Delaware
|
7389 | 20-1677033 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Mark L. Reinstra, Esq.
Mario M. Rosati, Esq. Alexander D. Phillips, Esq. Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 (650) 493-9300 |
David Van
Engelhoven, Esq.
General Counsel Limelight Networks, Inc. 2220 W. 14 th Street Tempe, AZ 85281 (602) 850-5000 |
Kevin P. Kennedy, Esq.
Simpson Thacher & Bartlett LLP 2550 Hanover Street Palo Alto, CA 94304 (650) 251-5000 |
Proposed
Maximum
|
Amount of
|
|||||||||
Title of Each
Class of
|
Aggregate
|
Registration
|
||||||||
Securities to be Registered | Offering Price(1) | Fee | ||||||||
Common stock, par value
$0.001 per share
|
$ | 201,250,000 | $ | 6,179 | ||||||
(1) | Estimated solely for the purpose of computing the amount of the registration fee, in accordance with Rule 457(o) promulgated under the Securities Act of 1933. |
The
information in this prospectus is not complete and may be
changed. These securities may not be sold until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities nor does it seek an offer to buy these securities in
any jurisdiction where the offer or sale is not permitted.
|
Per
Share
|
Total
|
|||||||
Initial public offering price
|
$ | $ | ||||||
Underwriting discount
|
||||||||
Proceeds, before expenses, to
Limelight Networks
|
||||||||
Proceeds, before expenses, to the
selling stockholders
|
Goldman, Sachs & Co. | Morgan Stanley |
Jefferies & Company |
Piper Jaffray |
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Continuing to focus on customers with rich media content, a
market which we believe represents a stable and growing business
opportunity;
Expanding content delivery network infrastructure to address
significant growth opportunities and increase our market
penetration in key international markets, including Europe and
the Asia Pacific region;
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Continuing to innovate in order to enhance our content delivery
capabilities;
Expanding content delivery network capacity to further
advantages associated with the scale of our network;
Enhancing our sales and distribution channels to broaden our
customer relationships and deepen our penetration of existing
customer accounts; and
Expanding our partner relationships to further complement our
service offerings.
the limited operating history in our market, which makes
evaluating our business and future prospects difficult;
the possibility that we might not manage our future growth
effectively;
the consequences of a potential adverse resolution of the
lawsuit Akamai Technologies, Inc. and the Massachusetts
Institute of Technology have filed against us;
the highly competitive nature of the CDN market, and the adverse
consequences if we are unable to compete effectively; and
the possibility that rapidly evolving technologies or new
business models could cause demand for our CDN services to
decline or could cause these services to become obsolete.
3
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Common stock offered by Limelight Networks
shares
Common stock offered by the selling stockholders
shares
Common stock to be outstanding after this offering
shares
Use of proceeds
We expect to use the net proceeds from this offering to fund
capital expenditures for network and other equipment, as well as
for working capital and other general corporate purposes. In
addition, we intend to use approximately $23.8 million of
the net proceeds to repay the outstanding balance under our
credit facility. We also may use a portion of the net proceeds
to acquire complementary businesses, products, services or
technologies. We will not receive any proceeds from the sale of
shares in this offering by the selling stockholders. See
Use of Proceeds.
Proposed Nasdaq Global Market symbol
LLNW
3,767,495 shares of common stock issuable upon exercise of
options outstanding as of December 31, 2006 at a weighted
average exercise price of $4.47 per share;
65,390 shares of common stock issuable upon exercise of a
warrant outstanding as of December 31, 2006 at an exercise
price of $0.22 per share;
602,836 shares of common stock reserved for future issuance
under our Amended and Restated 2003 Incentive Compensation Plan
as of December 31, 2006, plus an additional
950,000 shares that we reserved for issuance under this
plan in March 2007; and
shares
of common stock reserved for future issuance under our 2007
Equity Incentive Plan adopted
in ,
subject to future adjustment as more fully described in
Management Employee Benefit Plans.
no exercise by the underwriters of their option to purchase up
to an
additional shares
of our common stock to cover over-allotments;
the conversion of each outstanding share of preferred stock into
one share of common stock upon the closing of this
offering; and
the filing of our amended and restated certificate of
incorporation prior to closing of this offering.
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6
Year Ended
December 31,
(in thousands,
except per share
data)
$
11,192
$
21,303
$
64,343
4,834
9,037
25,662
775
2,851
10,316
5,609
11,888
35,978
5,583
9,415
28,365
2,147
4,107
18,274
2,078
3,078
6,841
231
462
3,151
69
100
226
4,525
7,747
28,492
1,058
1,668
(127
)
(189
)
(955
)
(1,782
)
1
208
(48
)
(16
)
175
(236
)
(971
)
(1,399
)
822
697
(1,526
)
306
300
2,187
$
516
$
397
$
(3,713
)
$
317
$
185
$
(3,713
)
$
0.01
$
0.01
$
(0.22
)
$
0.01
$
0.01
$
(0.22
)
23,125
23,158
17,061
25,971
27,375
17,061
268
392
693
(in thousands)(4)
$
42
$
54
$
93
$
1,869
$
4,697
$
21,284
5
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(1)
Includes stock-based compensation as follows:
Year Ended
December 31,
2004
2005
2006
(in thousands)
$
$
$
459
14
94
6,686
329
1,660
$
14
$
94
$
9,134
(2)
In 2006, approximately $7.6 million in stock-based
compensation expense was not deductible for tax purposes by us,
which resulted in the incurrence of income tax expense despite
our having generated a loss before income taxes in this period.
(3)
We define active customers as those that generated revenue for
us within 30 days of the period end.
(4)
Annual revenue per customer equals revenue for the year divided
by the number of active customers with respect to each period.
(5)
We calculate Adjusted EBITDA as follows:
Year Ended
December 31,
2004
2005
2006
(in thousands)
$
516
$
397
$
(3,713
)
844
2,951
10,542
189
955
1,782
(1
)
(208
)
306
300
2,187
$
1,854
$
4,603
$
10,590
14
94
9,134
1,560
$
1,868
$
4,697
$
21,284
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on an actual basis;
on a pro forma basis to give effect to the conversion of all
outstanding shares of preferred stock into shares of common
stock; and
on a pro forma as adjusted basis to give effect to our receipt
of net proceeds from our sale
of shares
of common stock at an assumed initial public offering price of
$ per share, the mid-point of
the range on the cover of this prospectus, after deducting the
estimated underwriting discounts and commissions and estimated
offering expenses payable by us.
As of
December 31, 2006
Pro Forma
Actual
Pro
Forma
As
Adjusted(1)
(in thousands)
$
7,611
$
7,611
$
121,461
14,033
14,033
127,883
41,784
41,784
41,784
73,928
73,928
187,778
20,415
20,415
20,415
30
36,589
36,589
150,439
(1)
Each $1.00 increase or decrease in the assumed initial public
offering price of $ per share
would increase or decrease, as applicable, our cash and cash
equivalents, working capital, total assets and total
stockholders equity by approximately
$ million, assuming the
number of shares offered by us, as set forth on the cover page
of this prospectus, remains the same and after deducting the
estimated underwriting discounts and commissions payable by us.
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failure to increase sales of our core services;
significant increases in bandwidth and rack space costs or other
operating expenses;
inability to maintain our prices relative to our costs;
failure of our current and planned services and software to
operate as expected;
loss of any significant customers or loss of existing customers
at a rate greater than our increase in new customers or our
sales to existing customers;
failure to increase sales of our services to current customers
as a result of their ability to reduce their monthly usage of
our services to their minimum monthly contractual commitment;
failure of a significant number of customers to pay our fees on
a timely basis or at all or failure to continue to purchase our
services in accordance with their contractual
commitments; and
inability to attract high-quality customers to purchase and
implement our current and planned services.
10
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their satisfaction or dissatisfaction with our services;
11
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the prices of our services;
the prices of services offered by our competitors;
mergers and acquisitions affecting our customer base; and
reductions in our customers spending levels.
our ability to increase sales to existing customers and attract
new customers to our CDN services;
the addition or loss of large customers, or significant
variation in their use of our CDN services;
costs associated with current or future intellectual property
lawsuits;
service outages or security breaches;
the amount and timing of operating costs and capital
expenditures related to the maintenance and expansion of our
business, operations and infrastructure;
the timing and success of new product and service introductions
by us or our competitors;
the occurrence of significant events in a particular period that
result in an increase in the use of our CDN services, such as a
major media event or a customers online release of a new
or updated video game;
changes in our pricing policies or those of our competitors;
the timing of recognizing revenue;
stock-based compensation expenses associated with attracting and
retaining key personnel;
limitations of the capacity of our content delivery network and
related systems;
the timing of costs related to the development or acquisition of
technologies, services or businesses;
general economic, industry and market conditions and those
conditions specific to Internet usage and online businesses;
12
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limitations on usage imposed by our customers in order to limit
their online expenses; and
geopolitical events such as war, threat of war or terrorist
actions.
13
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cease selling, incorporating or using products or services that
incorporate the challenged intellectual property;
pay substantial damages;
obtain a license from the holder of the infringed intellectual
property right, which license may not be available on reasonable
terms or at all; or
redesign products or services.
14
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increased expenses associated with sales and marketing,
deploying services and maintaining our infrastructure in foreign
countries;
competition from local content delivery service providers, many
of which are very well positioned within their local markets;
unexpected changes in regulatory requirements resulting in
unanticipated costs and delays;
interpretations of laws or regulations that would subject us to
regulatory supervision or, in the alternative, require us to
exit a country, which could have a negative impact on the
quality of our services or our results of operations;
longer accounts receivable payment cycles and difficulties in
collecting accounts receivable;
corporate and personal liability for violations of local laws
and regulations;
currency exchange rate fluctuations; and
potentially adverse tax consequences.
17
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implementing customer orders for services;
delivering these services; and
timely billing for these services.
18
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variations in our operating results;
announcements of technological innovations, new services or
service enhancements, strategic alliances or significant
agreements by us or by our competitors;
commencement or resolution of, or our involvement in,
litigation, particularly our current litigation with Akamai and
MIT;
recruitment or departure of key personnel;
changes in the estimates of our operating results or changes in
recommendations by any securities analysts that elect to follow
our common stock;
developments or disputes concerning our intellectual property or
other proprietary rights;
the gain or loss of significant customers;
20
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market conditions in our industry, the industries of our
customers and the economy as a whole; and
adoption or modification of regulations, policies, procedures or
programs applicable to our business.
21
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22
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authorize the issuance of blank check preferred
stock that could be issued by our board of directors to thwart a
takeover attempt;
establish a classified board of directors, as a result of which
the successors to the directors whose terms have expired will be
elected to serve from the time of election and qualification
until the third annual meeting following their election;
require that directors only be removed from office for cause and
only upon a supermajority stockholder vote;
provide that vacancies on the board of directors, including
newly created directorships, may be filled only by a majority
vote of directors then in office;
limit who may call special meetings of stockholders;
prohibit stockholder action by written consent, requiring all
actions to be taken at a meeting of the stockholders; and
require supermajority stockholder voting to effect certain
amendments to our restated certificate of incorporation and
amended and restated bylaws.
23
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24
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anticipated trends and challenges in our business and the
markets in which we operate;
our ability to compete in our industry and innovation by our
competitors;
our ability to establish and maintain intellectual property
rights, including the timing and potential consequences of our
current lawsuit with Akamai and MIT;
our expectations regarding our expenses, sales and operations;
our ability to attract and retain customers;
our ability to anticipate market needs or develop new or
enhanced services to meet those needs;
our ability to manage growth and to expand our infrastructure;
our ability to manage expansion into international markets and
new industries;
our ability to hire and retain key personnel;
our expectations regarding the use of proceeds from this
offering;
our ability to successfully identify and manage any potential
acquisitions; and
our anticipated cash needs and our estimates regarding our
capital requirements and our need for additional financing.
25
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26
on an actual basis;
on a pro forma basis reflecting the filing of our amended and
restated certificate of incorporation and the conversion of each
outstanding share of preferred stock into one share of common
stock upon the closing of this offering; and
On a pro forma as-adjusted basis to give effect to the sale of
shares of common stock by us in this offering at an assumed
initial public offering price of
$ per share, the mid-point of
the range set forth on the cover page of this prospectus, and
after deducting the estimated underwriting discounts and
estimated offering expenses payable by us.
As of
December 31, 2006
Pro Forma
(in thousands,
except share data)
$
7,611
$
7,611
$
121,461
20,415
20,415
20,415
30
14
44
41,712
41,712
(113
)
(113
)
(113
)
(5,054
)
(5,054
)
(5,054
)
36,589
36,589
150,439
$
57,004
$
57,004
$
170,854
(1)
Each $1.00 increase or decrease in the assumed initial public
offering price of $ per share
would increase or decrease, as applicable, the amount of
additional paid-in capital, total stockholders equity and
total capitalization by approximately
$ million, assuming the
number of shares
27
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offered by us, as set forth on the cover of this prospectus,
remains the same and after deducting the estimated underwriting
discounts and commissions payable by us.
3,767,495 shares of common stock issuable upon exercise of
options outstanding as of December 31, 2006 at a weighted
average exercise price of $4.47 per share;
65,390 shares of common stock issuable upon exercise of a
warrant outstanding as of December 31, 2006 at an exercise
price of $0.22 per share;
602,836 shares of common stock reserved for future issuance
under our Amended and Restated 2003 Incentive Compensation Plan
as of December 31, 2006, plus an additional
950,000 shares that we reserved for issuance under this
plan in March 2007; and
shares
of common stock reserved for future issuance under our 2007
Equity Incentive Plan adopted
in ,
subject to future adjustment as more fully described in
Management Employee Benefit Plans.
28
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$
$
$
Shares
Purchased
Total
Consideration
Average Price
%
$
%
$
100.0
%
$
100.0
%
29
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pro forma as adjusted net tangible book value per share would
increase from
$ to
$ ,
resulting in a decrease in dilution to new investors of
$
per share;
our existing stockholders, including the holders of these
options and this warrant, would
own % and our new investors would
own % of the total number of shares
of our common stock outstanding upon the completion of this
offering; and
our existing stockholders, including the holders of these
options and this warrant, would have
paid % of total consideration, at
an average price per share of
$ ,
and our new investors would have
paid % of total consideration.
30
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32
Limelight
Networks,
Limelight
Networks, LLC
Inc.
Pro
Forma(1)
Limelight
Networks, Inc.
Eight Months
Four Months
Year Ended
Ended
Ended
Year Ended
December 31,
August 31,
December 31,
December 31,
Year Ended
December 31,
(in thousands,
except per share data)
$
1,908
$
3,353
$
1,677
$
5,030
$
11,192
$
21,303
$
64,343
1,164
1,909
954
2,863
4,834
9,037
25,662
108
168
84
252
775
2,851
10,316
1,272
2,077
1,038
3,115
5,609
11,888
35,978
636
1,277
638
1,915
5,583
9,415
28,365
798
865
432
1,297
2,147
4,107
18,274
708
689
345
1,034
2,078
3,078
6,841
52
101
51
152
231
462
3,151
23
25
13
38
69
100
226
1,581
1,681
840
2,521
4,525
7,747
28,492
(945
)
(404
)
(202
)
(606
)
1,058
1,668
(127
)
(45
)
(46
)
(23
)
(69
)
(189
)
(955
)
(1,782
)
1
208
11
6
17
(48
)
(16
)
175
(45
)
(35
)
(17
)
(52
)
(236
)
(971
)
(1,399
)
(990
)
(439
)
(219
)
(658
)
822
697
(1,526
)
(34
)
(17
)
(51
)
306
300
2,187
$
(990
)
$
(405
)
$
(202
)
$
(607
)
$
516
$
397
$
(3,713
)
$
(607
)
$
317
$
185
$
(3,713
)
$
(0.03
)
$
0.01
$
0.01
$
(0.22
)
31
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Limelight
Networks,
Limelight
Networks, LLC
Inc.
Pro
Forma(1)
Limelight
Networks, Inc.
Eight Months
Four Months
Year Ended
Ended
Ended
Year Ended
December 31,
August 31,
December 31,
December 31,
Year Ended
December 31,
(in thousands,
except per share data)
$
(0.03
)
$
0.01
$
0.01
$
(0.22
)
23,079
23,125
23,158
17,061
23,079
25,971
27,375
17,061
(1)
The pro forma information for the
year ended December 31, 2003 has been prepared by adding
the amounts in each line item in the consolidated statement of
operations for the period from January 1, 2003 through
August 31, 2003 of Limelight Networks, LLC, with the
corresponding amounts for such line item in the consolidated
statement of operations for the period from September 1,
2003 through December 31, 2003 of Limelight Networks, Inc.
The pro forma results are provided for comparative purposes only
and do not purport to indicate the results of operations that
would have occurred if our conversion to a corporation had
occurred on January 1, 2003.
(2)
Includes stock-based compensation
as follows:
Limelight
Networks,
Limelight
Networks, LLC
Inc.
Pro
Forma
Limelight
Networks, Inc.
Eight Months
Four Months
Year Ended
Ended
Ended
Year Ended
December 31,
August 31,
December 31,
December 31,
Year Ended
December 31,
(in thousands)
$
$
$
$
$
$
$
459
14
94
6,686
329
1,660
$
$
$
$
$
14
$
94
$
9,134
(3)
In 2006, approximately
$7.6 million in stock-based compensation expense was not
deductible for tax purposes by us, which resulted in us
incurring income tax expense despite our having generated a loss
before income taxes in this period. Future non-deductible
compensation expense related to equity awards granted in 2006
are expected to be $9.4 million, $2.7 million,
$2.7 million and $2.2 million respectively, for 2007,
2008, 2009 and 2010.
Limelight
Networks,
LLC
Limelight
Networks, Inc.
December 31,
(in thousands)
$
25
$
97
$
536
$
1,536
$
7,611
(1,122
)
(636
)
(695
)
(1,827
)
14,033
440
1,080
3,018
11,986
41,784
735
2,127
5,718
19,583
73,928
461
8,809
20,415
2
4
4
30
857
174
1,239
1,823
36,589
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51
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year Ended
December 31,
2004
2005
2006
100
%
100
%
100
%
43
42
40
7
13
16
50
56
56
50
44
44
19
19
28
19
14
11
2
2
5
1
1
41
36
44
9
8
(2
)
(5
)
(3
)
1
(2
)
(5
)
(2
)
7
3
(2
)
3
1
4
4
%
2
%
(6
)%
33
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34
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increase our revenue by adding customers and limiting customer
cancellations and terminations, as well as increasing the amount
of monthly recurring revenue that we derive from our existing
customers;
manage the prices we charge for our services, as well as the
costs associated with operating our network;
successfully manage our litigation with Akamai and MIT to
conclusion; and
prevent disruptions to our services and network due to accidents
or intentional attacks.
35
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fees related to bandwidth provided by network operators;
fees paid for the lease of private line capacity for our
backbone;
fees paid for co-location services, which are the housing of
servers in third-party data centers;
network operations employee costs, including stock-based
compensation expense; and
costs associated with licenses.
36
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payroll and related costs, including stock-based compensation
expense for executive, finance, business applications, human
resources and other administrative personnel;
fees for professional services and litigation expenses; and
other expenses such as insurance, allowance for doubtful
accounts and corporate office rent.
37
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38
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39
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40
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In July 2006, we sold a controlling interest to an investor
group led by entities affiliated with Goldman, Sachs &
Co. through the issuance of shares of Series B preferred
stock, at a price of $4.89 per share, for total aggregate
consideration of $130.0 million. As part of the
transaction, we repurchased 20,880,000 shares of common stock
for an aggregate net consideration of $102.1 million.
In the fourth quarter of 2006, we appointed both a Chief
Executive Officer and a Chief Financial Officer with past public
company roles in a similar capacity.
Revenue growth in 2006 exceeded 200%, to $64.3 million
compared to revenue in 2005 of $21.3 million.
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Year Ended
December 31,
Increase
Percent
(in thousands)
$
21,303
$
64,343
$
43,040
202
%
Year Ended
December 31,
Increase
Percent
(in thousands)
$
11,888
$
35,978
$
24,090
203
%
Year Ended
December 31,
(in millions)
$
7.8
$
20.9
2.9
10.3
0.5
1.7
$
1.6
0.5
0.7
1.0
$
11.9
$
36.0
Year Ended
December 31,
_
_
Increase
Percent
(in thousands)
$
4,107
$
18,274
$
14,167
345
%
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Year Ended
December 31,
(in millions)
$
0.1
$6.7
0.2
3.4
1.8
3.7
0.1
0.7
1.9
3.8
$
4.1
$18.3
Year Ended
December 31,
Increase
Percent
(in thousands)
$
3,078
$
6,841
$
3,763
122
%
Year Ended
December 31,
(in millions)
$
2.2
$
4.3
0.3
0.7
1.3
0.1
0.4
0.1
0.5
$
3.1
$
6.8
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Increase
Percent
(in thousands)
$
462
$
3,151
$
2,689
582
%
Year Ended
December 31,
(in millions)
$
$
1.7
0.5
1.5
$
0.5
$
3.2
Increase
Percent
(in thousands)
$
955
$
1,782
$
827
87
%
Year Ended
December 31,
Increase
Percent
(in thousands)
$
$
208
$
208
N/A
Year Ended
December 31,
Increase
Percent
2005
2006
(in thousands)
$
(16
)
$
175
$
191
1,194
%
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Year Ended
December 31,
_
_
Increase
Percent
(in thousands)
$
300
$
2,187
$
1,887
629
%
Year Ended
December 31,
Increase
Percent
(in thousands)
$
11,192
$
21,303
$
10,111
90
%
Year Ended
December 31,
_
_
Increase
Percent
(in thousands)
$
5,609
$
11,888
$
6,279
112
%
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Year Ended
December 31,
(in millions)
$
4.0
$
8.3
0.8
2.9
0.3
0.5
0.5
0.2
$
5.6
$
11.9
Year Ended
December 31,
Increase
Percent
(in thousands)
$
2,147
$
4,107
$
1,960
91
%
Year Ended
December 31,
(in millions)
$
0.9
$
1.8
0.1
0.1
0.2
0.2
0.1
0.9
1.8
$
2.1
$
4.1
Year Ended
December 31,
Increase
Percent
(in thousands)
$
2,078
$
3,078
$
1,000
48
%
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Year Ended
December 31,
(in millions)
$
1.4
$
2.2
0.5
0.7
0.1
0.1
0.1
0.1
$
2.1
$
3.1
Year Ended
December 31,
Increase
Percent
(in thousands)
$
231
$
462
$
231
100
%
Year Ended
Increase
Percent
(in thousands)
$
189
$
955
$
776
405
%
Year Ended
December 31,
Increase
Percent
(in thousands)
$
1
$
$
(1
)
100
%
48
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Year Ended
December 31,
Increase
Percent
(in thousands)
$
(48
)
$
(16
)
$
(32
)
67
%
Year Ended
December 31,
Increase
Percent
(in thousands)
$
306
$
300
$
(6
)
2
%
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Three Months
Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
(in thousands)
$
3,593
$
4,475
$
5,638
$
7,597
$
10,838
$
14,841
$
17,057
$
21,607
1,585
2,057
2,496
2,899
3,807
5,231
7,300
9,324
405
550
803
1,093
1,473
2,035
2,900
3,908
1,990
2,607
3,299
3,992
5,280
7,266
10,200
13,232
1,603
1,868
2,339
3,605
5,558
7,575
6,857
8,375
687
826
968
1,626
1,571
2,231
4,616
9,856
587
724
777
990
1,034
1,497
1,860
2,450
88
109
119
146
321
437
1,193
1,200
22
25
26
27
28
44
63
91
1,384
1,684
1,890
2,789
2,954
4,209
7,732
13,597
219
184
449
816
2,604
3,366
(875
)
(5,222
)
(101
)
(304
)
(245
)
(305
)
(505
)
(519
)
(340
)
(418
)
79
129
(16
)
70
105
(101
)
(304
)
(245
)
(321
)
(505
)
(519
)
(191
)
(184
)
118
(120
)
204
495
2,099
2,847
(1,066
)
(5,406
)
51
(52
)
88
213
829
1,125
544
(311
)
$
67
$
(68
)
$
116
$
282
$
1,270
$
1,722
$
(1,610
)
$
(5,095
)
50
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Three Months
Ended
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
100
%
100
%
100
%
100
%
100
%
100
%
100
%
100
%
44
46
44
38
35
35
43
43
11
12
14
14
14
14
17
18
55
58
59
52
49
49
60
61
45
42
41
48
51
51
40
39
19
19
17
21
15
15
27
46
16
16
14
13
10
10
11
11
2
2
2
2
3
3
7
6
1
1
1
39
38
33
37
28
28
45
63
6
4
8
11
23
23
(5
)
(24
)
(3
)
(7
)
(4
)
(4
)
(5
)
(4
)
(2
)
(2
)
1
1
(3
)
(7
)
(4
)
(4
)
(5
)
(3
)
(1
)
(1
)
3
(3
)
4
7
19
19
(6
)
(25
)
1
(1
)
2
3
8
8
3
(1
)
2
%
(2
)%
2
%
4
%
11
%
11
%
(9
)%
(24
)%
Table of Contents
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53
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12
13 to 24
25 to 36
36 to 48
Total
Months
Months
Months
Months
Thereafter
(in thousands)
$
18,531
$
11,207
$
5,268
$
1,886
$
170
5,097
3,930
966
199
2
1,735
524
485
344
314
68
25,363
15,662
6,718
2,430
486
68
277
272
5
23,818
2,938
5,293
5,293
5,293
5,001
$
49,458
$
18,872
$
12,016
$
7,723
$
5,779
$
5,069
(1)
Excludes interest payments on each obligation.
54
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EBITDA and Adjusted EBITDA do not reflect our cash expenditures
or future requirements for capital expenditures or contractual
commitments;
they do not reflect changes in, or cash requirements for, our
working capital needs;
they do not reflect the interest expense, or the cash
requirements necessary to service interest or principal
payments, on our debt;
they do not reflect income taxes or the cash requirements for
any tax payments;
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized often will have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements;
while stock-based compensation is a component of operating
expense, the impact on our financial statements compared to
other companies can vary significantly due to such factors as
assumed life of the options and assumed volatility of our common
stock; and
other companies may calculate EBITDA and Adjusted EBITDA
differently than we do, limiting their usefulness as comparative
measures.
2004
2005
2006
(in thousands)
$
516
$
397
$
(3,713
)
844
2,951
10,542
189
955
1,782
(1
)
(208
)
306
300
2,187
$
1,854
$
4,603
$
10,590
14
94
9,134
1,560
$
1,868
$
4,697
$
21,284
(1)
During 2006, we repurchased stock in a transaction with a total
value of $102.1 million. Selling stockholders agreed to
hold $10.2 million of the proceeds to offset specific
claims for reimbursement associated with the Akamai lawsuit and
other undisclosed obligations that may arise. During 2006, we
had $1.6 million of litigation costs subject to
reimbursement from this escrow.
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consumption and distribution of rich media content are expanding
rapidly;
older alternatives for delivering rich media content over basic
Internet connections are not scaling well; and
a new set of technical, management and economic requirements
have emerged for content providers to meet the needs of
demanding consumers of rich media content.
Proliferation of broadband Internet
connections.
According to a report from
Strategy Analytics, nearly half of all U.S. households had
broadband Internet access in 2006, with broadband Internet
penetration expected to reach 73% by 2010. In addition, IDC
estimates that the average speed of downstream access for a
broadband connection, the speed at which an end-user accesses
media files, doubled from the third quarter of 2004 to the same
quarter of 2006 (Market Analysis: U.S. Broadband Services
2006-2010 Forecast, IDC, September 2006). The
proliferation of broadband Internet connections has provided an
increasing number of users with the capability to access rich
media content efficiently.
Consumption of media via the Internet is rivaling
consumption via other media channels.
The
proliferation of broadband Internet has fundamentally changed
the way that consumers access and interact with media content.
According to Forrester Research, Inc., consumers between the
ages of
18-26
spend
approximately 12 hours per week using the Internet,
compared to approximately 10.5 hours per week watching
television (State of the Consumers and Technology:
Benchmark 2006, Forrester Research, Inc., July 2006). In
addition, eMarketer estimates that at the end of 2006, nearly
60% of all Internet users regularly watched videos online. That
number is expected to climb to 80% by the end of 2010.
Consumers desire on-demand access to a broad range of
personalized media content.
Through
technologies like Internet search, personal digital video
recorders,
video-on-demand
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and social media platforms, consumers are increasingly
accustomed to immediate, on-demand access to media content,
including videos, music and photos provided by media or content
providers or by users themselves.
Proliferation of Internet-connected
devices.
The proliferation of devices that
are capable of connecting to the Internet, such as MP3 players,
mobile phones and videogame consoles, has given users even more
control and flexibility over how and where they access and use
media content from the Internet.
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Delivering a consistently high-quality media
experience.
User experience is critical for
content providers because consumers increasingly expect a
high-quality experience, will not tolerate interruptions or
inconsistency in the delivery of content, and may never return
to a particular media provider if that provider is unable to
meet their expectations. A media stream, for example, should
begin immediately and play continuously without interruption
every time a customer accesses that stream.
Delivering expansive content libraries of rich
media.
Consumers, particularly those who are
accustomed to broadband-enabled Internet services such as
high-quality television and radio, increasingly demand the
ability to consume any form of media content online. To meet
this demand, traditional media companies are moving their
enormous libraries of content, such as television shows and
movies, online. At the same time, emerging content businesses,
such as user-generated content companies, are creating expansive
libraries of rich media. Users expect a consistent media
experience across every title in these large libraries, for each
title regardless of its popularity, each time it is viewed.
Ability to scale content delivery capacity to handle
rapidly accelerating demand and diversity of audience
interest.
Content providers also need to
scale delivery of their content smoothly as the size of their
audience increases. When a large number of users simultaneously
access a particular website, the content provider must be able
to meet that surge in demand without making users wait. Rapidly
accelerating demand can be related to a single event, such as a
major news or sporting event, or can be spread across an entire
library of content, such as when a social media website surges
in popularity.
Reliability.
Throughout the path data
must traverse to reach a user, problems with the underlying
infrastructure supporting the Internet can occur. For instance,
servers can fail, or network connections can drop. Avoiding
these problems is important to content providers because
network, datacenter, or service provider outages can mean
frustrated users, lost audiences and missed revenue
opportunities.
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Flexibility and manageability.
Content
providers are making significant investments in preparing their
media libraries for delivery over the Internet. Once content is
ready for Internet distribution, content providers must be able
to support a wide range of formats, begin to distribute their
content quickly, and monitor their delivery activities.
Managing delivery costs.
Managing the
cost of content delivery is important for content providers so
that they can maximize profits. As a result, the combination of
major capital outlays and operating expenditures required to
build and maintain large server clusters, peak period capacity,
extensive Internet backbone networks and multiple connections to
global broadband access networks is simply not practical for
most companies. As users increasingly demand access to large
files and media streams, the infrastructure costs associated
with providing this content are rising.
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Limelight Networks Content Delivery (HTTP/Web delivery);
Limelight Networks Streaming Media (Streaming delivery); and
Limelight Networks Custom CDN.
LUX.
Web-based management and reporting
console that allows customers to manage their provisioned
Limelight services, as well as monitor usage, activity, and
delivery metrics via customizable CDN reporting.
StorageEdge.
Service option for storing
a customers content library within our CDN architecture,
ensuring consistent, high-quality delivery of every file, from
the most to the least popular, across the customers entire
library.
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Download Manager.
Client-deployed
software for managing downloads that enables end-users to
download multiple objects with one click.
Traffic Services Manager.
Service
management option that allows our customers to designate and
control traffic requests divided among multiple service delivery
infrastructures, including Limelight Networks, providing the
customer an easy way to manage network redundancy among internal
and externally-provisioned delivery infrastructures.
Geo-Compliance.
Content rights
compliance offering that allows our customer to define the
specific geographic location of a user prior to fulfilling the
users content request, allowing the content provider to
manage geographic restrictions for licensed content distribution.
MediaVault.
Security offering for
Content Delivery and Streaming Media customers that securely
associates digital media or stream locations (URLs) with
authorized viewers, protecting content from access by
unauthorized users.
Content Control.
Performance management
offering for Content Delivery that allows our customers to
manage costs by limiting the speed of digital media deliveries
to their end-users.
Log Access.
Access to an aggregated set
of detailed activity logs (on-demand or live), allowing our
customers to access detailed content and user information from
our edge delivery servers.
API.
Programmatic interface to
Limelight services and reporting which allows a customers
applications to directly access and pull information into their
systems, as well as directly manage Limelight services as part
of the customers application interface and workflow.
We have built and deployed a globally distributed network of
more than 4,000 servers specially configured for the delivery of
rich media content at 52 points of presence, or POPs, and 16
logical CDN locations, or a group of POPs, in the U.S., Europe
and Asia. Content consumers can connect to Limelight servers
that are closer to them, in network terms, than a content
providers own servers, eliminating much of the Internet
congestion and inconsistent network
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performance that could affect the delivery of content. This
reduces or eliminates the visible symptoms of poor Internet
performance, including slow start times and stopping or skipping
during playback.
Our architecture consists of dense clusters of
specially-configured edge servers and storage servers deployed
at each POP. A logical CDN location is provisioned with hundreds
of edge servers, which users connect to and which store our
customers most popular content files. A logical CDN
location also contains one or more intermediate storage systems,
which act as large, deep media file caches and store less
frequently requested content files. When an edge server in the
logical CDN location needs a file that it does not have, it can
often retrieve that object from the intermediate storage system,
rather than from a customers website servers or from
another location in our system. These retrievals from
intermediate storage systems are very fast, because they occur
across a local area or metro area ethernet network, rather than
across our backbone or across the public Internet. This
architecture enables us to maximize the amount of content stored
at each CDN location without requiring that we store every
content file on every edge server.
We have configured each of our CDN locations to connect with
hundreds of networks. They are also equipped with the capacity
to support additional network connections as needed. This design
allows us to provide maximum scalability and responsiveness as
end-user demand increases. In addition, any server within a CDN
location can send and receive data via any network at that
location. This
any-to-any
capability allows us to use our network connections to the
greatest extent possible, without having to simultaneously
optimize servers and networks, as some CDNs do. Each of our edge
servers has access to whichever locally-attached network is best
for each delivery.
In aggregate, our logical CDN locations are directly connected
to more than 600 broadband Internet access networks around the
world. Whenever possible, we use these interconnections to place
content objects directly on users access networks, which
means those users requested files reach them without ever
traversing the public Internet. We believe that there is no
faster method available for delivering content to a user. More
than half of our total content delivery volume is delivered in
this fashion.
When we are not connected directly to the users broadband
Internet access provider, we use commercial Internet carriers to
deliver content objects to the users broadband provider.
We maintain commercial relationships with many of the
worlds largest Internet carriers, including Deutsche
Telecom, France Telecom and Global Crossing, with multiple
commercial Internet carrier connections at each of our CDN
locations.
Our CDN locations in the United States and Europe are connected
together via a dedicated optical backbone, which we operate,
that includes redundant 10 gigabit per second connections to
every location. Our logical CDN locations in Asia are connected
to our U.S./Europe network via managed circuits. By connecting
all of our locations with a network infrastructure that we
operate and on which we manage the traffic flows (rather than
relying on the often-congested public Internet), we are able to
rapidly move objects around our network when needed to service
user requests. Also, using our own network, rather than relying
on the public Internet, means that the stream our edge server
acquires will be as high-quality as the stream we receive from
our customer.
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We have developed proprietary software that manages our content
delivery system. This software consists of several components:
Edge server software for managing download and streaming
delivery of content objects;
Software for assigning resources within our infrastructure and
for systematically improving our infrastructure over time as our
customers and infrastructure components change;
Intermediate cache server systems and software for storing
customer content libraries; and
Customer portal and customer reporting software.
Using our proprietary edge server software, we handle both
download and streaming deliveries across what we believe is one
of the broadest range of formats in our industry, including
Adobe Flash, MP3 audio, QuickTime, RealNetworks RealPlayer and
Windows Media.
Video:
MSNBC, Viacom.
Music:
RadioIO, ABC Radio.
Games:
Microsoft (XBOX), Valve
Corporation.
Software:
Microsoft, Adobe Systems.
Social Media:
MySpace.
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Performance, as measured by file delivery time and end-user
media consumption rates;
Scalability;
Proprietary software designed to efficiently locate and deliver
large media files;
Ease of implementation;
Flexibility in designing delivery systems for unique content
types and mixes;
Reliability; and
Cost efficiency.
Telesales force.
Our telesales force is
responsible for managing direct sales opportunities within the
mid-market within North America.
Field sales force.
In October 2006, we
began to develop a field sales force and have since hired
11 sales personnel in various geographic markets. This
sales force is responsible for managing direct sales
opportunities in major accounts in North America, Europe and the
Asia Pacific region.
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Distribution partners.
We have certain
customers who incorporate our services into their offerings, and
we also maintain relationships with a number of resellers and
distribution partners.
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69
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94
41
President, Chief Executive Officer
and Chairman
40
Co-Founder, Chief Technical
Officer and Director
54
Chief Financial Officer and
Secretary
50
Co-Founder and Chief Strategy
Officer
36
Co-Founder and Director
43
Co-Founder
37
Senior Vice President of
International Sales & Global Account Management
37
Vice President of North American
Sales and Business Development Channels
49
Director
52
Director
46
Director
39
Director
59
Director
50
Director
(1)
Member of our Audit Committee.
(2)
Member of our Compensation Committee
(3)
Member of our Nominating and Governance Committee
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Our Class I directors will be Messrs. Goad, Kaplan and
Lunsford;
Our Class II directors will be Messrs. Gleberman,
Harman and Perrone; and
Our Class III directors will be Messrs. Peterschmidt,
Raciborski and Valenzuela.
evaluate the independent auditors qualifications,
independence and performance;
determine the engagement of the independent auditors;
approve the retention of the independent auditors to perform any
proposed permissible non-audit services;
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monitor the rotation of partners of the independent auditors on
the Company engagement team as required by law;
review our financial statements and review our critical
accounting policies and estimates; and
review and discuss with management and the independent auditors
the results of the annual audit and our quarterly financial
statements.
review and recommend policy relating to compensation and
benefits of our officers and employees;
review and approve corporate goals and objectives relevant to
compensation of the Chief Executive Officer and other senior
officers;
evaluate the performance of our officers in light of established
goals and objectives;
set compensation of our officers based on its evaluations;
administer the issuance of stock options and other awards under
our stock plans; and
review and evaluate, at least annually, its own performance and
that of its members, including compliance with the committee
charter.
assess the performance of the board of directors;
direct guidelines for the composition of our board of
directors; and
review and administer our corporate governance guidelines.
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75
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77
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Stock
Option
All Other
$
38,333
$
100,000
$
1,668,000
$
367,000
$
322
$
2,173,655
220,000
337,622
1,481,000
11,476
2,050,098
22,917
44,000
18,000
28
84,945
180,000
337,622
1,483,000
11,265
2,011,887
220,000
337,622
1,480,000
8,537
2,046,159
180,000
40,000
3,000
3,867
226,867
140,453
197,444
1,800
3,867
343,564
(1)
Amounts represent stock-based compensation expense for fiscal
year 2006 for stock and option awards under SFAS 123R as
discussed in Note 8, Stockholders Equity subheading
Incentive
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Table of Contents
Compensation Plan, of the Notes to Consolidated Financial
Statements included elsewhere in this prospectus.
(2)
Represents amounts paid for health and life insurance for the
employee and the employees family members.
(3)
Mr. Lunsfords annual salary upon completion of this
offering will be $400,000.
(4)
Mr. Hales annual salary upon completion of this
offering will be $275,000.
(5)
Mr. Rinehart served as our Chief Executive Officer until
October 2006.
(6)
Mr. Gordon served as our principal financial officer until
November 2006.
All Other
All Other
Option Awards:
Exercise or
Grant Date
Stock Awards:
Number of
Base Price
Fair Value
Number of
Securities
of Option
of Stock
Shares of
Underlying
Awards
and Option
11/20/06
500,000
(2)
$
9.80
$
3,567,000
11/20/06
500,000
(3)
19.80
2,971,000
10/20/06
1,000,000
(4)
10,040,000
08/02/06
625,000
(5)
0.40
3,135,000
12/01/06
70,000
(2)
10.00
448,000
12/01/06
230,000
1,255,000
08/02/06
625,000
(5)
0.40
448,000
08/02/06
525,000
(5)
0.40
448,000
(1)
Amounts represent total fair value of stock and option awards
granted in 2006 under SFAS 123R as discussed in Note 8,
Stockholders Equity subheading Incentive
Compensation Plan, of the Notes to Consolidated Financial
Statements included elsewhere in this prospectus.
(2)
Vests
1
/
4
after
one year and approximately
1
/
48
per
month thereafter. Option expires 10 years from the date of
grant.
(3)
Vests
1
/
48
after
two years and approximately
1
/
48
per
month thereafter. Option expires 10 years from the date of
grant.
(4)
Twelve and one-half percent (12.5%) of the shares vested on the
grant date. An additional twelve and one-half percent (12.5%) of
the shares vest on the
120
th
day
after the grant date, and
1
/
48
of
the shares vest each month thereafter.
(5)
Vests approximately
1
/
12
per
month. The board of directors has authorized the early exercise
of this grant. Option expires 10 years from the date of
grant.
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Stock
Awards
Equity
Incentive
Equity
Incentive
Plan Awards:
Plan Awards:
Market or
Option
Awards
Number of
Payout Value
Number of
Number of
Unearned
of Unearned
Securities
Securities
Shares, Units
Shares, Units
Underlying
Underlying
or Other
or Other
Unexercised
Unexercised
Option
Option
Rights
Rights
Options:
Options:
Exercise
Expiration
That Have
That Have
500,000
$
9.80
11/20/16
(1)
875,000
(2)
$
1,111,250
500,000
19.80
11/20/16
(3)
70,000
10.00
12/01/16
(4)
230,000
(4)
292,100
243
0.21
12/15/13
(5)
3,500
71,500
0.40
10/27/15
(6)
18,900
51,100
0.40
10/27/15
(7)
(1)
Vesting commenced November 20, 2006 and vests
1
/
4
after one year and approximately
1
/
48
per
month thereafter.
(2)
12.5% of the shares vested on the grant date, October 20,
2006. An additional 12.5% of the shares vest on the
120
th
day
after the grant date, and approximately
1
/
48
of
the shares vest on the corresponding day of each month
thereafter.
(3)
Vesting commenced November 20, 2006 and vests
1
/
48
after
two years and approximately
1
/
48
per
month thereafter.
(4)
Vesting commenced December 1, 2006 and vests
1
/
4
after one year and approximately
1
/
48
per
month thereafter.
(5)
Vesting commenced December 15, 2003 and vests
1
/
4
after one year and approximately
1
/
36
per
month thereafter.
(6)
Vesting commenced November 1, 2005 and vests
1
/
4
after
one year and approximately
1
/
36
per
month thereafter.
(7)
Vesting commenced November 1, 2005 and vests
1
/
4
after one year and approximately
1
/
48
per month thereafter.
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Option
Awards
Stock
Awards
Number of
Number of
Shares
Value
Shares
Value
Acquired on
Realized on
Acquired on
Realized on
$
125,000
$
50,000
500,000
0
625,000
0
250,000
0
625,000
0
275,000
0
625,000
0
209,772
39,857
3,807
4,073
25,000
22,000
25,410
4,828
(1)
The aggregate dollar amount realized upon the vesting of a stock
award represents the aggregate market price of the shares of our
common stock underlying the stock award on the vesting date
(assumed to be the midpoint of the price range set forth on the
cover page of this prospectus) multiplied by the shares vested
on the vesting date.
81
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82
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83
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84
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% of
the outstanding shares of our common stock on the last day of
the immediately preceding fiscal year;
shares; or
such other amount as our board of directors may determine.
85
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86
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any breach of the directors duty of loyalty to us or our
stockholders;
87
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any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware
General Corporation Law; or
any transaction from which the director derived an improper
personal benefit.
88
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Series B
Preferred
13,966,505
7,214,515
4,789,316
553,716
89
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1,134,866 shares of our common stock from Michael and
Lauren Gordon;
50,000 shares of our common stock from Thunder Road Capital
LLC. Michael M. Gordon is a managing member of Thunder Road
Capital LLC;
2,951,872 shares of our common stock from Kaplan Group
Investments LLC. Allan M. Kaplan is a managing member of Kaplan
Group Investments LLC;
244,579 shares of our common stock from Cocoon Capital LLC.
Nathan F. Raciborski and Allan M. Kaplan are managing members of
Cocoon Capital LLC;
1,354,415 shares of our common stock from the Raciborski
Group Limited Partnership;
1,455,791 shares of common stock from Nathan F.
Raciborski;
1,735,871 shares of our common stock from the Rinehart
Family Trust dated May of 1999;
352,884 shares of our common stock from Erik W. Gabler and
Nicole A. Gabler;
123,981 shares of our common stock subject to a vested
option held by Erik W. Gabler, with an exercise price of
$0.21 per share; and
44,590 shares of our common stock subject to a vested
option held by Louis A. Greco III, with an exercise price
of $0.21 per share.
90
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91
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In February 2005, we granted Michael M. Gordon an option to
purchase 250,000 shares of our common stock at an exercise
price of $0.40 per share.
In February 2005, we granted Nathan F. Raciborski an option to
purchase 500,000 shares of our common stock at an exercise
price of $0.40 per share.
In February 2005, we granted William Rinehart an option to
purchase 275,000 shares of our common stock at an exercise
price of $0.40 per share.
In October 2005, we granted Eric W. Gabler an option to purchase
100,000 shares of our common stock at an exercise price of
$0.40 per share.
In October 2005, we granted Louis A. Greco III an option to
purchase 70,000 shares of our common stock at an exercise
price of $0.40 per share.
92
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each person known by us to beneficially own more than 5% of our
outstanding shares of common stock;
each of our named executive officers;
each of our directors;
all of our directors and executive officers as a group; and
each selling stockholder.
Shares
Being
20,181,661
45.3
%
4,089,227
9.2
2,310,207
5.2
1,000,000
2.3
3,598,260
8.1
230,000
*
1,809,867
4.1
2,788,054
6.3
2,360,871
5.3
249,322
*
48,860
*
20,181,661
45.3
4,089,227
9.2
93
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Shares
Being
20,181,661
45.3
36,193,069
81.2
(1)
Funds affiliated with or managed by Goldman, Sachs &
Co. are GS Capital Partners V Fund, L.P.
(10,626,855 shares of Series B Preferred Stock), GS
Capital Partners V Offshore Fund, L.P. (5,489,391 shares of
Series B Preferred Stock), GS Capital Partners V
Institutional, L.P. (3,644,102 shares of Series B
Preferred Stock) and GS Capital Partners V
GmbH & Co. KG (421,313 shares of Series B
Preferred Stock) (the Goldman Sachs Funds). Voting
and dispositive power for the shares held by GS Capital
Partners V Fund, L.P. is held by its general partner
GSCP V Advisors, L.L.C., which disclaims beneficial
ownership of the shares held by GS Capital Partners V
Fund, L.P. except to the extent of its pecuniary interest
therein, if any. Voting and dispositive power for the shares
held by GS Capital Partners V Offshore Fund, L.P. is
held by its general partner GSCP V Offshore Advisors,
L.L.C., which disclaims beneficial ownership of the shares held
by GS Capital Partners V Offshore Fund, L.P. except to
the extent of its pecuniary interest therein, if any. Voting and
dispositive power for the shares held by GS Capital
Partners V Institutional, L.P. is held by its general partner
GS Advisors V., L.L.C., which disclaims beneficial
ownership of the shares held by GS Capital Partners V
Institutional, L.P. except to the extent of its pecuniary
interest therein, if any. Voting and dispositive power for the
shares held by GS Capital Partners V GmbH &
CO. KG is held by its managing limited partner
GS Advisors V., L.L.C., which disclaims beneficial
ownership of the shares held by GS Capital Partners V
GmbH & CO. KG except to the extent of its pecuniary
interest therein, if any. Goldman, Sachs & Co. is a
direct and indirect, wholly owned subsidiary of The Goldman
Sachs Group, Inc. and is an underwriter of this offering.
Goldman, Sachs & Co. is an investment manager of
GSCP V Advisors, L.L.C., GSCP V Offshore Advisors,
L.L.C. and GS Advisors V., L.L.C. The Goldman Sachs
Group, Inc., and certain affiliates, including Goldman,
Sachs & Co. and the Goldman Sachs Funds, may be deemed
to directly or indirectly beneficially own an aggregate of
20,181,661 shares of Series B Preferred Stock which
are owned directly or indirectly by the Goldman Sachs Funds. The
general partner, managing general partner or managing limited
partner of the Goldman Sachs Funds are affiliates of the Goldman
Sachs Group, Inc. and Goldman, Sachs & Co. The Goldman
Sachs Group, Inc., Goldman, Sachs & Co. and the Goldman
Sachs Funds and their general partner, managing general partner
or managing limited partner share voting and investment power
with certain of their respective affiliates. The Goldman Sachs
Group, Inc. and Goldman, Sachs & Co. each disclaim
beneficial ownership of the shares held by the Goldman Sachs
Funds, except to the extent of its pecuniary interest therein,
if any. The address of each of the GS Capital Partners
entities is c/o Goldman Sachs & Co., One
New York Plaza, 38th Floor, New York, NY 10004, Attn:
Ben Adler.
(2)
The names of the parties who share power to vote and share power
to dispose of the shares held by Oak Investment Partners XII,
Limited Partnership are Fredric W. Harman, Bandel L. Carano, Ann
H. Lamont, and Edward F. Glassmeyer, all of whom are executive
managing members of Oak Associates XII, LLC, the General
Partner of Oak Investment Partners XII, Limited Partnership.
Each such individual disclaims beneficial ownership of the
securities held by such partnership in which such individual
does not have a pecuniary interest. The address of Oak
Investment Partners XII, L.P. is 525 University
Avenue, Suite 1300, Palo Alto, CA 94301, Attn: Fredric W.
Harman.
Table of Contents
(3)
Nathan F. Raciborski is a trustee of, and holds voting and
dispositive power for the shares held by, the Nathan Raciborski
Grantor Retained Annuity Trust Dated October 17, 2006.
(4)
Includes 2,310,207 shares of common stock held by the
Nathan Raciborski Grantor Retained Annuity Trust dated
October 17, 2006, 1,125,000 shares of common stock
held by Nathan Raciborski and 163,053 shares of common
stock held by Cocoon Capital LLC. Nathan F. Raciborski is a
trustee of the Nathan Raciborski Grantor Retained Annuity Trust
dated October 17, 2006 and a member manager of Cocoon
Capital LLC. Mr. Raciborski holds voting and dispositive
power for the shares held by the Nathan Raciborski Grantor
Retained Annuity Trust Dated October 17, 2006 and for
the shares held by Cocoon Capital LLC. Mr. Raciborski
disclaims beneficial ownership of the shares held by Cocoon
Capital LLC, except to the extent of his pecuniary interest
therein.
(5)
Includes 1,384,867 shares of common stock held by Michael
and Lauren Gordon, 50,000 shares of common stock held by
Thunder Road Capital LLC, 75,000 shares of common stock
held by the Buttercup Irrevocable Trust, 75,000 shares of
common stock held by the Dandelion Irrevocable Trust,
75,000 shares of common stock held by the Sunshine
Irrevocable Trust, 75,000 shares of common stock held by
the Tiger Irrevocable Trust and 75,000 shares of common
stock held by the Tigerlily Irrevocable Trust. Michael M. Gordon
is a managing member of Thunder Road Capital LLC and a trustee
of the Buttercup Irrevocable Trust, Dandelion Irrevocable Trust,
Sunshine Irrevocable Trust, Tiger Irrevocable Trust and
Tigerlily Irrevocable Trust. Mr. Gordon holds voting and
dispositive power for the shares held by Thunder Road Capital
LLC, the Buttercup Irrevocable Trust, the Dandelion Irrevocable
Trust, the Sunshine Irrevocable Trust, the Tiger Irrevocable
Trust and the Tigerlily Irrevocable Trust. Mr. Gordon
disclaims beneficial ownership of the shares held by Thunder
Road Capital LLC, except to the extent of his pecuniary interest
therein, and of the shares held by the Buttercup Irrevocable
Trust, the Dandelion Irrevocable Trust, the Sunshine Irrevocable
Trust, the Tiger Irrevocable Trust and the Tigerlily Irrevocable
Trust.
(6)
Includes 2,000,001 shares of common stock held by the Allan
Kaplan Grantor Retained Annuity Trust Dated
October 17, 2006, 625,000 shares of common stock held
by Allan Kaplan and 163,053 shares of common stock held by
Cocoon Capital LLC. Allan M. Kaplan is a trustee of the Allan
Kaplan Grantor Retained Annuity Trust dated October 17,
2006 and a managing member of Cocoon Capital LLC.
Mr. Kaplan holds voting and dispositive power for the
shares held by the Allan Kaplan Grantor Retained Annuity
Trust Dated October 17, 2006 and for the shares held
by Cocoon Capital LLC. Mr. Kaplan disclaims beneficial
ownership of the shares held by Cocoon Capital LLC, except to
the extent of his pecuniary interest therein.
(7)
Includes 2,360,871 shares of common stock held by the
Rinehart Family Trust dated May of 1999. William H. Rinehart is
a trustee of the Rinehart Family Trust dated May of 1999.
Mr. Rinehart holds voting and dispositive power for the
shares held by the Rinehart Family Trust dated May of 1999.
(8)
Includes 10,743 shares issuable upon exercise of options
that are exercisable within 60 days of December 31,
2006.
(9)
Includes 23,450 shares issuable upon exercise of options
that are exercisable within 60 days of December 31,
2006.
(10)
See footnote (1) above. Joseph H. Gleberman is a managing
director of Goldman, Sachs & Co. Mr. Gleberman
holds voting and dispositive power for the shares held by GS
Capital Partners V Fund, L.P., GS Capital Partners V Offshore
Fund, L.P., GS Capital Partners V Institutional, L.P. and GS
Capital Partners V GmbH & Co. KG. Mr. Gleberman
disclaims beneficial ownership of the shares held by GS Capital
Partners V Fund, L.P., GS Capital Partners V Offshore Fund,
L.P., GS Capital Partners V Institutional, L.P. and GS Capital
Partners V GmbH & Co. KG except to the extent of his
pecuniary interest therein.
(11)
See footnote (2) above. Fredric W. Harman has voting and
dispositive power for the shares held by Oak Investment Partners
XII, Limited Partnership. Mr. Harman disclaims beneficial
ownership of the securities held by such partnership in which he
does not have a pecuniary interest.
95
Table of Contents
(12)
See footnote (1) above. Peter J. Perrone is a vice
president of Goldman, Sachs & Co. Mr. Perrone does
not hold voting or dispositive power for the shares held by GS
Capital Partners V Fund, L.P., GS Capital Partners V Offshore
Fund, L.P., GS Capital Partners V Institutional, L.P. and GS
Capital Partners V GmbH & Co. KG. Mr. Perrone
disclaims beneficial ownership of the shares held by GS Capital
Partners V Fund, L.P., GS Capital Partners V Offshore Fund,
L.P., GS Capital Partners V Institutional, L.P. and GS Capital
Partners V GmbH & Co. KG except to the extent of his
pecuniary interest therein.
(13)
Includes an aggregate of 34,193 shares issuable upon
exercise of options that are exercisable within 60 days of
December 31, 2006.
96
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restricting dividends on the common stock;
diluting the voting power of the common stock;
impairing the liquidation rights of the common stock; and
delaying or preventing a change in control of our company
without further action by the stockholders.
97
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98
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prior to the date of the transaction, our board of directors
approved either the business combination or the transaction
which resulted in the stockholder becoming an interested
stockholder;
upon completion of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
calculated as provided under Section 203; or
at or subsequent to the date of the transaction, the business
combination is approved by our board of directors and authorized
at an annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least two-thirds
of the outstanding voting stock which is not owned by the
interested stockholder.
99
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100
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1% of the number of shares of common stock then outstanding,
which will equal
approximately shares
immediately after this offering; or
the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
101
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102
Table of Contents
$
$
$
$
$
$
$
$
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
F-1
Table of Contents
December 31
$
1,536
$
7,611
4,273
16,626
3,317
157
362
940
3,011
6,906
30,927
11,986
41,784
355
285
173
336
759
$
19,583
$
73,928
$
3,138
$
6,419
362
781
1,000
195
1,950
2,938
289
245
1,799
6,511
8,733
16,894
8,606
20,410
203
5
30
30
188
17,760
37,339
4
3
27
23
14
3,299
41,712
(91
)
(71
)
(113
)
(1,341
)
(5,054
)
1,823
36,589
$
19,583
$
73,928
F-2
Table of Contents
Consolidated Statements of Operations
Years Ended
December 31
(In thousands,
except per share data)
$
11,192
$
21,303
$
64,343
4,834
9,037
25,662
775
2,851
10,316
5,609
11,888
35,978
5,583
9,415
28,365
2,147
4,107
18,274
2,078
3,078
6,841
231
462
3,151
69
100
226
4,525
7,747
28,492
1,058
1,668
(127
)
(189
)
(955
)
(1,782
)
1
208
(48
)
(16
)
175
(236
)
(971
)
(1,399
)
822
697
(1,526
)
306
300
2,187
$
516
$
397
$
(3,713
)
$
317
$
185
$
(3,713
)
$
0.01
$
0.01
$
(0.22
)
$
0.01
$
0.01
$
(0.22
)
23,125
23,158
17,061
25,971
27,375
17,061
F-3
Table of Contents
Accumulated
Additional
Deferred
Other
Series A
Preferred Stock
Series B
Preferred Stock
Common
Stock
Paid-In
Share-Based
Comprehensive
Accumulated
Compensation
2,307,000
$
2
$
23,079,000
$
23
$
2,426
$
(23
)
$
$
(2,254
)
$
174
516
516
2,307,000
2
498
500
46,147
13
13
22
22
7
7
14
4,614,000
4
23,125,147
23
2,966
(16
)
(1,738
)
1,239
397
397
(71
)
(71
)
326
196,491
43
43
87,500
35
35
9
9
77
77
169
(75
)
94
4,614,000
4
23,409,138
23
3,299
(91
)
(71
)
(1,341
)
1,823
(3,713
)
(3,713
)
(42
)
(42
)
(3,755
)
(91
)
91
26,579,970
27
126,289
126,316
(1,233,800
)
(1
)
1,233,800
1
3,493,549
4
1,028
1,032
2,160,629
2
(2
)
3,907,588
4
1,050
1,054
1,230,000
1
(1
)
1,735
1,735
254
254
496
496
1,627
1,627
729
729
(20,879,910
)
(21
)
(102,100
)
(102,121
)
7,399
7,399
3,380,200
$
3
26,579,970
$
27
14,554,794
$
14
$
41,712
$
$
(113
)
$
(5,054
)
$
36,589
F-4
Table of Contents
Years Ended
December 31
(In
thousands)
$
516
$
397
$
(3,713
)
844
2,951
10,542
14
94
9,134
250
(125
)
(538
)
312
293
1,162
22
6
97
(2
)
(175
)
(1,189
)
(3,677
)
(13,515
)
(201
)
(707
)
(2,071
)
(3,317
)
(132
)
(153
)
(423
)
625
2,064
3,725
359
3
419
187
1,301
4,966
30
1,605
2,477
6,293
(2,620
)
(10,852
)
(40,609
)
123
(2,497
)
(10,852
)
(40,609
)
32,873
8,769
32,873
(31,319
)
(642
)
(19,682
)
1,000
(1,000
)
(261
)
(34
)
(242
)
659
(475
)
(464
)
(195
)
729
9
1,627
13
78
2,086
500
126,316
(102,121
)
1,331
9,375
40,391
439
1,000
6,075
97
536
1,536
$
536
$
1,536
$
7,611
$
118
$
634
$
1,143
$
67
$
$
4,805
F-5
Table of Contents
1.
Organization and
Basis of Presentation
2.
Summary of
Significant Accounting Policies and Use of Estimates
F-6
Table of Contents
F-7
Table of Contents
Additions
Deductions
Balance at
Charged to
Charged
Write-Offs,
Beginning
Costs and
Against
Net of
Balance at
$
18
$
229
$
83
$
69
$
261
261
135
158
226
328
328
618
544
286
1,204
3 years
3 years
3-5 years
3-7 years
F-8
Table of Contents
F-9
Table of Contents
Years Ended
December 31
(In thousands,
except per share data)
$
516
$
397
$
(3,713
)
199
212
$
317
$
185
$
(3,713
)
23,125
23,158
17,314
(253
)
23,125
23,158
17,061
791
894
2,055
3,323
25,971
27,375
17,061
$
0.01
$
0.01
$
(0.22
)
$
0.01
$
0.01
$
(0.22
)
(In
thousands)
2,326
15
F-10
Table of Contents
F-11
Table of Contents
3.
Prepaid Expenses
and Other Current Assets
(In thousands)
$
230
$
1,087
392
974
318
950
$
940
$
3,011
F-12
Table of Contents
4.
Property and
Equipment
(In
thousands)
$
15,444
$
54,530
426
951
72
136
173
526
27
106
16,142
56,249
(4,156
)
(14,465
)
$
11,986
$
41,784
5.
Other Current
Liabilities
(In
thousands)
$
759
$
3,549
379
675
386
610
275
1,677
$
1,799
$
6,511
6.
Notes Payable
and Credit Facilities
(In
thousands)
$
6,027
$
23,818
4,600
10,627
23,818
(1,950
)
(2,938
)
(71
)
(470
)
$
8,606
$
20,410
$
2,938
5,293
5,293
5,293
5,001
$
23,818
F-13
Table of Contents
F-14
Table of Contents
7.
Warrants
2,559
$0.08 - $0.22
582
$0.21 - $0.90
3,141
$0.08 - $0.90
1,072
$0.40
(88
)
$0.40
4,125
$0.08 - $0.90
297
$0.40
(3,908
)
$0.08 - $0.90
(449
)
$0.08
65
$0.22
F-15
Table of Contents
8.
Stockholders
Equity
F-16
Table of Contents
F-17
Table of Contents
2006
In July a controlling interest is sold to an investor group led
by Goldman Sachs through the issuance of shares of Series B
Preferred Stock, at a price of $4.89 per share, for total
aggregate consideration of $130 million. As part of the
transaction, the Company repurchased 20,880,000 shares of
common stock for an aggregate net consideration of
$102.1 million.
2006
In the fourth quarter the Company appoints both a Chief
Executive Officer and a Chief Financial Officer with past public
company roles in a similar capacity.
2006
Revenue growth exceeds 200%, to $64.3 million compared to
revenue in 2005 of $21.3 million.
F-18
Table of Contents
Weighted
Average
Number
Exercise
(In
thousands)
2,026
$
0.21
177
0.32
2,203
0.22
2,435
0.40
(196
)
0.22
(315
)
0.38
4,127
0.31
5,385
3.29
(5,654
)
0.34
(91
)
0.65
3,767
$
4.47
Options
Outstanding
Options
Exercisable
Weighted
Average
Weighted
Weighted
Remaining
Average
Number of
Average
Contractual
Exercise
Shares
Exercise
Number
Live
(Years)
Price
Exercisable
Price
(In
thousands)
(In
thousands)
229
6.24
$
0.21
211
$
0.21
2,168
8.99
0.40
1,908
0.40
300
9.76
1.27
1.27
570
9.92
9.95
9.95
500
9.92
19.80
19.80
3,767
2,119
Year Ended
December 31,
84.47
%
6.08
4.58
%
$
0.00
F-19
Table of Contents
9.
Related Party
Transactions
F-20
Table of Contents
10.
Leases and
Commitments
(In
thousands)
$
524
485
344
314
68
$
1,735
Amount
(In
thousands)
$
15,137
6,234
2,085
172
F-21
Table of Contents
(In
thousands)
$
272
5
277
(27
)
250
(245
)
$
5
11.
Concentrations
F-22
Table of Contents
12.
Income
Taxes
(In
thousands)
$
822
$
541
$
(2,184
)
156
658
$
822
$
697
$
(1,526
)
(In
thousands)
$
$
321
$
2,375
56
58
156
46
194
56
425
2,725
267
(112
)
(464
)
(17
)
(13
)
(74
)
250
(125
)
(538
)
$
306
$
300
$
2,187
(In
thousands)
$
287
$
244
$
(534
)
2,619
27
30
53
44
100
(6
)
(8
)
(18
)
(45
)
$
306
$
300
$
2,187
F-23
Table of Contents
(In
thousands)
$
95
$
280
68
45
53
47
75
29
33
82
272
535
(303
)
(303
)
$
(31
)
$
535
(In
thousands)
$
157
$
362
173
(188
)
$
(31
)
$
535
13.
Advertising and
Marketing
14.
401(k)
Plan
F-24
Table of Contents
15.
Segment
Reporting
(In
thousands)
$
11,192
$
20,303
$
59,252
1,000
5,091
$
11,192
$
21,303
$
64,343
$
10,343
$
39,198
1,643
2,586
$
11,986
$
41,784
16.
Subsequent
Events
F-25
1
8
25
26
26
27
29
31
33
57
70
89
93
97
101
103
107
107
107
F-1
EX-3.1
EX-3.2
EX-3.3
EX-3.4
EX-4.2
EX-10.1
EX-10.2
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-21.1
EX-23.1
Table of Contents
Item 13.
Other Expenses
of Issuance and Distribution.
$
6,179
*
*
*
*
*
*
*
*
$
2,400,000
Item 14.
Indemnification
of Officers and Directors.
II-1
Table of Contents
Item 15.
Recent Sales
of Unregistered Securities.
II-2
Table of Contents
II-3
Table of Contents
Item 16.
Exhibits and
Financial Statement Schedules
Exhibit
1
.1*
Form of Underwriting Agreement
3
.1
Amended and Restated Certificate
of Incorporation of the Registrant, as currently in effect
3
.2
Form of Amended and Restated
Certificate of Incorporation of the Registrant, to be effective
upon closing of the offering
3
.3
Bylaws of the Registrant, as
currently in effect
3
.4
Form of Amended and Restated
Bylaws of the Registrant, to be effective upon closing of the
offering
4
.1*
Specimen Common Stock Certificate
of the Registrant
4
.2
Amended and Restated
Investors Rights Agreement dated July 12, 2006
5
.1*
Opinion of Wilson Sonsini
Goodrich & Rosati, Professional Corporation
10
.1
Form of Indemnification Agreement
for directors and officers
10
.2
Amended and Restated 2003
Incentive Compensation Plan and form of agreement thereunder
10
.3*
2007 Equity Incentive Plan and
form of agreement thereunder
10
.4*
Employment Agreement between the
Registrant and Jeffrey W. Lunsford dated October 20, 2006
10
.5*
Employment Agreement between the
Registrant and Matthew Hale dated November 22, 2006
10
.6
Lease between the Registrant and
Bel de Mar, LLC dated November 18, 2002
10
.7
Lease between the Registrant and
Bel de Mar, LLC dated December 1, 2004
10
.8
Lease between the Registrant and
Calwest Industrial Properties, LLC dated September 7, 2005
10
.9
Loan and Security Agreement dated
April 15, 2005 between the Registrant and Silicon Valley
Bank, and amendments thereto
10
.10*
Bandwidth/Capacity Agreement
between Registrant and Global Crossing Bandwidth, Inc., dated
August 29, 2001, and amendments thereto
10
.11*
Series B Convertible
Preferred Stock Purchase Agreement dated May 18, 2006
21
.1
List of subsidiaries of the
Registrant
23
.1
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm
23
.2*
Consent of Wilson Sonsini
Goodrich & Rosati, Professional Corporation (included
in Exhibit 5.1)
24
.1
Power of Attorney (see
page II-5
to this registration statement on
Form S-1)
*
To be filed by amendment.
Confidential treatment has been requested for portions of this
exhibit. These portions have been omitted from this Registration
Statement and have been filed separately with the Securities and
Exchange Commission.
Item 17.
Undertakings.
