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EXHIBIT 10.20
AKAMAI TECHNOLOGIES, INC.
15% SENIOR SUBORDINATED NOTES
AND
WARRANTS TO PURCHASE COMMON STOCK
PURCHASE AGREEMENT
DATED AS OF MAY 7, 1999
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TABLE OF CONTENTS
Page
PURCHASE AGREEMENT................................................................................................1
ARTICLE I PURCHASE, SALE AND TERMS OF SHARES......................................................................1
1.01 The Senior Subordinated Notes and Warrants to Purchase Common Stock......................................1
1.02 The Warrant Shares.......................................................................................1
1.03 Sale of Securities.......................................................................................2
1.04 The Closing..............................................................................................2
1.05 Second Closing...........................................................................................2
1.06 Use of Proceeds..........................................................................................3
1.07 Representations and Warranties by the Purchasers.........................................................3
ARTICLE II CONDITIONS TO THE PURCHASERS' OBLIGATION...............................................................4
2.01 Representations and Warranties...........................................................................4
2.02 Documentation at Closing.................................................................................4
2.03 Consents, Waivers, Etc...................................................................................5
2.04 Registration Rights......................................................................................5
2.05 Bring-Down Certificate...................................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................5
3.01 Organization and Standing................................................................................5
3.02 Corporate Action.........................................................................................6
3.03 Governmental Approvals...................................................................................6
3.04 Litigation...............................................................................................6
3.05 Certain Agreements of Officers and Key Employees.........................................................7
3.06 Compliance with Other Instruments........................................................................7
3.07 Material Contracts.......................................................................................8
3.08 ERISA....................................................................................................8
3.09 Transactions with Affiliates.............................................................................9
3.10 Assumptions or Guaranties of Indebtedness of Other Persons...............................................9
3.11 Investments in Other Persons; Subsidiaries...............................................................9
3.12 Securities Laws..........................................................................................9
3.13 Disclosure...............................................................................................9
3.14 Brokers or Finders......................................................................................10
3.15 Capitalization; Status of Capital Stock.................................................................10
3.16 Registration Rights.....................................................................................10
3.17 Books and Records.......................................................................................11
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3.18 Title to Assets; Patents................................................................................11
3.19 The Year 2000...........................................................................................12
3.20 Financial Statements....................................................................................12
3.21 No Undisclosed Liabilities..............................................................................12
3.22 Technology..............................................................................................13
ARTICLE IV COVENANTS OF THE COMPANY..............................................................................13
4.01 Affirmative Covenants of the Company Other Than Reporting Requirements..................................13
4.02 Negative Covenants of the Company.......................................................................15
4.03 Reporting Requirements..................................................................................17
ARTICLE V REMEDIES ON DEFAULT....................................................................................18
5.01 Acceleration............................................................................................18
5.02 No Waivers or Election of Remedies, Expenses, etc.......................................................18
ARTICLE VI DEFINITIONS AND ACCOUNTING TERMS......................................................................19
6.01 Certain Defined Terms...................................................................................19
6.02 Accounting Terms........................................................................................22
6.03 Knowledge. ............................................................................................23
ARTICLE VII MISCELLANEOUS........................................................................................23
7.01 No Waiver; Cumulative Remedies..........................................................................23
7.02 Amendments, Waivers and Consents........................................................................23
7.03 Addresses for Notices...................................................................................23
7.04 Costs, Expenses and Taxes...............................................................................24
7.05 Binding Effect; Assignment..............................................................................24
7.06 Survival of Representations and Warranties..............................................................24
7.07 Prior Agreements........................................................................................24
7.08 Severability............................................................................................24
7.09 Governing Law...........................................................................................25
7.10 Headings................................................................................................25
7.11 Counterparts............................................................................................25
7.12 Further Assurances......................................................................................25
7.13 Confidentiality.........................................................................................25
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SCHEDULE I List of Purchasers
EXHIBITS
--------
2.02B Opinion of Counsel
3.01 Foreign Qualifications
3.04 Litigation
3.07 Material Contracts
3.08 ERISA
3.09 Transactions with Affiliates
3.11 Investments in Other Persons; Subsidiaries
3.15 Capitalization; Status of Capital Stock
3.16 Registration Rights
3.18(a) Title to Assets
3.18(b) Intellectual Property
3.18(c) Compensation for use of Intellectual Property Rights
3.20 Financial Statements
3.21 Undisclosed Liabilities
3.22 Technology
A - Form of Note
B - Form of Warrant
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AKAMAI TECHNOLOGIES, INC.
000 Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
As of May 7, 1999
TO: The Persons listed on SCHEDULE I
RE: 15% SENIOR SUBORDINATED NOTES AND WARRANTS TO PURCHASE COMMON STOCK
Ladies and Gentlemen:
Akamai Technologies, Inc., a Delaware corporation (the "COMPANY"), agrees
with each of you as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF SECURITIES
1.01 THE SENIOR SUBORDINATED NOTES AND WARRANTS TO PURCHASE COMMON STOCK.
The Company has authorized the issuance and sale of (i) up to $15,000,000 in
aggregate principal amount of its 15% Senior Subordinated Notes (the "NOTES"),
which are to have the terms and provisions set forth in the form of Note
attached hereto as EXHIBIT A and (ii) warrants for the purchase of Common Stock,
$.01 par value per share, of the Company ("COMMON STOCK"), which are to have the
terms and provisions set forth in the form of Warrant attached hereto as EXHIBIT
B (the "WARRANTS"). All of the Notes shall be identical in all respects other
than their respective principal amounts, the date of issuance and the names of
the registered holders. All of the Warrants shall be identical in all respects
other than the number of shares of Common Stock which may be purchased
thereunder, the date of issuance and the names of the registered holders. The
Notes and the Warrants are sometimes referred to herein as the "SECURITIES."
1.02 THE WARRANT SHARES. The Company has authorized and has reserved and
covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock issuable upon exercise of the Warrants. Any
shares of Common Stock issuable upon exercise of the Warrants, and such shares
when issued, are herein referred to as the "WARRANT SHARES."
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1.03 SALE OF SECURITIES. Subject to the terms and conditions in this
Agreement, at the Closing (as hereinafter defined), the Company agrees to issue
to each person listed on SCHEDULE I attached hereto (individually, a "PURCHASER"
and, collectively, the "PURCHASERS"), and each Purchaser, severally and not
jointly, agrees to acquire from the Company the Securities set forth opposite
such Purchaser's name on Schedule I hereto. The aggregate purchase price of the
Securities being purchased by each Purchaser is set forth opposite such
Purchaser's name on SCHEDULE I.
1.04 THE CLOSING. The purchase and sale of the Securities shall take place
at a closing (the "CLOSING") to be held on or about May 7, 1999 at such location
and at such time as may be mutually agreed upon, subject to the satisfaction of
all of the conditions to the Closing specified in Article II herein. At the
Closing the Company will issue and deliver the Notes and Warrants to be sold at
the Closing to each of the Purchasers (or its nominee) against payment of the
full purchase price therefor by (i) wire transfer of immediately available funds
to an account designated by the Company, (ii) check payable to the order of the
Company or its designee, or (iii) any combination of (i) and (ii) above.
1.05 SECOND CLOSING.
(a) In the event that the Company shall not have sold all of the
Securities at the Closing, the Company and the Purchasers agree that at a second
closing to occur within 30 days of the Closing (the "SECOND CLOSING"), the
Company may issue and sell any of the unsold Securities ("ADDITIONAL
SECURITIES") to one or more person who becomes a party to this Agreement (the
"ADDITIONAL PURCHASERS"). The Company and the Purchasers further agree that (i)
the Company shall amend this Agreement solely to provide for the issuance of the
Additional Securities to the Additional Purchasers at the same price and under
the terms and conditions of this Agreement and (ii) the Additional Purchasers
shall become parties to this Agreement as amended by executing counterparts
hereof. The terms "SECURITIES", "NOTES", "WARRANT SHARES", "PURCHASER" and
"PURCHASERS", when used in this Agreement, shall respectively be deemed to
include such Additional Securities as are issued and such Additional Purchaser
and Additional Purchasers as exist from time to time and the term "CLOSING"
shall include the Second Closing where appropriate.
(b) The Second Closing shall be held at such location and at such
times and dates, as shall be specified by the Company and the Additional
Purchasers. At the Second Closing, the Company will issue and deliver the Notes
and Warrants to be sold at the Second Closing to each of the Purchasers (or its
nominee) against payment of the full purchase price therefor by (i) wire
transfer of immediately available funds to an account designated by the Company,
(ii) check payable to the order of the Company or its designee, or (iii) any
combination of (i) and (ii) above. At the Second Closing, the Additional
Purchasers purchasing Additional Securities shall have received a certificate
from the President of the Company stating that the representations and
warranties of the
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Company contained in Article III hereof and otherwise made by the Company in
writing in connection with the transactions contemplated hereby are true and
correct (giving effect to updates, if any, to the Exhibits setting forth
exceptions to the representations and warranties of the Company) and that all
conditions required to be performed prior to or at the Second Closing have been
performed as of such Second Closing.
1.06 USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Securities for working capital and general corporate purposes.
