Certificate of Incorporation - Akamai Technologies Inc.
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
FIRST. The name of the Corporation is: Akamai Technologies, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 5,000,000 shares, consisting of (i)
4,000,000 shares of Common Stock, $0.01 par value per share ("Common Stock"),
and (ii) 1,000,000 shares of Preferred Stock, $0.01 par value per share
("Preferred Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled
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to vote, irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of Delaware.
3. Dividends. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.
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FIFTH. The name and mailing address of the sole incorporator are as
follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Daniel M. Lewin 15 Charlesden Park
Newtonville, MA 02460.
</TABLE>
SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
SEVENTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
EIGHTH. 1. Actions, Suits and Proceedings Other than by or in the Right of
the Corporation. The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to,
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the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding anything to the contrary in this Article, except as set forth in
Section 7 below, the Corporation shall not indemnify an Indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated by
the Indemnitee unless the initiation thereof was approved by the Board of
Directors of the Corporation. Notwithstanding anything to the contrary in this
Article, the Corporation shall not indemnify an Indemnitee to the extent such
Indemnitee is reimbursed from the proceeds of insurance, and in the event the
Corporation makes any indemnification payments to an Indemnitee and such
Indemnitee is subsequently reimbursed from the proceeds of insurance, such
Indemnitee shall promptly refund such indemnification payments to the
Corporation to the extent of such insurance reimbursement.
2. Actions or Suits by or in the Right of the Corporation. The Corporation
shall indemnify any Indemnitee who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees) and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
(including attorneys' fees) which the Court of Chancery of Delaware shall deem
proper.
3. Indemnification for Expenses of Successful Party. Notwithstanding the
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
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adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or nolo contendere by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.
4. Notification and Defense of Claim. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; provided,
however, that the payment of such expenses incurred by an Indemnitee in advance
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined
<PAGE> 6
that the Indemnitee is not entitled to be indemnified by the Corporation as
authorized in this Article. Such undertaking shall be accepted without reference
to the financial ability of the Indemnitee to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (c)
independent legal counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation), or (d) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by this
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation pursuant to Section 6 that the Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the Indemnitee has not met the applicable standard of conduct.
The Indemnitee's expenses (including attorneys' fees) incurred in connection
with successfully establishing his right to indemnification, in whole or in
part, in any such proceeding shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action,
<PAGE> 7
suit, proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the final adoption of such amendment,
termination or repeal.
9. Other Rights. The indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article.
10. Partial Indemnification. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. Insurance. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation Law
of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or facts
occurring prior to the date of such merger or consolidation.
<PAGE> 8
13. Savings Clause. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. Definitions. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. Subsequent Legislation. If the General Corporation Law of Delaware is
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
NINTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
EXECUTED as of the 20th day of August, 1998.
/s/ Daniel M. Lewin
---------------------------------
Daniel M. Lewin
Incorporator
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its entirety and
that the following paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 7,000,000 shares,
consisting of (i) 5,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 2,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
<PAGE> 10
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Treasurer on this 18th day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ F. Thomson Leighton
------------------------
F. Thomson Leighton
Treasurer
<PAGE> 11
CERTIFICATE OF DESIGNATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation")
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation, by unanimous written consent dated as of November
17, 1998 duly adopted the following resolution, which resolution remains in full
force and effect on the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation in accordance with the provisions
of its Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 1,100,000 shares, $.01
par value per share, to be designated the "Series A Convertible Preferred Stock"
(hereinafter, the "Series A Preferred Stock"); that the Board of Directors be
and hereby is authorized to issue such shares of Series A Preferred Stock from
time to time and for such consideration and on such terms as the Board of
Directors shall determine; and that, subject to the limitations provided by law
and by the Certificate of Incorporation, the voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof shall be as set forth on Schedule I
attached hereto.
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IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by an authorized officer this 23rd day of November, 1998.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
----------------
Daniel Lewin
President
<PAGE> 13
SCHEDULE I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series A
Convertible Preferred Stock" shall consist of 1,100,000 shares.
1. Voting.
1A. General. Except as may be otherwise provided in these terms of
the Series A Convertible Preferred Stock, in the Certificate of Incorporation
(the "Certificate of Incorporation") of Akamai Technologies, Inc. (the
"Corporation") or by law, the Series A Convertible Preferred Stock shall vote
together with all other classes and series of stock of the Corporation as a
single class on all actions to be taken by the stockholders of the Corporation.
Each share of Series A Convertible Preferred Stock shall entitle the holder
thereof to such number of votes per share on each such action as shall equal the
number of shares of Common Stock (including fractions of a share) into which
each share of Preferred Stock is then convertible.
1B. Board Size. Subject to the provisions of paragraph 1C below, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least 60% of the then outstanding shares of Series A Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, increase the maximum number of
directors constituting the Board of Directors to a number in excess of seven
(7).
1C. Board Seats. For so long as at least 50% of the shares of Series
A Convertible Preferred Stock issued pursuant to the Purchase Agreement remains
outstanding, the holders of the Series A Convertible Preferred Stock, voting as
a separate series, shall be entitled to elect two (2) directors of the
Corporation. At any meeting (or in a written consent in lieu thereof) held for
the purpose of electing directors, the presence in person or by proxy (or the
written consent) of the holders of at least a majority in interest of the then
outstanding shares of Series A Convertible Preferred Stock shall constitute a
quorum of the Series A Convertible Preferred Stock for the election of directors
to be elected solely by the holders of the Series A Convertible Preferred Stock
voting as a separate series. A vacancy in any directorship elected by the
holders of the Series A Convertible Preferred Stock shall be filled only by the
affirmative vote or written consent of the holders of at least 60% of the then
outstanding shares of Series A Convertible Preferred Stock. The directors to be
elected by the holders of the Series A Convertible Preferred Stock, voting
separately as one class, pursuant to this paragraph 1C, shall serve for terms
extending from the date of their election and qualification until the time of
the next succeeding annual meeting of stockholders and until their successors
have been elected and qualified.
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2. Dividends. No dividends shall be declared and set aside for any shares
of the Series A Convertible Preferred Stock except in the event that the Board
of Directors of the Corporation shall declare a dividend payable upon the then
outstanding shares of the Common Stock of the Corporation, in which event the
holders of the Series A Convertible Preferred Stock shall be entitled to the
amount of dividends per share of Series A Convertible Preferred Stock as would
be declared payable on the largest number of whole shares of Common Stock into
which each share of Series A Convertible Preferred Stock held by each holder
thereof could be converted pursuant to the provisions of Section 5 hereof, such
number determined as of the record date for the determination of holders of
Common Stock entitled to receive such dividend. All dividends declared upon the
Preferred Stock shall be declared pro rata per share.
3. Liquidation, Dissolution and Winding-up.
3A. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation (a "Liquidation Event"), whether voluntary or involuntary, the
holders of the shares of Series A Convertible Preferred Stock shall be paid an
amount equal to $7.60 per share plus, in the case of each share, an amount equal
to dividends accrued but unpaid thereon, computed to the date payment thereof is
made available, together with payment to any class of stock ranking equally with
the Series A Convertible Preferred Stock, and before any payment shall be made
to the holders of any stock ranking on liquidation junior to the Series A
Convertible Preferred Stock, such amount payable with respect to one share of
Series A Convertible Preferred Stock being sometimes referred to as the "Series
A Liquidation Preference Payment" and with respect to all shares of Series A
Convertible Preferred Stock being sometimes referred to as the "Series A
Liquidation Preference Payments". If upon any Liquidation Event, the assets to
be distributed to the holders of the Series A Convertible Preferred Stock shall
be insufficient to permit payment to such stockholders of the full preferential
amounts aforesaid, then all of the assets of the Corporation available for
distribution to holders of the Series A Convertible Preferred Stock shall be
distributed to such holders of the Series A Convertible Preferred Stock pro
rata, so that each holder receives that portion of the assets available for
distribution as the number of shares of such stock held by such holder bears to
the total number of shares of such stock then outstanding.
3B. Upon any Liquidation Event, immediately after the holders of
Series A Convertible Preferred Stock and holders of any class of stock ranking
equally with the Series A Convertible Preferred Stock have been paid in full
pursuant to subsection 3A above, the remaining net assets of the Corporation
available for distribution shall be distributed among the holders of the shares
of Common Stock.
<PAGE> 15
Written notice of such Liquidation Event, stating a payment date and the
place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series A
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or affiliate thereof (except a consolidation
or merger into a Subsidiary or merger in which the Corporation is the surviving
Corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction), (y) the sale or
transfer by the Corporation of all or substantially all its assets, or (z) the
sale or transfer by the Corporation's stockholders of capital stock representing
a majority of the outstanding capital stock of the Corporation shall be deemed
to be a Liquidation Event within the meaning of the provisions of this paragraph
3 (subject to the provisions of this paragraph 3 and not the provisions of
paragraph 5G hereof, unless 5G is elected in the following proviso), provided,
however, that if the holders of at least 60% of the then outstanding shares of
Series A Convertible Preferred Stock shall elect the benefits of the provisions
of paragraph 5G in lieu of receiving payment in a Liquidation Event pursuant to
this paragraph 3, then all holders of shares of Series A Convertible Preferred
Stock shall receive the benefits of the provisions of paragraph 5G in lieu of
receiving payment pursuant to this Section 3. Whenever the distribution provided
for in this paragraph 3 shall be payable in property other than cash, the value
of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.
4. Restrictions. At any time when at least 50% of the shares of Series A
Convertible Preferred Stock issued pursuant to the Purchase Agreement (as
defined in Section 8(a) below) remain outstanding, except where the vote or
written consent of the holders of a greater number of shares of the Corporation
is required by law or by the Certificate of Incorporation, and in addition to
any other vote required by law or the Certificate of Incorporation, without the
written consent of the holders of at least 60% of the then outstanding shares of
Series A Convertible Preferred Stock given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a series, the
Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate with or
into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a
consolidation or merger into a Subsidiary or
<PAGE> 16
merger in which the Corporation is the surviving corporation and the
holders of the Corporation's voting stock outstanding immediately prior to
the transaction constitute a majority of the holders of voting stock
outstanding immediately following the transaction or a consolidation or
merger pursuant to which the aggregate consideration definitively and
unconditionally payable to all of the stockholders of the Corporation is
greater than $50 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (unless the aggregate
consideration definitively and unconditionally payable to all of the
stockholders of the Corporation as a result of any such transaction is
greater than $50 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series A
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any additional
class or series of shares of stock unless the same ranks junior to or on
parity with the Series A Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the
authorized amount of Series A Convertible Preferred Stock or increase the
authorized amount of any additional class or series of shares of stock
unless the same ranks junior to or on parity with the Series A Convertible
Preferred Stock as to dividends and the distribution of assets on a
Liquidation Event, or create or authorize any obligation or security
convertible into shares of Series A Convertible Preferred Stock or into
shares of any other class or series of stock unless the same ranks junior
to or on parity with the Series A Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, whether
any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation
or otherwise;
(5) In any manner amend, alter or change the designations or the
powers, preferences or rights, privileges or the restrictions of the
Series A Convertible Preferred Stock, provided, however, that the
authorization or creation of any shares of capital stock on parity with
Series A Convertible Preferred Stock as to dividends and the distribution
of assets on a Liquidation Event shall not require approval of holders of
Series A Convertible Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase or
redemption of, or pay any dividend or make any distribution on, any shares
of stock ranking on parity with or junior to the Series A Convertible
Preferred Stock as to dividends and the distribution of assets on a
Liquidation Event, except for (i) dividends or other
<PAGE> 17
distributions payable on the Common Stock solely in the form of additional
shares of Common Stock or (ii) repurchases of shares of capital stock (at
the original purchase price therefor) from officers, employees, directors
or consultants of the Corporation which are subject to restrictive stock
purchase, right of first refusal or other agreements under which the
Corporation has the option to repurchase such shares upon the occurrence
of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without the
affirmative vote or written consent of at least two of the directors
elected solely by the holders of Series A Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 60% of
the then outstanding shares of Series A Convertible Preferred Stock.
5. Conversion. The holders of shares of Series A Convertible Preferred
Stock shall have the following conversion rights:
5A. Right to Convert. Subject to the terms and conditions of this
paragraph 5, the holder of any share or shares of Series A Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series A Convertible Preferred Stock (except that upon any Liquidation
Event the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amounts distributable on the Series A
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series A Convertible Preferred Stock so to be converted by $7.60 and (ii)
dividing the result by the conversion price of $7.60 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 5, then by the conversion price as last adjusted and in effect at
the date any share or shares of Preferred Stock are surrendered for conversion
(such price, or such price as last adjusted, being referred to as the "Series A
Conversion Price"). Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Series A Convertible Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Series A Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly
after the receipt of the written notice referred to in paragraph 5A and
surrender of the certificate or
<PAGE> 18
certificates for the share or shares of Series A Convertible Preferred Stock to
be converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Series A
Convertible Preferred Stock. To the extent permitted by law, such conversion
shall be deemed to have been effected and the Series A Conversion Price shall be
determined as of the close of business on the date on which such written notice
shall have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at such
time the rights of the holder of such share or shares of Series A Convertible
Preferred Stock shall cease, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby.
5C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series A Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall: (i) if cash
is legally available, pay in cash an amount equal to all dividends accrued and
unpaid on the shares of Series A Convertible Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in paragraph 5B, or (ii) if cash is not legally available, provide to
such holder a certificate representing a number of shares of Common Stock equal
to the quotient of all dividends accrued and unpaid on the shares of Series A
Convertible Preferred Stock so surrendered divided by the applicable Series A
Conversion Price. In case the number of shares of Series A Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
paragraph 5A exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 5C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series A Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of Shares of Series A Convertible Preferred Stock surrendered by any one
holder.
5D. Adjustment of Series A Conversion Price Upon Issuance of Common
Stock. Except as provided in paragraphs 5E and 5F, if and whenever the
Corporation shall
<PAGE> 19
issue or sell, or is, in accordance with subparagraphs 5D(1) through 5D(8),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Series A Conversion Price in effect immediately prior to
the time of such issue or sale, (such number being appropriately adjusted to
reflect the occurrence of any event described in paragraph 5F), then, forthwith
upon such issue or sale, the Series A Conversion Price shall be reduced to the
price determined by dividing (i) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
(assuming the conversion of the outstanding shares of Series A Convertible
Preferred Stock) multiplied by the then existing Series A Conversion Price and
(b) the consideration, if any, received by the Corporation upon such issue or
sale, by (ii) the total number of shares of Common Stock outstanding immediately
after such issue or sale (assuming the conversion of the outstanding shares of
Series A Convertible Preferred Stock).
For purposes of this paragraph 5D, the following subparagraphs 5D(1)
to 5D(8) shall also be applicable:
5D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption
in a merger or otherwise) any warrants or other rights to subscribe for or
to purchase, or any options for the purchase of, Common Stock or any stock
or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called "Options" and such convertible or
exchangeable stock or securities being called "Convertible Securities")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such Options
or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of all such Options, plus, in
the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of all such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options) shall be less than the Series A Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance
of such Convertible Securities and thereafter
<PAGE> 20
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 5D(3), no adjustment of the Series A Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
5D(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger
or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
total amount received or receivable by the Corporation as consideration
for the issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of all such Convertible
Securities thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Series A Conversion Price in effect
immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been
issued for such price per share as of the date of the issue or sale of
such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 5D(3), no adjustment of the Series A Conversion Price shall
be made upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and (b) if any such issue or sale
of such Convertible Securities is made upon exercise of any Options to
purchase any such Convertible Securities for which adjustments of the
Series A Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 5D, no further adjustment of the Series A
Conversion Price shall be made by reason of such issue or sale.