II-4
Table of Contents
II-5
Table of Contents
By:
President, Chief Executive Officer
and Chairman (principal executive officer)
March 22, 2007
Chief Financial Officer (principal
financial officer and principal
accounting officer)
March 22, 2007
Director
March 22, 2007
Director
March 22, 2007
Director
March 22, 2007
II-6
Table of Contents
Co-Founder and Director
March 22, 2007
Director
March 22, 2007
Director
March 22, 2007
Co-Founder, Chief Technical
Officer and Director
March 22, 2007
Director
March 22, 2007
II-7
Table of Contents
Exhibit
1
.1*
Form of Underwriting Agreement
3
.1
Amended and Restated Certificate
of Incorporation of the Registrant, as currently in effect
3
.2
Form of Amended and Restated
Certificate of Incorporation of the Registrant, to be effective
upon closing of the offering
3
.3
Bylaws of the Registrant, as
currently in effect
3
.4
Form of Amended and Restated
Bylaws of the Registrant, to be effective upon closing of the
offering
4
.1*
Specimen Common Stock Certificate
of the Registrant
4
.2
Amended and Restated
Investors Rights Agreement dated July 12, 2006
5
.1*
Opinion of Wilson Sonsini
Goodrich & Rosati, Professional Corporation
10
.1
Form of Indemnification Agreement
for directors and officers
10
.2
Amended and Restated 2003
Incentive Compensation Plan and form of agreement thereunder
10
.3*
2007 Equity Incentive Plan and
form of agreement thereunder
10
.4*
Employment Agreement between the
Registrant and Jeffrey W. Lunsford dated October 20, 2006
10
.5*
Employment Agreement between the
Registrant and Matthew Hale dated November 22, 2006
10
.6
Lease between the Registrant and
Bel de Mar, LLC dated November 18, 2002
10
.7
Lease between the Registrant and
Bel de Mar, LLC dated December 1, 2004
10
.8
Lease between the Registrant and
Calwest Industrial Properties, LLC dated September 7, 2005
10
.9
Loan and Security Agreement dated
April 15, 2005 between the Registrant and Silicon Valley
Bank, and amendments thereto
10
.10*
Bandwidth/Capacity Agreement
between Registrant and Global Crossing Bandwidth, Inc., dated
August 29, 2001, and amendments thereto
10
.11*
Series B Convertible
Preferred Stock Purchase Agreement dated May 18, 2006
21
.1
List of subsidiaries of the
Registrant
23
.1
Consent of Ernst & Young
LLP, Independent Registered Public Accounting Firm
23
.2*
Consent of Wilson Sonsini
Goodrich & Rosati, Professional Corporation (included
in Exhibit 5.1)
24
.1
Power of Attorney (see
page II-5
to this registration statement on
Form S-1)
*
To be filed by amendment.
Confidential treatment has been requested for portions of this
exhibit. These portions have been omitted from this Registration
Statement and have been filed separately with the Securities and
Exchange Commission.
Exhibit 3.1
Delaware
The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "LIMELIGHT NETWORKS, INC.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH DAY OF FEBRUARY, A.D. 2007, AT 4:46 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Harriet Smith Windsor ---------------------------------------- Harriet Smith Windsor Secretary of State AUTHENTICATION: 5471863 DATE: 03-01-07 |
3694871 8100 (SEAL)
070243884
State of Delaware
Secretary of State
Division of Corporations
Delivered 04:59 PM 02/27/2007
FILED 04:46 PM 02/27/2007
SRV 070243884 - 3694871 FILE
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
LIMELIGHT NETWORKS, INC.
Limelight Networks, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Limelight Networks, Inc. The original Certificate of Incorporation of the corporation was filed with the Delaware Secretary of State on August 20, 2003.
B. This Certificate of Amendment was duly adopted by the corporation's
directors and stockholders in accordance with the applicable provisions of
Section 242 of the Delaware General Corporation Law.
C. Article IV, Subparagraph 5(b) of the Amended and Restated Certificate of Incorporation of this corporation is hereby amended to read as follows:
"The Board of Directors shall consist of nine (9) members. At each meeting of stockholders at which members of the Board of Directors are to be elected, or whenever members of the Board of Directors are to be elected by written consent of the stockholders, (i) the holders of the Series Preferred, voting together as a single class and not as separate series and on an as-converted basis, shall be entitled to elect five (5) members of the Board of Directors (the "Preferred Directors"); (ii) the holders of shares of Common, voting as a separate class, shall be entitled to elect three (3) members of the Board of Directors, one of whom shall be the then-current Chief Executive Officer of the Corporation (the "Common Directors"); and (iii) the holders of the Series Preferred and the holders of shares of Common, voting together as a single class and on an as-converted basis, shall be entitled to elect one (1) member of the Board of Directors (the "At-large Director"). In the case of any vacancy (other than a vacancy caused by removal) in the office of a director occurring among the directors elected by the holders of a class of stock pursuant to this subparagraph 5(b), the affirmative vote of the holders of a majority of the shares of that class may elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class of stock may be removed during the aforesaid term of office, either with or without cause, by the affirmative vote of the holders of the shares of the class of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class of stock represented at a meeting or pursuant to unanimous written consent. Notwithstanding the foregoing, any director may be removed for cause in accordance with Delaware General Corporation Law."
IN WITNESS WHEREOF, Limelight Networks, Inc has caused this certificate to be signed by Jeffrey W. Lunsford, a duly authorized officer of the corporation, on February 26, 2007.
/s/ Jeffrey W. Lunsford ---------------------------------------- Jeffrey W. Lunsford Chief Executive Officer |
Delaware
The First State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "LIMELIGHT NETWORKS, INC.", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF AUGUST, A.D. 2006, AT 2:17 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Harriet Smith Windsor ---------------------------------------- Harriet Smith Windsor Secretary of State AUTHENTICATION: 4994408 DATE: 08-23-06 |
3694871 8100 (SEAL) 060783074 |
State of Delaware Secretary of State Division of Corporations Delivered 02:34 PM 08/22/2006 FILED 02:17 PM 08/22/2006 SRV 060783074 - 3694871 FILE |
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
LIMELIGHT NETWORKS, INC.
Limelight Networks, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Limelight Networks, Inc. The original Certificate of Incorporation of the corporation was filed with the Delaware Secretary of State on August 21, 2003.
B. This Certificate of Amendment was duly adopted by the corporation's
directors and stockholders in accordance with the applicable provisions of
Section 242 of the Delaware General Corporation Law.
C. Article IV, Subparagraph 5(b) of the Amended and Restated Certificate of Incorporation of this corporation is hereby amended to read as follows:
"The Board of Directors shall consist of eight (8) members. At each meeting of stockholders at which members of the Board of Directors are to be elected, or whenever members of the Board of Directors are to be elected by written consent of the stockholders, (i) the holders of the Series Preferred, voting together as a single class and not as separate series and on an as converted basis, shall be entitled to elect five (5) members of the Board of Directors (the "PREFERRED DIRECTORS") and (ii) the holders of shares of Common, voting as a separate class, shall be entitled to elect three (3) members of the Board of Directors, one of whom shall be the then current Chief Executive Officer of the Corporation (the "COMMON DIRECTORS"). In the case of any vacancy (other than a vacancy caused by removal) in the office of a director occurring among the directors elected by the holders of a class of stock pursuant to this subparagraph 5(b), the affirmative vote of the holders of a majority of the shares of that class may elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class of stock may be removed during the aforesaid term of office, either with or without cause, by the affirmative vote of the holders of the shares of the class of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class of stock represented at a meeting or pursuant to unanimous written consent. Notwithstanding the foregoing, any director may be removed for cause in accordance with Delaware General Corporation Law."
IN WITNESS WHEREOF, Limelight Networks, Inc. has caused this certificate to be signed by William H. Rinehart, a duly authorized officer of the corporation, on August 9, 2006.
/s/ William H. Rinehart ---------------------------------------- William H. Rinehart Chief Executive Officer |
Delaware
The first State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF "LIMELIGHT NETWORKS, INC.", FILED IN THIS OFFICE ON THE ELEVENTH DAY OF JULY, A. D. 2006, AT 5:14 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
/s/ Harriet Smith Windsor ---------------------------------------- Harriet Smith Windsor, Secretary of State |
3694871 8100 (SEAL) 060658254 AUTHENTICATION: 4891924 DATE: 07-11-06 |
State of Delaware Secretary of State Division of Corporations Delivered 05:22 PM 07/11/2006 FILED 05:14 PM 07/11/2006 SRV 060658254 - 3694871 FILE |
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
LIMELIGHT NETWORKS, INC.
The undersigned, William Rinehart hereby certifies that:
1. He is the duly elected and acting President of Limelight Networks, Inc., a Delaware corporation
2. The Certificate of Incorporation of this corporation was originally filed with the Secretary of State of Delaware on August 20, 2003.
3. The Certificate of Incorporation of this corporation shall be amended and restated to read in full as follows:
ARTICLE I
"The name of this corporation is Limelight Networks, Inc. (the
"CORPORATION").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.
ARTICLE IV
The Corporation is authorized to issue two classes of shares to be designated respectively "PREFERRED" and "COMMON." The total number of Preferred shares authorized is thirty three million three hundred fourteen thousand (33,314,000), and the total number of Common shares authorized is eighty million one hundred thousand (80,100,000). The par value of the shares of Common Stock and shares of the Preferred Stock is one-tenth of one cent ($0,001) per share.
A. Preferred Stock.
The first such series of Preferred shares shall be designated "SERIES A CONVERTIBLE PREFERRED STOCK," and shall consist of four million six hundred fourteen thousand (4,614,000) shares. The second such series of Preferred shares shall be designated "SERIES B CONVERTIBLE PREFERRED STOCK," and shall consist of twenty eight million seven hundred thousand (28,700,000) shares. The rights, preferences, privileges, restrictions and other matters relating to the Series A Convertible Preferred Stock (the "SERIES A PREFERRED") and the Series B
Convertible Preferred Stock (the "SERIES B PREFERRED," and together with the Series A Preferred, the "SERIES PREFERRED") are as follows:
I. Dividend Rights of Series Preferred. The holders of the Series A Preferred and Series B Preferred shall be entitled to receive, out of any funds legally available therefor on a pari passu basis, dividends at the rate of 10% per annum per share of Series A Preferred and 10% per annum per share of Series B Preferred (as such amounts shall be adjusted to reflect subdivisions and combinations of shares and stock dividends), per annum, on each outstanding share of Series Preferred, payable in preference and priority to any payment of any dividend on the Common, when, as and if declared by the Board of Directors of the Corporation (the "BOARD OF DIRECTORS"). The right to such dividends on the Series Preferred shall not be cumulative, and no right shall accrue to holders of Series Preferred by reason of the fact that dividends on such shares are not declared or paid in any prior year. The holders of the outstanding Series Preferred can waive any dividend preference that such holders shall be entitled to receive under this subparagraph I upon the affirmative vote or written consent of the holders of at least a majority of the shares of Series Preferred then outstanding (voting together as a single class and not as separate series, and on an as-converted basis). In addition to, and not in lieu of, the preceding sentences of this subparagraph 1, in the event that the Board of Directors shall declare and pay or set apart dividends on the Common shares, such additional dividends shall be declared and set apart on the Series Preferred at the same rate based upon the number of Common shares into which the Series A Preferred and Series B Preferred are then convertible In no event shall the Self-Tender (as defined below) be considered a dividend for purposes of this Section 1.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, the holders of the Series A Preferred and Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Common shares by reason of their ownership thereof: (i) the amount of $0.2167 per share of Series A Preferred (as such amount shall be adjusted to reflect subdivisions and combintions of shares and stock dividends) for each share of Series A Preferred then held by them (the "INITIAL SERIES A LIQUIDATION PREFERENCE"), plus an amount equal to the sum of all declared but unpaid dividends on the Series A Preferred and (ii) the amount of $9.7818 per share of Series B Preferred (as such amount shall be adjusted to reflect subdivisions and combinations of shares and stock dividends) for each share of Series B Preferred then held by them (the "INITIAL SERIES B LIQUIDATION PREFERENCE"), plus an amount equal to the sum of all declared but unpaid dividends on the Series B Preferred. If upon any such liquidation, dissolution or winding up of the Corporation, the assets and funds available for distribution among the holders of the Series A Preferred and Series B Preferred shall be insufficient to permit the payment to such holders of the full preferential amount of the Initial Series A Liquidation Preference and Initial Series B Liquidation Preference, then such assets and funds of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred and Series B Preferred in proportion to the percentage of the aggregate Initial Series A Liquidation Preference and Initial Series B Liquidation Preference that each such holder is entitled to receive.
(b) In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, after payment has been made to the holders of the Series A Preferred and Series B Preferred of the full amount of the Initial Series A Liquidation Preference and Initial Series B Liquidation Preference, respectively, to which they shall be entitled pursuant to subparagraph 2(a) above, all remaining assets of the Corporation available for distribution to stockholders, if any, shall be distributed ratably among the holders of Series A Preferred and the Common shares based on the number of Common shares held by each such holder (assuming conversion of all such Series A Preferred into Common shares) until the holders of the Series A Preferred shall have received an aggregate of $0.3251 per share (as such amount shall be adjusted to reflect subdivisions and combinations of shares and stock dividends) for each share of Series A Preferred then held by them (including amounts paid pursuant to the Initial Series A Liquidation Preference); thereafter, if assets remain in the Corporation, the holders of the Common shares shall receive all of the remaining assets of the Corporation pro rata based on the number of Common shares held by each such holder.
(c) Notwithstanding the above, for purposes of determining the amount each holder of shares of Series Preferred is entitled to receive with respect to a liquidation, dissolution or winding up pursuant to this subparagraph 2, each such holder of shares of Series Preferred shall be deemed to have converted (regardless of whether such holder actually converted) such holder's shares of Series Preferred into shares of Common immediately prior to the liquidation, dissolution or winding up if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such holder's shares of Series Preferred into shares of Common. If any such holder shall be deemed to have converted shares of Series Preferred into Common pursuant to this paragraph, then such holder shall not be entitled to receive any distribution that would otherwise be made to holders of Series Preferred that have not converted (or have not been deemed to have converted) into shares of Common.
(d) For purposes of this subparagraph 2, a liquidation shall be deemed
to be occasioned by, or to include, (i) the Corporation's sale, lease or other
conveyance or disposition of all or substantially all of its assets, (ii) the
acquisition of the Corporation by another entity by means of merger or
consolidation in which the holders of voting securities of the Corporation
immediately prior to the consolidation or merger own (immediately after the
consolidation or merger) voting securities of the surviving or acquiring entity,
or of a parent of such entity, representing less than fifty percent (50%) of the
voting power of the surviving or acquiring entity or such parent, or (iii) a
liquidation, dissolution or winding up of the Corporation; provided, however,
that a transaction shall not constitute a liquidation if (1) its sole purpose is
to change the state of the Corporation's incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons
who held this Corporation's securities immediately prior to such transaction or
(2) it is an equity financing with the primary purpose of raising working
capital, in which the Corporation is the surviving corporation (each, a
"LIQUIDATION"); provided, however, that in no event shall the Self-render (as
defined below) constitute a Liquidation. The treatment of any particular
transaction or series of transactions as a Liquidation may be waived by the vote
or written consent of the holders of a majority of the outstanding Series
Preferred (voting together as a single class and not as separate series, and on
an as..converted basis.)
(e) In any of such events, if the consideration received by the Corporation or its stockholders is other than cash or indebtedness, its value will be deemed its fair market value, as deterrmined in good faith by the Board of Directors, including the approval of a majority of the Preferred Directors (as defined below). Any securities shall be valued as follows:
(i) Securities not subject to investment letter or other similar restrictions on free marketability covered by subparagraph (ii) below:
(A) if traded on a securities exchange or through the Nasdaq National Market, the value shall be based on the formula specified in the definitive agreements for the Liquidation or, if no such formula exists, then the value of such securities shall be based on a formula approved by the Board of Directors and derived from the closing prices of the securities on such exchange or Nasdaq over a specified time period;
(B) If actively traded over-the-counter, the value shall be based on the formula specified in the definitive agreements for the Liquidation or, if no such formula exists, then the value of such securities shall be based on a formula approved by the Board of Directors and derived from the closing bid or sales prices (whichever is applicable) of such securities over a specified time period;
(C) if there is no active public market, the value shall be the fail market value thereof, as mutually determined by the Corporation and the holders of at least a majority of the voting power of all then outstanding shares of Series Preferred; and
(D) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (i) (A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by the Corporation and the holders of at least a majority of the voting power of all then outstanding shares of such Series Preferred.
3. Redemption.
(a) At any time after July 12,2013 but within sixty (60) days after the receipt by the Corporation of a written request (the "REDEMPTION ELECTION") from any holder of outstanding shares of Series B Preferred (a "REDEEMING HOLDER") that all or some of the outstanding shares of Series B Preferred held by such Redeeming Holder be redeemed, and provided that a final determination of the fair market value of Series B Preferred in accordance with this Section 3(a) has been made, the Corporation shall, from any source of funds legally available therefor, redeem in four (4) quarterly installments (each payment date being referred to herein as a "REDEMPTION DATE") the number of outstanding shares of Series B Preferred specified in the Redemption Election from such Redeeming Holder (including, without limitation, all holders of Series B Preferred deemed to be Redeeming Holders pursuant to Section 3(b)) by paying in cash therefor a sum per share equal to the greater of (i) $4.8909 (as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like) plus all declared but unpaid dividends on such share or (ii) the fair market value per share of the Series B Preferred on the applicable Redemption Date as determined in good faith by
agreement between the Board of Directors and the Redeeming Holders holding a majority of the shares of Series B Preferred to be redeemed from all Redeeming Holders (the "MAJORITY HOLDER'S") (such greater amount referred to in this subparagraph 3 as the "REDEMPTION PRICE"). In the event that the Board of Directors and the Majority Holders cannot agree upon a Redemption Price as set forth in subparagraph 3(a)(ii) hereof, then the Board of Directors and the Majority Holders shall mutually agree on a nationally recognized independent appraiser (the "FIRST APPRAISER") who shall calculate the fair market value of the Series B Preferred within twenty (20) days of its appointment (i) in good faith and (ii) as though the Corporation is under no compulsion to buy and the Redeeming Holders are under no compulsion to sell and (iii) taking into account the lack of a public trading market for shares of the Series B Preferred. The cost of the determination of the fair market value of the Series B Preferred shall not be taken into account in determining the fair market value of the Series B Preferred and shall be borne by equally by the Corporation and the Redeeming Holders, with the amount borne by the Redeeming Holders to be deducted pro rata from the redemption payments due to such Redeeming Holders on the first Redemption Date. The number of shares of Series B Preferred that the Corporation shall be required to redeem on any one Redemption Date shall be equal to the amount determined by dividing (i) the aggregate number of shares of Series B Preferred held by each Redeeming Holder to be redeemed that are outstanding immediately prior to such Redemption Date by (ii) the number of remaining Redemption Dates (including the Redemption Date to which such calculation applies). In the event there is more than one Redeeming Holder, any redemption of Series B Preferred effected pursuant to this subparagraph 3(a) shall be made on a pro rata basis among the holders of Series B Preferred in proportion to the aggregate Redemption Price each such holder of Series B Preferred would otherwise be entitled to receive on the applicable Redemption Date.
(b) At least fifteen (15) but no more than thirty (30) days prior to the initial Redemption Date in regards to any Redemption Election, written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice is given) of Series B Preferred, at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected on the applicable Redemption Date, specifying that a Redemption Election has been delivered to the Corporation, the Redemption Price and the place at which payment may be obtained and informing such holder of the manner and the place designated for such redemption to be effected (the "INITIAL REDEMPTION NOTICE"). Each such holder of Series B Preferred shall be entitled to elect to have all or some of the outstanding shares of such holder's Series B Preferred redeemed as set forth in the Initial Redemption Notice by delivering written notice of such election to the Corporation at least five (5) days prior to such Redemption Date. Each such holder electing to redeem shares of Series B Preferred hereunder shall be a "REDEEMING HOLDER." At least ten (10) but no more than twenty (20) days prior to each of the three subsequent Redemption Dates, written notice shall be mailed, first class postage prepaid, to each Redeeming Holder, at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected on the applicable Redemption Date, specifying the Redemption Price and the place at which payment may be obtained and informing such holder of the manner and the place designated for such redemption to be effected (each a "SUBSEQUENT REDEMPTION NOTICE"). Except as provided in subparagraph (3)(c), on or after each Redemption Date, the Redeeming Holders on such Redemption Date shall surrender to the Corporation the certificate or certificates representing such shares to be redeemed, in the manner
and at the place designated in the Redemption Notice, and thereafter the applicable Redemption Price of such shares shall be promptly paid to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.
(c) From and after each Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the Redeeming Holders with respect to the shares of Series B Preferred held by such Redeeming Holders to be redeemed on such Redemption Date in the Redemption Notice for such Redeeming Holders (except the right to receive the applicable Redemption Price upon surrender of their certificate or certificates) 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 such shares of Series B Preferred on any Redemption Date are insufficient to redeem the total number of shares of Series B Preferred to be redeemed on such date, those funds that are legally available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares. If shares of more than one Redeeming Holder are to be redeemed on any Redemption Date, those funds which are legally available will be used to redeem the maximum possible number of shares, allocated ratably among the holders of such shares to be redeemed based upon the total Redemption Price applicable to the shares of Series B Preferred Stock designated to be redeemed by each Redeeming Holder. The shares of Series B Preferred not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. Upon any such default in payment on a given Redemption Date, the balance of the applicable Redemption Price for a Redeeming Holder shall accrue interest at the rate of fifteen percent (15%) per annum until the balance of the shares that the Corporation has become obliged to redeem on such Redemption Date are redeemed, which interest shall be payable quarterly in arrears. At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series B Preferred, such funds will immediately be used to redeem the balance of the shares that the Corporation has become obliged to redeem (including the interest thereon that is then due and payable) on any Redemption Date but that it has not redeemed.
4. Conversion. The holders of the Series Preferred shall have conversion rights as follows (the "CONVERSION RIGHTS"):
(a) Right to Convert.
(i) Optional Conversion. Each share of Series Preferred shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Series Preferred, into such number of fully paid and nonassessable shares of Common, as is determined by dividing, in the case of the Series A Preferred, $0.2167 by the Series A Conversion Price in effect at the time of conversion, and in the case of the Series B Preferred, $4.8909 by the Series B Conversion Price in effect at the time of conversion. The "SERIES A CONVERSION PRICE" shall initially be $0.2167 and the "SERIES B CONVERSION PRICE" shall initially be $4.8909. Each of the Series A Conversion Price and the Series B Conversion Price shall be subject to adjustment as hereinafter provided.
(ii) Automatic Conversion. Each share of Series Preferred shall automatically be converted into shares of Common, at the then effective Series A Conversion Price or Series B Conversion Price, as applicable, upon the earliest of (A) the date specified by vote or written consent of the holders of not less than a majority of the then outstanding shares of Series Preferred, voting together as a single class, or (B) the closing of a firm commitment underwritten public offering pursuant to an effective registration statement on Form S-l (or a successor form) under the Securities Act of 1933, as amended, covering the offer and sale of Common for the account of the Corporation, the public offering price of which is not less than an amount per share that shall initially be equal to $14.6727 on the date this Amended and Restated Certificate of Incorporation is filed with the Delaware Secretary of State (as adjusted for stock splits, stock dividends, combinations, reclassifications and the like) (the "IPO PRICE") and which yields to the Corporation net proceeds of not less than $40,000,000 (a "QUALIFIED PUBLIC OFFERING"). In the event of such a public offering, the person(s) entitled to receive the Common issuable upon such conversion of Series Preferred shall not be deemed to have converted such Series Preferred until immediately prior to the closing of such sale of Common, at which time the Series Preferred shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common issuable upon such conversion unless certificates evidencing such shares of Series Preferred being converted are either delivered to the Corporation or its transfer agent, as hereinafter provided, or the holder notifies the Corporation or any transfer agent, as hereinafter provided, that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. Upon the occurrence of such automatic conversion of Series Preferred, the holders of the Series A Preferred and/or Series B Preferred, as applicable, shall surrender the certificates representing such shares at the office of the Corporation or of any transfer agent for the Series A Preferred and/or Series B Preferred, as applicable. Thereupon, there shall be issued and delivered to such holder, promptly at such office and in his name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common into which such shares of Series Preferred surrendered are convertible on the date on which said automatic conversion occurred.
(b) Mechanics of Conversion. No fractional shares of Common shall be issued upon conversion of Series Preferred. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of the shares of Common, as determined in good faith by the Board of Directors, including the approval of a majority of the Preferred Directors. Except as otherwise provided in this subparagraph 4, before any holder of Series Preferred shall be entitled to convert the same into full shares of Common, such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series Preferred, and shall give written notice to the Corporation at such office that such holder elects to convert the same. The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series Preferred, a certificate or certificates for the number of shares of Common to which such holder shall be entitled as aforesaid and a check payable to the holder in the amount of any cash payable in lieu of fractional shares of Common (after aggregating all shares of Common issuable to such holder of Series Preferred upon conversion of the number of shares of Series Preferred at the time being converted). In addition, if less than all
of the shares represented by such certificates are surrendered for conversion pursuant to this subparagraph 4, the Corporation shall issue and deliver to such holder a new certificate for the balance of the shares of Series Preferred not so converted. Except as otherwise provided in this subparagraph 4, such conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of the certificate for the shares of Series Preferred to be converted, and the person or persons entitled to receive the shares of Common issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common on such date. If the conversion is in connection with a transaction or series of related transactions described in subparagraph 4(a)(ii) above, the conversion may, at the option of any holder tendering shares of Series Preferred for conversion, be conditioned upon the closing of such transaction(s), in which event the person(s) entitled to receive the shares of Common issuable upon such conversion of the Series Preferred shall not be deemed to have converted such Series Preferred until immediately prior to the final closing of such transaction(s). If the conversion is in connection with the automatic conversion provisions of subsection 4(a)(ii)(A) above, such conversion shall be deemed to have been made on the conversion date described in the stockholder consent approving such conversion, and the persons entitled to receive shares of Common issuable upon such conversion shall be treated for all purposes as the record holders of such shares of Common as of such date.
(c) Conversion Price Adjustments of Series Preferred for Certain Dilutive Issuances, Splits and Combinations. The Series A Conversion Price and/or Series B Conversion Price, as applicable, shall be subject to adjustment from time to time as follows:
(i) (A) If the Corporation shall issue, on or after the date upon which any shares of Series B Preferred Stock were first issued the "PURCHASE DATE"), any Additional Stock (as defined below) without consideration or for a consideration per share less than the Series A Conversion Price or Series B Conversion Price in effect immediately prior to the issuance of such Additional Stock, the Series A Conversion Price or Series B Conversion Price, as applicable, in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be automatically adjusted to a price determined by multiplying such Series A Conversion Price or Series B Conversion Price, as applicable, by a fraction, the numerator of which shall be the number of shares of Common Outstanding (as defined below) immediately prior to such issuance plus the number of shares of Common that the aggregate consideration received by the Corporation for such issuance would purchase at such Series A Conversion Price or Series B Conversion Price, as applicable; and the denominator of which shall be the number of shares of Common Outstanding (as defined below) immediately prior to such issuance plus the number of shares of such Additional Stock. For purposes of this paragraph 4(c)(i)(A), the term "COMMON OUTSTANDING" shall mean and include the following: (1) outstanding Common shares, (2) Common shares issuable upon conversion of outstanding Preferred shares, (3) Common shares issuable upon exercise of outstanding stock options, (4) Common shares issuable upon exercise (and, in the case of warrants to purchase Preferred shares, conversion) of outstanding warrants, and (5) any other shares of Common deemed issued pursuant to paragraph 4(c)(i)(E) below. Shares described in (1) through (5) above shall be included whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.
(B) No adjustment of the Series A Conversion Price or Series B Conversion Price, as applicable, shall be made in an amount less than one tenth of one cent per share, provided that any adjustments that are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to three (3) years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of three (3) years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subparagraphs (E)(3) and (E)(4), no adjustment of the Series A Conversion Price or Series B Conversion Price pursuant to this subparagraph 4(c)(i) shall have the effect of increasing the Series A Conversion Price or Series B Conversion Price, as applicable, above the Series A Conversion Price or Series B Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Additional Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof
(D) In the case of the issuance of the Additional Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors, including the approval of a majority of the Preferred Directors, irrespective of any accounting treatment.
(E) In the case of the issuance of options to purchase or rights to subscribe for Common shares, securities by their terms convertible into or exchangeable for Common shares or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for purposes of determining the number of shares of Additional Stock issued and the consideration paid therefor:
(1) The aggregate maximum number of shares of Common shares deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of Time, but without taking into account potential antidilution adjustments) of such options to purchase or rights to subscribe for Common shares shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subparagraphs 4(c)(i)(C) and 4(c)(i)(D)), if any, received by the Corporation upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential antidilution adjustments) for the Common shares covered thereby.
(2) The aggregate maximum number of shares of Common shares deliverable upon conversion of, or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the
Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Corporation (without taking into account potential antidilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subparagraphs 4(c)(i)(C) and 4(c)(i)(D)).
(3) In the event of any change in the number of shares of Common shares deliverable or in the consideration payable to the Corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, the Series A Conversion Price and/or Series B Conversion Price, as applicable, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common shares or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Series A Conversion Price and/or B Conversion Price, as applicable, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of Common shares (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.
(5) The number of shares of Additional Stock deemed issued and the consideration deemed paid therefor pursuant to subparagraphs 4(c)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either subparagraphs 4(c)(i)(E)(3) or (4).
(ii) "ADDITIONAL STOCK" shall mean any Common shares issued (or deemed to have been issued pursuant to subparagraph 4(c)(i)(E)) by the Corporation on or after the Purchase Date other than:
(A) Common shares issued pursuant to a transaction described in subparagraph 4(d) hereof;
(B) Common shares issued to employees, consultants, officers or directors of the Corporation pursuant to stock option plans or restricted stock plans or agreements if such grants of options or restricted stock are approved by the Board of Directors, including the approval of a majority of the Preferred Directors (including Common shares issued pursuant to options granted prior to the date on which this Amended and Restated Certificate of Incorporation is filed with the Secretary of State of Delaware);
(C) Common shares issued pursuant to a Qualified Public Offering;
(D) Common shares issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding as of the date this Amended and Restated Certificate of Incorporation is filed with the Delaware Secretary of State;
(E) Common shares issued in connection with bona fide business acquisitions by the Corporation, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise, if approved by the Board of Directors, including the approval of a majority of the Preferred Directors;
(F) Common shares issued or deemed issued pursuant to subparagraph 4(c)(i)(E) as a result of a decrease in the Series A Conversion Price or Series B Conversion Price resulting from the operation of paragraph 4(c);
(G) Common shares issued to financial institutions or lessors in connection with commercial credit arrangements, equipment financings, commercial property lease transactions or similar transactions that are approved by the Board of Directors, including the approval of a majority of the Preferred Directors, and are primarily for other than equity financing purposes;
(H) Common shares issued or issuable to an entity as a component of any bona fide commercial business relationship with such entity for the purpose of (i) joint venture, technology licensing or development activities, (ii) distribution, supply or manufacture of the Corporation's products or services or (iii) any other arrangements involving corporate partners that are primarily for purposes other than equity financing, the terms of which business relationship with such entity are approved by the Board of Directors, including the approval of a majority of the Preferred Directors;
(I) Common shares issued upon the conversion of Series A Preferred or Series B Preferred; or
(J) Common shares issued or issuable with the affirmative vote of at least a majority of the then outstanding shares of Series Preferred.
(d) Adjustment to Conversion Price for Stock Dividends and Subdivisions.
(i) Subdivision or Combination of Common. In case the Corporation shall at any time subdivide (by any stock split, stock dividend, distribution of Common shares or other securities, rights to obtain additional Common shares or otherwise) its outstanding shares of Common into a greater number of shares, without a corresponding and proportional subdivision of its outstanding Series Preferred, the Series A Conversion Price and Series B Conversion Price in effect immediately prior to such subdivision shall be proportionately reduced, and, conversely, in case the outstanding shares of Common shall be combined into a smaller number of shares, without a corresponding and proportional combination of its outstanding Series Preferred, the Series A Conversion Price and Series B Conversion Price in effect immediately prior to such combination shall be proportionately increased. In the case of any such subdivision or combination, no further adjustment shall be made pursuant to this subparagraph 4(d) by reason thereof.
(ii) Subdivision or Combination of Preferred. In case the Corporation shall at any time subdivide (by any stock split, stock dividend, distribution of Common shares or other securities, rights to obtain additional Common shares or otherwise) its outstanding shares of Series Preferred into a greater number of shares, without a corresponding and proportional subdivision of its outstanding Common, the Series A Conversion Price and Series B Conversion Price in effect immediately prior to such subdivision shall be proportionately increased, and, conversely, in case the outstanding shares of Series Preferred shall be combined into a smaller number of shares, without a corresponding and proportional combination of its outstanding Common, the Series A Conversion Price and Series B Conversion Price in effect immediately prior to such combination shall be proportionately decreased. In the case of any such subdivision or combination, no further adjustment shall be made pursuant to this subparagraph 4(d) by reason thereof.
(iii) Other Distributions. In the event the Corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in subparagraph 4(d)(i) or
4(d)(ii), then, in each such case for the purpose of this subparagraph
4(d)(iii), the holders of the Series Preferred shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of Common shares of the Corporation into which their shares of Series
Preferred are convertible as of the record date fixed for the determination of
the holders of Common shares of the Corporation entitled to receive such
distribution.
(iv) Reorganization or Reclassification. If any capital reorganization or reclassification of the capital stock of the Corporation shall be effected in such a way that holders of Common shall be entitled to receive stock, securities or assets with respect to or in exchange for Common, then, as a condition of such reorganization or reclassification, lawful and adequate provisions shall be made whereby each holder of Series Preferred shall thereupon have the right to receive, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common which the holders would have otherwise been entitled to receive, 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 equal to the number of shares of such Common immediately theretofore receivable upon such conversion had such reorganization or reclassification not taken place, and in any such case 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 and Series B Conversion Price) shall thereafter be applicable, as nearly as may be possible, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise of such conversion rights.
(e) Special Conversion Price Adjustment of Series B Preferred.
(i) If the Corporation's Actual EBITDA (as defined below) during the period beginning April 1, 2006 and ending March 31, 2007 (the "APPLICABLE PERIOD") is less than the Planned EBITDA (as defined below) during the Applicable Period, then the original Series B Conversion Price on the Purchase Date shall be deemed to have been: (1) $4.8909 multiplied by (2) the EBITDA Ratio (as defined below) (retroactively to the Series B Original
Issue Date and thereafter applying any subsequent adjustments to the Series B Conversion Price that may have occurred after the Purchase Date pursuant to subsection 4(c)) (the "NEW SERIES B CONVERSION PRICE"), provided however that in no event will the Series B Conversion Price be decreased below $3.6681 as a result of this adjustment.
"ACTUAL EBITDA" means the Corporation's consolidated earnings from operations before interest, taxes, depreciation and amortization, determined by the firm of independent certified public accountants engaged by the Corporation for purposes of its own audit in accordance with U.S. generally accepted accounting principles as consistently applied by the Corporation in accordance with past practices; however, for the avoidance of doubt, Actual EBITDA shall be computed excluding any Corporation accounting, legal or financial advisory fees or expenses associated with the transactions contemplated by that certain. Series B Convertible Preferred Stock Purchase Agreement dated May 18, 2006, as amended, whether or not such fees or expenses are capitalized, or any Non-Cash Compensation Expenses.
"PLANNED EBITDA" during the Applicable Period means $23,369,453, excluding any Corporation accounting, legal or financial advisory fees or expenses associated with the transactions contemplated by that certain Series B Convertible Preferred Stock Purchase Agreement dated on or about May 18, 2006, whether or not such fees or expenses are capitalized, or any Non-Cash Compensation Expenses, provided however that Planned EBITDA will be decreased (and an amendment to this Amended and Restated Certificate of Incorporation will be promptly filed to reflect such decrease) if and to the extent that the Board of Directors approves a change in the Corporation's operating plan that results in a decrease in Planned EBITDA for any portion of the Applicable Period after the date on which this Amended and Restated Certificate of Incorporation is filed with the Secretary of State of Delaware.
"EBITDA RATIO" means the quotient obtained by dividing Actual EBITDA (as defined above, together with all exclusions set forth above) by Planned EBITDA (as defined above, together with all exclusions set forth above).
"NON-CASH COMPENSATION EXPENSES" means expenses relating to stock options and the like, but excluding any non-cash consideration, including without limitation, promissory notes or shares of the Company's securities, given in lieu of compensation that would otherwise be payable for a defined amount of cash.
(ii) As soon as practicable after the final determination of the EBITDA Ratio, the Board of Directors shall take all such actions necessary (including seeking all necessary stockholder approvals) to file an Amended and Restated Certificate of Incorporation that amends Article IV A, Section 4(a)(l) to include the New Series B Conversion Price as of such filing.
(f) No Impairment. The Corporation will not, without the appropriate vote of the stockholders under the General Corporation Law of Delaware or subparagraph 7 hereof, by amendment of its Amended and Restated Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this subparagraph 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series Preferred against impairment.
(g) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price or Series B Conversion Price pursuant to this subparagraph 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred or Series B Preferred, as applicable, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, the Series A Conversion Price or Series B Conversion Price, as applicable, at the time in effect and the number of shares of Common and the amount, if any, of other property which at the time would be received upon the conversion of such holder's Series Preferred. The Corporation shall, upon the written request at any time of any holder of Series Preferred, furnish or cause to be furnished to such holder a like certificate setting forth (i) all such adjustments and readjustments, (ii) the Series A Conversion Price or Series B Conversion Price, as applicable, at the time in effect, and (iii) the number of shares of Common and the amount, if any, of other property which at the time would be received upon the conversion of such holder's Series Preferred.
(h) Notices of Record Date. Subject to Section 8 below, in the event that the Corporation shall propose at any time after the Purchase Date, other than with respect to the Self-Tender:
(i) to declare any dividend or distribution upon the Common, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus, other than distributions to stockholders in connection with the repurchase of shares of former employees or consultants;
(ii) to offer for subscription to the holders of any class or series of its capital stock any additional shares of stock of any class or series or any other rights;
(iii) to effect any reclassification or recapitalization; or
(iv) to merge or consolidate with or into any other corporation or entity, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the holders of the Series Preferred:
(A) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in clauses (iii) and (iv) above; and
(B) in the case of the matters referred to in clauses (iii)
and (iv) above, at least 20 days' prior written notice of the date when the same
shall take place (and
specifying the date on which the holders of Common shall be entitled to exchange their Common for securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage prepaid, addressed to the holders of Series Preferred at the address for each such holder as shown on the books of the Corporation. Notwithstanding the foregoing, the notices requited under this subparagraph (g) can be waived, either retroactively or prospectively, by the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of Series Preferred voting as a single class, and not as separate series, on an as-converted basis, on behalf of all holders of Series Preferred.
(i) Reservation of Shares Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued Common shares, solely for the purpose of effecting the conversion of the Preferred shares, such number of its Common shares as shall from time to time be sufficient to effect the conversion of all outstanding Preferred shares; and if at any time the number of authorized but unissued Common shares shall not be sufficient to effect the conversion of all then outstanding Preferred shares, in addition to such other remedies as shall be available to the holder of such Preferred shares, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common shares to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to these Articles of Incorporation.
5. Voting Rights.
(a) Except as otherwise provided herein or required by law, each share of Series Preferred issued and outstanding shall have the number of votes equal to the number of Common shares into which the Series Preferred is convertible, as adjusted from time to time pursuant to subparagraph 4 hereof. Except as otherwise provided herein or required by law, holders of Series Preferred shall be entitled to vote on all matters as to which holders of Common shall be entitled to vote, in the same manner and with the same effect as the holders of Common, voting together with the holders of Common as one class.
(b) The Board of Directors shall consist of seven (7) members. At each meeting of stockholders at which members of the Board of Directors are to be elected, or whenever members of the Board of Directors are to be elected by written consent of the stockholders, (i) the holders of the Series Preferred, voting together as a single class and not as separate series and on an as-converted basis, shall be entitled to elect four (4) members of the Board of Directors (the "PREFERRED DIRECTORS") and (ii) the holders of shares of Common, voting as a separate class, shall be entitled to elect three members of the Board of Directors, one of whom shall be the then-current Chief Executive Officer of the Corporation (the "COMMON DIRECTORS"). In the case of any vacancy (other than a vacancy caused by removal) in the office of a director occurring among the directors elected by the holders of a class of stock pursuant to this subparagraph 5(b), the affirmative vote of the holders of a majority of the shares of that class may elect a successor or successors to hold office for the unexpired term of the director or directors whose place or places shall be vacant. Any director who shall have been elected by the holders of a class of stock may be removed during the aforesaid term of office, either with or
without cause, by the affirmative vote of the holders of the shares of the class of stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class of stock represented at a meeting or pursuant to unanimous written consent. Notwithstanding the foregoing, any director may be removed for cause in accordance with Delaware General Corporation Law.
6. No Reissuance of Series Preferred. No share or shares of Series Preferred acquired by the Corporation by reason of purchase, conversion, redemption or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
7. Protective Provisions. Except as otherwise required by law or this Amended and Restated Certificate of Incorporation, so long as 500,000 shares of Series Preferred shall be outstanding, the Corporation shall not without first obtaining the affirmative vote or written consent of the holders of not less than a majority of such outstanding shares of Series Preferred, voting as a single class, and not as separate series, on an as-converted basis:
(a) Repurchase, redeem, acquire or retire any shares of Common or Preferred, except (i) at or below the initial cost, upon termination of and from employees, officers, directors or consultants of this Corporation pursuant to the terms of stock option or incentive stock agreements or plans approved by the Board of Directors, (ii) upon the exercise of the Corporation's right of first refusal upon a transfer of such shares, (iii) the redemption of Series B Preferred in accordance with subparagraph 3 hereof, or (iv) any repurchase, redemption or other acquisition from the holders of shares of Common or Series A Preferred or options or other securities exercisable for or convertible into shares of Common of up to an aggregate of $100,000,000 and at a price per share not to exceed $4.8909 (determined on an as-converted and as exercised to Common Stock basis and as adjusted to reflect subdivisions and combinations of shares and stock dividends) that occurs prior to or on July 31, 2006 (the "SELF-TENDER");
(b) increase or decrease (other than by conversion or in accordance with the redemption provisions of this Amended and Restated Certificate of incorporation) the authorized number of shares of Series A Preferred or Series B Preferred;
(c) authorize or create, by reclassification, merger or otherwise, any new class or series of shares having rights, preferences or privileges senior to, or on parity with any series of Preferred Stock;
(d) change the authorized number of the Board of Directors;
(e) liquidate or wind up the Corporation;
(f) consummate a merger, corporate reorganization, or any transaction or series of transactions in which more than 25% of the assets of the Corporation (measured by either book value in accordance with generally accepted accounting principles consistently applied or fair market value determined in the reasonable good faith judgment of the Board of Directors) are sold or transferred, or in which transaction or series of transactions the Corporation's stockholders immediately prior to such transaction or series of transactions own immediately
after such transaction or series of transactions less than a majority of the equity securities of the surviving corporation or its parent (by virtue of the securities of the Corporation outstanding immediately prior to such transaction), or enter into any agreement for the purpose of any of the foregoing;
(g) alter or change the rights, preferences or privileges of the Series A Preferred or Series B Preferred;
(h) amend the Corporation's Certificate of Incorporation or Bylaws; or
(i) declare or pay any dividend with respect to the Common shares or Preferred Stock of the Corporation.
8. Matters Requiring Approval of the Preferred Directors. So long as 500,000 shares of Series Preferred shall be outstanding, this Corporation shall not, without obtaining the approval of the Board of Directors, which approval shall include the affirmative vote or written consent of a majority of the Preferred Directors:
(a) make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership or other entity unless it is wholly owned by the Corporation;
(b) make any loan or advance to any person, including any employee or director, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors;
(c) guarantee any indebtedness, except for trade accounts of the Corporation or any subsidiary arising in the ordinary course of business;
(d) encumber or grant a security interest in all or substantially all of the assets of the Corporation or incur any aggregate indebtedness in excess of $250,000 that is not already included in a budget approved by the Board of Directors, other than trade credit incurred in the ordinary course of business;
(e) enter into or be a party to any transaction with any director, officer or employee of the Corporation or any "associate" or "affiliate" (as such terms are defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934) of any such person;
(f) hire, fire or change the compensation of the executive officers of the Corporation, including approving any option plans; or
(g) sell, transfer, license, pledge or encumber technology or intellectual property, other than licenses granted in the ordinary course of business;
(h) acquire a material amount of assets through a merger or purchase of all or substantially all of the assets or capital stock of another entity;
(i) increase the number of shares authorized for issuance under any existing stock or option plan or create any new stock or option plan; or
(j) effect the Corporation's initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common shares for the account of the Corporation to the public.
9. Self-Tender. No provision contained in this Amended and Restated Certificate of Incorporation of the Corporation shall require the Corporation to give notice of, obtain any consent or waiver for, or prevent or in any way restrict the Corporation from entering into or offering to enter into or consummating the Self-Tender.
B. Common Stock.
1. Dividend Rights. Subject to the prior rights of the Series Preferred, the holders of Common shall be entitled to receive, when, as and if declared by the Board of Directors, out of any assets of this Corporation legally available therefor, such dividends as may be declared from time to time by the Board of Directors.
2. Liquidation. Upon the liquidation, dissolution or winding up of this Corporation, the assets of this Corporation shall be distributed as provided in subparagraph 2 of paragraph A of this Article IV.
3. Voting Rights. The holder of each share of Common shall have the right to one vote, and shall be entitled to notice of any stockholders' meeting in accordance with the Bylaws of this Corporation, and shall be entitled to vote upon such matters in such manner as may be provided by law.
4. Adjustment in Authorized Common Stock. 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 to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.
5. Protective Provisions. Except as otherwise required by law or this Amended and Restated Certificate of Incorporation, the Corporation shall not enter into, or agree to enter into, any Series B Directed Liquidation (as defined below), or, until the final determination of the EBITDA Ratio, amend the provisions of Article IV(A) Section 4(e) without first obtaining the affirmative vote or written consent of either (a) a majority of the Common Directors, or (b) the holders of not less than a majority of the outstanding shares of Common, voting as a single class (provided however that any shares of Common that are held by a Series B Stockholder (resulting from the conversion of shares of Series B Preferred or otherwise) shall not be included in the numerator or denominator in calculating such requisite majority of the outstanding Common shares).
The term "SERIES B DIRECTED LIQUIDATION" shall mean: (1) any Liquidation as described in subsection 2(d)(i) or 2(d)(ii) between (a) the Corporation or any subsidiary of the Corporation and (b) any individual, corporation or entity who or which (i) is at such time or was at any time
in the six month period prior to the Liquidation the record or beneficial owner
of any shares of Series B Preferred (a "SERIES B STOCKHOLDER") or (ii) is at
such time or was at any time in the six month period prior to the Liquidation an
Affiliate (as defined below) or Associate (as defined below) of a Series B
Stockholder, (2) any equity financing, convertible debt financing,
reclassification of securities or recapitalization or other similar transaction
or series of related transactions that would have the effect, either directly or
indirectly, of increasing the proportionate ownership interest of the Series B
Stockholders after the Purchase Date; provided, however, that if the material
terms of such equity financing, convertible debt financing, reclassification,
recapitalization or other similar transaction or series of related transactions
have been negotiated in good faith by each of the Corporation and an independent
third party (or syndicate of independent third parties) who is not or was not at
any time in the six month period prior to such transaction a Series B
Stockholder (or an Affiliate or Associate thereof) and such independent third
party (or syndicate of independent third parties) provides at least 75% of the
consideration to be so delivered in such transaction, not including
consideration that is being delivered by any stockholder, including a Series B
Stockholder, pursuant to the exercise of a preexisting right of first offer or
other similar pre-emptive right under an agreement with the Company (provided
that such agreement has been duly approved by the Board of Directors, including
the Common Directors, if applicable, in accordance with the provisions of this
Section B(5)), then the consent of the Common Directors or holders of
outstanding shares of Common as provided pursuant to the provisions of this
Section B(5) shall not be required, or (3) any agreement, contract or other
arrangement providing for any of the transactions described in this definition
of Series B Directed Liquidation.
The terms "AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
ARTICLE V
The Board of Directors of the Corporation is expressly authorized to make, alter or repeal Bylaws of the Corporation consistent with the Protective Provisions set forth in Article IV(A)(7).
ARTICLE VI
Elections of directors need not be by written ballot unless otherwise provided in the Bylaws of the Corporation.
ARTICLE VII
(A) To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director
(B) The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he, his testator or intestate is or was a director or officer of the Corporation or any predecessor of the Corporation, or serves or served
at any other enterprise as a director or officer at the request of the Corporation or any predecessor to the Corporation.
(C) Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of the Corporation's Certificate of Incorporation inconsistent with this Article VII, shall eliminate or reduce the effect of this Article VII in respect of any matter occurring, or any action or proceeding accruing or arising or that, but for this Article VII, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision."
* * *
The foregoing Amended and Restated Certificate of Incorporation has been duly adopted by this corporation's Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the Delaware General Corporation Law.
Executed at Tempe, Arizona, on July 11, 2006.
/s/ William H. Rinehart ---------------------------------------- William H. Rinehart, President |
Exhibit 3.2
LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Limelight Networks, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
A. The original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on August 20th, 2003.
B. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL"), and has been duly approved by the written consent of the stockholders of the corporation in accordance with Section 228 of the DGCL.
C. The Certificate of Incorporation of the corporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
The name of the corporation is Limelight Networks, Inc.
ARTICLE II
The address of the corporation's registered office in the State of Delaware is 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.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
ARTICLE IV
The corporation shall have authority to issue shares as follows:
100,000,000 shares of Common Stock, par value $0.001 per share. Each share of Common Stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of stockholders.
5,000,000 shares of Preferred Stock, par value $0.001 per share, which may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors). The Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.
ARTICLE V
The number of directors that constitutes the entire Board of Directors of the corporation shall be fixed by, or in the manner provided in, the Bylaws of the corporation. At each annual meeting of stockholders, directors of the corporation shall be elected to hold office until the expiration of the term for which they are elected and until their successors have been duly elected and qualified or until their earlier resignation or removal; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the DGCL.
Effective upon the effective date of the corporation's initial public offering (the "EFFECTIVE DATE"), the directors of the corporation shall be divided into three classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The Board of Directors may assign members of the Board of Directors already in office to such classes at the time such classification becomes effective. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of the stockholders following the Effective Date, the term of office of the initial Class II directors shall expire at the second annual meeting of the stockholders following the Effective Date and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders following the Effective Date. At each annual meeting of stockholders, commencing with the first regularly-scheduled annual meeting of stockholders following the Effective Date, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified.
Notwithstanding the foregoing provisions of this Article, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. If the number of directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Any director may be removed from office by the stockholders of the corporation only for cause. Vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, or by a sole remaining director, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall be duly elected and qualified.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the corporation is expressly authorized to adopt, amend or repeal the Bylaws of the corporation.
ARTICLE VII
Elections of directors need not be by written ballot unless the Bylaws of the corporation shall so provide.
ARTICLE VIII
No action shall be taken by the stockholders of the corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent. The affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the then outstanding voting securities of the corporation, voting together as a single class, shall be required for the amendment, repeal or modification of the provisions of Article V, Article VI or Article VIII of this Certificate of Incorporation or Sections 2.1 (Place of Meetings), 2.2 (Annual Meeting), 2.3 (Special Meeting), 2.4 (Advance Notice Procedures; Notice of Stockholders' Meetings), 2.9 (Voting), or 3.2 (Number of Directors) of the corporation's Bylaws.
ARTICLE IX
To the fullest extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
The corporation shall indemnify, to the fullest extent permitted by applicable law, any director or officer of the corporation 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 (a "PROCEEDING") by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding. The corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board.
The corporation shall have the power to indemnify, to the extent permitted by the DGCL, as it presently exists or may hereafter be amended from time to time, any employee or agent of the corporation who was or is a party or is threatened to be made a party to any Proceeding by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.
Neither any amendment nor repeal of this Article IX, nor the adoption of any provision of this corporation's Certificate of Incorporation inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any matter occurring, or any cause of action, suit or proceeding accruing or arising or that, but for this Article IX, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE X
Except as provided in Article IX above, the corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, Limelight Networks, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by the President and Chief Executive Officer of the corporation on this ____ day of _________ 2007.
Exhibit 3.3
AMENDED AND RESTATED
BYLAWS
OF
LIMELIGHT NETWORKS, INC.
ADOPTED SEPTEMBER 13, 2006
TABLE OF CONTENTS
PAGE ---- ARTICLE I -- MEETINGS OF STOCKHOLDERS.................................... 1 1.1 PLACE OF MEETINGS................................................ 1 1.2 ANNUAL MEETING................................................... 1 1.3 SPECIAL MEETING.................................................. 1 1.4 NOTICE OF STOCKHOLDERS' MEETINGS................................. 2 1.5 QUORUM........................................................... 2 1.6 ADJOURNED MEETING; NOTICE........................................ 2 1.7 CONDUCT OF BUSINESS.............................................. 2 1.8 VOTING........................................................... 2 1.9 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.......... 3 1.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS...... 4 1.11 PROXIES.......................................................... 5 1.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE............................ 5 ARTICLE II -- DIRECTORS.................................................. 5 2.1 POWERS........................................................... 5 2.2 NUMBER OF DIRECTORS.............................................. 5 2.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.......... 6 2.4 RESIGNATION AND VACANCIES........................................ 6 2.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE......................... 7 2.6 CONDUCT OF BUSINESS.............................................. 7 2.7 REGULAR MEETINGS................................................. 7 2.8 SPECIAL MEETINGS; NOTICE......................................... 7 2.9 QUORUM; VOTING................................................... 8 2.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................ 8 2.11 FEES AND COMPENSATION OF DIRECTORS............................... 8 2.12 REMOVAL OF DIRECTORS............................................. 8 ARTICLE III -- COMMITTEES................................................ 8 3.1 COMMITTEES OF DIRECTORS.......................................... 8 3.2 COMMITTEE MINUTES................................................ 9 3.3 MEETINGS AND ACTIONS OF COMMITTEES............................... 9 3.4 SUBCOMMITTEES.................................................... 9 ARTICLE IV -- OFFICERS................................................... 10 4.1 OFFICERS......................................................... 10 4.2 APPOINTMENT OF OFFICERS.......................................... 10 4.3 SUBORDINATE OFFICERS............................................. 10 4.4 REMOVAL AND RESIGNATION OF OFFICERS.............................. 10 4.5 VACANCIES IN OFFICES............................................. 10 |
TABLE OF CONTENTS
(CONTINUED)
Page ---- 4.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................... 10 4.7 AUTHORITY AND DUTIES OF OFFICERS................................. 10 ARTICLE V -- INDEMNIFICATION............................................. 11 5.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS...................................................... 11 5.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE COMPANY............................................. 11 5.3 SUCCESSFUL DEFENSE............................................... 11 5.4 INDEMNIFICATION OF OTHERS........................................ 12 5.5 ADVANCED PAYMENT OF EXPENSES..................................... 12 5.6 LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF EXPENSES........ 12 5.7 DETERMINATION; CLAIM............................................. 13 5.8 NON-EXCLUSIVITY OF RIGHTS........................................ 13 5.9 INSURANCE........................................................ 13 5.10 SURVIVAL......................................................... 13 5.11 EFFECT OF REPEAL OR MODIFICATION................................. 13 5.12 CERTAIN DEFINITIONS.............................................. 13 ARTICLE VI -- STOCK...................................................... 14 6.1 STOCK CERTIFICATES; PARTLY PAID SHARES........................... 14 6.2 SPECIAL DESIGNATION ON CERTIFICATES.............................. 14 6.3 LOST CERTIFICATES................................................ 14 6.4 DIVIDENDS........................................................ 15 6.5 STOCK TRANSFER AGREEMENTS........................................ 15 6.6 REGISTERED STOCKHOLDERS.......................................... 15 6.7 TRANSFERS 15 ARTICLE VII -- MANNER OF GIVING NOTICE AND WAIVER........................ 15 7.1 NOTICE OF STOCKHOLDER MEETINGS................................... 15 7.2 NOTICE BY ELECTRONIC TRANSMISSION................................ 16 7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS........................ 16 7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL............. 17 7.5 WAIVER OF NOTICE................................................. 17 ARTICLE VIII -- GENERAL MATTERS.......................................... 17 8.1 FISCAL YEAR...................................................... 17 8.2 SEAL............................................................. 17 8.3 ANNUAL REPORT.................................................... 17 8.4 INTERESTED DIRECTORS; QUORUM..................................... 18 8.5 CONSTRUCTION; DEFINITIONS........................................ 18 |
TABLE OF CONTENTS
(CONTINUED)
Page ---- ARTICLE IX -- AMENDMENTS................................................. 18 |
BYLAWS
ARTICLE I -- MEETINGS OF STOCKHOLDERS
1.1 PLACE OF MEETINGS. Meetings of stockholders of Limelight Networks, Inc. (the "COMPANY") shall be held at any place, within or outside the State of Delaware, determined by the Company's board of directors (the "BOARD"). The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the "DGCL"). In the absence of any such designation or determination, stockholders' meetings shall be held at the Company's principal executive office.
1.2 ANNUAL MEETING. An annual meeting of stockholders shall be held for the election of directors at such date and time as may be designated by resolution of the Board from time to time. Any other proper business may be transacted at the annual meeting. The Company shall not be required to hold an annual meeting of stockholders, provided that (i) the stockholders are permitted to act by written consent under the Company's certificate of incorporation and these bylaws, (ii) the stockholders take action by written consent to elect directors and (iii) the stockholders unanimously consent to such action or, if such consent is less than unanimous, all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.
1.3 SPECIAL MEETING. A special meeting of the stockholders may be called at any time by the Board, Chairperson of the Board, Chief Executive Officer or President (in the absence of a Chief Executive Officer) or by one or more stockholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.
If any person(s) other than the Board calls a special meeting, the request shall:
(i) be in writing;
(ii) specify the time of such meeting and the general nature of the business proposed to be transacted; and
(iii) be delivered personally or sent by registered mail or by facsimile transmission to the Chairperson of the Board, the Chief Executive Officer, the President (in the absence of a Chief Executive Officer) or the Secretary of the Company.
The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting. No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this SECTION 1.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.
1.4 NOTICE OF STOCKHOLDERS' MEETINGS. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting.
1.5 QUORUM. Except as otherwise provided by law, the certificate of incorporation or these bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, in the manner provided in SECTION 1.6, until a quorum is present or represented.
1.6 ADJOURNED MEETING; NOTICE. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
1.7 CONDUCT OF BUSINESS. Meetings of stockholders shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by the Chief Executive Officer, or in the absence of the foregoing persons by the President, or in the absence of the foregoing persons by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.
1.8 VOTING. The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of SECTION 1.10 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of capital stock held by such stockholder which has voting power upon the matter in question. Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. If authorized by the Board, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission (as defined in SECTION 7.2 of these bylaws), provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.
Except as otherwise required by law, the certificate of incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the certificate of incorporation or these bylaws, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
1.9 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise provided in the certificate of incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
An electronic transmission (as defined in SECTION 7.2) consenting to an action to be taken and transmitted by a stockholder or proxy holder, or by a person or persons authorized to act for a stockholder or proxy holder, shall be deemed to be written, signed and dated for purposes of this section, provided that any such electronic transmission sets forth or is delivered with information from which the Company can determine (i) that the electronic transmission was transmitted by the stockholder or proxy holder or by a person or persons authorized to act for the stockholder or proxy holder and (ii) the date on which such stockholder or proxy holder or authorized person or persons transmitted such electronic transmission.
In the event that the Board shall have instructed the officers of the Company to solicit the vote or written consent of the stockholders of the Company, an electronic transmission of a stockholder written consent given pursuant to such solicitation may be delivered to the Secretary or the President of the Company or to a person designated by the Secretary or the President. The Secretary or the President of the Company or a designee of the Secretary or the President shall cause any such written consent by electronic transmission to be reproduced in paper form and inserted into the corporate records.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Company as provided in Section 228 of the DGCL. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the DGCL, if such action had been voted on by stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.
1.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date:
(i) in the case of determination of stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting;
(ii) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board; and
(iii) in the case of determination of stockholders for any other action, shall not be more than 60 days prior to such other action.
If no record date is fixed by the Board:
(i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;
(ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company in accordance with applicable law, or, if prior action by the Board is required by law, shall be at the close of business on the day on which the Board adopts the resolution taking such prior action; and
(iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided that the Board may fix a new record date for the adjourned meeting.
1.11 PROXIES. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.
1.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge of the stock ledger of the Company shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Company shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Company's principal place of business. In the event that the Company determines to make the list available on an electronic network, the Company may take reasonable steps to ensure that such information is available only to stockholders of the Company. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.
ARTICLE II -- DIRECTORS
2.1 POWERS. The business and affairs of the Company shall be managed by or under the direction of the Board, except as may be otherwise provided in the DGCL or the certificate of incorporation.
2.2 NUMBER OF DIRECTORS. The Board shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the Board. No reduction of
the authorized number of directors shall have the effect of removing any director before that director's term of office expires.
2.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. Except as provided in SECTION 2.4 of these bylaws, and subject to SECTIONS 1.2 and 1.9 of these bylaws, directors shall be elected at each annual meeting of stockholders. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors. Each director shall hold office until such director's successor is elected and qualified or until such director's earlier death, resignation or removal.
2.4 RESIGNATION AND VACANCIES. Any director may resign at any time upon notice given in writing or by electronic transmission to the Company. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.
Unless otherwise provided in the certificate of incorporation or these bylaws:
(i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
Company should have no directors in office, then any officer or any stockholder
or an executor, administrator, trustee or guardian of a stockholder, or other
fiduciary entrusted with like responsibility for the person or estate of a
stockholder, may call a special meeting of stockholders in accordance with the
provisions of the certificate of incorporation or these bylaws, or may apply to
the Court of Chancery for a decree summarily ordering an election as provided in
Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to
replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office and until such director's successor is elected and qualified, or until such director's earlier death, resignation or removal.
2.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
2.6 CONDUCT OF BUSINESS. Meetings of the Board shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.
2.7 REGULAR MEETINGS. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.
2.8 SPECIAL MEETINGS; NOTICE. Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the President, the Secretary or any two directors.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile; or
(iv) sent by electronic mail,
directed to each director at that director's address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Company's records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the
holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Company's principal executive office) nor the purpose of the meeting.
2.9 QUORUM; VOTING. At all meetings of the Board, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.
If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.
2.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
2.11 FEES AND COMPENSATION OF DIRECTORS. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.
2.12 REMOVAL OF DIRECTORS. Unless otherwise restricted by statute, the certificate of incorporation or these bylaws, any director or the entire Board maybe removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office.
ARTICLE III -- COMMITTEES
3.1 COMMITTEES OF DIRECTORS. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Company. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not
such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Company.
3.2 COMMITTEE MINUTES. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
3.3 MEETINGS AND ACTIONS OF COMMITTEES. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) SECTION 2.5 (Place of Meetings; Meetings by Telephone);
(ii) SECTION 2.7 (Regular Meetings);
(iii) SECTION 2.8 (Special Meetings; Notice);
(iv) SECTION 2.9 (Quorum; Voting);
(v) SECTION 2.10 (Board Action by Written Consent Without a Meeting); and
(vi) SECTION 7.5 (Waiver of Notice)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board; and
(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
3.4 SUBCOMMITTEES. Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE IV -- OFFICERS
4.1 OFFICERS. The officers of the Company shall be a President and a Secretary. The Company may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Executive Officer, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, one or more Assistant Treasurers, one or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.
4.2 APPOINTMENT OF OFFICERS. The Board shall appoint the officers of the Company, except such officers as may be appointed in accordance with the provisions of SECTION 4.3 of these bylaws.
4.3 SUBORDINATE OFFICERS. The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Company may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
4.4 REMOVAL AND RESIGNATION OF OFFICERS. Any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Company. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.
4.5 VACANCIES IN OFFICES. Any vacancy occurring in any office of the Company shall be filled by the Board or as provided in SECTION 4.3.
4.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Unless otherwise directed by the Board, the President or any other person authorized by the Board or the President is authorized to vote, represent and exercise on behalf of the Company all rights incident to any and all shares of any other corporation or corporations standing in the name of the Company. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
4.7 AUTHORITY AND DUTIES OF OFFICERS. Except as otherwise provided in these bylaws, the officers of the Company shall have such powers and duties in the management of the Company as may be designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
ARTICLE V -- INDEMNIFICATION
5.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS. Subject to the other provisions of this ARTICLE V, the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "PROCEEDING") (other than an action by or in the right of the Company) by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any 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 such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful.
5.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE COMPANY. Subject to the other provisions of this ARTICLE V, the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company; 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 Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
5.3 SUCCESSFUL DEFENSE. To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described in SECTION 5.1 or SECTION 5.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
5.4 INDEMNIFICATION OF OTHERS. Subject to the other provisions of this ARTICLE V, the Company shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The Board shall have the power to delegate to such person or persons the determination of whether employees or agents shall be indemnified.
5.5 ADVANCED PAYMENT OF EXPENSES. Expenses (including attorneys' fees) incurred by an officer or director of the Company in defending any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this ARTICLE V or the DGCL. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate.
Notwithstanding the foregoing, unless otherwise determined pursuant to
SECTION 5.8, no advance shall be made by the Company to an officer of the
Company (except by reason of the fact that such officer is or was a director of
the Company, in which event this paragraph shall not apply) in any Proceeding if
a determination is reasonably and promptly made (i) by a majority vote of the
directors who are not parties to such Proceeding, even though less than a
quorum, or (ii) by a committee of such directors designated by majority vote of
such directors, even though less than a quorum, or (iii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, that facts known to the decision-making party at the time such
determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Company.
5.6 LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. Subject to the requirements in SECTION 5.3 and the DGCL, the Company shall not be required to provide indemnification or, with respect to clauses (i), (iii) and (iv) below, advance expenses to any person pursuant to this ARTICLE V:
(i) in connection with any Proceeding (or part thereof) initiated by such person except (i) as otherwise required by law, (ii) in specific cases if the Proceeding was authorized by the Board, or (iii) as is required to be made under SECTION 5.7;
(ii) in connection with any Proceeding (or part thereof) against such person providing for an accounting or disgorgement of profits pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state or local statutory law or common law;
(iii) for amounts for which payment has actually been made to or on behalf of such person under any statute, insurance policy or indemnity provision, except with respect to any excess beyond the amount paid; or
(iv) if prohibited by applicable law.
5.7 DETERMINATION; CLAIM. If a claim for indemnification or advancement of expenses under this ARTICLE V is not paid in full within 60 days after a written claim therefor has been received by the Company, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such suit, the Company shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.
5.8 NON-EXCLUSIVITY OF RIGHTS. The indemnification and advancement of expenses provided by, or granted pursuant to, this ARTICLE V shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. The Company is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
5.9 INSURANCE. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Company would have the power to indemnify such person against such liability under the provisions of the DGCL.
5.10 SURVIVAL. The rights to indemnification and advancement of expenses conferred by this ARTICLE V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
5.11 EFFECT OF REPEAL OR MODIFICATION. Any repeal or modification of this ARTICLE V shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
5.12 CERTAIN DEFINITIONS. For purposes of this ARTICLE V, references to the "COMPANY" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this ARTICLE V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this ARTICLE V, references to "OTHER ENTERPRISES" shall include employee benefit plans; references to "FINES" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "SERVING AT THE REQUEST OF THE COMPANY" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "NOT OPPOSED TO THE BEST INTERESTS OF THE COMPANY" as referred to in this ARTICLE V.
ARTICLE VI -- STOCK
6.1 STOCK CERTIFICATES; PARTLY PAID SHARES. The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Company. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Company by the Chairperson of the Board or Vice-Chairperson of the Board, or the President or a Vice- President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Company representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The Company shall not have power to issue a certificate in bearer form.
The Company may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Company in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Company shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 SPECIAL DESIGNATION ON CERTIFICATES. If the Company is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Company shall issue to represent such class or series of stock; provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Company shall issue to represent such class or series of stock a statement that the Company will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
6.3 LOST CERTIFICATES. Except as provided in this SECTION 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Company
and cancelled at the same time. The Company may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Company may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the Company a bond sufficient to indemnify it against any claim that maybe made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
6.4 DIVIDENDS. The Board, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the Company's capital stock. Dividends may be paid in cash, in property, or in shares of the Company's capital stock, subject to the provisions of the certificate of incorporation.
The Board may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.
6.5 STOCK TRANSFER AGREEMENTS. The Company shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Company to restrict the transfer of shares of stock of the Company of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
6.6 REGISTERED STOCKHOLDERS. The Company:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
6.7 TRANSFERS. Transfers of record of shares of stock of the Company shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and upon the surrender of a certificate or certificates for a like number of shares, properly endorsed.
ARTICLE VII -- MANNER OF GIVING NOTICE AND WAIVER
7.1 NOTICE OF STOCKHOLDER MEETINGS. Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the Company's records. An affidavit of the Secretary or an Assistant Secretary of the Company or of the transfer agent or other agent of the Company that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 NOTICE BY ELECTRONIC TRANSMISSION. Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Company under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Company. Any such consent shall be deemed revoked if:
(i) the Company is unable to deliver by electronic transmission two consecutive notices given by the Company in accordance with such consent; and
(ii) such inability becomes known to the Secretary or an Assistant Secretary of the Company or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iv) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Company that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
An "ELECTRONIC TRANSMISSION" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Notice by a form of electronic transmission shall not apply to Sections 164,296,311,312 or 324 of the DGCL.
7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS. Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders,
any notice to stockholders given by the Company under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the Company. Any stockholder who fails to object in writing to the Company, within 60 days of having been given written notice by the Company of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.
7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Company is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
7.5 WAIVER OF NOTICE. Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
ARTICLE VIII -- GENERAL MATTERS
8.1 FISCAL YEAR. The fiscal year of the Company shall be fixed by resolution of the Board and may be changed by the Board.
8.2 SEAL. The Company may adopt a corporate seal, which shall be in such form as may be approved from time to time by the Board. The Company may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
8.3 ANNUAL REPORT. The Company shall cause an annual report to be sent to the stockholders of the Company to the extent required by applicable law. If and so long as there are fewer than 100 holders of record of the Company's shares, the requirement of sending an annual report to the stockholders of the Company is expressly waived (to the extent permitted under applicable law).
