provide Intira with prompt notice
thereof so that Intira may seek a protective order or other appropriate remedy
or waive compliance with the provisions of this Agreement. In the event that
such protective order or other remedy shall not be obtained by Intira or Intira
shall have waived compliance with the provisions of this Agreement, then Roberts
shall furnish or cause to be furnished only that portion of the Confidential
Information which Roberts shall have been legally required to furnish. The term
"Confidential Information," as used herein, shall mean any communication
disclosed to Roberts by Intira or known by Roberts as a consequence of or
through his past or present employment or business relationship with Intira,
which constitutes Intira's proprietary and non-public method(s) of doing
business, including, but not limited to, any information related to trade
secrets, pricing formulas, know-how, test data, customer lists, vendor lists,
training and operating manuals, software and reporting systems; provided,
however, that the term "Confidential Information" shall not include such
portions of any such communication or information which: (i) are or become
generally available to the public other than as a result of a disclosure by
Roberts in violation of his obligation of confidentiality hereunder; or (ii)
become available to Roberts on a non-confidential basis from a source which is
not prohibited from disclosing such information to Roberts by a legal,
contractual or fiduciary obligation to Intira.
4. Releases.
--------
a. Intira (on behalf of itself and its shareholders, officers,
directors, employees, affiliates, agents, successors and assigns) hereby
irrevocably, unconditionally and forever releases, waives, discharges and
covenants not to sue Roberts (and his heirs, personal representatives and
advisors) from and with respect to any and all claims, charges, debts,
judgments, demands, liabilities, obligations, damages and causes of action
(personal, statutory or otherwise) whether known or unknown, matured or
unmatured, fixed or contingent, which Intira (or its shareholders, officers,
directors, employees, affiliates, agents, successors and assigns) may have or
assert against Roberts (and his heirs and personal representatives), for any
reason whatsoever, for, or arising out of, or related to, or in connection with,
actions or omissions occurring or matters existing prior to or as of the date
hereof, including, but not limited to, any such matter as arises out of, relates
to or is in connection with Roberts' capacity as a shareholder, director,
officer or agent of Intira (including, for example, claims for breach of
fiduciary duties, corporate opportunities or otherwise). This release and
covenant shall not apply to actions to enforce the express terms and provisions
of this Agreement or to third party claims against Intira in connection with
Roberts' sale of his Intira stock. Intira also shall indemnify and hold harmless
Roberts (and his heirs and personal representatives) from any and all claims,
damages and losses (including reasonable attorneys' fees) suffered or incurred
by Roberts in connection with any personal guarantees made by Roberts, if any,
prior to the date hereof with respect to any debts or obligations of Intira.
-3-
<PAGE>
This is a full and general release which includes, without limitation,
a release of any right Intira may have to sue, with respect to the matters
described above: (1) under Title VII of the Civil Rights Act of 1964, as
amended, (2) under the Civil Rights Act of 1866, 42 U.S.C. (S) 1981, (3) under
the Age Discrimination in Employment Act, 29 U.S.C. (S) 621 et seq., (4) under
-------
the Missouri Human Rights Act, Chapter 213 of the Missouri Revised Statutes, (5)
under any ordinance of the City of St. Louis, (6) Executive Order 11246 or any
other state, federal, or local law, ordinance, or regulation dealing with
employment discrimination, discrimination on the basis of age or gender, or
other form of discrimination, or retaliation for filing any charge or claim,
complaining about any practice or conduct or participating or testifying in any
investigation, (7) under the Family and Medical Leave Act of 1993, 29 US.C (S)
2601 et seq., (8) under (S) 290.140 of the Missouri Revised Statutes, (8) under
-------
the National Labor Relations Act, (9) under the Employee Retirement Income
Security Act of 1974, as amended, (10) under the Missouri Minimum Wage Act,
Sections 290.500-530 of the Missouri Revised Statutes and Section 290.080 et
--
seq. of the Missouri Revised Statutes, (11) under any federal or state
securities laws, (12) under the Fair Labor Standards Act of 1938, as amended, or
the Equal Pay Act, (13) under the Consolidated Omnibus Budget Reconciliation Act
(COBRA) or any other law regarding insurance continuation, (14) for damages of
any kind including but not limited to damages for personal, emotional, or
economic injury, damage to reputation, breach of contract, wrongful discharge,
or violation of implied or express contract rights under any state, federal, or
local law, decision, or regulation, (15) for lost pay, reinstatement, liquidated
damages, or any other form of equitable relief, (16) for overtime pay, vacation
or sick pay, violation of any equal pay law, sex discrimination, severance pay,
attorneys' fees, expert's fees, or costs, and (17) for personal injury, slander,
libel, defamation, fraud, misrepresentation, intimidation, retaliation,
intentional tort, economic loss, intentional or negligent infliction of
emotional distress, costs, damages, punitive damage, front pay, failure to grant
insurance continuation, retaliation, retaliatory or wrongful discharge, breach
of contract, or breach of an implied contract.
This release shall not extinguish the obligation of Intira to
indemnify Roberts in accordance with the Indemnification Agreement or otherwise
its indemnification obligations arising under its articles or bylaws arising
prior to the date of this agreement.
b. Roberts (on behalf of himself and his heirs, personal
representatives and companies or other entities wholly-owned by Roberts and/or
Roberts and his spouse and/or children) hereby irrevocably, unconditionally and
forever releases, waives, discharges and covenants not to sue Intira (and its
shareholders, officers, directors, employees, affiliates, advisors, agents,
successors and assigns) from and with respect to any and all claims, charges,
debts, judgments, demands, liabilities, obligations, demands and causes of
action (personal, statutory or otherwise) whether known or unknown, matured or
unmatured, fixed or contingent, which Roberts (and his heirs, personal
representatives and companies or other entities wholly-owned by Roberts and/or
Roberts and his spouse and/or children) may have or assert against Intira, its
shareholders, officers, directors, employees, affiliates, advisors, agents,
successors and assigns, for any reason whatsoever, for, or arising out of, or
related to, or in connection with, actions or omissions occurring or matters
existing prior to or as of the date hereof. This release and covenant shall not
apply to (i) actions to enforce the express terms and conditions of this
Agreement, and (ii) any claim, charge, debt, judgement, liability, loss, cause
of action or other matter that does not arise out of or in connection with, or
relate to either (x) the business or operations of Intira or (y) the ownership
of Intira stock or other Intira securities.