5D(3) Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if the purchase price provided for
in any Option referred to in subparagraph 5D(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 5D(1) or 5D(2), or the
rate at which Convertible Securities referred to in subparagraph 5D(1) or
5D(2) are convertible into or exchangeable for Common Stock shall change
at any time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Series A Conversion
Price in effect at the time of such event shall forthwith be readjusted to
the Series A Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding
<PAGE> 21
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold; provided, however, that in no event shall the Series A Conversion
Price then in effect hereunder be increased; and on the expiration of any
such Option or the termination of any such right to convert or exchange
such Convertible Securities, the Series A Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
5D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for the issue of stock dividends or
distributions upon the outstanding Common Stock for which adjustment is
made pursuant to paragraph 5F), Options or Convertible Securities, any
Common Stock, Options or Convertible Securities, as the case may be,
issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
5D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors
of the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
5D(6) Record Date. In case the Corporation shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common
<PAGE> 22
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
5D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of
this paragraph 5D.
5D(8) Taxed Shares. The initial 650,000 Option Shares (as defined in
paragraph 8 herein and including 165,400 shares issued prior to the
closing of the initial issuance of the Series A Convertible Preferred
Stock) subject to the Plan (as defined in paragraph 8 herein) shall be
deemed to be "Taxed Shares". In case at any time the Corporation shall
grant an award of any of the Taxed Shares or grant an option to purchase
any of the Taxed Shares (including options to purchase an aggregate of
71,500 Taxed Shares granted prior to the date of the initial issuance of
Series A Convertible Preferred Stock), the Corporation shall not be
required to make any adjustment of the Series A Conversion Price;
provided, however, to the extent (i) the right of the Corporation to
repurchase shares (at the purchase price paid by the award recipient)
subject to an award of Taxed Shares terminates or does not exist and/or
(ii) the Corporation issues any shares of its Common Stock upon exercise
of an option to purchase Taxed Shares, then such Taxed Shares shall be
deemed to be "Issued Taxed Shares," and the Corporation shall adjust the
Series A Conversion Price as provided in paragraph 5D hereof and, that for
purposes of such adjustment the Corporation shall be deemed to have
received no consideration for the Issued Taxed Shares. Notwithstanding the
foregoing, if the Company shall repurchase any of the Founders' Shares (as
defined in paragraph 8 herein), any such Founders' Shares repurchased by
the Company shall reduce the number (on a one-for-one basis) of any Taxed
Shares (to the extent that such Taxed Shares have not become Issued Taxed
Shares), such that there shall be no adjustment to the Series A Conversion
Price upon issuance of the Option Shares previously designated as Taxed
Shares. It is the intent of this 5D(8) that notwithstanding any increase
in the number of Option Shares permitted by paragraph 8(c), no more than
an aggregate of 650,000 Option Shares (appropriately adjusted to reflect
an event described in paragraph 5F hereof) be deemed to be Taxed Shares;
and all calculations and determinations made pursuant to this 5D(8) shall
be made in good faith by the Corporation's Board of Directors after
consultation with the Corporation's counsel.
5E. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Series A Conversion Price in the case of the issuance of (i)
shares of Common Stock issuable
<PAGE> 23
upon conversion of the Series A Convertible Preferred Stock, (ii) shares of
Common Stock issued or issuable as a dividend or distribution on Series A
Convertible Preferred Stock and (iii) Reserved Employee Shares (as defined in
paragraph 8 herein) (other than Taxed Shares).
5F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series A Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series A Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
5G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series A Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series A Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series A Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
5H. Adjustment of Series A Conversion Price Upon Incurrence of
Loss.
(1) If and whenever the Purchasers (as defined in the Purchase
Agreement) shall be entitled to indemnification pursuant to Section 7.13 of the
Purchase Agreement and to the extent the amount of Losses (as defined in the
Purchase Agreement) for which indemnification is provided therein is not paid in
cash, the Series A Conversion Price shall be adjusted such that the number of
shares of Common Stock issuable upon the conversion of
<PAGE> 24
one share of Series A Convertible Preferred Stock shall be equal to the sum of
(A) the number of shares of Common Stock issuable upon conversion of one share
of Series A Convertible Preferred Stock immediately prior to the application of
this Section 5H and (B) the Additional Loss Shares. For purposes of this Section
5H, "Additional Loss Shares" shall mean such number of shares of Common Stock as
is determined by dividing the Loss Amount (as determined in accordance with
Section 7.13(c) of the Purchase Agreement) by the product of (x) the total
number of shares of Series A Convertible Preferred Stock then outstanding times
(y) the Current Series A Value (as determined in accordance with Section 7.13(c)
of the Purchase Agreement).
(2) In addition to any other notice required herein, the Corporation
shall provide each Purchaser with notice of any Loss promptly upon becoming
aware of such Loss, which notice shall specify the amount of such Loss and
specify in reasonable detail each individual item of Loss included in the amount
so stated.
5I. Notice of Adjustment. Upon any adjustment of the Series A
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Series A Conversion Price resulting
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
5J. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all its assets
to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
<PAGE> 25
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
5K. Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series A Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series A Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Series A Conversion Price in effect at the time. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
5L. No Reissuance of Series A Convertible Preferred Stock. Shares of
Series A Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
5M. Issue Tax. The issuance of certificates for shares of Common
Stock upon conversion of Series A Convertible Preferred Stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the
<PAGE> 26
issuance and delivery of any certificate in a name other than that of the holder
of the Series A Convertible Preferred Stock which is being converted.
5N. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
5O. Definition of Common Stock. As used in this paragraph 5, the
term "Common Stock" shall mean and include the Corporation's authorized Common
Stock, par value $.01 per share, as constituted on the date of filing of these
terms of the Preferred Stock, and shall also include any capital stock of any
class of the Corporation thereafter authorized which shall neither be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends nor entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series A Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 5G.
5P. Mandatory Conversion. All outstanding shares of Series A
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering") provided (i)
the aggregate net proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least $22.80 (appropriately adjusted to reflect the occurrence of any event
described in paragraph 5F) and (iii) the offering is a firm commitment
underwritten public offering, then effective upon the closing of the sale of
such shares by the Corporation pursuant to such public offering, all outstanding
shares of Preferred Stock shall automatically convert to shares of Common Stock.
6. Redemption. The shares of Preferred Stock shall be redeemed as follows:
6A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Series A Convertible Preferred
Stock. With the approval of the holders of 66% of the then outstanding shares of
Series A Convertible Preferred Stock, one or more holders of shares of Series A
Convertible Preferred Stock may,
<PAGE> 27
by giving notice (the "Notice") to the Corporation at any time after November
23, 2003 require the Corporation to redeem all of the outstanding Series A
Convertible Preferred Stock in two equal installments, with one-half of the
shares of Series A Convertible Preferred Stock redeemed on the First Redemption
Date (as defined below), and the remainder redeemed on the first anniversary of
the First Redemption Date (the "Second Redemption Date"). Upon receipt of the
Notice, the Corporation will so notify all other persons holding Series A
Convertible Preferred Stock. After receipt of the Notice, the Corporation shall
fix the first date for redemption (the "First Redemption Date"), provided that
such First Redemption Date shall occur within sixty (60) days after receipt of
the Notice. All holders of Series A Convertible Preferred Stock shall deliver to
the Corporation during regular business hours, at the office of any transfer
agent of the Corporation for the Series A Convertible Preferred Stock, or at the
principal office of the Corporation or at such other place as may be designated
by the Corporation, the certificate or certificates for the Series A Convertible
Preferred Stock, duly endorsed for transfer to the Corporation (if required by
it) on or before the First Redemption Date. The First Redemption Date and the
Second Redemption Date are collectively referred to as the "Redemption Dates".
6B. Redemption Price and Payment. The Series A Convertible Preferred
Stock to be redeemed on the Redemption Dates shall be redeemed by paying for
each share in cash an amount equal to $7.60 per share, plus an amount equal to
all dividends accrued and unpaid on each such share, such amount being referred
to as the "Series A Redemption Price." Such payment shall be made in full on
each of the Redemption Dates to the holders entitled thereto.
6C. Redemption Mechanics. At least 15 but not more than 35 days
prior to each Redemption Date, written notice (the "Redemption Notice") shall be
given by the Corporation by mail, postage prepaid, or by facsimile transmission
to non-U.S. residents, to each holder of record (at the close of business on the
business day next preceding the day on which the Redemption Notice is given) of
shares of Series A Convertible Preferred Stock notifying such holder of the
redemption and specifying the Series A Redemption Price, the Redemption Date and
the place where said Series A Redemption Price shall be payable. The Redemption
Notice shall be addressed to each holder at his address as shown by the records
of the Corporation. From and after the close of business on the Redemption Date,
unless there shall have been a default in the payment of the Series A Redemption
Price, all rights of holders of shares of Series A Convertible Preferred Stock
(except the right to receive the Series A Redemption Price) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available for redemption of
shares of Series A Convertible Preferred Stock on any Redemption Date are
insufficient to redeem the total number of outstanding shares of Series A
Convertible Preferred Stock to be
<PAGE> 28
redeemed on such Redemption Date, the holders of shares of Series A Convertible
Preferred Stock shall share ratably in any funds legally available for
redemption of such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by them if all such
outstanding shares were redeemed in full. The shares of Series A Convertible
Preferred Stock not redeemed shall remain outstanding and entitled to all rights
and preferences provided herein; provided, however, that such unredeemed shares
shall be entitled to receive interest accruing daily with respect to the
applicable Series A Redemption Price at the rate of 15% per annum, payable
quarterly in arrears. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series A
Convertible Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
6D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares
of Series A Convertible Preferred Stock redeemed pursuant to this paragraph 6 or
otherwise acquired by the Corporation in any manner whatsoever shall be canceled
and shall not under any circumstances be reissued; and the Corporation may from
time to time take such appropriate corporate action as may be necessary to
reduce accordingly the number of authorized shares of Series A Convertible
Preferred Stock.
7. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by these terms of the
Series A Convertible Preferred Stock by law or by the Certificate of
Incorporation, no provision of these terms of the Series A Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series A Convertible Preferred Stock.
8. Definitions. As used herein, the following terms shall have the
following meanings:
(a) The term "Purchase Agreement" shall mean the Series A
Convertible Preferred Stock Purchase Agreement dated as of November 23, 1998
between the Corporation and the Purchasers listed in Exhibit 1.01 thereto as in
effect on November 23, 1998.
(b) The term the "Plan" shall mean the Corporation's 1998 Stock
Incentive Plan.
(c) The term "Reserved Employee Shares" shall mean shares of Common
Stock reserved by the Corporation pursuant to the Plan from time to time for (i)
the sale of shares of Common Stock to employees, consultants or non-employee
directors (other than representatives of the holders of Preferred Stock) of the
Corporation or (ii) the exercise of options to purchase Common Stock granted to
employees, consultants or non-employee directors (other than
<PAGE> 29
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 650,000 shares of Common Stock for both clauses (i) and
(ii) , with such number including 236,900 shares issued or subject to options
granted prior to the date of the initial issuance of the Series A Convertible
Preferred Stock (the "Option Shares") (appropriately adjusted to reflect an
event described in paragraph 5F hereof), provided that, such number of such
shares subject to the Plan shall be increased by up to 839,914 additional shares
of Common Stock (appropriately adjusted to reflect an event described in
paragraph 5F hereof) (collectively, the "Founders' Shares") upon the repurchase
of such Founders' Shares by the Company from the Founders pursuant to
contractual rights held by the Company. The foregoing number of Reserved
Employee Shares may be increased by the affirmative vote or written consent of
the directors elected solely by the holders of Series A Convertible Preferred
Stock or the affirmative vote or written consent of the holders of at least 60%
of the then outstanding shares of Series A Convertible Preferred Stock.
(c) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
Executed: November 23, 1998 AKAMAI TECHNOLOGIES, INC.
/s/ Daniel Lewin
----------------
Daniel Lewin
President
<PAGE> 30
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its
entirety and that the following paragraph be inserted in lieu
thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 17,000,000 shares,
consisting of (i) 15,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 2,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 26th day of January, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------
Daniel M. Lewin
President
<PAGE> 31
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent in
lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation be and hereby is deleted in its
entirety and that the following paragraph be inserted in lieu
thereof:
"FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 27,000,000 shares,
consisting of (i) 22,000,000 shares of Common Stock, $0.01 par value per
share ("Common Stock"), and (ii) 5,000,000 shares of Preferred Stock,
$0.01 par value per share ("Preferred Stock")."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 16th day of April, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel M. Lewin
-------------------
Daniel M. Lewin
President
<PAGE> 32
CERTIFICATE OF DESIGNATIONS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on April 13, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 1,327,500 shares, $0.01
par value per share, to be designated "Series B Convertible Preferred Stock"
(hereinafter, the "Series B Preferred Stock"); that the Board of Directors be
and hereby is authorized to issue such shares of Series B Preferred Stock from
time to time and for such consideration and on such terms as the Board of
Directors shall determine; and that, subject to the limitations provided by law
and by the Certificate of Incorporation, the voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof shall be as set forth on Schedule I
attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by its President on this 16th day of April, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
-----------------
Daniel Lewin
President
<PAGE> 33
SCHEDULE I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES B CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series B
Convertible Preferred Stock" shall consist of 1,327,500 shares.
1. Voting.
1A. General. Except as may be otherwise provided in the terms of the
Series B Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series B Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
B Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series B
Convertible Preferred Stock is then convertible.
1B. Board Size. Subject to the provisions of paragraph 1C below, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least 60% of the then outstanding shares of Series B Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, increase the maximum number of
directors constituting the Board of Directors to a number in excess of nine (9).
1C. Board Seats. For so long as at least 50% of the shares of Series B
Convertible Preferred Stock issued pursuant to the Purchase Agreement (as
defined in paragraph 9 herein) remains outstanding, the holders of the Series B
Convertible Preferred Stock, voting as a separate series, shall be entitled to
elect one (1) director of the Corporation. At any meeting (or in a written
consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of at
least a majority in interest of the then outstanding shares of Series B
Convertible Preferred Stock shall constitute a quorum of the Series B
Convertible Preferred Stock for the election of directors to be elected solely
by the holders of the Series B Convertible Preferred Stock voting as a separate
series. A vacancy in any directorship elected by the holders of the Series B
Convertible Preferred Stock will be filled only by the affirmative vote or
written consent of the holders of at least 60% of the then outstanding shares of
Series B Convertible Preferred Stock. The directors to be elected by the holders
of the Series B Convertible Preferred Stock, voting separately as one class,
pursuant to this paragraph 1C, shall serve for terms extending from the date of
their election and qualification until the time of the next succeeding annual
meeting of stockholders and until their successors have been elected and
qualified.
2. Ranking. The Series B Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the
<PAGE> 34
Corporation) established before the Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series C Convertible Preferred Stock of the
Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Preferred Stock Issue Date by
the Board of Directors. All classes of common stock of the Company, the Series A
Convertible, Preferred Stock and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date to which the
Series B Convertible Preferred Stock is senior, are collectively referred to
herein as "Junior Securities". The Series C Convertible Preferred Stock of the
Corporation and any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date which ranks pari passu with the
Series B Convertible Preferred Stock, are collectively referred to herein as
"Pari Passu Securities".