1.07 REPRESENTATIONS AND WARRANTIES BY THE PURCHASERS. Each of the
Purchasers represents and warrants, severally, but not jointly, that (a) it will
acquire the Securities to be acquired by it for its own account and that the
Securities are being and will be acquired by it for the purpose of investment
and not with a view to distribution or resale thereof; (b) the execution of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of such Purchaser, and this
Agreement has been duly executed and delivered, and constitutes a valid, legal,
binding and enforceable agreement of such Purchaser; (c) it has taken no action
which would give rise to any claim by any other person for any brokerage
commissions, finders' fees or the like relating to this Agreement or the
transactions contemplated hereby; (d) such Purchaser has had the opportunity to
ask questions of and receive answers from representatives of the Company
concerning the terms of the offering of the Securities and to obtain additional
information concerning the Company and its business; (e) such Purchaser has the
ability to evaluate the merits and risks of an investment in the Securities and
can bear the economic risks of such investment and (f) such Purchaser is an
"Accredited Investor" as such term is defined in Rule 501(a) promulgated under
the Securities Act. The acquisition by each Purchaser of the Securities acquired
by it shall constitute a confirmation of the representations and warranties made
by each such Purchaser as at the date of such acquisition. Each of the
Purchasers further represents that it understands and agrees that, until
registered under the Securities Act or transferred pursuant to the provisions of
Rule 144 as promulgated by the Commission, all Securities and certificates
evidencing any of the Warrant Shares, whether upon initial issuance or upon any
transfer thereof, shall bear a legend, prominently stamped or printed thereon,
reading substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND
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APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM
THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS."
ARTICLE II
CONDITIONS TO THE PURCHASERS' OBLIGATION
The obligation of any Purchaser to purchase and pay for the Securities to
be purchased by it at the Closing is subject to the satisfaction of the
following conditions:
2.01 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true and
correct on the date of the Closing.
2.02 DOCUMENTATION AT CLOSING. The Purchasers shall have received prior to
or at the Closing all of the following documents or instruments, or evidence of
completion thereof, each in form and substance satisfactory to the Purchasers
and their counsel:
(a) A copy of the Certificate of Incorporation of the Company (the
"CERTIFICATE OF INCORPORATION"), certified by the Secretary of State of the
State of Delaware, a copy of the resolutions of the Board of Directors
evidencing approval of this Agreement, the issuance of the Notes and the
Warrants and the other matters contemplated hereby, and a copy of the By-laws of
the Company, all of which shall have been certified by the Secretary of the
Company to be true, complete and correct in every particular, and certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the
Securities.
(b) The opinion of Xxxx and Xxxx LLP, counsel to the Company, in the
form of EXHIBIT 2.02B attached hereto.
(c) A certificate of the Secretary of the Company which shall certify
the names of the officers of the Company authorized to sign this Agreement, the
certificates for the Notes and the Warrants and the other documents, instruments
or certificates to be delivered pursuant to this Agreement by the Company or any
of its officers, together with the true signatures of such officers. The
Purchasers may conclusively rely on such certificate until they shall receive a
further certificate of the Secretary or an Assistant Secretary of the Company
canceling or amending the prior certificate and submitting the signatures of the
officers named in such further certificate.
(d) A certificate of the President of the Company stating that the
representations and warranties of the Company contained in Article III hereof
and
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otherwise made by the Company in writing in connection with the transactions
contemplated hereby are true and correct and that all conditions required to be
performed prior to or at the Closing have been performed as of the Closing.
(e) Certificates of Good Standing for the Company from the
Secretaries of State of the States of Delaware and California, and the
Commonwealth of Massachusetts.
(f) The Company shall have paid costs and expenses identified in
Section 7.04.
2.03 CONSENTS, WAIVERS, ETC. Prior to the Closing, the Company shall have
obtained all consents or waivers, if any, necessary to execute and deliver this
Agreement, issue the Notes and the Warrants and to carry out the transactions
contemplated hereby and thereby, and all such consents and waivers shall be in
full force and effect. All corporate and other action and governmental filings
necessary to effectuate the terms of this Agreement, the Notes and the Warrants
and other agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken, except for any post-sale
filing that may be required under federal or state securities laws. In addition
to the documents set forth above, the Company shall have provided to the
Purchasers any other information or copies of documents that they may reasonably
request.
2.04 REGISTRATION RIGHTS. The Company shall have obtained all consents and
waivers, if any, necessary under Section 11(d) of that certain Amended and
Restated Registration Rights Agreement dated April 16, 1999 among the Company
and the individuals and entities named therein (the "REGISTRATION RIGHTS
AGREEMENT") in order that the grant by the Company of registration rights with
respect to the Warrant Shares does not violate Section 11(h) of the Registration
Rights Agreement.
2.05 BRING-DOWN CERTIFICATE. At the Second Closing the Purchaser(s)
purchasing Notes and Warrants shall have received a bring-down certificate and
shall be entitled to receive such other certificates, opinions and other
documents as shall be reasonably requested.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants as follows as of the date hereof
and as of the date of the Closing:
3.01 ORGANIZATION AND STANDING. The Company is a duly organized and validly
existing corporation in good standing under the corporate laws of the State of
Delaware
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and has all requisite corporate power and authority for the ownership and
operation of its properties and for the carrying on of its business as now
conducted or as now proposed to be conducted. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted, by it makes such licensing or
qualification necessary as set forth in EXHIBIT 3.01, except where the failure
to so qualify would not have a material adverse effect on the business,
operations, affairs or condition of the Company or in its properties or assets
taken as a whole, or which might call into question the validity of this
Agreement, any of the Securities, or any action taken or to be taken pursuant
hereto or thereto (a "MATERIAL ADVERSE EFFECT").
3.02 CORPORATE ACTION. The Company has all necessary corporate power and
has taken all corporate action required to enter into and perform this
Agreement, the Notes, the Warrants and any other agreements and instruments
executed in connection herewith (collectively, the "FINANCING DOCUMENTS"). The
Financing Documents are valid and binding obligations of the Company,
enforceable in accordance with their terms. The issuance, sale and delivery of
the Securities in accordance with this Agreement and the issuance, sale and
delivery of the Warrant Shares have been duly authorized and reserved for
issuance by all necessary corporate action on the part of the Company.
Sufficient authorized but unissued shares of Common Stock have been reserved by
appropriate corporate action in connection with the prospective exercise of the
Warrants, and the issuance of the Securities is not, and the issuance of the
Warrant Shares upon the exercise of the Warrants will not be, subject to
preemptive rights or other preferential rights in any present stockholders of
the Company and will not conflict with any provision of any agreement or
instrument to which the Company is a party or by which it or its property is
bound.
3.03 GOVERNMENTAL APPROVALS. Except for the filing of any notice subsequent
to the Closing that may be required under applicable state and/or federal
securities laws (which, if required, shall be filed on a timely basis and a copy
of which shall be provided to the Purchasers and their counsel), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for the execution and delivery by the Company of this Agreement, for the offer,
issue, sale and delivery of the Securities and the Warrant Shares, or for the
performance by the Company of its obligations under this Agreement.
3.04 LITIGATION. Except as set forth in EXHIBIT 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against any officer or Key Employee relating
to such person's performance of duties for the Company or relating to his stock
ownership in the Company or otherwise relating to the business of the Company,
nor to the knowledge of the Company has there occurred
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any event or does there exist any condition on the basis of which any such
litigation, proceeding or investigation might properly be instituted. Neither
the Company nor, to the knowledge of the Company, any officer, Key Employee or
holder of more than 5% of the Common Stock of the Company (other than any
Purchaser) is in default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other governmental agency
specifically naming the Company or an officer of the Company. Except as set
forth in EXHIBIT 3.04, there are no actions or proceedings pending or, to the
knowledge of the Company, threatened against the Company or against any officer
or Key Employee which could reasonably be expected to result, either in any case
or in the aggregate, in any Material Adverse Effect. The foregoing sentences
include, without limiting their generality, actions pending or, to the knowledge
of the Company, threatened (or any basis therefor), involving the prior
employment of any of the Company's officers or employees (including any Key
Employees) or their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers.
3.05 CERTAIN AGREEMENTS OF OFFICERS AND KEY EMPLOYEES.
(a) To the knowledge of the Company, no officer or Key Employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the employment of any such officer or Key Employee by the Company,
the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary or confidential information
of others. The Company has no reason to believe that the employment of the
Company's officers and Key Employees will subject the Company or any Purchaser
to any liability to third-parties. The Company has entered into Noncompetition
and Nonsolicitation Agreements and Invention and Nondisclosure Agreements with
each of its employees.
(b) To the knowledge of the Company, no officer of the Company nor
any Key Employee of the Company whose termination, either individually or in the
aggregate, would have a Material Adverse Effect, has expressed any present
intention of terminating his employment with the Company.
3.06 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance in all
respects with the terms and provisions of this Agreement and of its Certificate
of Incorporation and By-laws, and in all material respects with the terms and
provisions of all mortgages, indentures, leases, agreements and other
instruments by which it is bound or to which it or any of its respective
properties or assets are subject. The Company is in compliance with all
judgments specifically naming the Company or any of the Founders, decrees,
governmental orders specifically naming the Company or any of the Founders,
statutes, rules or regulations by which it is bound or to which any of its
properties or assets
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are subject. Neither the execution and delivery of this Agreement or the
issuance of the Securities, nor the consummation of any transaction contemplated
by this Agreement, has constituted or resulted in or will constitute or result
in a default or violation of any term or provision of any of the foregoing
documents, instruments, judgments, agreements, decrees, orders, statutes, rules
and regulations.
3.07 MATERIAL CONTRACTS.
(a) Except as set forth on EXHIBIT 3.07, neither the Company nor any
of its properties or assets is a party to or bound by any (i) contract not made
in the ordinary course of business, or involving a commitment or payment by the
Company in excess of $50,000 or, in the Company's belief, otherwise material to
the business of the Company; (ii) contract among stockholders or granting a
right of first refusal or for a partnership or a joint venture or for the
acquisition, sale or lease of any assets or capital stock of the Company or any
other Person or involving a sharing of profits; (iii) mortgage, pledge,
conditional sales contract, security agreement, factoring agreement or other
similar contract with respect to any real or tangible personal property of the
Company; (iv) loan agreement, credit agreement, promissory note, guarantee,
subordination agreement, letter of credit or any other similar type of contract;
(v) contract with any governmental agency; or (vi) binding commitment or
agreement to enter into any of the foregoing. The Company has delivered or
otherwise made available to the Purchasers true, correct and complete copies of
the contracts listed on EXHIBIT 3.07 (except as noted thereon), together with
all amendments, modifications, supplements or side letters affecting the
obligations of any party thereunder.