8.4 INTERESTED DIRECTORS; QUORUM. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorized the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the corporation as of the time it is authorized, or ratified by the Board, a committee thereof, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.
8.5 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person.
ARTICLE IX -- AMENDMENTS
These bylaws may be altered or repealed, and new bylaws made by the Board, but the stockholders may make additional bylaws and may alter and repeal any bylaws adopted by them or otherwise.
A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the Board.
LIMELIGHT NETWORKS, INC.
CERTIFICATE OF AMENDMENT OF BYLAWS
The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Limelight Networks, Inc., a Delaware corporation (the "Company"), and that the foregoing bylaws, comprising eighteen (18) pages, were amended and restated on September 13, 2006 by the Company's board of directors.
The undersigned has executed this certificate as of September 13, 2006.
/s/ William H. Rinehart ---------------------------------------- William H. Rinehart, Secretary |
Exhibit 3.4
AMENDED AND RESTATED BYLAWS OF
LIMELIGHT NETWORKS, INC.
(as amended on [_________], 2007 effective as of the closing of the corporation's initial public offering)
TABLE OF CONTENTS
PAGE ---- ARTICLE I - CORPORATE OFFICES............................................ 1 1.1 REGISTERED OFFICE................................................ 1 1.2 OTHER OFFICES.................................................... 1 ARTICLE II - MEETINGS OF STOCKHOLDERS.................................... 1 2.1 PLACE OF MEETINGS................................................ 1 2.2 ANNUAL MEETING................................................... 1 2.3 SPECIAL MEETING.................................................. 1 2.4 ADVANCE NOTICE PROCEDURES; NOTICE OF STOCKHOLDERS' MEETINGS...... 2 2.5 QUORUM........................................................... 3 2.6 ADJOURNED MEETING; NOTICE........................................ 3 2.7 CONDUCT OF BUSINESS.............................................. 4 2.8 VOTING........................................................... 4 2.9 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.......... 4 2.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS...... 4 2.11 PROXIES.......................................................... 5 2.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE............................ 5 2.13 INSPECTORS OF ELECTION........................................... 5 ARTICLE III - DIRECTORS.................................................. 6 3.1 POWERS........................................................... 6 3.2 NUMBER OF DIRECTORS.............................................. 6 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.......... 6 3.4 RESIGNATION AND VACANCIES........................................ 7 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE......................... 7 3.6 REGULAR MEETINGS................................................. 7 3.7 SPECIAL MEETINGS; NOTICE......................................... 8 3.8 QUORUM; VOTING................................................... 8 3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING................ 8 3.10 FEES AND COMPENSATION OF DIRECTORS............................... 9 3.11 REMOVAL OF DIRECTORS............................................. 9 ARTICLE IV - COMMITTEES.................................................. 9 4.1 COMMITTEES OF DIRECTORS.......................................... 9 4.2 COMMITTEE MINUTES................................................ 9 4.3 MEETINGS AND ACTION OF COMMITTEES................................ 9 4.4 SUBCOMMITTEES.................................................... 10 ARTICLE V - OFFICERS..................................................... 10 5.1 OFFICERS......................................................... 10 5.2 APPOINTMENT OF OFFICERS.......................................... 10 |
TABLE OF CONTENTS
(CONTINUED)
PAGE ---- 5.3 SUBORDINATE OFFICERS............................................. 11 5.4 REMOVAL AND RESIGNATION OF OFFICERS.............................. 11 5.5 VACANCIES IN OFFICES............................................. 11 5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................... 11 5.7 AUTHORITY AND DUTIES OF OFFICERS................................. 11 ARTICLE VI - STOCK....................................................... 12 6.1 STOCK CERTIFICATES; PARTLY PAID SHARES........................... 12 6.2 SPECIAL DESIGNATION ON CERTIFICATES.............................. 12 6.3 LOST CERTIFICATES................................................ 12 6.4 DIVIDENDS........................................................ 13 6.5 TRANSFER OF STOCK................................................ 13 6.6 STOCK TRANSFER AGREEMENTS........................................ 13 6.7 REGISTERED STOCKHOLDERS.......................................... 13 ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER......................... 13 7.1 NOTICE OF STOCKHOLDERS' MEETINGS................................. 13 7.2 NOTICE BY ELECTRONIC TRANSMISSION................................ 14 7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS........................ 15 7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL............. 15 7.5 WAIVER OF NOTICE................................................. 15 ARTICLE VIII - INDEMNIFICATION........................................... 15 8.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS...................................................... 15 8.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION......................................... 16 8.3 SUCCESSFUL DEFENSE............................................... 16 8.4 INDEMNIFICATION OF OTHERS........................................ 16 8.5 ADVANCED PAYMENT OF EXPENSES..................................... 16 8.6 LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF EXPENSES........ 17 8.7 DETERMINATION; CLAIM............................................. 17 8.8 NON-EXCLUSIVITY OF RIGHTS........................................ 17 8.9 INSURANCE........................................................ 18 8.10 SURVIVAL......................................................... 18 8.11 EFFECT OF REPEAL OR MODIFICATION................................. 18 8.12 CERTAIN DEFINITIONS.............................................. 18 ARTICLE IX - GENERAL MATTERS............................................. 18 9.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS................. 18 9.2 FISCAL YEAR...................................................... 19 9.3 SEAL............................................................. 19 9.4 CONSTRUCTION; DEFINITIONS........................................ 19 |
TABLE OF CONTENTS
(CONTINUED)
PAGE ---- ARTICLE X - AMENDMENTS................................................... 19 |
BYLAWS OF LIMELIGHT NETWORKS, INC.
ARTICLE I - CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of Limelight Networks, Inc. shall be fixed in the corporation's certificate of incorporation, as the same may be amended from time to time.
1.2 OTHER OFFICES
The corporation's board of directors (the "BOARD") may at any time establish other offices at any place or places where the corporation is qualified to do business.
ARTICLE II - MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the "DGCL"). In the absence of any such designation or determination, stockholders' meetings shall be held at the corporation's principal executive office.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year. The Board shall designate the date and time of the annual meeting. In the absence of such designation the annual meeting of stockholders shall be held on the second Tuesday of May of each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding business day. At the annual meeting, directors shall be elected and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the Board, chairperson of the Board, chief executive officer or president (in the absence of a chief executive officer), but such special meetings may not be called by any other person or persons.
No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.
2.4 ADVANCE NOTICE PROCEDURES; NOTICE OF STOCKHOLDERS' MEETINGS
(i) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the board of directors, (B) otherwise properly brought before the meeting by
or at the direction of the board of directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days before the one year anniversary of the date on which the
corporation first mailed its proxy statement to stockholders in connection with
the previous year's annual meeting of stockholders; provided, however, that in
the event that no annual meeting was held in the previous year or the date of
the annual meeting has been changed by more than thirty (30) days from the date
of the prior year's meeting, notice by the stockholder to be timely must be so
received not later than the close of business on the later of one hundred twenty
(120) calendar days in advance of such annual meeting and ten (10) calendar days
following the date on which public announcement of the date of the meeting is
first made. A stockholder's notice to the secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the stockholder proposing
such business, (c) the class and number of shares of the corporation that are
beneficially owned by the stockholder, (d) any material interest of the
stockholder in such business, and (e) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 ACT"), in the stockholder's capacity
as a proponent to a stockholder proposal. Notwithstanding the foregoing, in
order to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (i). The chairperson of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (i), and, if the chairperson should so determine, he or she shall
so declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
(ii) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (ii) shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the corporation
may be made at a meeting of stockholders by or at the direction of the board of
directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (ii). Such nominations, other than those made by or at
the direction of the board of directors, shall be made pursuant to timely notice
in writing to the secretary of the corporation in accordance with the provisions
of paragraph (i) of this Section 2.4. Such stockholder's notice shall set forth
(a) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation that are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in
solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (b) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (i) of this Section 2.4. At the request of the board of directors, any person nominated by a stockholder for election as a director shall furnish to the secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (ii). The chairperson of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these bylaws, and if the chairperson should so determine, he or she shall so declare at the meeting, and the defective nomination shall be disregarded.
These provisions shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the board of directors, but in connection therewith no new business shall be acted upon at any such meeting unless stated, filed and received as herein provided. Notwithstanding anything in these bylaws to the contrary, no business brought before a meeting by a stockholder shall be conducted at an annual meeting except in accordance with procedures set forth in this Section 2.4.
Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting.
2.5 QUORUM
The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
2.6 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place if any thereof, and the means of remote communications if any by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
2.7 CONDUCT OF BUSINESS
The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.10 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
Except as otherwise required by law, the certificate of incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise required by law, the certificate of incorporation or these bylaws, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
2.9 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof having a preference over the Common Stock as dividend or upon liquidation, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders.
2.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other such action.
If the Board does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.
2.11 PROXIES
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.
2.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation's principal place of business. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
2.13 INSPECTORS OF ELECTION
A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the person.
Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder's proxy shall, appoint a person to fill that vacancy.
Such inspectors shall:
(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;
(ii) receive votes, ballots or consents;
(iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;
(iv) count and tabulate all votes or consents;
(v) determine when the polls shall close;
(vi) determine the result; and
(vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.
The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
ARTICLE III - DIRECTORS
3.1 POWERS
The business and affairs of the corporation shall be managed by or under the direction of the Board, except as may be otherwise provided in the DGCL or the certificate of incorporation.
3.2 NUMBER OF DIRECTORS
The Board shall consist of one or more members, each of whom shall be a natural person. Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the Board. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director's successor is elected and qualified or until such director's earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.
If so provided in the certificate of incorporation, the directors of the corporation shall be divided into three classes.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.
Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified.
If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary or a majority of the authorized number of directors.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile; or
(iv) sent by electronic mail,
directed to each director at that director's address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation's records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation's principal executive office) nor the purpose of the meeting.
3.8 QUORUM; VOTING
At all meetings of the Board, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.
If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.
3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if
all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
3.10 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.
3.11 REMOVAL OF DIRECTORS
Any director may be removed from office by the stockholders of the corporation only for cause.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office.
ARTICLE IV - COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The Board may, by resolution passed by a majority of the authorized number of directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 3.5 (place of meetings and meetings by telephone);
(ii) Section 3.6 (regular meetings);
(iii) Section 3.7 (special meetings and notice);
(iv) Section 3.8 (quorum; voting);
(v) Section 7.5 (waiver of notice); and
(vi) Section 3.9 (action without a meeting)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board; and
(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
4.4 SUBCOMMITTEES
Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.
ARTICLE V - OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The Board shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled by the Board or as provided in Section 5.3.
5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
5.7 AUTHORITY AND DUTIES OF OFFICERS
All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
ARTICLE VI - STOCK
6.1 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the corporation by the chairperson of the Board or vice-chairperson of the Board, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The corporation shall not have power to issue a certificate in bearer form.
The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
6.3 LOST CERTIFICATES
Except as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
6.4 DIVIDENDS
The Board, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the corporation's capital stock. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock, subject to the provisions of the certificate of incorporation.
The Board may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
6.5 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.
6.6 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
6.7 REGISTERED STOCKHOLDERS
The corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER
7.1 NOTICE OF STOCKHOLDERS' MEETINGS
Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the corporation's records. An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or other
agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 NOTICE BY ELECTRONIC TRANSMISSION
Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if:
(i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and
(ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iv) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
An "ELECTRONIC TRANSMISSION" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.
7.3 NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.
7.4 NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
7.5 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
ARTICLE VIII - INDEMNIFICATION
8.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
Subject to the other provisions of this Article VIII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "PROCEEDING") (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any 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 such person 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 reasonable cause to believe that such person's conduct was unlawful.
8.2 INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
Subject to the other provisions of this Article VIII, the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the corporation, or is or was a director or officer of the corporation serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the 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 or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
8.3 SUCCESSFUL DEFENSE
To the extent that a present or former director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 8.1 or Section 8.2, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
8.4 INDEMNIFICATION OF OTHERS
Subject to the other provisions of this Article VIII, the corporation shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law. The Board shall have the power to delegate to such person or persons the determination of whether employees or agents shall be indemnified.
8.5 ADVANCED PAYMENT OF EXPENSES
Expenses (including attorneys' fees) incurred by an officer or director of the corporation in defending any Proceeding shall be paid by the corporation in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article VIII or the DGCL. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 8.8, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director
of the corporation, in which event this paragraph shall not apply) in any
Proceeding if a determination is reasonably and promptly made (i) by a majority
vote of the directors who are not parties to such Proceeding, even though less
than a quorum, or (ii) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum, or (iii) if there are no
such directors, or if such directors so direct, by independent legal counsel in
a written opinion, that facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
8.6 LIMITATION ON INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
Subject to the requirements in Section 8.3 and the DGCL, the corporation
shall not be required to provide indemnification or, with respect to clauses
(i), (iii) and (iv) below, advance expenses to any person pursuant to this
Article VIII:
(i) in connection with any Proceeding (or part thereof) initiated by such person except (i) as otherwise required by law, (ii) in specific cases if the Proceeding was authorized by the Board, or (iii) as is required to be made under Section 8.7;
(ii) on account of any Proceeding (or part thereof) against such person providing for an accounting or disgorgement of profits pursuant to the provisions of Section 16(b) of the 1934 Act, or similar provisions of any federal, state or local statutory law or common law;
(iii) for expenses (including attorneys' fees), judgments, fines and amounts paid in settlement for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid; or
(iv) if prohibited by applicable law.
8.7 DETERMINATION; CLAIM
If a claim for indemnification or advancement of expenses under this Article VIII is not paid in full within 60 days after a written claim therefor has been received by the corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such suit, the corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.
8.8 NON-EXCLUSIVITY OF RIGHTS
The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.
8.9 INSURANCE
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under the provisions of the DGCL.
8.10 SURVIVAL
The rights to indemnification and advancement of expenses conferred by this Article VIII shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
8.11 EFFECT OF REPEAL OR MODIFICATION
Any repeal or modification of this Article VIII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
8.12 CERTAIN DEFINITIONS
For purposes of this Article VIII, references to the "CORPORATION" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. For purposes of this Article VIII, references to "OTHER ENTERPRISES" shall include employee benefit plans; references to "FINES" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "SERVING AT THE REQUEST OF THE CORPORATION" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "NOT OPPOSED TO THE BEST INTERESTS OF THE CORPORATION" as referred to in this Article VIII.
ARTICLE IX - GENERAL MATTERS
9.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
Except as otherwise provided by law, the certificate of incorporation or these bylaws, the Board may authorize any officer or officers, or agent or agents, to enter into any contract or execute any document or instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific
instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
9.2 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the Board and may be changed by the Board.
9.3 SEAL
The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
9.4 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "PERSON" includes both a corporation and a natural person.
ARTICLE X - AMENDMENTS
These bylaws may be adopted, amended or repealed by the stockholders entitled to vote. However, the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.
A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the Board.
LIMELIGHT NETWORKS, INC.
CERTIFICATE OF AMENDMENT OF BYLAWS
The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary or Assistant Secretary of Limelight Networks, Inc., a Delaware corporation and that the foregoing bylaws, comprising nineteen pages, were amended and restated on [_______] by the corporation's board of directors.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ___ day of __________, ___.
Exhibit 4.2
LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
JULY 12, 2006
TABLE OF CONTENTS
PAGE ---- 1. REGISTRATION RIGHTS................................................... 2 1.1 Definitions...................................................... 2 1.2 Request for Registration......................................... 3 1.3 Company Registration............................................. 5 1.4 Form S-3 Registration............................................ 5 1.5 Obligations of the Company....................................... 6 1.6 Information From Holders......................................... 9 1.7 Expenses of Registration......................................... 9 1.8 Underwriting Requirements........................................ 9 1.9 Delay of Registration............................................ 10 1.10 Indemnification.................................................. 10 1.11 Reports Under the Exchange Act................................... 12 1.12 Assignment of Registration Rights................................ 12 1.13 Limitations on Subsequent Registration Rights.................... 13 1.14 Termination of Registration Rights............................... 13 2. COVENANTS OF THE COMPANY.............................................. 13 2.1 Delivery of Financial Statements................................. 13 2.2 Inspection....................................................... 14 2.3 Right of First Offer............................................. 14 2.4 Company Operations............................................... 15 2.5 Related Party Transactions....................................... 15 2.6 Termination of Covenants......................................... 16 3. MISCELLANEOUS......................................................... 16 3.1 Termination...................................................... 16 3.2 Entire Agreement................................................. 16 3.3 Successors and Assigns........................................... 16 3.4 Amendments and Waivers........................................... 17 3.5 Notices.......................................................... 17 3.6 Severability..................................................... 17 3.7 Governing Law.................................................... 17 3.8 Counterparts..................................................... 17 3.9 Titles and Subtitles............................................. 17 3.10 Aggregation of Stock............................................. 17 |
LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the "AGREEMENT") is made as of the 12th day of July, 2006, by and among Limelight Networks, Inc., a Delaware corporation (the "COMPANY"), the holders of the Company's Series A Preferred Stock set forth on Exhibit A attached hereto (each a "SERIES A HOLDER" and collectively, the "SERIES A HOLDERS"), the holders of Series B Preferred Stock listed on Exhibit A attached hereto (each a "SERIES B HOLDER" and collectively the "SERIES B HOLDERS," and together with the Series A Holders, the "INVESTORS") and, for the purposes of Sections 2.3 and 3.4 only, the holders of the Company's Common Stock and/or warrants and options to purchase shares of the Company's Common Stock set forth in Exhibit B attached hereto (each a "MAJOR COMMON HOLDER" and collectively, the "MAJOR COMMON HOLDERS").
RECITALS
A. The Company and the Series A Holders have previously entered into a First Amended and Restated Investors Rights Agreement dated as of January 9, 2004 (the "PRIOR RIGHTS AGREEMENT"), pursuant to which the Company granted the Series A Holders certain rights.
B. The Company and the Series B Holders are parties to the Series B Preferred Stock Purchase Agreement dated as of May 18, 2006 (the "SERIES B AGREEMENT"). In order to induce the Investors to purchase Series B Preferred Stock and invest funds in the Company pursuant to the Series B Agreement, the Company hereby agrees that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issued or issuable to them and certain other matters as set forth herein.
C. The Company and the Series A Holders each desire to amend and restate the Prior Rights Agreement to add the Series B Holders as parties to this Agreement and make certain other changes.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Company, the Investors and the Major Common Holders agree that the Prior Agreement shall be superseded and replaced in its entirety by this Agreement, and the parties hereto agree as follows:
AGREEMENT
A. AMENDMENTS OF PRIOR RIGHTS AGREEMENT; WAIVER OF PREEMPTIVE RIGHTS. Effective and contingent upon execution of this Agreement by the Company and the holders of a majority of the outstanding shares of Series A Preferred Stock, and upon closing of the transactions contemplated by the Series B Agreement, the Prior Rights Agreement is hereby amended and restated in its entirety to read as set forth in this Agreement, and the Company, the Investors and the Major Common Holders hereby agree to be bound by the provisions hereof as the sole agreement of the Company, the Investors and the Major Common Holders with respect to registration rights of the Company's securities and certain other preemptive rights, as set forth
herein. The Series A Holders, on their own behalf and on the behalf of the other Series A Holders, hereby waive the preemptive rights, set forth in Section 2.16 of the Prior Rights Agreement, including any notice requirements, with respect to the issuance of Series B Preferred Stock.
1. REGISTRATION RIGHTS.
1.1 Definitions. As used in this Agreement, the following terms shall have the following respective meanings:
(a) "Affiliated Fund" means, with respect to a Holder that is a limited liability company or a limited liability partnership, a fund or entity managed by the same manager or managing member or general partner or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or general partner or management company.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as amended (and any successor thereto) and the rules and regulations promulgated thereunder.
(c) "Excluded Registration" means a registration statement relating solely to the sale of securities of participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, or a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities which are also being registered.
(d) "Form S-3" means such form under the Securities Act as in effect on the date hereof or any successor form under the Securities Act that permits significant incorporation by reference of the Company's subsequent public filings under the Exchange Act.
(e) "Holder" means any Investor owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.12 of this Agreement.
(f) "Major Investor" means any Investor that holds at least 500,000 shares of the Preferred Stock or the Common Stock issued upon conversion thereof (subject to adjustment for stock splits, stock dividends, combinations, reclassifications or the like) and, with respect to Section 2.3 only, any Major Common Holder. A Major Investor includes (i) any general partners, managing members and affiliates of a Major Investor, including Affiliated Funds, (ii) a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (such a relation, a Major Investor's "IMMEDIATE FAMILY MEMBER", which term shall include adoptive relationships), and (iii) a trust for the benefit of an individual Major Investor or such Major Investor's Immediate Family Member.
(g) "Qualified IPO" means the first firm commitment underwritten public offering of Common Stock of the Company pursuant to an effective registration statement on form S-1 (or a successor form) filed pursuant to the Securities Act.
(h) "Register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.
(i) "Registrable Securities" means (i) the shares of Common Stock issuable or issued upon conversion of the Series A or Series B Preferred Stock held by the Holders and any assignee thereof in accordance with Section 1.12 of this Agreement, and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares listed in (i); excluding, however, in all cases any Registrable Securities sold in a transaction in which the rights under this Agreement are not assigned, or any shares for which registration rights have terminated pursuant to Section 1.14 of this Agreement.
(j) The number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of Common Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities.
(k) "Restated Certificate" means the Company's Amended and Restated Certificate of Incorporation, as may be amended from time to time
(l) "SEC" means the Securities and Exchange Commission.
(m) "Securities Act" means the Securities Act of 1933, as amended (and any successor thereto) and the rules and regulations promulgated thereunder.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier of (i) April 24, 2013, or (ii) six months after the effective date of the Qualified IPO, a written request from the Holders of at least 25% of the Registrable Securities then outstanding (the "Initiating Holders") that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities with an anticipated aggregate offering price of at least $10,000,000, then the Company shall, within 20 days after receiving such request, give written notice of such request to all Holders and shall, subject to the limitations of subsection 1.2(b), cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered within 20 days after the mailing of such notice by the Company.
(b) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request and the Company shall include such information in the written notice referred to in subsection 1.2(a). The underwriter will be selected by the Company, which underwriter shall be reasonably acceptable to a majority in interest of the Holders whose Registrable Securities are to be included in the underwriting. In such event, the right of any Holder to include Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. The Company and all Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all participating Holders thereof, including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities of the Company owned by each participating Holder. In no event shall any Registrable Securities be excluded from such underwriting unless all other securities are first excluded from such offering. Any Registrable Securities excluded from or withdrawn from such underwriting shall be withdrawn from registration.
(c) Notwithstanding the foregoing, if the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company (the "BOARD OF DIRECTORS") it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed, the Company shall have the right to defer such filing for a period of not more than 120 days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right or the similar right set forth in Section 1.4(b)(iii) more than once in any 12-month period, and provided, further, that the Company shall not register any securities for the account of itself or any other stockholder during such 120-day period (other than in a Qualified IPO or an Excluded Registration).
(d) In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two registrations pursuant to this Section 1.2 and such registrations have been declared or ordered effective, provided, however, that such registrations have been declared or ordered effective and that either (A) the conditions of Section 1.5(a) have been satisfied or (B) the registration statements remain effective and there are no stop orders in effect to such registration statements;
(ii) During the period starting with the date 90 days prior to the Company's good faith estimate of the date of filing of, and ending on a date 180 days after the effective date of, a registration subject to Section 1.3 hereof, unless such offering is not the initial public offering of the Company's securities, in which case, ending on a date 90 days after the effective date of such registration subject to Section 1.3 hereof; provided that the Company is actively employing in good faith all commercially reasonable efforts to cause such registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 1.4 below.
1.3 Company Registration.
(a) If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock under the Securities Act in connection with the public offering of such securities solely for cash (other than an Excluded Registration or any registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within 20 days after mailing of such notice by the Company in accordance with Section 3.4, the Company shall, subject to the provisions of Section 1.8, cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered if any stock of the Company is registered; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance for such requesting Holders, pursuant to this Section 1.3 if all such requesting Holders propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000.
(b) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The expenses of such registration shall be borne by the Company, in accordance with Section 1.7 hereof.
1.4 Form S-3 Registration. In case the Company shall receive from any Holder or Holders of not less than 5% of the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and
(b) use all commercially reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.4: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000; (iii) if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed, in the Company shall have the right to defer such filing for a period of not more than 120 days after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right or the similar
right set forth in Section 1.2(c) more than once in any 12-month period; (iv) if
the Company has, within the 12-month period preceding the date of such request,
already effected two registrations on Form S-3 for the Holders pursuant to this
Section 1.4; (v) in any jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already qualified to do business or subject to service of process in that
jurisdiction; or (vi) during the period ending 90 days after the effective date
of a registration statement subject to Section 1.3.
(c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. Registrations effected pursuant to this Section 1.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 1.2 or 1.3, respectively.
1.5 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to 120 days, or until the distribution described in such registration statement is completed, if earlier.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for up to 120 days, or until the distribution described in such registration statement is completed, if earlier. For purposes of this Agreement, the term "prospectus" shall be deemed to include a free writing prospectus where appropriate.
(c) Promptly notify the Holders of the effectiveness of such registration statement, and furnish to the Holders such numbers of copies of a prospectus, including any supplement to the prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.
(d) Following the effective date of such registration statement, notify the Holders of any request by the SEC that the Company amend or supplement such registration statement, or the associated prospectus.
(e) Use all commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or
to file a general consent to service of process in any such states or jurisdiction unless the Company is already qualified to do business or subject to service of process in that jurisdiction.
(f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder and other security holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.
(g) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for 120 days or until the distribution described in such registration statement is completed, if earlier.
(h) Cause all such Registrable Securities registered pursuant to this
Section 1 to be listed on each national securities exchange or trading system on
which similar securities issued by the Company are then listed.
(i) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.
(j) Make generally available to its security holders, and to deliver to each Holder participating in the registration statement, an earnings statement of the Company that will satisfy the provisions of Section 1l(a) of the Securities Act covering a period of 12 months beginning after the effective date of such registration statement as soon as reasonably practicable after the termination of such 12-month period.
(k) Use its commercially reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and reasonably satisfactory to a majority in interest of the Holders requesting registration of Registrable Securities and (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters.
(l) Otherwise use its commercially reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
(m) Take all reasonable action to ensure that any free writing prospectus utilized in connection with any registration covered by Section 1.2 or 1.3 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and
(n) In connection with any underwritten offering, if at any time the information conveyed to a purchaser at the time of sale includes any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendments or supplements to such information as may be necessary so that the statements as so amended or supplemented will not, in light of the circumstances, be misleading.
(o) To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a "WKSI") at the time any request for registration is submitted to the Company pursuant to Section 1.2, and request for registration requests that the Company file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an "automatic shelf registration statement") on Form S-3, the Company shall file an automatic shelf registration statement which covers those Registrable Securities which are requested to be registered. The Company shall use its commercially reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such automatic shelf registration statement is required to remain effective. If the Company does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement is filed, the Company agrees to pay such fee at such time or times as the Registrable Securities are to be sold. If the automatic shelf registration statement has been outstanding for at least three years, at the end of the third year the Company shall refile a new automatic shelf registration statement covering the Registrable Securities held by any Holder not then able to sell the Registrable Securities pursuant to Rule 144(k) as promulgated by the SEC under the Securities Act. If at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI and the applicable Holders are not then able to sell the Registrable Securities pursuant to Rule 144(k) as promulgated by the SEC under the Securities Act, the Company shall use its commercially reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available, Form S-l and keep such registration statement effective during the period during which such registration statement is required to be kept effective.
(p) If the Company files any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, the Company agrees that it shall include in such registration statement such disclosures as may be required by Rule 430B (referring to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders) in order to ensure that the Holders may be added to such shelf registration statement at a later time through the filing of a prospectus supplement rather than a post-effective amendment.
1.6 Information From Holders. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding such Holder, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. The Company shall have no obligation with respect to any registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement if, as a result of the application of the preceding sentence, or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the anticipated aggregate offering price required to originally trigger the Company's obligation to initiate such registration as specified in subsection 1.2(a) or subsection 1.4(b)(2), whichever is applicable.
1.7 Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Sections 1.2, 1.3 and 1.4 including (without
limitation) all registration, filing and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them with the approval of the Company, which approval shall not be
unreasonably withheld, shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 or 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2 or one right to a Form S-3 registration under Section 1.4, as the
case may be.
1.8 Underwriting Requirements. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 1.2 or Section 1.3 to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their reasonable discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall the amount of securities of the selling Holders included in the offering be reduced below 20% of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company's securities, in which case, the selling stockholders maybe excluded if the underwriters make the determination described above and no other stockholder's securities are included. For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a venture capital fund, or a partnership or corporation, the Affiliated Funds, members, partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling stockholder," and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "selling stockholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "VIOLATION"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder, underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that in no event shall any indemnity under this subsection 1.10(b) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a Holder under this Subsection 1.10(d) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under the Exchange Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date of the Qualified IPO so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
(d) furnish to any Holder upon request, so long as the Holder owns any Registrable Securities, (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after 90 days after the effective date of the Qualified IPO), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.
1.12 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee (i) of at least 500,000 shares of such securities (subject to adjustment for stock splits, stock dividends, reclassification or the like) (or if the transferring Holder owns less than 500,000 shares of such securities, then all Registrable Securities held by the transferring Holder), (ii) that is a subsidiary, parent, partner, limited
partner, retired partner, member, retired member or stockholder of a Holder,
(iii) that is an Affiliated Fund, (iv) who is a Holder's Immediate Family
Member, or (v) that is a trust for the benefit of an individual Holder or such
Holder's Immediate Family Member, provided the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if the transferee agrees in writing to be
bound by this Agreement and immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Securities Act. For the purposes of determining the number of shares of
Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of (x) a partnership who are partners or retired
partners of such partnership or (y) a limited liability company who are members
or retired members of such limited liability company (including Immediate Family
Members of such partners or members who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership or limited liability company; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under Section 1.
1.13 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights the terms of which are pari passu with or senior to the registration rights granted to the Holders hereunder.
1.14 Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Section 1 after the earlier of (i) five years following the consummation of a Qualified IPO, (ii) with respect to any Holder, at such time after the Qualified IPO as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder's shares during a three-month period without registration, or (iii) upon termination of the Agreement, as provided in Section 3.1.
2. COVENANTS OF THE COMPANY.
2.1 Delivery of Financial Statements. The Company shall deliver to each Major Investor (other than a Major Investor reasonably deemed by the Company to be a competitor of the Company):
(a) as soon as practicable, but in any event within 120 days after the end of each fiscal year of the Company (or such longer period of time as may be required by the Company's independent public accountants), an income statement for such fiscal year, a balance sheet of the Company and statement of stockholder's equity as of the end of such year, and a statement of cash flows for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), and audited and certified by an independent public accounting firm of nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited profit or loss statement, a statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of such fiscal quarter;
(c) within 30 days of the end of each month, an unaudited income statement and a statement of cash flows and balance sheet for and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event prior to the end of each fiscal year, a budget and business plan for the next fiscal year, and, as soon as prepared, any other updated or revised budgets for such fiscal year prepared by the Company; and
(e) with respect to the financial statements called for in subsections
(b) and (c) of this Section 2.1, an instrument executed by the Chief Financial
Officer or President of the Company and certifying on behalf of the Company that
such financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors or a committee thereof determines that it is in the best interest
of the Company to do so.
2.2 Inspection. The Company shall permit each Major Investor (except for a Major Investor reasonably deemed by the Company to be a competitor of the Company), at such Major Investor's expense, to visit and inspect the Company's properties, to examine its books of account and records and to discuss the Company's affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information.
2.3 Right of First Offer. Subject to the terms and conditions specified in this Section 2.3, the Company hereby grants to each Major Investor a right of first offer with respect to future sales by the Company of its Shares (as hereinafter defined). A Major Investor who chooses to exercise the right of first offer may designate as purchasers under such right itself or its general partners, managing members or affiliates, including Affiliated Funds, Immediate Family Members or trusts, in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities convertible into or exercisable for any shares of, any class of its capital stock ("SHARES"), the Company shall first make an offering of such Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice (the "RFO NOTICE") to the Major Investors stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such Shares.
(b) Within 15 days after delivery of the RFO Notice, the Major Investor may elect to purchase or obtain, at the price and on the terms specified in the RFO Notice, up to that portion of such Shares which equals the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion and exercise of all convertible or exercisable securities then held, by such Major Investor bears to the sum of (A) the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all then outstanding convertible or exercisable securities) and (B) shares of Common Stock issuable to employees, consultants or directors pursuant to a stock option plan, restricted stock plan, or other stock plan approved by the Board of Directors (but not including shares accounted for in subsection (A)). Such purchase shall be completed at the same closing as that of any third party purchasers or at an additional closing. The Company shall promptly, in writing, inform each Major Investor that purchases all the shares available to it (each, a "FULLY-EXERCISING INVESTOR") of any other Major Investor's failure to do likewise. During the 10-day period commencing after receipt of such information, each Fully-Exercising Investor shall be entitled to obtain that portion of the Shares for which Major Investors were entitled to subscribe but which were not subscribed for by the Major Investors that is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion and exercise of all convertible or exercisable securities then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock then outstanding (assuming full conversion and exercise of all convertible or exercisable securities).
(c) The Company may, during the 60-day period following the expiration of the period provided in subsection 2.3(b) hereof, offer the remaining unsubscribed portion of the Shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the RFO Notice. If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within 60 days after the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.3 shall not be applicable to issuances of securities of the Company that are not "Additional Stock" (as determined in accordance with the Restated Certificate).
2.4 Company Operations. The Investors covenant that at all times prior to March 31, 2007, they shall act in good faith with respect to the management and operation of the Company and to allow the Company to be operated in such a manner that will not unreasonably impede the Company's ability to achieve its revenue and operating goals, including, specifically, the achievement of the Planned EBITDA target set forth in the Restated Certificate. By way of amplification and not limitation, the Investors agree that, prior to March 31, 2007, they shall not unreasonably and adversely interfere with decisions regarding the Company's employment and hiring of key employees and the Company's capital expenditures so long as such decisions are consistent with the Company's business plan, its past practices and commensurate with the growth of the Company.
2.5 Related Party Transactions.
After the closing of the transactions contemplated by the Series B Agreement, the Company shall use its reasonable best efforts to promptly terminate all contracts, agreements or transactions (each, a "Related Party Transaction") between (a) the Company or any of its subsidiaries and (b) any director or officer of the Company or any Affiliates or Associates (as defined below) thereof (each, a "Related Party"); provided that (i) agreements relating to the ownership of the Company's securities, (ii) agreements relating to the employment or consulting relationship of such officer or director with the Company, (iii) agreements executed in connection with the transactions contemplated by the Series B Agreement, (iv) agreements relating to the indemnification of its officers and directors, and (v) agreements involving the payment of fees to the Company pursuant to currently existing customer contracts are not required to be terminated hereunder and provided further that advancement of expenses in the ordinary course of business shall not be deemed a Related Party Transaction. In addition, the Company shall use its best efforts to document all oral agreements with any Related Party not required to be terminated hereunder and shall not enter into any new oral agreements with any Related Party without the express written consent of the Board of Directors. The terms "AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.
2.6 Termination of Covenants.
(a) The covenants set forth in Sections 2.1 through Section 2.5 shall terminate as to each Holder and be of no further force or effect (i) immediately prior to the consummation of a Qualified IPO, or (ii) upon termination of the Agreement, as provided in Section 3.1.
(b) The covenants set forth in Sections 2.1 and 2.2 shall terminate as to each Holder and be of no further force or effect when the Company first becomes subject to the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events described in Section 2.5(a) above.
3. MISCELLANEOUS.
3.1 Termination. This Agreement shall terminate, and have no further force and effect, when (a) the Company shall consummate a transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of the Company pursuant to the Restated Certificate, or (b) when the Company and Investors holding at least a majority of the Registrable Securities then outstanding agree in writing to terminate this Agreement.
3.2 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.
3.3 Successors and Assigns. Except as otherwise provided in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties (including transferees of any Preferred Stock or any Common Stock issued upon conversion thereof). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
3.4 Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the Investors holding at least a majority of the Registrable Securities then outstanding; provided, however, that, (a) with respect to Section 2.3 only, if such amendment or waiver has the effect of materially adversely affecting the shares of Common Stock held by the Major Common Holders in a manner different than the securities held by the Investors, then such amendment or waiver shall require the consent of the holders of a majority of the outstanding shares of Common Stock held by the Major Common Holders and (b) any amendments to Section 2.4 shall require the approval of the Board of Directors, with the approval of a majority of the Common Directors, as such term is defined in the Restated Certificate. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party to the Agreement, whether or not such party has signed such amendment or waiver, each future holder of all such Registrable Securities, and the Company.
3.5 Notices. Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile, or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party's address or facsimile number as set forth on Exhibit A or Exhibit B hereto or as subsequently modified by written notice. A copy of any notice sent to any Series B Holder shall be sent to Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, CA 94304, Attn: Mark L. Reinstra and to Goldman Sachs & Co., One New York Plaza, 30th Floor, NY, NY 10004, Attn: Ben Adler.
3.6 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement, and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
3.7 Governing Law. This Agreement and all acts and transactions pursuant hereto shall be governed, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws.
3.8 Counterparts. This Agreement may be executed in two or more counterparts, including facsimiles, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
3.9 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
3.10 Aggregation of Stock. All shares of the Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.
***
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
COMPANY:
LIMELIGHT NETWORKS, INC.
By: /s/ William Rinehart ------------------------------------ William Rinehart Chief Executive Officer |
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
GS CAPITAL PARTNERS V FUND, L.P.
BY: GSCP V Advisors, L.L.C.
its General Partner
BY: /s/ JOSEPH P. DISABATO ------------------------------------ NAME: JOSEPH P. DISABATO TITLE: MANAGING DIRECTOR |
GS CAPITAL PARTNERS V OFFSHORE FUND,
L.P.
BY: GSCP V Offshore Advisors, L.L.C.
its General Partner
BY: /s/ JOSEPH P. DISABATO ------------------------------------ NAME: JOSEPH P. DISABATO TITLE: MANAGING DIRECTOR |
GS CAPITAL PARTNERS V GmbH & CO. KG
BY: GS Advisors V. L.L.C.
its Managing Limited Partner
BY: /s/ JOSEPH P. DISABATO ------------------------------------ NAME: JOSEPH P. DISABATO TITLE: MANAGING DIRECTOR |
GS CAPITAL PARTNERS V INSTITUTIONAL,
L.P.
BY: GS Advisors V, L.L.C.
its General Partner
BY: /s/ JOSEPH P. DISABATO ------------------------------------ NAME: JOSEPH P. DISABATO TITLE: MANAGING DIRECTOR |
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
FOR INDIVIDUAL:
/s/ JON GAVENMAN ---------------------------------------- Signature |
JON GAVENMAN
Print Name
Address: 288 N, AVALON DRIVE
LOS ALTOS, CA 94022
FOR ENTITY:
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTOR:
THE SAN DOMENICO TRUST UDT DATED
AUGUST 12, 1999
By: /s/ Mark Reinstra ------------------------------------ Name: Mark Reinstra Title: Trustee |
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
FOR INDIVIDUAL:
/s/ Steven Tonsfeldt ---------------------------------------- Signature |
Steven Tonsfeldt Print Name
Address: 75 Holbrook lane Atherton, CA 94027
FOR ENTITY:
By: Heller Ehrman LLP, Manager
VLG Investments 2006 LLC
Printed Name of Entity
By: /s/ Illegible ------------------------------------ Signature |
Illegible, Fund Manager Printed Name and Title
Address: 275 Middlefield Road Menlo Park, CA 94025
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
FOR INDIVIDUAL:
/s/ Mark Windfeld-Hansen ---------------------------------------- Signature |
Mark Windfeld-Hansen Print Name
Address: 275 MIDDLEFIELD ROAD
MENLO PARK, CA 94025
FOR ENTITY:
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
WS INVESTMENT COMPANY, LLC (2006A)
By: /s/ Mario Rosati ------------------------------------ Name: Mario Rosati Title: Member |
WS INVESTMENT COMPANY, LLC (2006C)
By: /s/ Mario Rosati ------------------------------------ Name: Mario Rosati Title: Member |
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
FOR INDIVIDUAL:
FOR ENTITY:
NORTHVIEW INVESTMENTS LLC
Printed Name of Entity
By: /s/ DAVID L. BRUNER, MANAGER ------------------------------------ Signature |
DAVID L. BRUNER, MANAGER
Printed Name and Title
Address: 7600 E. DOUBLETREE #210
SCOTTSDALE AZ 85258
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
INVESTORS:
FOR INDIVIDUAL:
FOR ENTITY:
AMALIA LIMITED
Printed Name of Entity
By: /s/ MIAKUNAL S.A., Director ------------------------------------ Signature |
represented by
Pierre GRANDJEAN Marie-Helene Lanjard Printed Name and Title
Address: 116 Main Street, Road Town, Tortola, BUI
mailing address Rue Jasques - Balmat 1-3, 1204 Geneva, Switzerland
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
MAJOR COMMON HOLDERS:
FOR INDIVIDUAL:
FOR ENTITY:
Cocoon Capital, LLC
Printed Name of Entity
By: /s/ Allan Kaplan ------------------------------------ Signature |
Allan Kaplan, Member Printed Name and Title
Address: 14538 E Dale LN Scottsdale, AZ 85262
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
MAJOR COMMON HOLDERS:
FOR INDIVIDUAL:
/s/ Michael Gordon ---------------------------------------- Signature |
Michael Gordon Print Name
/s/ Lauren Gordon ---------------------------------------- Signature |
Lauren Gordon Print Name
Address: 6500 E.Cactus Wren Rd.
Paradise Valley, AZ 85263
FOR ENTITY:
Thunder Road Capital, LLC
Printed Name of Entity
By: /s/ Michael Gordon ------------------------------------ Signature |
Michael Gordon, Member, Mgr Printed Name and Title
Address: P.O. Box 44702 Phoenix, AZ 85064
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
MAJOR COMMON HOLDERS:
FOR INDIVIDUAL:
FOR ENTITY:
Kaplan Group Investment LLC
Printed Name of Entity
By: /s/ Allan Kaplan ------------------------------------ Signature |
Allan Kaplan, Member Printed Name and Title
Address: 14538 E Dale LN Scottsdale, AZ 85262
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
MAJOR COMMON HOLDERS:
FOR INDIVIDUAL:
/s/ Nathan Raciborski ---------------------------------------- Signature |
Nathan Raciborski Print Name
Address: 2643 E Spring Rd Phoenix, AZ 85032
FOR ENTITY:
Raciborski Group Limited Partnership
Printed Name of Entity
By: /s/ Nathan Raciborski, ------------------------------------ Signature |
Nathan Raciborski, Partner Printed Name and Title
Address: 2643 Espring Rd Phoenix, AZ 85032
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
The parties have executed this Amended and Restated Investors' Rights Agreement as of the date first above written.
MAJOR COMMON HOLDERS:
FOR INDIVIDUAL:
/s/ William H Rinehart ---------------------------------------- Signature |
William H Rinehart Print Name
Address: 2402 E. Esplanade Lane #504 Phoenix, AZ 85016
FOR ENTITY:
Rinehart Family Trust
Printed Name of Entity
By: /s/ William H. Rinehart ------------------------------------ Signature |
William H. Rinehart, Trustee Printed Name and Title
Address: 2402 E. Esplanade Lane #504 Phoenix, AZ 85016
SIGNATURE PAGE TO LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
EXHIBIT A
INVESTORS
SERIES A HOLDERS
NO. OF SHARES NAME/ADDRESS OF SERIES A * ------------ ------------- Amalia Limited 2,307,000 Rue Jacques Balmat 1-3 1204 Geneva Switzerland Northview Investments LLC 2,307,000 7600 E. Doubletree #210 Scottsdale, AZ 85258 --------- TOTAL 4,614,000 ========= |
* Prior to consummation of tender offer
SERIES B HOLDERS
NO. OF SHARES NAME/ADDRESS OF SERIES B ------------ ------------- GS CAPITAL PARTNERS V FUND, L.P. 13,966,505 c/o Goldman Sachs & Co. One New York Plaza, 30th Floor NY, NY 10004 Attn: Ben Adler GS CAPITAL PARTNERS V OFFSHORE FUND, L.P. 7,214,515 c/o Goldman Sachs & Co. One New York Plaza, 30th Floor NY, NY 10004; Attn: Ben Adler GS CAPITAL PARTNERS V GmbH & CO. KG 553,716 c/o Goldman Sachs & Co. One New York Plaza, 30th Floor NY, NY 10004 Attn: Ben Adler GS CAPITAL PARTNERS V INSTITUTIONAL, L.P. 4,789,316 c/o Goldman Sachs & Co. One New York Plaza, 30th Floor NY, NY 10004 Attn: Ben Adler |
VLGI 2006 31,694 c/o Heller Ehrman LLP 275 Middlefield Road Menlo Park, CA 94025 Steve Tonsfeldt 3,066 75 Holbrook Lane Atherton, CA 94027 Jon Gavenman 3,066 288 N. Avalon Drive Los Altos, CA 94022 Mark Windfeld-Hansen 3,066 918 Dunston Road Redwood City, CA 94062 WS Investment Company, LLC (2006A) 3,680 c/o Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 Attn: James Terranova WS Investment Company, LLC (2006C) 5,213 c/o Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 Attn: James Terranova San Domenico Trust UDT dated August 12, 1999 6,133 c/o Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 Attn: Mark Reinstra ---------- TOTAL 26,579,970 ========== |
EXHIBIT B
MAJOR COMMON HOLDERS
NO. OF SHARES OPTIONS TO PURCHASE WARRANTS TO PURCHASE NAME/ADDRESS OF COMMON STOCK* COMMON STOCK* COMMON STOCK* ------------ ---------------- ------------------- -------------------- Cocoon Capital LLC 407,632 0 0 14538 E. Dale Lane Scottsdale, AZ 85262 Michael Gordon 0 250,000 0 6500 E. Cactus Wren Road Paradise Valley, AZ 85253 Michael and Lauren Gordon 2,019,733 0 0 6500 E. Cactus Wren Road Paradise Valley, AZ 85253 Kaplan Group Investments LLC 4,951,873 0 0 8936 North Capital Phoenix, AZ 85020 Nathan Raciborski 0 500,000 1,455,791 2643 E. Spring Road Phoenix, AZ 85032 Raciborski Group Limited Partnership 3,664,622 0 0 2643 E. Spring Road Phoenix, AZ 85032 William H. Rinehart 0 275,000 0 2402 E. Esplanade Lane #504 Phoenix, AZ 85016 Rinehart Family Trust 3,196,742 0 0 2402 E. Esplanade Lane #504 Phoenix, AZ 85016 Thunder Road Capital LLC 100,000 0 0 P.O. Box 44702 Phoenix, AZ 85064-4702 ---------- --------- --------- Total 14,340,602 1,025,000 1,455,791 ========== ========= ========= |
* Prior to consummation of tender offer
Exhibit 10.1
LIMELIGHT NETWORKS, INC.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into, effective as of __________, 2007 by and between Limelight Networks, Inc., a Delaware corporation (the "Company"), and __________ ("Indemnitee"), effective as of the date that the Registration Statement on Form S-1 related to the initial public offering of the Company's Common Stock is declared effective by the United States Securities and Exchange Commission.
WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations;
WHEREAS, the Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation") and Amended and Restated Bylaws (the "Bylaws") of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Delaware law, and the Indemnitee has been serving and continues to serve as a director and/or officer of the Company in part in reliance on the Company's Certificate of Incorporation and Bylaws; and
WHEREAS, in recognition of Indemnitee's need for (i) substantial protection against personal liability based on Indemnitee's reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company) and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Delaware law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows:
1. Certain Definitions:
(a) "Affiliate" shall mean any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with, the person specified, including, without limitation, with respect to the Company, any direct or indirect subsidiary of the Company.
(b) "Board" shall mean the Board of Directors of the Company.
(c) A "Change in Control" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Securities Act of 1933, as amended, or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his or her spouse or lineal descendants), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company's assets.
(d) "Expenses" shall mean any expense, liability or loss, including attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments or other charges imposed thereon, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal) or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event.
(e) "Indemnifiable Event" shall mean any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company or an Affiliate of the Company, or while a director or officer is or was serving at the request of the Company or an Affiliate of the Company as a director, officer, employee, trustee, agent or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust or other enterprise or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of
another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent of the Company or an Affiliate of the Company, as described above.
(f) "Independent Counsel" shall mean the person or body appointed in connection with Section 3.
(g) "Proceeding" shall mean any threatened, pending or completed action, suit or proceeding or any alternative dispute resolution mechanism (including an action by or in the right of the Company or an Affiliate of the Company) or any inquiry, hearing or investigation, whether conducted by the Company or an Affiliate of the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other.
(h) "Reviewing Party" shall mean the person or body appointed in accordance with Section 3.
(i) "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company's Certificate of Incorporation, its Bylaws, vote of its stockholders or disinterested directors or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this
Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by
Indemnitee against the Company or any director or officer of the Company unless
(i) the Company has joined in or the Board has consented to the initiation of
such Proceeding, (ii) the Proceeding is one to enforce indemnification rights
under Section 5 or (iii) the Proceeding is instituted after a Change in Control
(other than a Change in Control approved by a majority of the directors on the
Board who were directors immediately prior to such Change in Control) and
Independent Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the Company shall advance (within thirty (30) days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). The Indemnitee shall qualify for such Expense Advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that the Indemnitee undertakes to repay such Expense Advances if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company. Indemnitee's obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon. This Section 2(c) shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 2(b) or 2(f).
(d) Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which a final judgment is rendered against Indemnitee or Indemnitee enters into a settlement, in each case (i) for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws; (ii) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or (iii) for which payment is prohibited by law. Notwithstanding anything to the contrary stated or implied in this Section 2(f), indemnification pursuant to this Agreement relating to any Proceeding against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws shall not be prohibited if Indemnitee ultimately establishes in any Proceeding that no recovery of such profits from Indemnitee is permitted under Section 16(b) of the Exchange Act or similar provisions of any federal, state or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; provided that if all members of the Board are parties to the particular Proceeding with respect to which Indemnitee is seeking indemnification, the Independent Counsel referred to below shall become the Reviewing Party; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising before a Change in Control for which Independent Counsel shall be the Reviewing
Party and all matters arising after a Change in Control, in each case concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company's Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld or delayed), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities, loss and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, but in no event later than thirty (30) business days after such demand, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law. Indemnitee shall cooperate with the Reviewing Party making a determination with respect to Indemnitee's entitlement to indemnification, including providing to the Reviewing Party upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty (30) days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of Arizona or the State of Delaware having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The Company shall be precluded from asserting in any such proceeding that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity.
(c) Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this
Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel or its stockholders) that the Indemnitee had 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. For purposes of this Agreement, the termination of any claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court approval), conviction or upon a plea of nolo contendere or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. For purposes of any determination of good faith under any applicable standard of conduct, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Company, including financial statements, or on information supplied to Indemnitee by the officers of the Company in the course of their duties, or on the advice of legal counsel for the Company or the Board or counsel selected by any committee of the Board or on information or records given or reports made to the Company by an independent certified public accountant or by an appraiser, investment banker or other expert selected with reasonable care by the Company or the Board or any committee of the Board. The provisions of the preceding sentence shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. The knowledge and/or actions, or failure to act, or any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for:
(i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company's Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or;
(ii) recovery under directors' and officers' liability insurance policies maintained by the Company; but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c).
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee's expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control, the employment of counsel by Indemnitee has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company, or as to which Indemnitee shall have made the determination provided for in (ii) above or under the circumstances provided for in (iii) and (iv) above.
(c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company's written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity as a result of Indemnitees' failure to provide notice, at its expense, to participate in the defense of such action, and the lack of such notice materially prejudiced the Company's ability to participate in defense of such action. The Company's liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.
7. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Certificate of Incorporation, Bylaws, applicable law or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company's Certificate of Incorporation, Bylaws, applicable law or
this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change.
8. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer.
9. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two (2) years from the date of accrual of such cause of action or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern.
10. Amendment of this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
11. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
12. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder.
13. Duration of Agreement. This Agreement shall continue until and
terminate upon the later of (a) six (6) years after the date that Indemnitee
shall have ceased to serve as a director or officer of the Company or (b) one
(1) year after the final termination of any Proceeding, including any appeal,
then pending in respect of which Indemnitee is granted rights of indemnification
or advancement of Expenses hereunder and of any proceeding commenced by
Indemnitee pursuant to Section 4(b) of this Agreement relating thereto.
14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all
of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though Indemnitee may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, (a) the remaining provisions shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void or unenforceable.
16. Contribution. To the fullest extent permissible under applicable law, whether or not the indemnification provided for in this Agreement is available to Indemnitee for any reason whatsoever, the Company shall pay all or a portion of the amount that would otherwise be incurred by Indemnitee for Expenses in connection with any claim relating to an Indemnifiable Event, as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
17. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to its
principles of conflicts of laws. The Company and Indemnitee hereby irrevocably
and unconditionally (i) agree that any action or proceeding arising out of or in
connection with this Agreement may be brought in the Delaware Court of Chancery
or in the applicable state or federal courts in the State of Arizona; (ii)
consent to submit to the jurisdiction of the Delaware Court of Chancery or of
the applicable state or federal courts in the State of Arizona for purposes of
any action or proceeding arising out of or in connection with this Agreement,
(iii) waive any objection to the laying of venue of any such action or
proceeding in the Delaware Court of Chancery or in the applicable state or
federal courts in the State of Arizona, and (iv) waive, and agree not to plead
or to make, any claim that any such action or proceeding brought in the Delaware
Court of Chancery or in the applicable state or federal courts in the State of
Arizona has been brought in an improper or inconvenient forum.
18. Notices. All notices, demands and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if
delivered by hand, against receipt or mailed, postage prepaid, certified or registered mail, return receipt requested and addressed to the Company at:
Limelight Networks, Inc.
2220 W. 14th Street
Tempe, AZ 85281
Attention: Chief Executive Officer/ General Counsel
and to Indemnitee at:
[_____]
[_____].
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.
19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
* * * * *
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.
LIMELIGHT NETWORKS, INC.
a Delaware corporation
INDEMNITEE,
an individual
Exhibit 10.2
LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED 2003 INCENTIVE COMPENSATION PLAN
.
.
.
1. Purpose............................................................... 1 2. Administration........................................................ 1 (a) Authority of the Committee..................................... 1 (b) Manner of Exercise of Authority................................ 1 (c) Limitation of Liability........................................ 2 3. Stock Subject to Plan................................................. 2 (a) Limitation on Overall Number of Shares Subject to Awards....... 2 (b) Application of Limitations..................................... 2 4. Eligibility; Per-Person Award Limitations............................. 2 5. Specific Terms of Awards.............................................. 2 (a) General........................................................ 2 (b) Options........................................................ 3 (c) Stock Appreciation Rights...................................... 4 (d) Restricted Stock............................................... 4 (e) Bonus Stock and Awards in Lieu of Obligations.................. 5 (f) Other Stock-Based Awards....................................... 6 6. Certain Provisions Applicable to Awards............................... 6 (a) Stand-Alone, Additional, Tandem, and Substitute Awards......... 6 (b) Term of Awards................................................. 6 (c) Form and Timing of Payment Under Awards; Deferrals............. 7 (d) Exemptions from Section 16(b) Liability........................ 7 7. Change in Control..................................................... 7 (a) Effect of "Change in Control................................... 7 (b) Definition of "Change in Control".............................. 8 (c) Definition of "Change in Control Price......................... 8 8. General Provisions.................................................... 9 (a) Compliance With Legal and Other Requirements................... 9 (b) Limits on Transferability; Beneficiaries....................... 9 (c) Adjustments.................................................... 9 (d) Taxes.......................................................... 10 (e) Changes to the Plan and Awards................................. 11 (f) Limitation on Rights Conferred Under Plan...................... 11 (g) Unfunded Status of Awards; Creation of Trusts.................. 11 (h) Nonexclusivity of the Plan..................................... 12 (i) Payments in the Event of Forfeitures; Fractional Shares........ 12 (j) Governing Law.................................................. 12 (k) Plan Effective Date and Stockholder Approval; Termination of Plan......................................... 12 9. Definitions........................................................... 12 (a) "Award"........................................................ 12 (b) "Award Agreement".............................................. 12 (c) "Beneficiary".................................................. 13 (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial Ownership"...................................... 13 (e) "Board"........................................................ 13 |
(f) "Change in Control"............................................ 13 (g) "Change in Control Price"...................................... 13 (h) "Code"......................................................... 13 (i) "Committee".................................................... 13 (j) "Company"...................................................... 13 (k) "Consultant"................................................... 13 (l) "Continuous Service"........................................... 13 (m) "Corporate Transaction"........................................ 14 (n) "Director"..................................................... 14 (o) "Dividend Equivalent".......................................... 14 (p) "Effective Date"............................................... 14 (q) "Eligible Person".............................................. 14 (r) "Employee"..................................................... 14 (s) "Exchange Act"................................................. 14 (t) "Executive Officer"............................................ 14 (u) "Fair Market Value"............................................ 14 (v) "Incentive Stock Option"....................................... 14 (w) "Incumbent Board".............................................. 15 (x) "Limited Stock Appreciation Right"............................. 15 (y) "Nonqualified Stock Option".................................... 15 (z) "Option"....................................................... 15 (aa) "Optionee"..................................................... 15 (bb) "Other Stock-Based Awards"..................................... 15 (cc) "Parent"....................................................... 15 (dd) "Participant".................................................. 15 (ee) "Person"....................................................... 15 (ff) "Plan"......................................................... 15 (gg) "Related Entity"............................................... 15 (hh) "Restricted Stock"............................................. 15 (ii) "Rule 16b-3" and "Rule 16a-1(c)(3)"............................ 15 (jj) "Stock"........................................................ 15 (kk) "Stock Appreciation Right"..................................... 15 (ll) "Subsidiary"................................................... 16 |
LIMELIGHT NETWORKS, INC.
AMENDED AND RESTATED 2003 INCENTIVE COMPENSATION PLAN
(as amended and restated through October 20, 2006)
1. PURPOSE. The purpose of this Amended and Restated 2003 Incentive Compensation Plan is to assist Limelight Networks, Inc., a Delaware corporation and its Related Entities in attracting, motivating, retaining, and rewarding high-quality executives and other Employees, officers, Directors, and Consultants by enabling such persons to acquire or increase a proprietary interest in the Company in order to strengthen the mutuality of interests between such persons and the Company's stockholders, and providing such persons with annual and long-term performance incentives to expend their maximum efforts in the creation of stockholder value. The Plan is intended to qualify certain compensation awarded under the Plan for tax deductibility under Section 162(m) of the Code to the extent deemed appropriate by the Board of Directors or any applicable committee (or any successor committee) of the Board of Directors of the Company.
2. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by the Board of Directors or the Committee. The Committee or the Board shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine the type, number, and other terms and conditions of, and all other matters relating to, Awards, prescribe Award Agreements (which need not be identical for each Participant) and rules and regulations for the administration of the Plan, construe and interpret the Plan and Award Agreements and correct defects, supply omissions, or reconcile inconsistencies therein, and to make all other decisions and determinations as the Committee or the Board may deem necessary or advisable for the administration of the Plan. In exercising any discretion granted to the Committee or the Board under the Plan or pursuant to any Award, the Committee or the Board shall not be required to follow past practices, act in a manner consistent with past practices, or treat any Eligible Person in a manner consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Authority. Any action of the Committee or
the Board shall be final, conclusive, and binding on all persons, including the
Company, its Related Entities, Participants, Beneficiaries, transferees under
Section 8(b) hereof, or other persons claiming rights from or through a
Participant, and stockholders. The express grant of any specific power to the
Committee or the Board, and the taking of any action by the Committee or the
Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any Related Entity, or committees thereof, the
authority, subject to such terms as the Committee or the Board shall determine,
to perform administrative functions or other functions as the Committee or the
Board may determine. The Committee or the Board may appoint agents to assist it
in administering the Plan.
(c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any Executive Officer, other officer or Employee, the Company's independent auditors, Consultants or any other agents assisting in the administration of the Plan. Members of the Committee and the Board, and any officer or Employee acting at the direction or on behalf of the Committee or the Board, shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
3. STOCK SUBJECT TO PLAN.
(a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment as provided in Section 8(c) hereof, the total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be the sum of (i) 2,540,000 shares plus (ii) the number of shares of Stock with respect to which any Awards previously granted under the Plan terminated without being exercised, expire, are forfeited or canceled, do not vest, or are surrendered in payment of any Awards or any tax withholding with regard thereto. Any shares of Stock delivered under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. Subject to adjustment as provided in Section 8(c) hereof, the number of shares of Stock that may be issued pursuant to Incentive Stock Options shall not exceed 2,540,000 shares.
(b) Application of Limitations. The Committee or the Board may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards), and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.
4. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted under the Plan only to Eligible Persons, provided only Employees may be granted Incentive Stock Options. In each fiscal year during any part of which the Plan is in effect, an Eligible Person may not be granted Awards relating to more than 500,000 shares of Stock, subject to adjustment as provided in Section 8(c), under each of Sections 5(b), 5(c), 5(d), 5(e), and 5(f).
5. SPECIFIC TERMS OF AWARDS.
(a) General. Each Award under the Plan will be evidenced by an Award
Agreement. Awards may be granted on the terms and conditions set forth in this
Section 5. In addition, the Committee or the Board may impose on any Award or
the exercise thereof, at the date of grant or thereafter (subject to Section
8(e)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee or the Board shall determine, including
terms requiring forfeiture of Awards in the event of termination of Continuous
Service by the Participant and terms permitting a Participant to make elections
relating to his or her Award. The Committee or the Board shall retain full power
and discretion to accelerate, waive, or modify, at any time, any term or
condition of an Award that is not mandatory under the Plan.
(b) Options. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. The Committee and the Board each is authorized to grant Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable under an Option shall be determined by the Committee or the Board, provided that such exercise price shall not, in the case of Incentive Stock Options, be less than 100% of the Fair Market Value of the Stock on the date of grant of the Option and shall not, in any event, be less than the par value of a share of Stock on the date of grant of such Option. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no less than 110% of the Fair Market Value of the Stock on the date such Incentive Stock Option is granted.
(ii) Time and Method of Exercise. The Committee or the Board shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Options shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the methods by which such exercise price may be paid or deemed to be paid (including in the discretion of the Committee or the Board a cashless exercise procedure), the form of such payment, including, without limitation, cash, Stock, other Awards, or awards granted under other plans of the Company or a Related Entity, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants.
(iii) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including any Stock Appreciation Right in tandem therewith) shall be interpreted, amended, or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification. Thus, if and to the extent required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the following special terms and conditions:
(A) The Option shall not be exercisable more than ten years
after the date such Incentive Stock Option is granted; provided, however, that
if a Participant owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10% of the combined voting power of all
classes of Stock of the Company or any Parent and the Incentive Stock Option is
granted to such Participant, the term of the Incentive Stock Option shall be (to
the extent required by the Code at the time of the grant) for no more than five
years from the date of grant; and
(B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the shares of Stock with respect to which Incentive Stock Options granted under the Plan and all other option plans of the Company or any Parent during any calendar year exercisable for the first time by the Participant during any calendar year shall not (to the extent required by the Code at the time of the grant) exceed $100,000.
(iv) Repurchase Rights. The Committee and the Board shall have the discretion to grant Options that are exercisable for unvested shares of Stock. Should the Optionee's Continuous Service cease while holding such unvested shares, the Company shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Committee or the Board and set forth in the document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee and the Board each is authorized to grant Stock Appreciation Right's to Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise (or, in the case of a "Limited Stock Appreciation Right" that may be exercised only in the event of a Change in Control, the Fair Market Value determined by reference to the Change in Control Price, as defined under Section 7(c) hereof), over (B) the grant price of the Stock Appreciation Right as determined by the Committee or the Board. The grant price of a Stock Appreciation Right shall not be less than the Fair Market Value of a share of Stock on the date of grant except as provided under Section 5(a) hereof.
(ii) Other Terms. The Committee or the Board shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which Stock Appreciation Rights shall cease to be or become exercisable following termination of Continuous Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not a Stock Appreciation Right shall be in tandem or in combination with any other Award, and any other terms and conditions of any Stock Appreciation Right. Limited Stock Appreciation Rights that may only be exercised in connection with a Change in Control or other event as specified by the Committee or the Board, may be granted on such terms, not inconsistent with this Section 5(c), as the Committee or the Board may determine. Stock Appreciation Rights and Limited Stock Appreciation Rights may be either freestanding or in tandem with other Awards.
(d) Restricted Stock. The Committee and the Board each is authorized to grant Restricted Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture, and other restrictions, if any, as the Committee or the Board may impose, or as otherwise provided in this Plan. The restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments, or otherwise, as the Committee or the Board may determine at the date of grant or thereafter. Except to the extent restricted under the terms of the Plan and any Award agreement relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee or the Board). During the restricted period applicable to the Restricted Stock, subject to Section 8(b) below, the Restricted Stock may not be sold, transferred, pledged, hypothecated, margined, or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee or the Board at the time of the Award, upon termination of a Participant's Continuous Service during the applicable restriction period, the Participant's Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee or the Board may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock shall be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee or the Board may in other cases waive in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee or the Board shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee or the Board may require that such certificates bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee or the Board may require that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or applied to the purchase of additional Awards under the Plan. Unless otherwise determined by the Committee or the Board, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed.
(e) Bonus Stock and Awards in Lieu of Obligations. The Committee and the Board each is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of Company obligations to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, provided that, in the case of Participants subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee or the Board.
(f) Other Stock-Based Awards. The Committee and the Board each is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee or the Board to be consistent with the purposes of the Plan, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee or the Board, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified Related Entities or business units. The Committee or the Board shall determine the terms and conditions of such Awards. Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 5(f) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee or the Board shall determine. The Committee and the Board shall have the discretion to grant such other Awards that are exercisable for unvested shares of Stock. Should the Optionee's Continuous Service cease while holding such unvested shares, the Company shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Committee or the Board and set forth in the document evidencing such repurchase right. Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 5(f).
6. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee or the Board, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Related Entity, or any business entity to be acquired by the Company or a Related Entity, or any other right of a Participant to receive payment from the Company or any Related Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award or award, the Committee or the Board shall require the surrender of such other Award or award in consideration for the grant of the new Award. In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any Related Entity, in which the value of Stock subject to the Award is equivalent in value to the cash compensation (for example, Deferred Stock or Restricted Stock), or in which the exercise price, grant price, or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash compensation surrendered (for example, Options granted with an exercise price "discounted" by the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee or the Board; provided that in no event shall the term of any
Option or Stock Appreciation Right exceed a period of ten years (or such shorter term as may be required in respect of an Incentive Stock Option under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made to the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee or the Board shall determine, including, without limitation, cash, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or the Board or upon occurrence of one or more specified events (in addition to a Change in Control). Installment or deferred payments may be required by the Committee or the Board (subject to Section 8(e) of the Plan) or permitted at the election of the Participant on terms and conditions established by the Committee or the Board. Payments may include, without limitation, provisions for the payment or crediting of a reasonable interest rate on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither the
grant of any Awards to nor other transaction by a Participant who is subject to
Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
Agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
7. CHANGE IN CONTROL.
(a) Effect of "Change in Control. "If and to the extent provided in the Award, in the event of a "Change in Control," as defined in Section 7(b):
(i) The Committee may, within its discretion, accelerate the vesting and exercisability of any Option or Award carrying a right to exercise that was not previously vested and exercisable as of the time of the Change in Control, subject to applicable restrictions set forth in Section 8 (a) hereof;
(ii) The Committee may, within its discretion, accelerate the exercisability of any limited Stock Appreciation Rights (and other Stock Appreciation Rights if so provided by their terms) and provide for the settlement of such Stock Appreciation Rights for amounts, in cash, determined by reference to the Change in Control Price; and
(iii) The Committee may, within its discretion, lapse the
restrictions, deferral of settlement, and forfeiture conditions applicable to
any other Award granted under the Plan and such Awards may be deemed fully
vested as of the time of the Change in Control, except to the extent of any
waiver by the Participant and subject to applicable restrictions set forth in
Section 8 (a) hereof.
(b) Definition of "Change in Control". A "Change in Control" shall be deemed to have occurred upon:
(i) Approval by the stockholders of the Company of a reorganization, merger, consolidation, or other form of corporate transaction or series of transactions, in each case, with respect to which persons who were the stockholders of the Company immediately prior to such reorganization, merger, consolidation, or other transaction do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged, or consolidated company's then outstanding voting securities, or a liquidation or dissolution of the Company or the sale of all or substantially all of the assets of the Company (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale (any such event being referred to as a "Corporate Transaction") is subsequently abandoned);
(ii) Individuals who, as of the date on which the Award is granted, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date on which the Award was granted whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or
(iii) The acquisition (other than from the Company) by any person, entity, or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of more than 50% of either the then outstanding shares of the Company's Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors (hereinafter referred to as the ownership of a "Controlling Interest") excluding, for this purpose, any acquisitions by (1) the Company or a Related Entity, (2) any person, entity, or "group" that as of the date on which the Award is granted owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a Controlling Interest or (3) any employee benefit plan of the Company a Related Entity.