3. Dividends.
3A. The holders of shares of the Series B Convertible Preferred Stock
shall be entitled to receive, when, as and if dividends are declared by the
Board of Directors out of funds of the Corporation legally available therefor,
cumulative preferential dividends at the annual rate of 8% on the Series B
Liquidation Preference Payments (as defined in paragraph 4A herein); provided,
however, that any such dividends shall be declared and paid only in the event of
(i) a Liquidation Event pursuant to paragraph 4A hereof or (ii) a Redemption
pursuant to paragraph 7B hereof. Holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive the dividends provided for herein
in preference to and in priority over any dividends upon any of the Junior
Securities.
3B. Dividends on the Series B Convertible Preferred Stock shall accrue
on a daily basis from, the Preferred Stock Issue Date and, to the extent they
are not paid, shall accumulate on an annual basis on each December 31, whether
or not the Corporation has earnings or profits, whether or not there are funds
legally available for the payment of such dividends and whether or not dividends
are declared.
4. Liquidation, Dissolution and Winding-Up.
4A. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation (a "Liquidation Event"), whether voluntary or involuntary, the
holders of the shares of Series B Convertible Preferred Stock shall be paid an
amount equal to $15.066 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series B Convertible Preferred
Stock being sometimes referred to as the "Series B Liquidation Preference
Payment" and with respect to all shares of Series B Convertible Preferred Stock
being sometimes referred to as the "Series B Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series B Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series B
Convertible Preferred Stock shall be distributed to such holders of the Series B
Convertible Preferred Stock pro rata, so that each
<PAGE> 35
holder receives that portion of the assets available for distribution as the
number of shares of such stock held by such holder bears to the total number of
shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders of Series
B Convertible Preferred Stock and holders of any Pari Passu Securities have been
paid in full pursuant to paragraph 4A above, the remaining net assets of the
Corporation available for distribution shall be distributed among the holders of
the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and the
place where said payments shall be made. shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents not less than 20 days prior to
the payment date stated therein, to the holders of record of Series B
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to be
issued or paid by any such entity or affiliate thereof (except a consolidation
or merger into a Subsidiary or merger in which the Corporation is the surviving
Corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction), (y) sale or
transfer by the Corporation of all or substantially all of its assets, or (z)
sale or transfer by the Corporation's stockholders of capital stock representing
a majority of the outstanding capital stock of the Corporation shall be deemed
to be a Liquidation Event within the meaning of the provisions of this paragraph
4 (subject to the provisions of this paragraph 4 and not the provisions of
paragraph 6G hereof unless paragraph 6G is elected in the following proviso);
provided, however, that if the holders of at least 60% of the then outstanding
shares of Series B Convertible Preferred Stock shall elect the benefits of the
provisions of paragraph 6G in lieu of receiving payment in a Liquidation Event
pursuant to this paragraph 4, then all holders of shares of Series B Convertible
Preferred Stock shall receive the benefits of the provisions of paragraph 6G in
lieu of receiving payment pursuant to this paragraph 4. Whenever the
distribution provided for in this paragraph 4 shall be payable in property other
than cash, the value of such distribution shall be the fair market value of such
property as determined in good faith by the Board of Directors of the
Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series B
Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series B Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate with or
into, or permit any Subsidiary to merge or consolidate with or into, any other
corporation, corporations, entity or entities (except a consolidation or merger
into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock
<PAGE> 36
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series B
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any additional class
or series of shares of stock (other than the Series C Convertible Preferred
Stock of the Corporation) unless the same ranks junior to or on parity with the
Series B Convertible Preferred Stock as to dividends and the distribution of
assets on a Liquidation Event, or increase the authorized amount of Series B
Convertible Preferred Stock or increase the authorized amount of any additional
class or series of shares of stock unless the same ranks junior to or on parity
with the Series B Convertible Preferred Stock as to dividends and the
distribution of assets on a Liquidation Event, or create or authorize any
obligation or security convertible into shares of Series B Convertible Preferred
Stock or into shares of any other class or series of stock unless the same ranks
junior to or on parity with the Series B Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, whether any
such creation, authorization or increase shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;
(5) In any manner amend, alter or change the designations or the
powers, preferences or rights, privileges or the restrictions of the Series B
Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series B Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require approval of holders of Series B Convertible Preferred
Stock;
(6) Purchase or redeem, or set aside any sums for the purchase or
redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without the
affirmative vote or written consent of a majority of the directors designated
solely by the holders of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock or the affirmative vote or written consent of the
holders of at least 50% of the then outstanding shares of Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock, voting together as a single class on a Common Stock equivalent
basis.
<PAGE> 37
6. Conversion. The holders of shares of Series B Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series B Convertible Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Series B Convertible Preferred Stock (except that upon any Liquidation
Event the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amounts distributable on the Series B
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series B Convertible Preferred Stock so to be converted by $15.066 and (ii)
dividing the result by the conversion price of $15.066 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 6, then by the conversion price as list adjusted and in effect at
the date any share or shares of Series B Convertible Preferred Stock are
surrendered for conversion (such price, or such price as last adjusted, being
referred to as the "Series B Conversion Price"). Such rights of conversion shall
be exercised by the holder thereof by giving written notice that the holder
elects to convert a stated number of shares of Series B Convertible Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series B Convertible Preferred Stock)
at any time during its usual business hours on the date set forth in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in paragraph 6A and surrender of
the certificate or certificates for the share or shares of Series B Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Series B Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected and the Series B
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the right of the holder of such share or shares
of Series B Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series B Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any conversion
on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall pay in cash an
amount equal to all dividends declared and unpaid (if any) on the shares of
Series B Convertible Preferred Stock surrendered for conversion to the date upon
which such conversion is deemed to take place as provided in paragraph 6B. In
case the number of shares of Series B Convertible Preferred Stock represented by
the certificate or certificates
<PAGE> 38
surrendered pursuant to paragraph 6A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates for the number
of shares of Series B Convertible Preferred Stock represented by the certificate
or certificates surrendered which are not to be converted. If any fractional
share of Common Stock would, except for the provisions of the first sentence of
this paragraph 6C, be delivered upon such conversion, the Corporation, in lieu
of delivering such fractional share, shall pay to the holder surrendering the
Series B Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series B Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series B Conversion Price Upon Issuance of Common
Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series B Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series B Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series B Convertible Preferred Stock) multiplied by the then existing Series
B Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (assuming the
conversion of the outstanding shares of Series B Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible exchangeable
stock or securities being called "Convertible Securities") whether or not
such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if it any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or
exchange of
<PAGE> 39
all such Convertible Securities issuable upon the exercise of such Options)
shall be less than the Series B Conversion Price in effect immediately
prior to the time of the granting of such Options, then the total maximum
number of shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding. Except as otherwise provided
in subparagraph 6D(3), no adjustment of the Series B Conversion Price shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon
the conversion or exchange of all such Convertible Securities thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be less
than the Series B Conversion Price in effect immediately prior to the time
of such issue or sale, then the total maximum number of shares of Common
Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as
of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in subparagraph 6D(3), no adjustment of the Series B
Conversion Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is made upon exercise of
any Options to purchase any such Convertible Securities for which
adjustments of the Series B Conversion Price have been or are to be made
pursuant to other provisions of this paragraph 6D, no further adjustment of
the Series B Conversion Price shall be made by reason of such issue or
sale.
6D(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any Option referred to in subparagraph 6D(1), the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in subparagraph 6D(1) or 6D(2), or the rate at which
Convertible Securities referred to in subparagraph 6D(1) or 6D(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Series B Conversion Price in
effect at the time of such event shall forthwith be readjusted to the
Series B Conversion Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case
<PAGE> 40
may be, at the time initially granted, issued or sold; provided, however,
that in no event shall the Series B Conversion Price then in effect
hereunder be increased; and on the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Series B Conversion Price then in effect hereunder shall
forthwith be increased to the Conversion Price which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for the issue of stock dividends or
distributions upon the outstanding Common Stock for which adjustment is
made pursuant to paragraph 6F), Options or
Convertible Securities, any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
6D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation (or any Subsidiary), and the disposition
of any such shares shall be considered an issue or sale of Common Stock for
the purpose of this paragraph 6D.
<PAGE> 41
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series B Conversion Price in the case of the issuance of (i) shares of
Series C Convertible Preferred Stock pursuant to the Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock, (iii) shares of Common Stock issued or issuable as a dividend
or distribution on Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock or Series C Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein) or (v) warrant shares issued as
contemplated by the Purchase Agreement or shares of Common Stock issuable upon
conversion of such warrant shares.
6F. Subdivision or Combination of Common Stock. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Series B Conversion Price in effect immediately prior to such subdivision shall
be proportionately reduced and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Series B
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
6G. Reorganization or Reclassification. If any capital reorganization,
reclassification, recapitalization, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction (any
such transaction being referred to herein as an "Organic Change") shall be
effected in such a way that holders of Common Stock shall be entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock, then, as a condition of such
Organic Change, lawful and adequate provisions shall be made whereby each holder
of a share or shares of Series B Convertible Preferred Stock shall thereupon
have the right to receive, upon the basis and upon the terms and conditions
specified herein and in lieu of or in addition to, as the case may be, the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series B Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such Organic Change not taken place, and in any case of a
reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series B Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series B
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
B Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series B Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
<PAGE> 42
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all of its assets
to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to "exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series B Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series B Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Series B Conversion Price in effect at the time. The Corporation
will take all such action as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
<PAGE> 43
6K. No Reissuance of Series B Convertible Preferred Stock. Shares of
Series B Convertible Preferred Stock which are converted into shares of Common
Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series B Convertible Preferred Stock shall be made without
charge to the holder thereof for any issuance tax in respect thereof; provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series B Convertible
Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Series B Convertible Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series B Convertible Preferred Stock in any manner which interferes
with the timely conversion of such Preferred Stock, except as may otherwise be
required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these terms of
the Series B Convertible Preferred Stock, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall neither
be limited to a fixed sum or percentage of par value in respect of the rights of
the holders thereof to participate in dividends nor entitled to a preference in
the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Series B Convertible Preferred
Stock shall include only shares designated as Common Stock of the Corporation on
the date of filing of this instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series B
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Preferred Stock Issue Date or
(y) 3.0 times the then Series B Conversion Price if the Public Offering occurs
on or after the 18 month anniversary of the Preferred Stock Issue Date, and
(iii) the offering is a firm commitment underwritten Public Offering, and such
automatic conversion shall be effective upon the closing of the sale of such
shares by the Corporation pursuant to such Public Offering.
<PAGE> 44
7. Redemption. The shares of Series B Convertible Preferred Stock shall be
redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Series B Convertible Preferred
Stock. With the approval of the holders of 66% of the then outstanding shares of
Series B Convertible Preferred Stock, one or more holders of shares of Series B
Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series B Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series B Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Preferred Stock Issue Date and (ii) the date which is
the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series B Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series B
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series B Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series B Convertible Preferred
Stock to be redeemed on the Redemption Date shall be redeemed by paying for each
share in cash an amount equal to the Series B Redemption Price (as defined
below). For purposes of this paragraph 7B, the "Series B Redemption Price" shall
mean $15.066 per share, plus an amount equal to all dividends accrued and unpaid
on each such share; provided, however, that if the Redemption Date is after the
fifth (5th) anniversary of the Preferred Stock Issue Date, then the "Series B
Redemption Price" shall mean the greater of (i) $15.066 per share, plus an
amount equal to all dividends accrued and unpaid on each such share and (ii) the
Fair Market Value (as defined below) of the Common Stock underlying the Series B
Convertible Preferred Stock. Such payment shall be made in full on the
Redemption Date to the holders entitled thereto. For purposes of this paragraph
7B, "Fair Market Value" of the Common Stock shall mean the average of the fair
market valuations of the Common Stock performed by two investment banks (the
"Initial Appraisers"), one of which shall be retained by the Corporation and one
of which shall be retained by the holders of a majority in interest of the
Series B Convertible Preferred Stock. Subject to the following sentence, such
determination by the Initial Appraisers of Fair Market Value shall be final and
binding on the parties. If the higher of the two valuations of the Initial
Appraisers is equal to or greater than 110% of the lower valuation, the
Corporation and holders of a majority in interest of the Series B Convertible
Preferred Stock shall select a third investment bank (the "Final Appraiser"),
which shall be mutually agreeable to the Corporation and the holders of a
majority in interest of the Series B Convertible Preferred Stock. The fair
market value of the Common Stock as determined by the Final Appraiser shall be
final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series B Convertible Preferred Stock.
<PAGE> 45
7C. Redemption Mechanics. At least 15 but not more than 35 days prior
to the Redemption Date, written notice (the "Redemption Notice") shall be given
by the Corporation by mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, to each holder of record (at the close of business on the
business day next preceding the day on which the Redemption Notice is given) of
shares of Series B Convertible Preferred Stock notifying such holder of the
redemption and specifying the Series B Redemption Price, the Redemption Date and
the place where said Series B Redemption Price shall be payable. The Redemption
Notice shall be addressed to each holder at his address as shown by the records
of the Corporation. From and after the close of business on the Redemption Date
unless there shall have been a default in the payment of the Series B Redemption
Price, all rights of holders of shares of Series B Convertible Preferred Stock
(except the right to receive the Series B Redemption Price) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. If the funds of the Corporation legally available for redemption of
shares of Series B Convertible Preferred Stock on the Redemption Date are
insufficient to redeem the total number of outstanding shares of Series B
Convertible Preferred Stock to be redeemed on such Redemption Date, the holders
of shares of Series B Convertible Preferred Stock shall share ratably in any
funds legally available for redemption of such shares according to the
respective amounts which would be payable with respect to the full number of
shares owned by them if all such outstanding shares were redeemed in full. The
shares of Series B Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series B Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series B Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares of
Series B Convertible Preferred Stock redeemed pursuant to this paragraph 7 or
otherwise acquired by the Corporation in any manner whatsoever shall be canceled
and shall not under any circumstances be reissued; and the Corporation may from
time to time take such appropriate corporate action as may be necessary to
reduce accordingly the number of authorized shares of Series B Convertible
Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by these terms of the
Series B Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series B Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series B Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel Lewin,
Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
<PAGE> 46
(2) The term "Preferred Stock Issue Date" shall mean the date on which
the Series B Convertible Preferred Stock is originally issued by the Corporation
pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock Purchase Agreement
dated as of April 16, 1999 between the Corporation, Baker Communications Fund,
L.P. and the other purchasers named therein, as in effect on April 16, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998 Stock
Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of Common
Stock reserved by the Corporation pursuant to the Plan from time to time for (i)
the sale of shares of Common Stock to employees, consultants or non-employee
directors (other than representatives of the holders of Preferred Stock) of the
Corporation or (ii) the exercise of options to purchase Common Stock granted to
employees, consultants or non-employee directors (other than representatives of
the holders of Preferred Stock) of the Corporation, not to exceed in the
aggregate 3,450,000 shares of Common Stock for both clauses (i) and (ii), with
such number including 710,700 shares issued or subject to options granted prior
to the date of the initial issuance of the Series A Convertible Preferred Stock
(the "Option Shares") (approximately adjusted to reflect an event described in
paragraph 6F hereof); provided that, such number of such shares subject to the
Plan shall be increased by up to 2,519,742 additional shares of Common Stock
(appropriately adjusted to reflect an event described in paragraph 6F hereof)
(collectively, the "Founders' Shares") upon the repurchase of such Founders'
Shares by the Corporation from the Founders pursuant to contractual rights hold
by the Corporation. The foregoing numbers of Reserved Employee Shares may be
increased by the affirmative vote or written consent of a majority of the
directors designated solely by the holders of Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock or the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis.