(b) (i) Each of the contracts listed on EXHIBIT 3.07 is valid and
enforceable in accordance with its terms, and there is no default under any
contract listed on EXHIBIT 3.07 by the Company or, to the knowledge of the
Company, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder except where such default, individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect and (ii) no previous or
current party to any contract has given written notice to the Company of or made
a written claim with respect to any breach or default thereunder and the Company
has no knowledge of any notice of or claim with respect to any such breach or
default.
(c) With respect to the contracts listed on EXHIBIT 3.07 that were
assigned to the Company by a third party, all necessary consents to such
assignment have been obtained.
3.08 ERISA. Except as set forth on EXHIBIT 3.08, the Company does not make
and has no present intentions to make any contributions to any employee pension
benefit plans for its employees that are subject to ERISA.
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3.09 TRANSACTIONS WITH AFFILIATES. Except as set forth on EXHIBIT 3.09, as
contemplated hereby or consented to by the Purchasers in accordance with this
Agreement, there are no loans, leases, royalty agreements or other continuing
transactions between any Founder, officer, employee or director of the Company
or any Person owning 5% or more of any class of capital stock of the Company or
any member of the immediate family of such Founder, officer, employee, director
or stockholder or any corporation or other entity controlled by such officer,
employee, director or stockholder or a member of the immediate family of such
officer, employee, director or stockholder.
3.10 ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS. Except as
contemplated hereby or consented to by the Purchasers in accordance with this
Agreement, the Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor or otherwise to
assure the creditor against loss), any Indebtedness of any other Person.
3.11 INVESTMENTS IN OTHER PERSONS; SUBSIDIARIES. Except as set forth on
EXHIBIT 3.11 or consented to by the Purchasers in accordance with this
Agreement, the Company has not made any loan or advance to any Person which is
outstanding on the date of this Agreement, nor is it committed or obligated to
make any such loan or advance, nor does the Company own any capital stock,
assets comprising the business of, obligations of, or any interest in, any
Person except as disclosed in this Agreement. The Company has no Subsidiaries.
3.12 SECURITIES LAWS. The Company has complied with all applicable federal
and state securities laws in connection with the offer, issuance and sale of the
Securities. Prior to the Closing, neither the Company nor anyone acting on its
behalf has sold, offered to sell or solicited offers to buy the Securities or
similar securities to, or solicit offers with respect thereto from, or entered
into any preliminary conversations or negotiations relating thereto with, any
Person, so as to bring the issuance and sale of the Securities under the
registration provisions of the Securities Act, and applicable state securities
laws.
3.13 DISCLOSURE. Neither this Agreement nor any other agreement, document,
certificate or written statement furnished to the Purchasers or their counsel by
or on behalf of the Company in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact relating directly to the Company necessary in order to make the
statements contained herein or therein not misleading. There is no fact within
the knowledge of the Company which has not been disclosed herein or in writing
to the Purchasers and which taken by itself would constitute a circumstance
having a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company does not have any knowledge that there exists, or there
is pending
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or planned, any statute, rule, law, regulation, standard or code which would
have a Material Adverse Effect on the Company's business.
3.14 BROKERS OR FINDERS. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company or any of their
respective agents.
3.15 CAPITALIZATION; STATUS OF CAPITAL STOCK. The Company has a total
authorized capitalization consisting of (i) 22,000,000 shares of Common Stock,
par value $.01 per share, of which 7,080,885 shares are issued and outstanding
and (ii) 5,000,000 shares of Preferred Stock, par value $.01 per share, of which
(A) 1,100,000 shares are designated as Series A Convertible Preferred Stock, (B)
1,327,500 shares are designated as Series B Convertible Preferred Stock, and (C)
145,195 shares are designated as Series C Convertible Preferred Stock. The
number of shares of each class or series of the capital stock of the Company
that is issued and outstanding is set forth in EXHIBIT 3.15 hereto. All the
outstanding shares of capital stock of the Company have been duly authorized,
and are validly issued, fully paid and non-assessable. The Warrant Shares, when
issued and delivered in accordance with the terms hereof and after payment of
the purchase price therefor, will be duly authorized, validly issued, fully-paid
and non-assessable. Except as otherwise set forth in EXHIBIT 3.15, no options,
warrants, subscriptions or purchase rights of any nature to acquire from the
Company shares of capital stock or other securities are authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities except as contemplated by this Agreement.
Except as set forth in EXHIBIT 3.15, there are no restrictions on the transfer
of shares of capital stock of the Company other than those imposed by relevant
federal and state securities laws and as otherwise contemplated by this
Agreement, the Certificate of Incorporation, the Amended and Restated
Stockholders Agreement dated April 16, 1999 by and among the Company and certain
stockholders of the Company (the "STOCKHOLDERS AGREEMENT"), the Registration
Rights Agreement and certain stock restriction and right of first refusal
agreements by and among the Company and certain stockholders of the Company.
Other than as provided in this Section and in the Stockholders Agreement, there
are no agreements, understandings, trusts or other collaborative arrangements or
understandings concerning the voting of the capital stock of the Company. The
offer and sale of all capital stock and other securities of the Company issued
before the Closing complied with or were exempt from all applicable federal and
state securities laws and no stockholder has a right of rescission with respect
thereto.
3.16 REGISTRATION RIGHTS. Except as set forth in EXHIBIT 3.16 and except
for the rights granted to the Purchasers and certain other parties pursuant to
the Registration Rights Agreement, no Person has demand or other rights to cause
the Company to file any registration statement under the Securities Act relating
to any securities of the Company or any right to participate in any such
registration statement.
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3.17 BOOKS AND RECORDS. The books of account, ledgers, order books, records
and documents of the Company accurately and completely reflect all material
information relating to the business of the Company, the location and collection
of its assets, and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company.
3.18 TITLE TO ASSETS; PATENTS.
(a) The Company has good and marketable title in fee to such of its
fixed assets, if any, as are real property, and good and marketable title to all
of its other assets and properties, free of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except those occurring in the
ordinary course of business and those indicated on EXHIBIT 3.18(a). The Company
enjoys peaceful and undisturbed possession under all leases under which it is
operating, and all said leases are valid and subsisting and in full force and
effect.
(b) The Company does not know of any claim, previously asserted,
pending, threatened or which may otherwise be asserted ("CLAIM") that would
interfere with, or adversely impact upon, the Company's unencumbered right to
use, make, sell, license, distribute, promote, apply, develop and make
derivative works of ("USE"), the patents, patent rights, permits, licenses,
trade secrets, trademarks (registered or unregistered), trademark rights, trade
names, trade name rights, franchises, copyrights (registered or unregistered),
inventions (regardless of whether patentable or not), software, confidential
information, innovations and other intellectual property rights being used to
conduct its business as now operated and as now proposed to be operated, or in
the development, manufacture, use, distribution or licensing of the Company's
proprietary technology, information, products, processes, or services
(collectively, the "INTELLECTUAL PROPERTY RIGHTS") (a list of all material
patents, trademarks, trade names, permits, and licenses Used by the Company is
attached hereto as EXHIBIT 3.18(b)); and the Company does not have any reason to
believe that the Use of the Intellectual Property Rights infringes, conflicts or
will conflict with valid rights of any other Person. No claim is known by the
Company to be pending or threatened to the effect that, and the Company has no
reason to believe that, any such Intellectual Property Right is invalid or
unenforceable by the Company or its licensor. Except as set forth in EXHIBIT
3.18(c), the Company has no obligation known by the Company to compensate any
Person for the use of any such Intellectual Property Rights, and except in the
ordinary course of business or as set forth in EXHIBIT 3.18(c), the Company has
not granted any Person any license or other rights to use in any manner any of
the Intellectual Property Rights of the Company, whether requiring the payment
of royalties or not.
3.19 THE YEAR 2000. Each item of hardware, software, information
technology, embedded, or processor based system and/or any combination thereof,
used, developed, manufactured, distributed, licensed, transferred or delivered,
by the Company
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(collectively, the "SYSTEM"), shall be able to correctly function, operate,
process data or perform date related calculations, including, but not limited
to, calculating, comparing and sequencing, from, into and between the years 1999
and 2000, accurately process, provide and/or receive date data, including leap
year calculations, into and between the years 1999, 2000 and beyond, shall
otherwise function as per the specifications thereof both before, during and
following January 1, 2000. Neither performance nor functionality of the System
shall be affected by dates prior to, during and after January 1, 2000. A System
containing or calling on a calendar function including, without limitation, any
function indexed to the CPU clock, and any function providing specific dates or
days, or calculating spans of dates or days shall record, store, process,
provide and, where appropriate, insert, true and accurate dates and calculations
for dates and spans, before, during and following January 1, 2000. The System
shall have no lesser functionality or operability with respect to records
containing dates, before, during or after January 1, 2000 than heretofore with
respect to dates prior to January 1, 2000.
3.20 FINANCIAL STATEMENTS. Attached hereto as EXHIBIT 3.20 are copies of
the unaudited balance sheet of the Company as of December 31, 1998, the
statements of income and retained earnings of the Company for the period ended
December 31, 1998, and the statements of cash flows of the Company for the
period ended December 31, 1998 (the "Financial Statements"). Each of the
Financial Statements was prepared in good faith, is complete and correct in all
material respects, has been prepared in accordance with generally accepted
accounting principles and in conformity with the practices consistently applied
by the Company and presents fairly the financial position, results of operations
and cash flows of the Company as of the dates and for the periods indicated.
