Document:

exv10w4

 

Exhibit 10.4

April 23, 2007

Mr. Curtis Broome

c/o Natural Health Trends Corp.

2050 Diplomat Drive

Dallas, Texas 75234

Re: Employment Terms

Dear Curtis:

     I am pleased to set forth the terms and conditions of your employment with Natural Health
Trends Corp. (the “Company”), effective as of April 23, 2007 (the “Commencement Date”). We look
forward to your significant contributions toward the achievement of our goals.

The Position

     You will continue to serve the Company as President of NHT Global, with the authority and
responsibility to direct, manage and supervise all of the Company’s markets worldwide. You will be
an executive officer of the Company and will report to the President of the Company.

Compensation Package

     Your base salary is $250,000 per year, subject to a minimum of 3% annual increase per year
every January 1st as approved by the Board, and you will also be eligible to receive
annual incentive compensation, in accordance with the Company’s Annual Incentive Plan. The
incentive bonus will be paid in cash immediately following the completion of the Company’s year end
audit of its financial statements.

Housing Allowance

     You will also be provided with a housing and living allowance equal to $80,000 per annum for
the period of time during which you reside in Hong Kong. This housing and living allowance may be
evaluated by an independent appraiser retained by the Company from time to time. If any such
appraisal reveals that an adjustment is warranted, this housing and living allowance will be
increased or decreased accordingly.

Benefits Package

     Your compensation will also include participation in our standard benefits program available
to our U.S. based employees.

Equity Participation

     You will be eligible for a “staking grant” of restricted shares no later than April 23 2007 in
accordance with the Company’s 2005 Stock Option Plan, as amended. The restricted shares will vest
over a three year period on a pro rata quarterly basis following the Commencement Date (unless your
employment with the Company is sooner terminated). You will also be entitled to an annual equity
grant in accordance with the Company Annual Incentive Plan or Annual Equity Plan.

Vacation

     You will be entitled to four (4) weeks vacation per annum, in accordance with the Company’s
vacation policy.

Severance

     You will be entitled to Severance Payments (as defined below) if any of the following events
occur: (i) the Company terminates you without Cause (as defined below) during the period
commencing on the date that is thirty (30) days prior to a Change of Control (as defined below)
through and including the date that is 18 months following such Change of Control (a “Change of
Control Termination”); (ii) you

 

 

Mr. Curtis Broome

April 23, 2007

Page 2 of 3

provide the Company with written notice of your resignation for Good Reason (as defined below) and
the Company has not cured such event within 30 days following its receipt of such written notice;
or (iii) the Company terminates you without Cause (other than in connection with a Change of
Control as contemplated in (i) above).

     However, in order to receive any Severance Payments you must execute and deliver to the
Company a full general release of all claims against the Company and its affiliates in form and
substance satisfactory to the Company.

     As used herein, the term:

     (a) “Severance Payments” shall mean the continuation of the payment of your base salary then
in effect (plus health and medical insurance coverage as previously provided to you or, if required
in lieu thereof, COBRA payments providing such coverage) for a period of one (1) years following
the termination date, or until such earlier date on which you become engaged in any Competitive
Activity (as defined in the Non-Competition Agreement) or otherwise breach the terms and conditions
of the Non-Competition Agreement (each, a “Severance Payment Termination Event); provided however,
that with respect to a Change of Control Termination, the Employee shall be entitled to receive
Severance Payments equal to your base salary for two (2) years, due and payable to you in a lump
sum 30 days after the termination date; ;

     (b) “Cause” shall include, without limitation, the following: (i) failure or neglect, by you
to perform the duties of your position; (ii) your failure to obey orders given by the Company or
your supervisors; (iii) your misconduct in connection with the performance of any of your duties,
including, without limitation, misappropriation of funds or property of the Company, securing or
attempting to secure personally any profit in connection with any transaction entered into on
behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on
Company premises or to which the Company is subject; (iv) your commission of an act involving moral
turpitude, dishonesty, theft or unethical business conduct, or conduct which impairs or injures the
reputation of, or harms, the Company; (v) your disloyalty, including without limitation, aiding a
competitor; (vi) your failure to devote your full time and best efforts to the
Company’s business and affairs; (vii) your failure to work exclusively for
the Company; (viii) your failure to fully cooperate in any investigation by the Company; (ix) your
material breach of this Agreement or Company rules; (x) any other act of misconduct by you that
could reasonably be expected to have a material adverse effect on the Company, its business,
prospects or reputation; (xi) your abuse of alcohol or other drugs or controlled substances; or
(xii) your resignation (other than for Good Reason).

     (c) “Change of Control” shall mean: (i) when any “person” as defined in Section 3(a)(9) of the
Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and as used in Section 13(d)
and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act, but
excluding the Company or any subsidiary or any affiliate of the Company or any employee benefit
plan sponsored or maintained by the Company or any subsidiary of the Company (including any trustee
of such plan acting as trustee), becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing more than 50% of the combined voting power
of the Company’s then outstanding securities; or (ii) when, during any period of twenty-four (24)
consecutive months, the individuals who, at the beginning of such period, constitute the Board of
Directors (the “Incumbent Directors”) cease for any reason other than death to constitute at least
a majority thereof, provided, however, that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such 24-month requirement (and be an
Incumbent Director) if such director was elected by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such 24-month period) or through the
operation of this provision; or (iii) the occurrence of a transaction requiring stockholder
approval under applicable state law for the acquisition of the Company by an entity other than the
Company or a subsidiary or an affiliated company of the Company through the purchase of assets, or
by merger, or otherwise; provided however, that none of the foregoing shall constitute a Change of
Control if such transaction, event or occurrence shall be approved by, or consented to, by the
Employee;

 

 

Mr. Curtis Broome

April 23, 2007

Page 3 of 3

     (d) “Good Reason” shall mean the occurrence of any of the following without your written
consent or approval: (A) the assignment to you of duties inconsistent with this Agreement or a
material diminution in your title, authority or base compensation; (B) any change in reporting
responsibility so that you report to any person other than the Board of Directors thereof; (C) any
material breach of the Agreement by this Company or (D) the Company requires you to relocate more
than 50 miles outside of the Dallas-Fort Worth Metroplex metropolitan area.