<PAGE> 47
(6) The term "Subsidiary" or "Subsidiaries" shall mean any corporation,
partnership, trust or other entity of which the Corporation and/or any of its
other subsidiaries directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 48
CERTIFICATE OF DESIGNATIONS
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on April 13, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 145,195 shares,
$0.01 par value per share, to be designated "Series C Convertible Preferred
Stock" (hereinafter, the "Series C Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series C Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 16th day of April, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Daniel Lewin
------------------------------
Daniel Lewin
President
<PAGE> 49
SCHEDULE 1
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES C CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series C
Convertible Preferred Stock" shall consist of 145,195 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series C Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series C Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
C Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series C
Convertible Preferred Stock is then convertible.
2. Ranking. The Series C Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock of the
Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date by the Board of Directors. All classes of common stock of the Company, the
Series A Convertible Preferred Stock and any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date to which the Series C Convertible Preferred Stock is senior, are
collectively referred to herein as "Junior Securities". The Series B Convertible
Preferred Stock of the Corporation and any other class of capital stock or
series of preferred stock established after the Series B Preferred Stock Issue
Date which ranks pari passu with the Series C Convertible Preferred Stock, are
collectively referred to herein as "Pari Passu Securities".
3. Dividends.
3A. The holders of shares of the Series C Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series C Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall be declared and paid
only in the event of (i) a Liquidation Event pursuant to paragraph 4A hereof or
(ii) a Redemption pursuant to paragraph 7B hereof. Holders of shares of Series C
Convertible Preferred Stock shall be entitled to receive the dividends provided
for herein in preference to and in priority over any dividends upon any of the
Junior Securities.
3B. Dividends on the Series C Convertible Preferred Stock
shall accrue on a daily basis from the Series C Preferred Stock Issue Date and,
to the extent they are not paid, shall
<PAGE> 50
accumulate on an annual basis on each December 31, whether or not the
Corporation has earnings or profits, whether or not there are funds legally
available for the payment of such dividends and whether or not dividends are
declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series C Convertible Preferred Stock shall be paid
an amount equal to $34.436 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series C Convertible Preferred
Stock being sometimes referred to as the "Series C Liquidation Preference
Payment" and with respect to all shares of Series C Convertible Preferred Stock
being sometimes referred to as the "Series C Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series C Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series C
Convertible Preferred Stock shall be distributed to such holders of the Series C
Convertible Preferred Stock pro rata, so that each holder receives that portion
of the assets available for distribution as the number of shares of such stock
held by such holder bears to the total number of shares of such stock then
outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series C Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series C
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at least 60% of
the then outstanding shares of Series C Convertible Preferred Stock shall elect
the
<PAGE> 51
benefits of the provisions of paragraph 6G in lieu of receiving payment in a
Liquidation Event pursuant to this paragraph 4, then all holders of shares of
Series C Convertible Preferred Stock shall receive the benefits of the
provisions of paragraph 6G in lieu of receiving payment pursuant to this
paragraph 4. Whenever the distribution provided for in this paragraph 4 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
C Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series C Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million);
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million);
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series C
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series B
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series C Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
amount of Series C Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series C Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series C
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series C Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
<PAGE> 52
(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
C Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series C Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require approval of holders of Series C Convertible Preferred
Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
6. Conversion. The holders of shares of Series C Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series C Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series C Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series C Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series C Convertible Preferred Stock so to be converted by
$34.436 and (ii) dividing the result by the conversion price of $34.436 per
share or in case an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion price as last
adjusted and in effect at the date any share or shares of Series C Convertible
Preferred Stock are surrendered for conversion (such price, or such price as
last adjusted, being referred to as the "Series C Conversion Price"). Such
rights of conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of Series C
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series C
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
<PAGE> 53
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series C
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series C Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series C
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder or such share or shares
of Series C Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series C Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends declared and unpaid (if any) on the
shares of Series C Convertible Preferred Stock surrendered for conversion to the
date upon which such conversion is deemed to take place as provided in paragraph
6B. In case the number of shares of Series C Convertible Preferred Stock
represented by the certificate or certificates surrendered pursuant to paragraph
6A exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series C Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series C Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series C Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series C Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series C Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series C Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series C Convertible Preferred Stock) multiplied by the then existing Series
C Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately
<PAGE> 54
after such issue or sale (assuming the conversion of the outstanding shares of
Series C Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series C Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series C Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange of all such Convertible Securities thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Series C Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of
<PAGE> 55
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series C Conversion Price
shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and (b) if any
such issue or sale of such Convertible Securities is made upon exercise
or any Options to purchase any such Convertible Securities for which
adjustments of the Series C Conversion Price have been or are to be
made pursuant to other provisions of this paragraph 6D, no further
adjustments of the Series C Conversion Price shall be made by reason of
such issue or sale.
6D(3) Change in Option Price of Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason if provisions designed to protect against
dilution), the Series C Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series C Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series C Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series C Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by
<PAGE> 56
the Board of Directors of the Corporation without deduction of any
expenses incurred or any underwriting commissions or concessions paid
or allowed by the Corporation in connection therewith. In case any
Options shall be issued in connection with the issue and sale of other
securities of the Corporation, together comprising one integral
transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have
been issued for such consideration as determined in good faith by the
Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment
for the Series C Conversion Price in the case of the issuance of (i) shares of
Series B Convertible Preferred Stock pursuant to the Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock, (iii) shares of Common Stock issued or issuable as a dividend
or distribution on Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock or Series C Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein) or (v) warrant shares issued as
contemplated by the Purchase Agreement or shares of Common Stock issuable upon
conversion of such warrant shares.
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series C Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series C Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change,
<PAGE> 57
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Series C Convertible Preferred Stock shall thereupon have the right to
receive, upon the basis and upon the terms and conditions specified herein and
in lieu of or in addition to, as the case may be, the shares of Common Stock
immediately theretofore receivable upon the conversion of such share or shares
of Series C Convertible Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of such
Common Stock immediately theretofore receivable upon such conversion had such
Organic Change not taken place, and in any case of a reorganization or
reclassification only appropriate provisions shall be made with respect to the
rights and interests of such holder to the end that the provisions hereof
(including without limitation provisions for adjustments of the Series C
Conversion Price) shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series C
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
C Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series C Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend,
<PAGE> 58
distribution or subscription rights, the date on which the holders or Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series C Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series C Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series C Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
6K. No Reissuance of Series C Convertible Preferred Stock.
Shares of Series C Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series C Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series C Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series C Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series C Convertible Preferred Stock in any manner which
interferes with the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series C Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum of percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series C
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or
<PAGE> 59
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series C
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date, and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
7. Redemption. The shares of Series C Convertible Preferred Stock shall
be redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series C Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series C Convertible Preferred Stock, one or more holders of shares of
Series C Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series C Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series C Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series C Convertible
Preferred Stock shall delivery to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series C
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series C Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series C Convertible
Preferred Stock to be redeemed on the Redemption date shall be redeemed by
paying for each share in cash an amount equal to the Series C Redemption Price
(as defined below). For purposes of this paragraph 7B the "Series C Redemption
Price" shall mean $34.436 per share, plus an amount equal to all dividends
accrued and unpaid on each such share; provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series C Redemption Price" shall mean the greater of (i) $34.436
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series C Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled
<PAGE> 60
thereto. For purposes of this paragraph 7B, "Fair Market Value" of the Common
stock shall mean the average of the fair market valuations of the Common Stock
performed by two investment banks (the "Initial Appraisers"), one of which shall
be retained by the Corporation and one of which shall be retained by the holders
of a majority in interest of the Series C Convertible Preferred Stock. Subject
to the following sentence, such determination by the Initial Appraisers of Fair
Market Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series C Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series C Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series C Convertible Preferred Stock.
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation by mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, to each holder of record (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) of shares of Series C Convertible Preferred Stock notifying
such holder of the redemption and specifying the Series C Redemption Price, the
Redemption Date and the place where said Series C Redemption Price shall be
payable. The Redemption Notice shall be addressed to each holder at his address
as shown by the records of the Corporation. From and after the close of business
on the Redemption Date, unless there shall have been a default in the payment of
the Series C Redemption Price, all rights of holders of shares of Series C
Convertible Preferred Stock (except the right to receive the Series C Redemption
Price) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Series C Convertible Preferred Stock on
the Redemption Date are insufficient to redeem the total number of outstanding
shares of Series C Convertible Preferred Stock to be redeemed on such Redemption
Date, the holders of shares of Series C Convertible Preferred Stock shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full number
of shares owned by them if all such outstanding shares were redeemed in full.
The shares of Series C Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series C Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series C Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series C Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any
<PAGE> 61
circumstances be reissued; and the Corporation may from time to time take such
appropriate corporate action as may be necessary to reduce accordingly the
number of authorized shares of Series C Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a greater number of shares of the Corporation is required by these terms of
the Series C Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series C Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series C Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thornson Leighton,
Daniel Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
(2) The term "Purchase Agreement" shall mean the Series B
Convertible Preferred Stock and Series C Convertible Preferred Stock Purchase
Agreement dated as of April 16, 1999 between the Corporation, Baker
Communications Fund, L.P. and the other purchasers named therein, as in effect
on April 16, 1999.
(3) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(4) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 3,450,000 shares of Common Stock for both clauses (i)
and (ii), with such number including 710,700 shares issued or subject to options
granted prior to the date of the initial issuance of the Series A Convertible
Preferred Stock (the "Option Shares") (appropriately adjusted to reflect an
event described in paragraph 6F hereof); provided that, such number of such
shares subject to the Plan shall be increased by up to 2,519,742 additional
shares of Common Stock (appropriately adjusted to reflect an event described in
paragraph 6F hereof) (collectively, the "Founders' Shares") upon the repurchase
of such Founders' Shares by the Corporation from the Founders pursuant to
contractual rights held by the Corporation. The foregoing numbers of Reserved
Employee Shares may be increased by the affirmative vote or written consent of a
majority of the directors designated solely by the holders of Series A
Convertible Preferred Stock and Series B Convertible Preferred Stock or the
affirmative vote or written consent of the holders of at least 50% of the then
outstanding shares of Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock and Series C Convertible Preferred Stock, voting together as a
single class on a Common Stock equivalent basis.
<PAGE> 62
(5) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(6) The term "Series B Preferred Stock Issue Date" shall mean
the date on which the Series B Convertible Preferred Stock is originally issued
by the Corporation pursuant to the Purchase Agreement.
(7) The term "Series C Preferred Stock Issue Date" shall mean
the date on which the Series C Convertible Preferred Stock is originally issued
by the Corporation pursuant to the Purchase Agreement.
(8) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 63
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by unanimous written consent
in lieu of a meeting, duly adopted a resolution, pursuant to Sections 141(f) and
242 of the General Corporation Law of the State of Delaware, setting forth an
amendment to the Certificate of Incorporation of the Corporation and declaring
said amendment to be advisable. The stockholders of the Corporation duly
approved said proposed amendment by written consent in accordance with Sections
228 and 242 of the General Corporation Law of the State of Delaware, and written
notice of such consent has been or will be given to all stockholders who have
not consented in writing to said amendment. The resolution setting forth the
amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Certificate
of Incorporation of the Corporation be and hereby is deleted in its entirety and
that the following paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 65,000,000
shares, consisting of (i) 60,000,000 shares of Common Stock, $0.01 par
value per share ("Common Stock"), and (ii) 5,000,000 shares of
Preferred Stock, $0.01 par value per share ("Preferred Stock").
<PAGE> 64
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Treasurer on this 25th day of May, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
----------------------------------
Paul Sagan
Treasurer
<PAGE> 65
CERTIFICATE OF DESIGNATIONS
OF
SERIES D CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-----------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-----------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on May 18, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 685,194 shares,
$0.01 par value per share, to be designated "Series D Convertible Preferred
Stock" (hereinafter, the "Series D Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series D Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 21st day of June, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-------------------------------
Paul Sagan
President
<PAGE> 66
Schedule I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES D CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series D
Convertible Preferred Stock" shall consist of 685,194 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series D Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series D Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
D Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series D
Convertible Preferred Stock is then convertible.
2. Ranking. The Series D Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock and the
Series C Convertible Preferred Stock of the Corporation, and senior or pari
passu to any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date by the Board of Directors. All
classes of common stock of the Company, the Series A Convertible Preferred Stock
and any other class of capital stock or series of preferred stock established
after the Preferred Stock Issue Date to which the Series D Convertible Preferred
Stock is senior, are collectively referred to herein as "Junior Securities". The
Series B Convertible Preferred Stock and the Series C Convertible Preferred
Stock of the Corporation and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date which ranks
pari passu with the Series D Convertible Preferred Stock, are collectively
referred to herein as "Pari Passu Securities".
3. Dividends. The holders of shares of the Series D Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series D Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall only be paid, whether
declared or not, immediately upon the occurrence of (i) a Liquidation Event
pursuant to paragraph 4.A hereof or (ii) a Redemption pursuant to paragraph 7B
hereof. Holders of shares of Series D Convertible Preferred Stork shall be
entitled to receive the dividends provided for herein in preference to and in
priority over any dividends upon any of the Junior Securities. Dividends on the
Series D Convertible Preferred Stock shall accrue on a daily basis from the
Preferred Stock Issue Date and, to the extent they are not paid, shall
accumulate on an annual basis on each December 31,
<PAGE> 67
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series D Convertible Preferred Stock shall be paid
an amount equal to $18.243 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series D Convertible Preferred
Stock being sometimes referred to as the "Series D Liquidation Preference
Payment" and with respect to all shares of Series D Convertible Preferred Stock
being sometimes referred to as the "Series D Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series D Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series D
Convertible Preferred Stock and Pari Passu Securities shall be distributed to
such holders of the Series D Convertible Preferred Stock and Pari Passu
Securities pro rata, so that each holder receives that portion of the assets
available for distribution as the number of shares of such stock held by such
holder bears to the total number of shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series D Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series D
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at
<PAGE> 68
least 60% of the then outstanding shares of Series D Convertible Preferred Stock
shall elect the benefits of the provisions of paragraph 6G in lieu of receiving
payment in a Liquidation Event pursuant to this paragraph 4, then all holders of
shares of Series D Convertible Preferred Stock shall receive the benefits of the
provisions of paragraph 6G in lieu of receiving payment pursuant to this
paragraph 4 for the particular Organic Change (as defined in Section 6G) causing
the rights of Section 6G to be available. The election of the rights under
Section 6G for any particular Organic Change shall not constitute an election of
the rights available under Section 6G for any other Organic Change, for which
the holders of Series D Convertible Preferred Stock shall have a new election
under the foregoing proviso. Whenever the distribution provided for in this
paragraph 4 shall be payable in property other than cash, the value of such
distribution shall be the fair market value of such property as determined in
good faith by the Board of Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
D Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series D Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $400 million) without the affirmative vote or written consent of
the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and Series D
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis;
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $400 million) without the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series D Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis;
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series D
Convertible Preferred Stock;
<PAGE> 69
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series C
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series D Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
amount of Series D Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series D Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series D
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series D Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
D Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series D Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require the approval of holders of Series D Convertible
Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock and Series D Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis.