(c) Definition of "Change in Control Price." The "Change in Control Price" means an amount in cash equal to the higher of (i) the amount of cash and fair market value of property that is the highest price per share paid (including extraordinary dividends) in any Corporate Transaction triggering the Change in Control under Section 7(b)(i) hereof or any liquidation of shares following a sale of substantially all of the assets of the Company, or (ii) the highest Fair Market Value per share at any time during the 60-day period preceding and the 60-day period following the Change in Control.
8. GENERAL PROVISIONS.
(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee or the Board, postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action under any federal or state law, rule, or regulation, listing, or other required action with respect to any stock exchange or automated quotation system upon which the Stock or other Company securities may then be listed or quoted, or compliance with any other obligation of the Company, as the Committee or the Board, may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations.
(b) Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan, including any Award or right that constitutes a derivative security as generally defined in Rule 16a 1(c) under the Exchange Act, shall be pledged, hypothecated, or otherwise encumbered or subject to any lien, obligation, or liability of such Participant to any party (other than the Company or a Subsidiary), or assigned or transferred by such Participant otherwise than by a qualified domestic relations order, by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or other transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers and exercises are permitted by the Committee or the Board pursuant to the express terms of an Award Agreement (subject to any terms and conditions which the Committee or the Board may impose thereon, and further subject to any prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee or the Board, and to any additional terms and conditions deemed necessary or appropriate by the Committee or the Board.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or other distribution (whether in the form of cash, Stock, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution, or other similar corporate transaction or event affects the Stock and/or such other securities of the Company or any other issuer such that a substitution, exchange, or adjustment is determined by the Committee or the Board to be appropriate, then the Committee or the Board shall, in such manner as it may deem equitable, substitute, exchange, or adjust any or all of (A) the number and kind of shares of Stock that may be delivered in connection with Awards granted thereafter, (B) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 4 hereof, (C) the number and kind of shares of Stock subject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price, or purchase price relating to any Award and/or make provision for payment of cash or other property in respect of any outstanding Award, and (E) any other aspect of any Award that the Committee or Board determines to be appropriate.
(ii) Adjustments in Case of Certain Corporate Transactions. In
the event of a proposed sale of all or substantially all of the Company's assets
or any reorganization, merger, consolidation, or other form of corporate
transaction in which the Company does not survive (except for a transaction the
principal purposes of which is to change the state in which the Company is
incorporated), or in which the shares of Stock are exchanged for or converted
into securities issued by another entity, then the successor or acquiring entity
or an affiliate thereof may, with the consent of the Committee or the Board,
assume each outstanding Option or substitute an equivalent option or right. If
the successor or acquiring entity or an affiliate thereof, does not cause such
an assumption or substitution, then (A) each Option shall terminate upon the
consummation of sale, merger, consolidation, or other corporate transaction, and
(B) the Committee shall have the discretion and authority, consistent with
Section 7, exercisable at any time, to provide for the automatic acceleration of
vesting or exercisability of one or more Awards granted by it under the Plan.
The Committee or the Board shall give written notice of any proposed transaction
referred to in this Section 8(c)(ii) a reasonable period of time prior to the
closing date for such transaction (which notice may be given either before or
after the approval of such transaction), in order that Optionees may have a
reasonable period of time prior to the closing date of such transaction within
which to exercise any Options that are then exercisable (including any Options
that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of the
transaction.
(iii) Other Adjustments. In addition, the Committee (and the Board if and only to the extent such authority is not required to be exercised by the Committee to comply with Code Section 162(m)) is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of businesses and assets) affecting the Company, any Related Entity, or any business unit, or the financial statements of the Company or any Related Entity, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations, or business conditions or in view of the Committee's assessment of the business strategy of the Company, any Related Entity or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that such authority or the making of such adjustment would cause Options, or Stock Appreciation Rights hereof to Participants designated by the Committee as Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and the regulations thereunder to otherwise fail to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Related Entity are authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a
distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee or the Board may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant's tax obligations, either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan, or the Committee's authority to grant Awards under the Plan, without the consent of stockholders or Participants, except that any amendment or alteration to the Plan shall be subject to the approval of the Company's stockholders not later than the next annual meeting following such Board action if such stockholder approval is required by any federal or state law or regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to stockholders for approval; provided that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. The Committee or the Board may waive any conditions or rights under, or amend, alter, suspend, discontinue, or terminate any Award theretofore granted and any Award Agreement relating thereto, except as otherwise provided in the Plan; provided that, without the consent of an affected Participant, no such Committee or the Board action may materially and adversely affect the rights of such Participant under such Award.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ of the Company or a Related Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate any Eligible Person's or Participant's Continuous Service at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and Employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other Awards, or other property, or make other arrangements to meet the Company's obligations under the Plan. Such trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. The trustee of such trusts may be authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable including incentive arrangements and awards which do not qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee or the Board, in the event of a forfeiture of an Award with respect to which a Participant paid cash or other consideration, the Participant shall be repaid the amount of such cash or other consideration. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee or the Board shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations under the Plan, and any Award Agreement shall be determined in accordance with the laws of the state of Delaware without giving effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan shall become effective on the Effective Date, subject to subsequent approval within 12 months of its adoption by the Board by stockholders of the Company eligible to vote in the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), or rules of any stock exchange or automated quotation system on which the stock may be listed or quoted, and other laws, regulations, and obligations of the Company applicable to the Plan. Awards may be granted subject to stockholder approval, but may not be exercised or otherwise settled in the event stockholder approval is not obtained except with respect to Awards granted by the Company that are otherwise in compliance with Treasury Regulations Section 1.162-27(f)(4)(iii). The Plan shall terminate at such time as no shares of Stock remain available for issuance under the Plan and the Company has no further rights or obligations with respect to outstanding Awards under the Plan.
9. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof.
(a) "Award" means any Option, Stock Appreciation Right (including Limited Stock Appreciation Right), Restricted Stock, Stock granted as a bonus or in lieu of another award, or Other Stock-Based Award, together with any other right or interest, granted to a Participant under the Plan.
(b) "Award Agreement" means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(c) "Beneficiary" means the person, persons, trust, or trusts that have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under the Plan upon such Participant's death or to which Awards or other rights are transferred if and to the extent permitted under Section 8(b) hereof. If, upon a Participant's death, there is no designated Beneficiary or surviving designated Beneficiary, then the term Beneficiary means the person, persons, trust, or trusts entitled by will or the laws of descent and distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial Ownership" shall have the meanings ascribed to such terms in Rule 13d 3 under the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Change in Control" means a Change in Control as defined with related terms in Section 7 of the Plan.
(g) "Change in Control Price" means the amount calculated in accordance with Section 7(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.
(i) "Committee" means a committee designated by the Board to administer the Plan. The Board may designate more than one committee to administer the Plan as to various categories of Eligible Persons. The Committee shall consist of at least two directors, and each member of which shall be (i) a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act, unless administration of the Plan by "non-employee directors" is not then required in order for exemptions under Rule 16b-3 to apply to transactions under the Plan, and (ii) an "outside director" within the meaning of Section 162(m) of the Code, unless administration of the Plan by "outside directors" is not then required in order to qualify for tax deductibility under Section 162(m) of the Code, provided, when appropriate, a Committee shall satisfy the then requirements of any stock exchange or automated quotation system upon which the Stock or other Company securities are listed or quoted.
(j) "Company" means Limelight Networks, Inc., a Delaware corporation, or any successor thereto.
(k) "Consultant" means any person (other than an Employee or a Director, solely with respect to rendering services in such person's capacity as a director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.
(l) "Continuous Service" means uninterrupted provision of services to the Company in any capacity of Employee, Director, or Consultant. Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in any capacity of Employee Director, or Consultant, or (iii) any change in status as long as the individual remains in the
service of the Company or a Related Entity in any capacity of Employee, Director, or Consultant (except as otherwise provided in the Option Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.
(m) "Corporate Transaction" means a Corporate Transaction as defined in Section 7(b)(i) of the Plan.
(n) "Director" means a member of the Board or the board of directors of any Related Entity.
(o) "Dividend Equivalent" means a right, granted to a Participant under Section 6(c) hereof, to receive, cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.
(p) "Effective Date" means the effective date of the Plan, which shall be October 20, 2006.
(q) "Eligible Person" means each Executive Officer of the Company (as defined under the Exchange Act) and other officers, Directors, and Employees of the Company or of any Related Entity, and Consultants with the Company or any Related Entity. The foregoing notwithstanding, only employees of the Company, the Parent, or any Subsidiary shall be Eligible Persons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence may be considered as still in the employ of the Company or a Related Entity for purposes of eligibility for participation in the Plan.
(r) "Employee" means any person, including an officer or Director, who is an employee of the Company or any Related Entity. The Payment of a director's fee by the Company or a Related Entity shall not be sufficient to constitute "employment" by the Company.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.
(t) "Executive Officer" means an executive officer of the Company as defined under the Exchange Act.
(u) "Fair Market Value" means the fair market value of Stock, Awards, or other property as determined by the Committee or the Board, or under procedures established by the Committee or the Board. Unless otherwise determined by the Committee or the Board, the Fair Market Value of Stock as of any given date after which the Company is becomes a publicly held corporation shall be the closing sale price per share reported on a consolidated basis for stock listed on the principal stock exchange or market on which Stock is traded on the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported.
(v) "Incentive Stock Option" means any Option intended to be designated as an incentive stock option within the meaning of Section 422 of the Code or any successor provision thereto.
(w) "Incumbent Board" means the Incumbent Board as defined in Section 7(b)(ii) of the Plan.
(x) "Limited Stock Appreciation Right" means a right granted to a Participant under Section 5(c) hereof.
(y) "Nonqualified Stock Option" means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
(z) "Option" means a stock option right granted to a Participant pursuant to Section 5(b) of the Plan.
(aa) "Optionee" means a person to whom an Option is granted under this Plan or any person who succeeds to the rights of such person under this Plan.
(bb) "Other Stock-Based Awards" means Awards granted to a Participant under Section 5(f) hereof.
(cc) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code.
(dd) "Participant" means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.
(ee) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a "group" as defined in Section 13(d) thereof.
(ff) "Plan" means this amended and restated 2003 Incentive Compensation Plan.
(gg) "Related Entity" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Board or the Committee.
(hh) "Restricted Stock" means Stock granted to a Participant under
Section 5(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(ii) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(jj) "Stock" means the Company's Common Stock, and such other as may be substituted (or resubstituted) for Stock pursuant to Section 8(c) hereof.
(kk) "Stock Appreciation Right" means a right granted to a Participant under Section 5(c) hereof.
(ll) "Subsidiary" means a "subsidiary corporation" whether now or hereafter existing, as defined in Section 424(f) of the Code.
LIMELIGHT NETWORKS, INC.
2003 INCENTIVE COMPENSATION PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
1. Grant of Option.
<<NAME>>
<<ADDRESS>>
The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Company's Amended and Restated 2003 Incentive Compensation Plan (the "PLAN") and this Nonqualified Stock Option Agreement (this "AGREEMENT"), as follows:
Date of Grant <<GrantDate>>
Vesting Commencement Date <<VestingStartDate>>
Exercise Price per Share $<<FMV>>
Total Number of Shares Granted <<Numberofshares>>
Total Exercise Price $<<ExcerisePrice>>
Type of Option: Incentive Stock Option
X Nonqualified Stock Option
Term/Expiration Date: <<ExpDate>>
The Optionee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all of the terms and conditions hereof and thereof and all applicable laws and regulations.
2. Definitions. Unless otherwise provided herein, terms used herein that are defined in the Plan and not defined herein shall have the meanings attributed thereto in the Plan.
3. Vesting Schedule. Except as otherwise provided in Sections 7 or 10 of this Agreement, or in the Plan, this Option shall be exercisable, in whole or in part, according to the following vesting schedule:
One-fourth (1/4th) of the total number of shares of common stock subject to the Option shall vest and become exercisable on the one (1) year anniversary of the Vesting Commencement Date, and an additional one forty-eighth (1/48th) of the total number of shares of common stock subject to the Option shall vest and become exercisable on the same day as the Vesting Commencement Date of each calendar month thereafter, provided that the Continuous Service of the Optionee continues through and on such date.
Upon the termination of the Optionee's Continuous Service with the Company and its Related Entities, any unvested portion of the Option shall terminate and be null and void, except as provided below.
4. Method of Exercise. The vested portion of this Option shall be
exercisable in whole or in part in accordance with the vesting schedule set
forth in Section 3 hereof by written notice, in the form attached as Exhibit A
(the "Exercise Notice"), which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised (the
"EXERCISED SHARES"), and such other representations and agreements as to the
holder's investment intent with respect to such Shares as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised after both (a) receipt by the Company of such
fully executed Exercise Notice accompanied by such aggregate Exercise Price and
(b) arrangements that are satisfactory to the Committee or the Board in its sole
discretion have been made for Optionee's payment to the Company of the amount
that is necessary to be withheld in accordance with applicable Federal or state
withholding requirements. No Shares will be issued pursuant to the Option unless
and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.
5. Lock-Up Period. Optionee hereby agrees that Optionee shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of any registration statement of the Company filed under the Exchange Act (or such other period as may be requested by the Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).
Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities pursuant to a registration statement filed under the Exchange Act. The obligations described in this Section 5 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be
promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day (or other) period. Optionee agrees that any transferee of the Option or shares acquired pursuant to the Option shall be bound by this Section 5.
6. Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee: (a) cash;
(b) check; or (c) with Shares that have been held by the Optionee for at least 6
months (or such other Shares as the Company determines will not cause the
Company to recognize for financial accounting purposes a charge for compensation
expense), (d) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (e) such
other consideration or in such other manner as may be determined by the Board or
the Committee in its absolute discretion.
7. Termination of Option.
(a) This Option may be exercised only in accordance with the Plan and the terms of this Agreement.
(b) Any unexercised portion of the Option shall automatically and without notice terminate and become null and void at the time of the earliest to occur of:
(i) three months after the date on which the Optionee's Continuous Service is terminated other than by reason of (A) Cause, which, solely for purposes of this Agreement, shall mean the termination of the Optionee's Continuous Service by reason of the Optionee's willful misconduct or gross negligence, (B) a mental or physical disability (within the meaning of Internal Revenue Code Section 22(e)) of the Optionee as determined by a medical doctor satisfactory to the Committee or the Board, or (C) the death of the Optionee;
(ii) immediately upon the termination of the Optionee's Continuous Service for Cause;
(iii) twelve months after the date on which the Optionee's Continuous Service is terminated by reason of a mental or physical disability (within the meaning of Section 22(e) of the Code) as determined by a medical doctor satisfactory to the Committee or the Board;
(iv) twelve months after the date of termination of the Optionee's Continuous Service by reason of the death of the Optionee, or, if later, (B) three months after the date on which the Optionee shall die if such death shall occur during the one year period specified in Subsection 7(b)(iii) hereof; or
(v) the tenth anniversary of the Date of Grant.
(c) To the extent not previously exercised, (i) the Option shall terminate immediately in the event of (1) the liquidation or dissolution of the Company, or (2) any
reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the Shares are converted into or exchanged for securities issued by another entity, unless the successor or acquiring entity, or an affiliate of such successor or acquiring entity, assumes the Option or substitutes an equivalent option or right pursuant to Section 9(c) of the Plan, and (ii) the Committee or the Board in its sole discretion may by written notice ("CANCELLATION NOTICE") cancel, effective upon the consummation of any corporate transaction described in Subsection 7(b)(i) of the Plan in which the Company does survive, the Option (or portion thereof) that remains unexercised on such date. The Committee or the Board shall give written notice of any proposed transaction referred to in this Section 7(c) a reasonable period of time prior to the closing date for such transaction (which notice may be given either before or after approval of such transaction), in order that the Optionee may have a reasonable period of time prior to the closing date of such transaction within which to exercise the Option if and to the extent that it then is exercisable (including any portion of the Option that may become exercisable upon the closing date of such transaction). The Optionee may condition his exercise of the Option upon the consummation of a transaction referred to in this Section 7(c).
8. Transferability. The Option granted hereby is not transferable otherwise than by will or under the applicable laws of descent and distribution, and during the lifetime of the Optionee the Option shall be exercisable only by the Optionee, or the Optionee's guardian or legal representative. In addition, the Option shall not be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and the Option shall not be subject to execution, attachment or similar process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the Option, or in the event of any levy upon the Option by reason of any execution, attachment or similar process contrary to the provisions hereof, the Option shall immediately become null and void.
9. No Rights of Stockholders. Neither the Optionee nor any personal representative (or beneficiary) shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any shares of Stock purchasable or issuable upon the exercise of the Option, in whole or in part, prior to the date of exercise of the Option.
10. Acceleration of Exercisability of Option. This Option shall become immediately fully exercisable in the event that, prior to the termination of the Option pursuant to Section 7 hereof, there is a "Change in Control", as defined in Section 7(b) of the Plan, that occurs during the Optionee's Continuous Service and such "Change in Control" was not approved by the Board of Directors of the Company.
11. Law Governing. This Agreement shall be governed in accordance with and governed by the internal laws of the State of Delaware.
12. Interpretation / Provisions of Plan Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan adopted by the Committee or the Board as may be in effect from time to time. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly. The
Optionee accepts the Option subject to all the terms and provisions of the Plan and this Agreement. The undersigned Optionee hereby accepts as binding, conclusive and final all decisions or interpretations of the Committee or the Board upon any questions arising under the Plan and this Agreement.
13 Notices. Any notice under this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Company, to the Company's President at 2220 West 14th Street, Tempe, Arizona 85281, or if the Company should move its principal office, to such principal office, and, in the case of the Optionee, to the Optionee's last permanent address as shown on the Company's records, subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section.
14. Tax Consequences. Set forth below is a brief summary as of the date of this Option of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Option. There may be a regular federal income tax liability upon the exercise of the Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the fair market value of the Shares on the date of exercise over the exercise price. If Optionee is an employee, the Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.
(b) Disposition of Shares. If Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes.
(c) Code Section 409A. Under Code Section 409A, an option that vests after December 31, 2004 that was granted with a per share exercise price that is determined by the Internal Revenue Service (the "IRS") to be less than the fair market value of a share on the date of grant (a "DISCOUNT OPTION") may be considered "deferred compensation". An option that is a "discount option" may result in (i) income recognition by the optionee prior to the exercise of the option, (ii) an additional twenty percent (20%) tax, and (iii) potential penalty and interest charges. Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share Exercise Price of this Option equals or exceeds the Fair Market Value of a Share on the Date of Grant in a later examination. Optionee agrees that if the IRS determines that the Option was granted with a per Share Exercise Price that was less than the Fair Market Value of a Share on the Date of Grant, Optionee will be solely responsible for Optionee's costs related to such a determination.
15. No Right to Continuous Service. Neither the Option nor this Agreement shall confer upon the Optionee any right to Continuous Service with the Company.
16. Additional Terms Applicable to California Residents. This Section 16 of the Agreement shall apply only to Optionee's receiving Nonqualified Stock Options under the Plan if Optionee is a resident of the State of California. Capitalized terms contained in this Section 16 shall have the same meanings given to them in the Plan and the other sections of this Agreement, unless otherwise provided in this Section 16. Notwithstanding any provisions contained in the Plan or the Agreement to the contrary and to the extent required by applicable law, the following terms shall apply to all options granted to residents of the State of California, until such time as the Plan Administrator amends this Section 16.
(a) Options granted to a person who, at the time of grant of such
option, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent Corporation or Subsidiary,
shall have an exercise price not less than 110% of the Fair Market Value per
share of Stock on the date of grant. Nonqualified Stock Options granted to any
other person shall have an exercise price that is not less than 85% of the Fair
Market Value per share of Stock on the date of grant. Notwithstanding the
foregoing, options may be granted with a per Share exercise price other than as
required above in accordance with and pursuant to a transaction described in
Section 424 of the Code.
(b) The term of each Option is provided for in Section 7 of this
Agreement, provided, however, that in no event shall the term be greater than
(10) years from the Date of Grant thereof.
(c) Unless determined otherwise by the Committee or the Board, options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Committee or the Board in its sole discretion makes an option transferable, such option may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Exchange Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Exchange Act.
(d) Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Committee or the Board and set forth in this Agreement. Except in the case of options granted to officers, directors and consultants, options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the options are granted.
(e) If Optionee's Continuous Service with the Company and its Related Entities terminates other than for Cause, disability or death, the Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in this Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in this Agreement).
(f) If Optionee's Continuous Service with the Company and its Related Entities terminates for Cause, the Optionee's Option will terminate immediately upon such termination.
(g) If Optionee's Continuous Service with the Company and its Related Entities terminates as a result of Optionee's disability (within the meaning of Section 22(e) of the Code), as determined by a medical doctor satisfactory to the Committee or the Board, Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified elsewhere in this Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in this Agreement).
(h) If Optionee's Continuous Service with the Company and its Related Entities terminates as a result of Optionee's death, the Option may be exercised within six (6) months following Optionee's death, or such longer period of time as specified in this Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in this Agreement) by Optionee's designated beneficiary, personal representative, or by the person(s) to whom the Option is transferred pursuant to Optionee's will or in accordance with the laws of descent and distribution.
(i) No option shall be granted to a resident of California more than ten (10) years after the earlier of the date of adoption of the Plan or the date the Plan is approved by the shareholders.
(j) The Company shall provide to Optionee, not less frequently than annually during the period such Optionee has one or more options outstanding, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.
(k) Any right of repurchase of unvested shares of Stock on behalf of the Company in the event of Optionee's termination of Continuous Service shall be at the original Exercise Price set forth in this Agreement, provided that such right to repurchase at the original Exercise Price shall lapse at a rate of at least 20% of the shares per year over five (5) years from the date the Option is granted (without respect to the date the Option was exercised or became exercisable) and the right to repurchase shall be exercised for cash or cancellation of indebtedness for the shares within 90 days of the termination of Continuous Service (or in the case of securities issued upon exercise of options after the date of termination, within 90 days after the date of exercise), and the right of repurchase shall terminate when the Company's securities become publicly traded. The foregoing notwithstanding, shares held by an officer, director, manager or consultant of the Company may be subject to additional or greater restrictions.
(l) Any right of repurchase of vested shares of Stock on behalf of the Company in the event of Optionee's termination of Continuous Service shall be at the Fair Market Value of such shares on the repurchase date, provided that the right to repurchase shall be exercised for cash or cancellation of indebtedness for the shares within 90 days of the termination of employment (or in the case of securities issued upon exercise of options after the date of termination, within 90 days after the date of exercise). The foregoing notwithstanding,
shares held by an officer, director, manager or consultant of the Corporation may be subject to additional or greater restrictions.
(m) In the event that any dividend or other distribution (whether in the form of cash, shares of Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares of Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the shares of Stock occurs, the Committee or the Board, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall adjust the number and class of shares of Stock that may be delivered under the Plan and/or the number, class, and price of such shares covered by each outstanding option, including adjustments to the extent required by Section 25102(o) of the California Corporations Code.
(n) This Section 16 is incorporated by reference into the Plan and the Committee or the Board shall have the authority to amend this Section 16 in accordance with Section 2 of the Plan.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the ____ day of _________, ____.
COMPANY:
LIMELIGHT NETWORKS, INC.
By:
Name:
Title:
Optionee has consented to receiving a copy of the Company's most recent prospectus describing the Plan via the Company's web site by executing the attached Consent. Optionee also acknowledges that a complete copy of the Plan document has been made available to him or her through the Company's web site. This Notice shall constitute delivery of the Plan. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option, and fully understands all provisions of the Option.
Dated: OPTIONEE:
By:
Print Name:
EXHIBIT A
2003 INCENTIVE COMPENSATION PLAN
NONQUALIFIED STOCK OPTION EXERCISE NOTICE
Limelight Networks, Inc.
Attention: Chief Executive Officer
2220 W. 14th Street
Tempe, Arizona 85281
1. Exercise of Option. The undersigned, (the "PURCHASER") was granted an option (the "OPTION") to purchase shares of the common stock of Limelight Networks, Inc. (the "COMPANY") on ___________________, _____, pursuant to the Company's Amended and Restated 2003 Incentive Compensation Plan (the "PLAN") and pursuant to the Nonqualified Stock Option Agreement dated __________________, _____ (the "OPTION AGREEMENT"). Purchaser hereby elects to exercise the Option as to a total of __________________ shares of the Stock of the Company (the "SHARES"), all of which are vested, as determined in accordance with the Option Agreement, subject to adjustment in accordance with Section 8(c) of the Plan, the purchase price for the Shares shall be $_______________, as required by the Option Agreement.
2. Payment. Purchaser herewith delivers to the Company the full purchase price for the Shares. Purchaser authorizes payroll withholding and otherwise will make adequate provision for foreign, federal, state, and local tax withholding obligations of the Company, if any.
3. Binding Effect. Purchaser acknowledges that the Shares are being acquired in accordance with and subject to the terms, provisions, and conditions of the Plan and the Option Agreement. This Agreement shall inure to the benefit of and be binding upon Purchaser's heirs, executors, administrators, successors, and assigns.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Shares
purchased hereby, notwithstanding the exercise of the Option. The Shares so
acquired shall be issued to the Purchaser as soon as practicable after exercise
of the Option. No adjustment will be made for a dividend or other right for
which the record date is prior to the date of issuance, except as provided in
Section 8(c) of the Plan.
5. Transfer. Purchaser is aware that Rule 144, promulgated under the Securities Act of 1933, which permits limited public resale of securities acquired in a nonpublic offering, is not currently available with respect to the Shares and, in any event, is available only if certain conditions are satisfied. Purchaser understands that any sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be delivered to Purchaser upon request.
6. Company's Right of First Refusal. Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the "HOLDER") may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section 6 (the "RIGHT OF FIRST REFUSAL").
(a) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the "NOTICE") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee ("PROPOSED TRANSFEREE"); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the "OFFERED PRICE"), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(c) Purchase Price. The purchase price ("PURCHASE PRICE") for the Shares purchased by the Company or its assignee(s) under this Section 6 shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section 6, then the Holder
may sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price; provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section 6 shall continue to apply to the Shares in the hands of such Proposed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 6 notwithstanding, the transfer of any or all of the Shares during the Optionee's lifetime or on the Optionee's death by will or intestacy to the Optionee's immediate family or a trust for the benefit of the Optionee's immediate
family shall be exempt from the provisions of this Section 6. "IMMEDIATE FAMILY"
as used herein shall mean spouse, lineal descendant or antecedent, father,
mother, brother or sister. In such case, the transferee or other recipient shall
receive and hold the Shares so transferred subject to the provisions of this
Section 6, and there shall be no further transfer of such Shares except in
accordance with the terms of this Section 6.
(g) Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.
7. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.
8. Restrictive Legends and Stop-Transfer Orders
(a) Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN
PUBLIC OFFERING OF THE COMPANY'S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
9. Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.
10. Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Committee or the Board which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Committee or the Board shall be final and binding on all parties.
11. Governing Law; Severability. This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of Delaware. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.
12. Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee.
Purchaser agrees to promptly notify the Chief Financial Officer of the Company if any of the Shares acquired pursuant to the Option are transferred within one (1) year from the date of exercise of all or part of the Option or within two (2) years of the Date of Grant of the Option.
Purchaser's address of record is:
Purchaser's Social Security Number is:
Very truly yours,
(Signature)
(Purchaser's Name Printed)
Receipt of the above is hereby acknowledged.
LIMELIGHT NETWORKS, INC.
By:
Print Name:
Title:
Dated:
Exhibit 10.6
MAINSPRING CAPITAL, L.L.C.
COMMERCIAL LEASE
BEL DE MAR, L.L.C, an Arizona limited liability company
"Landlord"
AND
LIMELIGHT MAINSTREET TEMPE, LLC.
"Tenant"
SUMMARY OF LEASE TERMS*
Date: November 18, 2002 Lease Number: ________________________________________ Project: Airway Corporate Center Square Footage: 13,341 (approximately) Address: 2220 W. 14th Street Tempe, AZ Term: Three Years Base Rental Schedule: ________________________________________ Current Rental Tax Rate: 2.3% Current Estimated Operating Expenses: $.18 per square foot per month Other Items: OPTIONS TO EXTEND: Tenant has one (1) three (3)-year options to extend the term of the lease subject to the terms of paragraph 28, "Options". TENANT IMPROVEMENT ALLOWANCE: Landlord agrees provide Tenant with a tenant improvement allowance of forty-thousand dollars ($45,000) subject to the terms outlined in paragraph 29, "Tenant Improvement Allowance." |
*NOTE: This summary is provided for the Tenant's convenience only. It is not to be construed as a part of the above referenced Lease Agreement. In the event that there is a conflict between this summary of lease terms and the Lease Agreement, the language in the Lease Agreement shall prevail.
STANDARD LEASE AGREEMENT
PHXINDNII
DATE: NOVEMBER 18, 2002
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between Bel de Mar, L.L.C., an Arizona limited liability company, hereinafter referred to as "Landlord", and Limelight Mainstreet Tempe, LLC, hereinafter referred to as "Tenant";
WITNESSETH:
1. PREMISES AND TERM. In consideration of the mutual obligations of Landlord and Tenant set forth herein. Landlord leases to Tenant, and Tenant hereby takes from Landlord the Premises situated within the County of Maricopa, State of Arizona, more particularly described on Exhibit "A" attached hereto and incorporated herein by reference, (the "Premises"), together with all rights, privileges, easements, appurtenances, and amenities belonging to or in any way pertaining to the Premises, to have and to hold, subject to the terms, covenants and conditions of this Lease. The term of this Lease shall commence on the commencement date hereinafter set forth and shall end on NOVEMBER 18, 2005. If this Lease is executed before the Premises become vacant or otherwise available and ready for occupancy, or if any present Tenant or occupant of the Premises holds over, and Landlord cannot acquire possession of the Premises prior to the date recited as the commencement date of this Lease, Landlord shall not be deemed in default hereunder, and Tenant agrees to accept possession of the Premises at such time as Landlord is able to tender the same, which date shall thenceforth be deemed the "commencement date", and Landlord hereby waives payment of rent covering any period prior to the tendering of possession to Tenant hereunder.
A. EXISTING BUILDING. The commencement date shall be NOVEMBER 18, 2002. Tenant acknowledges that, (i) it has inspected and accepts the Premises, (ii) the buildings and improvements comprising the same are suitable for the purpose for which the Premises are leased, (iii) the Premises are in good and satisfactory condition, and (iv) no representations as to the repair of the Premises, nor promises to alter, remodel or improve the Premises have been made by Landlord (unless otherwise set forth in the Lease). In no event shall any existing defects in the Premises or any limitation on its use be considered a breach by Landlord under this lease or a failure to any conditions to Tenant's obligations hereunder. Upon request by Landlord, Tenant shall execute and deliver to Landlord a Letter of Acceptance of delivery of the Premises.
B. BUILDING TO BE CONSTRUCTED OR SHELL SPACE. If the Premises or part thereof are to be constructed, the commencement date shall be deemed to be the sooner of the date upon which the Premises and other improvements to be erected in accordance with the plans and specifications described on Exhibit "C" attached hereto and incorporated herein by reference (the "Plans") have been substantially completed or the date upon which the Tenant takes occupancy. As used herein, the term "substantially completed" shall mean, that in the opinion of the architect or space planner that prepared the Plans, such improvements have been completed in accordance with the Plans and the Premises are in good and satisfactory condition, subject only to completion of minor punch list items. As soon as such improvements have been substantially completed, Landlord shall notify Tenant in writing that the commencement date has occurred. Within ten (10) days thereafter, Tenant shall submit to Landlord in writing a punch list of items needing completion or correction. Landlord shall use reasonable efforts to complete such items within thirty (30) days after the receipt of such notice. In the event Tenant, its employees, agents or contractors cause construction of such improvements to be delayed, the commencement date shall be deemed to be the date that, in the opinion of the architect or space planner that prepared the Plans, substantial completion would have occurred if such delays had not taken place. The taking of possession by Tenant shall be deemed to conclusively establish that the buildings and other improvements had been completed in accordance with the Plans, that the Premises are in good and satisfactory condition as of when possession was taken, and that Tenant has accepted such buildings and other improvements without representation or warranty from Landlord. Upon Landlord's request, Tenant shall execute and deliver to Landlord a Letter of Acceptance of delivery of the Premises.
2. BASE RENT, SECURITY DEPOSIT AND OPERATING EXPENSE PAYMENTS.
A. BASE RENT. Tenant agrees to pay Landlord base rent ("Base Rent") for the Premises, in advance, without demand, deduction or set off, at the rate of six thousand and three dollars ($6,003)* per month during months 1-12 of the initial lease term, seven thousand and three and 50/100's dollars ($7,003.50)* per month during months 13-24 of the initial lease term, and eight thousand and four ($8.004)* per month for months 25-36 of the initial lease term. One (1) such monthly installment, plus the other monthly charges set forth in Paragraph 2.C below for such one (1) month, shall be due and payable on the date hereof, and thereafter, one such monthly installment shall be due and payable on or before the first day of each succeeding calendar month following the commencement date, except that all payments due hereunder for any fractional calendar month shall be prorated. The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under
* plus current rental tax
this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any rent due hereunder except where expressly provided in this Lease. Tenant waives and releases all statutory liens and off-set rights as to rent.
B. SECURITY DEPOSIT. In addition, Tenant agrees to deposit with Landlord on the date hereof the sum of Fifteen thousand and 00/100 Dollars ($15,000.00) and also agrees to deposit with Landlord an additional Fifteen thousand and 00/100 Dollars ($15,000.00) six (6) months from the commencement date, which shall be held by Landlord, without obligation for interest, as security for the performance of Tenant's obligations under the Lease, it being expressly understood and agreed that this deposit is not an advance rental deposit or a measure of Landlord's damages in case of Tenant's default. Upon each occurrence of an event of default, Landlord may use all or part of the deposit to pay rent or other payments due Landlord under this Lease, and the cost of any other damage, injury, expense or liability caused by such event of default without prejudice to any other remedy provided herein or provided by law. On demand, Tenant shall pay Landlord the amount that will restore the security deposit to its original amount. The security deposit shall be deemed the property of Landlord, but any remaining balance of such deposit shall be returned by. Landlord to Tenant within thirty (30) days from the time Tenant's obligations under this Lease have been fulfilled, less a refurbishment fee equal to fifteen percent of the total deposit
C. OPERATING EXPENSE PAYMENTS. During each month of the Lease Term, on the same date that Base Rent is due, Tenant agrees to pay to Landlord as additional rent an amount equal to one-twelfth of the amount, as estimated by Landlord, of Tenant's Proportionate Share (hereinafter defined) of Operating Expenses for the Project. Payments thereof for any fractional calendar month shall be prorated. The term "Operating Expenses" means all costs and expenses incurred by Landlord with respect to the ownership, maintenance, and operation of the Project including, but not limited to costs of Taxes (hereinafter defined) and fees payable to tax consultants and attorneys for consultation and contesting taxes; insurance; utilities (subject to the other provisions of this Lease regarding utilities) maintenance, repair and replacement of all portions of the Project, including without limitation, paving and parking areas, roads, roofs, alleys, and driveways, mowing, landscaping, exterior painting, utility lines, mechanical systems, and amounts paid to contractors and subcontractors for work or services performed in connection with any of the foregoing; charges or assessments of any association of which the Project is subject; property management fees payable to a property manager, including any affiliate of Landlord, or if there is no property manager, an administration fee of fifteen percent (15%) of Operating Expenses payable to Landlord; security services, if any; trash collection, sweeping and removal; and additions, alterations or replacements made by Landlord at Landlord's sole discretion to the Project in order to comply with applicable laws or codes as amended from time to time or that are appropriate to the continued operation of the Project, provided that the cost of such additions, alterations, or replacements that are required to be capitalized for federal income tax purposes shall be amortized on a straight line basis over a period equal to the lesser of the useful life thereof for federal income tax purposes or ten (10) years. Operating Expenses do not include debt service under mortgages or ground rent under ground leases, costs of restoration to the extent of net insurance proceeds received by Landlord with respect thereto, leasing commissions, renovating of space for tenants, or depreciation or amortization except as provided above.
The monthly estimated Operating Expense payments may be increased or decreased by Landlord from time to time to reflect the projected actual cost of all such items. If the Tenant's total payments for any year are less that Tenant's Proportionate Share of actual operating costs for such year, Tenant shall pay the difference to Landlord within thirty (30) days after demand. If the total payments of Tenant for any year are more than Tenant's Proportionate Share of actual operating costs for such year, Landlord shall retain such excess and credit it against Tenant's next payments. For purposes of calculating Tenant's Proportionate Share of Operating Expenses, a year shall mean a calendar year except the first year, which shall begin on the Commencement Date, and the last year, which shall end on the expiration of this Lease.
The Tenant's "Proportionate Share" shall be a fraction, having as its numerator the floor area of the Premises and its denominator the total floor area of the Project, all as determined by Landlord. Landlord may equitably increase Tenant's Proportionate Share for any item of the Project that includes the Premises.
3. TAXES.
A. Subject to Tenant's reimbursement obligation and Landlord's right to contest, Landlord agrees to pay all taxes, assessments and governmental charges of any kind and nature (collectively referred to herein as "Taxes") that accrue against the Premises, and/or the land and/or improvements of which the Premises are a part. Landlord shall have the right to contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens thereof. The Landlord shall have the right to employ a tax consulting firm and legal counsel to attempt to assure a fair tax burden on the building and grounds within the applicable taxing jurisdiction. Tenant agrees to pay its proportionate share of the cost of such consultant and legal counsel.
B. Tenant shall be liable for all taxes levied or assessed against any personal property or fixtures placed in the Premises. If any such taxes are levied or assessed against Landlord or Landlord's property and (i) Landlord pays the same or (ii) the assessed value of Landlord's property is increased by inclusion of such personal property and fixtures and Landlord pays the increased taxes, then, upon demand Tenant shall pay to Landlord such taxes.
C. If at any time during the term of this Lease, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly or indirectly upon the rents received therefrom and/or a franchise tax, any excise, transaction, sales or privilege tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents from the Premises and/or the land improvements of which the Premises are a part, then all such taxes, assessments, levies or charges, or the part thereof so measured or based, shall be payable to Landlord, monthly or upon demand, at the option of the Landlord, as additional rent.
4. LANDLORD'S REPAIRS.
A. Landlord, at its own expense, shall maintain only the structural soundness of the roof, foundation and exterior walls of the Premises in good repair, reasonable wear and tear and casualty losses and damages caused by Tenant excluded. The term "walls" as used herein shall not include windows, glass or plate glass, doors and overhead doors, special store fronts, dock bumpers, dock plates or levelers, or office entries Tenant shall immediately give Landlord written notice of defect or need for repairs, after which Landlord shall have reasonable opportunity to repair same or cure such defect. Landlord's obligation to maintain the aforementioned items shall be limited solely to the cost of such repairs or maintenance or the curing of any defect in the same.
B. Landlord reserves the right to perform the paving maintenance, common area and landscape replacement and maintenance, exterior painting, common water and sewage line plumbing and any other items that are otherwise Tenant's obligations under Paragraph 5.A, all of which are sometimes referred to herein as common area charges, and Tenant shall be liable for its proportionate share of the cost and expense of such repair, replacement, maintenance and other such items.
C. Tenant agrees to pay its proportionate share of the cost of (i) maintenance and/or landscaping of any property that is a part of the building and/or project of which the Premises are a part, (ii) maintenance and/or landscaping of any property that is maintained or landscaped by any property owner or community owner association that is named in the restrictive covenants or deed restrictions to which the Premises are subject, and (iii) operating and maintaining any property, facilities or services provided for the common use of Tenant and other tenants of any project or building of which the Premises are a part.
D. Landlord reserves the right to alter or modify the building of which the premises are a part and/or common areas associated therewith, when such alterations or modifications are required by governmental laws, codes, ordinances, regulations, or any other applicable authorities, including, without limitation, the Americans with Disabilities Act of 1990 (the "ADA"), in which event Tenant shall be liable for its proportionate share of such cost. If such modification is a capital modification for the general benefit of the project, and is required regardless of Tenant's particular use of the Premises, then the cost shall be an operating expense allocated over the lesser of five (5) years or the useful life of the modification. Notwithstanding the foregoing, if such modification is predicated by Tenant's particular use of the Premises or is principally for the benefit of Tenant (and not other Tenants of the building) the cost shall be borne entirely by Tenant and Tenant shall reimburse Landlord for same promptly upon demand.
E. Tenant may audit Landlord's books relevant to the operating expenses upon reasonable notice to Landlord; provided, however, Tenant agrees to pay all costs associated with or resulting from such audit, including reimbursement to Landlord and Landlord's agents for time or costs incurred.
5. TENANT'S REPAIRS.
A. Landlord reserves the prior right, exercisable at any time and in its sole discretion, to coordinate, perform, or to contract of the performance of Tenant's repair, maintenance and replacement obligations under this Paragraph 5. Tenant shall reimburse Landlord upon demand for the costs of any such services or repairs incurred by Landlord. Except only those repairs for which Landlord is responsible under Paragraph 4.A, Tenant, at Tenant's sole cost and expense shall: (i) maintain all parts of the Premises, landscape and grounds surrounding the Premises and the building at which the Premises are a part, in good condition, (ii) promptly make all necessary repairs and replacements, (iii) keep the parking areas, driveways and alleys surrounding the Premises in a clean and sanitary condition, and maintain any spur track servicing the Premises.
B. Tenant, at its own cost and expense, shall enter into and deliver to Landlord a regularly scheduled preventative maintenance service contract with a maintenance contractor approved by Landlord for servicing all hot water, heating and air-conditioning systems and other equipment within the Premises. The service contract must include all services required by the Landlord and must become effective within thirty (30) days of the date Tenant takes possession of the Premises. In the event Tenant does not deliver said contract to Landlord within thirty (30) days of the commencement date, the Landlord has the right to contract a third-party professional contractor for said service without notice to Tenant, and Tenant shall upon demand reimburse Landlord for the full cost thereof. Additionally Landlord, at any time and in its sole discretion, reserves the right
upon ninety (90) days written notice to Tenant to enter into a regularly scheduled preventative maintenance service contract covering the service, repair and/or replacement of any or all such items for the entire building(s) of which the Premises are a part, in which event Tenant shall be liable for its proportionate share of the cost and expense of said preventative maintenance service contract in accordance with Paragraph 4 above.
C. Subject to the provisions of Paragraph 10, Tenant shall repair and pay for any damage to the Premises or the Project caused by Tenant or Tenant's employees, agents or invitees, or caused by Tenant's default hereunder. Access to the roof or the exterior walls of the Premises or Project for purposes of repairs or otherwise by the Tenant shall be subject to Landlord's prior approval and to such conditions as Landlord may require.
6. ALTERATIONS. Tenant shall not make any alterations, additions, partitions, or other improvements to the Premises without the prior written consent of Landlord. Tenant, at its own cost and expense, may erect shelves, bins, machinery and trade fixtures as it desires as well as alterations, additions, partitions, communication towers or other improvements which have been specifically consented to in writing by Landlord, provided that (i) such items do not alter the basic character of the Premises or the building and/or improvements of which the Premises are a part, (ii) such items do not overload or damage the same, (iii) such items may be removed without injury to the Premises, and (iv) the construction, erection or installation thereof complies with all applicable governmental laws, codes, ordinances, regulations, or any other applicable authorities, including, without limitation, the Americans with Disabilities Act of 1990 (the "ADA"), and with Landlord's details, specifications and other requirements, (v) any architectural, engineering, construction management, permits, inspections or other cost or fee required to assure compliance with conditions set forth in this Paragraph 6 shall be paid by Tenant promptly upon demand. All alterations, additions, partitions, or other improvements erected by Tenant shall be and remain the property of Tenant during the term of this Lease; provided however, at the termination of this Lease, Landlord shall have the option, exercisable in Landlord's sole discretion, to require Tenant either to remove, at Tenant's sole cost and expense, all or part of each alterations, additions, partitions, or other improvements, at which time Tenant shall promptly restore the Premises to its original condition, or to keep in place the same at which time such alterations, additions, improvements, and partitions shall become the property of Landlord. If requested by Tenant at any time prior to termination of this Lease, Landlord shall, in its sole discretion, give or withhold its consent to the future removal by Tenant of any particular alteration, addition, partition or other improvement then existing or planned by Tenant; provided, however, Landlord shall not unreasonably withhold its consent to Tenant's future removal of any specialized equipment installed in the Premises by Tenant Such consent must be in writing to be binding upon Landlord. Landlord hereby consents to Tenant's removal of those items listed on Exhibit D attached hereto and incorporated herein by this reference. (Note: The requesting and granting of such consent shall not preclude Tenant from subsequently electing to leave any such items in place or, under such circumstances, Landlord from requiring that such items be removed.) (Note: Tenant's obligation to restore the Premises to its original condition shall apply following the removal of a particular alteration, addition, partition or other improvement pursuant to Landlord's consent.) All shelves, bins, machinery and trade fixtures installed by Tenant shall be removed on or before the earlier to occur of the date of termination of this Lease or vacating the Premises, at which time Tenant shall restore the Premises to their original condition. All alterations, installations, removals and restoration shall be performed in a good and workmanlike manner so as not to damage or alter the primary structure or structural qualities of the buildings and other improvements situated on the Premises or of which the Premises are a part.
7. SIGNS. Any signage Tenant desires for the Premises shall be subject to Landlord's written approval. Tenant shall repair, paint and/or replace the building facia surface to which its signs are attached upon vacation of the Premises, or the removal or alteration of the signage. Tenant shall not (i) make any changes to the exterior of the Premises, (ii) install any exterior lights, decorations, balloons, flags, pennants, banners or painting, or (iii) erect or install any signs, windows, or door lettering, placards, decorations or advertising media of any type which can be viewed from the exterior of the Premises, without Landlord's prior written consent. Tenant, at its sole cost, shall obtain all applicable governmental permits and approvals for signage and exterior treatments. All signs, decorations, advertising media, blinds, draperies and other window treatment or bars or other security installations visible from outside the Premises shall conform in all respects to the criteria established by Landlord and any applicable governmental laws, ordinances, regulations, or other requirements.
8. PARKING. Tenant shall be entitled to park in common with other tenants of the Project in those areas designed for non-reserved parking. Tenant agrees not to burden the parking facilities and agrees to cooperate with Landlord and other tenants in the use of the parking facilities. Landlord reserves the right, in its absolute discretion, to determine whether parking facilities are becoming crowded and, in such event, to allocate parking spaces among Tenant and other tenants,. Landlord shall not be responsible for enforcing Tenant's parking rights against any third parties. No vehicle storage of any nature shall be allowed or permitted in any parking area without Landlord's prior written consent.
9. UTILITIES.
A. Landlord agrees to provide normal water and electricity connection to the Premises as determined by Landlord's sole, reasonable discretion. Subject to the following qualifications, Tenant shall have the right to increase the electrical capacity of the Premises by installing additional, or upgrading existing, electrical system components in or serving the Premises. All such installations and/or upgrades shall be at Tenant's sole cost and expense and shall be performed only after obtaining Landlord's written consent, which consent shall not be unreasonably withheld or delayed. Tenant shall provide Landlord with such detail as Landlord shall request regarding such installations and/or upgrades. If any installation or upgrade requires work to be performed outside of the Premises, then Landlord may further reasonably condition its consent thereto on a case-by-case basis. All such installations and/or upgrades are further subject to the provisions of Paragraph 6. Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler services, refuse and trash collection, and other utilities and services used on or at the Premises and any maintenance or inspection charges for utilities, together with any taxes, penalties, surcharges or the like pertaining to the Tenant's use of the Premises. Landlord shall have the right to cause any of said services to be separately metered or charged to Tenant by provider, at Tenant's expense. Tenant shall pay its share of all charges for jointly metered utilities, based on consumption as reasonably determined by Landlord. Landlord shall not be liable for any interruption or failure of utility service on the Premises.
B. In the event water is not separately metered to Tenant, Tenant agrees that it will not use water for uses other than normal domestic restroom and kitchen usage; and, Tenant does further agree to reimburse Landlord for the entire amount of common water costs as additional rental if, in fact, Tenant uses water for uses other than normal domestic restroom and kitchen uses without first obtaining Landlord's written permission. Furthermore, Tenant agrees in such event to install at its own expense, a submeter to determine Tenant's usage.
C. Tenant agrees it will not use sewer capacity for any use other than normal domestic restroom and kitchen use. Tenant further agrees to notify Landlord of any other sewer use ("excess sewer use") and also agrees to reimburse Landlord for the costs and expenses related to Tenant's excess sewer use, which shall include, but is expressly herein not limited to, the cost of acquiring additional sewer capacity to service Tenant's Lease.
10. INSURANCE.
A. Subject to Tenant's reimbursement obligation, Landlord shall maintain such fire and extended coverage insurance covering the building situated on the Premises or of which the Premises are a part as Landlord deems appropriate. Such insurance may provide for a commercially reasonable deductible. Landlord may, but is not obligated to, maintain such other insurance and additional coverage as it may deem necessary, including but not limited to, comprehensive general liability insurance, loss of rental insurance for up to 12 months rental, and such additional insurance and coverage shall be reimbursable by Tenant as provided herein. The Project may be included in a blanket policy (in which case the cost of such insurance allocable to the Project will be determined by Landlord based upon insurer's cost calculations).
B. Tenant, at its own expense, shall maintain during the term of this Lease a policy or policies of worker's compensation and comprehensive general liability insurance, including personal injury and property damage, with contractual liability endorsement, in the amount of $1,000,000 for property damage and $2,000,000 per occurrence for personal injuries or deaths of persons occurring in or about the Premises. Tenant, at its own expense, also shall maintain during the term of this Lease fire and extended coverage insurance covering the replacement cost of (i) all alterations, additions, partitions and Tenant's persona] property contained within the Premises by Tenant or by Landlord on behalf of Tenant and (ii) all of Tenant's personal property contained within the Premises. Said policies shall (i) name Landlord as an additional insured and insure Landlord's contingent liability under this Lease (except for the worker's compensation policy, which instead shall include waiver of subrogation endorsement in favor of Landlord), (ii) be issued by an insurance company which is acceptable to Landlord, (iii) provide that said insurance shall not be canceled unless thirty (30) days written notice shall be given to Landlord, and (iv) provide primary coverage to Landlord, when any policy issued to Landlord provides duplicate or if similar coverage, Landlord's policy will be excess over Tenant's policies. Said policies or certificates thereof shall be delivered to Landlord by Tenant within ten (10) written days of the commencement of the term of the Lease and upon each renewal of said insurance.
C. Tenant will not permit the Premises to be used for any purpose or in any manner that would (i) void the insurance thereon, (ii) increase the insurance risk, or (iii) cause the disallowance of any sprinkler credits, including without limitation, use of the Premises for the receipt, storage or handling of any product, material or merchandise that is explosive or highly flammable. If any increase in the cost of any insurance of the Premises or the building of which the Premises are a part is caused by Tenant's use of the Premises, or because Tenant vacates the Premises, then Tenant shall pay the amount of such increase to Landlord.
11. FIRE AND CASUALTY DAMAGE.
A. If the Premises or the building of which the Premises are a part should be damaged or destroyed by fire or other peril, Tenant immediately shall give written notice to Landlord. If the buildings situated on the Premises or of which the Premises are a part should be totally destroyed by any peril covered by insurance to be provided by Landlord under Paragraph
10. A above, or if they should be so damaged thereby that, in the Landlord's estimation, rebuilding or repairs cannot be completed within one hundred and twenty ninety (90) days after the date of such damage, this Lease shall terminate and rent shall be abated during the unexpired portion of this Lease, effective upon the date of the occurrence of such damage, provided Tenant has paid to Landlord the deductible or applicable portion of the deductible, as the case may be, under the Landlord's insurance policy.
B. If the buildings situated upon the Premises or of which the Premises are
a part, should be damaged by any peril covered by the insurance to be provided
by Landlord under Paragraph 10.A above, and in Landlord's estimation, rebuilding
or repairs can be substantially completed within one hundred and twenty ninety
(90) days after the date of such damage, this Lease shall not terminate, and
Landlord shall restore the Premises to substantially its previous condition,
except that Landlord shall not be required to rebuild, repair or replace any
part of the partitions, fixtures, additions and other improvements that may have
been constructed, erected or installed in, or about the Premises or for the
benefit of, or by or for the Tenant. Tenant shall pay to Landlord the amount of
the deductible under Landlord's insurance policy within thirty (30) days after
receipt of Landlord's invoice therefor. If the damage covered by the insurance
also involves portions of the building or buildings other than the Premises,
Tenant shall pay only a portion of the deductible, based on the ratio of the
cost of repairing the damage in the Premises to the total of repairing all
damage in the building or buildings. If such repairs and rebuilding have not
been substantially completed within one hundred fifty (150) days after the date
of such damage, Tenant, at Tenant's exclusive remedy, may, upon payment of
insurance policy, terminate this Lease by delivering written notice of
termination to Landlord in which event the rights and obligations hereunder
shall cease and terminate.
C. Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirements is made known by any such holder, whereupon all rights and obligations hereunder shall cease and terminate.
D. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant hereby waive and release each other of and from any and all rights of recovery, claim, action or cause of action, against each other, their agents, officers and employees, for any loss or damage that may occur to the Premises, improvements to the building of which the Premises are a part, or personal property (building contents) within the building and /or Premises, for any reason regardless of cause or origin. Each party of this Lease agrees immediately after execution of this Lease to give each insurance company, which has issued to its policies of fire and extended coverage insurance, written notice of the terms of the mutual waivers contained in this subparagraph, and if necessary, to have the insurance policies properly endorsed.
12. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of recovery and causes of action that Tenant has released, Landlord shall hold Tenant harmless and defend Tenant against any and all claims or liability for any injury or damage to any person in, on or about the Premises or any part thereof and/or the building of which the Premises are a part, when such injury shall be caused by the act, neglect, negligence, fault of, or omission of any duty with respect to the same by Landlord, its agents, servants and employees. Except for any claims, rights of recovery and causes of action that Landlord has released, Tenant shall hold Landlord harmless from and defend Landlord against any and all claims or liability for any injury or damage to any person or property whatsoever occurring in, on or about the Premises or any part thereof and/or of the building of which the Premises are a part, including without limitation elevators, stairways, passageways or hallways, the use of which Tenant may have in accordance with this Lease, when such injury or damage shall (i) be caused by the act, neglect, negligence, fault of, or omission of any duty with respect to the same by Tenant, its agents, servants, employees, or invitees, (ii) arise from the conduct of management of any work done by the Tenant in or about the Premises, (iii) arise from transactions of the Tenant, or (iv) arise from Tenant's breach of any covenant contained in this Lease, including but not limited to Tenant's failure to comply with any of the matters set forth relating to environmental requirements as defined and described in Paragraph 23 and incorporated herein by reference, along with all reasonable costs, counsel fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon. The provisions of this Paragraph 12 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination.
13. USE. The Premises shall be used only for the purpose of data center, co-location, and general offices and for such other lawful purposes as may be incidental thereto. Outside storage, including without limitation, storage of trucks and other vehicles and the washing thereof at any time is prohibited without Landlord's prior written consent. Tenant shall, at its own cost and expense, obtain any and all licenses and permits necessary for such use, shall at all times maintain the Premises in a clean, healthful and safe condition and comply with all governmental laws, codes, ordinances, regulations or any other applicable authorities with regard to the use, condition or occupancy of the Premises including, without limitation, the ADA. Tenant shall be responsible, at Tenant's sole cost and expense, for the correction, prevention, and abatement of nuisances in or upon, or connected with, the Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise, vibrations, pest infestations to emanate from the Premises, nor take any other action that would constitute a nuisance or would disturb,
unreasonably interfere with, or endanger Landlord or any other tenants of the building or project of which the Premises are a part. Tenant's use of the Premises shall at all times comply with the insurance provisions in Paragraph 10 hereof.
14. INSPECTION. Landlord and its agents and representatives shall have the right to enter the Premises at any reasonable time during business hours to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease. During the period that is six (6) months prior to the end of the Lease term upon telephonic notice to Tenant, Landlord and Landlord's representative may enter the Premises during business hours for the purpose of showing the Premises. In addition, Landlord shall have the right to erect a suitable sign on the Premises stating the Premises are available. Tenant shall notify Landlord in writing at least thirty (30) days prior to vacating the Premises and shall arrange to meet with Landlord for a joint inspection of the Premises prior to vacating. If Tenant fails to give such notice or to arrange for such inspection, then Landlord's inspection of the Premises shall be deemed correct for the purpose of determining Tenant's responsibility for repairs and restoration of the Premise.
15. ASSIGNMENT AND SUBLETTING.
A. Tenant shall not have the right to assign, sublet, transfer or encumber this Lease, or any interest therein, without the prior written consent of Landlord, or without such consent as provided for in this Section of the Lease. Any attempted assignment, subletting, transfer or encumbrance by Tenant in violation of the terms and covenants of this Paragraph shall be void. Notwithstanding the foregoing, Tenant shall have the right to assign this Lease to any affiliate provided that such assignment is in form satisfactory to Landlord. Any assignee, Sub-Tenant or transferee of Tenant's interest in this Lease (all such assignees, Sub-Tenant and transferees being hereinafter referred to as "Transferees"), by assuming Tenant's obligations hereunder, shall assume liability to Landlord for all amounts paid to persons other than Landlord by such Transferees is contravention of this Paragraph. No assignment, subletting or other transfer, whether consented to by Landlord or not permitted hereunder shall relieve Tenant of its Liability hereunder. If an event of default occurs while the Premises or any part thereof are assigned or sublet, then Landlord, in addition to any other remedies herein provided, or provided by law, may collect directly from such Transferee all rents payable to the Tenant and apply such rent against any sums due Landlord hereunder. No such collection shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant's obligations hereunder.
B. The Tenant's principal operating business as defined herein shall be deemed approved by the Landlord with respect to the Tenant's rights under this or any other applicable Section of the Lease. The Tenant's principal business is in operating data center co-location facilities, i.e. providing a facility with certain attributes, amenities and services that are desirable for housing and operating computer equipment for the Tenant's customers ("Customers"). Customers may enter into agreements with the Tenant to purchase a variety of services ("Services"), including but not limited to: renting equipment and space to house the Customer's computers; power to operate the Customer's equipment; Internet access; monitoring of the Customer's computer systems: data backup; and additional security measures including restricting access to a certain amount of space via a subdivision within the data center for the Customer's sole use for housing and operating their computer systems. Certain customers may choose to utilize the Services in a "disaster recovery" capacity and/or as a backup computer system in the event of failure on the part of their primary computer systems. In the event of a catastrophic failure of a Customer's primary computer system, Tenant may provide the Customer with temporary workspace, including but not limited to: workbenches; desks; telephones; facsimile machines; copiers; tools; storage and desktop computers. Such Agreements between Tenant and Customers shall not be considered an assignment, sublet, transfer or encumberment for the purposes of this Lease.
C. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C., Section 101, et. seq., (the "Bankruptcy Code"), any and all monies or other consideration payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord be held in trust for the benefit of Landlord and be promptly paid or delivered to Landlord.
D. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code, shall be deemed, without further act or deed, to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall upon demand execute and deliver to Landlord an instrument confirming such assumption.
16. CONDEMNATION. If the whole or any substantial part as determined by Landlord of the Premises should be taken for any public or quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof and the taking prevents or materially interferes with the use of the Premises for the purpose for which they were leased to tenant, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease,
effective on the date of such taking. If less than a substantial part, as determined by Landlord, of the Premises is taken for any public of quasi-public use under any governmental law, ordinance or regulation or by right of eminent domain, or by private purchase in lieu thereof, this Lease shall not terminate, but the rent payable hereunder during the unexpired portion of this Lease shall be reduced to such extent as may be fair and reasonable under all of the circumstances. All compensation awarded in connection with or as a result of any of the foregoing proceedings shall be the property of Landlord and Tenant hereby assigns any interest in any such award to Landlord; provided, however, Landlord shall have no interest in any award made to Tenant for loss of business or goodwill or for the taking of Tenant's fixtures and improvements, if a separate award for such items is made to Tenant.
17. HOLDING OVER. At the termination of this Lease by its expiration or otherwise, Tenant immediately shall deliver possession to Landlord with all cleaning, repairs and maintenance required herein to be performed by Tenant completed. If, for any reason, Tenant retains possession of the Premises after the expiration of the Lease, unless the parties hereto otherwise agree in writing, such possession shall be subject to termination by either Landlord or Tenant at any time upon not less than ten (10) days advance written notice, and all of the other terms and provisions of this Lease shall be applicable during such period, except that Tenant shall pay Landlord from time to time, upon demand, as rental for the period of such possession, an amount equal to double the rent in effect on the termination date, computed on a daily basis for each day of such period. No holding over by Tenant, whether with or without consent of Landlord shall operate to extend this Lease except as otherwise expressly provided. The preceding provisions of this Paragraph 17 shall not be construed as consent for Tenant to retain possession of the Premises in the absence of written consent thereto by Landlord.
18. QUIET ENJOYMENT. Landlord covenants that on or before the commencement date it will have good title to the Premises, free and clear of all liens and encumbrances, excepting only the lien for such mortgage or mortgages as are permitted by the terms of this Lease, zoning ordinances and other building and fire ordinances and governmental regulations relating to the use of such property, and easements, restrictions and other conditions of record. If this Lease is a sublease, then Tenant agrees to take the Premises subject to the provisions of the prior Leases. Landlord represents that it has the authority to enter into this Lease and that so long as Tenant pays all amounts due hereunder and performs all other covenants and agreements herein set forth, Tenant shall peaceably and quietly have, hold and enjoy the Premises for the term hereof without hindrance or molestation from Landlord, subject to the terms and provisions of this Lease.
19. EVENTS OF DEFAULT. The following events (herein individually referred to as "event of default") each shall be deemed to be events of nonperformance by Tenant under this Lease:
A. Tenant shall fail to pay any installment of the rent herein when due, or any other payment of reimbursement to Landlord required herein when due, and such failure continues for a period of five (5) days following Tenant's receipt of written notice from Landlord that such payment was due and not received by the Landlord.
B. The Tenant or any guarantor of the Tenant's obligations hereunder shall
(i) become insolvent; (ii) admit in writing its inability to pay its debts;
(iii) make a general assignment for the benefit of creditors; (iv) commence any
case, proceeding or other case action seeking to have an order for relief
entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or of any substantial part
of its property; or (v) take any action to authorize or in contemplation of any
of the actions set forth above in this Paragraph.
C. Any case, proceeding or other action against the Tenant or any guarantor
of the Tenant's obligations hereunder shall be commenced seeking (i) to have an
order for relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent; (ii) reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization of relief of debtors; (iii) appointment
of a receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property, and such case, proceeding or other action
(a) results in the entry of an order for relief against it which is not fully
stayed within seven (7) business days after the entry thereof, or (b) shall
remain undismissed for a period of forty-five (45) days.
D. E. Tenant shall fail to discharge any lien placed upon the Premises in violation of Paragraph 22 hereof within twenty (20) days after any such lien or encumbrance is filed against the Premises.
F. Tenant shall fail to comply with any term, provision or covenant of this Lease (other than those listed in this Paragraph 19) and shall not cure such failure within twenty (20) days after written notice thereof to Tenant.
20. REMEDIES.
A. Upon each occurrence of an event of default and so long as such event of default shall be continuing. Landlord shall have the option to pursue any one or more of the following remedies without any notice or demand:
(i) Terminate this Lease; and/or (ii) Enter upon and take possession of the Premises without terminating this Lease; and/or (iii) Alter all locks and other security devices at the Premises with or without terminating this Lease, and pursue, at Landlord's option, one or more remedies pursuant to this Lease, Tenant hereby specifically waiving any state or federal law to the contrary; and in any such event Tenant immediately shall surrender the Premises to Landlord, and if Tenant fails so to do, Landlord, without Waiving any other remedy it may have, may enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying such Premises or any part thereof, without being liable for prosecution or any claim of damages therefore.
B. If Landlord terminates this Lease, at Landlord's option, Tenant shall be
liable for and shall pay to Landlord, the sum of all rental and other payments
owed to Landlord hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to (i) the present value of the total rental
and other payments owed hereunder for the remaining portion of the Lease term,
calculated as if such term expired on the date set forth in Paragraph 1, less
(ii) the then present fair market value of the Premises for such period, which
because of the difficulty of ascertaining such value, Landlord and Tenant
stipulate and agree, shall in no event be deemed to exceed seventy-five percent
(75%) of the rental amount set forth in Paragraph 2 above.
C. If Landlord repossesses the Premises without terminating the Lease, Tenant, at Landlord's option, shall be liable for and shall pay Landlord on demand all rental and other payments owed to Landlord hereunder, accrued to the date of such repossession, plus all amounts required to be paid by Tenant to Landlord until the date of expiration of the term as stated in Paragraph 1, diminished by all amounts received by Landlord through reletting the Premises during such remaining term (but only to the extent of the rent herein reserved). Actions to collect amounts due by Tenant to Landlord under this subparagraph may be brought from time to time, on one or more occasions, without the necessity of Landlord's waiting until expiration of the Lease term.
D. During an event of default, in addition to any sum provided to be paid herein, Tenant also shall be liable for and shall pay to Landlord (i) broker's fees incurred by Landlord in connection with reletting the whole or any part of the Premises; (ii) the costs of removing and storing Tenant's or other occupant's property; (iii) the costs of repairing, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants; and (iv) all reasonable expenses incurred by Landlord in enforcing or defending Landlord's rights and/or remedies. If either party hereto institute any action or proceeding to enforce any provision hereof by reason of any alleged breach of any provision of the Lease, the prevailing party shall be entitled to receive from the losing party all reasonable attorney's fees and all court costs in connection with such proceeding.
E. In the event Tenant fails to make any payment due hereunder when payment is due, to help defray the additional cost to Landlord for processing such late payments, Tenant shall pay to Landlord on demand a late charge in an amount equal to five percent (5%) of such installment; and the failure to pay such amount within ten (10) days after demand therefor shall be an additional event of default hereunder. The provision for such late charge shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord's remedies in any manner.
F. Exercise by Landlord of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises by Landlord, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. Tenant and Landlord further agree that forbearance by Landlord to enforce its rights pursuant to the Lease at law or in equity, shall not be a waiver of Landlord's right to enforce one or more of its rights in connection with any subsequent default.
G. In the event of termination and/ or repossession of the Premises for an event of default, Landlord shall use reasonable efforts to relet the Premises and to collect rental after reletting; provided that, Tenant shall not be entitled to credit or reimbursement of any proceeds in excess of the rental owed hereunder. Landlord may relet the whole or any portion of the Premises for any period, to any Tenant and for any use and purpose.
H. If Landlord fails to perform any of its obligations hereunder within the time specified in this Lease or, if no time is specified, within thirty (30) days after written notice from Tenant specifying such failure, Tenant's exclusive remedy shall be an action for damages. Unless and until Landlord fails to so cure any default after such notice, Tenant shall not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants, not conditions; and all such obligations will be binding upon Landlord only during the period of its possession of the Premises and not thereafter. The term "Landlord" shall mean only the owner, for the time being of the Premises, and in the event of the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing but such covenants and obligations shall be binding during the Lease term upon each new owner for the duration of such owner's ownership. Notwithstanding any other provision hereof, Landlord shall not have any personal liability hereunder. In the event of breach or default by Landlord in any term or provision of this Lease,
Tenant agrees to look solely to the equity or interest then owned by Landlord in the Premises; however, in no event, shall any deficiency judgment or any money of any kind be sought or obtained against any Landlord.
I. If Landlord repossesses the Premises pursuant to the authority herein granted, the Landlord shall have the right to (i) keep in place and use or (ii) remove and store all of the furniture, Fixtures and equipment at the Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by any Landlord thereof of third party having a lien thereof. Landlord also shall have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person ("Claimant") who presents to Landlord a copy of any instrument represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity or legality of said instrument. The rights of Landlord herein stated shall be in addition to any and all other rights that Landlord has or may hereafter have at law or in equity; and Tenant stipulates and agrees that the rights herein granted Landlord are commercially reasonable.
J. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated as rent, shall constitute rent.
K. This is a contract under which applicable law excuses Landlord from accepting performance from (or rendering performance to) any person or entity other than Tenant.
21. MORTGAGES. Tenant accepts this Lease subject and subordinate to any mortgages and/or deeds of trust now or any time hereafter constituting a lien or change upon the Premises or the improvements situated thereon or the building of which the Premises are a part, provided, however, that if the mortgagee, trustee, or holder of any such mortgage or deed of trust elects to have Tenant's interest in this Lease superior to any such instrument, then by notice to Tenant from such mortgage, trustee or holder, this Lease shall be deemed superior to such lien, whether this Lease was executed before or after said mortgage or deed of trust. Tenant, at any time hereafter on demand, shall execute any instruments, releases or other documents that may be required by any mortgagee for the purpose of subjecting and subordinating this Lease to the lien of any such mortgage. Further, Tenant, at any time hereafter on demand, shall deliver to Landlord a certified copy of its most recent financial statement.
22. MECHANIC'S LIENS. Tenant has no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind the interest of Landlord or Tenant in the Premises or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises and that will save and hold Landlord harmless from any and all loss, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of the Landlord in the Premises or under the terms of this Lease. Tenant agrees to give Landlord immediate written notice of the placing of any lien or encumbrance against the Premises.