-4-
<PAGE>
This is a full and general release which includes, without limitation,
a release of any right Roberts may have to sue, with respect to the matters
described above: (1) under Title V11 of the Civil Rights Act of 1964, as
amended, (2) under the Civil Rights Act of 1866, 42 U.S.C. (S) 1981, (3) under
the Age Discrimination In Employment Act, 29 U.S.C. (S) 621 et seq., (4) under
-------
the Missouri Human Rights Act, Chapter 213 of the Missouri Revised Statutes, (5)
under any ordinance of the City of St. Louis, (6) Executive Order 11246 or any
other state, federal, or local law, ordinance, or regulation dealing with
employment discrimination, discrimination on the basis of age or gender, or
other form of discrimination, or retaliation for filing any charge or claim,
complaining about any practice or conduct or participating or testifying in any
investigation, (7) under the Family and Medical Leave Act of 1993, 29 U.S.C. (S)
2601 et seq., (8) under (S) 290.140 of the Missouri Revised Statutes, (8) under
-------
the National Labor Relations Act, (9) under the Employee Retirement Income
Security Act of 1974, as amended, (10) under the Missouri Minimum Wage Act,
Sections 290.500-530 of the Missouri Revised Statutes and Section 290.080 et
--
seq. of the Missouri Revised Statutes, (11) under any federal or state
- ----
securities laws, (12) under the Fair Labor Standards Act of 1938, as amended, or
the Equal Pay Act, (13) under the Consolidated Omnibus Budget Reconciliation Act
(COBRA) or any other law regarding insurance continuation, (14) for damages of
any kind including but not limited to damages for personal, emotional, or
economic injury, damage to reputation, breach of contract, wrongful discharge,
or violation of implied or express contract rights under any state, federal, or
local law, decision, or regulation, (15) for lost pay, reinstatement, liquidated
damages, or any other form of equitable relief, (16) for overtime pay, vacation
or sick pay, violation of any equal pay law, sex discrimination, severance pay,
attorneys' fees, expert's fees, or costs, and (17) for personal injury, slander,
libel, defamation, fraud, misrepresentation, intimidation, retaliation,
intentional tort, economic loss, intentional or negligent infliction of
emotional distress, costs, damages, punitive damage, front pay, failure to grant
insurance continuation, retaliation, retaliatory or wrongful discharge, breach
of contract, or breach of an implied contract.
Roberts hereby waives any and all rights to request a service letter
under Section 290.140 R.S.Mo., and agrees not to request any such letter.
Roberts further agrees that for purposes of any such letter or other inquiry,
the reason for his cessation of employment is his voluntary resignation.
5. Rights as Shareholder. The provisions of this Agreement shall not
---------------------
affect or otherwise diminish the rights that Roberts has as of the date hereof
as a shareholder of Intira provided however, Roberts hereby agrees (which such
agreement shall be binding on his successors and assigns) that, if so requested
by any representative of the underwriters (the "Managing Underwriter") in
connection with any registration of the offering of any securities of Intira
under the federal securities and exchange acts ("Securities Act"), Roberts shall
not sell or otherwise transfer any shares or other securities of Intira during
the 180-day period (or such other shorter period as may be requested in writing
by the Managing Underwriter and agreed to in writing by Intira) (the "Market
Standoff Period") following the effective date of a registration statement of
Intira filed tinder the Securities Act. Such restriction shall apply only to the
first registration statement of Intira to become effective under the Securities
Act that includes securities to be sold on behalf of Intira to the public in an
underwritten public offering under the Securities Act. Intira may impose stop-
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period. The obligation not to
sell shares of Intira during the Market Standoff Period shall apply to Roberts
only if Roberts receives terms relating thereto at least as favorable
-5-
<PAGE>
(applied to Roberts on the basis of the proportion of the number of shares owned
by Roberts to the number of shares owned by such other shareholder if such terms
depend upon the number of shares owned) as the terms agreed to by Intira or the
Managing Underwriter to induce any other shareholder who signs a similar
agreement not to sell shares of Intira, including without limitation, the
exclusion of any shares from such agreement or the reserving of shares for such
shareholder to purchase under Intira's first effective registration statement.
The immediately foregoing sentence shall not apply to: (i) Timothy M. Roberts or
the Roberts Family Trust, (ii) the rights of shareholders holding Series A
Preferred Stock that exist prior to their execution of any agreement requested
by the Managing Underwriter restricting the right to sell shares, or (iii) the
rights of Ascend Communications and Stifel Capco that exist prior to their
execution of any agreement requested by the Managing Underwriter restricting the
right to sell shares.
6. Invalidity of Provisions: Independence of Certain Provisions. In the
------------------------------------------------------------
event that any provision of this Agreement is adjudicated to be invalid or
unenforceable under applicable law, the validity or enforceability of the
remaining provisions shall be unaffected. To the extent that any court or other
body having appropriate jurisdiction determines that any provision of this
Agreement is invalid or unenforceable because it is too broad or otherwise
unreasonable (including the area and duration of the restraints on competition
provided in Section 3 hereof), such overbroad or unreasonable provision shall
not be void but rather shall be limited only to the extent required by
applicable law and enforced as so limited.
7. Governing Law. This Agreement shall be construed and governed by the
-------------
laws of the State of Missouri.
8. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of any successors or assigns of Intira and this Agreement shall
be binding upon and inure to the benefit of the heirs and personal
representatives of Roberts. In the event that Intira is merged with or
consolidated into another entity or sells or transfers all or substantially all
of its assets, then the survivor of such merger or consolidation or the
purchaser of such assets, as the case may be, shall assume all of the
obligations of Intira hereunder.