6. Conversion. The holders of shares of Series D Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series D Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series D Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series D
<PAGE> 70
Convertible Preferred Stock) into such number of fully paid and nonassessable
shares of Common Stock as is obtained by (i) multiplying the number of shares of
Series D Convertible Preferred Stock so to be converted by $18.243 and (ii)
dividing the result by the conversion price of $6.081 per share or in case an
adjustment of such price has taken place pursuant to the further provisions of
this paragraph 6, then by the conversion price as last adjusted and in effect at
the date any share or shares of Series D Convertible Preferred Stock are
surrendered for conversion (such price, or such price as last adjusted, being
referred to as the "Series D Conversion Price"). Such rights of conversion shall
be exercised by the holder thereof by giving written notice that the holder
elects to convert a stated number of shares of Series D Convertible Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series D Convertible Preferred Stock)
at any time during its usual business hours on the date set forth in such
notice, together with a statement of the name or names (with address) in which
the certificate or certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series D
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series D Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series D
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder of such share or shares
of Series D Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series D Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon party conversion on account of any cash dividends on the Common Stock
issued upon such conversion. At the time of each conversion, the Corporation
shall pay in cash an amount equal to all dividends declared and unpaid (if any)
on the shares of Series D Convertible Preferred Stock surrendered for conversion
to the date upon which such conversion is deemed to take place as provided in
paragraph 6B. In case the number of shares of Series D Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
paragraph 6A exceeds the number of shares converted, the Corporation shall, upon
such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series D Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series D Convertible Preferred Stock
<PAGE> 71
for conversion an amount in cash equal to the current fair market value of such
fractional share as determined in good faith by the Board of Directors of the
Corporation, and based upon the aggregate number of shares of Series D
Convertible Preferred Stock surrendered by any one holder.
6D. Adjustment of Series D Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs, 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series D Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series D Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series D Convertible Preferred Stock) multiplied by the then existing Series
D Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (assuming the
conversion of the outstanding shares of Series D Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series D Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
<PAGE> 72
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series D Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be
less than the Series D Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Series D Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Series D
Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 6D, no further adjustment of the Series D
Conversion Price shall be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), the Series D Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series D Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series D Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series D Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been
<PAGE> 73
in effect at the time of such expiration or termination had such Option
or Convertible Securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by
the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series D Conversion Price if it first obtains the written consent of the
holders of at least 60% of the then outstanding shares
<PAGE> 74
of Series D Convertible Preferred Stock that no adjustment shall be required. In
no event shall the Corporation be required to make any adjustment to the Series
D Conversion Price in the case of the issuance of (i) shares of Series C
Convertible Preferred Stock pursuant to the Series B Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock or Series D Convertible Preferred Stock, (iii) shares of Common
Stock issued or issuable as a dividend or distribution on Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock or Series D Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein), (v) warrants issued in connection
with senior subordinated notes of the Corporation as contemplated by the
Series B Purchase Agreement or shares of Common Stock issuable upon conversion
of such warrants, or (vi) Options outstanding as of the Preferred Stock Issue
Date.
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series D Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series D Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series D Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series D Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and Interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series D Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series D
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
D Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series D Conversion Price
resulting
<PAGE> 75
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of arty such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series D Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series D Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series D Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of
<PAGE> 76
Common Stock may be so issued without violation of any applicable law or
regulation, or of any requirement of any national securities exchange upon which
the Common Stock may be listed.
6K. No Reissuance of Series D Convertible Preferred Stock.
Shares of Series D Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series D Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series D Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series D Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series D Convertible Preferred Stock in any manner which
interferes with the timely conversion of such Preferred Stock, except as may
otherwise be required to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series D Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series D
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series D
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000; (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date, and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
<PAGE> 77
7. Redemption. The shares of Series D Convertible Preferred Stock shall
be redeemed as follows:
7A. Operational Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series D Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series D Convertible Preferred Stock, one or more holders of shares of
Series D Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series D Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series D Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series D Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series D
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series D Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series D Convertible
Preferred Stock to be redeemed on the Redemption Date shall be redeemed by
paying for each share in cash an amount equal to the Series D Redemption Price
(as defined below). For purposes of this paragraph 7B, the "Series D Redemption
Price" shall mean $18.243 per share, plus an amount equal to all dividends
accrued and unpaid on each such share, provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series D Redemption Price" shall mean the greater of (i) $18.243
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series D Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled thereto. For purposes of
this paragraph 7B, "Fair Market Value" of the Common Stock shall mean the
average of the fair market valuations of the Common Stock performed by two
investment banks (the "Initial Appraisers"), one of which shall be retained by
the Corporation and one of which shall be retained by the holders of a majority
in interest of the Series D Convertible Preferred Stock. Subject to the
following sentence, such determination by the Initial Appraisers of Fair Market
Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series D Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series D Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the final Appraiser shall be shared by the Corporation
and the holders of the Series D Convertible Preferred Stock.
<PAGE> 78
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation by mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, to each holder of record (at the close of
business on the business day next preceding the day on which the Redemption
Notice is given) of shares of Series D Convertible Preferred Stock notifying
such holder of the redemption and specifying the Series D Redemption Price, the
Redemption Date and the place where said Series D Redemption Price shall be
payable. The Redemption Notice shall be addressed to each holder at his address
as shown by the records of the Corporation. From and after the close of business
on the Redemption Date, unless there shall have been a default in the payment of
the Series D Redemption Price, all rights of holders of shares of Series D
Convertible Preferred Stock (except the right to receive the Series D Redemption
Price) shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever. If the funds of the Corporation legally
available for redemption of shares of Series D Convertible Preferred Stock on
the Redemption Date are insufficient to redeem the total number of outstanding
shares of Series D Convertible Preferred Stock to be redeemed on such Redemption
Date, the holders of shares of Series D Convertible Preferred Stock shall share
ratably in any funds legally available for redemption of such shares according
to the respective amounts which would be payable with respect to the full number
of shares owned by them if all such outstanding shares were redeemed in full.
The shares of Series D Convertible Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Series D Redemption Price
at the rate of 15% per annum, payable quarterly in arrears. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series D Convertible Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series D Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series D
Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a different number of shares of the Corporation is required by these terms of
the Series D Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series D Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series D Convertible Preferred Stock.
<PAGE> 79
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel
Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
(2) The term "Preferred Stock Issue Date" shall mean the date
on which the Series D Convertible Preferred Stock is originally issued by the
Corporation pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series D
Convertible Preferred Stock Purchase Agreement dated as of June 21, 1999 between
the Corporation and Apple Computer Inc. Ltd., as in effect on June 21, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 11,377,800 shares of Common Stock for both clauses (i)
and (ii), with such number including 2,132,100 shares issued or subject to
options granted prior to the date of the initial issuance of the Series A
Convertible Preferred Stock (the "Option Shares") (appropriately adjusted to
reflect an event described in paragraph 6F hereof); provided that, such number
of such shares subject to the Plan shall be increased by up to 7,559,226
additional shares of Common Stock (appropriately adjusted to reflect an event
described in paragraph 6F hereof) (collectively, the "Founders' Shares") upon
the repurchase of such Founders' Shares by the Corporation from the Founders
pursuant to contractual rights held by the Corporation. The foregoing numbers of
Reserved Employee Shares may be increased by the affirmative vote or written
consent of a majority of the directors designated solely by the holders of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 50% of the
then outstanding shares of Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
(6) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(7) The term "Series B Preferred Stock Issue Date" shall mean
April 16, 1999.
<PAGE> 80
(8) The term "Series B Purchase Agreement" shall mean the
Series B Convertible Preferred Stock and Series C Convertible Preferred Stock
Purchase Agreement dated as of April 16, 1999 among the Corporation and the
purchasers named therein.
(9) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 81
CERTIFICATE OF DESIGNATIONS
OF
SERIES E CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
-------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on August 5, 1999, duly adopted
the following resolution, which resolution remains in full force and effect on
the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation, a series of Preferred Stock
of the Corporation be and hereby is established, consisting of 1,867,480 shares,
$0.01 par value per share, to be designated "Series E Convertible Preferred
Stock" (hereinafter, the "Series E Preferred Stock"); that the Board of
Directors be and hereby is authorized to issue such shares of Series E Preferred
Stock from time to time and for such consideration and on such terms as the
Board of Directors shall determine; and that, subject to the limitations
provided by law and by the Certificate of Incorporation, the voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof shall be as set forth on
Schedule I attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
duly executed by its President on this 6th day of August, 1999
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-----------------------------------
Paul Sagan
President
<PAGE> 82
Schedule I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES E CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series E
Convertible Preferred Stock" shall consist of 1,867,480 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series E Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corporation")
or by law, the Series E Convertible Preferred Stock shall vote together with all
other classes and series of stock of the Corporation as a single class on all
actions to be taken by the stockholders of the Corporation. Each share of Series
E Convertible Preferred Stock shall entitle the holder thereof to such number of
votes per share on each such action as shall equal the number of shares of
Common Stock (including fractions of a share) into which each share of Series E
Convertible Preferred Stock is then convertible.
2. Ranking. The Series E Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event (as
defined in paragraph 4A herein), senior to all classes of common stock of the
Company and to each other class of capital stock or series of preferred stock
(including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock, the Series
C Convertible Preferred Stock and the Series D Convertible Preferred Stock of
the Corporation, and senior or pari passu to any other class of capital stock or
series of preferred stock established after the Preferred Stock Issue Date by
the Board of Directors. All classes of common stock of the Company, the Series A
Convertible Preferred Stock and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date to which the
Series E Convertible Preferred Stock is senior, are collectively referred to
herein as "Junior Securities". The Series B Convertible Preferred Stock, the
Series C Convertible Preferred Stock and the Series D Convertible Preferred
Stock of the Corporation and any other class of capital stock or series of
preferred stock established after the Preferred Stock Issue Date which ranks
pari passu with the Series E Convertible Preferred Stock, are collectively
referred to herein as "Pari Passu Securities".
3. Dividends. The holders of shares of the Series E Convertible
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Corporation legally
available therefor, cumulative preferential dividends at the annual rate of 8%
on the Series E Liquidation Preference Payments (as defined in paragraph 4A
herein); provided, however, that any such dividends shall only be paid, whether
declared or not, immediately upon the occurrence of (i) a Liquidation Event
pursuant to paragraph 4A hereof or (ii) a Redemption pursuant to paragraph 7B
hereof. Holders of shares of Series E Convertible Preferred Stock shall be
entitled to receive the dividends provided for herein in preference to and in
priority over any dividends upon any of the Junior Securities. Dividends on the
Series E Convertible Preferred Stock shall accrue on a daily basis from the
Preferred Stock Issue Date and, to the extent they are not paid, shall
accumulate on an annual basis on each December 31,
<PAGE> 83
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation (a "Liquidation Event"), whether voluntary or involuntary,
the holders of the shares of Series E Convertible Preferred Stock shall be paid
an amount equal to $26.239 per share plus, in the case of each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series E Convertible Preferred
Stock being sometimes referred to as the "Series E Liquidation Preference
Payment" and with respect to all shares of Series E Convertible Preferred Stock
being sometimes referred to as the "Series E Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series E Convertible Preferred Stock shall be insufficient to permit payment
to such stockholders of the full preferential amounts aforesaid, then all of the
assets of the Corporation available for distribution to holders of the Series E
Convertible Preferred Stock and Pari Passu Securities shall be distributed to
such holders of the Series E Convertible Preferred Stock and Pari Passu
Securities pro rata, so that each holder receives that portion of the assets
available for distribution as the number of shares of such stock held by such
holder bears to the total number of shares of such stock then outstanding.
4B. Upon any Liquidation Event, immediately after the holders
of Series E Convertible Preferred Stock and holders of any Pari Passu Securities
have been paid in full pursuant to paragraph 4A above, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and
the place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series E
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (except a
consolidation or merger into a Subsidiary or merger in which the Corporation is
the surviving Corporation and the holders of the Corporation's voting stock
outstanding immediately prior to the transaction constitute a majority of the
holders of voting stock outstanding immediately following the transaction), (y)
sale or transfer by the Corporation of all or substantially all of its assets,
or (z) sale or transfer by the Corporation's stockholders of capital stock
representing a majority of the outstanding capital stock of the Corporation
shall be deemed to be a Liquidation Event within the meaning of the provisions
of this paragraph 4 (subject to the provisions of this paragraph 4 and not the
provisions of paragraph 6G hereof, unless paragraph 6G is elected in the
following proviso); provided, however, that if the holders of at least 60% of
the then outstanding shares of Series E Convertible Preferred Stock shall elect
the benefits of the provisions of paragraph 6G in lieu of receiving payment in a
Liquidation Event
<PAGE> 84
pursuant to this paragraph 4, then all holders of shares of Series E Convertible
Preferred Stock shall receive the benefits of the provisions of paragraph 6G in
lieu of receiving payment pursuant to this paragraph 4 for the particular
Organic Change (as defined in Section 6G) causing the rights of Section 6G to be
available. The election of the rights under Section 6G for any particular
Organic Change shall not constitute an election of the rights available under
Section 6G for any other Organic Change, for which the holders of Series E
Convertible Preferred Stock shall have a new election under the foregoing
proviso. Whenever the distribution provided for in this paragraph 4 shall be
payable in property other than cash, the value of such distribution shall be the
fair market value of such property as determined in good faith by the Board of
Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of Series
E Convertible Preferred Stock issued pursuant to the Purchase Agreement remain
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series E Convertible Preferred
Stock given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate
with or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration definitely
and unconditionally payable to all of the stockholders of the Corporation is
greater than $1.2 billion) without the affirmative vote or written consent of
the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series D
Convertible Preferred Stock and Series E Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis;
(2) Sell, abandon, transfer, lease or otherwise dispose of all
or substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $1.2 billion) without the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series D Convertible Preferred Stock and Series E Convertible Preferred Stock,
voting together as a single class on a Common Stock equivalent basis;
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series E
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any
additional class or series of shares of stock (other than the Series C
Convertible Preferred Stock of the Corporation) unless the same ranks junior to
or on parity with the Series E Convertible Preferred Stock as to dividends and
the distribution of assets on a Liquidation Event, or increase the authorized
<PAGE> 85
amount of Series E Convertible Preferred Stock or increase the authorized amount
of any additional class or series of shares of stock unless the same ranks
junior to or on parity with the Series E Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, or create or
authorize any obligation or security convertible into shares of Series E
Convertible Preferred Stock or into shares of any other class or series of stock
unless the same ranks junior to or on parity with the Series E Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event, whether any such creation, authorization or increase shall be by means of
amendment to the Certificate of Incorporation or by merger, consolidation or
otherwise;
(5) In any manner amend, alter or change the designations or
the powers, preferences or rights, privileges or the restrictions of the Series
E Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series E Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require the approval of holders of Series E Convertible
Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase
or redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without
the affirmative vote or written consent of a majority of the directors
designated solely by the holders of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock or the affirmative vote or written consent
of the holders of at least 50% of the then outstanding shares of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C
Convertible Preferred Stock, Series D Convertible Preferred Stock and Series E
Convertible Preferred Stock, voting together as a single class on a Common Stock
equivalent basis.