23. HAZARDOUS MATERIALS. The term "Substances," as used in this Lease shall mean
pollutants, contaminants, toxic or hazardous wastes, or any other substances,
the use, storage, handling, disposal, transportation or removal of which is
regulated, restricted, prohibited or penalized by any "Environmental Law," which
term shall mean any federal, state or local law, ordinance or other statute of a
governmental or quasi-governmental authority relating to pollution or protection
of health or the environment and shall specifically include, but not be limited
to, any "hazardous substance" as that term is defined under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and any
amendments or successors in function thereto. Tenant hereby agrees that (i) no
activity will be conducted on the Premises that will produce any Substance
except for such activities that are part of the ordinary course for Tenant's
business activities (the "Permitted Activities") provided said Permitted
Activities are conducted in accordance with all Environmental Laws and have been
approved in advance in writing by Landlord (which approval Landlord may grant or
withhold in its sole discretion); Tenant shall be responsible for obtaining any
required permits and paying any fees and providing any testing required by any
governmental agency; (ii) the Premises will not be used in any manner for the
storage of any Substance except for the temporary storage of such materials that
are used in the ordinary course of Tenant's business provided such substances
are properly stored in a manner and location meeting all Environmental Laws and
approved in advance in writing by Landlord (which approval Landlord may grant or
withhold in its sole discretion); Tenant shall be responsible for obtaining any
required permits and paying any fees and providing any testing required by any
governmental agency; (iii) no portion of the Premises will be used as a landfill
or a dump; (iv) other than a generator and its associated aboveground fuel
supply, Tenant will not install any underground or aboveground tank of any type;
(v) Tenant will not allow any surface or subsurface conditions to exist or come
into existence that constitute, or with the passage of time, may constitute a
public or private nuisance; (vi) Tenant will not permit any Substances to be
brought onto the Premises, except in accordance with the terms and conditions
hereof, and if so brought or found located thereon, the same shall
be immediately removed, and properly disposed, and all required cleanup procedures shall be diligently undertaken pursuant to all Environmental Laws; and (vii) Tenant shall in all regards comply with Environmental Laws including, without limitation, meeting any necessary financial responsibility requirements. Prior to any Substance being brought upon or into the Premises, whether Landlord's written permission is required or not, Tenant will provide to Landlord any applicable material safety data sheets regarding said Substance as well as a written description of the amount of such Substance to be brought upon or into the Premises and the common and recognized chemical name of such Substance. Tenant shall bear responsibility for insuring that all record keeping, reporting and remediation responsibilities of Tenant under Environmental Laws are met and Tenant assumes all such responsibility and liability for such legal compliance. Landlord or Landlord's representative shall have the right, but not the obligation, to enter the Premises for, among other purposes, the purposes of inspecting the storage, use and disposal of any Substances and to review compliance with all Environmental Laws. Should it be determined, in Landlord's sole opinion, that any Substances are being improperly stored, used, or disposed of, then Tenant shall immediately take such corrective action as required by applicable Environmental Laws. Tenant will provide Landlord written notification of the release or disposal of any Substances either within the Premises or outside of Tenant's Premises and will also provide Landlord written notice of any pending or threatened litigation concerning the breach or purported breach of any Environmental Laws. If at any time during or after the term of the Lease, the Premises is found to be contaminated by Substances or subject to said conditions, arising from or as a result of Tenant's negligence (whether in whole or in part) or the use of the Premises or any Substances by Tenant or any of Tenant's agents, employees, assigns or subtenants, Tenant shall diligently institute proper and thorough cleanup procedures in accordance with Environmental Laws at Tenant's sole cost, and Tenant agrees to indemnify and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, damages, fines, reimbursement, restitution, response costs, cleanup costs and obligations (including investigative responses and attorney's fees) of any nature. The foregoing indemnification and the responsibilities of Tenant shall apply to Tenant regardless of whether they arise from any Permitted Activity or from any Substances, the use of which Landlord approved, and shall survive the termination or expiration of this Lease. Landlord shall be under no obligation to expend any sums or to seek reimbursement to enforce the indemnification obligations of Tenant hereunder.
Permitted Materials:
The chemical components of the FM 200 Fire Suppression System.
Diesel fuel as required for the generator
Tenant acknowledges and agrees that it shall not be unreasonable for Landlord to
withhold its consent to any proposed assignment, subletting, or transfer of
Tenant's interest in this Lease if (i) the anticipated use of the Premises by
the proposed assignee, subtenant, or transferee (collectively, a "Transferee")
involves the generation, storage, use, treatment, or disposal of Substances;
(ii) the proposed Transferee has been required by any prior Landlord, lender, or
governmental authority to make remedial action in connection with Substances
contaminating a property, if the contamination resulted from such Transferee's
actions or use of the property in question; or (iii) the proposed Transferee is
subject to an enforcement order issued by any governmental authority in
connection with the use, disposal, or storage of a Substance.
24. MISCELLANEOUS.
A. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. The captions inserted in this Lease are for the convenience only and in no way define, limit or otherwise describe the scope of intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease.
B. In the event the Premises constitute a portion of a multiple occupancy building or buildings, Tenant's "proportionate share", as used in this Lease, shall mean a fraction, the numerator of which is the space contained in the Premises and the denominator of which the entire space contained in the building or buildings.
C. The terms, provisions and covenants and conditions contained in this Lease shall run with the land and shall apply to, inure to the benefit of, and be binding upon, the parties hereto and upon their respective heirs, executors, personal representatives, legal representatives, successors and assigns, except as otherwise herein expressly provided. Landlord shall have the right to transfer and assign, in whole or in part, its rights and obligations in the building and property that are subject of this Lease. Each party agrees to furnish to the other, promptly upon demand, a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the due amortization of such party to enter into this Lease.
D. Landlord shall not be held responsible for delays in the performance of its obligations hereunder when caused by strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental controls, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the control of the Landlord.
E. Tenant agrees, from time to time, within ten (10) days after request of Landlord, to execute and deliver to Landlord, or Landlord's designee, a Certificate of Occupancy and an estoppel certificate prepared and/or submitted by Landlord stating that this Lease is in full force and effect, the date to which rent has been paid, the unexpired term of this Lease and such other factual matters pertaining to this Lease as may be requested by Landlord. It is understood and agreed that Tenant's obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord's execution of this Lease. No grace or cure period provided in this Lease shall apply to the Tenant's obligations to timely deliver an estoppel certificate. Tenant hereby irrevocably appoints as its attorney in fact to execute on its behalf and in its name any such estoppel certificate if Tenant fails to execute and deliver the estoppel certificate within ten (10) days after Landlord's written request thereof.
F. This Lease constitutes the entire understanding and agreement of the Landlord and Tenant with respect to the subject matter of this Lease, and contains all of the covenants and agreements of Landlord and Tenant with respect thereto. Landlord and Tenant each acknowledge that no representations, inducements, promises or agreements, oral or written, have been made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant, which are not contained herein, and any prior agreements, promises, negotiations or representations not expressly set forth in this Lease are of no force and effect. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.
G. All obligations of Tenant hereunder not fully performed as of the expiration or earlier termination of the term of this Lease shall survive the expiration or earlier termination of the term hereof, including without limitation, all payment obligations with respect to operating expenses as set forth in Paragraph 2.C and all obligations concerning the condition and repair of the Premises, including without limitation, all heating and air-conditioning systems and equipment therein, in good condition and repair, reasonable wear and tear excluded. Tenant shall also, prior to vacating the Premises, pay to Landlord the amount, as estimated by Landlord, of Tenant's obligation hereunder for operating expenses for the year in which the Lease expires or terminates. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs therefore upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied as the case may be. Any security deposit held by Landlord (less the refurbishment fee specified in Paragraph 2.B) shall be credited against the amount due from Tenant under this Paragraph 24.G.
H. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby, and it is also the intention of the parties to this Lease that in lieu of such clause or provision of this Lease that it is illegal, invalid or unenforceable, there be added, as part of this Lease, a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.
I. All references in this Lease to "the date hereof of similar references shall be deemed to refer to the last date, in point of time, on which all parties hereto have executed this Lease.
J. Tenant represents and warrants that it has dealt with no broker, agent or other person in connection with this transaction or that no broker, agent or other person brought into this transaction, other than as may be referenced in a separate written agreement executed by Tenant, and delivered to Landlord prior to the date hereof, and Tenant agrees to indemnify and hold Landlord harmless from and against any claims by any other broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this leasing transaction.
K. If and when included within the term "Landlord", as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of a notice specifying some individual at some specific address for the receipt of notices and payments to Landlord. If and when included within the term "Tenant", as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of a notice specifying some individual at some specific address within the continental Unites States for the receipt of notices and payments to Tenant. All parties included within the terms "Landlord" and 'Tenant", respectively shall be bound by notices given in accordance with the provisions of Paragraph 26 hereof to the same effect as if each had received such notice.
L. Tenant shall, at all times during the term of this Lease and any extension thereof, comply with all reasonable rules and regulations ("Building Rules and Regulations") at any time or from time to time established by Landlord covering use of the Premises and common areas. The existing Building Rules and Regulations currently in force and effect are attached hereto as Exhibit "B" and made a part hereof. In the events of any conflict between said Building Rules and Regulations and the Lease, the terms and provisions of the Lease shall control.
M. N. As Tenant has been previously informed, the Landlord is a manager managed limited liability company whose manager is FBR Investments, L.L.C. The members of FBR Investments, L.L.C. are shareholders of Ross Brown Partners. Inc. and may, furthermore, be members of the Landlord. Furthermore, FBR Investments, L.L.C. may be a member of Landlord. Ross Brown Partners, Inc. is the property manager for the Landlord and is employed by Landlord to
lease the property of which the demised premises are a part. As such, the broker and real estate licensees of Ross Brown Partners, Inc. are solely agents of Landlord.
25. SECURITY SERVICE. Tenant agrees to pay the proportionate share of the cost of any security services and/or of monitoring, repair and maintenance of any burglar alarm systems, water flow detection systems and other protective security equipment that is on or may be installed on the Premises and/or the building of which the Premises are a part, including the cost of any license or permit or user charge required for any such security systems. Landlord shall not be liable to Tenant for any damages, costs or expenses suffered or incurred by Tenant in connection with any unauthorized entry into the Premises and any other liability arising in connection with such security systems or services.
26. NOTICES. Each provision of this instrument or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing or delivering of notice or the making of any payment to Landlord to Tenant or with reference to sending, mailing or delivering any notice or the making of any payment by Tenant to Landlord shall be deemed to be compiled with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address set forth below or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such rent and other amounts have been actually received by Landlord. In addition to base rental due hereunder, all sums of money and all payments due Landlord hereunder shall be deemed to be additional rent owed to Landlord.
(b) All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address set forth below, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be delivered hereunder shall be deemed to be delivered whether actually received or not when deposited in the United States Mail, postage prepaid, Certified or Registered Mail, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have therefore specified by written notice delivered in accordance herewith.
28. 27. LANDLORD'S LIEN. In addition to any statutory lien for the rent in Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a continuing security interest for all rentals and other sums of money due or which may become due hereunder from Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory and other personal property of the Tenant now or hereafter situated as fixtures, furniture, inventory and other personal property of the Tenant now or hereafter situated at 2220 W. 14TH STREET TEMPE, ARIZONA, and such property shall not be removed therefrom without the consent of Landlord until all arrearages in rent as well as any and all other sums of money then due to Landlord hereunder shall first have been paid and discharged. (Note: Landlord acknowledges that certain goods, wares, equipment, fixtures, furniture, inventory and other personal property located in the Premises may belong to parties other than Tenant and that the foregoing lien does not attach thereto.) In the event any of the foregoing described property is removed from the Premises in violation of the covenant in the preceding sentence, the security interest shall continue in such property and all proceeds and products, regardless of locations. Upon a default hereunder by Tenant in addition to all other rights and remedies, Landlord shall have all rights and remedies under the Uniform Commercial Code, including without limitation, the right to sell the property described in this Paragraph at public or private sale upon five (5) days notice by Landlord. Tenant hereby agrees to execute such other instruments, necessary or desirable under applicable law to perfect the security interest hereby created. Landlord and Tenant agree that this Lease and security agreement serves as a financing statement and that a copy, photographic or other reproduction of this portion of this Lease may be filed of record by Landlord and have the same force and effect as the original. This security agreement and financing statement also covers fixtures located at the Premises subject to this Lease and legally described in Exhibit "A" attached hereto and incorporated herein by reference and is to be filed for record in the real estate records. The record owner of this property is BEL DE MAR, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY. OPTIONS. SUBJECT TO THE TENANT'S TIMELY COMPLIANCE WITH ALL PROVISIONS OF THIS LEASE INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF BASE RENT AND ALL OTHER PAYMENTS REQUIRED UNDER THIS LEASE AND PROVIDED TENANT IS NOT, AND NEVER HAS BEEN, IN DEFAULT UNDER THE TERMS OF THIS LEASE AND IS PRESENTLY NOT SUB-LETTING ALL OF THE PREMISES THEN LANDLORD HEREBY GRANTS TO TENANT THE FOLLOWING OPTIONS TO EXTEND THIS LEASE:
TENANT SHALL HAVE TWO (2) OPTIONS TO EXTEND THIS LEASE EACH FOR A PERIOD OF THIRTY-SIX (36) MONTHS EACH BY PROVIDING LANDLORD WITH WRITTEN NOTICE ONE HUNDRED FIFTY 150 ) DAYS BEFORE THE EXPIRATION OF THE THEN EXISTING TERM OF THE LEASE. THE BASE RENT FOR THE FIRST TWELVE (12) MONTHS OF THE FIRST OPTION PERIOD SHALL BE EIGHT THOUSAND SIX HUNDRED SEVENTY-ONE AND 00/100 DOLLARS ($8,671.00) PER MONTH, EIGHT THOUSAND NINE HUNDRED THIRTY-SEVEN AND 00/100 DOLLARS ($8,937.00) PER MONTH FOR THE SECOND TWELVE (12) MONTHS, AND NINE THOUSAND TWO HUNDRED FOUR AND 00/100 DOLLARS
($9,204.00) per month for the last twelve (12) months. Base Rent for the second option period shall be at a rent negotiated by the parties at the time the prevailing market rates for similarly available space. If the Landlord and Tenant cannot agree on the prevailing market rates, such rates shall be determined by an independent third party market survey in accordance with commercial real estate standard practices.
The Parties acknowledge and agree that the foregoing options are personal to Limelight Mainstreet Tempe, LLC, and are not assignable by Limelight Mainstreet Tempe, LLC without the prior, written consent of Landlord, which consent may be granted or withheld by Landlord in Landlord's sole discretion. (Note: Landlord's written consent to an assignment of Tenant's interest in and to this Lease shall not, unless otherwise expressly stated, be deemed an assignment of the foregoing options.)
29. TENANT IMPROVEMENT ALLOWANCE. Landlord acknowledges that Tenant has informed Landlord of certain improvements that it desires to do to the Demised Premises including adding additional office space as well as certain improvements to the warehouse. Landlord is generally aware of such plans but has not received detailed drawings and specifications and has not approved such intended alterations. Landlord hereby agrees to provide Tenant with an improvement allowance of forty-five thousand dollars ($45,000). The improvement allowance will be released to Tenant subject to the following:
A. Detailed plans and specifications have been submitted in advance to the Landlord and approved by Landlord. Landlord's approval of such plans and specification is subject to Landlord's discretion.
B. All improvements have been completed in a good and workmanlike condition by contractors approved by Landlord in accordance with all provisions of the lease agreement including, but not limited to, appropriate municipal permits and approvals.
C. Landlord receives appropriate lien waivers from all contractors involved.
D. The cost of any improvements deemed to be standard in the opinion of landlord will be amortized over a 6 year period at an interest rate acceptable to Landlord and added to the base monthly rent due from Tenant.
E. The cost of any improvements deemed to be non-standard by the landlord will be amortized over the remaining term of the lease or any exercised option period at an interest rate acceptable to Landlord and added to the base monthly rent due from tenant.
F. There is at least 24 months left on the lease term or the term of any exercised option period.
30. Notwithstanding anything mentioned in this lease to the contrary, Tenant understands that Tenant is obligated to return the Premises to the condition of a generic industrial building. In particular, returning the building to the condition of a generic industrial building includes, but is not limited to the following:
A. Removing all tenant specific equipment including equipment leased and/or purchased (this does not give Tenant any right to remove any electrical panels, meters or distribution systems). Any damage made to the Premises, building, parking and loading areas or other areas surrounding the building because of such removals will be fully repaired in a good and workmanlike manner as approved by Landlord. Furthermore, any costs that Landlord expends to remove any of tenant's equipment will be immediately due and payable to Landlord in addition to all other costs.
B. Remove the drop ceiling and lights in the area behind the office area and install warehouse level lighting (double tube fluorescent fixtures) and evaporative cooling as approved by Landlord.
C. Remove the specialized fire suppression system and make certain that the "wet" fire suppression system that is in the office areas is extended throughout the "warehouse" area as approved by Landlord.
D. Landlord and Tenant acknowledge that Tenant's liability for items B. and C. above is limited to Thirty thousand and 00/100 Dollars ($30,000.00)
31. RIGHT OF FIRST OFFER/REFUSAL. If Landlord intends to solicit offers to sell either the Project or the Premises, then Landlord will deliver written notice of such intent to Tenant - such notice to contain Landlord's proposal for the basic sale terms. For a period of not less than ten (10) days thereafter, Landlord shall negotiate in good faith with Tenant over the terms of sale for the Premises. If after ten (10) days, Landlord and Tenant have not entered into a binding commitment for the purchase and sale of the Premises, then Landlord's obligation to continue negotiating with Tenant shall automatically cease and Landlord shall be free to sell the premises at any time thereafter to whomever and on whatever terms Landlord desires.
If Landlord receives an unsolicited offer to purchase the Project or the Premises that the Landlord desires to accept, Landlord shall deliver written notice to Tenant of the terms of such offer. Tenant shall have five (5) days from the receipt of such notice to accept the terms of such offer as its own - such acceptance to be by written notice to Landlord. Tenant shall be deemed to have rejected such offer if Tenant (i) fails to respond in writing within such five (5) day period (ii) conditions its acceptance in any material way, or (iii) changes the terms of such offer in any material way.
EXECUTED BY LANDLORD, this 19th day of November, 2002.
LANDLORD: BEL DE MAR, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY By: MainSpring Capital, L.L.C. Its: Managing Member ADDRESS: 2999 North 44th Street, Suite 200 By: /s/ Wilford M. Farnsworth Phoenix, Arizona 85018 ------------------------------------ (602) 840-6363 Wilford M. Farnsworth Its: Member |
EXECUTED BY TENANT, this 19th day of November, 2002.
ADDRESS:
8936 N. Central Ave By: Limelight Mainstreet LLC by Phoenix, AZ 85020 Limelights Ne; Sole Member William H. Rinehart, C Its: /s/ William H. Rinehart ----------------------------------- |
EXHIBIT "A"
2220 W. 14th Street, Tempe, Arizona 85281
EXHIBIT "B"
BUILDING RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, lettering, name or notice (hereinafter collectively referred to as "sign") shall be inscribed, displayed, printed or affixed on or to any part of the outside or inside of the building, the Premises or surrounding area without Landlord's written consent. If such consent is given by Landlord, Landlord may regulate the manner of display of the sign. Landlord shall reserve the right to remove any sign which has not been approved by Landlord or is being displayed in a non-approved manner without notice to and at the expense of the Tenant. All approved signs shall be installed at expense of Tenant by a person approved by Landlord.
Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall which may appear unsightly from outside of Premises.
2. The sidewalks, paved area, exits and entrances, shall not be obstructed by any of the Tenants or used by them for any purpose other than for ingress to and egress from their respective Premises. The paved areas, exits, entrances and roof are not for the use of the general public and the Landlord shall in all cases retain the right to control thereof and prevent access thereto by all persons whose presence in the judgment of the Landlord shall be prejudicial to the safety, character, reputation and interests of the Building or its Tenants; provided, however, that nothing herein contained shall be construed to prevent access by persons with whom Tenant normally deals in the ordinary course of Tenant's business unless such persons are engaged in illegal activities. No Tenant and no employees, invitees, contractors or subcontractors of any Tenant shall go upon the roof of the Building. In addition, the Tenant will cause to be removed all debris, pallets or any outside storage immediately in front or to the rear of the Premises. If Landlord has to remove the above then Tenant will be charged a minimum of $300.00 for the removal of the material.
3. Tenant shall not alter any lock or install any new additional locks or any bolts on any door of the Premises without the written consent of Landlord.
4. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose than that for which they are constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of breakage, stoppage or damage resulting from a violation of this rule shall be borne by the Tenant who, or whose employees or invitees, shall have caused it.
5. Tenant shall not overload the floor of the Premises, shall not mark on or drive nails, screw or drill into the partitions, woodwork or plaster (except as may be incidental to the hanging of the wall decoration), and shall not in any way deface the Premises or any part thereof.
6. Tenant shall not use, keep or permit to be used any food or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to the Landlord or other occupants of the building by reason of noise, odors and/or vibrations, or interfere in any way with the other Tenants or those having business in the building. No animals or birds shall be brought in or kept in or about the Premises or the building. No tenant shall disturb neighboring buildings or premises, or those having business with such occupants, by the use of any musical instruments, radio, phonograph, unusual noise, or in any other way. No tenant shall throw anything out of doors or down the passageways. No cooking shall be permitted by Tenant in the Premises.
7. Tenant shall not use or keep in the Premises, or the building, any kerosene, gasoline or inflammable or combustible fluid or material or use any method of heating or air-conditioning other than by means similar to methods previously deployed on the Premises operation as a data center.
8. Landlord will direct electricians as to where and how telephone and telegraph wires are to be introduced. No boring or cutting for or stringing of wires will be allowed without the consent of Landlord. The location of telephones, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Landlord.
9. All keys to the building, offices, rooms and toilet rooms shall be obtained from Landlord's office. Tenant, upon termination of tenancy, shall deliver to the Landlord the keys to the building, offices, rooms and toilet rooms which shall have been furnished and shall pay Landlord the cost of replacing any lost or of changing the lock or locks opened by such lost key if Landlord deems it necessary to make such change.
10. No tenant shall affix to the floor of the Premises any linoleum, tile, carpet or other familiar floor coverings except as approved by the Landlord. The expense of repairing any damage resulting from a violation of this rule or removal of any floor covering shall be borne by the tenant.
11. Landlord reserves the right to exclude or expel from the building any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any rules and regulations of the building.
12. Landlord shall have the right, exercisable without notice and without liability to tenant, to change name and the street address of the building on which the Premises are a part.
13. Tenant agrees that it shall comply with all fire regulations that may be issued from time to time by Landlord, and Tenant also shall provide Landlord with the name of a designated responsible employee to represent Tenant in all matters pertaining to fire regulations.
14. Landlord reserves the right by written notice to Tenant, to rescind, alter or waive any rule or regulation at any time prescribed for the building when, in Landlord's judgment, it is necessary, or desirable or proper for the best interest of the building or its tenants.
15. Without the written consent of Landlord, Tenant shall not use the name of the building in connection with or in promotion or advertising the business of Tenant except as Tenant's address. Tenant shall not disturb, solicit or canvas any occupant of the building and shall cooperate to prevent same.
16. Tenant shall be entitled to use parking spaces during working hours, the exact location of which may be designated by Landlord. Tenant shall not park in driveways or loading areas nor reserved parking spaces of other tenants. Landlord or its agents shall have the right to cause to be removed any car of Tenant, its employees or agents, that may be parked in unauthorized areas, and Tenant agrees to save and hold harmless Landlord, its agents and employees from any such and all claims, losses, damages and demands asserted or arising in respect to or in connection with the removal of any such vehicle and for all expenses incurred by Landlord in connection with such removal. Tenant will from time to time, upon request of Landlord, supply Landlord with a list of license plate numbers of vehicles owned and/or operated by its employees and agents.
(FLOOR PLAN)
EXHIBIT D
Landlord hereby consents to tenants removal of the following items in accordance with Paragraph 6 of this lease:
1. UPS system consisting of control cabinet, 2 inverter cabinets, 4 battery cabinets, bypass panelboard.
2. 3 Fike FM-200 fire suppression system containers and gas only
3. 3 Liebert air Conditioners and condensers
4. 25 Encore racks with Panduit cable management and power strips
5. Cage fence
6. 5 Control center computer desks
7. Security system, card access system, closed circuit TV system including 16 channel video multiplexer
8. All the cat 5 cable, trays, conduit, unistrut, and above racks and cabinets
9. 2 video projectors and screens, unmounted
10. 2 Sony 32" TVs and carriers for 4 TVs, unmounted
11. 4x10 natural wood conference table
12. 4x8 formica simulated wood conference table
13. 4x8 lunchroom table
14. 4x4 lunchroom table
15. 8 lunchroom chairs
16. 4 waiting room chairs
17. 10 framed prints
18. Windows PC with Badge Access Software and Liebert SiteScan Software
19. Miscellaneous Fiber patch cables
20. 2 filing cabinets
21. Zenith MX200 2000 amp generator transfer switch
22. Sixty-seven cabinets (enclosed racks)
23. Caterpillar 3508 Generator Set, including diesel engine, generator, its fuel tank base and enclosure.
Rider to Lease November 19, 2002
This Rider to Lease by and between Bel de Mar, LLC, an Arizona limited liability company (Landlord) and Limelight Mainstreet Tempe, LLC, an Arizona limited liability company (Tenant) is hereby made an integral part of the Commercial Lease by and between Landlord and Tenant for the building whose street address is 2220 W. 14th Street, Tempe, AZ.
Landlord understands that as part of the normal course of Tenant's business, it will be renting to its customers, equipment and space to house the customer's computers. Furthermore, Tenant intends to provide "disaster recovery" services. In the event of such catastrophic failure of customer's computer system, certain of Tenant's customers may occupy space in the warehouse for limited periods of time solely as part of such disaster recovery service. Notwithstanding anything mentioned in this lease to the contrary, the rental by Tenant of equipment and space to house customer's computers shall not be considered subleasing for purposes of this lease and will not require consent of Landlord. For those customers occupying space pursuant to catastrophic circumstances, in the event Tenant notifies Landlord of such occupancy and describes the catastrophic circumstances in writing, Landlord agrees that such occupancy will not require Landlord's written consent. For any other occupancy of the space by third parties, Tenant agrees that Landlord's written consent shall be required as described in paragraph 15A of the lease. If Landlord provides such written consent, Tenant agrees to increase the rent it pays to Landlord by half of the amount it receives in excess of the rent it pays to Landlord on a pro rata basis.
Agreed: Landlord: Tenant: Bel de Mar, LLC Limelight Mainstreet Tempe, LLC by By: MainSpring Capital, LLC Limelight Networks, LLC sole member Its: Manager By: /s/ Wilford M. Farnsworth, III By: /s/ William H. Rinehart --------------------------------- ------------------------------------ Wilford M. Farnsworth, III William H. Rinehart Its: Presiding Member Its: CEO, MEMBER |
FIRST AMENDMENT TO LEASE AGREEMENT
RECITALS
A. Bel de Mar, L.L.C., an Arizona limited liability company (Landlord) and Limelight Mainstreet Tempe, LLC. (Tenant), entered into a Commercial Lease Agreement (Lease Agreement) on the premises located at 2220 W. 14th Street, Tempe, Arizona 85281 (Premises) on November 18, 2002.
B. Landlord and Tenant are mutually desirous of modifying the Lease Agreement.
NOW THERFORE, FOR VALUE RECEIVED, Landlord and Tenant hereby agree as follows:
1. EXPIRATION DATE: The Expiration Date is hereby extended from November 18, 2005 to November 30, 2010.
2. BASE RENT: The Base Rent due from Tenant under Section 2.A. of the Lease Agreement is hereby modified as follows:
January 1, 2005 - November 30, 2005 $ 9,388.70* $0.70 per sq. ft. December 1, 2005 - November 30, 2006 $10,005.75* $0.75 per sq. ft. December 1, 2006 - November 30, 2007 $10,272.57* $0.77 per sq. ft. December 1, 2007 - November 30, 2008 $10,539.40* $0.79 per sq. ft. December 1, 2008 - November 30, 2009 $11,073.03* $0.83 per sq. ft. December 1, 2009 - November 30, 2010 $11,339.85* $0.85 per sq. ft. |
* Does not include applicable sales tax which shall be payable by Tenant along with Base Rent.
3. EXTENSION OPTION: The two (2), thirty-six (36)-month extension options provided in Section 28 (Bottom of page 14) of the Lease Agreement are hereby terminated and replaced with a single sixty (60) month extension option at the Base Rent set forth below and otherwise exercisable in accordance with the provisions of said Section 28.
December 1, 2010 - November 30, 2011 $15,115.35* $1.13 per sq. ft. December 1, 2011 - November 30, 2012 $15,568.81* $1.16 per sq. ft. December 1, 2012 - November 30, 2013 $16,035.87* $1.20 per sq. ft. December 1, 2013 - November 30, 2014 $16,516.95* $1.23 per sq. ft. December 1, 2014 - November 30, 2015 $17,012.46* $1.27 per sq. ft. |
* Does not include applicable sales tax which shall be payable by Tenant along with Base Rent.
4. EARLY TERMINATION: Provided Tenant is not in default under any provision of this amendment or the original "Lease Agreement" referenced above, then Tenant shall have the right to terminate this Lease Agreement on November 30, 2008. Tenant's right to terminate is conditioned upon Tenant giving Landlord written notice of Tenant's intention to terminate no later than May 31, 2008 accompanied by a payment to Landlord of Thirty-one thousand and 00/100 Dollars ($31,000.00). If Tenant is in default without having been notified of such default and been given a reasonable time to cure, at the time early termination is exercised, then
tenants right of early termination will not be voided, but, rather, it will be extended until such notice and time to cure is given. At which time, if Tenant has not cured the default, Tenant's right to early termination will be null and void. This notification and time to cure requirement does not apply to any default due to failure to pay any amounts due when owed.
5. EXPANSION OPTION: Tenant has expressed an interest in leasing certain space owned by Landlord located at 2250 W. 14th Street, which space is currently occupied by Integrated Information Systems or its subsidiary (the "Potential Expansion Premises"). Should the Potential Expansion Premises become available, Landlord shall, by written notice, first offer to lease such space to Tenant on the terms and conditions that Landlord intends to offer such space for lease to the general public. Tenant shall have two (2) business days to accept such offer by delivering a written notice of acceptance to Landlord. If Tenant fails to timely deliver such written notice of acceptance or thereafter fails, in Landlord's sole determination, to proceed in good faith towards the execution of a lease for the Potential Expansion Premises, then Tenant shall be deemed to have refused such offer and Landlord shall be free to market the Potential Expansion Premises to the general public.
6. TENANT IMPROVEMENT REIMBURSEMENT: The Forty-five thousand and 00/100 Dollar ($45,000.00) improvement allowance provided by Landlord to Tenant under Section 29 of the Lease Agreement is hereby terminated and replaced with the reimbursement obligations contained in this Paragraph 6. Landlord acknowledges that Tenant has made certain improvements to the Premises that were approved by and are acceptable to Landlord. Subject to Landlord's receipt of (i) a final certificate of occupancy from the City of Tempe for such improvements, (ii) unconditional lien waivers from all applicable contractors, suppliers and/or consultants, and (iii) proof of the amounts paid by Tenant to such contractors, suppliers and/or consultants in connection with such improvements, Landlord shall reimburse Tenant for the full amount of such expenditures up to the maximum amount of Seventy-six thousand and 00/100 Dollars ($76,000.00). Tenant acknowledges and agrees that its obligation to restore the Premises as provided in Section 30 of the Lease Agreement remains unchanged by Landlord's consent to such improvements.
7. RATIFICATION: Any and all terms and conditions of the Lease Agreement not expressly amended by this First Addendum remain in full force and effect and Landlord and Tenant hereby ratify the same.
AGREED to and accepted this ___________ day of December 2004.
LANDLORD: TENANT: BEL DE MAR, LLC LIMELIGHT MAINSTREET TEMPE, L.L.C. X By: /s/ Wilford M. Farnsworth X By: /s/ William H. Rinehart ------------------------------- ---------------------------------- Wilford M. Farnsworth William H. Rinehart Its: Presiding Member Its: CEO |
Exhibit 10.7
MAINSPRING CAPITAL, L.L.C.
COMMERCIAL LEASE
BEL DE MAR, L.L.C., an Arizona limited liability company
"Landlord"
AND
Limelight Networks, Inc. a Delaware Corporation
"Tenant"
SUMMARY OF LEASE TERMS*
Date: December 1, 2004 Lease Number: ______________________________________________ Project: Airway Corporate Center Square Footage: 7,529 (approximately) Address: 2250 W. 14th Street, Tempe, Arizona 85281 Term: Five (5) years Base Rental Schedule: Rate Months (per s.f.) Base Rent ------- ---------- ------------------------ 1 - 6 $0.35 $2,635.15 per month NNN* 7 - 12 $0.70 $5,270.30 per month NNN* 13 - 24 $0.75 $5,646.75 per month NNN* 25 - 36 $0.80 $6,023.20 per month NNN* 37 - 48 $0.81 $6,098.49 per month NNN* 49 - 60 $0.83 $6,249.07 per month NNN* |
* Plus applicable rental tax.
Current Rental Tax Rate: 2.3% Current Estimated Operating Expenses: $0.22 per square foot per month Other Items: ______________________________________________ ______________________________________________ |
NOTE: This summary is provided for the Tenant's convenience only. It is not to be construed as a part of the above referenced Lease Agreement. In the event that there is a conflict between this summary of lease terms and the Lease Agreement, the language in the Lease Agreement shall prevail.
STANDARD LEASE AGREEMENT
PHXINDNII DATE December 23, 2004
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into by and between BEL DE MAR, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY, hereinafter referred to as "Landlord", and LIMELIGHT NETWORKS, INC. A DELAWARE CORPORATION., hereinafter referred to as "Tenant";
WITNESSETH:
1. PREMISES AND TERM. In consideration of the mutual obligations of Landlord and Tenant set forth herein, Landlord leases to Tenant, and Tenant hereby takes from Landlord the Premises situated within the County of MARICOPA, State of ARIZONA, more particularly described on Exhibit "A" attached hereto and incorporated herein by reference, (the "Premises"), together with all rights, privileges, easements, appurtenances, and amenities belonging to or in any way pertaining to the Premises, to have and to hold, subject to the terms, covenants and conditions of this Lease. The term of this Lease shall commence on the commencement date hereinafter set forth and shall end on JANUARY 31, 2010. If this Lease is executed before the Premises become vacant or otherwise available and ready for occupancy, or if any present Tenant or occupant of the Premises holds over, and Landlord cannot acquire possession of the Premises prior to the date recited as the commencement date of this Lease, Landlord shall not be deemed in default hereunder, and Tenant agrees to accept possession of the Premises at such time as Landlord is able to tender the same, which date shall thenceforth be deemed the "commencement date", and Landlord hereby waives payment of rent covering any period prior to the tendering of possession to Tenant hereunder.
A. EXISTING BUILDING. If no improvements are to be constructed to the Premises, the commencement date shall be FEBRUARY 1, 2005. Tenant acknowledges that, (i) it has inspected and accepts the Premises, (ii) the buildings and improvements comprising the same are suitable for the purpose for which the Premises are leased, (iii) the Premises are in good and satisfactory condition, and (iv) no representations as to the repair of the Premises, nor promises to alter, remodel or improve the Premises have been made by Landlord (unless otherwise set forth in the Lease). In no event shall Landlord be liable for any defects in the Premises or for any limitation on its use. Upon request by Landlord, Tenant shall execute and deliver to Landlord a Letter of Acceptance of delivery of the Premises.
B. BUILDING TO BE CONSTRUCTED OR SHELL SPACE. If the Premises or part thereof are to be constructed, the commencement date shall be deemed to be the sooner of the date upon which the Premises and other improvements to be erected in accordance with the plans and specifications described on Exhibit "C" attached hereto and incorporated herein by reference (the "Plans") have been substantially completed or the date upon which the Tenant takes occupancy. As used herein, the term "substantially completed" shall mean, that in the opinion of the architect or space planner that prepared the Plans, such improvements have been completed in accordance with the Plans and the Premises are in good and satisfactory condition, subject only to completion of minor punch list items. As soon as such improvements have been substantially completed, Landlord shall notify Tenant in writing that the commencement date has occurred. Within ten (10) days thereafter, Tenant shall submit to Landlord in writing a punch list of items needing completion or correction. Landlord shall use reasonable efforts to complete such items within thirty (30) days after the receipt of such notice. In the event Tenant, its employees, agents or contractors cause construction of such improvements to be delayed, the commencement date shall be deemed to be the date that, in the opinion of the architect or space planner that prepared the Plans, substantial completion would have occurred if such delays had not taken place. The taking of possession by Tenant shall be deemed to conclusively establish that the buildings and other improvements had been completed in accordance with the Plans, that the Promises are in good and satisfactory condition as of when possession was taken, and that Tenant has accepted such buildings and other improvements without representation or warrant) from Landlord. Upon Landlord's request, Tenant shall execute and deliver to Landlord a Letter of Acceptance of delivery of the Premises.
2. BASE RENT, SECURITY DEPOSIT AND OPERATING EXPENSE PAYMENTS.
A. BASE RENT. Tenant agrees to pay Landlord base rent ("Base Rent") for the
Premises, in advance, without demand, deduction or set off, at the rate of TWO
THOUSAND SIX HUNDRED THIRTY-FIVE AND 15/100 DOLLARS ($2,635.15)* PER MONTH
DURING MONTHS ONE (1) THROUGH SIX (6) OF THE INITIAL LEASE TERM, FIVE THOUSAND
TWO HUNDRED SEVENTY AND 30/100 DOLLARS ($5,270.30)* PER MONTH DURING MONTHS
SEVEN (7) THROUGH TWELVE (12) OF THE INITIAL LEASE TERM, FIVE THOUSAND SIX
HUNDRED FORTY-SIX AND 75/100 DOLLARS ($5,646.75)* PER MONTH DURING MONTHS
THIRTEEN (13) THROUGH TWENTY-FOUR (24) OF THE INITIAL LEASE TERM, SIX THOUSAND
TWENTY-THREE AND 20/100 DOLLARS ($6,023.20)* PER MONTH DURING MONTHS TWENTY-FIVE
(25) THROUGH THIRTY-SIX (36) OF THE INITIAL LEASE TERM, SIX THOUSAND
NINETY-EIGHT AND 49/100 DOLLARS ($6,098.49)* PER MONTH DURING MONTHS
THIRTY-SEVEN (37) THROUGH FORTY-EIGHT (48) OF THE INITIAL LEASE TERM AND SIX
THOUSAND TWO HUNDRED FORTY-NINE AND _7/100 DOLLARS ($6,249.07)* PER MONTH DURING
MONTHS FORTY-NINE (49) THROUGH SIXTY (60) OF THE INITIAL LEASE TERM, per month
during the term hereof. One such monthly installment, plus the other monthly
charges set forth in Paragraph 2.C below,
shall be due and payable on the date hereof and a like monthly installment shall be due and payable on or before the first day of each calendar month succeeding the commencement date, except that all payments due hereunder for any fractional calendar month shall be prorated. The obligation of Tenant to pay Base Rent and other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any rent due hereunder except where expressly provided in this Lease. Tenant waives and releases all statutory liens and off-set rights as to rent.
B. SECURITY DEPOSIT. In addition, Tenant agrees to deposit with Landlord on the date hereof the sum of SEVEN THOUSAND THREE HUNDRED AND 00/100 DOLLARS ($7,300.00). which shall be held by Landlord, without obligation for interest, as security for the performance of Tenant's obligations under the Lease, it being expressly understood and agreed that this deposit is not an advance rental deposit or a measure of Landlord's damages in case of Tenant's default. Upon each occurrence of an event of default, Landlord may use all or part of the deposit to pay rent or other payments due Landlord under this Lease, and the cost of any other damage, injury, expense or liability caused by such event of default without prejudice to any other remedy provided herein or provided by law. On demand, Tenant shall pay Landlord the amount that will restore the security deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Tenant shall, upon written request from Landlord, deposit additional monies with Landlord so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Use be amended to accommodate a material change in the business of Tenant or to accommodate a Tenant or assignee, Landlord shall have the right to increase the Security Deposit to the extent necessary, in Landlord's reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. The security deposit shall be deemed the property of Landlord and Landlord shall not be required to keep the Security Deposit separate from its general accounts, but any remaining balance of such deposit shall be returned by Landlord to Tenant within thirty (30) days from the time Tenant's obligations under this Lease have been fulfilled, less a refurbishment fee equal to fifteen percent of the total deposit.
C. OPERATING EXPENSE PAYMENTS. During each month of the Lease Term, on the same date that Base Rent is due, Tenant agrees to pay to Landlord as additional rent an amount equal to one-twelfth of the amount, as estimated by Landlord, of Tenant's Proportionate Share (hereinafter defined) of Operating Expenses for the Project. Payments thereof for any fractional calendar month shall be prorated. The term "Operating Expenses" means all costs and expenses incurred by Landlord with respect to the ownership, maintenance, and operation of the Project including, but not limited to costs of Taxes (hereinafter defined) and fees payable to tax consultants and attorneys for consultation and contesting taxes; insurance; utilities (subject to the other provisions of this Lease regarding utilities) maintenance, repair and replacement of all portions of the Project, including without limitation, paying and parking areas, roads, roofs, alleys, and driveways, mowing, landscaping, exterior painting, utility lines, mechanical systems, and amounts paid to contractors and subcontractors for work or services performed in connection with any of the foregoing; charges or assessments of any association of which the Project is subject; property management fees payable to a property manager, including any affiliate of Landlord, or if there is no property manager, an administration fee of fifteen percent (15%) of Operating Expenses payable to Landlord; security services, if any; trash collection, sweeping and removal; and additions, alterations or replacements made by Landlord at Landlord's sole discretion to the Project in order to comply with applicable laws or codes as amended from time to time or that are appropriate to the continued operation of the Project, provided that the cost of such additions, alterations, or replacements that are required to be capitalized for federal income tax purposes shall be amortized on a straight line basis over a period equal to the lesser of the useful life thereof for federal income tax purposes or ten (10) ten years. Operating Expenses do not include debt service under mortgages or ground rent under ground leases, costs of restoration to the extent of net insurance proceeds received by Landlord with respect thereto, leasing commissions, renovating of space for tenants, or depreciation or amortization except as provided above.
The monthly estimated Operating Expense payments may be increased or decreased by Landlord from time to time to reflect the projected actual cost of all such items. If the Tenant's total payments for any year are less that Tenant's Proportionate Share of actual operating costs for such year, Tenant shall pay the difference to Landlord within ten (10) days after demand. If the total payments of Tenant for any year are more than Tenant's Proportionate Share of actual operating costs for such year, Landlord shall retain such excess and credit it against Tenant's next payments. For purposes of calculating Tenant's Proportionate Share of Operating Expenses, a year shall mean a calendar year except the first year, which shall begin on the Commencement Date, and the last year, which shall end on the expiration of this Lease.
The Tenant's "Proportionate Share" shall be a fraction, having as its numerator the floor area of the Premises and its denominator the total floor area of the Project, all as determined by Landlord. Landlord may equitably increase Tenant's Proportionate Share for any item of the Project that includes the Premises.
3. TAXES.
A. Subject to Tenant's reimbursement obligation and Landlord's right to contest, Landlord agrees to pay all taxes, assessments and governmental charges of any kind and nature (collectively referred to herein as "Taxes") that accrue against the
Premises, and/or the land and/or improvements of which the Premises are a part. Landlord shall have the right to contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens thereof. The Landlord shall have the right to employ a tax consulting firm and legal counsel to attempt to assure a fair tax burden on the building and grounds within the applicable taxing jurisdiction. Tenant agrees to pay its proportionate share of the cost of such consultant and legal counsel.
B. Tenant shall be liable for all taxes levied or assessed against any personal property or fixtures placed in the Premises. If any such taxes are levied or assessed against Landlord or Landlord's property and (i) Landlord pays the same or (ii) the assessed value of Landlord's property is increased by inclusion of such personal property and fixtures and Landlord pays the increased taxes, then, upon demand Tenant shall pay to Landlord such taxes.
C. If at any time during the term of this Lease, there shall be levied, assessed or imposed on Landlord a capital levy or other tax directly or indirectly upon the rents received therefrom and/or a franchise tax, any excise, transaction, sales or privilege tax, assessment, levy or charge measured by or based, in whole or in part, upon such rents from the Premises and/or the land improvements of which the Premises are a part, then all such taxes, assessments, levies or charges, or the part, thereof so measured or based, shall be payable to Landlord, monthly or upon demand, at the option of the Landlord, as additional rent.
4. LANDLORD'S REPAIRS.
A. Landlord, at its own expense, shall maintain only the structural soundness of the roof, foundation and exterior walls of the building of which the Premises are a part in good repair, reasonable wear and tear and casualty losses and damages caused by Tenant excluded. The term "walls" as used herein shall not include windows, glass or plate glass, doors and overhead doors, special store fronts, dock bumpers, dock plates or levelers, or office entries. Tenant shall immediately give Landlord written notice of defect or need for repairs, after which Landlord shall have reasonable opportunity to repair same or cure such defect. Landlord's obligation to maintain the aforementioned items shall be limited solely to the cost of such repairs or maintenance or the curing of any defect in the same.
B. Landlord reserves the right to perform the paving maintenance, common area and landscape replacement and maintenance, exterior painting, common water and sewage line plumbing and any other items that are otherwise Tenant's obligations under Paragraph 5.A, all of which are sometimes referred to herein as common area charges, and Tenant shall be liable for its proportionate share of the cost and expense of such repair, replacement, maintenance and other such items.
C. Tenant agrees to pay its proportionate share of the cost of (i) maintenance and/or landscaping of any property that is a part of the building and/or project of which the Premises are a part, (ii) maintenance and/or landscaping of any property that is maintained or landscaped by any property owner or community owner association that is named in the restrictive covenants or deed restrictions to which the Premises are subject, and (iii) operating and maintaining any property, facilities or services provided for the common use of Tenant and other tenants of any project or building of which the Premises are a part.
D. Landlord reserves the right to alter or modify the building of which the premises are a part and/or common areas associated therewith, when such alterations or modifications are required by governmental laws, codes, ordinances, regulations, or any other applicable authorities, including, without limitation, the Americans with Disabilities Act of 1990 (the "ADA"), in which event Tenant shall be liable for its proportionate share of such cost. If such modification is a capital modification for the general benefit of the project, and is required regardless of Tenant's particular use of the Premises, then the cost shall be an operating expense allocated over the lesser of five (5) years or the useful life of the modification. Notwithstanding the foregoing, if such modification is predicated by Tenant's particular use of the Premises or is principally for the benefit of Tenant (and not other Tenants of the building) the cost shall be borne entirely by Tenant and Tenant shall reimburse Landlord for same promptly upon demand.
E. Tenant may audit Landlord's books relevant to the operating expenses upon reasonable notice to Landlord; provided, however, Tenant agrees to pay all costs associated with or resulting from such audit, including reimbursement to Landlord and Landlord's agents for time or costs incurred.
5. TENANT'S REPAIRS.
A. Landlord reserves the prior right, exercisable at any time and in its sole discretion, to coordinate, perform, or to contract of the performance of Tenant's repair, maintenance and replacement obligations under this Paragraph 5. Tenant shall reimburse Landlord upon demand for the costs of any such services or repairs incurred by Landlord. Except only those repairs for which Landlord is responsible under Paragraph 4.A, Tenant, at Tenant's sole cost and expense shall: (i) maintain all parts of the Premises, landscape and grounds surrounding the Premises and the building at which the Premises are a part, in good condition, (ii) promptly make all necessary repairs and replacements, (iii) keep the parking areas, driveways and alleys surrounding the Premises in a clean and sanitary condition, and maintain any spur track servicing the Premises.
B. Tenant, at its own cost and expense, shall enter into and deliver to Landlord a regularly scheduled preventative maintenance service contract with a maintenance contractor approved by Landlord for servicing all hot water, heating and air-conditioning systems and other equipment within the Premises. The service contract must include all services required by the Landlord and must become effective within thirty (30) days of the date Tenant takes possession of the Premises. In the event Tenant does not deliver said contract to Landlord within thirty (30) days of the commencement date, the Landlord has the right to
contract for said service without notice to Tenant, and Tenant shall upon demand reimburse Landlord for the full cost thereof. Additionally Landlord, at any time and in its sole discretion, reserves the right upon ninety (90) days written notice to Tenant to enter into a regularly scheduled preventative maintenance service contract covering the service, repair and/or replacement of any or all such items for the entire building(s) of which the Premises are a part, in which event Tenant shall be liable for its proportionate share of the cost and expense of said preventative maintenance service contract in accordance with Paragraph 4 above.
C. Subject to the provisions of Paragraph 10, Tenant shall repair and pay for any damage to the Premises or the Project caused by Tenant or Tenant's employees, agents or invitees, or caused by Tenant's default hereunder. Access to the roof or the exterior walls of the Premises or Project for purposes of repairs or otherwise by the Tenant shall be subject to Landlord's prior approval and to such conditions as Landlord may require.
6. ALTERATIONS. Tenant shall not make any alterations, additions, partitions, or other improvements to the Premises without the prior written consent of Landlord. Tenant has conveyed to the Landlord its desire to make certain alterations to the Premises as specified in Schedule "C" of this Agreement ("Specified Alterations"), and the Landlord has agreed in principle to allow the Specified Alterations to be made by the Tenant subject to Landlord's approval of plans and specifications to be submitted to Landlord by Tenant and, provided that Tenant complies with all other provisions of paragraph 6 herein. Tenant, at its own cost and expense, may erect shelves, bins, machinery and trade fixtures as it desires as well as alterations, additions, partitions, or other improvements which have been specifically consented to in writing by Landlord, provided that (i) such items do not alter the basic character of the Premises or the building and/or improvements of which the Premises are a part, (ii) such items do not overload or damage the same, (iii) such items may be removed without injury to the Premises, and (iv) the construction, erection or installation thereof complies with all applicable governmental laws, codes, ordinances, regulations, or any other applicable authorities, including, without limitation, the Americans with Disabilities Act of 1990 (the "ADA"), and with Landlord's details, specifications and other requirements, (v) any architectural, engineering, construction management, permits, inspections or other cost or fee required to assure compliance with conditions set forth in this Paragraph 6 shall be paid by Tenant promptly upon demand. All alterations, additions, partitions, or other improvements erected by Tenant shall be and remain the property of Tenant during the term of this Lease; provided however, at the termination of this Lease, Landlord shall have the option, exercisable in Landlord's sole discretion, to require Tenant either upon request to remove, at Tenant's sole cost and expense, all or part of each alterations, additions, partitions, or other improvements, at which time Tenant shall promptly restore the Premises to its original condition, or to keep in place the same at which time such alterations, additions, improvements, and partitions shall become the property of Landlord. All shelves, bins, machinery and trade fixtures installed by Tenant shall be removed on or before the earlier to occur of the date of termination of this Lease or vacating the Premises, at which time Tenant shall restore the Premises to their original condition. All alterations, installations, removals and restoration shall be performed in a good and workmanlike manner so as not to damage or alter the primary structure or structural qualities of the buildings and other improvements situated on the Premises or of which the Premises are a part.
7. SIGNS. Any signage Tenant desires for the Premises shall be subject to Landlord's written approval and shall be submitted to Landlord prior to the commencement date of this Lease. Tenant shall repair, paint and/or replace the building facia surface to which its signs are attached upon vacation of the Premises, or the removal or alteration of the signage. Tenant shall not (i) make any changes to the exterior of die Premises, (ii) install any exterior lights, decorations, balloons, flags, pennants, banners or painting, or (iii) erect or install any signs, windows, or door lettering, placards, decorations or advertising media of any type which can be viewed from the exterior of the Premises, without Landlord's prior written consent. Tenant, at its sole cost, shall obtain all applicable governmental permits and approvals for signage and exterior treatments. All signs, decorations, advertising media, blinds, draperies and other window treatment or bars or other security installations visible from outside the Premises shall conform in all respects to the criteria established by Landlord and any applicable governmental laws, ordinances, regulations, or other requirements.
8. PARKING. Tenant shall be entitled to park in common with other tenants of the Project in those areas designed for non-reserved parking. Tenant agrees not to burden the parking facilities and agrees to cooperate with Landlord and other tenants in the use of the parking facilities. Landlord reserves the right, in its absolute discretion, to determine whether parking facilities are becoming crowded and, in such event, to allocate parking spaces among Tenant and other tenants. Landlord shall not be responsible for enforcing Tenant's parking rights against any third parties. No vehicle storage of any nature shall be allowed or permitted in any parking area without Landlord's prior written consent.
9. UTILITIES.
A. Landlord agrees to provide normal water and electricity connection to the Premises as determined in Landlord's reasonable discretion. Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler services, refuse and trash collection, and other utilities and services used on or at the Premises and any maintenance or inspection charges for utilities, together with any taxes, penalties, surcharges or the like pertaining to the Tenant's use of the Premises. Landlord shall have the right to cause any of said services to be separately metered or charged to Tenant by provider, at Tenant's expense. Tenant shall
pay its share of all charges for jointly metered utilities, based on consumption as reasonably determined by Landlord. Landlord shall not be liable for any interruption or failure of utility service on the Premises.
B. In the event water is not separately metered to Tenant, Tenant agrees that it will not use water for uses other than normal domestic restroom and kitchen usage; and, Tenant does further agree to reimburse Landlord for the entire amount of common water costs as additional rental if, in fact, Tenant uses water for uses other than normal domestic restroom and kitchen uses without first obtaining Landlord's written permission. Furthermore, Tenant agrees in such event to install at its own expense, a submeter to determine Tenant's usage.
C. Tenant agrees it will not use sewer capacity for any use other than normal domestic restroom and kitchen use. Tenant further agrees to notify Landlord of any other sewer use ("excess sewer use") and also agrees to reimburse Landlord for the costs and expenses related to Tenant's excess sewer use, which shall include, but is expressly herein not limited to, the cost of acquiring additional sewer capacity to service Tenant's Lease.
10. INSURANCE.
A. Subject to Tenant's reimbursement obligation, Landlord shall maintain such fire and extended coverage insurance covering the building situated on the Premises or of which the Premises are a part as Landlord deems appropriate. Such insurance may provide for a commercially reasonable deductive. Landlord may, but is not obligated to, maintain such other insurance and additional coverage as it may deem necessary, including but not limited to, comprehensive general liability insurance, loss of rental insurance for up to 12 months rental, and such additional insurance and coverage shall be reimbursable by Tenant as provided herein. The Project may be included in a blanket policy (in which case the cost of such insurance allocable to the Project will be determined by Landlord based upon insurer's cost calculations).
B. Tenant, at its own expense, shall maintain during the term of this Lease
a policy or policies of worker's compensation and comprehensive general
liability insurance, including personal injury and property damage, with
contractual liability endorsement, in the amount of One Million Dollars
($1,000,000.00) for property damage and Two Million Dollars ($2,000,000.00) per
occurrence for personal injuries or deaths of persons occurring in or about the
Premises. Tenant, at its own expense, also shall maintain during the term of
this Lease fire and extended coverage insurance covering the replacement cost of
(i) all alterations, additions, partitions and Tenant's personal property
contained within the Premises by Tenant or by Landlord on behalf of Tenant and
(ii) all of Tenant's personal property contained within the Premises. Said
policies shall (i) name Landlord as an additional insured and insure Landlord's
contingent liability under this Lease (except for the worker's compensation
policy, which instead shall include waiver of subrogation endorsement in favor
of Landlord), (ii) be issued by an insurance company which is acceptable to
Landlord, (iii) provide that said insurance shall not be canceled unless thirty
(30) days written notice shall be given to Landlord, and (iv) provide primary
coverage to Landlord, when any policy issued to Landlord provides duplicate or
if similar coverage, Landlord's policy will be excess over Tenant's policies.
Said policies or certificates thereof shall be delivered to Landlord by Tenant
within ten (10) written days of the commencement of the term of the Lease and
upon each renewal of said insurance.
C. Tenant will not permit the Premises to be used for any purpose or in any manner that would (i) void the insurance thereon, (ii) increase the insurance risk, or (iii) cause the disallowance of any sprinkler credits, including without limitation, use of the Premises for the receipt, storage or handling of any product, material or merchandise that is explosive or highly flammable. If any increase in the cost of any insurance of the Premises or the building of which the Premises are a part is caused by Tenant's use of the Premises, or because Tenant vacates the Premises, then Tenant shall pay the amount of such increase to Landlord.
11. FIRE AND CASUALTY DAMAGE.
A. If the Premises or the building of which the Premises are a part should be damaged or destroyed by fire or other peril, Tenant immediately shall give written notice to Landlord. If the buildings situated on the Premises or of which the Premises are a part should be totally destroyed by any peril covered by insurance to be provided by Landlord under Paragraph 10.A above, or if they should be so damaged thereby that, in the Landlord's estimation, rebuilding or repairs cannot be completed within one hundred eighty (180) days after the date of such damage, this Lease shall terminate and rent shall be abated during the unexpired portion of this Lease, effective upon the date of the occurrence of such damage, provided Tenant has paid to Landlord the deductible or applicable portion of the deductible, as the case may be, under the Landlord's insurance policy.
B. If the buildings situated upon the Premises or of which the Premises are a part, should be damaged by any peril covered by the insurance to be provided by Landlord under Paragraph 10.A above, and in Landlord's estimation, rebuilding or repairs can be substantially completed within one hundred twenty (120) days after the date of such damage, this Lease shall not terminate, and Landlord shall restore the Premises to substantially its previous condition, except that Landlord shall not be required to rebuild, repair or replace any part of the partitions, fixtures, additions and other improvements that may have been constructed, erected or installed in, or about the Premises or for the benefit of, or by or for the Tenant. Tenant shall pay to Landlord the amount of the deductible under Landlord's insurance policy within thirty (30) days after receipt of Landlord's invoice therefor. If the damage covered by the insurance also involves portions of the building or buildings other than the Premises, Tenant shall pay only a portion of the deductible, based on the ratio of the cost of repairing the damage in the Premises
to the total of repairing all damage in the building or buildings. If such repairs and rebuilding have not been substantially completed within one hundred fifty (150) days after the date of such damage, Tenant, at Tenant's exclusive remedy, may, upon payment of insurance policy, terminate this Lease by delivering written notice of termination to Landlord in which event the rights and obligations hereunder shall cease and terminate. As an alternative to the aforementioned rebuilding, repairs and/or reduction of rent, Landlord may, at its sole option, use reasonable efforts to provide a reasonably comparable facility for Tenant to lease at the then prevailing fair market rental for either (i) the remainder of the term of the Lease, or (ii) the period of time during which the Premises are untenantable.
C. Notwithstanding anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirements is made known by any such holder, whereupon all rights and obligations hereunder shall cease and terminate.
D. Anything in this Lease to the contrary notwithstanding, Landlord and Tenant hereby waive and release each other of and from any and all rights of recovery, claim, action or cause of action, against each other, their agents, officers and employees, for any loss or damage that may occur to the Premises, improvements to the building of which the Premises are a part, or personal property (building contents) within the building and /or Premises, for any reason regardless of cause or origin. Each party of this Lease agrees immediately after execution of this Lease to give each insurance company, which has issued to its policies of fire and extended coverage insurance, written notice of the terms of the mutual waivers contained in this subparagraph, and if necessary, to have the insurance policies properly endorsed.
12. LIABILITY AND INDEMNIFICATION. Except for any claims, rights of recovery and causes of action that Tenant has released, Landlord shall hold Tenant harmless and defend Tenant against any and all claims or liability for any injury or damage to any person in, on or about the Premises or any part thereof and/or the building of which the Premises are a part, when such injury shall be caused by the act, neglect, negligence, fault of, or omission of any duty with respect to the same by Landlord, its agents, servants and employees. Except for any claims, rights of recovery and causes of action that Landlord has released, Tenant shall hold Landlord harmless from and defend Landlord against any and all claims or liability for any injury or damage (i) to any person or property whatsoever occurring in, on or about the Premises or any part thereof and/or of the building of which the Premises are a part, including without limitation elevators, stairways, passageways or hallways, the use of which Tenant may have in accordance with this Lease, when such injury or damage shall be caused by the act, neglect, negligence, fault of, or mission of any duty with respect to the same by Tenant, its agents, servants, employees, or invitees, (ii) arising from the conduct of management of any work done by the Tenant in or about the Premises, (iii) arising from transactions of the Tenant, (iv) Tenant's breach of any covenant contained in this Lease, including but not limited to Tenant's failure to comply with any of the matters set forth relating to environmental requirements as defined and described in Paragraph 23 and incorporated herein by reference, and (v) all costs, counsel fees, expenses and liabilities incurred in connection with any such claim or action or proceeding brought thereon. The provisions of this Paragraph 12 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring prior to such expiration or termination.
13. USE. The Premises shall be used only for the purpose of general office use, data center operations, receiving, storing, shipping, and selling (other than retail) products, materials and merchandise made and/or distributed by Tenant and for such other lawful purposes as may be incidental thereto. Outside storage, including without limitation, storage of trucks and other vehicles and the washing thereof at any time is prohibited without Landlord's prior written consent. Tenant shall, at its own cost and expense, obtain any and all licenses and permits necessary for such use, shall at all times maintain the Premises in a clean, healthful and safe condition and comply with all governmental laws, codes, ordinances, regulations or any other applicable authorities with regard to the use, condition or occupancy of the Premises including, without limitation, the ADA. Tenant shall be responsible, at Tenant's sole cost and expense, for the correction, prevention, and abatement of nuisances in or upon, or connected with, the Premises. Tenant shall not permit any objectionable or unpleasant odors, smoke, dust, gas, noise, vibrations, or pest infestations to emanate from the Premises, nor take any other action that would constitute a nuisance or would disturb, unreasonably interfere with, or endanger Landlord or any other tenants of the building or project of which the Premises are a part. Tenant's use of the Premises shall at all times comply with the insurance provisions in Paragraph 10 hereof.
14. INSPECTION. Landlord and its agents and representatives shall have the right to enter the Premises at any reasonable time during business hours to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease. During the period that is six (6) months prior to the end of the Lease term upon telephonic notice to Tenant, Landlord and Landlord's representative may enter the Premises during business hours for the purpose of showing the Premises. In addition, Landlord shall have the right to erect a suitable sign on the Premises stating the Premises are available. Tenant shall notify Landlord in writing at least thirty (30) days prior to vacating the Premises and shall arrange to meet with Landlord for a joint inspection of the Premises prior to vacating. If Tenant fails to give such notice or to arrange for such inspection, then Landlord's inspection of the Premises shall be deemed correct for the purpose of determining Tenant's responsibility for repairs and restoration of the Premise.
15. ASSIGNMENT AND SUBLETTING.
A. Tenant shall not have the right to assign, transfer or encumber this Lease, or any interest therein, without the prior written consent of Landlord. Any attempted assignment, transfer or encumbrance by Tenant in violation of the terms and covenants of this Paragraph shall be void. Notwithstanding the foregoing, Tenant shall have the right to assign this Lease to any affiliate provided that such assignment is in form satisfactory to Landlord. Any assignee or transferee of Tenant's interest in this Lease (all such assignees and transferees being hereinafter referred to as "Transferees"), by assuming Tenant's obligations hereunder, shall assume liability to Landlord for all amounts paid to persons other than Landlord by such Transferees in contravention of this Paragraph. No assignment, or other transfer, whether consented to by Landlord or not permitted hereunder shall relieve Tenant of its liability hereunder. If an event of default occurs while the Premises or any part thereof are assigned or sublet, then Landlord, in addition to any other remedies herein provided, or provided by law, may collect directly from such Transferee all rents payable to the Tenant and apply such rent against any sums due Landlord hereunder. No such collection shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant's obligations hereunder.
B. Tenant is permitted to enter into a lease agreement that permits a third party ("Sub-Tenant(s)") to take a portion or all of the Premises from the Tenant, provided that the Sub-tenant's use, in the sole discretion of the Landlord, does not substantively or adversely change the Tenant's approved use, the Tenant remains primarily responsible for all monies to be paid under the terms of this lease, including but not limited to, the payment of base rent and operating expenses as defined in paragraph 2, and the Sub-Tenant maintains an adherence to the applicable terms set out in this Agreement. In the event that a Sub-Tenant fails to adhere to the applicable terms of this Agreement, the Landlord shall retain its rights with respect to the Tenant, and may proceed with rights and recourse provided for the benefit of the Landlord under this Agreement, as if the Tenant itself had failed to adhere the terms of this Agreement.
C. If an event of default occurs while the Premises or any part thereof are assigned, transferred or sublet, then Landlord, in addition to any other remedies herein provided, or provided by law, may collect directly from such Transferee all rents payable to the Tenant and apply such rent against any sums due Landlord hereunder. No such collection shall be construed to constitute a novation or a release of Tenant from the further performance of Tenant's obligations hereunder.
D. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C., Section 101, et seq., (the "Bankruptcy Code"), any and all monies or other consideration payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord be held in trust for the benefit of Landlord and be promptly paid or delivered to Landlord.
E. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code, shall be deemed, without further act or deed, to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall upon demand execute and deliver to Landlord an instrument confirming such assumption.
16. CONDEMNATION. If the whole or any substantial part as determined by Landlord of the Premises should be taken for any public or quasi-public use under governmental law, ordinance or regulation, or by right of eminent domain, or by private purchase in lieu thereof and the taking prevents or materially interferes with the use of the Premises for the purpose for which they were leased to tenant, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease, effective on the date of such taking. If less than a substantial part, as determined by Landlord, of the Premises is taken for any public or quasi-public use under any governmental law, ordinance or regulation or by right of eminent domain, or by private purchase in lieu thereof, this Lease shall not terminate, but the rent payable hereunder during the unexpired portion of this Lease shall be reduced to such extent as may be fair and reasonable under all of the circumstances. All compensation awarded in connection with or as a result of any of the foregoing proceedings shall be the property of Landlord and Tenant hereby assigns any interest in any such award to Landlord; provided, however, Landlord shall have no interest in any award made to Tenant for loss of business or goodwill or for the taking of Tenant's fixtures and improvements, if a separate award for such items is made, to Tenant.
17. HOLDING OVER. At the termination of this Lease by its expiration or otherwise, Tenant immediately shall deliver possession to Landlord with all cleaning, repairs and maintenance required herein to be performed by Tenant completed. If, for any reason, Tenant retains possession of the Premises after the expiration of the Lease, unless the parties hereto otherwise agree in writing, such possession shall be subject to termination by either Landlord or Tenant at any time upon not less than ten (10) days advance written notice, and all of the other terms and provisions of this Lease shall be applicable during such period, except that Tenant shall pay Landlord from time to time, upon demand, as rental for the period of such possession, an amount equal to double the rent in effect on the termination date, computed on a daily basis for each day of such period. No holding over by Tenant, whether with or without consent of Landlord shall operate to extend this Lease except as otherwise expressly
provided. The preceding provisions of this Paragraph 17 shall not be construed as consent for Tenant to retain possession of the Premises in the absence of written consent thereto by Landlord.
18. QUIET ENJOYMENT. Landlord covenants that on or before the commencement date it will have good title to the Premises, free and clear of all liens and encumbrances, excepting only the lien for such mortgage or mortgages as are permitted by the terms of this Lease, zoning ordinances and other building and fire ordinances and governmental regulations relating to the use of such property, and easements, restrictions and other conditions of record. If this Lease is a sublease, then Tenant agrees to take the Premises subject to the provisions of the prior Leases. Landlord represents that it has the authority to enter into this Lease and that so long as Tenant pays all amounts due hereunder and performs all other covenants and agreements herein set forth, Tenant shall peaceably and quietly have, hold and enjoy the Premises for the term hereof without hindrance or molestation from Landlord, subject to the terms and provisions of this Lease.
19. EVENTS OF DEFAULT. The following events (herein individually referred to as "event of default") each shall be deemed to be events of nonperformance by Tenant under this Lease:
A. Tenant shall fail to pay any installment of the rent herein when due, or any other payment of reimbursement to Landlord required herein when due, and such failure shall continue for a period of five (5) days from the date such payment was due.
B. The Tenant or any guarantor of the Tenant's obligations hereunder shall
(i) become insolvent; (ii) admit in writing its inability to pay its debts;
(iii) make a general assignment for the benefit of creditors; (iv) commence any
case, proceeding or other case action seeking to have an order for relief
entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or of any substantial part
of its property; or (v) take any action to authorize or in contemplation of any
of the actions set forth above in this Paragraph.
C. Any case, proceeding or other action against the Tenant or any guarantor
of the Tenant's obligations hereunder shall be commenced seeking (i) to have an
order for relief entered against it as debtor or to adjudicate it a bankrupt or
insolvent; (ii) reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization of relief of debtors; (iii) appointment
of a receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property, and such case, proceeding or other action
(a) results in the entry of an order for relief against it which is not fully
stayed within seven (7) business days after the entry thereof, or (b) shall
remain undismissed for a period of forty-five (45) days.
D. Tenant shall (i) vacate all of a substantial portion of the Premises, or
(ii) fail to continuously operate its business at the Premises for the permitted
use set forth herein, whether or not Tenant is in default of the rental payments
due under this Lease.