9. No Waiver. Any delay or failure by Intira or Roberts to exercise a right
---------
under this Agreement, or a partial or singe exercise of that right, shall not
constitute a waiver of that or any other right.
10. Entire Agreement. This writing contains the whole and entire agreement
----------------
of the parties hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous agreements, representations and understandings;
provided, however, that this Agreement shall not supersede or otherwise
terminate the Shareholders' Agreement or the Indemnification Agreement which
shall continue in full force and effect in accordance with their respective
terms.
11. Amendments. No amendments or variations of the term or conditions of
----------
this Agreement shall be valid unless in writing and signed by the parties
thereto.
-6-
<PAGE>
12. Registration Rights. Roberts shall be entitled to receive registration
-------------------
rights with respect to his shares of Intira stock on terms that are at least as
favorable as the terms granted by Intira to its officer(s), director(s),
executive(s), and/or employee(s).
13. Miscellaneous.
-------------
a. Intira and Roberts shall, within five (5) days after the date hereof,
change the billing on his cellular phone to his personal account and Roberts
shall thereafter pay all outstanding amounts due as of such date.
b. At the time of signing this Agreement, Intira and Roberts shall
cancel his Intira American Express credit cards, if any. Contemporaneous with
the execution of this Agreement, Roberts shall pay or otherwise reimburse Intira
for all personal obligations incurred by Roberts under such credit cards then
outstanding. Roberts hereby represents and warrants that he has no other credit
arrangements or obligations in respect of which Intira is or could become liable
in whole or part.
c. Intira shall promptly forward to Roberts (at the address set forth
in Section 14.a hereof or at such other address as Roberts may from time to time
designate in writing to Intira) personal mail, packages, faxes and other
correspondence sent to Roberts at the Intira offices from and after the date
hereof.
14. Counterpart Facsimile Execution. For purposes of this Agreement, a
-------------------------------
document (or signature page thereto) signed and transmitted by facsimile machine
or telecopier is to be treated as an original document. The signature of any
party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any party, any facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document.
No party may raise the use of a facsimile machine or telecopier or the fact that
any signature was transmitted through the use of a facsimile or telecopier
machine as a defense to the enforcement of this Agreement or any amendment or
other document executed in compliance with this Section 14.
15. Amendment to Shareholders' Agreement. The Company and Roberts agree
------------------------------------
that Article II.1 of the Shareholders' Agreement is hereby amended so that the
period that the Company has to exercise its option to repurchase Roberts' stock
shall begin on the date hereof and end on the date 60 days thereafter. The
Company and Roberts further agree that the Company shall only have the right to
exercise the option during said 60 day period in the event that Roberts either
breaches this Agreement and fails to cure such breach within 5 business days
after receipt of written notice from the Company, or engages in activity that
irreparably harms the Company. The parties agree that Roberts shall have no
opportunity to cure any activity that irreparably harms the Company. In the
event that the Company exercises its option hereunder, it shall pay the purchase
price by delivering a cashier's check to Roberts for the full amount of the
purchase price. All other terms of the Restricted Stock Agreement shall remain,
except as otherwise provided in section 15 of this Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Severance Agreement
as of the date above written.
I HAVE READ THIS SEVERANCE AGREEMENT, UNDERSTANDING ALL ITS TERMS, AND SIGN
IT AS MY FREE ACT AND DEED.
/s/ James Roberts
-----------------
James Roberts
I HAVE READ THIS SEVERANCE AGREEMENT & UNDERSTANDING ALL ITS TERMS, AND
SIGN IT ON BEHALF OF INTIRA AS THE FREE ACT AND DEED OF INTIRA WITH FULL
AUTHORITY TO EXECUTE THIS DOCUMENT ON BEHALF OF INTIRA.
DIGITAL BROADCAST NETWORK CORPORATION
d/b/a Intira Corporation
By:__________________________________
-8-
<PAGE>
LETTER OF UNDERSTANDING
-----------------------
This Letter of Understanding is made and entered into as of this 15th day
of January, 2000 by and between JAMES ROBERTS, a resident of St. Louis County,
Missouri ("Roberts") and DIGITAL BROADCAST NETWORK CORPORATION d/b/a INTIRA
CORPORATION, a Missouri corporation ("Intira"), as an addendum to the Severance
Agreement, a copy of which is attached.
1. Paragraph 3, Non-Competition, shall have no application to the
---------------
following entities:
. Phoenix Networks
1842 Lackland Hill Parkway
St. Louis, Missouri 63146
. Broadband Investment Group, L.L.C. ("Broadband")
1842 Lackland Hill Parkway
St. Louis, Missouri 63146
Roberts acknowledges that Timothy M. Roberts, who is affiliated with
Broadband, is subject to a restriction on solicitation of employees of Intira
and that Roberts will not accept employment with Broadband unless Intira waives
such restriction.
2. Roberts is entitled to ownership and possession, at no additional cost
to him, of the three (3) nature-scape framed photos by Peter Jackson that were
obtained for his office.
IN WITNESS WHEREOF, the undersigned have executed this Letter of
Understanding as the date above written.
JAMES ROBERTS DIGITAL BROADCAST NETWORK
CORPORATION d/b/a INTIRA CORPORATION
/s/ James Roberts By: /s/ David Boone
- --------------------------- -----------------------------
<PAGE>
EXHIBIT 10.25
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into as of
this 15th day of October 1999, by and between MARK IVIE, a resident of St. Louis
County, Missouri ("Ivie"), and DIGITAL BROADCAST NETWORK CORPORATION, a Missouri
corporation ("dbn").