6. Conversion. The holders of shares of Series E Convertible Preferred
Stock shall have the following conversion rights:
6A. Right to Convert. Subject to the terms and conditions of
this paragraph 6, the holder of any share or shares of Series E Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series E Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series E Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series E Convertible Preferred Stock so to be converted by
$26.239 and (ii) dividing the result by the conversion price of $26.239 per
share or in case an adjustment of such price has taken place pursuant to the
further provisions of this paragraph 6, then by the conversion price as last
adjusted and in effect at the date any share or shares of Series E Convertible
Preferred Stock are surrendered for conversion (such
<PAGE> 86
price, or such price as last adjusted, being referred to as the "Series E
Conversion Price"). Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
number of shares of Series E Convertible Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be converted
to the Corporation at its principal office (or such other office or agency of
the Corporation as the Corporation may designate by notice in writing to the
holders of the Series E Convertible Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in paragraph 6A and
surrender of the certificate or certificates for the share or shares of Series E
Convertible Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in such
name or names as such holder may direct, a certificate or certificates for the
number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series E Convertible Preferred Stock. To the extent permitted
by law, such conversion shall be deemed to have been effected and the Series E
Conversion Price shall be determined as of the close of business on the date on
which such written notice shall have been received by the Corporation and the
certificate or certificates for such share or shares shall have been surrendered
as aforesaid, and at such time the rights of the holder of such share or shares
of Series E Convertible Preferred Stock shall cease, and the person or persons
in whose name or names any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the shares represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series E Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends declared and unpaid (if any) on the
shares of Series E Convertible Preferred Stock surrendered for conversion to the
date upon which such conversion is deemed to take place as provided in paragraph
6B. In case the number of shares of Series E Convertible Preferred Stock
represented by the certificate or certificates surrendered pursuant to paragraph
6A exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series E Convertible Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional share
of Common Stock would, except for the provisions of the first sentence of this
paragraph 6C, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series E Convertible Preferred Stock for conversion an amount in cash equal to
the current fair market value of such fractional share as determined in good
faith by the Board of Directors of the Corporation, and based upon the aggregate
number of shares of Series E Convertible Preferred Stock surrendered by any one
holder.
6D. Adjustment of Series E Conversion Price Upon Issuance of
Common Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold,
<PAGE> 87
any shares of Common Stock for a consideration per share less than the Series E
Conversion Price in effect immediately prior to the time of such issue or sale,
(such number being appropriately adjusted to reflect the occurrence of any event
described in paragraph 6F), then, forthwith upon such issue or sale, the Series
E Conversion Price shall be reduced to the price determined by dividing (i) an
amount equal to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale (assuming the conversion of the
outstanding shares of Series E Convertible Preferred Stock) multiplied by the
then existing Series E Conversion Price and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total number of
shares of Common Stock outstanding immediately after such issue or sale
(assuming the conversion of the outstanding shares of Series E Convertible
Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the
total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Series E Conversion
Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have been
issued for such price per share as of the date of granting of such
Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subparagraph 6D(3), no adjustment of the Series E Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which
<PAGE> 88
Common Stock is issuable upon such conversion or exchange (determined
by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion
or exchange of all such Convertible Securities thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Series E Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Series E Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Series E
Conversion Price have been or are to be made pursuant to other
provisions of this paragraph 6D, no further adjustment of the Series E
Conversion Price shall be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 6D(1), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred to
in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable for
Common Stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against
dilution), the Series E Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Series E Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; provided,
however, that in no event shall the Series E Conversion Price then in
effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such
Convertible Securities, the Series E Conversion Price then in effect
hereunder shall forthwith be increased to the Conversion Price which
would have been in effect at the time of such expiration or termination
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for the issue of stock
dividends or distributions upon the outstanding Common Stock for which
adjustment is made pursuant to paragraph 6F), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall
be deemed to have been issued or sold without consideration.
<PAGE> 89
6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for consideration other than cash, the amount
of the consideration other than cash received by the Corporation shall
be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith.
In case any Options shall be issued in connection with the issue and
sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to
such Options by the parties thereto, such Options shall be deemed to
have been issued for such consideration as determined in good faith by
the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation (or any Subsidiary), and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series E Conversion Price if it first obtains the written consent of the
holders of at least 60% of the then outstanding shares of Series E Convertible
Preferred Stock that no adjustment shall be required. In no event shall the
Corporation be required to make any adjustment to the Series E Conversion Price
in the case of the issuance of (i) shares of Series C Convertible Preferred
Stock pursuant to the Series B Purchase Agreement, (ii) shares of Common Stock
issuable upon conversion of the Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock or Series E Convertible Preferred Stock, (iii)
shares of Common Stock issued or issuable as a dividend or distribution on
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock or
Series E Convertible Preferred Stock, (iv) Reserved Employee Shares (as defined
in paragraph 9 herein), (v) warrants issued in connection with senior
subordinated notes of the Corporation as contemplated by the Series B Purchase
Agreement or shares of Common Stock issuable upon conversion of such warrants,
or (vi) Options outstanding as of the Preferred Stock Issue Date.
<PAGE> 90
6F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Series E Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Series E Conversion Price in effect immediately prior to such
combination shall be proportionately increased.
6G. Reorganization or Reclassification. If any capital
reorganization, reclassification, recapitalization, consolidation, merger, sale
of all or substantially all of the Corporation's assets or other similar
transaction (any such transaction being referred to herein as an "Organic
Change") shall be effected in such a way that holders of Common Stock shall be
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such Organic Change, lawful and adequate provisions shall be made
whereby each holder of a share or shares of Series E Convertible Preferred Stock
shall thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series E Convertible Preferred Stock, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such Common Stock immediately theretofore receivable
upon such conversion had such Organic Change not taken place, and in any case of
a reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Series E Conversion Price) shall thereafter be applicable, as nearly as may
be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series E
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by first class mail, postage prepaid, or by facsimile
transmission to non-U.S. residents, addressed to each holder of shares of Series
E Convertible Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Series E Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a consolidation or
merger of the Corporation with or into, or a sale of all or substantially all of
its assets to, another entity or entities; or
<PAGE> 91
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least 20 days' prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at least 20
days' prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause (a) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto and such notice in
accordance with the foregoing clause (b) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issuance upon the conversion of Series E Convertible Preferred Stock
as herein provided, such number of shares of Common Stock as shall then be
issuable upon the conversion of all outstanding shares of Series E Convertible
Preferred Stock. The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series E Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
6K. No Reissuance of Series E Convertible Preferred Stock.
Shares of Series E Convertible Preferred Stock which are converted into shares
of Common Stock as provided herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series E Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof; provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series E Convertible Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Series E Convertible Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any shares of Series E Convertible Preferred
<PAGE> 92
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
6N. Definition of Common Stock. As used in this paragraph 6,
the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.01 per share, as constituted on the date of filing of
these terms of the Series E Convertible Preferred Stock, and shall also include
any capital stock of any class of the Corporation thereafter authorized which
shall neither be limited to a fixed sum or percentage of par value in respect of
the rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
shares of Common Stock receivable upon conversion of shares of Series E
Convertible Preferred Stock shall include only shares designated as Common Stock
of the Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series E
Convertible Preferred Stock shall automatically convert to shares of Common
Stock if at any time the Corporation shall effect a public offering of shares of
Common Stock (any such offering, regardless of compliance with subsections (i),
(ii) and (iii) herein, being referred to as a "Public Offering"), provided (i)
the aggregate gross proceeds from such offering to the Corporation shall be at
least $20,000,000, (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
<PAGE> 93
7. Redemption. The shares of Series E Convertible Preferred Stock shall
be redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the
right to call or redeem at any time all or any shares of Series E Convertible
Preferred Stock. With the approval of the holders of 66% of the then outstanding
shares of Series E Convertible Preferred Stock, one or more holders of shares of
Series E Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series E Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series E Convertible Preferred Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of Series E Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series E
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series E Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series E Convertible
Preferred Stock to be redeemed on the Redemption Date shall be redeemed by
paying for each share in cash an amount equal to the Series E Redemption Price
(as defined below). For purposes of this paragraph 7B, the "Series E Redemption
Price" shall mean $26.239 per share, plus an amount equal to all dividends
accrued and unpaid on each such share; provided, however, that if the Redemption
Date is after the fifth (5th) anniversary of the Series B Preferred Stock Issue
Date, then the "Series E Redemption Price" shall mean the greater of (i) $26.239
per share, plus an amount equal to all dividends accrued and unpaid on each such
share and (ii) the Fair Market Value (as defined below) of the Common Stock
underlying the Series E Convertible Preferred Stock. Such payment shall be made
in full on the Redemption Date to the holders entitled thereto. For purposes of
this paragraph 7B, "Fair Market Value" of the Common Stock shall mean the
average of the fair market valuations of the Common Stock performed by two
investment banks (the "Initial Appraisers"), one of which shall be retained by
the Corporation and one of which shall be retained by the holders of a majority
in interest of the Series E Convertible Preferred Stock. Subject to the
following sentence, such determination by the Initial Appraisers of Fair Market
Value shall be final and binding on the parties. If the higher of the two
valuations of the Initial Appraisers is equal to or greater than 110% of the
lower valuation, the Corporation and holders of a majority in interest of the
Series E Convertible Preferred Stock shall select a third investment bank (the
"Final Appraiser"), which shall be mutually agreeable to the Corporation and the
holders of a majority in interest of the Series E Convertible Preferred Stock.
The fair market value of the Common Stock as determined by the Final Appraiser
shall be final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series E Convertible Preferred Stock.
7C. Redemption Mechanics. At least 15 but not more than 35
days prior to the Redemption Date, written notice (the "Redemption Notice")
shall be given by the Corporation
<PAGE> 94
by mail, postage prepaid, or by facsimile transmission to non-U.S. residents, to
each holder of record (at the close of business on the business day next
preceding the day on which the Redemption Notice is given) of shares of Series E
Convertible Preferred Stock notifying such holder of the redemption and
specifying the Series E Redemption Price, the Redemption Date and the place
where said Series E Redemption Price shall be payable. The Redemption Notice
shall be addressed to each holder at his address as shown by the records of the
Corporation. From and after the close of business on the Redemption Date, unless
there shall have been a default in the payment of the Series E Redemption Price,
all rights of holders of shares of Series E Convertible Preferred Stock (except
the right to receive the Series E Redemption Price) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. If
the funds of the Corporation legally available for redemption of shares of
Series E Convertible Preferred Stock on the Redemption Date are insufficient to
redeem the total number of outstanding shares of Series E Convertible Preferred
Stock to be redeemed on such Redemption Date, the holders of shares of Series E
Convertible Preferred Stock shall share ratably in any funds legally available
for redemption of such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by them if all such
outstanding shares were redeemed in full. The shares of Series E Convertible
Preferred Stock not redeemed shall remain outstanding and entitled to all rights
and preferences provided herein; provided, however, that such unredeemed shares
shall be entitled to receive interest accruing daily with respect to the
applicable Series E Redemption Price at the rate of 15% per annum, payable
quarterly in arrears. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series E
Convertible Preferred Stock, such funds will be used, at the end of the next
succeeding fiscal quarter, to redeem the balance of such shares, or such portion
thereof for which funds are then legally available, on the basis set forth
above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any
shares of Series E Convertible Preferred Stock redeemed pursuant to this
paragraph 7 or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series E
Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders
of a different number of shares of the Corporation is required by these terms of
the Series E Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series E Convertible Preferred
Stock may be amended, modified or waived without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series E Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel
Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
<PAGE> 95
(2) The term "Preferred Stock Issue Date" shall mean the date
on which the Series E Convertible Preferred Stock is originally issued by the
Corporation pursuant to the Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series E
Convertible Preferred Stock Purchase Agreement dated as of August 6, 1999
between the Corporation and Cisco Systems, Inc., as in effect on August 6, 1999.
(4) The term the "Plan" shall mean the Corporation's 1998
Stock Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of
Common Stock reserved by the Corporation pursuant to the Plan from time to time
for (i) the sale of shares of Common Stock to employees, consultants or
non-employee directors (other than representatives of the holders of Preferred
Stock) of the Corporation or (ii) the exercise of options to purchase Common
Stock granted to employees, consultants or non-employee directors (other than
representatives of the holders of Preferred Stock) of the Corporation, not to
exceed in the aggregate 11,377,800 shares of Common Stock for both clauses (i)
and (ii), with such number including 2,132,100 shares issued or subject to
options granted prior to the date of the initial issuance of the Series A
Convertible Preferred Stock (the "Option Shares") (appropriately adjusted to
reflect an event described in paragraph 6F hereof); provided that, such number
of such shares subject to the Plan shall be increased by up to 7,559,226
additional shares of Common Stock (appropriately adjusted to reflect an event
described in paragraph 6F hereof) (collectively, the "Founders' Shares") upon
the repurchase of such Founders' Shares by the Corporation from the Founders
pursuant to contractual rights held by the Corporation. The foregoing numbers of
Reserved Employee Shares may be increased by the affirmative vote or written
consent of a majority of the directors designated solely by the holders of
Series A Convertible Preferred Stock and Series B Convertible Preferred Stock or
the affirmative vote or written consent of the holders of at least 50% of the
then outstanding shares of Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock and Series E Convertible Preferred Stock, voting
together as a single class on a Common Stock equivalent basis.
(6) The term "Series B Conversion Price" shall mean the
conversion price of the Series B Convertible Preferred Stock from time to time
under the terms of the designation of the Series B Convertible Preferred Stock
of the Corporation.
(7) The term "Series B Preferred Stock Issue Date" shall mean
April 16, 1999.
(8) The term "Series B Purchase Agreement" shall mean the
Series B Convertible Preferred Stock and Series C Convertible Preferred Stock
Purchase Agreement dated as of April 16, 1999 among the Corporation and the
purchasers named therein.
<PAGE> 96
(9) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a majority
of the outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
<PAGE> 97
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
AKAMAI TECHNOLOGIES, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
Akamai Technologies, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, at a meeting held on August
5, 1999, duly adopted a resolution, pursuant to Sections 141(f) and 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Certificate of Incorporation of the Corporation and declaring said amendment
to be advisable. The stockholders of the Corporation duly approved said proposed
amendment by written consent in accordance with Sections 228 and 242 of the
General Corporation Law of the State of Delaware, and written notice of such
consent has been or will be given to all stockholders who have not consented in
writing to said amendment. The resolution setting forth the amendment is as
follows:
RESOLVED: That the first paragraph of Article FOURTH of the
Certificate of Incorporation of the Corporation be and
hereby is deleted in its entirety and that the following
paragraph be inserted in lieu thereof:
"FOURTH. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is 310,000,000
shares, consisting of (i) 300,000,000 shares of Common Stock, $0.01 par
value per share ("Common Stock"), and (ii) 10,000,000 shares of
Preferred Stock, $0.01 par value per share ("Preferred Stock").
<PAGE> 98
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on this 5th day of August, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ Paul Sagan
-----------------------------
Paul Sagan
President
<PAGE> 99
CERTIFICATE OF DESIGNATIONS
OF
SERIES F CONVERTIBLE PREFERRED STOCK
OF
AKAMAI TECHNOLOGIES, INC.
------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------
Akamai Technologies, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation and in accordance with the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of the
Directors of the Corporation, at a meeting held on September 20, 1999, duly
adopted the following resolution, which resolution remains in full force and
effect on the date hereof:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation, a series of Preferred Stock of the
Corporation be and hereby is established, consisting of 985,545 shares, $0.01
par value per share, to be designated "Series F Convertible Preferred Stock"
(hereinafter, the "Series F Preferred Stock"); that the Board of Directors be
and hereby is authorized to issue such shares of Series F Preferred Stock from
time to time and for such consideration and on such terms as the Board of
Directors shall determine; and that, subject to the limitations provided by law
and by the Certificate of Incorporation, the voting powers, preferences and
relative, participating, optional and other special rights, and qualifications,
limitations and restrictions thereof shall be as set forth on Schedule I
attached hereto.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be duly
executed by its President on this 20th day of September, 1999.