3.21 NO UNDISCLOSED LIABILITIES. Except as set forth on EXHIBIT 3.21, the
Company has no liabilities (whether accrued, absolute, contingent or otherwise,
and whether due or to become due or asserted or unasserted), except (a)
obligations under contracts described in EXHIBIT 3.07 or under contracts that
are not required to be disclosed thereon as a result of dollar thresholds
therein; (b) liabilities provided for in the Financial Statements (other than
liabilities which, in accordance with generally accepted accounting principles,
need not be disclosed); (c) liabilities (other than accounts payable) incurred
since the Financial Statements, in the ordinary course of business consistent
with past practice, the sum of which is, in the aggregate, no greater than
$200,000; and (d) accounts payable in excess of those shown on the Financial
Statements, incurred in the ordinary course of business consistent with past
practice, the sum of which is, in the aggregate, not greater than $200,000.
3.22 TECHNOLOGY. Except as set forth in EXHIBIT 3.22 and other than the
Intellectual Property Rights licensed to the Company pursuant to the License
Agreement, the products, processes, proprietary technology and other proprietary
know-how owned or used by the Company were completely developed by the Company's
full-time employees only; the concepts, inventions and original works of
authorship owned or used by the Company
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were developed or conceived by employees within the scope of their employment by
the Company and are connected with the Company's underlying products, processes
and proprietary technology. No independent contractors or consultants were used
or employed by the Company in the development of the products, processes,
proprietary technology and other proprietary know-how owned or used by the
Company.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01 AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the payment of the unpaid principal
amount of the Notes, it will perform and observe the following covenants and
provisions, and will cause each Subsidiary, if and when such Subsidiary exists,
to perform and observe such of the following covenants and provisions as are
applicable to such Subsidiary:
(a) PAYMENT OF TAXES AND TRADE DEBT. Pay and discharge, and cause
each Subsidiary to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income, profits or business, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon any properties of the Company or any Subsidiary, provided that neither the
Company nor any Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by appropriate
proceedings if the Company or any Subsidiary shall have set aside on its books
sufficient reserves, if any, with respect thereto.
(b) MAINTENANCE OF INSURANCE. Obtain and maintain from reputable
insurance companies or associations a term life insurance policy on the lives of
each of X. Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxx the face amount equal to $2,000,000
each (so long as each remains an employee of the Company), which proceeds will
be payable to the order of the Company, and maintain insurance with a reputable
insurance company or association in such amount and covering such risks as is
customary coverage covering its properties and businesses customarily carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company or any Subsidiary operates for the type
and scope of its properties and businesses and maintain, and cause each
Subsidiary to maintain, such insurance. Except as may be required by holders of
Senior Indebtedness, the Company will not cause or permit any assignment of the
proceeds of the life insurance policies specified in the first sentence of this
paragraph and will not borrow against such policies.
(c) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain, and,
unless the Company deems it not to be in its best interests, cause each
Subsidiary to
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preserve and maintain, its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified, and cause each Subsidiary to qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties. Use commercially reasonable best efforts to secure,
preserve and maintain, and cause each Subsidiary to use commercially reasonable
best efforts to secure, preserve and maintain, all licenses and other rights to
use patents, processes, licenses, permits, trademarks, trade names, inventions,
intellectual property rights or copyrights owned or possessed by it and deemed
by the Company to be material to the conduct of its business or the business of
any Subsidiary.
(d) COMPLIANCE WITH LAWS. Comply, and cause each Subsidiary to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority, where noncompliance would have a Material
Adverse Effect.
(e) MAINTENANCE OF PROPERTIES; MATERIAL ASSETS. Use commercially
reasonable best efforts to maintain and preserve, and cause each Subsidiary to
use commercially reasonable best efforts to maintain and preserve, all of its
properties and assets, necessary for the proper conduct of its business, in good
repair, working order and condition, ordinary wear and tear excepted, including,
without limitation, the maintenance and preservation of any material patents,
licenses, permits or agreements being used by the Company in its business as now
operated and as now proposed to be operated, including that certain patent and
license agreement dated October 26, 1998 by and between the Massachusetts
Institute of Technology ("MIT") and the Company (the "LICENSE AGREEMENT").
(f) REQUIRED PREPAYMENT UPON CHANGE OF CONTROL. At the option of the
holders of 50% of the unpaid principal amount of the Notes then outstanding
exercised by delivery to the Company no later than 15 days prior to a Change of
Control or, if later, five (5) days after receipt of written notice from the
Company of a pending Change of Control, the Company shall prepay in cash in full
all principal then outstanding under the Notes concurrently with the
consummation of any such Change of Control, together with accrued and unpaid
interest thereon to the prepayment date, and any or all other amounts payable to
the holders of the Notes under or in respect of the Notes.
(g) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and cause each
Subsidiary to keep, adequate records and books of account in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
any Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, returns of merchandise, obsolescence, amortization,
taxes, bad debts and other purposes in connection with its business shall be
made.
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4.02 NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that until the
payment of the unpaid principal amount of the Notes, it will comply with and
observe the following covenants and provisions, and will cause each Subsidiary,
if and when such Subsidiary exists, to comply with and observe such of the
following covenants and provisions as are applicable to such Subsidiary, and
will not:
(a) LIMITATION ON INDEBTEDNESS. At any time permit the aggregate
amount of Indebtedness for Borrowed Money (including Senior Indebtedness but
excluding amounts owed under the Notes) to exceed $15,000,000.
(b) DISTRIBUTIONS. Declare or pay any dividends, purchase,
repurchase, redeem, retire, or otherwise acquire for value any of its capital
stock (or rights, options or warrants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, and will not make any
payment in cash, securities or other property or purchase on or in respect of,
or repurchase, redeem, retire or otherwise acquire for value, any indebtedness
of the Company that is subordinated by its express terms in right of payment to
the Notes, or permit any Subsidiary to do any of the foregoing (such
transactions being hereinafter referred to as "DISTRIBUTIONS"), except that any
such Subsidiary may declare and make payment of cash and stock dividends, return
capital and make distributions of assets to the Company, and EXCEPT as
specifically provided for in the Company's Certificate of Incorporation or if
such dividend, purchase, repurchase, redemption, retirement or other acquisition
for value is solely in the form of capital stock (or rights, options or warrants
to purchase such shares) of the Company; PROVIDED, HOWEVER, that nothing herein
contained shall prevent the Company from:
(i) effecting a stock split or declaring or paying any dividend
consisting of shares of any class of capital stock to the holders of shares of
such class of capital stock, or
(ii) redeeming any stock of a deceased stockholder out of
insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at the original
cost thereof held by officers, employees, directors or consultants of the
Company which are subject to restrictive stock purchase agreements under which
the Company has the option to repurchase such shares upon the occurrence of
certain events, including the termination of employment,
if in the case of any such transaction the payment can be made in compliance
with the other terms of this Agreement.
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(c) DEALINGS WITH AFFILIATES AND OTHERS. Other than as contemplated
by this Agreement, and other than transactions in the ordinary course of
business involving less than $50,000, enter into any transaction, including,
without limitation, any loans or extensions of credit or royalty agreements,
with any officer or director of the Company or any Subsidiary or holder of any
class of capital stock of the Company, or any member of their respective
immediate families or any corporation or other entity directly or indirectly
affiliated with one or more of such officers, directors or stockholders or
members of their immediate families unless such transaction is approved in
advance by a majority of disinterested members of the Board of Directors, or
absent such Board of Directors approval, by a majority in interest of holders of
the Notes.
(d) MERGER, CONSOLIDATION, ETC. Consolidate with or merge with or
into any other entity or sell, convey, transfer or lease all or substantially
all of its assets in a single transaction or a series of related transactions to
any Person unless:
(i) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by sale, conveyance, transfer or
lease all or substantially all of the assets of the Company shall have executed
and delivered to each holder of a Note its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement and
the Notes; and
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing.
(e) LIMITATION ON LIENS. Directly or indirectly create, incur, assume
or suffer to exist any Lien directly or indirectly securing Indebtedness for
Borrowed Money other than Senior Indebtedness.
(f) LAYERED DEBT. The Company will not create, assume, incur,
guarantee or suffer to exist any indebtedness, other than indebtedness evidenced
by the Notes, that is subordinate by its terms in right of payment to any Senior
Indebtedness unless such indebtedness, by its terms or the terms of the
instrument creating or evidencing it, is pari passu with the Notes or
subordinate in right of payment to the Notes pursuant to subordination
provisions substantially similar to those contained in the Note.
(g) RESTRICTED PAYMENTS. Make payments on, or purchase, repurchase,
redeem, retire or otherwise acquire for value, Indebtedness for Borrowed Money
that, by the express terms governing its repayment, is junior to, or pari passu
with, the Notes, without making a simultaneous payment, purchase, repurchase,
redemption, retirement or other acquisition for value to the holder of the Notes
in an amount which is in the same proportion to the unpaid balance of the Notes
as the amount of the payment, purchase, repurchase, redemption, retirement or
other acquisition for value bears to the unpaid principal amount of such
Indebtedness for Borrowed Money.