E. Tenant shall fail to discharge any lien placed upon the Premises in violation of Paragraph 22 hereof within twenty (20) days after any such lien or encumbrance is filed against the Premises.
F. Tenant shall fail to comply with any term, provision or covenant of this Lease (other than those listed in this Paragraph 19), and shall not cure such failure within twenty (20) days after written notice thereof to Tenant.
20. REMEDIES.
A. Upon each occurrence of an event of default and so long as such event of default shall be continuing. Landlord shall have the option to pursue any one or more of the following remedies without any notice or demand:
(i) Terminate this Lease; and/or (ii) Enter upon and take possession of the Premises without terminating this Lease; and/or (iii) Alter all locks and other security devices at the Premises with or without terminating this Lease, and pursue, at Landlord's option, one or more remedies pursuant to this Lease, Tenant hereby specifically waiving any state or federal law to the contrary; and in any such event Tenant immediately shall surrender the Premises to Landlord, and if Tenant fails so to do, Landlord, without waiving any other remedy it may have, may enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying such Premises or any part thereof, without being liable for prosecution or any claim of damages therefore.
B. If Landlord terminates this Lease, at Landlord's option, Tenant shall be
liable for and shall pay to Landlord, the sum of all rental and other payments
owed to Landlord hereunder accrued to the date of such termination, plus, as
liquidated damages, an amount equal to (i) the present value of the total rental
and other payments owed hereunder for the remaining portion of the Lease term,
calculated as if such term expired on the date set forth in Paragraph 1, less
(ii) the then present fair market value of the Premises for such period, which
because of the difficulty of ascertaining such value, Landlord and Tenant
stipulate and agree, shall in no event be deemed to exceed seventy-five percent
(75%) of the rental amount set forth in Paragraph 2 above.
C. If Landlord repossesses the Premises without terminating the Lease, Tenant, at Landlord's option, shall be liable for and shall pay Landlord on demand all rental and other payments owed to Landlord hereunder, accrued to the date of such repossession, plus all amounts required to be paid by Tenant to Landlord until the date of expiration of the term as stated in
Paragraph 1, diminished by all amounts received by Landlord through reletting the Premises during such remaining term (but only to the extent of the rent herein reserved). Actions to collect amounts due by Tenant to Landlord under this subparagraph may be brought from time to time, on one or more occasions, without the necessity of Landlord's waiting until expiration of the Lease term.
D. During an event of default, in addition to any sum provided to be paid herein, Tenant also shall be liable for and shall pay to Landlord (i) broker's fees incurred by Landlord in connection with reletting the whole or any part of the Premises; (ii) the costs of removing and storing Tenant's or other occupant's property; (iii) the costs of repairing; altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants; and (iv) all reasonable expenses incurred by Landlord in enforcing or defending Landlord's rights and/or remedies. If either party hereto institute any action or proceeding to enforce any provision hereof by reason of any alleged breach of any provision of the Lease, the prevailing party shall be entitled to receive from the losing party all reasonable attorney's fees and all court costs in connection with such proceeding.
E. In the event Tenant fails to make any payment due hereunder when payment is due, to help defray the additional cost to Landlord for processing such late payments, Tenant shall pay to Landlord on demand a late charge in an amount equal to five percent (5%) of such installment; and the failure to pay such amount within ten (10) days after demand therefor shall be an additional event of default hereunder. The provision for such late charge shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord's remedies in any manner.
F. Exercise by Landlord of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an acceptance of surrender of the Premises by Landlord, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. Tenant and Landlord further agree that forbearance by Landlord to enforce its rights pursuant to the Lease at law or in equity, shall not be a waiver of Landlord's right to enforce one or more of its rights in connection with any subsequent default.
G. In the event of termination and/ or repossession of the Premises for an event of default, Landlord shall use reasonable efforts to relet the Premises and to collect rental after reletting; provided that, Tenant shall not be entitled to credit or reimbursement of any proceeds in excess of the rental owed hereunder. Landlord may relet the whole or any portion of the Premises for any period, to any Tenant and for any use and purpose.
H. If Landlord fails to perform any of its obligations hereunder within thirty (30) days after written notice from Tenant specifying such failure, Tenant's exclusive remedy shall be an action for damages. Unless and until Landlord fails to so cure any default after such notice, Tenant shall not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants, not conditions; and all such obligations will be binding upon Landlord only during the period of its possession of the Premises and not thereafter. The term "Landlord" shall mean only the owner, for the time being of the Premises, and in the event of the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing but such covenants and obligations shall be binding during the Lease term upon each new owner for the duration of such owner's ownership. Notwithstanding any other provision hereof, Landlord shall not have any personal liability hereunder. In the event of breach or default by Landlord in any term or provision of this Lease, Tenant agrees to look solely to the equity or interest then owned by Landlord in the Premises; however, in no event, shall any deficiency judgment or any money of any kind be sought or obtained against any Landlord.
I. If Landlord repossesses the Premises pursuant to the authority herein granted, the Landlord shall have the right to (i) keep in place and use or (ii) remove and store all of the furniture, fixtures and equipment at the Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or repossession thereof by any Landlord thereof of third party having a lien thereof. Landlord also shall have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person ("Claimant") who presents to Landlord a copy of any instrument represented by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right under various circumstances to take possession of such furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity or legality of said instrument. The rights of Landlord herein stated shall be in addition to any and all other rights that Landlord has or may hereafter have at law or in equity; and Tenant stipulates and agrees that the rights herein granted Landlord are commercially reasonable.
J. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated as rent, shall constitute rent.
K. This is a contract under which applicable law excuses Landlord from accepting performance from (or rendering performance to) any person or entity other than Tenant.
21. MORTGAGES. Tenant accepts this Lease subject and subordinate to any mortgages and/or deeds of trust now or any time hereafter constituting a lien or change upon the Premises or the improvements situated thereon or the building of which the Premises are a part, provided, however, that if the mortgagee, trustee, or holder of any such mortgage or deed of trust elects to
have Tenant's interest in this Lease superior to any such instrument, then by notice to Tenant from such mortgage, trustee or holder, this Lease shall be deemed superior to such lien, whether this Lease was executed before or after said mortgage or deed of trust. Tenant, at any time hereafter on demand, shall execute any instruments, releases or other documents that may be required by any mortgagee for the purpose of subjecting and subordinating this Lease to the lien of any such mortgage. Further, Tenant, at any time hereafter on demand, shall deliver to Landlord a certified copy of its most recent financial statement.
22. MECHANIC'S LIENS. Tenant has no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any manner to bind the interest of Landlord or Tenant in the Premises or to charge the rentals payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs. Tenant covenants and agrees that it will pay or cause to be paid all sums legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises and that will save and hold Landlord harmless from any and all loss, cost or expense based on or arising out of asserted claims or liens against the leasehold estate or against the right, title and interest of the Landlord in the Premises or under the terms of this Lease. Tenant agrees to give Landlord immediate written notice of the placing of any lien or encumbrance against the Premises.
23. HAZARDOUS MATERIALS. The term "Substances," as used in this Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any other substances, the use, storage, handling, disposal, transportation or removal of which is regulated, restricted, prohibited or penalized by any "Environmental Law," which term shall mean any federal, state or local law, ordinance or other statute of a governmental or quasi-governmental authority relating to pollution or protection of health or the environment and shall specifically include, but not be limited to, any "hazardous substance" as that term is defined under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and any amendments or successors in function thereto. Tenant hereby agrees that (i) no activity will be conducted on the Premises that will produce any Substance except for such activities that are part of the ordinary course for Tenant's business activities (the "Permitted Activities") provided said Permitted Activities are conducted in accordance with all Environmental Laws and have been approved in advance in writing by Landlord (which approval Landlord may grant or withhold in its sole discretion); Tenant shall be responsible for obtaining any required permits and paying any fees and providing any testing required by any governmental agency; (ii) the Premises will not be used in any manner for the storage of any Substance except for the temporary storage of such materials that are used in the ordinary course of Tenant's business provided such substances are properly stored in a manner and location meeting all Environmental Laws and approved in advance in writing by Landlord (which approval Landlord may grant or withhold in its sole discretion); Tenant shall be responsible for obtaining any required permits and paying any fees and providing any testing required by any governmental agency; (iii) no portion of the Premises will be used "as a landfill or a dump; (iv) Tenant will not install any underground or aboveground tank of any type; (v) Tenant will not allow any surface or subsurface conditions to exist or come into existence that constitute, or with the passage of time, may constitute a public or private nuisance; (vi) Tenant will not permit any Substances to be brought onto the Premises, except in accordance with the terms and conditions hereof, and if so brought or found located thereon, the same shall be immediately removed, and properly disposed, and all required cleanup procedures shall be diligently undertaken pursuant to all Environmental Laws; and (vii) Tenant shall in all regards comply with Environmental Laws including, without limitation, meeting any necessary financial responsibility requirements. Prior to any Substance being brought upon or into the Premises, whether Landlord's written permission is required or not, Tenant will provide to Landlord any applicable material safety data sheets regarding said Substance as well as a written description of the amount of such Substance to be brought upon or into the Premises and the common and recognized chemical name of such Substance. Tenant shall bear responsibility for insuring that all record keeping, reporting and remediation responsibilities of Tenant under Environmental Laws are met and Tenant assumes all such responsibility and liability for such legal compliance. Landlord or Landlord's representative shall have the right, but not the obligation, to enter the Premises for, among other purposes, the purposes of inspecting the storage, use and disposal of any Substances and to review compliance with all Environmental Laws. Should it be determined, in Landlord's sole opinion, that any Substances are being improperly stored, used, or disposed of, then Tenant shall immediately take such corrective action as required by applicable Environmental Laws. Tenant will provide Landlord written notification of the release or disposal of any Substances either within the Premises or outside of Tenant's Premises and will also provide Landlord written notice of any pending or threatened litigation concerning the breach or purported breach of any Environmental Laws. If at any time during or after the term of the Lease, the Premises is found to be contaminated by Substances or subject to said conditions, arising from or as a result of Tenant's negligence (whether in whole or in part) or the use of the Premises or any Substances by Tenant or any of Tenant's agents, employees, assigns or subtenants, Tenant shall diligently institute proper and thorough cleanup procedures in accordance with Environmental Laws at Tenant's sole cost, and Tenant agrees to indemnify and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, damages, fines, reimbursement, restitution, response costs, cleanup costs and obligations (including investigative responses and attorney's fees) of any nature. The foregoing indemnification and the responsibilities of Tenant shall apply to Tenant regardless of whether they arise from any Permitted Activity or from any Substances, the use of which Landlord approved, and shall survive the termination or expiration of this lease. Landlord shall be under no obligation to expend any sums or to seek reimbursement to enforce the indemnification obligations of Tenant hereunder.
Permitted Materials: Chemicals approved and used for industrial fire suppression systems operating in the premises.
Tenant acknowledges and agrees that it shall not be unreasonable for
Landlord to withhold its consent to any proposed assignment, subletting, or
transfer of Tenant's interest in this Lease if (i) the anticipated use of the
Premises by the proposed assignee, subtenant, or transferee (collectively, a
"Transferee") involves the generation, storage, use, treatment, or disposal of
Substances; (ii) the proposed Transferee has been required by any prior
Landlord, lender, or governmental authority to make remedial action in
connection with Substances contaminating a property, if the contamination
resulted from such Transferee's actions or use of the property in question; or
(iii) the proposed Transferee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
Substance.
24. MISCELLANEOUS.
A. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. The captions inserted in this Lease are for the convenience only and in no way define, limit or otherwise describe the scope of intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease.
B. In the event the Premises constitute a portion of a multiple occupancy building or buildings, Tenant's "proportionate share", as used in this Lease, shall mean a fraction, the numerator of which is the space contained in the Premises and the denominator of which the entire space contained in the building or buildings.
C. The terms, provisions and covenants and conditions contained in this Lease shall run with the land and shall apply to, inure to the benefit of, and be binding upon, the parties hereto and upon their respective heirs, executors, personal representatives, legal representatives, successors and assigns, except as otherwise herein expressly provided. Landlord shall have the right to transfer and assign, in whole or in part, its rights and obligations in the building and property that are subject of this Lease. Each party agrees to furnish to the other, promptly upon demand, a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the due amortization of such party to enter into this Lease.
D. Landlord shall not be held responsible for delays in the performance of its obligations hereunder when caused by strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental controls, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the control of the Landlord.
E. Tenant agrees, from time to time, within ten (10) days after request of Landlord, to execute and deliver to Landlord, or Landlord's designee, a Certificate of Occupancy and an estoppel certificate prepared and/or submitted by Landlord stating that this Lease is in full force and effect, the date to which rent has been paid, the unexpired term of this Lease and such other factual matters pertaining to this Lease as may be requested by Landlord. It is understood and agreed that Tenant's obligation to furnish such estoppel certificates in a timely fashion is a material inducement for Landlord's execution of this Lease. No grace or cure period provided in this Lease shall apply to the Tenant's obligations to timely deliver an estoppel certificate. Tenant hereby irrevocably appoints as its attorney in fact to execute on its behalf and in its name any such estoppel certificate if Tenant fails to execute and deliver the estoppel certificate within ten (10) days after Landlord's written request thereof.
F. This Lease constitutes the entire understanding and agreement of the Landlord and Tenant with respect to the subject matter of this Lease, and contains all of the covenants and agreements of Landlord and Tenant with respect thereto. Landlord and Tenant each acknowledge that no representations, inducements, promises or agreements, oral or written, have been made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant, which are not contained herein, and any prior agreements, promises, negotiations or representations not expressly set forth in this Lease are of no force and effect. This Lease may not be altered, changed or amended except by an instrument in writing signed by both parties hereto.
G. All obligations of Tenant hereunder not fully performed as of the expiration or earlier termination of the term of this Lease shall survive the expiration or earlier termination of the term hereof, including without limitation, all payment obligations with respect to operating expenses as set forth in Paragraph 2.C and all obligations concerning the condition and repair of the Premises, including without limitation, all heating and air-conditioning systems and equipment therein, in good condition and repair, reasonable wear and tear excluded. Tenant shall also, prior to vacating the Premises, pay to Landlord the amount, as estimated by Landlord, of Tenant's obligation hereunder for operating expenses for the year in which the Lease expires or terminates. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant hereunder, with Tenant being liable for any additional costs therefore upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied as the case may be. Any security deposit held by Landlord (less the refurbishment fee specified in Paragraph 2.B) shall be credited against the amount due from Tenant under this Paragraph 24.G.
H. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the term of this Lease, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall
not be affected thereby, and it is also the intention of the parties to this Lease that in lieu of such clause or provision of this Lease that it is illegal, invalid or unenforceable, there be added, as part of this Lease, a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be legal, valid and enforceable.
I. All references in this Lease to "the date hereof of similar references shall be deemed to refer to the last date, in point of time, on which all parries hereto have executed this Lease.
J. Tenant represents and warrants that it has dealt with no broker, agent or other person in connection with this transaction or that no broker, agent or other person brought into this transaction, other than as may be referenced in a separate written agreement executed by Tenant, and delivered to Landlord prior to the date hereof, and Tenant agrees to indemnify and hold Landlord harmless from and against any claims by any other broker, agent or other person claiming a commission or other form of compensation by virtue of having dealt with Tenant with regard to this leasing transaction.
K. If and when included within the term "Landlord", as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of a notice specifying some individual at some specific address for the receipt of notices and payments to Landlord. If and when included within the term "Tenant", as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for their joint execution of a notice specifying some individual at some specific address within the continental Unites States for the receipt of notices and payments to Tenant. All parties included within the terms "Landlord" and "Tenant", respectively shall be bound by notices given in accordance with the provisions of Paragraph 26 hereof to the same effect as if each had received such notice.
L. Tenant shall, at all times during the term of this Lease and any extension thereof, comply with all reasonable rules and regulations ("Building Rules and Regulations") at any time or from time to time established by Landlord covering use of the Premises and common areas. The existing Building Rules and Regulations currently in force and effect are attached hereto as Exhibit "B" and made a part hereof. In the events of any conflict between said Building Rules and Regulations and the Lease, the terms and provisions of the Lease shall control.
M. Landlord shall have the right to substitute for the Premises other space within the building; provided, however, the usable area of the substituted premises shall not be less than the usable area of the originally leased premises, and no increase in the rentals provided to be paid by Tenant hereunder shall be occasioned by such substitution of premises. Tenant shall relocate to such substitution of premises. Tenant shall relocate to such substituted premises upon thirty (30) days notice thereof, and Landlord shall pay the reasonable moving expenses of Tenant incidental to such substitution of premises. Upon such relocation, such substituted premises shall be considered the Premises described in this Lease for all uses and purposes as though originally leased to Tenant by this Lease.
N. As Tenant has been previously informed, the Landlord is a manager managed limited liability company whose manager is MainSpring Capital, L.L.C. The members of MainSpring Capital, L.L.C. are shareholders of Ross Brown Partners, Inc. and may, furthermore, be members of the Landlord. Furthermore, MainSpring Capital, L.L.C. may be a member of Landlord. Ross Brown Partners, Inc. is the property manager for the Landlord and is employed by Landlord to lease the property of which the demised premises are a part. As such, the broker and real estate licensees of Ross Brown Partners, Inc. are solely agents of Landlord.
25. SECURITY SERVICE. Tenant agrees to pay the proportionate share of the cost of any security services and/or of monitoring, repair and maintenance of any burglar alarm systems, water flow detection systems and other protective security equipment that is on or may be installed on the Premises and/or the building of which the Premises are a part, including the cost of any license or permit or user charge required for any such security systems. Landlord shall not be liable to Tenant for any damages, costs or expenses suffered or incurred by Tenant in connection with any unauthorized entry into the Premises and any other liability arising in connection with such security systems or services.
26. NOTICES. Each provision of this instrument or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing or delivering of notice or the making of any payment to Landlord to Tenant or with reference to sending, mailing or delivering any notice or the making of any payment by Tenant to Landlord shall be deemed to be compiled with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address set forth below or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. Tenant's obligation to pay rent and any other amounts to Landlord under the terms of this Lease shall not be deemed satisfied until such rent and other amounts have been actually received by Landlord. In addition to base rental due hereunder, all sums of money and all payments due Landlord hereunder shall be deemed to be additional rent owed to Landlord.
(b) All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address set forth below, or at such other address within the continental United States as Tenant may specify from time to time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be delivered hereunder shall be deemed to be delivered whether actually received or not when deposited in the United States Mail, postage prepaid, Certified or Registered
Mail, addressed to the parties hereto at the respective addresses set out below, or at such other address as they have therefore specified by written notice delivered in accordance herewith.
27. LANDLORD'S LIEN. In addition to any statutory lien for the rent in Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a continuing security interest for all rentals and other sums of money due or which may become due hereunder from Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory and other personal property of the Tenant now or hereafter situated as fixtures, furniture, inventory and other personal property of the Tenant now or hereafter situated at 2250 W. 14TH STREET, TEMPE, ARIZONA 85282, and such property shall not be removed therefrom without the consent of Landlord until all arrearages in rent as well as any and all other sums of money then due to Landlord hereunder shall first have been paid and discharged. In the event any of the foregoing described property is removed from the Premises in violation of the covenant in the preceding sentence, the security interest shall continue in such property and all proceeds and products, regardless of locations. Upon a default hereunder by Tenant in addition to all other rights and remedies, Landlord shall have all rights and remedies under the Uniform Commercial Code, including without limitation, the right to sell the property described in this Paragraph at public or private sale upon five (5) days notice by Landlord. Tenant hereby agrees to execute such other instruments, necessary or desirable under applicable law to perfect the security interest hereby created. Landlord and Tenant agree that this Lease and security agreement serves as a financing statement and that a copy, photographic or other reproduction of this portion of this Lease may be filed of record by Landlord and have the same force and effect as the original. This security agreement and financing statement also covers fixtures located at the Premises subject to this Lease and legally described in Exhibit "A" attached hereto and incorporated herein by reference and is to be filed for record in the real estate records. The record owner of this property is BEL DE MAR, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY.
EXECUTED BY LANDLORD, this 28th day of December, 2004.
LANDLORD: BEL DE MAR, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY
By: MainSpring Capital, LLC
Its: Manager
ADDRESS: /s/ Wilford M. Farnsworth 2999 North 44th Street, Suite 200 ---------------------------------------- Phoenix, Arizona 85018 By: Wilford M. Farnsworth, III (602) 840-6363 Its: Presiding Member |
EXECUTED BY TENANT, this __________ day of ____________, 20__.
TENANT: LIMELIGHT NETWORKS, INC., A DELAWARE CORPORATION
ADDRESS: /s/ Bill Rinehart 2250 W. 14th Street ---------------------------------------- Tempe, Arizona 85282 By: Bill Rinehart Its: President |
EXHIBIT "A"
2250 W. 14th STREET, TEMPE, ARIZONA 85282
(RENDERING OF SITE PLAN)
* All dimensions are approximate
EXHIBIT "B"
BUILDING RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, lettering, name or notice (hereinafter collectively referred to as "sign") shall be inscribed, displayed, printed or affixed on or to any part of the outside or inside of the building, the Premises or surrounding area without Landlord's written consent. If such consent is given by Landlord, Landlord may regulate the manner of display of the sign. Landlord shall reserve the right to remove any sign which has not been approved by Landlord or is being displayed in a non-approved manner without notice to and at the expense of the Tenant. All approved signs shall be installed at expense of Tenant by a person approved by Landlord.
Tenant shall not place anything or allow anything to be placed near the glass of any window, door, partition or wall which may appear unsightly from outside of Premises.
2. The sidewalks, paved area, exits and entrances, shall not be obstructed by any of the Tenants or used by them for any purpose other than for ingress to and egress from their respective Premises. The paved areas, exits, entrances and roof are not for the use of the general public and the Landlord shall in all cases retain the right to control thereof and prevent access thereto by all persons whose presence in the judgment of the Landlord shall be prejudicial to the safety, character, reputation and interests of the Building or its Tenants; provided, however, that nothing herein contained shall be construed to prevent access by persons with whom Tenant normally deals in the ordinary course of Tenant's business unless such persons are engaged in illegal activities. No Tenant and no employees, invitees, contractors or subcontractors of any Tenant shall go upon the roof of the Building. In addition, the Tenant will cause to be removed all debris, pallets or any outside storage immediately in front or to the rear of the Premises. If Landlord has to remove the above then Tenant will be charged a minimum of $300.00 for the removal of the material.
3. Tenant shall not alter any lock or install any new additional locks or any bolts on any door of the Premises without the written consent of Landlord.
4. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose than that for which they are constructed and no foreign substance of any kind whatsoever shall be thrown therein. The expense of breakage, stoppage or damage resulting from a violation of this rule shall be borne by the Tenant who, or whose employees or invitees, shall have caused it.
5. Tenant shall not overload the floor of the Premises, shall not mark on or drive nails, screw or drill into the partitions, woodwork or plaster (except as may be incidental to the hanging of the wall decoration), and shall not in any way deface the Premises or any part thereof.
6. Tenant shall not use, keep or permit to be used any food or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to the Landlord or other occupants of the building by reason of noise, odors and/or vibrations, or interfere in any way with the other Tenants or those having business in the building. No animals or birds shall be brought in or kept in or about the Premises or the building. No tenant shall disturb neighboring buildings or premises, or those having business with such occupants, by the use of any musical instruments, radio, phonograph, unusual noise, or in any other way. No tenant shall throw anything out of doors or down the passageways. No cooking shall be permitted by Tenant in the Premises.
7. Tenant shall not use or keep in the Premises, or the building, any kerosene, gasoline or inflammable or combustible fluid or material or use any method of heating or air-conditioning other than that supplied by Landlord.
8. Landlord will direct electricians as to where and how telephone and telegraph wires are to be introduced. No boring or cutting for or stringing of wires will be allowed without the consent of Landlord. The location of telephones, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Landlord.
9. All keys to the building, offices, rooms and toilet rooms shall be obtained from Landlord's office. Tenant, upon termination of tenancy, shall deliver to the Landlord the keys to the building, offices, rooms and toilet rooms which shall have been furnished and shall pay Landlord the cost of replacing any lost or of changing the lock or locks opened by such lost key if Landlord deems it necessary to make such change.
10. No tenant shall affix to the floor of the Premises any linoleum, tile, carpet or other familiar floor coverings except as approved by the Landlord. The expense of repairing any damage resulting from a violation of this rule or removal of any floor covering shall be borne by the tenant.
11. Landlord reserves the right to exclude or expel from the building any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any rules and regulations of the building.
12. Landlord shall have the right, exercisable without notice and without liability to tenant, to change name and the street address of the building on which the Premises are a part.
13. Tenant agrees that it shall comply with all fire regulations that may be issued from time to time by Landlord, and Tenant also shall provide Landlord with the name of a designated responsible employee to represent Tenant in all matters pertaining to fire regulations.
14. Landlord reserves the right by written notice to Tenant, to rescind, alter or waive any rule or regulation at any time prescribed for the building when, in Landlord's judgment, it is necessary, or desirable or proper for the best interest of the building or its tenants. .
15. Without the written consent of Landlord, Tenant shall not use the name of the building in connection with or in promotion or advertising the business of Tenant except as Tenant's address. Tenant shall not disturb, solicit or canvas any occupant of the building and shall cooperate to prevent same.
16. Tenant shall be entitled to use parking spaces during working hours, the exact location of which may be designated by Landlord. Tenant shall not park in driveways or loading areas nor reserved parking spaces of other tenants. Landlord or its agents shall have the right to cause to be removed any car of Tenant, its employees or agents, that may be parked in unauthorized areas, and Tenant agrees to save and hold harmless Landlord, its agents and employees from any such and all claims, losses, damages and demands asserted or arising in respect to or in connection with the removal of any such vehicle and for all expenses incurred by Landlord in connection with such removal. Tenant will from time to time, upon request of Landlord, supply Landlord with a list of license plate numbers of vehicles owned and/or operated by its employees and agents.
EXHIBIT "C"
Specified Alterations:
1. One partition wall that will divide the bullpen East/West. It may be a modular wall or drywall construction partition for the purpose of creating two secure spaces, each inaccessible to the other without entering through an outside entrance or interior common area ("Common Area").
2. Modification of existing HVAC ducting so as to properly control airflow throughout the Premises after partitioning, utilizing existing rooftop HVAC units without alterations to hardware or location.
3. Providing access to the Common Area from the northward space via a new doorway at the north wall or north west corner wall of the Common Area.
Exhibit 10.8
LEASE
CALWEST INDUSTRIAL PROPERTIES, LLC,
Landlord,
and
LIMELIGHT NETWORKS, INC.,
Tenant
TABLE OF CONTENTS
PAGE ---- 1. USE AND RESTRICTIONS ON USE.......................................... 1 2. TERM................................................................. 1 3. RENT................................................................. 2 4. RENT ADJUSTMENTS..................................................... 3 5. SECURITY DEPOSIT..................................................... 4 6. ALTERATIONS.......................................................... 4 7. REPAIR............................................................... 5 8. LIENS................................................................ 6 9. ASSIGNMENT AND SUBLETTING............................................ 6 10. INDEMNIFICATION...................................................... 7 11. INSURANCE............................................................ 8 12. WAIVER OF SUBROGATION................................................ 8 13. SERVICES AND UTILITIES............................................... 8 14. HOLDING OVER......................................................... 8 15. SUBORDINATION........................................................ 9 16. RULES AND REGULATIONS................................................ 9 17. REENTRY BY LANDLORD.................................................. 9 18. DEFAULT.............................................................. 9 19. REMEDIES............................................................. 10 20. TENANT'S BANKRUPTCY OR INSOLVENCY.................................... 12 21. QUIET ENJOYMENT...................................................... 13 22. CASUALTY............................................................. 13 23. EMINENT DOMAIN....................................................... 14 24. SALE BY LANDLORD..................................................... 14 25. ESTOPPEL CERTIFICATES................................................ 14 26. SURRENDER OF PREMISES................................................ 15 27. NOTICES.............................................................. 15 28. TAXES PAYABLE BY TENANT.............................................. 15 29. RELOCATION OF TENANT................................................. 16 30. DEFINED TERMS AND HEADINGS........................................... 16 31. TENANT'S AUTHORITY................................................... 16 32. FINANCIAL STATEMENTS AND CREDIT REPORTS.............................. 16 33. COMMISSIONS.......................................................... 16 34. TIME AND APPLICABLE LAW.............................................. 17 35. SUCCESSORS AND ASSIGNS............................................... 17 36. ENTIRE AGREEMENT..................................................... 17 37. EXAMINATION NOT OPTION............................................... 17 |
TABLE OF CONTENTS
(continued)
PAGE ---- 38. RECORDATION.......................................................... 17 39. OPTION TO EXTEND..................................................... 17 40. TELECOMMUNICATIONS EQUIPMENT......................................... 17 41. LIMITATION OF LANDLORD'S LIABILITY................................... 18 |
EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES
EXHIBIT A-1 - SITE PLAN
EXHIBIT B - BILL OF SALE
EXHIBIT C - COMMENCEMENT DATE MEMORANDUM
EXHIBIT D - RULES AND REGULATIONS
EXHIBIT E - ADDITIONAL SURRENDER CONDITIONS
MULTI-TENANT INDUSTRIAL NET LEASE
REFERENCE PAGES
BUILDING: 801 S. 16TH STREET PHOENIX, AZ 85034 LANDLORD: CALWEST INDUSTRIAL PROPERTIES, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY LANDLORD'S ADDRESS: C/O RREEF MANAGEMENT COMPANY 4050 EAST COTTON CENTER BLVD. SUITE 14 PHOENIX, AZ 85040 WIRE INSTRUCTIONS AND/OR FILE 50050 ADDRESS FOR RENT PAYMENT: LOS ANGELES, CA 90074-0050 LEASE REFERENCE DATE: SEPTEMBER 7, 2005 TENANT: LIMELIGHT NETWORKS, INC., A DELAWARE CORPORATION TENANT'S NOTICE ADDRESS: (a) As of beginning of 801 S.16TH STREET Term: PHOENIX, AZ 85034 (b) Prior to beginning of 2220 W. 14TH ST. Term (if different): TEMPE, AZ 85281 PREMISES ADDRESS: 801 S. 16TH STREET PHOENIX, AZ 85034 PREMISES RENTABLE AREA: APPROXIMATELY 8,224 RENTABLE SQ. FT. (FOR OUTLINE OF PREMISES SEE EXHIBIT A) USE: GENERAL ADMINISTRATIVE AND SALES OFFICES RELATED TO THE WAREHOUSING AND DISTRIBUTION OF CONTENT DELIVERY NETWORK FOR INTERNET DISTRIBUTION OF VIDEO, MUSIC, GAMES AND DOWNLOADS SCHEDULED COMMENCEMENT DATE: OCTOBER 1, 2005 TERM OF LEASE: APPROXIMATELY FIVE (5) YEARS, BEGINNING ON THE COMMENCEMENT DATE AND ENDING ON THE TERMINATION DATE. THE PERIOD FROM THE COMMENCEMENT DATE TO THE LAST DAY OF THE SAME MONTH IS THE "COMMENCEMENT MONTH." TERMINATION DATE: THE LAST DAY OF THE SIXTIETH (60TH) FULL CALENDAR MONTH AFTER (IF THE COMMENCEMENT MONTH IS NOT A FULL CALENDAR MONTH), OR FROM AND INCLUDING (IF THE COMMENCEMENT MONTH IS A FULL CALENDAR MONTH), THE COMMENCEMENT MONTH |
ANNUAL RENT and MONTHLY INSTALLMENT OF
RENT (Article 3):
MONTHS: $/RSF MONTHLY/RENT* ------- ------ ------------- COMMENCEMENT DATE-1/31/06 $ 0.00 $ 0.00 2/1/06-9/30/06 $0.825 $6,784.80 10/1/06-9/30/07 $0..85 $6,990.40 10/1/07-9/30/08 $0.875 $7,196.00 10/1/08-9/30/09 $ 0.90 $7,401.60 10/1/09-9/30/10 $0.925 $7,607.20 |
* PLUS APPLICABLE SALES AND TRANSACTION PRIVILEGE TAXES
INITIAL ESTIMATED MONTHLY $888.19, WHICH CHARGES SHALL COMMENCE TO BE INSTALLMENT OF RENT DUE ON FEBRUARY 1, 2006 ADJUSTMENTS (Article 3) TENANT'S PROPORTIONATE SHARE: 9.64% SECURITY DEPOSIT: $7,500.00 ASSIGNMENT/SUBLETTING FEE $750.00 SUBORDINATION FEE $750.00 (IF LANDLORD FORM IS USED, THIS FEE WILL BE WAIVED.) REAL ESTATE BROKER DUE LANDLORD WILL PAY A BROKERAGE FEE TO TRAMMELL COMMISSION: CROW COMPANY (MARK DETMER/BO MILLS) TENANT WILL PAY A BROKERAGE FEE TO CIRCLE ROAD (DAVID BRUNNER) PER SEPARATE AGREEMENT BETWEEN TENANT AND CIRCLE ROAD TENANT'S SIC CODE: 3648 AMORTIZATION RATE: 11% |
The Reference Pages information is incorporated into and made a part of the Lease. In the event of any conflict between any Reference Pages information and the Lease, the Lease shall control. This Lease includes Exhibits A through E, all of which are made a part of this Lease.
LANDLORD: TENANT: CALWEST INDUSTRIAL PROPERTIES, LLC, LIMELIGHT NETWORKS, INC., A CALIFORNIA LIMITED LIABILITY A DELAWARE CORPORATION COMPANY By: RREEF MANAGEMENT COMPANY, a Delaware corporation, Authorized Agent By: /s/ Bret C. Borg By: /s/ William H. Rinehart --------------------------------- ------------------------------------ Name: Bret C. Borg, CPM Name: William H. Rinehart Title: District Manager Title: President Dated: 9/23/05 Dated: 9-22-05 |
LEASE
By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the Building as set forth and described on the Reference Pages. The Premises are depicted on the floor plan attached hereto as Exhibit A, and the Building is depicted on the site plan attached hereto as Exhibit A-1. The Reference Pages, including all terms defined thereon, are incorporated as part of this Lease.
1. USE AND RESTRICTIONS ON USE.
1.1 The Premises are to be used solely for the purposes set forth on the Reference Pages. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building or injure, annoy, or disturb them, or allow the Premises to be used for any improper, immoral, unlawful, or objectionable purpose, or commit any waste. Tenant shall not do, permit or suffer in, on, or about the Premises the sale of any alcoholic liquor without the written consent of Landlord first obtained. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises and its occupancy and shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in the Building or appurtenant land, caused or permitted by, or resulting from the specific use by, Tenant, or in or upon, or in connection with, the Premises, all at Tenant's sole expense. Tenant shall not do or permit anything to be done on or about the Premises or bring or keep anything into the Premises which will in any way increase the rate of, invalidate or prevent the procuring of any insurance protecting against loss or damage to the Building or any of its contents by fire or other casualty or against liability for damage to property or injury to persons in or about the Building or any part thereof.
1.2 Tenant shall not, and shall not direct, suffer or permit any of its agents, contractors, employees, licensees or invitees (collectively, the "Tenant Entities") to at any time handle, use, manufacture, store or dispose of in or about the Premises or the Building any (collectively "Hazardous Materials") flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation by or under any federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of environmentally hazardous materials, substances, or wastes, presently in effect or hereafter adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of such laws or ordinances (collectively "Environmental Laws"), nor shall Tenant suffer or permit any Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws, in the Premises or the Building and appurtenant land or allow the environment to become contaminated with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store, use or dispose of products containing small quantities of Hazardous Materials (such as aerosol cans containing insecticides, toner for copiers, paints, paint remover and the like) to the extent customary and necessary for the use of the Premises for general office purposes; provided that Tenant shall always handle, store, use, and dispose of any such Hazardous Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each and all of the Landlord Entities (as defined in Article 30) harmless from and against any and all loss, claims, liability or costs (including court costs and attorney's fees) incurred by reason of any actual or asserted failure of Tenant to fully comply with all applicable Environmental Laws, or the presence, handling, use or disposition in or from the Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though permissible under all applicable Environmental Laws or the provisions of this Lease), or by reason of any actual or asserted failure of Tenant to keep, observe, or perform any provision of this Section 1.2.
1.3 Tenant and the Tenant Entities will be entitled to the non-exclusive use of the common areas of the Building as they exist from time to time during the Term, including the parking facilities, subject to Landlord's rules and regulations regarding such use. However, in no event will Tenant or the Tenant Entities park more vehicles in the parking facilities than Tenant's Proportionate Share of the total parking spaces available for common use. The foregoing shall not be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the availability of any particular parking spaces or any specific number of parking spaces.
2. TERM.
2.1 The Term of this Lease shall begin on the date ("Commencement Date") which shall be the later of the Scheduled Commencement Date as shown on the Reference Pages and the date that Landlord shall tender possession of the Premises to Tenant, and shall terminate on the date as shown on the Reference Pages ("Termination Date"), unless sooner terminated by the provisions of this Lease. Landlord shall have no obligation to (but may do so earlier) tender possession of the Premises to Tenant until Tenant has submitted to Landlord checks representing the first Monthly Installment of Rent that
is due (representing the month of February, 2006), the rent adjustments due per Article 4 below (which are due for the first month of the Term, and each month thereafter), and the Security Deposit, together with proof satisfactory to Landlord that Tenant has properly procured all of the insurance coverages required of Tenant under this Lease). Landlord shall tender possession of the Premises in "broom-swept" and clean condition, with all of the electrical, mechanical (excluding the Leibert air conditioning units) and plumbing systems in good working condition, the work, if any, to be performed by Landlord pursuant to Exhibit B to this Lease substantially completed. Tenant understands and agrees that the existing generator in the Premises shall be delivered to it in its current "as is, where is" condition, with Tenant being responsible for all maintenance, repair and/or replacement of the generator during the Term of the Lease. If Tenant spends in excess of One Hundred Fifty Thousand Dollars ($150,000.00) on the maintenance, repair and/or replacement of the generator during the sixty (60) month initial Term of the Lease, and if reasonable proof of such expenses is delivered to Landlord at least thirty (30) days prior to September 30, 2010, then Landlord shall execute a bill of sale as in the form attached hereto as Exhibit B transferring all of Landlord's right, title and interest in and to the generator to Tenant, without any warranty or representation as to its condition. Despite any inference to the contrary which can be drawn from the foregoing language, if an Event of Default (as defined in Article 18 of the Lease) occurs during the Term, of the Lease, then Landlord shall have no obligation to deliver the generator to Tenant regardless of how much Tenant spends in connection therewith. Tenant shall deliver a punch list of items not in good working condition completed within thirty (30) days after Landlord tenders possession of the Premises and Landlord agrees to proceed with due diligence to perform its obligations regarding such items. Tenant shall, at Landlord's request, execute and deliver a memorandum agreement provided by Landlord in the form of Exhibit C attached hereto, setting forth the actual Commencement Date, Termination Date and, if necessary, a revised rent schedule. Should Tenant fail to do so within thirty (30) days after Landlord's request, the information set forth in such memorandum provided by Landlord shall be conclusively presumed to be agreed and correct. Upon occupancy of the Premises, Landlord shall deliver to Tenant a bill of sale as in the form attached hereto as Exhibit B.
2.2 Tenant agrees that in the event of the inability of Landlord to deliver possession of the Premises on the Scheduled Commencement Date for any reason, Landlord shall not be liable for any damage resulting from such inability, but Tenant shall not be liable for any rent until the time when Landlord can, after notice to Tenant, deliver possession of the Premises to Tenant. No such failure to give possession on the Scheduled Commencement Date shall affect the other obligations of Tenant under this Lease, except that if Landlord is unable to deliver possession of the Premises within one hundred twenty (120) days after the Scheduled Commencement Date (other than as a result of strikes, shortages of materials, holdover tenancies or similar matters beyond the reasonable control of Landlord and Tenant is notified by Landlord in writing as to such delay), Tenant shall have the option to terminate this Lease unless said delay is as a result of: (a) Tenant's failure to agree to plans and specifications and/or construction cost estimates or bids; (b) Tenant's request for materials, finishes or installations other than Landlord's standard except those, if any, that Landlord shall have expressly agreed to furnish without extension of time agreed by Landlord; (c) Tenant's change in any plans or specifications; or, (d) performance or completion by a party employed by Tenant (each of the foregoing, a "Tenant Delay"). If any delay is the result of a Tenant Delay, the Commencement Date and the payment of rent under this Lease shall be accelerated by the number of days of such Tenant Delay.
2.3 In the event Landlord permits Tenant, or any agent, employee or contractor of Tenant, to enter, use or occupy the Premises prior to the Commencement Date, such entry, use or occupancy shall be subject to all the provisions of this Lease other than the payment of rent, including, without limitation, Tenant's compliance with the insurance requirements of Article 11. Said early possession shall not advance the Termination Date.
3. RENT.
3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to
time by paying the Monthly Installment of Rent then in effect on or before the
first day of each full calendar month during the Term, except that the first
full month's rent (representing the charges due for the month of February, 2006)
shall be paid upon the execution of this Lease. The Monthly Installment of Rent
in effect at any time shall be one-twelfth (1/12) of the Annual Rent in effect
at such time. Rent for any period during the Term which is less than a full
month shall be a prorated portion of the Monthly Installment of Rent based upon
the number of days in such month. Said rent shall be paid to Landlord, without
deduction or offset and without notice or demand, at the Rent Payment Address,
as set forth on the Reference Pages, or to such other person or at such other
place as Landlord may from time to time designate in writing. If an Event of
Default occurs, Landlord may require by notice to Tenant that all subsequent
rent payments be made by an automatic payment from Tenant's bank account to
Landlord's account, without cost to Landlord. Tenant must implement such
automatic payment system prior to the next scheduled rent payment or within ten
(10) days after Landlord's notice, whichever is later. Unless specified in this
Lease to the contrary, all amounts and sums payable by Tenant to Landlord
pursuant to this Lease shall be deemed additional rent.
3.2 Tenant recognizes that late payment of any rent or other sum due under this Lease will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) six percent (6%) of the unpaid rent or other payment. The amount of the late charge to be paid by Tenant shall be reassessed and added to Tenant's obligation for each successive month until paid. The provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do the terms of this Section 3.2 in any way affect Landlord's remedies pursuant to Article 19 of this Lease in the event said rent or other payment is unpaid after date due.
4. RENT ADJUSTMENTS.
4.1 For the purpose of this Article 4, the following terms are defined as follows:
4.1.1 LEASE YEAR: Each fiscal year (as determined by Landlord from time to time) falling partly or wholly within the Term.
4.1.2 EXPENSES: All costs of operation, maintenance, repair,
replacement and management of the Building (including the amount of any credits
which Landlord may grant to particular tenants of the Building in lieu of
providing any standard services or paying any standard costs described in this
Section 4.1.2 for similar tenants), as determined in accordance with generally
accepted accounting principles, including the following costs by way of
illustration, but not limitation: water and sewer charges; insurance charges of
or relating to all insurance policies and endorsements deemed by Landlord to be
reasonably necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas; waste
disposal; the cost of janitorial services; the cost of security and alarm
services (including any central station signaling system); costs of cleaning,
repairing, replacing and maintaining the common areas, including parking and
landscaping, window cleaning costs; labor costs; costs and expenses of managing
the Building including management and/or administrative fees; air conditioning
maintenance costs; elevator maintenance fees and supplies; material costs;
equipment costs including the cost of maintenance, repair and service agreements
and rental and leasing costs; purchase costs of equipment; current rental and
leasing costs of items which would be capital items if purchased; tool costs;
licenses, permits and inspection fees; wages and salaries; employee benefits and
payroll taxes; accounting and legal fees; any sales, use or service taxes
incurred in connection therewith. In addition, Landlord shall be entitled to
recover, as additional rent (which, along with any other capital expenditures
constituting Expenses, Landlord may either include in Expenses or cause to be
billed to Tenant along with Expenses and Taxes but as a separate item), Tenant's
Proportionate Share of: (i) an allocable portion of the cost of capital
improvement items which are reasonably calculated to reduce operating expenses;
(ii) the cost of fire sprinklers and suppression systems and other life safety
systems; and (iii) other capital expenses which are required under any
governmental laws, regulations or ordinances which were not applicable to the
Building at the time it was constructed; but the costs described in this
sentence shall be amortized over the reasonable life of such expenditures in
accordance with such reasonable life and amortization schedules as shall be
determined by Landlord in accordance with generally accepted accounting
principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building or
equipment in the Building except as provided herein, loan principal payments,
costs of alterations of tenants' premises, leasing commissions, interest
expenses on long-term borrowings or advertising costs.
4.1.3 TAXES: Real estate taxes and any other taxes, charges and assessments which are levied with respect to the Building or the land appurtenant to the Building, or with respect to any improvements, fixtures and equipment or other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and said land, any payments to any ground lessor in reimbursement of tax payments made by such lessor; and all fees, expenses and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year. Taxes shall not include any corporate franchise, or estate, inheritance or net income tax, or tax imposed upon any transfer by Landlord of its interest in this Lease or the Building or any taxes to be paid by Tenant pursuant to Article 28.
4.2 Tenant shall pay as additional rent for each Lease Year Tenant's Proportionate Share of Expenses and Taxes incurred for such Lease Year.
4.3 The annual determination of Expenses shall be made by Landlord and
shall be binding upon Landlord and Tenant, subject to the provisions of this
Section 4.3. During the Term, Tenant may review, at Tenant's sole cost and
expense, the books and records supporting such determination in an office of
Landlord, or Landlord's agent, during normal business
hours, upon giving Landlord five (5) days advance written notice within sixty
(60) days after receipt of such determination, but in no event more often than
once in any one (1) year period, subject to execution of a confidentiality
agreement acceptable to Landlord, and provided that if Tenant utilizes an
independent accountant to perform such review it shall be one of national
standing which is reasonably acceptable to Landlord, is not compensated on a
contingency basis and is also subject to such confidentiality agreement. If
Tenant fails to object to Landlord's determination of Expenses within ninety
(90) days after receipt, or if any such objection fails to state with
specificity the reason for the objection, Tenant shall be deemed to have
approved such determination and shall have no further right to object to or
contest such determination. In the event that during all or any portion of any
Lease Year or Base Year, the Building is not fully rented and occupied Landlord
shall make an appropriate adjustment in occupancy-related Expenses for such year
for the purpose of avoiding distortion of the amount of such Expenses to be
attributed to Tenant by reason of variation in total occupancy of the Building,
by employing consistent and sound accounting and management principles to
determine Expenses that would have been paid or incurred by Landlord had the
Building been at least ninety-five percent (95%) rented and occupied, and the
amount so determined shall be deemed to have been Expenses for such Lease Year.
4.4 Prior to the actual determination thereof for a Lease Year, Landlord may from time to time estimate Tenant's liability for Expenses and/or Taxes under Section 4.2, Article 6 and Article 28 for the Lease Year or portion thereof. Landlord will give Tenant written notification of the amount of such estimate and Tenant agrees that it will pay, by increase of its Monthly Installments of Rent due in such Lease Year, additional rent in the amount of such estimate. Any such increased rate of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in effect until further written notification to Tenant pursuant hereto.
4.5 When the above mentioned actual determination of Tenant's Liability for Expenses and/or Taxes is made for any Lease Year and when Tenant is so notified in writing, then:
4.5.1 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is less than
Tenant's liability for Expenses and/or Taxes, then Tenant shall pay such
deficiency to Landlord as additional rent in one lump sum within thirty (30)
days of receipt of Landlord's bill therefor; and
4.5.2 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is more than
Tenant's Liability for Expenses and/or Taxes, then Landlord shall credit the
difference against the then next due payments to be made by Tenant under this
Article 4, or, if the Lease has terminated, refund the difference in cash.
4.6 If the Commencement Date is other than January 1 or if the Termination Date is other than December 31, Tenant's liability for Expenses and Taxes for the Lease Year in which said Date occurs shall be prorated based upon a three hundred sixty-five (365) day year.
5. SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with Landlord
upon the execution of this Lease. Said sum shall be held by Landlord as security
for the faithful performance by Tenant of all the terms, covenants and
conditions of this Lease to be kept and performed by Tenant and not as an
advance rental deposit or as a measure of Landlord's damage in case of Tenant's
default. If Tenant defaults with respect to any provision of this Lease,
Landlord may use any part of the Security Deposit for the payment of any rent or
any other sum in default, or for the payment of any amount which Landlord may
spend or become obligated to spend by reason of Tenant's default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by
reason of Tenant's default. If any portion is so used, Tenant shall within five
(5) days after written demand therefor, deposit with Landlord an amount
sufficient to restore the Security Deposit to its original amount and Tenant's
failure to do so shall be a material breach of this Lease. Except to such
extent, if any, as shall be required by law, Landlord shall not be required to
keep the Security Deposit separate from its general funds, and Tenant shall not
be entitled to interest on such deposit. If Tenant shall fully and faithfully
perform every provision of this Lease to be performed by it, the Security
Deposit or any balance thereof shall be returned to Tenant at such time after
termination of this Lease when Landlord shall have determined that all of
Tenant's obligations under this Lease have been fulfilled.
6. ALTERATIONS.
6.1 Except for those, if any, specifically provided for in Exhibit B to this Lease, Tenant shall not make or suffer to be made any alterations, additions, or improvements, including, but not limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any part thereof or the making of any improvements as required by Article 7, without the prior written consent of Landlord. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete plans and specifications for such alterations, additions and improvements. Landlord's consent shall not be
unreasonably withheld with respect to alterations which (i) are not structural in nature, (ii) are not visible from the exterior of the Building, (iii) do not affect or require modification of the Building's electrical, mechanical, plumbing, HVAC or other systems, and (iv) in aggregate do not cost more than $5.00 per rentable square foot of that portion of the Premises affected by the alterations in question.
6.2 In the event Landlord consents to the making of any such alteration, addition or improvement by Tenant, the same shall be made by using either Landlord's contractor or a contractor reasonably approved by Landlord, in either event at Tenant's sole cost and expense. If Tenant shall employ any contractor other than Landlord's contractor and such other contractor or any subcontractor of such other contractor shall employ any non-union labor or supplier, Tenant shall be responsible for and hold Landlord harmless from any and all delays, damages and extra costs suffered by Landlord as a result of any dispute with any labor unions concerning the wage, hours, terms or conditions of the employment of any such labor. In any event Landlord may charge Tenant a construction management fee not to exceed five percent (5%) of the cost of such work to cover its overhead as it relates to such proposed work, plus third-party costs actually incurred by Landlord in connection with the proposed work and the design thereof, with all such amounts being due five (5) days after Landlord's demand.
6.3 All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all government laws, ordinances, rules and regulations, using Building standard materials where applicable, and Tenant shall, prior to construction, provide the additional insurance required under Article 11 in such case, and also all such assurances to Landlord as Landlord shall reasonably require to assure payment of the costs thereof, including but not limited to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded construction escrows and to protect Landlord and the Building and appurtenant land against any loss from any mechanic's, materialmen's or other liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real estate taxes attributable to any such alteration, addition or improvement for so long, during the Term, as such increase is ascertainable; at Landlord's election said sums shall be paid in the same way as sums due under Article 4. Landlord may, as a condition to its consent to any particular alterations or improvements, require Tenant to deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost of removing such alterations or improvements and restoring the Premises, to the extent required under Section 26.2
7. REPAIR.
7.1 Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises, except as specified in Exhibit B if attached to this Lease and except that Landlord shall repair and maintain the structural portions of the roof, foundation and walls of the Building. By taking possession of the Premises, Tenant accepts them as being in good order, condition and repair and in the condition in which Landlord is obligated to deliver them, except as set forth in the punch list to be delivered pursuant to Section 2.1. It is hereby understood and agreed that no representations respecting the condition of the Premises or the Building have been made by Landlord to Tenant, except as specifically set forth in this Lease. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant.
7.2 Tenant shall at its own cost and expense keep and maintain all parts of the Premises and such portion of the Building and improvements as are within the exclusive control of Tenant in good condition, promptly making all necessary repairs and replacements, whether ordinary or extraordinary, with materials and workmanship of the same character, kind and quality as the original (including, but not limited to, repair and replacement of all fixtures installed by Tenant, water heaters serving the Premises, windows, glass and plate glass, doors, exterior stairs, skylights, any special office entries, interior walls and finish work, floors and floor coverings, heating and air conditioning systems serving the Premises, electrical systems and fixtures, sprinkler systems, dock boards, truck doors, dock bumpers, plumbing work and fixtures, and performance of regular removal of trash and debris). Tenant as part of its obligations hereunder shall keep the Premises in a clean and sanitary condition. Tenant will, as far as possible keep all such parts of the Premises from deterioration due to ordinary wear and from falling temporarily out of repair, and upon termination of this Lease in any way Tenant will yield up the Premises to Landlord in good condition and repair, loss by fire or other casualty excepted (but not excepting any damage to glass). Tenant shall, at its own cost and expense, repair any damage to the Premises or the Building resulting from and/or caused in whole or in part by the negligence or misconduct of Tenant, its agents, employees, contractors, invitees, or any other person entering upon the Premises as a result of Tenant's business activities or caused by Tenant's default hereunder.
7.3 Except as provided in Article 22, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant's business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or to fixtures, appurtenances and equipment in the Building. Except to the
extent, if any, prohibited by law, Tenant waives the right to make repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect.
7.4 Tenant shall, at its own cost and expense, enter into a regularly scheduled preventive maintenance/service contract with a maintenance contractor approved by Landlord for servicing all heating and air conditioning systems and equipment serving the Premises (and a copy thereof shall be furnished to Landlord). The service contract must include all services suggested by the equipment manufacturer in the operation/maintenance manual and must become effective within thirty (30) days of the date Tenant takes possession of the Premises. Should Tenant fail to do so, Landlord may, upon notice to Tenant, enter into such a maintenance/ service contract on behalf of Tenant or perform the work and in either case, charge Tenant the cost thereof along with a reasonable amount for Landlord's overhead.
7.5 Landlord shall coordinate any repairs and other maintenance of any railroad tracks serving the Building and, if Tenant uses such rail tracks, Tenant shall reimburse Landlord or the railroad company from time to time upon demand, as additional rent, for its share of the costs of such repair and maintenance and for any other sums specified in any agreement to which Landlord or Tenant is a party respecting such tracks, such costs to be borne proportionately by all tenants in the Building using such rail tracks, based upon the actual number of rail cars shipped and received by such tenant during each calendar year during the Term.
8. LIENS. Tenant shall keep the Premises, the Building and appurtenant land and Tenant's leasehold interest in the Premises free from any liens arising out of any services, work or materials performed, furnished, or contracted for by Tenant, or obligations incurred by Tenant. In the event that Tenant fails, within ten (10) days following the imposition of any such lien, to either cause the same to be released of record or provide Landlord with insurance against the same issued by a major title insurance company or such other protection against the same as Landlord shall accept (such failure to constitute an Event of Default), Landlord shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be payable to it by Tenant within five (5) days Landlord's demand.
9. ASSIGNMENT AND SUBLETTING.
9.1 Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or any part of the Premises whether voluntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, and shall not make, suffer or permit such assignment, subleasing or occupancy without the prior written consent of Landlord, such consent not to be unreasonably withheld, and said restrictions shall be binding upon any and all assignees of the Lease and subtenants of the Premises. In the event Tenant desires to sublet, or permit such occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant shall give written notice thereof to Landlord at least sixty (60) days but no more than one hundred twenty (120) days prior to the proposed commencement date of such subletting or assignment, which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of any sublease or assignment and copies of financial reports and other relevant financial information of the proposed subtenant or assignee.
9.2 Notwithstanding any assignment or subletting, permitted or otherwise, Tenant shall at all times remain directly, primarily and fully responsible and liable for the payment of the rent specified in this Lease and for compliance with all of its other obligations under the terms, provisions and covenants of this Lease. Upon the occurrence of an Event of Default, if the Premises or any part of them are then assigned or sublet, Landlord, in addition to any other remedies provided in this Lease or provided by law, may, at its option, collect directly from such assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease and apply such rent against any sums due to Landlord from Tenant under this Lease, and no such collection shall be construed to constitute a novation or release of Tenant from the further performance of Tenant's obligations under this Lease.
9.3 In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event
of any proposed subletting or assignment, to terminate this Lease, or in the
case of a proposed subletting of less than the entire Premises, to recapture the
portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised, if at all, by
Landlord giving Tenant written notice given by Landlord to Tenant within thirty
(30) days following Landlord's receipt of Tenant's written notice as required
above. However, if Tenant notifies Landlord, within five (5) days after receipt
of Landlord's termination notice, that Tenant is rescinding its proposed
assignment or sublease, the termination notice shall be void and the Lease shall
continue in full force and effect. If this Lease shall be terminated with
respect to the entire Premises pursuant to this Section, the Term of this Lease
shall end on the date stated in Tenant's notice as the effective date of the
sublease or assignment as if that date had been originally fixed in this Lease
for the expiration of the Term. If Landlord recaptures under this Section only a
portion of the Premises, the rent to be paid from time to time during the
unexpired Term shall abate proportionately based on the
proportion by which the approximate square footage of the remaining portion of the Premises shall be less than that of the Premises as of the date immediately prior to such recapture. Tenant shall, at Tenant's own cost and expense, discharge in full any outstanding commission obligation which may be due and owing as a result of any proposed assignment or subletting, whether or not the Premises are recaptured pursuant to this Section 9.3 and rented by Landlord to the proposed tenant or any other tenant.
9.4 In the event that Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay to Landlord as additional rent an amount equal to one hundred percent (100%) of any Increased Rent (as defined below), less the Costs Component (as defined below), when and as such Increased Rent is received by Tenant. As used in this Section, "Increased Rent" shall mean the excess of (i) all rent and other consideration which Tenant is entitled to receive by reason of any sale, sublease, assignment or other transfer of this Lease, over (ii) the rent otherwise payable by Tenant under this Lease at such time. For purposes of the foregoing, any consideration received by Tenant in form other than cash shall be valued at its fair market value as determined by Landlord in good faith. The "Costs Component" is that amount which, if paid monthly, would fully amortize on a straight-line basis, over the entire period for which Tenant is to receive Increased Rent, the reasonable costs incurred by Tenant for leasing commissions and tenant improvements in connection with such sublease, assignment or other transfer.
9.5 Notwithstanding any other provision hereof, it shall be considered reasonable for Landlord to withhold its consent to any assignment of this Lease or sublease of any portion of the Premises if at the time of either Tenant's notice of the proposed assignment or sublease or the proposed commencement date thereof, there shall exist any uncured default of Tenant or matter which will become a default of Tenant with passage of time unless cured, or if the proposed assignee or sublessee is an entity: (a) with which Landlord is already in negotiation; (b) is already an occupant of the Building unless Landlord is unable to provide the amount of space required by such occupant; (c) is a governmental agency; (d) is incompatible with the character of occupancy of the Building; (e) with which the payment for the sublease or assignment is determined in whole or in part based upon its net income or profits; or (f) would subject the Premises to a use which would: (i) involve increased personnel or wear upon the Building; (ii) violate any exclusive right granted to another tenant of the Building; (iii) require any addition to or modification of the Premises or the Building in order to comply with building code or other governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant expressly agrees that for the purposes of any statutory or other requirement of reasonableness on the part of Landlord, Landlord's refusal to consent to any assignment or sublease for any of the reasons described in this Section 9.5, shall be conclusively deemed to be reasonable.
9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord's costs, including reasonable attorney's fees, incurred in investigating and considering any proposed or purported assignment or pledge of this Lease or sublease of any of the Premises, regardless of whether Landlord shall consent to, refuse consent, or determine that Landlord's consent is not required for, such assignment, pledge or sublease. Any purported sale, assignment, mortgage, transfer of this Lease or subletting which does not comply with the provisions of this Article 9 shall be void.
9.7 If Tenant is a corporation, limited liability company, partnership or trust, any transfer or transfers of or change or changes within any twelve (12) month period in the number of the outstanding voting shares of the corporation or limited liability company, the general partnership interests in the partnership or the identity of the persons or entities controlling the activities of such partnership or trust resulting in the persons or entities owning or controlling a majority of such shares, partnership interests or activities of such partnership or trust at the beginning of such period no longer having such ownership or control shall be regarded as equivalent to an assignment of this Lease to the persons or entities acquiring such ownership or control and shall be subject to all the provisions of this Article 9 to the same extent and for all intents and purposes as though such an assignment.
10. INDEMNIFICATION. None of the Landlord Entities shall be liable and Tenant hereby waives all claims against them for any damage to any property or any injury to any person in or about the Premises or the Building by or from any cause whatsoever (including without limiting the foregoing, rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing works or appliances, the Building not being in good condition or repair, gas, fire, oil, electricity or theft), except to the extent caused by or arising from the gross negligence or willful misconduct of Landlord or its agents, employees or contractors. Tenant shall protect, indemnify and hold the Landlord Entities harmless from and against any and all loss, claims, liability or costs (including court costs and attorney's fees) incurred by reason of (a) any damage to any property (including but not limited to property of any Landlord Entity) or any injury (including but not limited to death) to any person occurring in, on or about the Premises or the Building to the extent that such injury or damage shall be caused by or arise from any actual or alleged act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any standards imposed by any duty with respect to the injury or damage; (b) the conduct or management of any work or thing whatsoever done by the Tenant in or about the Premises or from transactions of the Tenant concerning the Premises;
Tenant's failure to comply with any and all governmental laws, ordinances and regulations applicable to the condition or use of the Premises or its occupancy; or (d) any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant to this Lease. The provisions of this Article shall survive the termination of this Lease with respect to any claims or liability accruing prior to such termination.
11. INSURANCE.
11.1 Tenant shall keep in force throughout the Term: (a) a Commercial General Liability insurance policy or policies to protect the Landlord Entities against any liability to the public or to any invitee of Tenant or a Landlord Entity incidental to the use of or resulting from any accident occurring in or upon the Premises with a limit of not less than $1,000,000 per occurrence and not less than $2,000,000 in the annual aggregate, or such larger amount as Landlord may prudently require from time to time, covering bodily injury and property damage liability and $1,000,000 products/completed operations aggregate; (b) Business Auto Liability covering owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per accident; (c) insurance protecting against liability under Worker's Compensation Laws with limits at least as required by statute; (d) Employers Liability with limits of $1,000,000 $500,000 each accident, $1,000,000 $500,000 disease policy limit, $1,000,000 $500,000 disease--each employee; (e) All Risk or Special Form coverage protecting Tenant against loss of or damage to Tenant's alterations, additions, improvements, carpeting, floor coverings, panelings, decorations, fixtures, inventory and other business personal property situated in or about the Premises to the full replacement value of the property so insured, (f) Business Interruption Insurance for 100% of the 12 months actual loss sustained, and (g) and (f) Excess Liability in the amount of $5,000,000 $4,000,000.
11.2 The aforesaid policies shall (a) be provided at Tenant's expense; (b) name the Landlord Entities as additional insureds (General Liability) and loss payee (Property--Special Form); (c) be issued by an insurance company with a minimum Best's rating of "A:VII" during the Term; and (d) provide that said insurance shall not be canceled unless thirty (30) days prior written notice (ten days for non-payment of premium) shall have been given to Landlord; a certificate of Liability insurance on ACORD Form 25 and a certificate of Property insurance on ACORD Form 27 shall be delivered to Landlord by Tenant upon the Commencement Date and at least thirty (30) days prior to each renewal of said insurance.
11.3 Whenever Tenant shall undertake any alterations, additions or improvements in, to or about the Premises ("Work") the aforesaid insurance protection must extend to and include injuries to persons and damage to property arising in connection with such Work, without limitation including liability under any applicable structural work act, and such other insurance as Landlord shall require; and the policies of or certificates evidencing such insurance must be delivered to Landlord prior to the commencement of any such Work.
12. WAIVER OF SUBROGATION. So long as their respective insurers so permit, Tenant and Landlord hereby mutually waive their respective rights of recovery against each other for any loss insured by fire, extended coverage, All Risks or other insurance now or hereafter existing for the benefit of the respective party but only to the extent of the net insurance proceeds payable under such policies. Each party shall obtain any special endorsements required by their insurer to evidence compliance with the aforementioned waiver.
13. SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone, sewer, sprinkler system charges and other utilities and services used on or from the Premises, together with any taxes, penalties, and surcharges or the like pertaining thereto and any maintenance charges for utilities. Tenant shall furnish all electric light bulbs, tubes and ballasts, battery packs for emergency lighting and fire extinguishers. If any such services are not separately metered to Tenant, Tenant shall pay such proportion of all charges jointly metered with other premises as determined by Landlord, in its sole discretion, to be reasonable. Any such charges paid by Landlord and assessed against Tenant shall be immediately payable to Landlord on demand and shall be additional rent hereunder. Tenant will not, without the written consent of Landlord, contract with a utility provider to service the Premises with any utility, including, but not limited to, telecommunications, electricity, water, sewer or gas, which is not previously providing such service to other tenants in the Building. Landlord shall in no event be liable for any interruption or failure of utility services on or to the Premises.
14. HOLDING OVER. Tenant shall pay Landlord for each day Tenant retains
possession of the Premises or part of them after termination of this Lease by
lapse of time or otherwise at the rate ("Holdover Rate") which shall be Two
Hundred Percent (200%) of the greater of (a) the amount of the Annual Rent for
the last period prior to the date of such termination plus all Rent Adjustments
under Article 4; and (b) the then market rental value of the Premises as
determined by Landlord assuming a new lease of the Premises of the then usual
duration and other terms, in either case, prorated on a daily basis, and also
pay all damages sustained by Landlord by reason of such retention. If Landlord
gives notice to Tenant of Landlord's election to such effect, such holding over
shall constitute renewal of this Lease for a period from month to month or one
(1) year, whichever shall be specified in such notice, in either case at the
Holdover Rate, but if the Landlord does not so elect, no
such, renewal shall result notwithstanding acceptance by Landlord of any sums due hereunder after such termination; and instead, a tenancy at sufferance at the Holdover Rate shall be deemed to have been created. In any event, no provision of this Article 14 shall be deemed to waive Landlord's right of reentry or any other right under this Lease or at law.
15. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, this Lease
shall be subject and subordinate at all times to ground or underlying leases and
to the lien of any mortgages or deeds of trust now or hereafter placed on,
against or affecting the Building, Landlord's interest or estate in the
Building, or any ground or underlying lease; provided, however, that if the
lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant's interest in this Lease be superior to any such
instrument, then, by notice to Tenant, this Lease shall be deemed superior,
whether this Lease was executed before or after said instrument. Notwithstanding
the foregoing, Tenant covenants and agrees to execute and deliver within ten
(10) days of Landlord's request such further instruments evidencing such
subordination or superiority of this Lease as may be required by Landlord.
16. RULES AND REGULATIONS. Tenant shall faithfully observe and comply with all the rules and regulations as set forth in Exhibit D to this Lease and all reasonable and non-discriminatory modifications of and additions to them from time to time put into effect by Landlord. Landlord shall not be responsible to Tenant for the non-performance by any other tenant or occupant of the Building of any such rules and regulations.
17. REENTRY BY LANDLORD.
17.1 Landlord reserves and shall at all times have the right to re-enter the Premises to inspect the same, to show said Premises to prospective purchasers, mortgagees or tenants, and to alter, improve or repair the Premises and any portion of the Building, without abatement of rent, and may for that purpose erect, use and maintain scaffolding, pipes, conduits and other necessary structures and open any wall, ceiling or floor in and through the Building and Premises where reasonably required by the character of the work to be performed, provided entrance to the Premises shall not be blocked thereby, and further provided that the business of Tenant shall not be interfered with unreasonably. Landlord shall have the right at any time to change the arrangement and/or locations of entrances, or passageways, doors and doorways, and corridors, windows, elevators, stairs, toilets or other public parts of the Building and to change the name, number or designation by which the Building is commonly known. In the event that Landlord damages any portion of any wall or wall covering, ceiling, or floor or floor covering within the Premises, Landlord shall repair or replace the damaged portion to match the original as nearly as commercially reasonable but shall not be required to repair or replace more than the portion actually damaged. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned by any action of Landlord authorized by this Article 17.
17.2 For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in the Premises, excluding Tenant's vaults and safes or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any portion of the Premises. As to any portion to which access cannot be had by means of a key or keys in Landlord's possession, Landlord is authorized to gain access by such means as Landlord shall elect and the cost of repairing any damage occurring in doing so shall be borne by Tenant and paid to Landlord within five (5) days of Landlord's demand.
18. DEFAULT.
18.1 Except as otherwise provided in Article 20, the following events shall be deemed to be Events of Default under this Lease:
18.1.1 Tenant shall fail to pay when due any sum of money becoming due to be paid to Landlord under this Lease, whether such sum be any installment of the rent reserved by this Lease, any other amount treated as additional rent under this Lease, or any other payment or reimbursement to Landlord required by this Lease, whether or not treated as additional rent under this Lease, and such failure shall continue for a period of five (5) days after written notice that such payment was not made when due, but if any such notice shall be given, for the twelve (12) month period commencing with the date of such notice, the failure to pay within five (5) days after due any additional sum of money becoming due to be paid to Landlord under this Lease during such period shall be an Event of Default, without notice.