AKAMAI TECHNOLOGIES, INC.
By: /s/ PAUL SAGAN
---------------------------------
Paul Sagan
President
1
<PAGE> 100
Schedule I
AKAMAI TECHNOLOGIES, INC.
DESIGNATION OF SERIES F CONVERTIBLE PREFERRED STOCK
The series of Preferred Stock designated and known as "Series F Convertible
Preferred Stock" shall consist of 985,545 shares.
1. Voting. Except as may be otherwise provided in these terms of the
Series F Convertible Preferred Stock, in the Certificate of Incorporation (the
"Certificate of Incorporation") of Akamai Technologies, Inc. (the "Corpora-
tion") or by law, the Series F Convertible Preferred Stock shall vote together
with all other classes and series of stock of the Corporation as a single class
on all actions to be taken by the stockholders of the Corporation. Each share
of Series F Convertible Preferred Stock shall entitle the holder thereof to
such number of votes per share on each such action as shall equal the number of
shares of Common Stock (including fractions of a share) into which each share
of Series F Convertible Preferred Stock is then convertible.
2. Ranking. The Series F Convertible Preferred Stock shall rank, with
respect to dividend distributions and distributions upon a Liquidation Event
(as defined in paragraph 4A herein), senior to all classes of common stock of
the Company and to each other class of capital stock or series of preferred
stock (including the Series A Convertible Preferred Stock of the Corporation)
established before the Series B Preferred Stock Issue Date, by the Board of
Directors, pari passu with the Series B Convertible Preferred Stock, the
Series C Preferred Stock, the Series D Convertible Preferred Stock and the
Series E Convertible Preferred Stock of the Corporation, and senior or pari
passu to any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date by the Board of Directors. All
classes of common stock of the Company, the Series A Convertible Preferred
Stock and any other class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date to which the Series F
Convertible Preferred Stock is senior, are collectively referred to herein as
"Junior Securities". The Series B Convertible Preferred Stock, the Series C
Convertible Preferred Stock, the Series D Convertible Preferred Stock and the
Series E Convertible Preferred Stock of the Corporation and any other class of
capital stock or series of preferred stock established after the Preferred
Stock Issue Date which ranks pari passu with the Series F Convertible Preferred
Stock, are collectively referred to herein as "Pari Passu Securities".
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<PAGE> 101
3. Dividends. The holders of shares of the Series F Convertible Preferred
Stock shall be entitled to receive, when, as and if dividends are declared by
the Board of Directors out of funds of the Corporation legally available
therefor, cumulative preferential dividends at the annual rate of 8% on the
Series F Liquidation Preference Payments (as defined in paragraph 4A herein);
provided, however, that any such dividends shall only be paid, whether declared
or not, immediately upon the occurrence of (i) a Liquidation Event pursuant to
paragraph 4A hereof or (ii) a Redemption pursuant to paragraph 7B hereof.
Holders of shares of Series F Convertible Preferred Stock shall be entitled to
receive the dividends provided for herein in preference to and in priority over
any dividends upon any of the Junior Securities. Dividends on the Series F
Convertible Preferred Stock shall accrue on a daily basis from the Preferred
Stock Issue Date and, to the extent they are not paid, shall accumulate on an
annual basis on each December 31, whether or not the Corporation has earnings or
profits, whether or not there are funds legally available for the payment of
such dividends and whether or not dividends are declared.
4. Liquidation, Dissolution and Winding-up.
4A. Liquidation. Upon any liquidation, dissolution or winding up of the
Corporation (a "Liquidation Event"), whether voluntary or involuntary, the
holders of the shares of Series F Convertible Preferred Stock shall be paid an
amount equal to $15.22 per share plus, in the case if each share, an amount
equal to dividends accrued but unpaid thereon, computed to the date payment
thereof is made available, together with payment to any Pari Passu Securities,
and before any payment shall be made to the holders of any Junior Securities,
such amount payable with respect to one share of Series F Convertible Preferred
Stock being sometimes referred to as the "Series F Liquidation Preference
Payment" and with respect to all shares of Series F Convertible Preferred Stock
being sometimes referred to as the "Series F Liquidation Preference Payments".
If upon any Liquidation Event, the assets to be distributed to the holders of
the Series F Convertible Preferred Stock shall be insufficient to permit
payment to such stockholders of the full preferential amounts aforesaid, then
all of the assets of the Corporation available for distribution to holders of
the Series F Convertible Preferred Stock and Pari Passu Securities shall be
distributed to such holders of the Series F Convertible Preferred Stock and
Pari Passu Securities pro rata, so that each holder receives that portion of
the assets available for distribution as the number of shares of such stock
held by such holder bears to the total number of shares of such stock then
outstanding.
4B. Upon any Liquidation Event, immediately after the holders of Series
F Convertible Preferred Stock and holders of any Pari Passu Securities have been
paid in full pursuant to paragraph 4A above, the remaining net assets of the
Corporation available for distribution shall be distributed among the holders
of the shares of Junior Securities.
Written notice of such Liquidation Event, stating a payment date and the
place where said payments shall be made, shall be given by mail, postage
prepaid, or by facsimile to non-U.S. residents, not less than 20 days prior to
the payment date stated therein, to the holders of record of Series F
Convertible Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
The (x) consolidation or merger of the Corporation into or with any other
entity or entities which results in the exchange of outstanding shares of the
Corporation for securities or other consideration issued or paid or caused to
be issued or paid by any such entity or affiliate
3
<PAGE> 102
thereof (except a consolidation or merger into a Subsidiary or merger in which
the Corporation is the surviving Corporation and the holders of the
Corporation's voting stock outstanding immediately prior to the transaction
constitute a majority of the holders of voting stock outstanding immediately
following the transaction), (y) sale or transfer by the Corporation of all or
substantially all of its assets, or (z) sale or transfer by the Corporation's
stockholders of capital stock representing a majority of the outstanding
capital stock of the Corporation shall be deemed to be a Liquidation Event
within the meaning of the provisions of this paragraph 4 (subject to the
provisions of this paragraph 4 and not the provisions of paragraph 6G hereof,
unless paragraph 6G is elected in the following proviso); provided, however,
that if the holders of at least 60% of the then outstanding shares of Series F
Convertible Preferred Stock shall elect the benefits of the provisions of
paragraph 6G in lieu of receiving payment in a Liquidation Event pursuant to
this paragraph 4, then all holders of shares of Series F Convertible Preferred
Stock shall receive the benefits of the provisions of paragraph 6G in lieu of
receiving payment pursuant to this paragraph 4 for the particular Organic
Change (as defined in Section 6G) causing the rights of Section 6G to be
available. The election of the rights under Section 6G for any particular
Organic Change shall not constitute an election of the rights available under
Section 6G for any other Organic Change, for which the holders of Series F
Convertible Preferred Stock shall have a new election under the foregoing
proviso. Whenever the distribution provided for in this paragraph 4 shall be
payable in property other than cash, the value of such distribution shall be
the fair market value of such property as determined in good faith by the Board
of Directors of the Corporation.
5. Restrictions. At any time when at least 50% of the shares of
Series F Convertible Preferred Stock issued pursuant to the Purchase Agreement
remain outstanding, except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by law or by the
Certificate of Incorporation, and in addition to any other vote required by law
or the Certificate of Incorporation, without the written consent of the holders
of at least 60% of the then outstanding shares of Series F Convertible
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, the Corporation will not:
(1) Consent to any Liquidation Event or merge or consolidate with
or into, or permit any Subsidiary to merge or consolidate with or into, any
other corporation, corporations, entity or entities (except a consolidation or
merger into a Subsidiary or merger in which the Corporation is the surviving
corporation and the holders of the Corporation's voting stock outstanding
immediately prior to the transaction constitute a majority of the holders of
voting stock outstanding immediately following the transaction or a
consolidation or merger pursuant to which the aggregate consideration
definitely and unconditionally payable to all of the stockholders of the
Corporation is greater than $1.2 billion) without the affirmative vote or
written consent of the holders of at least 50% of the then outstanding shares
of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series E Convertible Preferred Stock and
Series F Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis;
(2) Sell, abandon, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (unless the aggregate
consideration definitely and unconditionally payable to all of the stockholders
of the Corporation is greater than $1.2 billion) without the affirmative vote
or written consent of the holders of at least 50% of the then outstanding shares
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<PAGE> 103
of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series D Convertible Preferred Stock, Series E Convertible Preferred Stock
and Series F Convertible Preferred Stock, voting together as a single class on a
Common Stock equivalent basis;
(3) Amend, alter or repeal any provision of its Certificate of
Incorporation or By-laws in a manner adverse to holders of the Series F
Convertible Preferred Stock;
(4) Create or authorize the creation of or issue any additional class
or series of shares of stock (other than the Series C Convertible Preferred
Stock of the Corporation) unless the same ranks junior to or on parity with the
Series F Convertible Preferred Stock as to dividends and the distribution of
assets on a Liquidation Event, or increase the authorized amount of Series F
Convertible Preferred Stock or increase the authorized amount of any additional
class or series of shares of stock unless the same ranks junior to or on parity
with the Series F Convertible Preferred Stock as to dividends and the
distribution of assets on a Liquidation Event, or create or authorize any
obligation or security convertible into shares of Series F Convertible Preferred
Stock or into shares of any other class or series of stock unless the same ranks
junior to or on parity with the Series F Convertible Preferred Stock as to
dividends and the distribution of assets on a Liquidation Event, whether any
such creation, authorization or increase shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;
(5) In any manner amend, alter or change the designations or the
powers, preferences or rights, privileges or the restrictions of the Series F
Convertible Preferred Stock, provided, however, that the authorization or
creation of any shares of capital stock on parity with the Series F Convertible
Preferred Stock as to dividends and the distribution of assets on a Liquidation
Event shall not require the approval of holders of Series F Convertible
Preferred Stock;
(6) Purchase or redeem, or set aside any sums for the purchase or
redemption of, or pay any dividend or make any distribution on, any Junior
Securities, except for (i) dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock or (ii)
repurchases of shares of capital stock (at the original purchase price therefor)
from officers, employees, directors or consultants of the Corporation which are
subject to restrictive stock purchase, right of first refusal or other
agreements under which the Corporation has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment; or
(7) Increase the number of Reserved Employee Shares without the
affirmative vote or written consent of a majority of the directors designated
solely by the holders of Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock or the affirmative vote or written consent of the
holders of at least 50% of the then outstanding shares of Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible
Preferred Stock and Series F Convertible Preferred Stock, voting together as a
single class on a Common Stock equivalent basis.
6. Conversion. The holders of shares of Series F Convertible Preferred
Stock shall have the following conversion rights:
5
<PAGE> 104
6A. Right to Convert. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series F Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series F Convertible Preferred Stock (except that upon any
Liquidation Event the right of conversion shall terminate at the close of
business on the business day fixed for payment of the amounts distributable on
the Series F Convertible Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of Series F Convertible Preferred Stock so to be converted by
$15.22 and (ii) dividing the result by the conversion price of $15.22 per share
or in case an adjustment of such price has taken place pursuant to the further
provisions of this paragraph 6, then by the conversion price as last adjusted
and in effect at the date any share or shares of Series F Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Series F Conversion Price"). Such rights of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series F
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series F
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
6B. Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in paragraph 6A and surrender of
the certificate or certificates for the share or shares of Series F Convertible
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number
of whole shares of Common Stock issuable upon the conversion of such share or
shares of Series F Convertible Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected and the Series F
Conversion Price shall be determined as of the close of business on the date
on which such written notice shall have been received by the Corporation and
the certificate or certificates for such share or shares shall have been
surrendered as aforesaid, and at such time the rights of the holder of such
share or shares of Series F Convertible Preferred Stock shall cease, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed
to have become the holder or holders of record of the shares represented
thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Series F Convertible Preferred Stock
into Common Stock and no payment or adjustment shall be made upon any
conversion on account of any cash dividends on the Common Stock issued upon
such conversion. At the time of each conversion, the Corporation shall pay in
cash an amount equal to all dividends declared and unpaid (if any) on the
shares of Series F Convertible Preferred Stock surrendered for conversion to
the date upon which such conversion is deemed to take place as provided in
paragraph 6B. In case the number of shares of Series F Convertible Preferred
Stock represented by the certificate or certificates surrendered pursuant to
paragraph 6A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series F Convertible
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<PAGE> 105
Preferred Stock represented by the certificate or certificates surrendered which
are not to be converted. If any fractional share of Common Stock would, except
for the provisions of the first sentence of this paragraph 6C, be delivered upon
such conversion, the Corporation, in lieu of delivering such fractional share,
shall pay to the holder surrendering the Series F Convertible Preferred Stock
for conversion an amount in cash equal to the current fair market value of such
fractional share as determined in good faith by the Board of Directors of the
Corporation, and based upon the aggregate number of shares of Series F
Convertible Preferred Stock surrendered by any one holder.
6D. Adjustment of Series F Conversion Price Upon Issuance of Common
Stock. Except as provided in paragraphs 6E and 6F, if and whenever the
Corporation shall issue or sell, or is, in accordance with subparagraphs 6D(1)
through 6D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Series F Conversion Price in effect
immediately prior to the time of such issue or sale, (such number being
appropriately adjusted to reflect the occurrence of any event described in
paragraph 6F), then, forthwith upon such issue or sale, the Series F Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale (assuming the conversion of the outstanding shares
of Series F Convertible Preferred Stock) multiplied by the then existing Series
F Conversion Price and (b) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the total number of shares of
Common Stock outstanding immediately after such issue or sale (assuming the
conversion of the outstanding shares of Series F Convertible Preferred Stock).
For purposes of this paragraph 6D, the following subparagraphs 6D(1)
to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or
exchangeable stock or securities being called "Convertible Securities")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities (determined
by dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issue or sale
of all such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Series F Conversion Price in effect
immediately prior to the time of the granting of such Options, then the
total maximum number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion
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<PAGE> 106
or exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance of
such Convertible Securities and thereafter shall be deemed to be outstanding.
Except as otherwise provided in subparagraph 6D(3), no adjustment of the Series
F Conversion Price shall be made upon the actual issue of such Common Stock or
of such Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.
6D(2) Issuance of Convertible Securities. In case the Corporation shall
in any manner issue (whether directly or by assumption in a merger or otherwise)
or sell any Convertible Securities, whether or not the rights to exchange or
convert any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange of all such
Convertible Securities thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Series F Conversion Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in subparagraph 6D(3), no adjustment of the Series F
Conversion Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities and (b) if any such issue
or sale of such Convertible Securities is made upon exercises of any Options to
purchase any such Convertible Securities for which adjustments of the Series F
Conversion Price have been or are to be made pursuant to other provisions of
this paragraph 6D, no further adjustment of the Series F Conversion Price shall
be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate. Upon the happening of any
of the following events, namely, if the purchase price provided for in any
Option referred to in subparagraph 6D(1), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in subparagraph 6D(1) or 6D(2), or the rate at which Convertible Securities
referred to in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable
for Common Stock shall change at any time (including, but not limited to,
changes under or by reason of provisions designed to protect against dilution),
the Series F Conversion Price in effect at the time of such event shall
forthwith be readjusted to the Series F Conversion Price which would have been
in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional consideration
or conversion rate, as the case may be, at the time initially granted, issued or
sold; provided, however, that in no event shall the Series F Conversion Price
then in effect hereunder be increased; and on the expiration of any such Option
or the termination of any such right to convert or exchange such Convertible
Securities, the Series F Conversion Price then in effect
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hereunder shall forthwith be increased to the Conversion Price which would
have been in effect at the time of such expiration or termination had such
Option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been issued.