RECITALS
--------
A. Ivie is one of the founders and executive officer of dbn.
B. Ivie and dbn are parties to that certain Employment Agreement, dated
as of March 1, 1999 (the "Employment Agreement"); Ivie and dbn are a party to
that certain Co-Sale Agreement dated the 30/th/ day of June, 1999 (the "Co-Sale
Agreement"), Ivie and dbn are a party to that certain Voting Agreement dated the
30/th/ day of June, 1999 (the "Voting Agreement") and Ivie and dbn are a party
to that certain Restricted Common Stock Agreement dated the 2nd day of February,
1998 (the "Restricted Common Stock Agreement") and that certain indemnification
agreement dated June 15, 1998 ("Indemnification Agreement").
C. Ivie desires to terminate his employment with dbn in order to develop
and pursue other business ventures.
D. Ivie and dbn desire to terminate the Employment Agreement and to set
forth herein the agreement between them regarding Ivie' separation from
employment with dbn.
E. For and in consideration of the covenants, agreements and
understandings set forth herein, and for other good and valuable consideration,
the receipt and adequacy of which is acknowledged by Ivie and dbn, Ivie and dbn
hereby agree as follows:
AGREEMENT
---------
1. Resignation. Ivie hereby resigns, effective as of the 31/st/ day of
-----------
October, 1999 which resignation shall be irrevocable and this Agreement shall
constitute his resignation, as an employee of dbn without any further action on
the part of Ivie or dbn. dbn shall pay and provide Ivie his current salary
through October 31, 1999, net of usual withholdings and Ivie shall provide such
services to dbn as requested by dbn through October 31, 1999. Ivie and dbn
hereby terminate the Employment Agreement effective as of the date hereof;
provided, however, that Section 4 of the Employment Agreement (but not any other
Sections of the Employment Agreement that could apply to such Section 4, such as
Section 8 of the Employment Agreement) shall survive and remain in full force
and effect as if republished and incorporated by reference herein.
2. Severance Payments and Other Benefits.
-------------------------------------
<PAGE>
a. In consideration of the covenants and agreements of Ivie set
forth in Section 3 hereof, dbn shall continue to pay Ivie, a bi-monthly
severance payment equal to Ivie's base gross bi-monthly income, minus applicable
federal and state tax withholding) through and including April 30, 2000.
b. dbn shall continue to maintain, at the sole cost and expense of
dbn, health and dental insurance coverage, on the same terms, conditions and
coverage as exist on the date hereof, for Ivie and his eligible dependents
(which shall include those persons in Ivie' family currently covered under dbn's
health and insurance coverage) from the date hereof until October 31, 2000.
Alternatively, Ivie may, at his option at any time between the date hereof and
October 31, 2000, obtain his own policy of health and dental insurance coverage
(on terms no less favorable than the terms under dbn's existing coverage) for
Ivie and his eligible dependents (which shall include those persons in Ivie'
family currently covered under dbn's health and insurance coverage) and dbn
shall pay the costs and expenses of such insurance coverage until October 31,
2000 in an amount not to exceed the amount that dbn would be responsible for
under the first sentence of this Section 2.b.
c. dbn shall, in compliance with COBRA, offer Ivie and his eligible
dependents continuation coverage in compliance with COBRA from and after October
31, 2000, at the sole cost and expense of Ivie.
d. The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts payable, or in any way diminish, Ivie'
rights under any benefit, 401(k), retirement, defined contribution, defined
benefit or other plan or arrangement as of the date of this Agreement.
3. Non-Competition.
---------------
a. From the date hereof and for one (1) year thereafter (the
"Restricted Period"), Ivie shall not, within the continental United States,
directly or indirectly, acting alone or with others, voluntarily or
involuntarily, own, operate, engage in, have an interest in, control through
stock ownership or otherwise, or become employed by, work for, advise, be
connected with, consult with or represent in any capacity or in any manner
whatsoever in any role, any individual, firm, corporation, partnership,
association or other entity (other than dbn) who or which is engaged in business
as a "Netsourcing company" (as such terms are used and described in dbn's
current business plan, website or marketing materials which are incorporated
herein by this reference); provided, however, that the foregoing restrictions
shall not be construed or otherwise interpreted so as to prevent Ivie from
owning stock or other securities in a company if (i) such stock or securities
are owned for investment purposes only, (ii) Ivie does not, directly or
indirectly, acting alone or with others, participate in the management or
operation of such company, and (iii) such company has a class of stock publicly
traded or tradeable on the New York Stock Exchange, The Nasdaq National Market
or any other recognized national stock exchange (no Internet alternative trading
system or order matching system shall be considered a national stock exchange
for this purpose).
<PAGE>
b. During the Restricted Period, Ivie shall not, either directly or
indirectly, either on his own behalf or on behalf of any other individual, firm,
corporation, partnership, association or other entity, approach or solicit
customers of dbn as of the date hereof with a view towards diverting or
attempting to divert from dbn any business which dbn has enjoyed, to Ivie or to
any other individual, firm, corporation, partnership, association or other
entity. During the Restricted Period, Ivie shall not, directly or indirectly,
either on his own behalf or on behalf of any other individual, firm,
corporation, partnership, association or other entity, approach or solicit
employees, consultants, or other associates of dbn with a view towards
terminating said employee's, consultant's or other associate's employment,
relationship or association with dbn; provided, however, that the foregoing
restrictions shall not apply to any person who shall have been terminated by
dbn.
c. Ivie shall keep all Confidential Information (as defined below in
this Section 3(c)) in the strictest confidence and shall not discuss, publish,
communicate, transmit, reproduce or otherwise disclose such Confidential
Information to anyone who is not a professional advisor of Ivie. In the event
that Ivie shall become legally compelled to disclose any of the Confidential
Information, Ivie shall provide dbn with prompt notice thereof so that dbn may
seek a protective order or other appropriate remedy or waive compliance with the
provisions of this Agreement. In the event that such protective order or other
remedy shall not be obtained by dbn or dbn shall have waived compliance with the
provisions of this Agreement, then Ivie shall furnish or cause to be furnished
only that portion of the Confidential Information which Ivie shall have been
legally required to furnish. The term "Confidential Information," as used
herein, shall mean any communication disclosed to Ivie by dbn or known by Ivie
as a consequence of or through his past or present employment or business
relationship with dbn, which constitutes dbn's proprietary and non-public
method(s) of doing business, including, but not limited to, any information
related to trade secrets, pricing formulas, know-how, test data, customer lists,
vendor lists, training and operating manuals, software and reporting systems;
provided, however, that the term "Confidential Information" shall not include
such portions of any such communication or information which: (i) are or become
generally available to the public other than as a result of a disclosure by Ivie
in violation of his obligation of confidentiality hereunder; or (ii) become
available to Ivie on a non-confidential basis from a source which is not
prohibited from disclosing such information to Ivie by a legal, contractual or
fiduciary obligation to dbn.