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4.03 REPORTING REQUIREMENTS. The Company will furnish the following to each
Purchaser who holds Notes with at least $1,000,000 in principal amount
outstanding:
(a) QUARTERLY REPORTS: as soon as available and in any event within
45 days after the end of each of the first three quarters of each fiscal year of
the Company, unaudited consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarter and consolidated statements of income
and cash flows of the Company and its Subsidiaries for such quarter and for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding fiscal year,
and including comparisons to quarterly budgets and a summary discussion of the
Company's principal functional areas, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief financial officer
of the Company as having been prepared in accordance with generally accepted
accounting principles consistently applied;
(b) ANNUAL REPORTS: as soon as available and in any event within 120
days after the end of each fiscal year of the Company, a copy of the annual
audit report for such year for the Company and its Subsidiaries, including
therein consolidated balance sheets of the Company and its Subsidiaries as of
the end of such fiscal year and consolidated statements of income of the Company
and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, all
such consolidated statements to be duly certified by the chief financial officer
of the Company and by such independent public accountants of recognized national
standing approved by a majority of the Board of Directors;
(c) NOTICES UNDER SENIOR DEBT: promptly after delivery thereof, a
copy of any notice provided by the Company to holders of Senior Indebtedness;
(d) STOCKHOLDERS' AND COMMISSION REPORTS: promptly upon sending,
making available, or filing the same, such reports and financial statements as
the Company or any Subsidiary shall send or make available to the stockholders
of the Company or file with the Commission.
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ARTICLE V
REMEDIES ON DEFAULT
5.01 ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (a), (f) or (g) of the definition of Event of Default in Section 6.01
of this Agreement has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 5.01, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus all accrued and unpaid interest
thereon (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
If any Event of Default has occurred and is continuing, and irrespective of
whether any Notes have become or have been declared immediately due and payable
under this Section 5.01, the holder of any Note at the time outstanding may
proceed to protect and enforce the rights of such holder by an action at law,
suit in equity or other appropriate proceeding, whether for the specific
performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
5.02 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. The Company will pay to
the holder of each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any enforcement or
collection under this Article V, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
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ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.01 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"AGREEMENT" means this Purchase Agreement as from time to time amended and
in effect between the parties, including all Exhibits hereto.
"BOARD OF DIRECTORS" means the board of directors of the Company as
constituted from time to time.
"CAPITAL LEASE" means leases required to be capitalized in accordance with
applicable Statements of Financial Accounting Standards, determined by
discounting all such payments at the interest rate determined in accordance with
applicable Statements of Financial Accounting Standards.
"CHANGE OF CONTROL" shall mean (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after such
merger or consolidation; (b) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (for purposes of this definition,
a "Person") of beneficial ownership of any capital stock of the Company if,
after such acquisition, such Person beneficially owns (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (i) the
then-outstanding shares of Common Stock of the Company (the "Outstanding Company
Common Stock") or (ii) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (b), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (ii) any acquisition by any corporation pursuant to
a transaction which results in all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such transaction
beneficially owning, directly or indirectly, more than 50% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election
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of directors, respectively, of the resulting or acquiring corporation in such
transaction (which shall include, without limitation, a corporation which as a
result of such transaction owns all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; (c) any sale of all or substantially all of the assets of the
Company; or (d) the complete liquidation of the Company.
"CLOSING" shall have the meaning attributable to it in Section 1.04 of this
Agreement.
"COMMISSION" means the Securities and Exchange Commission (or any other
federal agency administering the securities laws).
"COMMON STOCK" shall have the meaning attributable to it in Section 1.01 of
this Agreement.
"COMPANY" means and shall include Akamai Technologies, Inc., a Delaware
corporation, and its successors and assigns.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) the Company defaults in the payment of any amounts due under the
Notes when due;
(b) the Company defaults in observance of any covenants contained in
Sections 4.01, 4.02 and 4.03 which continue unremedied 20 days after written
notice thereof;
(c) the Company or any Subsidiary defaults (after any applicable
grace period) in the payment of any principal or interest or any other amount in
respect of Indebtedness for Borrowed Money (other than the Notes) of the Company
with an aggregate amount outstanding in excess of $2,000,000;
(d) a final judgment or final order of a court of competent
jurisdiction for the payment of money aggregating in excess of $2,000,000 is
rendered against the Company or its Subsidiary which judgment or order remains
uncontested, unappealed, unpaid, unstayed and uninsured for a period of 45 days;
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(e) any representation or warranty in this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made
where such failure to be correct has a Material Adverse Effect;
(f) the Company or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; and
(g) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect.
"FOUNDERS" shall mean X. Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxxxxxx Xxxxxx,
Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxx.
"INDEBTEDNESS FOR BORROWED MONEY" means all obligations, contingent and
otherwise, for borrowed money including liabilities secured by any mortgage on
property owned or acquired subject to such mortgage, whether or not the
liability secured thereby shall have been assumed, and also including (a) all
guaranties, endorsements and other contingent obligations, in respect of
Indebtedness for Borrowed Money of others, whether or not the same are or should
be so reflected in said balance sheet (or the notes thereto), except guaranties
by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business and (b) the present value of any
lease payments due under Capital Leases.
"KEY EMPLOYEE" means any Founder, the President, chief executive officer,
chief financial officer, chief operating officer, vice president of operations,
research, development, sales or marketing, or any other individual who performs
a significant role in the operations of the Company or a Subsidiary as may be
reasonably designated by the Board of Directors.
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"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholders' agreements, voting trust agreements and all similar
arrangements).
"PERSON" means an individual, corporation, partnership, joint venture,
trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"NOTES" shall have the meaning attributable to it in Section 1.01 of this
Agreement.
"PURCHASER" and "PURCHASERS" shall have that meaning attributable to those
words in Section 1.01 of this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"SENIOR INDEBTEDNESS" shall have the meaning attributable to it in the
Notes.
"SUBSIDIARY" or "SUBSIDIARIES" means any corporation, partnership, trust or
other entity of which the Company and/or any of its other Subsidiaries (as
herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
"WARRANT" shall have the meaning attributable to it in Section 1.01 of this
Agreement.
"WARRANT SHARES" shall have that meaning attributable to it in Section 1.02
of this Agreement.
6.02 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
consistently applied, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
6.03 KNOWLEDGE. All references to the knowledge or awareness of the Company
shall mean the knowledge of any director or Key Employee of the Company.
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ARTICLE VII
MISCELLANEOUS
7.01 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of any
party to this Agreement in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
7.02 AMENDMENTS, WAIVERS AND CONSENTS. Subject to the provisions of Section
6(c) of the Notes, any provision in this Agreement to the contrary
notwithstanding, and except as hereinafter provided, changes in or additions to
this Agreement may be made, and compliance with any covenant or provision set
forth herein may be omitted or waived, if the Company (i) shall obtain consent
thereto in writing from the holder or holders of at least 50% of the then
outstanding aggregate principal amount of the Notes, and (ii) shall deliver
copies of such consent in writing to any holders who did not execute such
consent. Any waiver or consent may be given subject to satisfaction of
conditions stated therein and any waiver or consent shall be effectively only in
the specific instance and for the specific purpose for which given.
Notwithstanding anything to the contrary contained herein, no consent of any
holder of the Notes shall be required to amend this Agreement to provide for the
issuance of Additional Securities to Additional Purchasers as provided in
Section 1.05 hereof.
7.03 ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth in SCHEDULE I hereto
or at such other address as to which such party may inform the other parties in
writing in compliance with the terms of this Section:
If to any other holder of the Securities: at such holder's address for
notice as set forth in the register maintained by the Company, or, as to each of
the foregoing, at the addresses set forth on SCHEDULE I hereto or at such other
address as shall be designated by such Person in a written notice to the other
parties complying as to delivery with the terms of this Section.
If to the Company: at the address set forth on page 1 hereof, or at such
other address as shall be designated by the Company in a written notice to the
other parties complying as to delivery with the terms of this Section, with a
copy to: Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx
X. Xxxxx, Esq.
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All such notices, requests, demands and other communications shall, when
mailed (which mailing must be accomplished by first class mail, postage prepaid;
express overnight courier service; or registered mail, return receipt requested)
or transmitted by facsimile, be effective three days after deposited in the
mails or upon transmission by facsimile, respectively, addressed as aforesaid,
unless otherwise provided herein.
7.04 COSTS, EXPENSES AND TAXES. The Company agrees to pay in connection
with the preparation, execution and delivery of this Agreement and the issuance
of the Securities, the reasonable out-of-pocket expenses of Xxxxx Communications
Fund, L.P. (including legal, accounting and other expenses), up to a maximum of
$15,000. In addition, the Company shall pay any and all stamp and other taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, the issuance of the Securities and the other
instruments and documents to be delivered hereunder or thereunder, and agrees to
save the Purchasers harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
7.05 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchasers and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations hereunder or to assign its
respective rights hereunder or any interest herein without the prior written
consent of the holders of at least a majority in interest of the Notes.
7.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties and agreements made in this Agreement, or any other instrument or
document delivered in connection herewith, shall survive the execution and
delivery hereof or thereof and until the payment of all amounts due under the
Notes.
7.07 PRIOR AGREEMENTS. This Agreement and the Notes constitute the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the purchase and sale of the Securities.
7.08 SEVERABILITY. The provisions of this Agreement and the Securities are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained in this Agreement or the Securities shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Agreement or the terms of the Securities; but this Agreement and the
terms of the Securities, as the case may be, shall be reformed and construed as
if such invalid or illegal or unenforceable provision, or part of a provision,
had never been contained herein, and such provisions or part reformed so that it
would be valid, legal and enforceable to the maximum extent possible.
-24-
29
7.09 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts.
7.10 HEADINGS. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
7.12 FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Securities.
7.13 CONFIDENTIALITY. Each Purchaser agrees that he or it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Purchaser may obtain from the Company pursuant to
this Agreement and which the Company has advised the Purchaser is protected
information, unless such information is known, or until such information becomes
known, to the public; provided, however, that such information may be disclosed
by the Purchaser to comply with applicable laws or governmental regulations, in
any court proceeding, in any action the Purchaser must take to protect and
enforce its rights under this Agreement if any Event of Default shall occur and
be continuing, provided that the Purchaser provides prior written notice of such
disclosure to the Company and takes reasonable and lawful action to avoid or
minimize the extent of such disclosure.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
THE COMPANY: AKAMAI TECHNOLOGIES, INC.