18.1.2 Tenant shall fail to comply with any term, provision or covenant of this Lease which is not provided for in another Section of this Article and shall not cure such failure within twenty (20) days (forthwith, if the failure involves a hazardous condition) after written notice of such failure to Tenant provided, however, that such failure shall not be an event of default if such failure could not reasonably be cured during such twenty (20) day period, Tenant has commenced
the cure within such twenty (20) day period and thereafter is diligently pursuing such cure to completion, but the total aggregate cure period shall not exceed ninety (90) days.
18.1.3 Tenant shall fail to vacate the Premises immediately upon termination of this Lease, by lapse of time or otherwise, or upon termination of Tenant's right to possession only.
18.1.4 Tenant shall become insolvent, admit in writing its inability to pay its debts generally as they become due, file a petition in bankruptcy or a petition to take advantage of any insolvency statute, make an assignment for the benefit of creditors, make a transfer in fraud of creditors, apply for or consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other applicable law or statute of the United States or any state thereof.
18.1.5 A court of competent jurisdiction shall enter an order, judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its property, without the consent of Tenant, or approving a petition filed against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof.
19. REMEDIES.
19.1 Except as otherwise provided in Article 20, upon the occurrence of any of the Events of Default described or referred to in Article 18, Landlord shall have the option to pursue any one or more of the following remedies without any notice or demand whatsoever, concurrently or consecutively and not alternatively:
19.1.1 Landlord may, at its election, terminate this Lease or terminate Tenant's right to possession only, without terminating the Lease.
19.1.2 Upon any termination of this Lease, whether by lapse of time or otherwise, or upon any termination of Tenant's right to possession without termination of the Lease, Tenant shall surrender possession and vacate the Premises immediately, and deliver possession thereof to Landlord, and Tenant hereby grants to Landlord full and free license to enter into and upon the Premises in such event and to repossess Landlord of the Premises as of Landlord's former estate and to expel or remove Tenant and any others who may be occupying or be within the Premises and to remove Tenant's signs and other evidence of tenancy and all other property of Tenant therefrom without being deemed in any manner guilty of trespass, eviction or forcible entry or detainer, and without incurring any liability for any damage resulting therefrom, Tenant waiving any right to claim damages for such re-entry and expulsion, and without relinquishing Landlord's right to rent or any other right given to Landlord under this Lease or by operation of law.
19.1.3 Upon any termination of this Lease, whether by lapse of time or otherwise, Landlord shall be entitled to recover as damages, all rent, including any amounts treated as additional rent under this Lease, and other sums due and payable by Tenant on the date of termination, plus as liquidated damages and not as a penalty, an amount equal to the sum of: (a) an amount equal to the then present value of the rent reserved in this Lease for the residue of the stated Term of this Lease including any amounts treated as additional rent under this Lease and all other sums provided in this Lease to be paid by Tenant, minus the fair rental value of the Premises for such residue; (b) the value of the time and expense necessary to obtain a replacement tenant or tenants, and the estimated expenses described in Section 19.1.4 relating to recovery of the Premises, preparation for reletting and for reletting itself; and (c) the cost of performing any other covenants which would have otherwise been performed by Tenant.
19.1.4 Upon any termination of Tenant's right to possession only without termination of the Lease:
19.1.4.1 Neither such termination of Tenant's right to possession nor Landlord's taking and holding possession thereof as provided in Section 19.1.2 shall terminate the Lease or release Tenant, in whole or in part, from any obligation, including Tenant's obligation to pay the rent, including any amounts treated as additional rent, under this Lease for the full Term, and if Landlord so elects Tenant shall continue to pay to Landlord the entire amount of the rent as and when it becomes due, including any amounts treated as additional rent under this Lease, for the remainder of the Term plus any other sums provided in this Lease to be paid by Tenant for the remainder of the Term.
19.1.4.2 Landlord shall use commercially reasonable efforts to relet the Premises or portions thereof to the extent required by applicable law. Landlord and Tenant agree that nevertheless Landlord shall at most be required to use only the same efforts Landlord then uses to lease premises in the Building generally and that in any case that Landlord shall not be required to give any preference or priority to the showing or leasing of the Premises or portions thereof over any other space that Landlord may be leasing or have available and may place a suitable prospective tenant in any such other space regardless of when such other space becomes available and that Landlord shall have the right to relet the Premises for a greater or lesser term than that remaining under this Lease, the right to relet only a portion of the Premises, or a portion of the Premises or the entire Premises as a part of a larger area, and the right to change the character or use of the Premises. In connection with or in preparation for any reletting, Landlord may, but shall not be required to, make repairs, alterations and additions in or to the Premises and redecorate the same to the extent Landlord deems necessary or desirable, and Tenant shall pay the cost thereof, together with Landlord's expenses of reletting, including, without limitation, any commission incurred by Landlord, within five (5) days of Landlord's demand. Landlord shall not be required to observe any instruction given by Tenant about any reletting or accept any tenant offered by Tenant unless such offered tenant has a credit-worthiness acceptable to Landlord and leases the entire Premises upon terms and conditions including a rate of rent (after giving effect to all expenditures by Landlord for tenant improvements, broker's commissions and other leasing costs) all no less favorable to Landlord than as called for in this Lease, nor shall Landlord be required to make or permit any assignment or sublease for more than the current term or which Landlord would not be required to permit under the provisions of Article 9.
19.1.4.3 Until such time as Landlord shall elect to terminate the Lease and shall thereupon be entitled to recover the amounts specified in such case in Section 19.1.3, Tenant shall pay to Landlord upon demand the full amount of all rent, including any amounts treated as additional rent under this Lease and other sums reserved in this Lease for the remaining Term, together with the costs of repairs, alterations, additions, redecorating and Landlord's expenses of reletting and the collection of the rent accruing therefrom (including reasonable attorney's fees and broker's commissions), as the same shall then be due or become due from time to time, less only such consideration as Landlord may have received from any reletting of the Premises; and Tenant agrees that Landlord may file suits from time to time to recover any sums falling due under this Article 19 as they become due. Any proceeds of reletting by Landlord in excess of the amount then owed by Tenant to Landlord from time to time shall be credited against Tenant's future obligations under this Lease but shall not otherwise be refunded to Tenant or inure to Tenant's benefit.
19.2 Upon the occurrence of an Event of Default, Landlord may (but shall not be obligated to) cure such default at Tenant's sole expense. Without limiting the generality of the foregoing, Landlord may, at Landlord's option, enter into and upon the Premises if Landlord determines in its sole discretion that Tenant is not acting within a commercially reasonable time to maintain, repair or replace anything for which Tenant is responsible under this Lease or to otherwise effect compliance with its obligations under this Lease and correct the same, without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage or interruption of Tenant's business resulting therefrom and Tenant agrees to reimburse Landlord within five (5) days of Landlord's demand as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime rate.
19.3 Tenant understands and agrees that in entering into this Lease, Landlord is relying upon receipt of all the Annual and Monthly Installments of Rent to become due with respect to all the Premises originally leased hereunder over the full Initial Term of this Lease for amortization, including interest at the Amortization Rate. For purposes hereof, the "Concession Amount" shall be defined as the aggregate of all amounts forgone or expended by Landlord as free rent under the lease, under Exhibit B hereof for construction allowances (excluding therefrom any amounts expended by Landlord for Landlord's Work, as defined in Exhibit B), and for brokers' commissions payable by reason of this Lease. Accordingly, Tenant agrees that if this Lease or Tenant's right to possession of the Premises leased hereunder shall be terminated as of any date ("Default Termination Date") prior to the expiration of the full Initial Term hereof by reason of a default of Tenant, there shall be due and owing to Landlord as of the day prior to the Default Termination Date, as rent in addition to all other amounts owed by Tenant as of such Date, the amount ("Unamortized Amount") of the Concession Amount determined as set forth below; provided, however, that in the event that such amounts are recovered by Landlord pursuant to any other provision of this Article 19, Landlord agrees that it shall not attempt to recover such amounts pursuant to this Paragraph 19.3. For the purposes hereof, the Unamortized Amount shall be determined in the same manner as the remaining principal balance of a mortgage with interest at the Amortization Rate payable in level payments over the same length of time as from the effectuation of the Concession concerned to the end of the full Initial Term of this Lease would be determined. The foregoing provisions shall also apply to and upon any reduction of space in the Premises, as though such reduction were a termination for Tenant's default, except that (i) the Unamortized Amount shall be reduced by any amounts paid by Tenant to Landlord to effectuate such reduction and (ii) the manner of application shall be that the Unamortized Amount shall first be determined as though for a full termination as of the Effective Date of the elimination of the portion, but then the amount so
determined shall be multiplied by the fraction of which the numerator is the rentable square footage of the eliminated portion and the denominator is the rentable square footage of the Premises originally leased hereunder; and the amount thus obtained shall be the Unamortized Amount.
19.4 If, on account of any breach or default by Tenant in Tenant's obligations under the terms and conditions of this Lease, it shall become necessary or appropriate for Landlord to employ or consult with an attorney or collection agency concerning or to enforce or defend any of Landlord's rights or remedies arising under this Lease or to collect any sums due from Tenant, Tenant agrees to pay all costs and fees so incurred by Landlord, including, without limitation, reasonable attorneys' fees and costs. TENANT EXPRESSLY WAIVES ANY RIGHT TO: (A) TRIAL BY JURY; AND (B) SERVICE OF ANY NOTICE REQUIRED BY ANY PRESENT OR FUTURE LAW OR ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY THE TERMS OF THIS LEASE.
19.5 Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies provided in this Lease or any other remedies provided by law (all such remedies being cumulative), nor shall pursuit of any remedy provided in this Lease constitute a forfeiture or waiver of any rent due to Landlord under this Lease or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions and covenants contained in this Lease.
19.6 No act or thing done by Landlord or its agents during the Term shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of said Premises shall be valid, unless in writing signed by Landlord. No waiver by Landlord of any violation or breach of any of the terms, provisions and covenants contained in this Lease shall be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions and covenants contained in this Lease. Landlord's acceptance of the payment of rental or other payments after the occurrence of an Event of Default shall not be construed as a waiver of such Default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord in enforcing one or more of the remedies provided in this Lease upon an Event of Default shall not be deemed or construed to constitute a waiver of such Default or of Landlord's right to enforce any such remedies with respect to such Default or any subsequent Default.
19.7 To secure the payment of all rentals and other sums of money becoming due from Tenant under this Lease, Landlord shall have and Tenant grants to Landlord a first lien upon the leasehold interest of Tenant under this Lease, which lien may be enforced in equity, and a continuing security interest upon all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other personal property of Tenant situated on the Premises, and such property shall not be removed therefrom without the consent of Landlord until all arrearages in rent as well as any and all other sums of money then due to Landlord under this Lease shall first have been paid and discharged. Upon the occurrence of an Event of Default, Landlord shall have, in addition to any other remedies provided in this Lease or by law, all rights and remedies under the Uniform Commercial Code, including without limitation the right to sell the property described in this Section 19.7 at public or private sale upon five (5) days' notice to Tenant. Tenant shall execute all such financing statements and other instruments as shall be deemed necessary or desirable in Landlord's discretion to perfect the security interest hereby created. Any request by Tenant or its lender(s) that Landlord subordinate or waive the lien granted herein, or Landlord's statutory lien, shall be made in writing and shall be accompanied by a check made payable to Landlord in the amount of the Subordination Fee, as set forth on the Reference Pages to this Lease.
19.8 Any and all property which may be removed from the Premises by Landlord pursuant to the authority of this Lease or of law, to which Tenant is or may be entitled, may be handled, removed and/or stored, as the case may be, by or at the direction of Landlord but at the risk, cost and expense of Tenant, and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay to Landlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property so long as the same shall be in Landlord's possession or under Landlord's control. Any such property of Tenant not retaken by Tenant from storage within thirty (30) days after removal from the Premises shall, at Landlord's option, be deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale without further payment or credit by Landlord to Tenant.
19.9 If more than one (1) Event of Default occurs during the Term or any renewal thereof, Tenant's renewal options, expansion options, purchase options and rights of first offer and/or refusal, if any are provided for in this Lease, shall be null and void.
20. TENANT'S BANKRUPTCY OR INSOLVENCY.
20.1 If at any time and for so long as Tenant shall be subjected to the provisions of the United States Bankruptcy Code or other law of the United States or any state thereof for the protection of debtors as in effect at such time (each a "Debtor's Law"):
20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or receiver of Tenant's assets (each a "Tenant's Representative") shall have no greater right to assume or assign this Lease or any interest in this Lease, or to sublease any of the Premises than accorded to Tenant in Article 9, except to the extent Landlord shall be required to permit such assumption, assignment or sublease by the provisions of such Debtor's Law. Without limitation of the generality of the foregoing, any right of any Tenant's Representative to assume or assign this Lease or to sublease any of the Premises shall be subject to the conditions that:
20.1.1.1 Such Debtor's Law shall provide to Tenant's Representative a right of assumption of this Lease which Tenant's Representative shall have timely exercised and Tenant's Representative shall have fully cured any default of Tenant under this Lease.
20.1.1.2 Tenant's Representative or the proposed assignee, as the case shall be, shall have deposited with Landlord as security for the timely payment of rent an amount equal to the larger of: (a) three (3) months' rent and other monetary charges accruing under this Lease; and (b) any sum specified in Article 5; and shall have provided Landlord with adequate other assurance of the future performance of the obligations of the Tenant under this Lease. Without limitation, such assurances shall include, at least, in the case of assumption of this Lease, demonstration to the satisfaction of the Landlord that Tenant's Representative has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that Tenant's Representative will have sufficient funds to fulfill the obligations of Tenant under this Lease; and, in the case of assignment, submission of current financial statements of the proposed assignee, audited by an independent certified public accountant reasonably acceptable to Landlord and showing a net worth and working capital in amounts determined by Landlord to be sufficient to assure the future performance by such assignee of all of the Tenant's obligations under this Lease.
20.1.1.3 The assumption or any contemplated assignment of this Lease or subleasing any part of the Premises, as shall be the case, will not breach any provision in any other lease, mortgage, financing agreement or other agreement by which Landlord is bound.
20.1.1.4 Landlord shall have, or would have had absent the Debtor's Law, no right under Article 9 to refuse consent to the proposed assignment or sublease by reason of the identity or nature of the proposed assignee or sublessee or the proposed use of the Premises concerned.
21. QUIET ENJOYMENT. Landlord represents and warrants that it has full right and authority to enter into this Lease and that Tenant, while paying the rental and performing its other covenants and agreements contained in this Lease, shall peaceably and quietly have, hold and enjoy the Premises for the Term without hindrance or molestation from Landlord subject to the terms and provisions of this Lease. Landlord shall not be liable for any interference or disturbance by other tenants or third persons, nor shall Tenant be released from any of the obligations of this Lease because of such interference or disturbance.
22. CASUALTY
22.1 IN the event the Premises or the Building are damaged by fire or other cause and in Landlord's reasonable estimation such damage can be materially restored within one hundred eighty (180) days, Landlord shall forthwith repair the same and this Lease shall remain in full force and effect, except that Tenant shall be entitled to a proportionate abatement in rent from the date of such damage. Such abatement of rent shall be made pro rata in accordance with the extent to which the damage and the making of such repairs shall interfere with the use and occupancy by Tenant of the Premises from time to time. Within forty-five (45) days from the date of such damage, Landlord shall notify Tenant, in writing, of Landlord's reasonable estimation of the length of time within which material restoration can be made, and Landlord's determination shall be binding on Tenant. For purposes of this Lease, the Building or Premises shall be deemed "materially restored" if they are in such condition as would not prevent or materially interfere with Tenant's use of the Premises for the purpose for which it was being used immediately before such damage.
22.2 If such repairs cannot, in Landlord's reasonable estimation, be made within one hundred eighty (180) days, Landlord and Tenant shall each have the option of giving the other, at any time within ninety (90) days after such damage, notice terminating this Lease as of the date of such damage. In the event of the giving of such notice, this Lease shall expire and all interest of the Tenant in the Premises shall terminate as of the date of such damage as if such date had been originally fixed in this Lease for the expiration of the Term. In the event that neither Landlord nor Tenant exercises its option to terminate this Lease, then Landlord shall repair or restore such damage, this Lease continuing in full force and effect, and the rent hereunder shall be proportionately abated as provided in Section 22.1.
22.3 Landlord shall not be required to repair or replace any damage or loss by or from fire or other cause to any panelings, decorations, partitions, additions, railings, ceilings, floor coverings, office fixtures or any other property or improvements installed on the Premises by, or belonging to, Tenant. Any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or Premises shall be for the sole benefit of the party carrying such insurance and under its sole control.
22.4 In the event that Landlord should fail to complete such repairs and material restoration within sixty (60) days after the date estimated by Landlord therefor as extended by this Section 22.4, Tenant may at its option and as its sole remedy terminate this Lease by delivering written notice to Landlord, within fifteen (15) days after the expiration of said period of time, whereupon the Lease shall end on the date of such notice or such later date fixed in such notice as if the date of such notice was the date originally fixed in this Lease for the expiration of the Term; provided, however, that if construction is delayed because of changes, deletions or additions in construction requested by Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor shortages, government regulation or control or other causes beyond the reasonable control of Landlord, the period for restoration, repair or rebuilding shall be extended for the amount of time Landlord is so delayed.
22.5 Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 22 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord's notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.
22.6 In the event of any damage or destruction to the Building or Premises by any peril covered by the provisions of this Article 22, it shall be Tenant's responsibility to properly secure the Premises and upon notice from Landlord to remove forthwith, at its sole cost and expense, such portion of all of the property belonging to Tenant or its licensees from such portion or all of the Building or Premises as Landlord shall request.
23. EMINENT DOMAIN. If all or any substantial part of the Premises shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain, or conveyance in lieu of such appropriation, either party to this Lease shall have the right, at its option, of giving the other, at any time within thirty (30) days after such taking, notice terminating this Lease, except that Tenant may only terminate this Lease by reason of taking or appropriation, if such taking or appropriation shall be so substantial as to materially interfere with Tenant's use and occupancy of the Premises. If neither party to this Lease shall so elect to terminate this Lease, the rental thereafter to be paid shall be adjusted on a fair and equitable basis under the circumstances. In addition to the rights of Landlord above, if any substantial part of the Building shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain or conveyance in lieu thereof, and regardless of whether the Premises or any part thereof are so taken or appropriated, Landlord shall have the right, at its sole option, to terminate this Lease. Landlord shall be entitled to any and all income, rent, award, or any interest whatsoever in or upon any such sum, which may be paid or made in connection with any such public or quasi-public use or purpose, and Tenant hereby assigns to Landlord any interest it may have in or claim to all or any part of such sums, other than any separate award which may be made with respect to Tenant's trade fixtures and moving expenses; Tenant shall make no claim for the value of any unexpired Term.
24. SALE BY LANDLORD. In event of a sale or conveyance by Landlord of the Building, the same shall operate to release Landlord from any future liability upon any of the covenants or conditions, expressed or implied, contained in this Lease in favor of Tenant, and in such event Tenant agrees to look solely to the responsibility of the successor in interest of Landlord in and to this Lease. Except as set forth in this Article 24, this Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. If any security has been given by Tenant to secure the faithful performance of any of the covenants of this Lease, Landlord may transfer or deliver said security, as such, to Landlord's successor in interest and thereupon Landlord shall be discharged from any further liability with regard to said security.
25. ESTOPPEL CERTIFICATES. Within ten (10) days following any written request which Landlord may make from time to time, Tenant shall execute and deliver to Landlord or mortgagee or prospective mortgagee a sworn statement certifying: (a) the date of commencement of this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there have been modifications to this Lease, that this lease is in full force and effect, as modified, and stating the date
and nature of such modifications); (c) the date to which the rent and other sums payable under this Lease have been paid; (d) the fact that there are no current defaults under this Lease by either Landlord or Tenant except as specified in Tenant's statement; and (e) such other matters as may be requested by Landlord. Landlord and Tenant intend that any statement delivered pursuant to this Article 25 may be relied upon by any mortgagee, beneficiary or purchaser, and Tenant shall be liable for all loss, cost or expense resulting from the failure of any sale or funding of any loan caused by any material misstatement contained in such estoppel certificate. Tenant irrevocably agrees that if Tenant fails to execute and deliver such certificate within such ten (10) day period Landlord or Landlord's beneficiary or agent may execute and deliver such certificate on Tenant's behalf, and that such certificate shall be fully binding on Tenant.
26. SURRENDER OF PREMISES.
26.1 Tenant shall arrange to meet Landlord for two (2) joint inspections of the Premises, the first to occur at least thirty (30) days (but no more than sixty (60) days) before the last day of the Term, and the second to occur not later than forty-eight (48) hours after Tenant has vacated the Premises. In the event of Tenant's failure to arrange such joint inspections and/or participate in either such inspection, Landlord's inspection at or after Tenant's vacating the Premises shall be conclusively deemed correct for purposes of determining Tenant's responsibility for repairs and restoration. In connection with the condition of the Premises and the systems servicing same Tenant shall also be responsible, at its sole cost and expense, for compliance with the terms and conditions of Exhibit E attached hereto.
26.2 All alterations, additions, and improvements in, on, or to the
Premises made or installed by or for Tenant, including carpeting (collectively,
"Alterations"), shall be and remain the property of Tenant during the Term. Upon
the expiration or sooner termination of the Term, all Alterations shall become a
part of the realty and shall belong to Landlord without compensation, and title
shall pass to Landlord under this Lease as by a bill of sale. At the end of the
Term or any renewal of the Term or other sooner termination of this Lease,
Tenant will peaceably deliver up to Landlord possession of the Premises,
together with all Alterations by whomsoever made, in the same conditions
received or first installed, broom clean and free of all debris, excepting only
ordinary wear and tear and damage by fire or other casualty. Notwithstanding the
foregoing, if Landlord elects by notice given to Tenant at least ten (10) days
prior to expiration of the Term, Tenant shall, at Tenant's sole cost, remove any
Alterations, including carpeting, so designated by Landlord's notice, and repair
any damage caused by such removal. Tenant must, at Tenant's sole cost, remove
upon termination of this Lease, any and all of Tenant's furniture, furnishings,
movable partitions of less than full height from floor to ceiling and other
trade fixtures and personal property (collectively, "Personalty"). Personalty
not so removed shall be deemed abandoned by the Tenant and title to the same
shall thereupon pass to Landlord under this Lease as by a bill of sale, but
Tenant shall remain responsible for the cost of removal and disposal of such
Personalty, as well as any damage caused by such removal. In lieu of requiring
Tenant to remove Alterations and Personalty and repair the Premises as
aforesaid, Landlord may, by written notice to Tenant delivered at least thirty
(30) days before the Termination Date, require Tenant to pay to Landlord, as
additional rent hereunder, the cost of such removal and repair in an amount
reasonably estimated by Landlord.
26.3 All obligations of Tenant under this Lease not fully performed as of the expiration or earlier termination of the Term shall survive the expiration or earlier termination of the Term Upon the expiration or earlier termination of the Term, Tenant shall pay to Landlord the amount, as estimated by Landlord, necessary to repair and restore the Premises as provided in this Lease and/or to discharge Tenant's obligation for unpaid amounts due or to become due to Landlord. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied. Any otherwise unused Security Deposit shall be credited against the amount payable by Tenant under this Lease.
27. NOTICES. Any notice or document required or permitted to be delivered under this Lease shall be addressed to the intended recipient, by fully prepaid registered or certified United States Mail return receipt requested, or by reputable independent contract delivery service furnishing a written record of attempted or actual delivery, and shall be deemed to be delivered when tendered for delivery to the addressee at its address set forth on the Reference Pages, or at such other address as it has then last specified by written notice delivered in accordance with this Article 27, or if to Tenant at either its aforesaid address or its last known registered office or home of a general partner or individual owner, whether or not actually accepted or received by the addressee. Any such notice or document may also be personally delivered if a receipt is signed by and received from, the individual, if any, named in Tenant's Notice Address.
28. TAXES PAYABLE BY TENANT. In addition to rent and other charges to be paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon demand, any and all taxes payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties to this Lease: (a) upon, allocable to, or measured by or on the gross or net rent payable under this Lease, including without limitation any gross income tax or excise tax levied by
the State, any political subdivision thereof, or the Federal Government with respect to the receipt of such rent; (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises or any portion thereof, including any sales, use or service tax imposed as a result thereof; (c) upon or measured by the Tenant's gross receipts or payroll or the value of Tenant's equipment, furniture, fixtures and other personal property of Tenant or leasehold improvements, alterations or additions located in the Premises; or (d) upon this transaction or any document to which Tenant is a party creating or transferring any interest of Tenant in this Lease or the Premises. In addition to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes levied or assessed against Tenant and which become payable during the term hereof upon Tenant's equipment, furniture, fixtures and other personal property of Tenant located in the Premises.
29. RELOCATION OF TENANT. Landlord, at its sole expense, on at least sixty (60) days prior written notice, may require Tenant to move from the Premises to other space of comparable size and decor in order to permit Landlord to consolidate the space leased to Tenant with other adjoining space leased or to be leased to another tenant. In the event of any such relocation, Landlord will pay all expenses of preparing and decorating the new premises so that they will be substantially similar to the Premises from which Tenant is moving, and Landlord will also pay the expense of moving Tenant's furniture and equipment to the relocated premises. In such event this Lease and each and all of the terms and covenants and conditions hereof shall remain in full force and effect and thereupon be deemed applicable to such new space except that revised Reference Pages and a revised Exhibit A shall become part of this Lease and shall reflect the location of the new premises.
30. DEFINED TERMS AND HEADINGS. The Article headings shown in this Lease are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. Any indemnification or insurance of Landlord shall apply to and inure to the benefit of all the following "Landlord Entities", being Landlord, Landlord's investment manager, and the trustees, boards of directors, officers, general partners, beneficiaries, stockholders, employees and agents of each of them. Any option granted to Landlord shall also include or be exercisable by Landlord's trustee, beneficiary, agents and employees, as the case may be. In any case where this Lease is signed by more than one person, the obligations under this Lease shall be joint and several. The terms "Tenant" and "Landlord" or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators and permitted assigns, according to the context hereof. The term "rentable area" shall mean the rentable area of the Premises or the Building as calculated by the Landlord on the basis of the plans and specifications of the Building including a proportionate share of any common areas. Tenant hereby accepts and agrees to be bound by the figures for the rentable square footage of the Premises and Tenant's Proportionate Share shown on the Reference Pages; however, Landlord may adjust either or both figures if there is manifest error, addition or subtraction to the Building or any business park or complex of which the Building is a part, remeasurement or other circumstance reasonably justifying adjustment. The term "Building" refers to the structure in which the Premises are located and the common areas (parking lots, sidewalks, landscaping, etc.) appurtenant thereto. If the Building is part of a larger complex of structures, the term "Building" may include the entire complex, where appropriate (such as shared Expenses or Taxes) and subject to Landlord's reasonable discretion.
31. TENANT'S AUTHORITY. If Tenant signs as a corporation, partnership, trust or other legal entity each of the persons executing this Lease on behalf of Tenant represents and warrants that Tenant has been and is qualified to do business in the state in which the Building is located, that the entity has full right and authority to enter into this Lease, and that all persons signing on behalf of the entity were authorized to do so by appropriate actions. Tenant agrees to deliver to Landlord, simultaneously with the delivery of this Lease, a corporate resolution, proof of due authorization by partners, opinion of counsel or other appropriate documentation reasonably acceptable to Landlord evidencing the due authorization of Tenant to enter into this Lease.
32. FINANCIAL STATEMENTS AND CREDIT REPORTS. At Landlord's request, Tenant shall deliver to Landlord a copy, certified by an officer of Tenant as being a true and correct copy, of Tenant's most recent audited financial statement, or, if unaudited, certified by Tenant's chief financial officer as being true, complete and correct in all material respects. Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant at any time, and shall execute such further authorizations as Landlord may reasonably require in order to obtain a credit report.
33. COMMISSIONS. Each of the parties represents and warrants to the other that it has not dealt with any broker or finder in connection with this Lease, except as described on the Reference Pages. Tenant agrees that it shall be solely responsible for payment of any commission or fee due to its broker. Circle Road (David Brunner). Landlord shall pay the commission or fee due to its broker, Trammell Crow Company (Mark Detmer/Bo Mills).
34. TIME AND APPLICABLE LAW. Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the state in which the Building is located.
35. SUCCESSORS AND ASSIGNS. Subject to the provisions of Article 9, the terms, covenants and conditions contained in this Lease shall be binding upon and inure to the benefit of the heirs, successors, executors, administrators and assigns of the parties to this Lease.
36. ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all agreements of the parties to this Lease and supersedes any previous negotiations. There have been no representations made by the Landlord or any of its representatives or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument duly executed by the parties to this Lease.
37. EXAMINATION NOT OPTION. Submission of this Lease shall not be deemed to be a reservation of the Premises. Landlord shall not be bound by this Lease until it has received a copy of this Lease duly executed by Tenant and has delivered to Tenant a copy of this Lease duly executed by Landlord, and until such delivery Landlord reserves the right to exhibit and lease the Premises to other prospective tenants. Notwithstanding anything contained in this Lease to the contrary, Landlord may withhold delivery of possession of the Premises from Tenant until such time as Tenant has paid to Landlord any security deposit required by Article 5, the first month's rent as set forth in Article 3 and any sum owed pursuant to this Lease.
38. RECORDATION. Tenant shall not record or register this Lease or a short form memorandum hereof without the prior written consent of Landlord, and then shall pay all charges and taxes incident such recording or registration.
39. OPTION TO EXTEND. Tenant shall, provided the Lease is in full force and effect and Tenant is not in default under any of the other terms and conditions of the Lease at the time of notification or commencement, have three (3) options to extend this Lease for a term of three (3) years each, for the portion of the Premises being leased by Tenant as of the date each such extension term is to commence, on the same terms and conditions set forth in the Lease, except as modified by the terms, covenants and conditions as set forth below:
a. If Tenant elects to exercise said option, then Tenant shall provide
Landlord with written notice no earlier than the date which is eight
(8) months prior to the expiration of the Term of the Lease but no
later than the date which is six (6) months prior to the expiration of
the Term of this Lease. If Tenant fails to provide such notice, Tenant
shall have no further or additional right to extend or renew the term
of the Lease.
b. The Annual Rent and Monthly Installment in effect at the expiration of the Term of the Lease (as it may be extended from time to time) shall be increased to reflect the current fair market rental for comparable space in the Building and in other similar buildings in the same rental market as of the date the applicable extension term is to commence, taking into account the specific provisions of the Lease which will remain constant. Landlord shall advise Tenant of the new Annual Rent and Monthly Installment for the Premises no later than twenty (20) days after receipt of Tenant's written request therefor. Said request shall be made no earlier than thirty (30) days prior to the first date on which Tenant may exercise its option under this Paragraph. Said notification of the new Annual Rent may include a provision for its escalation to provide for a change in fair market rental between the time of notification and the commencement of the extension term. In no event shall the Annual Rent and Monthly Installment for any option period be less than the Annual Rent and Monthly Installment in the preceding period.
c. This option is not transferable; the parties hereto acknowledge and agree that they intend that the aforesaid option to extend this Lease shall be "personal" to Tenant as set forth above and that in no event will any assignee or sublessee have any rights to exercise the aforesaid option to extend.
40. TELECOMMUNICATIONS EQUIPMENT. Tenant, at its sole cost and expense, shall have the non-exclusive right (it being understood that Landlord may grant, extend or renew similar rights to others) to install, maintain, and from time to time replace a satellite dish or telecommunications antennae (a "DISH") on the roof of the Building, provided that prior to commencing any installation or maintenance. Tenant shall (i) obtain Landlord's prior approval of the proposed size, weight and location of the Dish and method for fastening the Dish to the roof, (ii) such installation and/or replacement shall comply strictly with all Laws and the conditions of any bond or warranty maintained by Landlord on the roof, (iii) use the Dish solely for its internal use, (iv) not grant any right to use of the Dish to any other party, and (v) obtain, at Tenant's sole cost and expense, any necessary federal, state, and municipal permits, licenses and approvals, and deliver copies thereof to Landlord. Landlord may supervise or perform any roof penetration related to the installation of a Dish, and Landlord may
charge the cost thereof to Tenant. Tenant agrees that all installation, construction and maintenance shall be performed in a neat, responsible, and workmanlike manner, using generally acceptable construction standards, consistent with such reasonable requirements as shall be imposed by Landlord. Tenant further agrees to label each cable or wire placed by Tenant in the telecommunications pathways of the Building, with identification information as required by Landlord. Tenant shall repair any damage to the Building caused by Tenant's installation, maintenance, replacement, use or removal of the Dish. The Dish shall remain the property of Tenant, and Tenant may remove the Dish at its cost at any time during the Term. Tenant shall remove the Dish at Tenant's cost and expense upon the expiration or termination of this Lease. Tenant agrees that the Dish, and any wires, cables or connections relating thereto, and the installation, maintenance and operation thereof shall in no way interfere with the use and enjoyment of the Building, or the operation of communications ("including, without limitation, other satellite dishes) or computer devices by Landlord or by other tenants or occupants of the Project. If such interference shall occur, Landlord shall give Tenant written notice thereof and Tenant shall correct the same within twenty-four (24) hours of receipt of such notice. Landlord reserves the right to disconnect power to any Dish if Tenant fails to correct such interference within twenty-four (24) hours after such notice. Landlord makes no warranty or representation that the Building or any portions thereof are suitable for the use of a Dish, it being assumed that Tenant has satisfied itself thereof. Tenant shall protect, defend, indemnify and hold harmless Landlord and Landlord's Agents from and against claims, damages, liabilities, costs and expenses of every kind and nature, including attorneys' fees, incurred by or asserted against Landlord arising out of Tenant's installation, maintenance, replacement, use or removal of the Dish.]
39.41. LIMITATION OF LANDLORD'S LIABILITY. Redress for any claim against Landlord under this Lease shall be limited to and enforceable only against and to the extent of Landlord's interest in the Building. The obligations of
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Landlord under this Lease are not intended to be and shall not be personally binding on, nor shall any resort be had to the private properties of, any of its or its investment manager's trustees, directors, officers, partners, beneficiaries, members, stockholders, employees, or agents, and in no case shall Landlord be liable to Tenant hereunder for any lost profits, damage to business, or any form of special, indirect or consequential damages.
LANDLORD: TENANT: CALWEST INDUSTRIAL PROPERTIES, LLC, LIMELIGHT NETWORKS, INC., A DELAWARE CORPORATION A CALIFORNIA LIMITED LIABILITY COMPANY By: RREEF MANAGEMENT COMPANY, a Delaware corporation, Authorized Agent By: /s/ Bret C. Borg By: /s/ William H. Rinehart --------------------------------- ------------------------------------ Name: Bret C. Borg, CPM Name: William H. Rinehart Title: District Manager Title: President Dated: 9/23/05 Dated: 9-22-05 |
EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES
attached to and made a part of Lease bearing the Lease Reference Date of September 7, 2005 between Calwest Industrial Properties, LLC, as Landlord and Limelight Networks, Inc., as Tenant
Exhibits A is intended only to show the general layout of the Premises as of the beginning of the Term of this Lease. It does not in any way supersede any of Landlord's rights set forth in Article 17 with respect to arrangements and/or locations of public parts of the Building and changes in such arrangements and/or locations. It is not to be scaled; any measurements or distances shown should be taken as approximate.
801 South 16th Street
Phoenix, Arizona 85034
8,224 Square Feet
(FLOOR PLAN DEPICTING THE PREMISES)
EXHIBIT A-1 - SITE PLAN
attached to and made a part of Lease bearing the Lease Reference Date of September 7, 2005 between Calwest Industrial Properties, LLC, as Landlord and Limelight Networks, Inc., as Tenant
Exhibits A-1 is intended only to show the general layout of the Premises as of the beginning of the Term of this Lease. It does not in any way supersede any of Landlord's rights set forth in Article 17 with respect to arrangements and/or locations of public parts of the Building and changes in such arrangements and/or locations. It is not to be scaled; any measurements or distances shown should be taken as approximate.
SKY HARBOR - 801 SOUTH 16TH
Phoenix, Arizona
(RENDERING OF SITE PLAN)
801 SOUTH 16TH STREET
PHOENIX, ARIZONA 85034
8,224 SQUARE FEET
EXHIBIT B - BILL OF SALE
ATTACHED TO AND MADE A PART OF LEASE BEARING THE
LEASE REFERENCE DATE OF SEPTEMBER 7, 2005 BETWEEN
CALWEST INDUSTRIAL PROPERTIES, LLC, AS LANDLORD AND
LIMELIGHT NETWORKS, INC., AS TENANT
BILL OF SALE
Calwest Industrial Properties, LLC ("Seller"), FOR VALUABLE CONSIDERATION,
the receipt and sufficiency of which is hereby acknowledged, does hereby grant,
sell, transfer and deliver to Limelight Networks, Inc. ("Buyer") all of its
right, title and interest in and to the following described property
(hereinafter the "Property") heretofore located at 801 S. 16th St., Phoenix, AZ:
Two (2) 30 ton Leibert air conditioning units, and the cables and racks
associated therewith.
Seller makes no warranty and/or representation as to the condition of the Property, that it is the lawful owner of the Property, that the Property is free from liens, security interests and/or encumbrances, or that the Property is suitable for Buyer's intended purposes.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale this ___________ day of _____________, 2005.
SELLER:
CALWEST INDUSTRIAL PROPERTIES, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By: RREEF MANAGEMENT COMPANY, a
Delaware corporation, Authorized
Agent
(SAMPLE ONLY)
EXHIBIT C - COMMENCEMENT DATE MEMORANDUM
ATTACHED TO AND MADE A PART OF LEASE BEARING THE
LEASE REFERENCE DATE OF SEPTEMBER 7, 2005 BETWEEN
CALWEST INDUSTRIAL PROPERTIES, LLC, AS LANDLORD AND
LIMELIGHT NETWORKS, INC., AS TENANT
COMMENCEMENT DATE MEMORANDUM
THIS MEMORANDUM, made as of __________, 20__, by and between ("Landlord") and __________ ("Tenant").
Recitals:
A. Landlord and Tenant are parties to that certain Lease, dated for reference __________, 20__ (the "Lease") for certain premises (the "Premises") consisting of approximately ____ square feet at the building commonly known as __________.
B. Tenant is in possession of the Premises and the Term of the Lease has commenced.
C. Landlord and Tenant desire to enter into this Memorandum confirming the Commencement Date, the Termination Date and other matters under the Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
1. The actual Commencement Date is __________
2. The actual Termination Date is __________
3. The schedule of the Annual Rent and the Monthly Installment of Rent set forth on the Reference Pages is deleted in its entirety, and the following is substituted therefor:
[INSERT RENT SCHEDULE]
4. Capitalized terms not defined herein shall have the same meaning as set forth in the Lease.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.
LANDLORD: TENANT: By: --------------------------------- By: DO NOT SIGN By: DO NOT SIGN --------------------------------- ------------------------------------ Name: Name: ------------------------------- ---------------------------------- Title: Title: ------------------------------ --------------------------------- Dated: Dated: ------------------------------ --------------------------------- |
EXHIBIT D - RULES AND REGULATIONS
ATTACHED TO AND MADE A PART OF LEASE BEARING THE
LEASE REFERENCE DATE OF SEPTEMBER 7, 2005 BETWEEN
CALWEST INDUSTRIAL PROPERTIES, LLC, AS LANDLORD AND
LIMELIGHT NETWORKS, INC., AS TENANT
1. No sign, placard, picture, advertisement, name or notice (collectively referred to as "Signs") shall be installed or displayed on any part of the outside of the Building without the prior written consent of the Landlord which consent shall be in Landlord's sole discretion. All approved Signs shall be printed, painted, affixed or inscribed at Tenant's expense by a person or vendor approved by Landlord and shall be removed by Tenant at Tenant's expense upon vacating the Premises. Landlord shall have the right to remove any Sign installed or displayed in violation of this rule at Tenant's expense and without notice.
2. If Landlord objects in writing to any curtains, blinds, shades or screens attached to or hung in or used in connection with any window or door of the Premises or Building, Tenant shall immediately discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not place anything or allow anything to be placed against or near any glass partitions or doors or windows which may appear unsightly, in the opinion of Landlord, from outside the Premises.
3. Tenant shall not alter any lock or other access device or install a new or additional lock or access device or bolt on any door of its Premises without the prior written consent of Landlord. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys or other means of access to all doors.
4. If Tenant requires telephone, data, burglar alarm or similar service, the cost of purchasing, installing and maintaining such service shall be borne solely by Tenant. No boring or cutting for wires will be allowed without the prior written consent of Landlord. Landlord shall direct electricians as to where and how telephone, data, and electrical wires are to be introduced or installed. The location of burglar alarms, telephones, call boxes or other office equipment affixed to the Premises shall be subject to the prior written approval of Landlord.
5. Tenant shall not place a load upon any floor of its Premises, including mezzanine area, if any, which exceeds the load per square foot that such floor was designed to carry and that is allowed by law. Heavy objects shall stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Landlord will not be responsible for loss of or damage to any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant.
6. Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or other device on the roof or exterior walls of the Building without Landlord's prior written consent which consent shall be in Landlord's sole discretion.
7. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork, plaster or drywall (except for pictures and general office uses) or in any way deface the Premises or any part thereof. Tenant shall not affix any floor covering to the floor of the Premises or paint or seal any floors in any manner except as approved by Landlord. Tenant shall repair any damage resulting from noncompliance with this rule.
8. No cooking shall be done or permitted on the Premises, except that Underwriters' Laboratory approved microwave ovens or equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted, provided that such equipment and use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations.
9. Tenant shall not use any hand trucks except those equipped with the rubber tires and side guards, and may use such other material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Building. Forklifts which operate on asphalt areas shall only use tires that do not damage the asphalt.
10. Tenant shall not use the name of the Building or any photograph or other likeness of the Building in connection with or in promoting or advertising Tenant's business except that Tenant may include the Building name in Tenant's address. Landlord shall have the right, exercisable without notice and without liability to any tenant, to change the name and address of the Building.
11. All trash and refuse shall be contained in suitable receptacles at locations approved by Landlord. Tenant shall not place in the trash receptacles any personal trash or material that cannot be disposed of in the ordinary and customary manner of removing such trash without violation of any law or ordinance governing such disposal.
12. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governing authority.
13. Tenant assumes all responsibility for securing and protecting its Premises and its contents including keeping doors locked and other means of entry to the Premises closed.
14. Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord without Landlord's prior written consent.
15. No person shall go on the roof without Landlord's permission.
16. Tenant shall not permit any animals, other than seeing-eye dogs, to be brought or kept in or about the Premises or any common area of the property.
17. Tenant shall not permit any motor vehicles to be washed or mechanical work or maintenance of motor vehicles to be performed on any portion of the Premises or parking lot.
18. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any premises in the Building. Landlord may waive any one or more of these Rules and Regulations for the benefit of any tenant or tenants, and any such waiver by Landlord shall not be construed as a waiver of such Rules and Regulations for any or all tenants.
19. Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Building and for the preservation of good order in and about the Building. Tenant agrees to abide by all such rules and regulations herein stated and any additional rules and regulations which are adopted. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant's employees, agents, clients, customers, invitees and guests.
20. Any toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown into them. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose employees or invitees, shall have caused it.
21. Tenant shall not permit smoking or carrying of lighted cigarettes or cigars in areas reasonably designated by Landlord or any applicable governmental agencies as non-smoking areas.
22. Any directory of the Building or project of which the Building is a part ("Project Area"), if provided, will be exclusively for the display of the name and location of tenants only and Landlord reserves the right to charge for the use thereof and to exclude any other names.
23. Canvassing, soliciting, distribution of handbills or any other written material in the Building or Project Area is prohibited and each tenant shall cooperate to prevent the same. No tenant shall solicit business from other tenants or permit the sale of any goods or merchandise in the Building or Project Area without the written consent of Landlord.
24. Any equipment belonging to Tenant which causes noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Landlord or to any tenants in the Building shall be placed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to eliminate the noise or vibration.
25. Driveways, sidewalks, halls, passages, exits, entrances and stairways ("Access Areas") shall not be obstructed by tenants or used by tenants for any purpose other than for ingress to and egress from their respective premises. Access areas are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by
all persons whose presence, in the judgement of Landlord, shall be prejudicial to the safety, character, reputation and interests of the Building or its tenants.
26. Landlord reserves the right to designate the use of parking areas and spaces. Tenant shall not park in visitor, reserved, or unauthorized parking areas. Tenant and Tenant's guests shall park between designated parking lines only and shall not park motor vehicles in those areas designated by Landlord for loading and unloading. Vehicles in violation of the above shall be subject to being towed at the vehicle owner's expense. Vehicles parked overnight without prior written consent of the Landlord shall be deemed abandoned and shall be subject to being towed at vehicle owner's expense. Tenant will from time to time, upon the request of Landlord, supply Landlord with a list of license plate numbers of vehicles owned or operated by its employees or agents.
27. No trucks, tractors or similar vehicles can be parked anywhere other than in Tenant's own truck dock area. Tractor-trailers which must be unhooked or parked with dolly wheels beyond the concrete loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the asphalt paving surfaces. No parking or storing of such trailers will be permitted in the parking areas or on streets adjacent thereto.
28. During periods of loading and unloading, Tenant shall not unreasonably interfere with traffic flow and loading and unloading areas of other tenants. All products, materials or goods must be stored within the Tenant's Premises and not in any exterior areas, including, but not limited to, exterior dock platforms, against the exterior of the Building, parking areas and driveway areas. Tenant agrees to keep the exterior of the Premises clean and free of nails, wood, pallets, packing materials, barrels and any other debris produced from their operation.
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EXHIBIT E - ADDITIONAL SURRENDER CONDITIONS
ATTACHED TO AND MADE A PART OF LEASE BEARING THE
LEASE REFERENCE DATE OF SEPTEMBER 7, 2005 BETWEEN
CALWEST INDUSTRIAL PROPERTIES, LLC, AS LANDLORD AND
LIMELIGHT NETWORKS, INC., AS TENANT
It is the Tenant's obligation to leave the Premises in good, clean condition with all systems in good working order and repair. Among any other items deemed reasonably appropriate by Landlord, the following items will be inspected by Landlord at such time as Landlord deems inspection thereof to be appropriate to confirm that they are in good working order and repair:
1. All heating and air conditioning equipment, exhaust fans and hot water heaters. Tenant shall provide Landlord's office with a copy of an inspection and service report detailing the condition of said equipment, which report shall be provided by an Arizona licensed mechanical contractor, within three (3) days after Tenant vacates or abandons the Premises. If Landlord terminates Tenant's right to possession of the Premises, Landlord shall have the report prepared at Tenant's cost and expense.
2. All lights in the office and warehouse must be working. Tenant is obligated to relamp and/or reballast the fixtures as necessary.
3. All overhead doors must be serviced and repaired.
4. All exterior metal doors, including hardware, must be serviced or replaced as necessary.
5. All damaged sheetrock in the office area and in the warehouse along the demising walls shall be repaired.
6. All office and warehouse floors must be left in good, clean condition.
7. Any and all exterior signage must be removed, with Tenant having the obligation to repair and repaint the fascia as necessary.
8. Tenant shall remove all data, telecommunication and other cabling installed by Tenant or Tenant's contractors within the Premises. Unless directed otherwise by Landlord, conduit and all other raceways are to remain in place. Tenant must use caution not to damage ceiling tile, ceiling grid, walls and all other improvements within the Premises when removing any such cabling. Tenant must restore ceiling tiles, ceiling grid, walls and all other improvements within the Premises to its original condition, normal wear & tear accepted.
If the Tenant elects not to do any of the above within three (3) days of written notice, Landlord shall have the right to have the necessary repairs performed, to deduct the cost thereof from the Security Deposit (if any), and to invoice Tenant for the balance due. Tenant shall pay said balance within ten (10) days of receipt of said invoice.
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Exhibit 10.9
LOAN AND SECURITY AGREEMENT
LIMELIGHT NETWORKS, INC.
.
.
.
TABLE OF CONTENTS
Page ---- 1 ACCOUNTING AND OTHER TERMS ......................................... 4 2 LOAN AND TERMS OF PAYMENT .......................................... 4 2.1 Promise to Pay .............................................. 4 2.2 Termination of Commitment to Lend ........................... 5 2.3 Overadvances ................................................ 5 2.4 Interest Rate, Payments ..................................... 6 2.5 Authority to Debit Accounts ................................. 6 2.6 Fees ........................................................ 6 3 CONDITIONS OF LOANS ................................................ 6 3.1 Conditions Precedent to Initial Credit Extension ............ 6 3.2 Conditions Precedent to all Credit Extensions ............... 7 4 CREATION OF SECURITY INTEREST ...................................... 7 4.1 Grant of Security Interest .................................. 7 4.2 Authorization to File ....................................... 7 5 REPRESENTATIONS AND WARRANTIES ..................................... 7 5.1 Due Organization and Authorization .......................... 7 5.2 Collateral .................................................. 8 5.3 Litigation .................................................. 8 5.4 No Material Adverse Change in Financial Statements .......... 8 5.5 Solvency .................................................... 8 5.6 Regulatory Compliance ....................................... 8 5.7 Investments in Subsidiaries ................................. 9 5.8 Full Disclosure ............................................. 9 6 AFFIRMATIVE CONVENANTS ............................................. 9 6.1 Government Compliance ....................................... 9 6.2 Financial Statements, Reports, Certificates ................. 9 6.3 Inventory; Returns .......................................... 10 6.4 Taxes ....................................................... 10 6.5 Insurance ................................................... 10 6.6 Primary Accounts ............................................ 10 6.7 Financial Covenants ......................................... 10 6.8 Registration of Intellectual Property Rights ................ 11 6.9 Further Assurances .......................................... 11 7 NEGATIVE CONVENANTS ................................................ 11 7.1 Dispositions ................................................ 12 7.2 Changes in Business, Ownership, Management or Locations ..... 12 7.3 Mergers or Acquisitions ..................................... 12 7.4 Indebtedness ................................................ 12 7.5 Encumbrance ................................................. 12 7.6 Distributions; Investments .................................. 12 7.7 Transactions with Affiliates ................................ 13 7.8 Subordinated Debt ........................................... 13 7.9 Compliance .................................................. 13 |
8 EVENTS OF DEFAULT .................................................. 13 8.1 Payment Default ............................................. 13 8.2 Covenant Default ............................................ 13 8.3 Material Adverse Change ..................................... 13 8.4 Attachment .................................................. 14 8.5 Insolvency .................................................. 14 8.6 Other Agreements ............................................ 14 8.7 Judgments ................................................... 14 8.8 Misrepresentations .......................................... 14 8.9 Guaranty .................................................... 14 9 BANK'S RIGHTS AND REMEDIES ......................................... 14 9.1 Rights and Remedies ......................................... 14 9.2 Power of Attorney ........................................... 15 9.3 Bank Expenses ............................................... 15 9.4 Bank's Liability for Collateral ............................. 15 9.5 Remedies Cumulative ......................................... 16 9.6 Demand Waiver ............................................... 16 10 NOTICES ............................................................ 16 11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER ......................... 16 12 GENERAL PROVISIONS ................................................. 16 12.1 Successors and Assigns ...................................... 16 12.2 Indemnification ............................................. 17 12.3 Time of Essence ............................................. 17 12.4 Severability of Provision ................................... 17 12.5 Amendments in Writing, Integration .......................... 17 12.6 Counterparts ................................................ 17 12.7 Survival .................................................... 17 12.8 Confidentiality ............................................. 17 12.9 Attorneys' Fees, Costs and Expenses ......................... 17 13 DEFINITIONS ........................................................ 18 13.1 Definitions ................................................. 18 |
THIS LOAN AND SECURITY AGREEMENT dated April 15, 2005 but effective as of the Effective Date, between SILICON VALLEY BANK, a California chartered bank with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 14300 Northsight Boulevard, Suite 203, Scottsdale, Arizona 85260 ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation with its principal place of business at 2220 W. 14th Street, Tempe, AZ 85281 ("Borrower") provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial statements" includes the notes and schedules. The terms "including" and "includes" always mean "including (or includes) without limitation," in this or any Loan Document. Capitalized terms in this Agreement shall have the meanings set forth in Section 13, if not otherwise defined herein.
2 LOAN AND TERMS Of PAYMENT
2.1 PROMISE TO PAY.
Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding (i) the lesser of (A) the Committed Revolving Line or (B) the Borrowing Base, minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iii) the amount of utilized Cash Management Services covered under the Cash Management Services Sublimit. Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by facsimile or telephone by 12:00 p.m. Pacific time on the Business Day the Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Payment/Advance Form attached as Exhibit B. Bank will credit Advances to Borrower's deposit account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance.
(c) The Committed Revolving Line terminates on the Revolving Maturity Date, when all Advances are immediately payable.
2.1.2 EQUIPMENT FACILITY.
(a) Through March 31, 2006 (the "Equipment Availability End Date"), Bank will make advances ("Equipment Advance" and, collectively, "Equipment Advances") not exceeding the Committed Equipment Line. The Equipment Advances may only be used to finance or refinance Equipment purchased on or after 90 days before the date of each Equipment Advance and may not exceed 100% of the equipment invoice excluding taxes, shipping, warranty charges, freight discounts and installation expense. Soft costs may constitute up to $500,000 of the aggregate Equipment Advances. Each Equipment Advance must be for a minimum of $100,000. The number of Equipment Advances is limited to 1 per month. Notwithstanding the foregoing, upon the Effective Date an Equipment Advance in the amount of $750,000 shall be advanced for
Equipment purchases, provided that the amount of such Equipment Advance does not exceed 100% of Borrower's net book value of fixed assets and that invoices for at least $250,000 of Equipment dated within 150 days prior the date of such Equipment Advance are provided to Bank on or prior thereto.
(b) Each Equipment Advance shall immediately amortize and be payable in 36 equal monthly payments of principal and interest beginning 30 days following such Equipment Advance and continuing on the same day of each month thereafter. The final payment due on the applicable Equipment Maturity Date shall include all outstanding principal and all accrued unpaid interest. Equipment Advances when repaid may not be re-borrowed.
(c) To obtain an Equipment Advance, Borrower must notify Bank (the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time one Business Day before the day on which the Equipment Advance is to be made. The notice in the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer or designee and include a copy of invoices for the Equipment being financed and such additional information as Bank may request; provided, however, copies of invoices related to the initial Equipment Advance made on the Effective Date shall not be required.
2.1.3 LETTERS OF CREDIT SUBLIMIT.
Bank will issue or have issued Letters of Credit for Borrower's account not exceeding (i) the lesser of the Committed Revolving Line or the Borrowing Base minus (ii) the outstanding principal balance of the Advances and minus the Cash Management Sublimit; however, the face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit) may not exceed $500,000. Borrower's Letter of Credit reimbursement obligation will be secured by unencumbered cash on terms acceptable to Bank at any time upon the Revolving Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further documentation in connection with the Letters of Credit as Bank may reasonably request.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use up to $500,000 (the "Cash Management Services Sublimit") for Bank's Cash Management Services, which may include merchant services, direct deposit of payroll, business credit card, and check cashing services identified in various cash management services agreements related to such services (the "Cash Management Services"). All amounts Bank pays for any Cash Management Services will be treated as Advances under the Committed Revolving Line.
2.2 TERMINATION OF COMMITMENT TO LEND.
Bank's obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank's sole discretion, there has been a material adverse change in the general affairs, management, results of operation or condition (financial or otherwise) of Borrower or in the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement.
2.3 OVERADVANCES.
If Borrower's Obligations under Section 2.1.1, 2.1.3, and 2.1.4 exceed the lesser of either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower must promptly pay Bank the excess.
2.4 INTEREST RATE, PAYMENTS.
(a) Interest Rate. Advances accrue interest on the outstanding principal balance at a per annum rate equal to the greater of either (i) 0.75 percentage points above the Prime Rate or (ii) 6.00%. Equipment Advances accrue interest on the outstanding principal balance at a per annum rate equal to the Basic Rate. After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on a 360 day year for the actual number of days elapsed.
(b) Payments. Interest due on the Committed Revolving Line is payable monthly on the same day of each month as the day on which the Effective Date occurs. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional interest shall accrue. If any change in the law increases Bank's expenses or decreases its return from the Equipment Advances, Borrower will pay Bank upon request the amount of such increase or decrease.
2.5 AUTHORITY TO DEBIT ACCOUNTS.
Bank may debit any of Borrower's deposit accounts including Account Number 3300467946 for principal and interest payments owing or any other amounts Borrower owes Bank when due. Bank will notify Borrower when it debits Borrower's accounts. These debits are not a set-off.
2.6 FEES. Borrower will pay:
(a) Facility Fee. A fully earned, non-refundable Facility Fee of $20,000 for the Committed Revolving Line, due on the Effective Date, and the deposit previously received by Bank in the same amount shall be applied against such Fee;
(b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and reasonable expenses) incurred through and after the date of this Agreement, payable when due; and
(c) Early Termination Fees. A fully earned, non-refundable early termination fee of one percent (1%) of the Committed Revolving Line (currently $10,000) shall be due upon voluntary or involuntary payment in full of Borrower's Obligations under the Committed Revolving Line and termination of the Committed Revolving Line prior to the Revolving Maturity Date; and a fully earned, non-refundable early termination fee of one percent (1%) of the outstanding principal balance of all Equipment Advances shall be due upon voluntary or involuntary payment in full of Borrower's Obligations under the Committed Equipment Line prior to the relevant Equipment Maturity Dates and termination of Bank's obligation to lend the undisbursed portion of such Obligations under the Committed Equipment Line; provided that no such early termination fees shall be payable if Bank agrees to refinance and/or redocument this Agreement in another lending division of Bank (in Bank's sole discretion) prior to the relevant Maturity Dates.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees it reasonably requires.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 5 must be materially true on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower's representation and warranty on that date that the representations and warranties of Section 5 remain true.
4 CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrower's duties under the Loan Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank may place a "hold" on any deposit account pledged as Collateral. If this Agreement is terminated, Bank's lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations. If Borrower shall at any time, acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the brief details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.
4.2 AUTHORIZATION TO FILE.
Borrower authorizes Bank to file financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect Bank's interest in the Collateral.
5 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. Borrower has not changed its state of formation or its organizational structure or type or any organizational number (if any) assigned by its jurisdiction of formation.
The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's formation documents, nor constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except Permitted Liens or Borrower has Rights to each asset that is Collateral. Borrower has no other deposit account, other than the deposit accounts described in the Schedule. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. Except as described in the Schedule the Collateral is not in the possession of any third party bailee (such as at a warehouse). In the event that Borrower, after the date hereof, intends to store with or otherwise deliver any of the Collateral to such a bailee, then Borrower will receive the prior written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. Borrower has no notice of any actual or imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All Inventory is in all material respects of good and marketable quality, free from material defects. Borrower is the sole owner of the intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is valid and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party, except to the extent such claim could not reasonably be expected to cause a Material Adverse Change.
5.3 LITIGATION.
Except as shown in the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower's Responsible Officers, threatened by or against Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations. There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an "investment company" under the investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower's or any Subsidiary's properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Borrower
and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change.
5.7 INVESTMENTS IN SUBSIDIARIES.
Borrower does not own any stock, partnership interest or other equity securities except for Permitted investments.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading. It being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected and forecasted results.
6 AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an obligation to lend, or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to cause a material adverse effect on Borrower's business or operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, the noncompliance with which could reasonably be expected to have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) as soon as available, but no later than 20 days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than 120 days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) within 5 days of filing, copies of all statements, reports and notices made available to Borrower's security holders or to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K, if any, filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of $100,000 or more; (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests; (vi) prompt notice of any material change in the composition of the intellectual Property, including any subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark not shown in any intellectual property security agreement between Borrower and Bank or knowledge of an event that materially adversely affects the value of the intellectual Property; and (vii) as soon as
available but no later than 30 days prior to each fiscal year end, Borrower's financial projections for the following year on a monthly basis.
(b) Within 20 days after the last day of each month, Borrower will deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit C, with aged listings of accounts receivable and accounts payable.
(c) Within 20 days after the last day of each month, Borrower will deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of Exhibit D.
(d) Borrower will allow Bank to audit Borrower's Collateral at Borrower's expense. Such audits will be conducted no more often than annually unless an Event of Default has occurred and is continuing.
6.3 INVENTORY; RETURNS.
Borrower will keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors will follow Borrower's customary practices as they exist at execution of this Agreement. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than $50,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments and will deliver to Bank, on demand, appropriate certificates attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks and in amounts, as Bank may reasonably request. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank's reasonable discretion. All property policies will have a lender's loss payable endorsement showing Bank as an additional loss payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least 20 days notice before canceling its policy. At Bank's request, Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank's option, be payable to Bank on account of the Obligations.
6.6 PRIMARY ACCOUNTS.
Borrower will maintain its primary operating and investment accounts with Bank. As to any deposit accounts and investment accounts maintained with institutions not related to Bank, in which the aggregate balances exceed 10% of Borrower's cash, Borrower shall cause such institutions to enter into a control agreement in form acceptable to Bank in its good faith business judgment in order to perfect Bank's first priority security interest in said deposit accounts and investment accounts.
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current Liabilities (excluding investor/related party debt) of at least 1.00 to 1.00 until October 31, 2005 and thereafter at least 1.25 to 1.00.
(ii) DEBT SERVICE COVERAGE RATIO. A ratio of Borrower's (a) consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrower's income (all a determined by GAAP) minus unfunded capital expenditures for the preceeding three-month period to (b) current maturities of long term debt due Bank plus interest expense paid Bank during the preceeding three-month period of at least 2.00 to 1.00, measured monthly on a rolling 3 month basis.
6.8 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.
Borrower shall not register any Copyrights or Mask Works with the United States Copyright Office unless it: (i) has given at least fifteen (15) days' prior notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank's security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such security documents with the United States Copyright Office contemporaneously with filing the Copyright application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of the recording of the security documents necessary for Bank So maintain the perfection and priority of its security interest in such Copyrights or Mask Works. Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within 30 days of any such filing.
Borrower will (i) protect, defend and maintain the validity and enforceability of the Intellectual Property and promptly advise Bank in writing of material infringements and (ii) not allow any Intellectual Property to be abandoned, forfeited or dedicated to the public without Bank's written consent.
6.9 FURTHER ASSURANCES.
(a) Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank's security interest in the Collateral or to effect the purposes of this Agreement.
(b) Borrower will cause each Subsidiary to guaranty the Obligations.
(c) Within 60 days following the Effective Date, Borrower will deliver to Bank Consents to Removal of Personal Property (or such other form of landlord's waiver as may be acceptable to Bank in its sole discretion) from the owners of Borrower's Tempe, Arizona headquarters, and from the owners of the premises at such locations as Bank may specify where Equinix, Global Crossing and Switch and Data are lessees, renters or otherwise have possession of Borrower's assets.
7 NEGATIVE COVENANTS
For so long as Bank has an obligation to lend or there are any outstanding Obligations, Borrower shall not, without Bank's prior written consent (which shall be a matter of its good faith business judgment), do any of the following:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries In the ordinary course of business; or (iii) of worn-out or obsolete Equipment.
7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR LOCATIONS OF COLLATERAL.
Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its ownership or management of greater than 25% (other than by the sale of Borrower's equity securities in a public offering or to venture capital investors so long as Borrower identifies the venture capital investors prior to the closing of the investment). Borrower will not, without at least 30 days prior written notice, relocate its chief executive office, change its state of formation (including reincorporation), change its organizational number or name or add any new offices or business locations (such as warehouses) in which Borrower maintains or stores over $5,000 in Collateral.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except, as long as no Event of Default has occurred and is continuing or would result from such action during the term of this Agreement, (i) where such transaction would not require more than 15% of Borrower's cash or 25% of Borrower's stock, and (ii) a Subsidiary may merge or consolidate into another Subsidiary or into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted here, subject to Permitted Liens.
7.6 DISTRIBUTIONS; INVESTMENTS.
Directly or indirectly acquire or own any Person, or make any investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; or pay any dividends or make any distribution or payment with respect to, or redeem, retire or purchase, any capital stock, except that Borrower may make repurchases of stock in Borrower from former employees or directors of Borrower or its Subsidiaries under the terms of applicable repurchase agreements in an aggregate amount not to exceed $100,000 in any fiscal year, provided that no Event of Default has occurred and is continuing or would exist after giving effect to any such repurchase.
7.7 TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a nonaffiliated Person.
7.8 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank's prior written consent.
7.9 COMPLIANCE.
Become an "investment company" or a company controlled by an "investment company," under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so.
8 EVENTS OF DEFAULT
Any one of the following is an Event of Default;
8.1 PAYMENT DEFAULT.
If Borrower fails to pay any of the Obligations within 3 days after their due date, however, during such period no Credit Extensions will be made;
8.2 COVENANT DEFAULT.
(a) If Borrower fails to perform any obligation under Sections 6.2 or 6.7 or violates any of the covenants contained in Section 7 of this Agreement, or
(b) If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE.
If there (i) occurs a material adverse change in the business, operations, or financial condition of the Borrower, or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations; or (iii) is a material impairment of the value or priority of Bank's security interests in the Collateral (the foregoing being defined as a "Material Adverse Change").
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed against any of Borrower's assets, by any government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions will be made during the cure period);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 45 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding $100,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $100,000 is rendered against Borrower and is unsatisfied and unstayed for 10 days (but no Credit Extensions will be made before the judgment is stayed or satisfied);
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document; or
8.9 GUARANTY.
Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor does not perform any obligation under any guaranty of the Obligations, or any material misrepresentation or material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs to any Guarantor.
9 BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable; notify any Person owing Borrower money of Bank's security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit;
(d) Make any payments and do any commercially reasonable acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank's rights or remedies;
(e) Place a "hold" on any account maintained with Bank and deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral;
(f) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;
(g) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit; and
(h) Dispose of the Collateral according to the Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of payment to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any commercially reasonable action under the policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable,
bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default.
9.4 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and Section 9-207 of the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Except as provided above, Borrower bears all risk of loss, damage or destruction of the Collateral.
9.5 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given.
9.6 DEMAND WAIVER.
Except as otherwise provided in this Agreement, Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.
10 NOTICES
All notices or demands by any party about this Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by facsimile to the addresses set forth at the beginning of this Agreement. A party may change its notice address by giving the other party written notice.
11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Arizona law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Maricopa County, Arizona.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
12 GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank's prior written consent which may be granted or withheld in Bank's discretion. Bank has the right,
without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement merge into this Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made (i) to Bank's subsidiaries or affiliates in connection with their business with Borrower, (ii) to prospective transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee or purchasers agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank's examination or audit and (v) as Bank considers reasonably appropriate exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank's possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys' fees and other reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled.
13 DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower's Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and members.
"BANK EXPENSES" are all reasonable audit fees and expenses and reasonable costs and expenses (including reasonable attorneys' fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or insolvency Proceedings).
"BASIC RATE" is, as of the date of the Equipment Advance, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to 36 months as quoted in The Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%.
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information.
"BORROWING BASE" is 80% of Eligible Accounts, as determined by Bank from Borrower's most recent Borrowing Base Certificate; provided, however, that Bank may lower the percentage of the Borrowing Base after performing an audit of Borrower's Collateral.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which the Bank is closed.
"CASH MANAGEMENT SERVICES" are defined in Section 2.1.4.
"CODE" is the Arizona Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on Exhibit A.
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $2,750,000.
"COMMITTED REVOLVING LINE" is an Advance of up to $1,000,000.
"COMMITMENT TERMINATION DATE" is March 31, 2006.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement.
"COPYRIGHTS" are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Letter of Credit, or any other extension of credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be included on that date as current assets on Borrower's consolidated balance sheet.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total liabilities which mature within one (1) year.
"EFFECTIVE DATE" is the date Bank executes this Agreement.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of Borrower's business that meet all Borrower's representations and warranties in Section 5; but Bank may in its reasonable discretion change eligibility standards by giving Borrower notice. Unless Bank agrees otherwise in writing, Eligible Accounts will not include:
(a) Accounts that the account debtor has not paid within 90 days of invoice date;
(b) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90 days of invoice date;
(c) Credit balances over 90 days from invoice date;
(d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Bank approves in writing;
(e) Accounts for which the account debtor does not have its principal place of business in the United States, except for Accounts which are otherwise Eligible and where the account debtor has its principal place of business in the United Kingdom limited to an aggregate amount of $125,000;
(f) Accounts for which the account debtor is a federal government entity or any department, agency, or instrumentality, except for Accounts of the United States if the
payee has assigned its payment rights to Bank and the assignment has been acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C. 3727);
(g) Accounts for which Borrower owes the account debtor, but only up to the amount owed (sometimes called "contra" accounts, accounts payable, customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account debtor's payment may be conditional;
(i) Accounts for which the account debtor is Borrower's Affiliate, officer, employee, or agent;
(j) Accounts in which the account debtor disputes liability or makes any claim and Bank believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines collection to be doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.
"EQUIPMENT ADVANCE" is defined in Section 2.1.2.
"EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.2.
"EQUIPMENT MATURITY DATE" is a date 36 months after each Equipment Advance, but no later than March 31, 2009 as to the last Equipment Advance.
"ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations. "GAAP" is generally accepted accounting principles. |
"GUARANTOR" is any present or future guarantor of the Obligations, including any present or future Subsidiary of Borrower.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
"INTELLECTUAL PROPERTY" is all of Borrower's:
(a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and royalties from the use;
(b) Any trade secrets and any intellectual property rights in computer software and computer software products now or later existing, created, acquired or held;
(c) All design rights which may be available to Borrower now or later created, acquired or held;
(d) Any claims for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above;
All proceeds and products of the foregoing, including all insurance, indemnity or warranty payments.