4. Releases.
--------
a. dbn (on behalf of itself and its shareholders, officers,
directors, employees, affiliates, agents, successors and assigns) hereby
irrevocably, unconditionally and forever releases, waives, discharges and
covenants not to sue Ivie (and his heirs, personal representatives and advisors)
from and with respect to any and all claims, charges, debts, judgments, demands,
liabilities, obligations, damages and causes of action (personal, statutory or
otherwise) whether known or unknown, matured or unmatured, fixed or contingent,
which dbn (or its shareholders, officers, directors, employees, affiliates,
agents, successors and assigns) may have or assert against Ivie (and his heirs
and personal representatives), for any reason whatsoever, for, or arising out
of, or related to, or in connection with, actions or omissions occurring or
matters existing prior to or as of
<PAGE>
the date hereof, including, but not limited to, any such matter as arises out
of, relates to or is in connection with Ivie' capacity as a shareholder,
director, officer or agent of dbn (including, for example, claims for breach of
fiduciary duties, corporate opportunities or otherwise). This release and
covenant shall not apply to actions to enforce the express terms and provisions
of this Agreement or to third party claims against dbn in connection with Ivie'
sale of his dbn stock. dbn also shall indemnify and hold harmless Ivie (and his
heirs and personal representatives) from any and all claims, damages and losses
(including reasonable attorneys' fees) suffered or incurred by Ivie in
connection with any personal guaranties made by Ivie, if any, prior to the date
hereof with respect to any debts or obligations of dbn.
This is a full and general release which includes, without
limitation, a release of any right dbn may have to sue, with respect to the
matters described above: (1) under Title VII of the Civil Rights Act of 1964, as
amended, (2) under the Civil Rights Act of 1866, 42 U.S.C. (S) 1981, (3) under
the Age Discrimination In Employment Act, 29 U.S.C. (S) 621 et seq., (4) under
-------
the Missouri Human Rights Act, Chapter 213 of the Missouri Revised Statutes, (5)
under any ordinance of the City of St. Louis, (6) Executive Order 11246 or any
other state, federal, or local law, ordinance, or regulation dealing with
employment discrimination, discrimination on the basis of age or gender, or
other form of discrimination, or retaliation for filing any charge or claim,
complaining about any practice or conduct or participating or testifying in any
investigation, (7) under the Family and Medical Leave Act of 1993, 29 U.S.C.
(S)2601 et seq., (8) under (S) 290.140 of the Missouri Revised Statutes, (8)
-------
under the National Labor Relations Act, (9) under the Employee Retirement Income
Security Act of 1974, as amended, (10) under the Missouri Minimum Wage Act,
Sections 290.500-530 of the Missouri Revised Statutes and Section 290.080 et
--
seq. of the Missouri Revised Statutes, (11) under any federal or state
- ----
securities laws, (12) under the Fair Labor Standards Act of 1938, as amended, or
the Equal Pay Act, (13) under the Consolidated Omnibus Budget Reconciliation Act
(COBRA) or any other law regarding insurance continuation, (14) for damages of
any kind including but not limited to damages for personal, emotional, or
economic injury, damage to reputation, breach of contract, wrongful discharge,
or violation of implied or express contract rights under any state, federal, or
local law, decision, or regulation, (15) for lost pay, reinstatement, liquidated
damages, or any other form of equitable relief, (16) for overtime pay, vacation
or sick pay, violation of any equal pay law, sex discrimination, severance pay,
attorneys' fees, expert's fees, or costs, and (17) for personal injury, slander,
libel, defamation, fraud, misrepresentation, intimidation, retaliation,
intentional tort, economic loss, intentional or negligent infliction of
emotional distress, costs, damages, punitive damage, front pay, failure to grant
insurance continuation, retaliation, retaliatory or wrongful discharge, breach
of contract, or breach of an implied contract.
This release shall not extinguish the obligation of dbn to indemnify
Ivie in accordance with the Indemnification Agreement or otherwise its
indemnification obligations arising under its articles or bylaws arising prior
to the date of this agreement.
b. Ivie (on behalf of himself and his heirs, personal
representatives and companies or other entities wholly-owned by Ivie and/or Ivie
and his spouse and/or children) hereby irrevocably, unconditionally and forever
releases, waives, discharges and covenants not to sue dbn (and its shareholders,
officers, directors, employees, affiliates, advisors, agents, successors
<PAGE>
and assigns) from and with respect to any and all claims, charges, debts,
judgments, demands, liabilities, obligations, damages and causes of action
(personal, statutory or otherwise) whether known or unknown, matured or
unmatured, fixed or contingent, which Ivie (and his heirs, personal
representatives and companies or other entities wholly-owned by Ivie and/or Ivie
and his spouse and/or children) may have or assert against dbn, its
shareholders, officers, directors, employees, affiliates, advisors, agents,
successors and assigns, for any reason whatsoever, for, or arising out of, or
related to, or in connection with, actions or omissions occurring or matters
existing prior to or as of the date hereof. This release and covenant shall not
apply to (i) actions to enforce the express terms and conditions of this
Agreement, and (ii) any claim, charge, debt, judgement, liability, loss, cause
of action or other matter that does not arise out of or in connection with, or
relate to either (x) the business or operations of dbn or (y) the ownership of
dbn stock or other dbn securities.