/s/ Xxxxxx Xxxxx
By:____________________________________
Name: Xxxxxx Xxxxx
Title: President
PURCHASERS: XXXXX COMMUNICATIONS FUND, L.P.
By: Xxxxx Capital Partners, LLC
its General Partner
/s/ Xxxxxx Xxxxx
By:____________________________________
Name: Xxxxxx Xxxxx
Title: Manager
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Investment Management Company,
as investment Advisor
/s/ Xxxx X. Xxxxxxxxx
By:____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: TCW Advisors (Bermuda), Ltd., as
general partner
/s/ Xxxxxxxx X. Tell, Jr.
By:____________________________________
Name: Xxxxxxxx X. Tell, Jr.
Title: Managing Director
-26-
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TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW Investment Management Company,
as Investment Advisor
/s/ Xxxx X. Xxxxxxxxx
By:____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: TCW (XXXX XX), L.P., as general
partner
By: TCW Advisors (Bermuda), Ltd., as
its general partner
/s/ Xxxxxxxx X. Tell, Jr.
By:____________________________________
Name: Xxxxxxxx X. Tell, Jr.
Title: Managing Director
TCW SHARED OPPORTUNITY FUND III, L.P.
By: TCW Asset Management Company, its
Investment Advisor
/s/ Xxxx X. Xxxxxxxxx
By:____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
/s/ Xxxxxxxx X. Tell, Jr.
By:____________________________________
Name: Xxxxxxxx X. Tell, Jr.
Title: Managing Director
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SHARED OPPORTUNITY FUND IIB, LLC
By: TCW Asset Management Company, its
Investment Advisor
/s/ Xxxx X. Xxxxxxxxx
By:____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
/s/ Xxxxxxxx X. Tell, Jr.
By:____________________________________
Name: Xxxxxxxx X. Tell, Jr.
Title: Managing Director
TCW SHARED OPPORTUNITY FUND II, L.P.
By: TCW Investment Management Company,
its Investment Advisor
/s/ Xxxx X. Xxxxxxxxx
By:____________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
/s/ Xxxxxxxx X. Tell, Jr.
By:____________________________________
Name: Xxxxxxxx X. Tell, Jr.
Title: Managing Director
POLARIS VENTURE PARTNERS II L.P.
[Illegible]
By:____________________________________
Name:
Title:
POLARIS VENTURE PARTNERS FOUNDERS FUND
II L.P.
[Illegible]
By:____________________________________
Name:
Title:
-28-
33
AT INVESTORS LLC
/s/ Xxxxxx X. Xxxxxx
By:____________________________________
Name: Xxxxxx X. Xxxxxx
Title:
/s/ Xxxxx X. Xxxxxx
__________________________________
Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxxx
__________________________________
Xxxxxx Xxxxxxxx
XXXXX XXXXX XXXXXX REVOCABLE TRUST
DATED DECEMBER 19, 1980
/s/ Xxxxx Xxxxx Xxxxxx
By:____________________________________
Name: Xxxxx Xxxxx Xxxxxx
Title: Trustee
/s/ Xxxx X. Xxxxxxxx III
__________________________________
Xxxx X. Xxxxxxxx III
/s/ Xxxxxx X. Xxxxxxx
__________________________________
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxx
__________________________________
Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxxxx
__________________________________
Xxxxx Xxxxxxxx
-29-
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/s/ Xxxxx Xxxx Xxxx
__________________________________
Xxxxx Xxxx Xxxx
/s/ Xxxx Xxxxx
__________________________________
Xxxx Xxxxx
/s/ Xxxxxxxx Xxxxxx
__________________________________
Xxxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
__________________________________
Xxxxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
__________________________________
Xxxxx Xxxxxx
-30-
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EXHIBIT A
FORM OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS
UNDER SAID ACT OR STATE SECURITIES LAWS.
No. ______
Akamai Technologies, Inc.
15% Senior Subordinated Note
$____________ Cambridge, Massachusetts
May 7, 1999
---------------------
Akamai Technologies, Inc., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to __________________ __________________,
or registered assigns, the principal sum of ____________________ Dollars
($_________) on May 6, 2004 or such earlier date as provided herein (the
"Maturity Date"), and to pay interest (computed on the basis of a 365-day year)
from the date hereof on the unpaid balance of such principal amount from time to
time outstanding at the rate of fifteen percent (15%) per annum. Such interest
is to be compounded annually and added to the principal amount of the Note on
May 6 of each year commencing May 6, 2000 and is due and payable on the Maturity
Date.
This Note is one of a series of the Company's Notes known as its 15% Senior
Subordinated Notes (collectively referred to herein as the "Notes"), all of like
tenor, except as to the date of issuance, identifying number and principal
amount thereof. The Notes are limited in aggregate original principal amount to
$15,000,000 and are issued or to be issued by the Company pursuant to the 15%
Senior Subordinated Notes and Warrants to Purchase Common Stock Purchase
Agreement dated May 7, 1999 among the Company, the original holder of this Note
and other purchasers of Notes (collectively referred to herein as the "Purchase
Agreement"), to which reference is made for a statement of certain additional
rights and benefits to which the holder of this Note is entitled.
36
1. SUBORDINATION.
(a) SUBORDINATION TO SENIOR INDEBTEDNESS. The indebtedness evidenced by
this Note, and the payment of the principal hereof, and any interest hereon, is
wholly subordinated, junior and subject in right of payment, to the extent and
in the manner hereinafter provided, to the prior payment of all Senior
Indebtedness of the Company now outstanding or hereinafter incurred. "Senior
Indebtedness" means the principal of, and premium, if any, and interest on (i)
all indebtedness of the Company for monies borrowed from banks, trust companies,
insurance companies and other financial institutions, including commercial paper
and accounts receivable sold or assigned by the Company to such institutions,
(ii) obligations of the Company as lessee under leases of real or personal
property, which obligations have been or should be, in accordance with generally
accepted accounting principles, capitalized on the books of the lessee, (iii)
principal of, and premium, if any, and interest on any indebtedness or
obligations of others of the kinds described in (i) and (ii) above assumed or
guaranteed in any manner by the Company, and (iv) deferrals, renewals,
extensions and refundings of any such indebtedness or obligations described in
(i), (ii) and (iii) above, unless such indebtedness, by its terms or the terms
of the instrument creating or evidencing it, is subordinate or pari passu in
right of payment to the Notes; PROVIDED that the aggregate principal amount of
Senior Indebtedness shall not in any event exceed $15,000,000 at any time
outstanding. Notwithstanding the foregoing, "Senior Indebtedness" shall not
include indebtedness of the Company evidenced by the other Notes, which shall
rank equally and ratably with this Note.
(b) NO PAYMENT UPON PAYMENT DEFAULT OR ACCELERATION OF SENIOR
INDEBTEDNESS. No payment on account of principal of or interest on the Notes
shall be made, and no Notes shall be redeemed or purchased directly or
indirectly by the Company (or any of its subsidiaries), if at the time of such
payment or purchase or immediately after giving effect thereto, there shall
exist or shall have occurred (i) any default by the Company in the payment of
principal of or interest on any Senior Indebtedness (a "Payment Default") or
(ii) an event of default (other than a Payment Default) with respect to any
Senior Indebtedness with an outstanding amount of at least $1,000,000, as
defined in the instrument under which the same is outstanding, permitting the
holders thereof to accelerate the maturity thereof (a "Covenant Default"), which
has resulted in the actual acceleration of such Senior Indebtedness; in each
case, of which the holders of the Notes shall have been given written notice and
such event of default or default shall not have been cured or waived or shall
not have ceased to exist.
37
(c) RESTRICTIONS ON PAYMENT UPON COVENANT DEFAULT IN SENIOR INDEBTEDNESS.
No payment on account of principal of or interest on the Notes shall be made,
and no Notes shall be redeemed or purchased directly or indirectly by the
Company (or any of its subsidiaries) during the period commencing with the date
on which a holder of Senior Indebtedness gives written notice to the holders of
the Notes of the occurrence of any Covenant Default and ending on the earlier of
(i) the date which is 180 days after the commencement of such period, and (ii)
the first date after the commencement of such period on which all such Covenant
Defaults are cured or waived ("Payment Blockage Period"); PROVIDED that (x) the
holders of Senior Indebtedness shall not be entitled to institute a Payment
Blockage Period more often than once within any period of three hundred sixty
(360) consecutive days and (y) no Covenant Default or event which, with the
giving of notice and/or lapse of time, would become a Covenant Default which
existed on the date of the commencement of any such Payment Blockage Period may
be used as the basis for any subsequent payment blockage notice unless such
Covenant Default or event, as the case may be, shall in the interim have been
cured or waived for a period of not less than ninety (90) consecutive days.
(d) PAYMENT UPON DISSOLUTION, ETC.
(i) Any bankruptcy, insolvency, reorganization, receivership,
composition, assignment for benefit of creditors or other similar proceeding
initiated by or against the Company or any dissolution or winding up or total or
partial liquidation or reorganization of the Company is hereinafter referred to
as a "Proceeding". Upon payment or distribution to creditors in a Proceeding of
assets of the Company of any kind or character, whether in cash, property or
securities, all principal and interest (including any interest accruing after
the commencement of the Proceeding, whether or not allowable), and any or all
other amounts payable to the holders of Senior Indebtedness under the Senior
Indebtedness, due upon any Senior Indebtedness shall first be paid in full, or
payment thereof in full duly provided for, before any holders of the Notes shall
be entitled to receive or, if received, to retain any payment or distribution on
account of the Notes; and upon any such Proceeding, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property or
securities, to which any holders of the Notes would be entitled except for the
provisions of this Section 1 shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by any holders of the Notes who shall have received
such payment or distribution, directly to the holders of the Senior Indebtedness
(pro rata to each such holder on the basis of the respective amounts of such
Senior Indebtedness held by such holder) or their representatives to the extent
necessary to pay all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to any holders of the
Notes. In the event of any Proceeding, the holders of Notes shall be entitled to
be paid one hundred percent (100%) of the principal amount thereof and accrued
interest thereon (including any interest accruing after the commencement of the
Proceeding, whether or not allowable), and any or all other amounts payable to
the
38
holders of the Notes under the Notes, before any distribution of assets shall be
made among the holders of debt subordinated to the Notes or any class of shares
of the capital stock of the Company in their capacities as holders of such
shares.