6D(4) Stock Dividends. In case the Corporation shall declare a dividend
or make any other distribution upon any stock of the Corporation payable in
Common Stock (except for the issue of stock dividends or distributions upon
the outstanding Common Stock for which adjustment is made pursuant to
paragraph 6F), Options or Convertible Securities, any Common Stock, Options
or Convertible Securities, as the case may be, issuable in payment of such
dividend or distribution shall be deemed to have been issued or sold without
consideration.
6D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for consideration
other than cash, the amount of the consideration other than cash received by
the Corporation shall be deemed to be the fair value of such consideration
as determined in good faith by the Board of Directors of the Corporation,
without deduction of any expenses incurred or any underwriting commissions
or concessions paid or allowed by the Corporation in connection therewith.
In case any Options shall be issued in connection with the issue and sale of
other securities of the Corporation, together comprising one integral
transaction in which no specific consideration is allocated to such Options
by the parties thereto, such Options shall be deemed to have been issued for
such consideration as determined in good faith by the Board of Directors of
the Corporation.
6D(6) Record Date. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive
a dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to
be the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
6D(7) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the
account of the Corporation (or any Subsidiary), and the disposition of any
such shares shall be considered an issue or sale of Common Stock for the
purpose of this paragraph 6D.
6E. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Corporation shall not be required to make any adjustment of
the Series F Conversion Price if it first obtains the written consent of the
holders of at least 60% of the then outstanding shares of Series F Convertible
Preferred Stock that no adjustment shall be required. In no event shall the
Corporation be required to make any adjustment to the Series F
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Conversion Price in the case of the issuance of (i) shares of Series C
Convertible Preferred Stock pursuant to the Series B Purchase Agreement, (ii)
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible
Preferred Stock or Series F Convertible Preferred Stock, (iii) shares of Common
Stock issued or issuable as a dividend or distribution on Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible
Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible
Preferred Stock or Series F Convertible Preferred Stock, (iv) Reserved Employee
Shares (as defined in paragraph 9 herein), (v) warrants issued in connection
with senior subordinated notes of the Corporation as contemplated by the Series
B Purchase Agreement or shares of Common Stock issuable upon conversion of such
warrants, or (vi) Options outstanding as of the Preferred Stock Issue Date.
6F. Subdivision or Combination of Common Stock. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Series F Conversion Price in effect immediately prior to such subdivision shall
be proportionately reduced, and, conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Series F
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
6G. Reorganization or Reclassification. If any capital reorganization,
reclassification, recapitalization, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction (any
such transaction being referred to herein as an "Organic Change") shall be
effected in such a way that holders of Common Stock shall be entitled to
receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock, then, as a condition of
such Organic Change, lawful and adequate provisions shall be made whereby each
holder of a share or shares of Series F Convertible Preferred Stock shall
thereupon have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of or in addition to, as the case may
be, the shares of Common Stock immediately theretofore receivable upon the
conversion of such share or shares of Series F Convertible Preferred Stock,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such Organic Change not taken
place, and in any case of a reorganization or reclassification only appropriate
provisions shall be made with respect to the rights and interests of such
holder to the end that the provisions hereof (including without limitation
provisions for adjustments of the Series F Conversion Price) shall thereafter
be applicable, as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise of such
conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the Series F Conversion
Price, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, addressed to each holder of shares of Series F Convertible
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Series F Conversion Price resulting
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
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6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of its
Common Stock;
(2) the Corporation shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other rights;
(3) there shall be any capital reorganization or reclassification of the
capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into, or a sale of all or substantially all of its assets
to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S.
residents, addressed to each holder of any shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation, (a) at least
20 days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least 20 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be.
6J. Stock to be Reserved. The Corporation will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series F Convertible Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Series F Convertible Preferred
Stock. The Corporation covenants that all shares of Common Stock which shall be
so issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants
that it will from time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock is at all times equal
to or less than the Series F Conversion Price in effect at the time. The
Corporation will take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed.
6K. No Reissuance of Series F Convertible Preferred Stock. Shares of
Series F Convertible Preferred Stock which are converted into shares of Common
Stock as provided
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herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Series F Convertible Preferred Stock shall be made without
charge to the holders thereof for any issuance tax in respect thereof; provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Series F Convertible
Preferred Stock which is being converted.
6M. Closing of Books. The Corporation will at no time close its transfer
books against the transfer of any Series F Convertible Preferred Stock or of
any shares of Common Stock issued or issuable upon the conversion of any shares
of Series F Convertible Preferred Stock in any manner which interferes with the
timely conversion of such Preferred Stock, except as may otherwise be required
to comply with applicable securities laws.
6N. Definition of Common Stock. As used in this paragraph 6, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.01 per share, as constituted on the date of filing of these terms
of the Series F Convertible Preferred Stock, and shall also include any capital
stock of any class of the Corporation thereafter authorized which shall neither
be limited to a fixed sum or percentage of par value in respect of the rights
of the holders thereof to participate in dividends nor entitled to a preference
in the distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of
Common Stock receivable upon conversion of shares of Series F Convertible
Preferred Stock shall include only shares designated as Common Stock of the
Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the
stock, securities or assets provided for in subparagraph 6G.
6O. Mandatory Conversion. All outstanding shares of Series F Convertible
Preferred Stock shall automatically convert to shares of Common Stock if at any
time the Corporation shall effect a public offering of shares of Common Stock
(any such offering, regardless of compliance with subsections (i), (ii) and
(iii) herein, being referred to as a "Public Offering"), provided (i) the
aggregate gross proceeds from such offering to the Corporation shall be at least
$20,000,000, (ii) the price paid by the public for such shares shall be at
least (x) 2.0 times the then Series B Conversion Price if the Public Offering
occurs prior to the 18 month anniversary of the Series B Preferred Stock Issue
Date or (y) 3.0 times the then Series B Conversion Price if the Public Offering
occurs on or after the 18 month anniversary of the Series B Preferred Stock
Issue Date and (iii) the offering is a firm commitment underwritten Public
Offering, and such automatic conversion shall be effective upon the closing of
the sale of such shares by the Corporation pursuant to such Public Offering.
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7. Redemption. The shares of Series F Convertible Preferred Stock shall
be redeemed as follows:
7A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Series F Convertible Preferred
Stock. With the approval of the holders of 66% of the then outstanding shares of
Series F Convertible Preferred Stock, one or more holders of shares of Series F
Convertible Preferred Stock may, by giving notice (the "Notice") to the
Corporation, require the Corporation to redeem any or all of the outstanding
Series F Convertible Preferred Stock on the Redemption Date (as defined below).
Upon receipt of the Notice, the Corporation will so notify all other persons
holding Series F Preferred Convertible Stock. After receipt of the Notice, the
Corporation shall fix the first date for redemption, which shall be the date
specified in the Notice, being any date on or after the earlier of (i) the fifth
(5th) anniversary of the Series B Preferred Stock Issue Date and (ii) the date
which is the day before the Corporation is due to redeem any outstanding Junior
Securities (the "Redemption Date"). All holders of the Series F Convertible
Preferred Stock shall deliver to the Corporation during regular business hours,
at the office of any transfer agent of the Corporation for the Series F
Convertible Preferred Stock, or at the principal office of the Corporation or at
such other place as may be designated by the Corporation, the certificate or
certificates for the Series F Convertible Preferred Stock, duly endorsed for
transfer to the Corporation (if required by it) on or before the Redemption
Date.
7B. Redemption Price and Payment. The Series F Convertible Preferred
Stock to be redeemed on the Redemption Date shall be redeemed by paying for each
share in cash an amount equal to the Series F Redemption Price (as defined
below). For purposes of this paragraph 7B, the "Series F Redemption Price" shall
mean $15.22 per share, plus an amount equal to all dividends accrued and unpaid
on each such share; provided, however, that if the Redemption Date is after the
fifth (5th) anniversary of the Series B Preferred Stock Issue Date, then the
"Series F Redemption Price" shall mean the greater of (i) $15.22 per share, plus
an amount equal to all dividends accrued and unpaid on each such share and (ii)
the Fair Market Value (as defined below) of the Common Stock underlying the
Series F Convertible Preferred Stock. Such payment shall be made in full on the
Redemption Date to the holders entitled thereto. For purposes of this paragraph
7B, "Fair Market Value" of the Common Stock shall mean the average of the fair
market valuations of the Common Stock performed by two investment banks (the
"Initial Appraisers"), one of which shall be retained by the Corporation and one
of which shall be retained by the holders of a majority in interest of the
Series F Convertible Preferred Stock. Subject to the following sentence, such
determination by the Initial Appraisers of Fair Market Value shall be final and
binding on the parties. If the higher of the two valuations of the Initial
Appraisers is equal to or greater than 110% of the lower valuation, the
Corporation and holders of a majority in interest of the Series F Convertible
Preferred Stock shall select a third investment bank (the "Final Appraiser"),
which shall be mutually agreeable to the Corporation and the holders of a
majority in interest of the Series F Convertible Preferred Stock. The fair
market value of the Common Stock as determined by the Final Appraiser shall be
final and binding on the parties. The fees and expenses of the Initial
Appraisers shall be paid for by the party selecting such Initial Appraiser and
the fees and expenses of the Final Appraiser shall be shared by the Corporation
and the holders of the Series F Convertible Preferred Stock.
7C. Redemption Mechanics. At least 15 but not more than 35 days prior
to the Redemption Date, written notice (the "Redemption Notice") shall be given
by the
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Corporation by mail, postage prepaid, or by facsimile transmission to non-U.S.
residents, to each holder of record (at the close of business on the business
day next preceding the day on which the Redemption Notice is given) of shares
of Series F Convertible Preferred Stock notifying such holder of the redemption
and specifying the Series F Redemption Price, the Redemption Date and the place
where said Series F Redemption Price shall be payable. The Redemption Notice
shall be addressed to each holder at his address as shown by the records of the
Corporation. From and after the close of business on the Redemption Date,
unless there shall have been a default in the payment of the Series F
Redemption Price, all rights of holders of shares of Series F Convertible
Preferred Stock (except the right to receive the Series F Redemption Price)
shall cease with respect to such shares, and such shares shall not thereafter
be transferred on the books of the Corporation or be deemed to be outstanding
for any purpose whatsoever. If the funds of the Corporation legally available
for redemption of shares of Series F Convertible Preferred Stock on the
Redemption Date are insufficient to redeem the total number of outstanding
shares of Series F Convertible Preferred Stock to be redeemed on such
Redemption Date, the holders of shares of Series F Convertible Preferred Stock
shall share ratably in any funds legally available for redemption of such
shares according to the respective amounts which would be payable with respect
to the full number of shares owned by them if all such outstanding shares were
redeemed in full. The shares of Series F Convertible Preferred Stock not
redeemed shall remain outstanding and entitled to all rights and preferences
provided herein; provided, however, that such unredeemed shares shall be
entitled to receive interest accruing daily with respect to the applicable
Series F Redemption Price at the rate of 15% per annum, payable quarterly in
arrears. At any time thereafter when additional funds of the Corporation are
legally available for the redemption of such shares of Series F Convertible
Preferred Stock, such funds will be used, at the end of the next succeeding
fiscal quarter, to redeem the balance of such shares, or such portion thereof
for which funds are then legally available, on the basis set forth above.
7D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares
of Series F Convertible Preferred Stock redeemed pursuant to this paragraph 7
or otherwise acquired by the Corporation in any manner whatsoever shall be
canceled and shall not under any circumstances be reissued; and the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of Series F
Convertible Preferred Stock.
8. Amendments. Except where the vote or written consent of the holders of
a different number of shares of the Corporation is required by these terms of
the Series F Convertible Preferred Stock, by law or by the Certificate of
Incorporation, no provision of these terms of the Series F Convertible
Preferred Stock may be amended, modified or waived without the written consent
or affirmative vote of the holders of at least 60% of the then outstanding
shares of Series F Convertible Preferred Stock.
9. Definitions. As used herein, the following terms shall have the
following meanings:
(1) The term "Founders" shall mean F. Thomson Leighton, Daniel
Lewin, Jonathan Seelig, Randall Kaplan, Gilbert Friesen and David Karger.
(2) The term "Preferred Stock Issue Date" shall mean the date on
which the Series F Convertible Preferred Stock is originally issued by the
Corporation pursuant to the
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Purchase Agreement.
(3) The term "Purchase Agreement" shall mean the Series F Convertible
Preferred Stock Purchase Agreement dated as of September 20, 1999 between the
Corporation and Microsoft Corporation, as in effect on September 20, 1999.
(4) The term the "Plan" shall mean the Corporation's Second Amended
and Restated 1998 Stock Incentive Plan.
(5) The term "Reserved Employee Shares" shall mean shares of Common
Stock reserved by the Corporation pursuant to the Plan from time to time for (i)
the sale of shares of Common Stock to employees, consultants or non-employee
directors (other than representatives of the holders of Preferred Stock) of the
Corporation or (ii) the exercise of options to purchase Common Stock to
employees, consultants or non-employee directors (other than representatives of
the holders of Preferred Stock) of the Corporation, not to exceed in the
aggregate 28,755,600 shares of Common Stock for both clauses (i) and (ii), with
such number including 4,264,200 shares issued or subject to options granted
prior to the date of the initial issuance of the Series A Convertible Preferred
Stock (the "Option Shares") (appropriately adjusted to reflect an event
described in paragraph 6F hereof); provided that, such number of such shares
subject to the Plan shall be increased by up to 15,118,452 additional shares of
Common Stock (appropriately adjusted to reflect an event described in paragraph
6F hereof) (collectively, the "Founders' Shares") upon the repurchase of such
Founders' Shares by the Corporation from the Founders pursuant to contractual
rights held by the Corporation. The foregoing numbers of Reserved Employee
Shares may be increased by the affirmative vote or written consent of a majority
of the directors designated solely by the holders of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock or the affirmative vote
or written consent of the holders of at least 50% of the then outstanding shares
of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock,
Series E Convertible Preferred Stock, Series F Convertible Preferred Stock,
voting together as a single class on a Common Stock equivalent basis.
(6) The term "Series B Conversion Price" shall mean the conversion
price of the Series B Convertible Preferred Stock from time to time under the
terms of the designation of the Series B Convertible Preferred Stock of the
Corporation.
(7) The term "Series B Preferred Stock Issue Date" shall mean
April 16, 1999.
(8) The term "series B Purchase Agreement" shall mean the Series B
Convertible Preferred Stock and Series C Convertible Preferred Stock Purchase
Agreement dated as of April 16, 1999 among the Corporation and the purchasers
named therein.
(9) The term "Subsidiary" or "Subsidiaries" shall mean any
corporation, partnership, trust or other entity of which the Corporation and/or
any of its other subsidiaries directly or indirectly owns at the time a
majority of the outstanding shares of every class of equity security of such
corporation, partnership, trust or other entity.
15