This is a full and general release which includes, without
limitation, a release of any right Ivie may have to sue, with respect to the
matters described above: (1) under Title VII of the Civil Rights Act of 1964, as
amended, (2) under the Civil Rights Act of 1866, 42 U.S.C. (S) 1981, (3) under
the Age Discrimination In Employment Act, 29 U.S.C. (S) 621 et seq., (4) under
-------
the Missouri Human Rights Act, Chapter 213 of the Missouri Revised Statutes, (5)
under any ordinance of the City of St. Louis, (6) Executive Order 11246 or any
other state, federal, or local law, ordinance, or regulation dealing with
employment discrimination, discrimination on the basis of age or gender, or
other form of discrimination, or retaliation for filing any charge or claim,
complaining about any practice or conduct or participating or testifying in any
investigation, (7) under the Family and Medical Leave Act of 1993, 29 U.S.C. (S)
2601 et seq., (8) under (S) 290.140 of the Missouri Revised Statutes, (8) under
-------
the National Labor Relations Act, (9) under the Employee Retirement Income
Security Act of 1974, as amended, (10) under the Missouri Minimum Wage Act,
Sections 290.500-530 of the Missouri Revised Statutes and Section 290.080 et
--
seq. of the Missouri Revised Statutes, (11) under any federal or state
- ----
securities laws, (12) under the Fair Labor Standards Act of 1938, as amended, or
the Equal Pay Act, (13) under the Consolidated Omnibus Budget Reconciliation Act
(COBRA) or any other law regarding insurance continuation, (14) for damages of
any kind including but not limited to damages for personal, emotional, or
economic injury, damage to reputation, breach of contract, wrongful discharge,
or violation of implied or express contract rights under any state, federal, or
local law, decision, or regulation, (15) for lost pay, reinstatement, liquidated
damages, or any other form of equitable relief, (16) for overtime pay, vacation
or sick pay, violation of any equal pay law, sex discrimination, severance pay,
attorneys' fees, expert's fees, or costs, and (17) for personal injury, slander,
libel, defamation, fraud, misrepresentation, intimidation, retaliation,
intentional tort, economic loss, intentional or negligent infliction of
emotional distress, costs, damages, punitive damage, front pay, failure to grant
insurance continuation, retaliation, retaliatory or wrongful discharge, breach
of contract, or breach of an implied contract.
Ivie hereby waives any and all rights to request a service letter
under Section 290.140 R.S.Mo., and agrees not to request any such letter. Ivie
further agrees that for purposes of any such letter or other inquiry, the reason
for his cessation of employment is his voluntary resignation.
<PAGE>
5. Rights as Shareholder. The provisions of this Agreement shall not
---------------------
affect or otherwise diminish the rights that Ivie has as of the date hereof as a
shareholder of dbn.
6. Invalidity of Provisions; Independence of Certain Provisions. In the
------------------------------------------------------------
event that any provision of this Agreement is adjudicated to be invalid or
unenforceable under applicable law, the validity or enforceability of the
remaining provisions shall be unaffected. To the extent that any court or other
body having appropriate jurisdiction determines that any provision of this
Agreement is invalid or unenforceable because it is too broad or otherwise
unreasonable (including the area and duration of the restraints on competition
provided in Section 3 hereof), such overbroad or unreasonable provision shall
not be void but rather shall be limited only to the extent required by
applicable law and enforced as so limited.
7. Governing Law. This Agreement shall be construed and governed by the
-------------
laws of the State of Missouri.
8. Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of any successors or assigns of dbn and this Agreement shall be
binding upon and inure to the benefit of the heirs and personal representatives
of Ivie. In the event that dbn is merged with or consolidated into another
entity or sells or transfers all or substantially all of its assets, then the
survivor of such merger or consolidation or the purchaser of such assets, as the
case may be, shall assume all of the obligations of dbn hereunder.
9. No Waiver. Any delay or failure by dbn or Ivie to exercise a right
---------
under this Agreement, or a partial or single exercise of that right, shall not
constitute a waiver of that or any other right.
10. Entire Agreement. This writing contains the whole and entire agreement
----------------
of the parties hereto with respect to the subject matter hereof and supersedes
all prior and contemporaneous agreements, representations and understandings;
provided, however, that this Agreement shall not supersede or otherwise
terminate the Co-Sale Agreement, the Voting Agreement, the Indemnification
Agreement or the Restricted Stock Purchase Agreement which shall continue in
full force and effect in accordance with their respective terms.
11. Amendments. No amendments or variations of the terms or conditions of
----------
this Agreement shall be valid unless in writing and signed by the parties
thereto.
12. Registration Rights. Ivie shall be entitled to receive registration
-------------------
rights with respect to his shares of dbn stock on terms that are at least as
favorable as the terms granted by dbn to its officer(s), director(s),
executive(s), and/or employee(s).
13. Miscellaneous.
-------------
a. dbn and Ivie shall, within five (5) days after the date hereof,
change the billing on his cellular phone to his personal account and Ivie shall
thereafter pay all outstanding amounts due as of such date.
<PAGE>
b. At the time of signing this Agreement, dbn and Ivie shall cancel
his American Express credit cards. Contemporaneous with the execution of this
Agreement, Ivie shall pay or otherwise reimburse dbn for all personal
obligations incurred by Ivie under such credit cards then outstanding. Ivie
hereby represents and warrants that he has no other credit arrangements or
obligations in respect of which dbn is or could become liable in whole or part.
c. dbn shall promptly forward to Ivie (at the address set forth in
Section 14.a hereof or at such other address as Ivie may from time to time
designate in writing to dbn) personal mail, packages, faxes and other
correspondence sent to Ivie at the dbn offices from and after the date hereof.
14. Counterpart Facsimile Execution. For purposes of this Agreement, a
-------------------------------
document (or signature page thereto) signed and transmitted by facsimile machine
or telecopier is to be treated as an original document. The signature of any
party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any party, any facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document.