(ii) The holders of the Notes also agree that they shall take all
reasonable actions necessary to file and prove the full amount of all their
claims in any Proceeding, and the holders of the Notes shall not expressly, by
implication or by inaction waive any claim in any Proceeding without the written
consent of such holders of Senior Indebtedness.
(iii) For purposes of this Section 1(d), the words "assets" and "cash,
property or securities" shall not be deemed to include shares of Common Stock of
the Company as reorganized or readjusted, or securities of the Company or any
other person provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Section
1 with respect to the Notes to the payment of all Senior Indebtedness which may
at the time be outstanding, if (x) the Senior Indebtedness is assumed by the new
person, if any, resulting from any such reorganization or readjustment, and (y)
the rights of the holders of Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.
(e) SUBROGATION. Subject to payment in full of all Senior Indebtedness,
the holders of the Notes shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of the assets of the
Company made on such Senior Indebtedness until all principal and interest on the
Notes shall be paid in full; and for purposes of such subrogation, no payments
or distributions to the holders of Senior Indebtedness of any cash, property or
securities to which any holders of the Notes would be entitled except for the
subordination provisions of this Section 1 shall, as between the holders of the
Notes and the Company and/or its creditors other than the holders of the Senior
Indebtedness, be deemed to be a payment on account of the Senior Indebtedness.
(f) RIGHTS OF HOLDERS UNIMPAIRED. The provisions of this Section 1 are and
are intended solely for the purposes of defining the relative rights of the
holders of the Notes and the holders of Senior Indebtedness and nothing in this
Section 1 shall impair, as between the Company and any holders of the Notes, the
obligation of the Company, which is unconditional and absolute, to pay to the
holders of the Notes the principal thereof and interest thereon, and any or all
other amounts payable to the holders of the Notes under the Notes, in accordance
with the terms of the Notes, nor shall anything herein prevent any holders of
the Notes from exercising all remedies otherwise permitted by applicable law or
hereunder upon default, subject to the rights set forth above of holders of
Senior Indebtedness to receive cash, property or securities otherwise payable or
deliverable to the holders of the Notes.
39
(g) HOLDERS OF SENIOR INDEBTEDNESS. These provisions regarding
subordination will constitute a continuing offer to all persons who, in reliance
upon such provisions, become holders of, or continue to hold, Senior
Indebtedness; such provisions are made for the benefit of the holders of Senior
Indebtedness, and such holders are hereby made obligees under such provisions to
the same extent as if they were named therein, and they or any of them may
proceed to enforce such subordination. The holder of this Note shall execute and
deliver to any holder of Senior Indebtedness any such instrument as such holder
of Senior Indebtedness may request in order to confirm the subordination of this
Note to such Senior Indebtedness upon the terms set forth in this Note.
2. PREPAYMENT OF PRINCIPAL. Subject to the subordination provisions of Section
1, the principal indebtedness represented by this Note may be prepaid in whole
or in part by the Company at any time without premium or penalty upon 10 days'
prior written notice to the holder of this Note. Partial prepayments shall first
be applied to accrued and unpaid interest, and then principal. Any prepayment
shall be allocated among the Notes so that the amount prepaid with respect to
the Notes is pro rata based upon the aggregate outstanding principal on the
Notes.
3. EVENT OF DEFAULT.
Subject to the subordination provisions of Section 1, in case an Event of
Default, as defined in the Purchase Agreement shall occur and be continuing, the
outstanding principal and interest of this Note, and any or all other amounts
payable to the holders of the Notes under the Notes may be declared immediately
due and payable in the manner and with the effect provided in the Purchase
Agreement.
4. CERTAIN ADDITIONAL COVENANTS. The Company covenants to the holder of this
Note that, so long as the Company has or may have any obligation under this
Note:
(a) It will comply in all material respects with all applicable laws and
orders to which it may be subject, if failure so to comply would materially
impair its ability to perform its obligations under this Note.
(b) It will notify holder of this Note immediately upon the occurrence of
an Event of Default or any event or action which constitutes or is likely to
give rise to a Change of Control (as defined in the Purchase Agreement).
(c) It will not use the proceeds of the Notes in any manner that would
cause such borrowing or the application of such proceeds to violate any
applicable law, rule or regulation.
(d) This Note will rank pari passu with or senior to all other
indebtedness of the Company which is not Senior Indebtedness.
40
5. NOTE REGISTER.
(a) The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary.
(b) Each holder of a Note shall be deemed to have agreed by acceptance of
such Note, not to transfer Notes except in minimum denominations of $500,000 (or
if less with respect to any Note, the entire unpaid principal amount of such
Note).
(c) Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Note and of indemnity
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Note (in case of mutilation) the Company will make and deliver in lieu of
this Note a new Note of like tenor and unpaid principal amount and dated as of
the date to which interest has been paid on the unpaid principal amount of this
Note in lieu of which such new Note is made and delivered.
6. GENERAL.
(a) SUCCESSORS AND ASSIGNS. This Note, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of this Note, and their respective heirs, successors and
assigns.
(b) RECOURSE. Recourse under this Note shall be to the general assets of
the Company only and in no event to the officers, directors or stockholders of
the Company.
(c) CHANGES. Changes in or additions to this Note may be made and
compliance with any term, covenant, agreement, condition or provision set forth
herein may be omitted or waived (either generally or in a particular instance
and either retroactively or prospectively), upon written consent of the Company
and the holders of at least 50% of the principal amount of the Notes then
outstanding; PROVIDED, HOWEVER, that no change, addition, omission or waiver
which causes any change in or extension of the time of payment of the principal
amount or interest, or the reduction of the rate of interest on, or in any way
affects or impairs the obligation of the Company in respect of the principal of
or interest on, any Note, or causes any change in the provisions of Section 2 of
any Note, or impairs or affects the right to institute suit for payment of the
Note or causes any change in this Section 6(c), shall be made without the
written consent of the holder of such Note.
41
(d) CURRENCY. All payments shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.
(e) NOTICES. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the holder hereof at their respective addresses in accordance with
the notice provisions of the Purchase Agreement.
(f) SATURDAYS, SUNDAYS, HOLIDAYS. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in
Boston, Massachusetts shall be a legal holiday, then the date for the making of
that payment shall be the next subsequent day which is not a Saturday, Sunday or
legal holiday.
(g) GOVERNING LAW. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the
Commonwealth of Massachusetts.
(h) All payments made by the Company in respect of principal of, and
interest on, this Note will be made without set-off, counterclaim or other
defense. The Company shall pay on demand all stamp, documentary and other
similar duties and taxes, if any, to which this Note from time to time may be
subject or give rise.
(i) The Company agrees to pay on demand all of the costs and expenses of
the holder of this Note, including, without limitation, reasonable attorneys'
fees, in connection with the collection of any sums due to the holder of this
Note and the enforcement, protection or perfection of its rights or interests
hereunder.
(j) The Company may not assign any of its rights or delegate any of its
obligations under this Note (or any part thereof) without the prior written
consent of the holder of this Note.
(k) The Company hereby waives diligence, presentment, protest, demand, and
notice of every kind other than notices expressly provided herein or by the
Purchase Agreement or required by applicable law and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
42
IN WITNESS WHEREOF, this Note has been executed and delivered as a sealed
instrument on the date first above written by the duly authorized representative
of the Company.
AKAMAI TECHNOLOGIES, INC.
By:________________________________
Name:
Title:
ATTEST:________________________
Secretary
43
EXHIBIT B
FORM OF WARRANT
THIS WARRANT IS NON-TRANSFERRABLE.
THE SHARES OF COMMON STOCK ISSUED UPON
EXERCISE OF THIS WARRANT ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 4
OF THIS WARRANT.
-----------------------------------------------
Warrant No. ___ Number of Shares: _________
(subject to adjustment)
Date of Issuance: May 7, 1999
AKAMAI TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
(Void after May 7, 2004)
Akamai Technologies, Inc., a Delaware corporation (the "Company"), for
value received, hereby certifies that ________________________________, or its
registered assigns (the "Registered Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company, at any time or from time to time
on or after the date of issuance and on or before May 7, 2004 at not later than
5:00 p.m. (Boston, Massachusetts time), ______ shares of Common Stock, $0.01 par
value per share, of the Company, at a purchase price of $14.979 per share. The
shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the "Warrant Shares" and the "Purchase
Price," respectively.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in whole or in
part, by surrendering this Warrant, with the purchase form appended hereto as
EXHIBIT I duly executed by such Registered Holder or by such Registered Holder's
duly authorized attorney, at the principal office of the Company, or at such
other office or agency as the Company may
44
designate, accompanied by payment in full, in lawful money of the United States,
of the Purchase Price payable in respect of the number of Warrant Shares
purchased upon such exercise; PROVIDED, HOWEVER, that this Warrant may not be
exercised unless such exercise and the issuance of the Warrant Shares pursuant
thereto shall comply with all applicable federal and state securities laws.