"INVENTORY" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person.
"LETTER OF CREDIT" is defined in Section 2.1.3.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated.
"MASK WORKS" are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired.
"MATERIAL ADVERSE CHANGE" is defined in Section 8.3.
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including cash management services, letters of credit and foreign exchange contracts, if any and including interest accruing after insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank.
"PATENTS" are patents, patent applications and like protections, including Improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.
"PERMITTED INDEBTEDNESS" IS:
(a) Borrower's indebtedness to Bank under this Agreement or any other Loan Document;
(b) indebtedness existing on the Effective Date and shown on the Schedule;
(c) Subordinated Debt;
(d) indebtedness to trade creditors incurred in the ordinary course of business; and
(e) indebtedness secured by Permitted Liens.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on the Effective Date; and
(b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii) Bank's certificates of deposit issued maturing no more than 1 year after issue.
"PERMITTED LIENS" are:
(a) Liens existing on the Effective Date and shown on the Schedule or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority when not paid over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment acquired or held by Borrower or
its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;
(d) Licenses or sublicenses granted in the ordinary course of Borrower's business and any interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest;
(e) Leases or subleases granted in the ordinary course of Borrower's business, including in connection with Borrower's leased premises or leased property;
(f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.
"PERSON" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate.
"QUICK ASSETS" is, on any date until three months after the Effective Date, Borrower's consolidated, unrestricted cash and cash equivalents, plus all Accounts; and, after three months after the Effective Date, Borrower's consolidated, unrestricted cash and cash equivalents held at Bank, plus all Accounts.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the President, the Chief Financial Officer and the Controller of Borrower.
"REVOLVING MATURITY DATE" is the date 364 days from the Effective Date.
"RIGHTS", as applied to the Collateral, means the Borrower's rights and interests in, and powers with respect to, that Collateral, whatever the nature of those rights, interests and powers and, in any event, including Borrower's power to transfer rights in such Collateral to Bank.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in writing.
"SUBSIDIARY" is for any Person, any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets of Borrower and its Subsidiaries minus, (i) any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt discount and expense, patents, trade and service marks and names, copyrights and research and development expenses except prepaid expenses, and (c) reserves not already deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated Debt.
"TRADEMARKS" are trademark and servicemark rights, registered or not, applications to register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks.
BORROWER:
LIMELIGHT NETWORKS, INC.
By: /s/ William H. Rinehart --------------------------------- Title: President & CEO |
BANK:
SILICON VALLEY BANK
By: /s/ Travis D. Wood --------------------------------- Title: VICE PRESIDENT Effective Date: 4/15/05 |
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in and to the following whether owned now or hereafter arising and whether the Borrower has rights now or hereafter has rights therein and wherever located:
All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above;
All contract rights and general intangibles (as such definitions may be amended from time to time according to the Code), now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind,;
All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (as such definitions may be amended from time to time according to the Code) whether or not earned by performance, and any and all credit insurance, insurance (including refund) claims and proceeds, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities entitlements, securities accounts, investment property, financial assets, letters of credit, letter of credit rights, certificates of deposit, instruments and chattel paper and electronic chattel paper now owned or hereafter acquired and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; all trade secret rights, including all rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or hereafter acquired; all mask work or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired; all claims for damages by way of any past, present and future infringement of any of the foregoing; and
All Borrower's Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof.
EXHIBIT B
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
FAX TO: _________ DATE: _______________
- LOAN PAYMENT:
LIMELIGHT NETWORKS, INC. (Borrower)
From Account #_______________________ To Account #_____________________
(Deposit Account #) (Loan Account #)
Principal $___________________ and/or interest $___________________________
All Borrower's representation and warranties in the Loan and Security Agreement are true, correct and complete in all material respects up to and including the date of the transfer request for a loan payment, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date:
- LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account #_______________________ To Account #_____________________
(Loan Account #) (Deposit Account #)
Amount of Advance $__________________
All Borrower's representation and warranties in the Loan and Security Agreement are true, correct and complete in all material respects up to and including the date of the transfer request for an advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of that date:
AUTHORIZED SIGNATURE: _____________________ Phone Number: _________________
OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE
TO BE WIRED.
Deadline for same day processing is 12:00 pm, P.S.T.
Beneficiary Name: ____________________ Amount of Wire: $________________
Beneficiary Bank: ____________________ Account Number: _________________
City and State: ____________________________
Beneficiary Bank Transit Beneficiary Bank Code (Swift, (ABA) #: _____________ Sort, Chip, etc.): ________ (FOR INTERNATIONAL WIRE ONLY) Intermediary Bank: __________________ Transit (ABA) #: ________________ |
For Further Credit to: ____________________________________________________
Special instruction: ______________________________________________________
By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me (us).
Authorized Signature: 2nd Signature (If Required): ----------- ---------- Print Name/Title: Print Name/Title: --------------- --------------------- Telephone # Telephone # ---------------------- ---------------------------- |
Schedule to Loan and Security Agreement
The exact correct corporate name of Borrower is (attach a copy of the formation documents, e.g., articles, partnership agreement): _____________________________
Borrower's State of formation: __________________
Borrower has operated under only the following other names (if none, so state):
All other address at which the Borrower does business are as follows (attach additional sheets if necessary and include all warehouse addresses):
Borrower has deposit accounts and/or investment accounts located only at the following institutions:
List Acct. Numbers: ____________________________________________________________
SUBORDINATED DEBT:
Tax ID Number _________________________________
Organizational Number, if any: ________________
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower LIMELIGHT NETWORKS, INC. Bank: Silicon Valley Bank 14300 Northsight Boulevard, Suite 203, Scottsdale, Arizona 85260 |
Commitment Amount: $1,000,000
ACCOUNTS RECEIVABLE 1. Accounts Receivable Book Value as of _______________________ $___________ 2. Additions (please explain on reverse) $___________ 3. TOTAL ACCOUNTS RECEIVABLE $___________ ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) 4. Amounts over 90 days due $___________ 5. Balance of 50% over 90 day accounts $___________ 6. Credit balances over 90 days $___________ 7. Concentration Limits $___________ 8. Foreign Accounts** $___________ 9. Federal Governmental Accounts $___________ 10. Contra Accounts $___________ 11. Promotion or Demo Accounts $___________ 12. Intercompany/Employee Accounts $___________ 13. Other (please explain on reverse) $___________ 14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________ 15. Eligible Accounts (#3 minus #14) $___________ 16. LOAN VALUE OF ACCOUNTS (80% of #15) $___________ ** except for up to $125,000 from UK eligibles BALANCES 17. Maximum Loan Amount $___________ 18. Total Funds Available [Lesser of #17 or #16] $___________ 19. Present balance owing on Line of Credit $___________ 20. Outstanding under Sublimits (LC or CM) $___________ 21. RESERVE POSITION (#18 minus #19 and #20) $___________ |
The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS:
LIMELIGHT NETWORKS, INC.
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
14300 Northsight Boulevard, Suite 203 Scottsdale, Arizona 85260 FROM: LIMELIGHT NETWORKS, INC. The undersigned Responsible Officer of LIMELIGHT NETWORKS, INC. |
("Borrower") certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending _____________________________ with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned certifies that Borrower, and each Subsidiary, has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Responsible Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES ------------------ -------- -------- Monthly financial statements + CC Monthly within 20 days Yes No Annual (Audited) FYE within 120 days Yes No A/R & A/P Agings Monthly within 20 days Yes No A/R Audit Initial and Annual Yes No Borrowing Base Certificate Monthly within 20 days Yes No Annual financial projections 30 days prior to FYE Yes No |
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES ------------------- -------- ------ -------- Maintain on a Monthly Basis: Minimum Quick Ratio (Adjusted) 1.00:1.00 to 10/31/05 _____:1.00 Yes No 1.25:1.00 thereafter Minimum Debt Service Coverage Ratio 2.00:1.00 _____:1.00 Yes No |
Have there been updates to Borrower's intellectual property? Yes/No
Borrower only has deposit accounts located at the following institutions:
______________________________.
COMMENTS REGARDING EXCEPTIONS: See Attached.
BANK USE ONLY
Received by: --------------------------- Sincerely, AUTHORIZED SIGNER Date: ---------------------------------- LIMELIGHT NETWORKS, INC. Verified: ------------------------------ AUTHORIZED SIGNER Date: ------------------------------------- ---------------------------------- |
SIGNATURE
------------------------------------- Compliance Status: Yes No
TITLE
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of July 21, 2005, by and between SILICON VALLEY BANK, a California - chartered bank with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office at 14300 Northsight Blvd., Suite 203, Scottsdale, AZ 85260 ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation with its principal place of business at 2220 W. 14th Street, Tempe, AZ 85281 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is or may be indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated April 15, 2005, as it may be amended from time to time (the "Loan Agreement"). The Loan Agreement provided for, among other things, a Committed Revolving Line in the original principal amount of One Million Dollars ($1,000,000) and a Committed Equipment Line in the original principal amount of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000). Defined terms used but not otherwise defined herein shall have the same meanings as set forth in the Loan Agreement. Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the Collateral, as described in the Loan Agreement and in the Intellectual Property Security Agreement. Hereinafter, the above-described security documents, together with all other documents securing repayment of the Indebtedness shall be referred to as the "Security Documents". Hereinafter, the Security Documents, together with all other documents evidencing or securing the Indebtedness shall be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Subsection (i) of Section 6.7 of the Loan Agreement entitled "Financial Covenants" is amended to read as follows:
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current Liabilities (excluding investor/related party debt) of at least 1.00 to 1.00 until April 30, 2006 and thereafter at least 1.25 to 1.00.
2. The following term in Section 13.1 entitled "Definitions" is hereby amended to read:
"COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $4,750,000 of which $2,637,675.26 is available as of July 21, 2005.
B. Consent to Transaction.
Borrower has notified Bank of Borrower's request to prepay existing Subordinated Debt owing to the Raciborski Family Foundation and to Ridgeline Capital, LLC which Subordinated Debt is subject to those certain Intercreditor and Subordination Agreements dated as of April 15, 2005 with such creditors (the "Transaction"). Borrower has requested that Bank consent to the Transaction for purposes of Section 7.8 of the Loan Agreement, which might otherwise constitute a default under the Loan Agreement if Bank does not provide its consent, and for purposes of such Intercreditor and Subordination Agreements. Bank's consent to the Transaction is specifically conditioned upon Borrower raising new Subordinated Debt (under an agreement satisfactory to Bank) from Partners for Growth, L.P., a Delaware limited partnership, in a minimum aggregate amount equal to, and the proceeds of which will be applied to, the Subordinated Debt
being prepaid to the Raciborski Family Foundation and to Ridgeline Capital,
LLC. This Loan Modification Agreement will serve as Bank's consent to the
Transaction solely for the purposes of Section 7.8 of the Loan Agreement.
Bank's consent: (1) shall not limit or impair the Bank's right to demand
strict performance of this covenant as set forth in the Loan Agreement
following consummation of the Transaction; and (2) shall not limit or
impair the Bank's right to demand strict performance of all other covenants
and provisions set forth in the Loan Agreement, at all times
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the amount of Ten Thousand and No/100 Dollars ($10,000.00) (the "Loan Fee") plus all of Bank's reasonable out-of-pocket expenses in connection with this Loan Modification Agreement.
6. NO DEFENSES. Borrower agrees that, as of the date hereof, it has no defenses against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank's agreement to modifications to the existing Indebtedness and the consent to the Transaction pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future consents, waivers or modifications to the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly released by Bank in writing. Unless expressly released herein, no maker, endorser, or guarantor will be released by virtue of this Loan Modification Agreement. The terms of this paragraph apply not only to this Loan Modification Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon receipt by Bank of (a) the Loan Fee, and (b) a fully executed counterpart hereof.
This Loan Modification Agreement is executed as of the date first written above.
BORROWER: BANK: LIMELIGHT NETWORK, INC. SILICON VALLEY BANK By: /s/ William H. Rinehart By: /s/ Travis D. Wood --------------------------------- ------------------------------------ Name: William H. Rinehart Name: TRAVIS D. WOOD Title: President & CEO Title: VICE PRESIDENT |
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of August 15, 2005, by and between SILICON VALLEY BANK, a California - chartered bank with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office at 14300 Northsight Blvd., Suite 203, Scottsdale, AZ 85260 ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation with its principal place of business at 2220 W. 14th Street, Tempe, AZ 85281 ("Borrower").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is or may be indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated April 15, 2005, as it may be amended from time to time (the "Loan Agreement"). The Loan Agreement provided for, among other things, a Committed Revolving Line in the original principal amount of One Million Dollars ($1,000,000) and a Committed Equipment Line in the original principal amount of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) which was changed to $4,750,000 as of July 21, 2005. Defined terms used but not otherwise defined herein shall have the same meanings as set forth in the Loan Agreement. Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by the Collateral, as described in the Loan Agreement and in the intellectual Property Security Agreement. Hereinafter, the above-described security documents, together with all other documents securing repayment of the Indebtedness shall be referred to as the "Security Documents". Hereinafter, the Security Documents, together with all other documents evidencing or securing the Indebtedness shall be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Section 6.7 of the Loan Agreement entitled "Financial Covenants" is amended to read as follows:
6.7 FINANCIAL COVENANTS.
Borrower will maintain as of the last day of each month:
(i) QUICK RATIO (ADJUSTED). A ratio of Quick Assets to Current Liabilities (excluding investor/related party debt) of at least 0.90 to 1.00 until October 31, 2005 and thereafter of at least 1.00 to 1.00 until April 30, 2006 and thereafter of at least 1.25 to 1.00.
(i) DEBT SERVICE COVERAGE RATIO. A ratio of Borrower's (a) consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrower's income (all a determined by GAAP) minus unfunded capital expenditures for the preceding three-month period to (b) the principal and interest payments on debt due Bank paid and payable to Bank during the preceding three-month period of at least 2.50 to 1.00 until October 31, 2005 and thereafter of at least 2.00 to 1.00, measured monthly on a rolling 3 month basis.
2. Exhibit D attached hereto shall be substituted for that attached to the Loan Agreement.
B. Waiver of Financial Covenant Default.
Bank hereby waives Borrower's existing default under the Loan Agreement by virtue of Borrower's failure to comply with the monthly Quick Ratio (Adjusted) financial covenant as of June 30, 2005. Bank's waiver of Borrower's compliance with this covenant shall apply only to the foregoing period. Accordingly, for the month ending July 31, 2005, Borrower shall be in compliance with this covenant.
Bank's agreement to waive the above-described default (1) in no way
shall be deemed an agreement by the Bank to waive Borrower's
compliance with the above-described covenant as of all other dates and
(2) shall not limit or impair the Bank's right to demand strict
performance of this covenant as of all other dates and (3) shall not
limit or impair the Bank's right to demand strict performance of all
other covenants as of any date.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE AND EXPENSES. Borrower shall pay to Bank a fee in the amount of One Thousand Five Hundred and No/100 Dollars ($1,500.00) (the "Loan Fee") plus all of Bank's reasonable out-of-pocket expenses in connection with this Loan Modification Agreement.
6. NO DEFENSES. Borrower agrees that, as of the date hereof, it has no defenses against the obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank's agreement to modifications to the existing Indebtedness and the waiver contained in this Loan Modification Agreement in no way shall obligate Bank to make any future consents, waivers or modifications to the indebtedness. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the indebtedness. It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Loan Documents, unless the party is expressly released by Bank in writing. Unless expressly released herein, no maker, endorser, or guarantor will be released by virtue of this Loan Modification Agreement. The terms of this paragraph apply not only to this Loan Modification Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is conditioned upon receipt by Bank of (a) the Loan Fee, and (b) a fully executed counterpart hereof.
This Loan Modification Agreement is executed as of the date first written above.
BORROWER: BANK: LIMELIGHT NETWORK, INC. SILICON VALLEY BANK By: /s/ William H. Rinehart By: /s/ Travis D. Wood --------------------------------- ------------------------------------ Name: William H. Rinehart Name: TRAVIS D. WOOD Title: President & CEO Title: VICE PRESIDENT |
THIRD AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT to Loan and Security Agreement (this "Amendment") is entered into this 27th day of October, 2005, by and between Silicon Valley Bank ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of April 15, 2005, as amended (as the same may from time to time be further amended, modified, supplemented or restated, the "Loan Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower has requested that Bank amend the Loan Agreement to provide additional equipment term loan financing.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 SECTION 2.1.5 (EQUIPMENT 2 FACILITY). A new Section 2.1.5 is added to the Loan Agreement as follows:
2.1.5 Equipment 2 Facility.
(a) Through September 30, 2006 (the "Equipment 2 Availability End Date"), Bank will make advances (each an "Equipment 2 Advance" and, collectively, "Equipment 2 Advances") not exceeding the Committed Equipment 2 Line. The Equipment 2 Advances may only be used to finance or refinance Equipment purchased on or after 90 days before the date of each Equipment 2 Advance and may not exceed 100% of the equipment invoice excluding taxes, shipping, warranty charges, freight discounts and installation expense. Soft costs
may constitute up to $500.000 of the aggregate Equipment 2 Advances. Each Equipment 2 Advance must be for a minimum of $100,000. The number of Equipment 2 Advances is limited to 1 per month.
(b) Each Equipment 2 Advance made prior to 07/01/2006 shall amortize and be payable in 24 equal monthly payments of principal and interest beginning 07/31/2006 and continuing on the last day of each month thereafter. Until the first equal monthly payment of principal and interest is due on each Equipment 2 Advance made prior to 07/01/2006, interest only shall be payable monthly beginning on the last day of the month in which the Equipment 2 Advance is made and continuing on the last day of each month thereafter. Each Equipment 2 Advance made on or after 07/01/2006 shall amortize and be payable in 24 equal monthly payments of principal and interest beginning 30 days following such Equipment 2 Advance and continuing on the same day of each month thereafter. The final payment due on the applicable Equipment 2 Maturity Date shall include all outstanding principal and all accrued unpaid interest. Equipment 2 Advances when repaid may not be re-borrowed.
(c) To obtain an Equipment 2 Advance, Borrower must notify Bank (the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time one Business Day before the day on which the Equipment 2 Advance is to be made. The notice in the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer or designee and include a copy of invoices for the Equipment being financed and such additional information as Bank may reasonably request.
2.2 SECTION 2.4 (INTEREST RATE, PAYMENTS). The second sentence of subsection (a) of Section 2.4 is amended in its entirety and replaced with the following:
Equipment Advances and Equipment 2 Advances accrue interest on the outstanding principal balance at a per annum rate equal to the Basic Rate.
The last sentence of subsection (b) of Section 2.4 is amended in its entirety and replaced with the following:
If any change in the law increases Bank's expenses or decreases its return from the Equipment Advances or the Equipment 2 Advances, Borrower will pay Bank upon request the amount of such increase or decrease.
2.3 SECTION 2.6 (FEES). Subsection (c) entitled "Early Termination Fees" of Section 2.6 is amended by adding the following clause (beginning in the third line from the end immediately before the words "provided that"):
and a fully earned, non-refundable early termination fee of one percent (1%) of the outstanding principal balance of all Equipment 2 Advances shall be due upon voluntary or involuntary payment in full of Borrower's Obligations under the
Committed Equipment 2 Line prior to the relevant Equipment 2 Maturity Dates and termination of Bank's obligation to lend the undisbursed portion of such Obligations under the Committed Equipment 2 Line;
2.4 SECTION 13 (DEFINITIONS). The following terms and their respective definitions set forth in SECTION 13.1 are amended in their entirety and replaced with the following:
"BASIC RATE" is, as of the date of the relevant Equipment Advance or Equipment 2 Advance, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to 36 months as quoted in The Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%; provided that, for any Equipment 2 Advance made on or after July 1, 2006, it is, as of the date of the relevant Equipment 2 Advance, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to 24 months as quoted in The Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Equipment 2 Advance, Letter of Credit, or any other extension of credit by Bank for Borrower's benefit.
2.5 SECTION 13 (DEFINITIONS). The following terms and their respective definitions set forth in SECTION 13.1 are added and inserted in their appropriate places:
"COMMITTED EQUIPMENT 2 LINE" is a Credit Extension of up to $2,500,000.
"EQUIPMENT 2 ADVANCE" is defined in Section 2.1.5.
"EQUIPMENT 2 AVAILABILITY END DATE" is defined in Section 2.1.5.
"EQUIPMENT 2 MATURITY DATE" is June 30, 2008 for any Equipment 2 Advance made prior to July 1, 2006; and for each Equipment 2 Advance made on or after July 1, 2006, it is the date 24 months after each such Equipment 2 Advance, but no later than September 30, 2008 as to the last Equipment 2 Advance.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which
Bank may now have or may have in the future under or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) to Borrower's knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, (b) Borrower's payment of a fee in an amount equal to $12,500.00, (c) Bank's receipt of an Acknowledgment of Amendment and Reaffirmation of Guaranty substantially in the form attached hereto as Schedule 1, duly executed and delivered by each Guarantor, and (d) Bank's receipt of an additional Warrant issued by Borrower entitling Bank to purchase 171,875 shares of common stock of Borrower at an exercise price of $0.40 per share, with such Warrant to be on the same terms as the Warrant for 83,333 shares issued by Borrower to Bank and dated with an Issue Date of August 31, 2005.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
BANK BORROWER SILICON VALLEY BANK LIMELIGHT NETWORKS, INC. By: /s/ Travis D. Wood By: /s/ William H. Rinehart --------------------------------- ------------------------------------ Name: TRAVIS D. WOOD Name: William H. Rinehart Title: VICE PRESIDENT Title: President & CEO |
FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT to Loan and Security Agreement (this "Amendment") is entered into this 24th day of February, 2006, by and between Silicon Valley Bank ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of April 15, 2005, as amended (as the same may from time to time be further amended, modified, supplemented or restated, the "Loan Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower has requested that Bank further amend the Loan Agreement to increase and extend the Committed Revolving Line and to provide additional equipment term loan financing beyond that which was provided by the Third Amendment to Loan and Security Agreement dated October 27, 2005.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 SECTION 2.1.6 (EQUIPMENT 3 FACILITY). A new Section 2.1.6 is added to the Loan Agreement as follows:
2.1.6 Equipment 3 Facility.
(a) Through September 30, 2006 (the "Equipment 3 Availability End Date") but subject to subsection (c) of this Section 2.1.6 below, Bank will make advances (each an "Equipment 3 Advance" and, collectively, "Equipment 3 Advances") not exceeding the Committed Equipment 3 Line. The Equipment 3 Advances may only be used to finance or refinance Equipment purchased on or
after 90 days before the date of each Equipment 3 Advance and may not exceed 100% of the equipment invoice excluding taxes, shipping, warranty charges, freight discounts and installation expense. Soft costs may constitute up to $500,000 of the aggregate Equipment 3 Advances. Each Equipment 3 Advance must be for a minimum of $100,000. The number of Equipment 3 Advances is limited to 1 per month.
(b) Each Equipment 3 Advance made prior to 09/30/2006 shall amortize and be payable in 24 equal monthly payments of principal and interest beginning 10/31/2006 and continuing on the last day of each month thereafter. Until the first equal monthly payment of principal and interest is due on each Equipment 3 Advance made prior to 09/30/2006, interest only shall be payable monthly beginning on the last day of the month in which the Equipment 3 Advance is made and continuing on the last day of each month thereafter. Each Equipment 3 Advance made on 09/30/2006 shall amortize and be payable in 24 equal monthly payments of principal and interest beginning 10/31/2006 and continuing on the same day of each month thereafter. The final payment due on the applicable Equipment 3 Maturity Date shall include all outstanding principal and all accrued unpaid interest. Equipment 3 Advances when repaid may not be re-borrowed.
(c) Bank has no obligation to make any Equipment 3 Advance until Borrower has reported EBITDA of not less than $1,500,000 for the months of January and February, 2006, combined, as reflected in the monthly financial statements delivered to Bank pursuant to Section 6.2 hereof. As used herein "EBITDA" means consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrower's income (all a determined by GAAP).
(d) To obtain an Equipment 3 Advance, Borrower must notify Bank (the notice is irrevocable) by facsimile no later than 12:00 p.m. Pacific time one Business Day before the day on which the Equipment 3 Advance is to be made. The notice in the form of Exhibit B (Payment/Advance Form) must be signed by a Responsible Officer or designee and include a copy of invoices for the Equipment being financed and such additional information as Bank may reasonably request.
2.2 SECTION 2.4 (INTEREST RATE, PAYMENTS). The second sentence of subsection (a) of Section 2.4 is amended in its entirety and replaced with the following:
Equipment Advances and Equipment 2 Advances and Equipment 3 Advances accrue interest on the outstanding principal balance at a per annum rate equal to the Basic Rate.
The last sentence of subsection (b) of Section 2.4 is amended in its entirety and replaced with the following:
If any change in the law increases Bank's expenses or decreases its return from the Equipment Advances or the Equipment 2 Advances or the Equipment 3 Advances, Borrower will pay Bank upon request the amount of such increase or decrease.
2.3 SECTION 2.6 (FEES). Subsection (c) entitled "Early Termination Fees" of Section 2.6 is amended by adding the following clause (beginning immediately before the words "provided that"):
and a fully earned, non-refundable early termination fee of one percent (1%) of the outstanding principal balance of all Equipment 3 Advances shall be due upon voluntary or involuntary payment in full of Borrower's Obligations under the Committed Equipment 3 Line prior to the relevant Equipment 3 Maturity Dates and termination of Bank's obligation to lend the undisbursed portion of such Obligations under the Committed Equipment 3 Line;
2.4 SECTION 13 (DEFINITIONS). The following terms and their respective definitions set forth in SECTION 13.1 are amended in their entirety and replaced with the following:
"BASIC RATE" is, as of the date of the relevant Equipment Advance or Equipment 2 Advance or Equipment 3 Advance, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to 36 months as quoted in The Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%; provided, that, for any Equipment 3 Advance made on September 30, 2006, it is, as of the date of any such Equipment 3 Advance, the per annum rate of interest (based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note yield to maturity for a term equal to 24 months as quoted in The Wall Street Journal on the day of the Equipment Advance, plus (b) 4.25%.
"COMMITTED REVOLVING LINE" is an Advance of up to $1,500,000.
"CREDIT EXTENSION" is each Advance, Equipment Advance, Equipment 2 Advance, Equipment 3 Advance, Letter of Credit, or any other extension of credit by Bank for Borrower's benefit.
"REVOLVING MATURITY DATE" is April 13, 2007.
2.5 SECTION 13 (DEFINITIONS). The following terms and their respective definitions set forth in SECTION 13.1 are added and inserted in their appropriate places:
"COMMITTED EQUIPMENT 3 LINE" is a Credit Extension of up to $2,500,000.
"EQUIPMENT 3 ADVANCE" is defined in Section 2.1.6.
"EQUIPMENT 3 AVAILABILITY END DATE" is defined in Section 2.1.6.
"EQUIPMENT 3 MATURITY DATE" is September 30, 2008 for any Equipment 3 Advance made on or prior to September 30, 2006.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) to Borrower's knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or
authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, (b) Borrower's payment of a fee in an amount equal to $15,000, (c) Bank's receipt of an Acknowledgment of Amendment and Reaffirmation of Guaranty substantially in the form attached hereto as Schedule 1, duly executed and delivered by each Guarantor, and (d) Bank's receipt of an additional Warrant issued by Borrower entitling Bank to purchase 171,875 shares of common stock of Borrower at an exercise price of $0.40 per share, with such Warrant to be on the same terms as the Warrant for 171,875 shares issued by Borrower to Bank and dated with an Issue Date of October 20, 2005.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
BANK BORROWER SILICON VALLEY BANK LIMELIGHT NETWORKS, INC. By: /s/ TRAVIS D WOOD By: /s/ William H Rinehart --------------------------------- ------------------------------------ Name: TRAVIS D WOOD Name: William H Rinehart Title: VICE PRESIDENT Title: President & CEO |
FIFTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT to Loan and Security Agreement (this "Amendment") is entered into this 10 day of November, 2006, by and between SILICON VALLEY BANK ("Bank") and LIMELIGHT NETWORKS, INC., a Delaware corporation ("Borrower") whose address is 2220 West 14th Street, Tempe, AZ 85281.
RECITALS
A. Bank and Borrower have entered into that certain Loan and Security Agreement dated as of April 15, 2005, as amended (as the same may from time to time be further amended, modified, supplemented or restated, the "Loan Agreement").
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Borrower has requested that Bank further amend the Loan Agreement to increase and extend the Committed Revolving Line to support working capital requirements and to refinance existing debt to Bank and to provide additional equipment term loan financing beyond that which was provided by the original Loan Agreement, the Third Amendment to Loan and Security Agreement dated October 27, 2005 and the Fourth Amendment to Loan and Security Agreement dated February 24, 2006, to finance new and used equipment and related software.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT.
2.1 Section 2.1.1 (Revolving Advances) and Section 2.1.2 (Equipment Facility). Sections 2.1.1 and 2.1.2 are amended entirely and replaced with the following:
2.1.1 Revolving Advances
(a) (I) Bank will make Revolving Advances up to an aggregate amount of $1,000,000 and (II) thereafter Bank will make Revolving Advances (that exceed $1,000,000 in the aggregate) up to an aggregate amount not exceeding (i) the lesser of (A) S4,000,000, or (B) the Borrowing Base, minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iii) the amount of utilized Cash Management Services covered under the Cash Management Services Sublimit. Amounts borrowed under this Section may be repaid and reborrowed during the term of this Agreement.
(b) To obtain a Revolving Advance, Borrower must notify Bank as provided in Section 3.4(a).
(c) The Committed Revolving Line terminates on the Revolving Maturity Date, when all Revolving Advances are immediately payable. Interest on the Committed Revolving Line is payable monthly.
2.1.2 Equipment Facility.
(a) Until the close of business December 31, 2008, Bank will make advances (each an "Equipment Advance" and, collectively, "Equipment Advances") not exceeding the Committed Equipment Line. The Equipment Advances may only be used to finance or refinance Eligible Equipment purchased on or after 90 days before the date of each Equipment Advance and may not exceed 100% of the equipment invoices including the following soft costs ("Soft Costs") relating to such Equipment being financed by such Equipment Advance: taxes, shipping, warranty charges, freight discounts and installation expense. Soft Costs may constitute up to $2,500,000 of the aggregate Equipment Advances. Each Equipment Advance (except the final Equipment Advance) must be for a minimum of $3,000,000 and the number of Equipment Advances is limited to eight (8). Notwithstanding the foregoing, (i) upon or promptly after the date the Fifth Amendment to Loan and Security Agreement relating to this Agreement becomes effective (the "Fifth Effective Date"), one Equipment Advance in the amount of the then existing debt to Bank for the equipment loans made by Bank to Borrower prior to such Fifth Effective Date (approximately $7,500,000) (the "Repayment Advance") shall be advanced hereunder and (ii) one Equipment Advance in the aggregate amount of Eligible Equipment purchases made since June 1, 2006 and up to the Fifth Effective Date shall be advanced hereunder on or before November 30, 2006, provided that invoices for such Eligible Equipment dated within 150 days prior the date of such Equipment Advance are provided to Bank on or prior to the date of such Equipment Advance.
(b) Each Equipment Advance shall bear interest payable monthly
commencing 30 days following such Equipment Advance until the date which is six
(6) months following such Equipment Advance, and such Equipment Advance shall
then amortize and be payable in 54 consecutive, equal monthly payments of
principal plus accrued interest beginning on the date six months following such
Equipment Advance and continuing on the same day of each month thereafter. The
final payment due on the applicable Equipment Maturity Date shall include all
outstanding principal and all accrued unpaid interest. After repayment, no
Equipment Advances may be re-borrowed.
(c) To obtain an Equipment Advance, Borrower must notify Bank as provided in Section 3.4(a) and include a copy of invoices for the Equipment being financed, except in the case of the Repayment Advance, and such additional information as Bank may reasonably request.
2.2 Section 2.1.3 (Letters of Credit Sublimit) and Section 2.1.4 (Cash Management Services Sublimit). Sections 2.1.3 and 2.1.4 are each amended by changing the dollar amount of "$500,000" in each place where it appears to the dollar amount of "$1,000,000"; and by changing the term "Advances" in each place where it appears to the term "Revolving Advances".
2.3 Section 2.1.5 (Equipment 2 Facility) and Section 2.1.6 (Equipment 3 Facility). Sections 2.1.5 and 2.1.6 are deleted entirely.
2.4 Section 2.3 (Overadvances) and Section 2.4 (Interest Rate, Payments). Sections 2.3 and 2.4 are amended entirely and replaced with the following:
2.3 General Provisions Relating to the Advances; Overadvances.
(a) Each Advance shall, at Borrower's option in accordance with the terms
of this Agreement, be either in the form of a Prime Rate Advance or a LIBOR
Advance; provided that in no event shall Borrower maintain at any time LIBOR
Advances having more than one Interest Period per Advance. Borrower shall pay
interest accrued on the Advances at the rates and in the manner set forth in
Section 2.4{b).
(b) If Borrower's Obligations for Revolving Advances made under Section 2.1.1(a)(II) and under Sections 2.1.3, and 2.1.4 exceed the lesser of either (i) $4,000,000 or (ii) the Borrowing Base, Borrower must promptly pay Bank the excess.
2.4 Payment of Interest on the Credit Extensions.
(a) Computation of Interest. Interest on the Credit Extensions and all fees payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed in the period during which such interest accrues. In computing interest on any Credit Extension, the date of the making of such Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.
(b) Advances. Each Advance shall bear interest on the outstanding principal amount thereof from the date when made, continued or converted until paid in full at a rate per annum equal to the Prime Rate plus the Prime Rate Margin or the LIBOR Rate plus the LIBOR Rate Margin, as the case may be. On and after the expiration of any Interest Period applicable to any LIBOR Advance outstanding on the date of occurrence of an Event of Default or acceleration of the Obligations, the Effective Amount of such LIBOR Advance shall, during the continuance of such Event of Default or after acceleration, bear interest at a rate per annum equal to the Prime Rate plus five percent (5.00%). Pursuant to the terms hereof, interest on each Advance shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of any Advance pursuant to this Agreement for the portion of any Advance so prepaid and upon payment (including prepayment) in full thereof. All accrued but unpaid interest on the Advances shall be due and payable on the applicable maturity date.
(c) Default Interest. Except as otherwise provided in Section 2.4(b), after an Event of Default, Obligations shall bear interest five percent (5.00%) above the rate effective immediately before the Event of Default (the "DEFAULT RATE"). Payment or acceptance of the increased interest provided in this Section 2.4(c) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Bank.
(d) Prime Rate Advances. Each change in the interest rate of the Prime Rate Advances based on changes in the Prime Rate shall be effective on the effective date of such change and to the extent of such change. Bank shall use its best efforts to give Borrower prompt notice of any such change in the Prime Rate; provided, however, that any failure by Bank to provide Borrower with notice hereunder shall not affect Bank's right to make changes in the interest rate of the Prime Rate Advances based on changes in the Prime Rate.
(e) LIBOR Advances. The interest rate applicable to each LIBOR Advance shall be determined in accordance with Section 3.4(a) hereunder. Subject to Sections 3.6 and 3.7, such rate shall apply during the entire Interest Period applicable to such LIBOR Advance, and interest calculated thereon shall be payable on the Interest Payment Date applicable to such LIBOR Advance.
2.5 Section 2.6 (Fees). Subsection (c) entitled "Early Termination Fees" of Section 2.6 is amended entirely and replaced with the following:
(c) Early Termination Fees. A fully earned, non-refundable early termination fee of three-fourths of one percent (0.75%) of the outstanding principal balance of all Equipment Advances shall be due upon voluntary or involuntary payment in full of Borrower's Obligations under the Committed Equipment Line prior to the relevant Equipment Maturity Dates and termination of Bank's obligation to lend the undisbursed portion of such Obligations under the Committed Equipment Line if such payment and termination is made on or prior to the first anniversary of the Fifth Effective Date, and a fee of one-half of one percent (0.50%) of the outstanding principal balance of all Equipment Advances if such payment and
termination is made on or prior to the second anniversary of the Fifth Effective Date; provided that no such early termination fees shall be payable if Bank agrees to refinance and/or redocument this Agreement in another lending division of Bank (in Bank's sole discretion) prior to the relevant Maturity Dates or if such payment and termination is made as a direct result of an initial public offering of Borrower's equity securities.
And a new subsection (d) entitled "Unused Revolving Line Facility Fee" is added to Section 2.6 as follows:
(d) Unused Revolving Line Facility Fee. A fee (the "Unused Revolving Line Facility Fee"), payable quarterly, in arrears, by the 15th day of the month following each calendar quarter, in an amount equal to one-fourth of one percent (0.25%) per annum of the average unused portion of the Revolving Line, as determined by Bank. Borrower shall not be entitled to any credit, rebate or repayment of any Unused Revolving Line Facility Fee previously earned by Bank pursuant to this Section notwithstanding any termination of the Agreement or the suspension or termination of Bank's obligation to make loans and advances hereunder.
2.6 Section 3.2 (Conditions Precedent to All Credit Extensions).
Section 3.2 is amended entirely and replaced with the following and the
following Sections 3.3, 3.4, 3.5, 3.6 and 3.7 are added to the Agreement:
3.2 Conditions Precedent to all Credit Extensions. Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:
(a) timely receipt of a Notice of Borrowing and/or Payment/Advance Form, as applicable; and
(b) the representations and warranties in Section 5 shall be true in all material respects on the date of the Notice of Borrowing or Payment/Advance Form, as applicable, and on the effective date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower's representation and warranty on that date that the representations and warranties in Section 5 remain true in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date.
3.3 Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition to any Credit Extension. Borrower expressly agrees that the extension of a Credit Extension prior to the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower's obligation to deliver such item, and any such extension in the absence of a required item shall be in Bank's sole discretion.
3.4 Procedure for the Borrowing of Advances.
(a) Subject to the prior satisfaction of all other applicable conditions to the making of an Advance set forth in this Agreement, each Advance shall be made upon Borrower's irrevocable written notice delivered to Bank in the form of a Notice of Borrowing and, if applicable, a Payment/Advance Form, each executed by a Responsible Officer of Borrower or his or her designee or without instructions if the Advances are necessary to meet Obligations which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank suffers due to such reliance. Such Notice of Borrowing must be received by Bank prior to 11:00 a.m. Pacific time, (i) at least three (3) Business Days prior to the requested
Funding Date, in the case of LIB0R Advances, and (ii) at least one (1) Business Day prior to the requested Funding Date, in the case of Prime Rate Advances, specifying:
(1) the amount of the Advance, which, if a LIB0R Advance is requested, shall be in an aggregate minimum principal amount of $1,000,000 or in any integral multiple of $1,000,000 in excess thereof;
(2) the requested Funding Date:
(3) whether the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and
(4) the duration of the Interest Period applicable to any such LIBOR Advances included in such notice; provided that if the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Advance comprised of LIBOR Advances, such Interest Period shall be one (1) month.
(b) The proceeds of all such Advances will then be made available to Borrower on the Funding Date by Bank by transfer to the Designated Deposit Account and, subsequently, by wire transfer to such other account as Borrower may instruct in the Notice of Borrowing. No Advances shall be deemed made to Borrower, and no interest shall accrue on any such Advance, until the related funds have been deposited in the Designated Deposit Account.
3.5 Conversion and Continuation Elections.
(a) So long as (i) no Event of Default or Default exists; (ii) Borrower shall not have sent any notice of termination of this Agreement; and (iii) Borrower shall have complied with such customary procedures as Bank has established from time to time for Borrower's requests for LIBOR Advances, Borrower may, upon irrevocable written notice to Bank:
(1) elect to convert on any Business Day, Prime Rate Advances in an amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof into LIBOR Advances;
(2) elect to continue on any Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date (or any part thereof in an amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof); provided, that if the aggregate amount of LIBOR Advances shall have been reduced, by payment, prepayment, or conversion of part thereof, to be less than $1,000,000, such LIBOR Advances shall automatically convert into Prime Rate Advances, and on and after such date the right of Borrower to continue such Advances as, and convert such Advances into, LIBOR Advances shall terminate; or
(3) elect to convert on any Interest Payment Date any LIBOR Advances maturing on such Interest Payment Date (or any part thereof in an amount equal to $1,000,000 or any integral multiple of $1,000,000 in excess thereof) into Prime Rate Advances.
(b) Borrower shall deliver a Notice of Conversion/Continuation in accordance with Section 10, entitled Notices, to be received by Bank prior to 11:00 a.m. Pacific time at least (i) three (3) Business Days in advance of the Conversion Date or Continuation Date, if any Advances are to be converted into or continued as LIBOR Advances; and (ii) one (1) Business Day in advance of the Conversion Date, if any Advances are to be converted into Prime Rate Advances, in each case specifying the:
(1) proposed Conversion Date or Continuation Date;
(2) aggregate amount of the Advances to be converted or continued which, if any Advances are to be converted into or continued as LIBOR Advances, shall be in an aggregate minimum principal amount of $1,000,000 or in any integral multiple of $1,000,000 in excess thereof;
(3) nature of the proposed conversion or continuation; and
(4) duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to any LIBOR Advances, Borrower shall have timely failed to select a new Interest Period to be applicable to such LIBOR Advances, Borrower shall be deemed to have elected to convert such LIBOR Advances into Prime Rate Advances.
(d) Any LIBOR Advances shall, at Bank's option, convert into Prime Rate
Advances in the event that (i) an Event of Default or Default shall exist, or
(ii) the aggregate principal amount of the Prime Rate Advances which have been
previously converted to LIBOR Advances, or the aggregate principal
amount of existing LIBOR Advances continued, as the case may be, at the beginning of an Interest Period shall at any time during such Interest Period exceed the Revolving Line. Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at its option, charge the Designated Deposit Account or any other account Borrower maintains with Bank) any amounts required to compensate Bank for any loss (including loss of anticipated profits), cost, or expense incurred by Bank, as a result of the conversion of LIBOR Advances to Prime Rate Advances pursuant to any of the foregoing.
(e) Notwithstanding anything to the contrary contained herein, Bank shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof shall be deemed to apply as if Bank had purchased such deposits to fund the LIBOR Advances.
3.6 Special Provisions Governing LIBOR Advances. Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to LIBOR Advances as to the matters covered:
(a) Determination of Applicable Interest Rate. As soon as practicable on each Interest Rate Determination Date, Bank shall determine (which determination shall, absent manifest error in calculation, be final, conclusive and binding upon all parties) the interest rate that shall apply to the LIBOR Advances for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower.
(b) Inability to Determine Applicable Interest Rate. In the event that Bank shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any LIBOR Advance, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Advance on the basis provided for in the definition of LIBOR, Bank shall on such date give notice (by facsimile or by telephone confirmed in writing) to Borrower of such determination, whereupon (i) no Advances may be made as, or converted to, LIBOR Advances until such time as Bank notifies Borrower that the circumstances giving rise to such notice no longer exist, and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with respect to Advances in respect of which such determination was made shall be deemed to be rescinded by Borrower.
(c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall compensate Bank, upon written request by Bank (which request shall set forth the manner and method of computing such compensation), for all reasonable losses, expenses and liabilities, if any (including any interest paid by Bank to lenders of funds borrowed by it to make or carry its LIBOR Advances and any loss, expense or liability incurred by Bank in connection with the liquidation or re-employment of such funds) such that Bank may incur: (i) if for any reason (other than a default by Bank or due to any failure of Bank to fund LIBOR Advances due to impracticability or illegality under Sections 3.7(d) and 3.7(e)) a borrowing or a conversion to or continuation of any LIBOR Advance does not occur on a date specified in a Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be, or (ii) if any principal payment or any conversion of any of its LIBOR Advances occurs on a date prior to the last day of an Interest Period applicable to that Advance.
(d) Assumptions Concerning Funding of LIBOR Advances. Calculation of all amounts payable to Bank under this Section 3.6 and under Section 3.4 shall be made as though Bank had actually funded each of its relevant LIBOR Advances through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to the definition of LIBOR Rate in an amount equal to the amount of such LIBOR Advance and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund each of its LIBOR Advances in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 3.6 and under Section 3.4.
(e) LIBOR Advances After Default. After the occurrence and during the continuance of an Event of Default, (i) Borrower may not elect to have an Advance be made or continued as, or converted to,
a LIBOR Advance after the expiration of any Interest Period then in effect for such Advance and (ii) subject to the provisions of Section 3.6(c), any Notice of Conversion/Continuation given by Borrower with respect to a requested conversion/continuation that has not yet occurred shall be deemed to be rescinded by Borrower and be deemed a request to convert or continue Advances referred to therein as Prime Rate Advances.
3.7 Additional Requirements/Provisions Regarding LIBOR Advances.
(a) If for any reason (including voluntary or mandatory prepayment or acceleration), Bank receives all or part of the principal amount of a LIBOR Advance prior to the last day of the Interest Period for such Advance, Borrower shall immediately notify Borrower's account officer at Bank and, on demand by Bank, pay Bank the amount (if any) by which (i) the additional interest which would have been payable on the amount so received had it not been, received until the last day of such Interest Period exceeds (ii) the interest which would have been recoverable by Bank by placing the amount so received on deposit in the certificate of deposit markets, the offshore currency markets, or United States Treasury investment products, as the case may be, for a period starting on the date on which it was so received and ending on the last day of such Interest Period at the interest rate determined by Bank in its reasonable discretion. Bank's determination as to such amount shall be conclusive absent manifest error.
(b) Borrower shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may determine to be necessary to compensate it for any costs incurred by Bank that Bank determines are attributable to its making or maintaining of any amount receivable by Bank hereunder in respect of any Advances relating thereto (such increases in costs and reductions in amounts receivable being herein called "Additional Costs"), in each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to Bank under this Agreement in respect of any Advances (other than changes which affect taxes measured by or imposed on the overall net income of Bank by the jurisdiction in which Bank has its principal office);
(ii) imposes or modifies any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with, or other liabilities of Bank (including any Advances or any deposits referred to in the definition of LIBOR); or
(iii) imposes any other condition affecting this Agreement (or any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the Closing Date which
will entitle Bank to compensation pursuant to this Section 3.7 as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Bank will furnish Borrower with a statement setting forth the
basis and amount of each request by Bank for compensation under this Section
3.7. Determinations and allocations by Bank for purposes of this Section 3.7 of
the effect of any Regulatory Change on its costs of maintaining its obligations
to make Advances, of making or maintaining Advances, or on amounts receivable by
it in respect of Advances, and of the additional amounts required to compensate
Bank in respect of any Additional Costs, shall be conclusive absent manifest
error.
(c) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation, or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank, or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change, or compliance
(taking into consideration policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within fifteen
(15) days after demand by Bank, Borrower shall pay to Bank such additional
amount or amounts as will compensate Bank for such reduction. A statement of
Bank claiming compensation under this Section 3.7(c) and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error.
(d) If, at any time, Bank, in its sole and absolute discretion, determines that (i) the amount of LIBOR Advances for periods equal to the corresponding Interest Periods are not available to Bank in the offshore currency interbank markets, or (ii) LIBOR does not accurately reflect the cost to Bank of lending the LIBOR Advances, then Bank shall promptly give notice thereof to Borrower. Upon the giving of such notice, Bank's obligation to make the LIBOR Advances shall terminate; provided, however, Advances shall not terminate if Bank and Borrower agree in writing to a different interest rate applicable to LIBOR Advances.
(e) If it shall become unlawful for Bank to continue to fund or maintain
any LIBOR Advances, or to perform its obligations hereunder, upon demand by
Bank, Borrower shall prepay the Advances in full with accrued interest thereon
and all other amounts payable by Borrower hereunder (including, without
limitation, any amount payable in connection with such prepayment pursuant to
Section 3.7(a)). Notwithstanding the foregoing, to the extent a determination by
Bank as described above relates to a LIBOR Advance then being requested by
Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Borrower shall have the option, subject to the
provisions of Section 3.6(c), to (i) rescind such Notice of Borrowing or Notice
of Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives
notice of its determination as described above, or (ii) modify such Notice of
Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or
to have outstanding Advances converted into or continued as Prime Rate Advances
by giving notice (by facsimile or by telephone confirmed in writing) to Bank of
such modification on the date on which Bank gives notice of its determination as
described above.
2.7 Section 6.2 (Financial Statements, Reports, Certificates), Subsection (b) of Section 6.2 is amended entirely and replaced with the following:
(b) Within 20 days after the last day of each month, Borrower will deliver to Bank aged listings of accounts receivable and accounts payable, and, after outstanding Revolving Advances exceed $1,000,000, within 20 days after the last day of each month and at the time of any request for a Revolving Advance, Borrower will deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit C.
2.8 Section 6.7 (Financial Covenants). Section 6.7 is amended entirely and replaced with the following:
6.7 Financial Covenants. Commencing as of November 30, 2006, Borrower will maintain as of the last day of each month:
(i) Minimum Adjusted Quick Ratio. A ratio of Quick Assets to Current Liabilities of at least 1.50 to 1.00.
(ii) Minimum Fixed Charge Coverage Ratio. A ratio of Borrower's (a) consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrower's income (all as determined by GAAP) minus unfunded capital expenditures and minus cash taxes for the preceding nine-month period to (b) current maturities of long term debt plus interest expense paid or payable during the preceding nine-month period of at least 1.50 to 1.00, measured monthly on a rolling 9 month basis.
(iii) Minimum Tangible Net Worth. A Tangible Net Worth of at least $30,000,000, increasing by 50% of quarterly Net Income each fiscal quarter.
2.9 Section 13 (Definitions). The following terms and their respective definitions set forth in Section 13.1 are amended in their entirety and replaced with the following:
"Advance" is a Revolving Advance or an Equipment Advance, or both Revolving Advances and Equipment Advances, collectively, as the context requires.
"Business Day" is any day other than a Saturday, Sunday or other day on which banking institutions in the State of California are authorized or required by law or other governmental action to close, except that if any determination of a "Business Day" shall relate to a LIBOR Advance, the term "Business Day" shall also mean a day on which dealings are carried on in the London interbank market.
"Committed Equipment Line" is an Equipment Advance or Equipment Advances in an aggregate maximum amount of up to $25,000,000.
"Committed Revolving Line" is a Revolving Advance or Revolving Advances in an aggregate maximum amount of up to $5,000,000.
"Credit Extension" is each Revolving Advance, Equipment Advance, Letter of Credit, or any other extension of credit by Bank for Borrower's benefit.
"Equipment Maturity Date" is the earliest of (a) the date sixty (60) months after the respective Equipment Advance or (b) the date of acceleration after the occurrence and continuance of an Event of Default.
"Quick Assets" is, on any date, Borrower's consolidated, unrestricted cash and cash equivalents held at Bank, plus all Accounts.
"Revolving Maturity Date" is the earliest of (a) October 31, 2009 [the third (3rd) anniversary of the Fifth Effective Date] or (b) the date of acceleration after the occurrence and continuance of an Event of Default.
"Schedule" is any attached schedule of exceptions or Perfection Certificate delivered to Bank.
The definition of "Eligible Accounts" set forth in Section 13.1 is amended by changing the dollar amount of "$125,000" set forth in subpart (e) of said definition to the dollar amount of "$400,000"
The following terms and their respective definitions are deleted from Section 13.1 in their entirety:
Basic Rate, Committed Equipment 2 Line, Committed Equipment 3 Line, Equipment Availability End Date, Equipment 2 Advance, Equipment 2 Availability End Date, Equipment 2 Maturity Date, Equipment 3 Advance, Equipment 3 Availability End Date, and Equipment 3 Maturity Date.
The following terms and their respective definitions set forth below are added to Section 13.1 and inserted in their appropriate alphabetical order:
"Continuation Date" means any date on which Borrower elects to continue a LIBOR Advance into another Interest Period.
"Conversion Date" means any date on which Borrower elects to convert a Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.
"Default Rate" is defined in Section 2.4(c).
"Designated Deposit Account" is Borrower's deposit account, Account Number 3300467946, maintained with Bank.
"EBITDA" is Borrower's consolidated earnings before interest expense, income taxes, depreciation, amortization of intangible assets and other non-cash charges made to Borrower's income (all a determined by GAAP).
"Effective Amount" means with respect to any Advances on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowing and prepayments or repayments thereof occurring on such date.
"Eligible Equipment" is (a) new or used general purpose computer equipment, office equipment, test and laboratory equipment, and furnishings, subject to the limitations set forth herein, and (b) leasehold improvements, intangible property such as computer software and software licenses, equipment specifically designed or manufactured for Borrower, other intangible property, limited use property and other similar property and soft costs approved by Bank, including taxes, shipping, warranty charges, freight discounts and installation expenses, all of which complies with all of Borrower's representations and warranties to Bank and which is acceptable to Bank in all respects and in which Bank has a first priority Lien.
"Fifth Effective Date" is defined in Section 2.1.2(a).
"Funded Debt" is, on any date, Borrower's consolidated Indebtedness.
"Funding Date" is any date on which a Credit Extension is made to or on account of Borrower which shall be a Business Day.
"Interest Payment Date" means, with respect to any LIBOR Advance, the last day of each Interest Period applicable to such LIBOR Advance and, with respect to Prime Rate Advances, the last day of each month (or, if the last day of the month does not fall on a Business Day, then on the first Business Day following such date), and each date a Prime Rate Advance is converted into a LIBOR Advance to the extent of the amount converted to a LIBOR Advance.
"Interest Period" means, as to any LIBOR Advance, the period
commencing on the date of such LIBOR Advance, or on the
conversion/continuation date on which the LIBOR Advance is converted into
or continued as a LIBOR Advance, and ending on the date that is one (1),
two (2) or three (3) months thereafter, in each case as Borrower may elect
in the applicable Notice of Borrowing or Notice of Conversion/Continuation;
provided, however, that (a) no Interest Period with respect to any LIBOR
Advance shall end later than the Revolving Maturity Date or any applicable
Equipment Maturity Date, (b) the last day of an Interest Period shall be
determined in accordance with the practices of the LIBOR interbank market
as from time to time in effect, (c) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless, in the case of a LIBOR
Advance, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the preceding Business Day, (d) any Interest Period pertaining
to a LIBOR Advance that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period, and
(e) interest shall accrue from and include the first Business Day of an
Interest Period but exclude the last Business Day of such Interest Period.
"Interest Rate Determination Date" means each date for calculating the LIBOR for purposes of determining the interest rate in respect of an Interest Period. The Interest Rate Determination Date shall be the second Business Day prior to the first day of the related Interest Period for a LIBOR Advance.
"LIBOR Rate" means, for each Interest Period in respect of LIBOR Advances comprising part of the same Advance or Advances, an interest rate per annum (rounded upward to
the nearest 1/16th of one percent (0.0625%)) equal to LIBOR for such Interest Period divided by one (1) minus the Reserve Requirement for such Interest Period.
"LIBOR Rate Margin" is, at any date of determination, the applicable interest rate factor set forth in the column entitled "LIBOR Margin" in the applicable table below set opposite the corresponding ratio or range of ratios in the column entitled "Funded Debt to Trailing 12-Month EBITDA" in the tables identified below for Revolving Advances or Equipment Advances, as applicable, in which Borrower's then current ratio of Funded Debt to Trailing 12-Month EBITDA would fall:
For Revolving Advances:
Pricing Funded Debt to LIBOR Prime Level Trailing 12-Month EBITDA Margin Margin ------- ------------------------ ------ ------ I < 1.50x 2.00% 0.00% II > or = 1.50x and < 2.00x 2.25% 0.50% III > or = 2.00x and < 2.50x 2.50% 0.75% IV > or = 2.50x and < 3.00x 2.75% 1.00% V > or = 3.00x 3.00% 1.25% |
For Equipment Advances:
Pricing Funded Debt to LIBOR Prime Level Trailing 12-Month EBITDA Margin Margin ------- ------------------------ ------ ------ I < 1.50x 2 25% 0.25% II > or = 1.50x and < 2.00x 2.50% 0.75% III > or = 2.00x and < 2.50x 2.75% 1.00% IV > or = 2.50x and < 3.00x 3.00% 1.25% V > or = 3.00x 3.25% 1.50% |
"LIBOR" means, for any Interest Rate Determination Date with respect to an Interest Period for any Advance to be made as, continued as or converted into a LIBOR Advance, the rate of interest per annum determined by Bank to be the per annum rate of interest at which deposits in United States Dollars are offered to Bank in the London interbank market (rounded upward, if necessary, to the nearest 1/100th of one percent (0.01%)) in which Bank customarily participates at 11:00 a.m. (local time in such interbank market) two (2) Business Days prior to the first day of such Interest Period for a period approximately equal to such Interest Period and in an amount approximately equal to the amount of such Advance.
"LIBOR Advance" means an Advance that bears interest based on the LIBOR Rate.
"Net Income" means, as calculated on a consolidated basis for Borrower and its Subsidiaries for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.
"Notice of Borrowing" means a notice given by Borrower to Bank in accordance with Section 3.4(a), substantially in the form of Exhibit E attached, with appropriate insertions.
"Notice of Conversion/Continuation" means a notice given by Borrower to Bank in accordance with Section 3.5, substantially in the form of Exhibit F. attached, with appropriate insertions.
"Payment/Advance Form" is a Loan Payment/Advance Request Form in the form attached as Exhibit B.
"Prime Rate Advance" means an Advance that bears interest based on the Prime Rate.
"Prime Rate Margin" is, at any date of determination, the applicable interest rate factor set forth in the column entitled "Prime Margin" in the applicable table below set opposite the corresponding ratio or range of ratios in the column entitled "Funded Debt to Trailing 12-Month EBITDA" in the tables identified below for Revolving Advances or Equipment Advances, as applicable, in which Borrower's then current ratio of Funded Debt to Trailing 12-Month EBITDA would fail:
For Revolving Advances:
Pricing Funded Debt to LIBOR Prime Level trailing 12-Month EBITDA Margin Margin ------- ------------------------ ------ ------ I < 1.50x 2.00% 0.00% II > or = 1.50x and < 2.00x 2.25% 0.50% III > or = 2.00x and < 2.50x 2.50% 0.75% IV > or = 2.50x and < 3.00x 2.75% 1.00% V > or = 3.00x 3.00% 1.25% |
For Equipment Advances:
Pricing Funded Debt to LIBOR Prime Level trailing 12-Month EBITDA Margin Margin ------- ------------------------ ------ ------ I < 1.50x 2 25% 0.25% II > or = 1.50x and < 2.00x 2.50% 0.75% III > or = 2.00x and < 2.50x 2.75% 1.00% IV > or = 2.50x and < 3.00x 3.00% 1.25% V > or = 3.00x 3.25% 1.50% |
"Regulatory Change" means, with respect to Bank, any change on or after the date of this Agreement in United States federal, state, or foreign laws or regulations, including Regulation D, or the adoption or making on or after such date of any interpretations, directives, or requests applying to a class of lenders including Bank, of or under any United States federal or state, or any foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof.
"Reserve Requirement" means, for any Interest Period, the average maximum rate at which reserves (including any marginal, supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D against "Eurocurrency liabilities" (as such term is used in Regulation D) by member banks of the Federal Reserve System. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by Bank by reason of any Regulatory Change against (a) any category of liabilities which includes deposits by reference to which the LIBOR Rate is to be determined as provided in the definition of LIBOR or (b) any category of extensions of credit or other assets which include Advances.
"Trailing 12-Month EBITDA" is, at any date of determination, Borrower's EBITDA, as of the most recent month end, for the most recent twelve (12) consecutive months.
2.9A Exhibits C and D attached to the Loan Agreement are amended entirely and replaced with Exhibits C and D attached hereto and Exhibits E and F attached hereto are added to the Loan Agreement.
3. LIMITATION OF AMENDMENTS.
3.1 The amendments set forth in SECTION 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
4. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) to Borrower's knowledge no Event of Default has occurred and is continuing;
4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors' rights.
5. COUNTERPARTS. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
6. EFFECTIVENESS. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto, (b)
Borrower's payment to Bank of a fee in an amount equal to $112,500.00, and (c)
Bank's receipt of (i) an Acknowledgment of Amendment and Reaffirmation of
Guaranty substantially in the form attached hereto as Schedule 1, duly executed
and delivered by each Guarantor, (ii) a Perfection Certificate on Bank's form
therefore, (iii) an Addendum to Intellectual Property Security Agreement, and
(iv) the proceeds of the Repayment Advance being made under Section 2.1.2(a) as
amended by this Amendment.
7. GOVERNING LAW. This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of Arizona.
8. MISCELLANEOUS. All of the provisions in Sections 10, 11 and 12 of the Loan Agreement which are not already included in this Amendment are incorporated in this Amendment by this reference as if fully set forth herein, except that the references in the Loan Agreement to the term "this Agreement" and words of similar import shall mean this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
BANK: BORROWER: SILICON VALLEY BANK LIMELIGHT NETWORKS, INC. By: /s/ Travis D. Wood By: /s/ William H. Rinehart --------------------------------- ------------------------------------ Name: TRAVIS D. WOOD Name: William H. Rinehart Title: VICE PRESIDENT Title: President & CEO |
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower LIMELIGHT NETWORKS, INC. Bank: Silicon Valley Bank 14300 Northsight Boulevard, Suite 203, Scottsdale, Arizona 85260 |
Commitment Revolving Line: $5,000,000
ACCOUNTS RECEIVABLE 1. Accounts Receivable Book Value as of __________ $___________ 2. Additions (please explain on reverse) $___________ 3. TOTAL ACCOUNTS RECEIVABLE $___________ ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) 4. Amounts over 90 days due $___________ 5. Balance of 50% over 90 day accounts $___________ 6. Credit balances over 90 days $___________ 7. Concentration Limits $___________ 8. Foreign Accounts** $___________ 9. Federal Governmental Accounts $___________ 10. Contra Accounts $___________ 11. Promotion or Demo Accounts $___________ 12. Intercompany/Employee Accounts $___________ 13. Other (please explain on reverse) $___________ 14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $___________ 15. Eligible Accounts (#3 minus #14) $___________ 16. LOAN VALUE OF ACCOUNTS (80% of #15) $___________ ** except for up to $400,000 from UK eligibles BALANCES 17. Maximum Loan Amount $ 4,000,000 18. Total Funds Available [Lesser of #17 or #16] $___________ 19. Present balance owing on Line of Credit minus $1,000,000 $___________ 20. Outstanding under Sublimits (LC or CM) $___________ 21. RESERVE POSITION (#18 minus #19 and #20) $___________ |
The undersigned represents and warrants that this is true, complete and correct, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank.
COMMENTS: BANK USE ONLY LIMELIGHT NETWORKS, INC. Rec'd by: ------------------------------ Auth. Signer By: Date: --------------------------------- ---------------------------------- Authorized Signer Verified: ------------------------------ Auth. Signer Date: ---------------------------------- |
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
14300 Northsight Boulevard, Suite 203
Scottsdale, Arizona 85260
FROM: LIMELIGHT NETWORKS, INC.
The undersigned Responsible Officer of LIMELIGHT NETWORKS, INC. ("Borrower") certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending _______ with all required covenants except as noted below and (ii) all representations and warranties in the Agreement are true and correct in all material respects on this date. In addition, the undersigned certifies that Borrower, and each Subsidiary, has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Responsible Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.
Please Indicate compliance status by circling Yes/No under "Complies" column.
Reporting Covenant Required Complies ------------------ -------- -------- Monthly financial statements + CC Monthly within 20 days Yes No Annual (Audited) FYE within 120 days Yes No A/R & A/P Agings Monthly within 20 days Yes No A/R Audit Initial and Annual Yes No Borrowing Base Certificate Monthly within 20 days* Yes No Annual financial projections 30 days prior to FYE Yes No |
* after Revolving Advances exceed $1,000,000
Financial Covenant Required Actual Complies ------------------ -------- ------ -------- Maintain on a Monthly Basis: Minimum (Adjusted Quick Ratio) 1.50:1.00 ____:1.00 Yes No Minimum Fixed Charge Coverage Ratio 1.50:1.00 ____:1.00 Yes No Minimum Tangible Net Worth $30,000,000 $_________ Yes No + 50% of Qtrly NI ea FQ |
For interest rate margin purposes:
Ratio of Funded Debt to Training 12-Month EBITDA, as of end of month is:
_______:1.00
Have there been updates to Borrower's intellectual property? Yes/No
Borrower only has deposit accounts located at the following institutions:
______________________________.
Comments Regarding Exceptions: See Attached.
Sincerely, BANK USE ONLY LIMELIGHT NETWORKS, INC. Received by: --------------------------- ---------------------------------- AUTHORIZED SIGNER SIGNATURE Date: ---------------------------------- ---------------------------------- TITLE Verified: ---------------------------------- ------------------------------ DATE AUTHORIZED SIGNER Date: ---------------------------------- |
Compliance Status: Yes
EXHIBIT E
FORM OF NOTICE OF BORROWING
LIMELIGHT NETWORKS, INC.
Date: _______________________
TO: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attention: Corporate Services Department
RE: Loan and Security Agreement dated as of April 15, 2005 (as amended, modified, supplemented or restated from time to time, the "Loan Agreement"), by and between Limelight Networks, Inc. ("Borrower") and Silicon Valley Bank (the "Bank")
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein and
used herein as so defined, and hereby gives you notice irrevocably, pursuant to
Section 3.4(a) of the Loan Agreement, of the borrowing of an Advance.
1. The Funding Date, which shall be a Business Day, of the requested borrowing is __________________.
2. The aggregate amount of the requested borrowing is $_________________.
3. The requested Advance shall consist of $_______________ of Prime Rate Advances and $_______________________ of LIBOR Advances.
4. The duration of the interest Period for the LIBOR Advances included in the requested Advance shall be ________ months.
The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Advance before and after giving effect thereto, and to the application of the proceeds therefrom, as applicable:
(a) all representations and warranties of Borrower contained in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date;
(b) no Default or Event of Default has occurred and is continuing, or would result from such proposed Advance; and
(c) if the requested Advance is to be a Revolving Advance, such Revolving Advance will not cause the aggregate principal amount of the outstanding Revolving Advances exceeding $1,000,000 to exceed, as of the designated Funding Date, (i) the lesser of (A) $4,000,000 or (B) the Borrowing Base minus (ii) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and minus (iii) the aggregate outstanding Revolving Advances (including any amounts used for Cash Management Services) exceeding $1,000,000.
BORROWER LIMELIGHT NETWORKS, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
For internal Bank use only
LIBOR Pricing Date LIBOR LIBOR Variance Maturity Date ------------------ ----- -------------- ------------- ___% |
EXHIBIT F
FORM OF NOTICE OF CONVERSION/CONTINUATION
LIMELIGHT NETWORKS, INC.
Date __________________
TO: SILICON VALLEY BANK
3003 Tasman Drive
Santa Clara, CA 95054
Attention: Corporate Services Department
RE: Loan and Security Agreement dated as of April 15, 2005 (as amended, modified, supplemented or restated from time to time, the "Loan Agreement"), by and between Limelight Networks, Inc. ("Borrower") and Silicon Valley Bank (the "Bank")
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 3.5 of the Loan Agreement, of the [conversion]
[continuation] of the Advances specified herein, that:
1. The date of the [conversion] [continuation] is _______________, 20___.
2. The aggregate amount of the proposed Advances to be [converted] is $_______ _______________or [continued] is $______________________.
3. The Advances are to be [converted into] [continued as] [LIBOR] [Prime Rate] Advances.
4. The duration of the Interest Period for the LIBOR Advances included in the
[conversion] [continuation] shall be_____months.
The undersigned, on behalf of Borrower, hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [conversion] [continuation], before and after giving effect thereto and to the application of the proceeds therefrom:
(a) all representations and warranties of Borrower stated in the Loan Agreement are true, accurate and complete in all material respects as of the date hereof; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and
(b) no Default or Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation].
BORROWER LIMELIGHT NETWORKS, INC. By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
For internal Bank use only
LIBOR Pricing Date LIBOR LIBOR Variance Maturity Date ------------------ ----- -------------- ------------- ___% |
SCHEDULE 1
ACKNOWLEDGMENT OF AMENDMENT
AND
REAFFIRMATION OF GUARANTY
Section 1. Guarantor hereby acknowledges and confirms that it has reviewed and approved the terms and conditions of the Fifth Amendment to Loan and Security Agreement dated as of even date herewith (the "Amendment").
Section 2. Guarantor hereby consents to the Amendment and agrees that the Unconditional Guaranty of Guarantor dated April 15, 2005 relating to the Obligations of Borrower under the Loan Agreement shall continue in full force and effect, shall be valid and enforceable and shall not be impaired or otherwise affected by the execution of the Amendment or any other document or instrument delivered in connection herewith.
Section 3. Guarantor represents and warrants that, after giving effect to the Amendment, all representations and warranties contained in the Guaranty are true, accurate and complete as if made the date hereof.
Dated as of___________, 2006
GUARANTOR [INSERT NAME] By: ------------------------------------ Name: ---------------------------------- Title: --------------------------------- |
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 21, 2007, in the Registration Statement (Form S-1) and related Prospectus of Limelight Networks, Inc. for the registration of shares of its Class A common stock.
/s/ Ernst & Young LLP Phoenix, Arizona March 21, 2007 |