No party may raise the use of a facsimile machine or telecopier or the fact that
any signature was transmitted through the use of a facsimile or telecopier
machine as a defense to the enforcement of this Agreement or any amendment or
other document executed in compliance with this Section 14.
IN WITNESS WHEREOF, the undersigned have executed this Severance Agreement
as of the date above written.
I HAVE READ THIS SEVERANCE AGREEMENT, UNDERSTANDING ALL ITS TERMS, AND SIGN
IT AS MY FREE ACT AND DEED.
/s/ Mark Ivie
--------------------------------
Mark Ivie
I HAVE READ THIS SEVERANCE AGREEMENT, UNDERSTANDING ALL ITS TERMS, AND SIGN
IT ON BEHALF OF DBN AS THE FREE ACT AND DEED OF DBN WITH FULL AUTHORITY TO
EXECUTE THIS DOCUMENT ON BEHALF OF DBN.
DIGITAL BROADCAST NETWORK CORPORATION
By: /s/ Richard Skoba
-----------------------------
Richard Skoba
Vice President of Channel Development
<PAGE>
EXHIBIT 10.26
INTIRA CORPORATION
AMENDED AND RESTATED
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Amended and Restated Settlement Agreement and Mutual Release
("Agreement") dated as of March 24, 2000 is made by and between Intira
Corporation, a Delaware corporation and successor by merger with digital
broadcast network corporation, a Missouri corporation (the "Company"), and
Timothy M. Roberts ("Roberts").
WHEREAS, the Company and Roberts, a founder of the Company, previously
entered into a Severance Agreement dated as of August 27, 1999 (the "Original
Severance Agreement") whereby the parties mutually agreed to terminate the
employment relationship and to release each other from any claims arising from
or related to the employment relationship;
WHEREAS, the Company and Roberts have previously entered into the Second
Amended and Restated Employment Agreement, dated as of March 29, 1999 (the
"Employment Agreement"), the Rights Agreement dated March 19, 1999 (the "Rights
Agreement"), the Memorandum of Understanding, dated May 9, 1999 (the "MOU" and
collectively with the Original Severance Agreement, the Employment Agreement and
the Rights Agreement the "Prior Agreements");
WHEREAS, the Company and Roberts desire to enter into this Agreement, which
will supersede all current or future obligations of the parties under the Prior
Agreements, and to clarify certain matters regarding the rights of the parties.
NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Roberts hereby agree as follows:
1. Payments. Company hereby authorizes Roberts to cash and receive
--------
payment under the $60,000 check previously delivered to him in connection with
the Original Severance Agreement. Roberts acknowledges and agrees that the
Company has no further payment obligations to Roberts as an employee, officer
or director.
2. Lock-Up Period for Equity Securities. Roberts has previously executed
------------------------------------
and delivered to Company a lock-up agreement and hereby agrees that, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter") in connection with any registration of an initial
public offering of securities of the Company under the Securities Act of 1933,
as amended (the "Securities Act"), Roberts shall execute a Lock-Up Agreement
in the form attached hereto as Exhibit A. Roberts agrees that the Company may
place a legend on Roberts' stock certificate evidencing the Lock-Up Agreement.
3. Stock Transfer Matters. Company acknowledges receipt and acceptance of
----------------------
Roberts' Affidavit pursuant to Rule 144(k) under the Securities Act of 1933 with
respect to all of the shares of Company common stock owned beneficially or of
record by Roberts ("Roberts' Shares"); Company shall cause the Company's stock
transfer agent, upon the surrender by Roberts of the certificates representing
Roberts' Shares, to promptly reissue certificates in replacement thereof which
do not bear a legend or other statement pertaining to any restrictions on the
transferability of the shares represented thereby other than as provided by the
Lock-Up Agreement; Company shall cause the Company's stock transfer agent to
promptly execute the stock transfer request instructions previously submitted by
Roberts by letters dated February 15,
<PAGE>
and March 24, 2000; Company shall cause the Company's stock transfer agent to
promptly execute any new stock transfer request instructions submitted by
Roberts prior to the commencement of any lock-up period provided in the Lock-
Up Agreement provided that such transferees agree to be bound by an agreement
with substantially the same terms as the Lock-Up Agreement; and Company shall
cause the Company's stock transfer agent, upon the request of Roberts at any
time after the expiration of the Lock-Up Period, to accept the surrender of
the certificates for Roberts' Shares and reissue replacement certificates
therefor which do not bear any legend or other statement pertaining to any
restrictions whatsoever on the transferability thereof.
4. Termination of Prior Agreements. The parties hereto agree that all
-------------------------------
Prior Agreements between the parties, including all previous employment
agreements, are hereby terminated and Roberts agrees that by signing this
Agreement he is not entitled to any additional capital stock or other
securities under the Prior Agreements.
5. Termination of Rights Under Shareholders Agreements. Roberts agrees
---------------------------------------------------
that all of Roberts' rights under any previous shareholder agreements,
including the Shareholders' Agreements dated March 3, 1998 (collectively, the
"Shareholders Agreements"), entered into by any among, the Company, Roberts
and each of Lou Cariffe, Mark Ivie, James Roberts and Richard Skoba are
terminated.
6. Statements and Filings. Company shall, in any formal written statement
----------------------
publicly distributed to more than ten people, in which it identifies or
otherwise lists its founders or organizers, include Roberts as a founder or
organizer as such. Company shall, in any prospectus or other offering document
relating to the initial public offering of its securities, list Roberts as a
founder of dbn who served as a director and executive officer of dbn until
August 1999 when he determined to leave dbn to pursue and develop other business
ventures and ideas. Neither party shall in any way make defamatory statements
concerning the other party or make or solicit any comments or statements, to the
media, financial underwriters, or the like, that are derogatory or detrimental
to the good name or business reputation of the other party.