(b) The Registered Holder may, at its option, elect to pay some or all of
the Purchase Price payable upon an exercise of this Warrant by cancelling a
portion of this Warrant exercisable for such number of Warrant Shares as is
determined by dividing (i) the total Purchase Price payable in respect of the
number of Warrant Shares being purchased upon such exercise by (ii) the excess
of the Fair Market Value per share of Common Stock as of the effective date of
exercise, as determined pursuant to subsection 1(c) below (the "Exercise Date")
over the Purchase Price per share. If the Registered Holder wishes to exercise
this Warrant pursuant to this method of payment with respect to the maximum
number of Warrant Shares purchasable pursuant to this method, then the number of
Warrant Shares so purchasable shall be equal to the total number of Warrant
Shares, minus the product obtained by multiplying (x) the total number of
Warrant Shares by (y) a fraction, the numerator of which shall be the Purchase
Price per share and the denominator of which shall be the Fair Market Value per
share of Common Stock as of the Exercise Date. The Fair Market Value per share
of Common Stock shall be determined as follows:
(i) If the Common Stock is listed on a national securities exchange,
the NASDAQ National Market System, the NASDAQ system, or another nationally
recognized exchange or trading system as of the Exercise Date, the Fair Market
Value per share of Common Stock shall be deemed to be the last reported sale
price per share of Common Stock thereon on the Exercise Date; or, if no such
price is reported on such date, such price on the next preceding business day
(provided that if no such price is reported on the next preceding business day,
the Fair Market Value per share of Common Stock shall be determined pursuant to
clause (ii)).
(ii) If the Common Stock is not listed on a national securities
exchange, the NASDAQ National Market System, the NASDAQ system or another
nationally recognized exchange or trading system as of the Exercise Date, the
Fair Market Value per share of Common Stock shall be deemed to be the amount
most recently determined by the Board of Directors to represent the fair market
value per share of the Common Stock (including without limitation a
determination for purposes of granting Common Stock options or issuing Common
Stock under an employee benefit plan of the Company); and, upon request of the
Registered Holder, the Board of Directors (or a representative thereof) shall
promptly notify the Registered Holder of the Fair Market Value per share of
Common Stock. In the event this Warrant is being exercised in connection with a
merger, sale or other transaction in which consideration is payable to the
holders of Common Stock, then the Fair Market Value per share of Common Stock
shall be the per share value of such consideration payable to such holders, as
determined in good faith by the Board of Directors. Notwithstanding the
foregoing, if the Board of Directors has not made such a determination within
the three-month period prior to the Exercise Date, then (A) the Fair Market
Value per share of Common Stock shall be the amount next determined by the Board
of Directors to represent the fair market value per share of the Common Stock
(including without limitation a determination for purposes of granting Common
Stock options or issuing Common Stock under an employee benefit plan of the
45
Company), (B) the Board of Directors shall make such a determination within 15
days of a request by the Registered Holder that it do so, and (C) the exercise
of this Warrant pursuant to this subsection 1(b) shall be delayed until such
determination is made.
(c) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above.
At such time, the person or persons in whose name or names any certificates for
Warrant Shares shall be issuable upon such exercise as provided in subsection
1(d) below shall be deemed to have become the holder or holders of record of the
Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within 10 days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of full Warrant
Shares to which such Registered Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Registered Holder would
otherwise be entitled, cash in an amount determined pursuant to Section 3
hereof; and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face or
faces thereof for the number of Warrant Shares equal (without giving effect to
any adjustment therein) to the number of such shares called for on the face of
this Warrant minus the sum of (a) the number of such shares purchased by the
Registered Holder upon such exercise plus (b) the number of Warrant Shares (if
any) covered by the portion of this Warrant cancelled in payment of the Purchase
Price payable upon such exercise pursuant to subsection 1(b) above.
2. ADJUSTMENTS.
(a) If outstanding shares of the Company's Common Stock shall be
subdivided into a greater number of shares or a dividend in Common Stock shall
be paid in respect of Common Stock, the Purchase Price in effect immediately
prior to such subdivision or at the record date of such dividend shall
simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of Warrant Shares purchasable upon the exercise of this Warrant shall be
changed to the number determined by dividing (i) an amount equal to the number
of shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Purchase Price in effect immediately prior to such
adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) If there shall occur any capital reorganization or reclassification of
the Company's Common Stock (other than a change in par value or a subdivision or
combination as provided for in subsection 2(a) above), or any consolidation or
merger of the Company with
46
or into another corporation, or a transfer of all or substantially all of the
assets of the Company, then, as part of any such reorganization,
reclassification, consolidation, merger or sale, as the case may be, lawful
provision shall be made so that the Registered Holder of this Warrant shall have
the right thereafter to receive upon the exercise hereof the kind and amount of
shares of stock or other securities or property which such Registered Holder
would have been entitled to receive if, immediately prior to any such
reorganization, reclassification, consolidation, merger or sale, as the case may
be, such Registered Holder had held the number of shares of Common Stock which
were then purchasable upon the exercise of this Warrant. In any such case,
appropriate adjustment (as reasonably determined in good faith by the Board of
Directors of the Company) shall be made in the application of the provisions set
forth herein with respect to the rights and interests thereafter of the
Registered Holder of this Warrant, such that the provisions set forth in this
Section 2 (including provisions with respect to adjustment of the Purchase
Price) shall thereafter be applicable, as nearly as is reasonably practicable,
in relation to any shares of stock or other securities or property thereafter
deliverable upon the exercise of this Warrant.
(c) When any adjustment is required to be made in the Purchase Price, the
Company shall promptly mail to the Registered Holder a certificate setting forth
the Purchase Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Such certificate shall also set forth the
kind and amount of stock or other securities or property into which this Warrant
shall be exercisable following the occurrence of any of the events specified in
subsection 2(a) or (b) above.
3. FRACTIONAL SHARES. The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the fair market value per share of Common
Stock, as determined in good faith by the Board of Directors of the Company.
4. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares may be sold or transferred to any
person who, immediately after the sale or transfer, holds or will hold (i) in
the case of a sale or transfer of this Warrant, a portion of this Warrant
covering at least 10,000 Warrant Shares, and (ii) in the case of a sale or
transfer of Warrant Shares, at least 10,000 Warrant Shares. Notwithstanding the
foregoing, this Warrant and the Warrant Shares may not be sold or transferred
unless either (i) they first shall have been registered under the Securities Act
of 1933, as amended (the "Act"), or (ii) if requested by the Company, the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act.
(b) Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for a sale or transfer made in accordance with Rule 144 under
the Act.
(c) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, and may
47
not be offered, sold or otherwise transferred, pledged
or hypothecated unless and until such securities are
registered under such Act or an opinion of counsel
satisfactory to the Company is obtained to the effect
that such registration is not required."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
5. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the exercise of this Warrant,
such number of Warrant Shares and other stock, securities and property, as from
time to time shall be issuable upon the exercise of this Warrant.
6. REGISTRATION RIGHTS. The Registered Holder and the holder of Warrant Shares
issued upon exercise of this Warrant shall have the same rights and obligations
with respect to registration under the Act and with respect to indemnification
in connection with any such registration as if (i) such Registered Holder or
holder were one of the Series B Purchasers under that certain Amended and
Restated Registration Rights Agreement dated as of April 16, 1999 among the
Company and the individuals and entities named therein (the "Registration Rights
Agreement") and (ii) the Warrant Shares were Series B Conversion Shares under
the Registration Rights Agreement. The rights of the Registered Holder and the
holder of Warrant Shares issued upon exercise of this Warrant shall continue
until not more than one year after the expiration or earlier exercise of this
Warrant.
7. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant and
(in the case of loss, theft or destruction) upon delivery of an indemnity
agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
8. TRANSFERS, ETC.
(a) The Company will maintain a register containing the names and
addresses of the Registered Holders of this Warrant. Any Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) Subject to the provisions of Section 4 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of EXHIBIT II hereto)
at the principal office of the Company.
(c) Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder of this Warrant as the absolute
owner hereof for all purposes; PROVIDED, HOWEVER, that if and when this Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
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9. MAILING OF NOTICES, ETC. All notices and other communications from the
Company to the Registered Holder of this Warrant shall be mailed by first-class
certified or registered mail, postage prepaid, to the address furnished to the
Company in writing by the last Registered Holder of this Warrant who shall have
furnished an address to the Company in writing. All notices and other
communications from the Registered Holder of this Warrant or in connection
herewith to the Company shall be mailed by first-class certified or registered
mail, postage prepaid, to the Company at its principal office set forth below.
If the Company should at any time change the location of its principal office to
a place other than as set forth below, it shall give prompt written notice to
the Registered Holder of this Warrant and thereafter all references in this
Warrant to the location of its principal office at the particular time shall be
as so specified in such notice.
10. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder of this Warrant shall not have or exercise any rights by
virtue hereof as a stockholder of the Company.
11. CHANGE OR WAIVER. This Warrant is one of a series of Warrants, all of like
tenor except as to the number of shares of Common Stock subject thereto, issued
by the Company pursuant to that certain 15% Senior Subordinated Notes and
Warrants to Purchase Common Stock Purchase Agreement dated as of May 7, 1999
among the Company and the individuals and entities named therein (collectively,
the "Company Warrants"). Any term of this Warrant may be amended or waived only
upon the written consent of the Company and the holders of Company Warrants
representing at least 50% of the number of shares of Common Stock then subject
to outstanding Company Warrants; provided that any such amendment or waiver must
apply to all Company Warrants then outstanding; and provided further that the
number of Warrant Shares subject to this Warrant and the Purchase Price of this
Warrant may not be amended, and the right to exercise this Warrant may not be
waived, without the written consent of the holder of this Warrant.
12. HEADINGS. The headings in this Warrant are for purposes of reference only
and shall not limit or otherwise affect the meaning of any provision of this
Warrant.
13. GOVERNING LAW. This Warrant will be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
AKAMAI TECHNOLOGIES, INC.
By:________________________________
Title:______________________________
Address: 000 Xxxxxxxx
Xxxxxxxxx, XX 00000
WITNESS:
_________________________