7. Release of Claims.
-----------------
(a) Company Release. The Company (on behalf of itself and its
---------------
stockholders, officers, directors, employees, affiliates, agents,
successors and assigns) hereby irrevocably, unconditionally and forever
releases, waives, discharges and covenants not to sue Roberts (and his
heirs, personal representatives and advisors) from and with respect to
any and all claims, charges, debts, judgments, demands, liabilities,
obligations, damages and causes of action (personal, statutory or
otherwise) whether known or unknown, matured or unmatured, fixed or
contingent, which the Company (or its stockholders, officers, directors,
employees, affiliates, agents, successors and assigns) may have or assert
against Roberts (and his heirs and personal representatives), for any
reason whatsoever, for, or arising out of, or related to, or in
connection with, actions or omissions occurring or matters existing prior
to or as of the date hereof, including, but not limited to, any such
matter as arises out of, relates to or is in connection with Roberts'
capacity as a stockholder, director, officer or agent of the Company
(including, for example, claims for breach of fiduciary duties, corporate
opportunities or otherwise). This release and covenant shall not apply to
actions to enforce the express terms and provisions of this Agreement
with respect to matters occurring after the date hereof or to third party
claims against the Company in connection with Roberts' sale of Company
capital stock or for any personal obligations of Roberts (other than in
his capacity as an officer, director or employee of the Company). The
Company also shall indemnify and hold harmless Roberts (and his heirs and
personal representatives) from any and all claims, damages and losses
(including reasonable attorneys' fees) suffered or incurred by Roberts in
connection with any personal guaranties made by Roberts prior to the date
hereof with respect to any debts or obligations of the Company.
<PAGE>
(b) Roberts Release. Roberts (on behalf of himself and his heirs,
---------------
personal representatives and companies or other entities wholly-owned by
Roberts and/or Roberts and his spouse and/or children) hereby
irrevocably, unconditionally and forever releases, waives, discharges and
covenants not to sue the Company (and its stockholders, officers,
directors, employees, affiliates, advisors, agents, successors and
assigns) from and with respect to any and all claims, charges, debts,
judgments, demands, liabilities, obligations, damages and causes of
action (personal, statutory or otherwise) whether known or unknown,
matured or unmatured, fixed or contingent, which Roberts (and his heirs,
personal representatives and companies or other entities wholly-owned by
Roberts and/or Roberts and his spouse and/or children) may have or assert
against the Company, its stockholders, officers, directors, employees,
affiliates, advisors, agents, successors and assigns, for any reason
whatsoever, for, or arising out of, or related to, or in connection with,
actions or omissions occurring or matters existing prior to or as of the
date hereof. This release and covenant shall not apply to (i) actions to
enforce the express terms and conditions of this Agreement with respect
to matters occurring after the date hereof, (ii) any claim or right that
Roberts may have or assert against or from the Company or its predecessor
for indemnification by reason of the fact that he was an officer,
director and employee of digital broadcast network corporation
(predecessor to the Company) to the fullest extent set forth in the
Certificate of Incorporation and Bylaws of the Company, and (iii) any
claim, charge, debt, judgement, liability, loss, cause of action or other
matter that does not arise out of or in connection with, or relate to
either (x) the business or operations of the Company or (y) the purchase,
ownership or sale of Company capital stock or other Company securities.
8. Civil Code Section 1542. Roberts and the Company each represent that
-----------------------
they are not aware of any claim by either of them other than the claims that
are released by this Agreement. Roberts and the Company acknowledge that they
have been advised by legal counsel and are familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Roberts and the Company, being aware of said California Civil Code section,
agree to expressly waive any rights they may have thereunder, as well as under
any other statute or common law principles of similar effect.
9. Entire Agreement; Supersession of Prior Agreements. This Agreement
--------------------------------------------------
represents the entire agreement and understanding between the Company and
Roberts concerning Roberts' previous relationship with the Company, and
supersedes and replaces any and all prior agreements and any other agreements
and understandings concerning Roberts' relationship with the Company and his
compensation by the Company, including the Employment Agreement, the Rights
Agreement the MOU and the Original Severance Agreement.
10. Miscellaneous. The parties agree that the Agreement shall be governed
-------------
by and interpreted in accordance with the laws of the State of California. This
Agreement may be executed in counterparts, and each counterpart shall have the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.
IN WITNESS WHEREOF, the Parties have executed this Amended and Restated
Severance Agreement on the respective dates set forth below.
<PAGE>
INTIRA CORPORATION
Dated: March 27, 2000 By /s/ Bernard V. Schneider
------------------------------------
Bernard V. Schneider
President
TIMOTHY M. ROBERTS, an individual
Dated: March 27, 2000 By /s/ Timothy M. Roberts
------------------------------------
Timothy M. Roberts
<PAGE>
Exhibit A
---------
Goldman Sachs & Co. Lock-Up Agreement
<PAGE>
Exhibit 21.1
Subsidiary of the Registrant
Percentage
Name Owner
- ---- ----------
LPBDBN Corporation 100%
a corporation organized
under the laws of Canada
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Intira Corporation:
We consent to the use of our form of report included herein and to the
references to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.
St. Louis, Missouri
March 31, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 11,195
<SECURITIES> 11,852
<RECEIVABLES> 1,982
<ALLOWANCES> 176
<INVENTORY> 0
<CURRENT-ASSETS> 25,629
<PP&E> 72,672
<DEPRECIATION> 15,412
<TOTAL-ASSETS> 83,690
<CURRENT-LIABILITIES> 55,888
<BONDS> 0
0
42,750
<COMMON> 43,764
<OTHER-SE> (88,100)
<TOTAL-LIABILITY-AND-EQUITY> 83,690
<SALES> 4,048
<TOTAL-REVENUES> 4,048
<CGS> 26,987
<TOTAL-COSTS> 63,091
<OTHER-EXPENSES> 33,204
<LOSS-PROVISION> 2,900
<INTEREST-EXPENSE> 4,457
<INCOME-PRETAX> (62,533)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,533)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,533)
<EPS-BASIC> (3.13)
<EPS-DILUTED> (3.13)
</TABLE>