Non-Competition and Confidentiality Agreement

     The Company agrees to provide you with confidential and proprietary information so that you
may perform your duties under this Agreement. You agree to enter into a Non-Competition and
Proprietary Rights Assignment Agreement, a form of which is attached hereto as Exhibit A (the
“Non-Competition Agreement”), pursuant to which you will agree that you will keep in confidence the
Company’s confidential information, you will not compete with the Company, and you will not solicit
employees or independent distributors of the Company.

Governing Law

     This Agreement shall be deemed a contract made under the laws of Texas and for all purposes
shall be construed in accordance with the laws of said State applicable to contracts made and to be
performed within said State.

Arbitration

     All disputes between Parties in connection with arising out of the existence, validity,
construction, performance and termination of this Agreement shall be finally settled by arbitration
under the Federal Arbitration Act. The arbitration shall be held in Dallas, Texas in accordance
with the Rules of the American Arbitration Association for employment disputes by one or more
arbitrators appointed in accordance with the said Rules and the award of such arbitrators shall be
final and binding upon the Parties. The non-prevailing party shall pay for all reasonable costs and
expenses incurred in connection with such dispute, including filing and arbitrator fees as well as
the reasonable costs and expenses of opposing legal counsel.

Employment at Will

     You understand that your employment will be at will, and either you or the Company may
terminate the relationship at any time upon four (4) weeks notice; provided however, that the at
will relationship will not in any way affect the Company’s obligation to pay severance to you as
set forth above under “Severance”.

     We all look forward to working with you and know that you will do an outstanding job in this
critical role. All of the benefits described in this letter are conditioned upon your acceptance of
this offer. Please indicate your acceptance and agreement with the terms of this letter by signing
below in the space provided and by signing the Non-Competition Agreement.

	 	 	 	 	 
	 	Sincerely,

NATURAL HEALTH TRENDS CORP.

 	 
	 	By:  	/s/ Chris T. Sharng
 	 
	 	 	Name:  	Chris T. Sharng 	 
	 	 	Title:  	President 	 
	 

	 	 	 
	Acknowledged and Agreed:

	 	 
	 
	 	 
	/s/ Curtis Broome
	 	 
	 
	 	 

 

 

Exhibit A

NATURAL HEALTH TRENDS CORP.

NON-COMPETITION AND PROPRIETARY RIGHTS

ASSIGNMENT AGREEMENT

Employee’s Name:     Curtis Broome (“Employee”)

Date: April 23, 2007

In consideration of Employee’s continued employment by or other similar relationship
with Natural Health Trends Corp. (the “Company”) and in consideration for and as a
condition to the transactions contemplated by that certain Employment Agreement dated
as of the date hereof by and between the Company and Employee (the “Employment
Agreement”), including without limitation the Company’s promise to provide Employee
with confidential information, Employee hereby agrees with the Company as follows:

     1. Confidential Information. During the term of this Agreement and in the course of
Employee’s performance of services for the Company, the Company agrees to provide Employee with
confidential or competitively sensitive information of the Company, which may include information
of a third party with which the Company has a business relationship, relating to the Company’s or
such third party’s current or prospective business, research and development activities, products,
technology, strategy, organization and/or finances (collectively, “Confidential Information”).
Such Confidential Information, which may be disclosed orally or in writing, shall include, without
limitation, Technology (as defined in Section 2(a)), Work Product (as defined in Section 2(a)),
plans, strategies, negotiations, customer or prospect identities, market analyses, projections,
forecasts, cost and performance data, sales data, financial statements, price lists, pre-release
information regarding the Company’s products, personnel lists and data, and all documents and other
materials (including any notes, drawings, reports, manuals, notebooks, summaries, extracts or
analyses), whether in written or electronic form, that disclose or embody such Confidential
Information.

     Confidential Information shall not include information that is now, or hereafter becomes,
through no act or failure to act on Employee’s part, generally known to the public; information
that was rightfully in Employee’s possession without confidentiality restriction prior to the
Company’s disclosure to Employee; information that was rightfully obtained by Employee from a third
party who has the right, without obligation to the Company, to transfer or disclose such
information; or information which Employee is required to disclose pursuant to judicial order,
provided that in the latter case Employee shall promptly notify the Company and take reasonable
steps to assist the Company in protecting the Company’s rights prior to disclosure. At all times,
both during Employee’s relationship with the Company and after the termination thereof, Employee
will keep all Confidential Information in strict confidence; will not use Confidential Information
except for the purpose of providing services to the Company; and will not divulge, publish,
disclose or communicate Confidential Information, in whole or in part, to any third party.
Employee further agrees that Employee will not allow any unauthorized person access to Confidential
Information, either before or after the termination of this Agreement, and will take all action
reasonably necessary and satisfactory to the Company to protect the confidentiality of Confidential
Information. Employee agrees not to reproduce or copy by any means Confidential Information,
except as reasonably required to accomplish the purposes of the Employment Agreement, and further
agrees not to remove any proprietary rights legend from such Confidential Information or copies
thereof made in accordance

 

 

with this Agreement. Employee will not erase, discard or destroy any tangible or electronic
materials that disclose or embody Confidential Information without specific instructions from the
Company to do so.

     Upon termination of Employee’s services for any reason, or upon demand by the Company at any
time, the Company’s agreement to provide, and Employee’s right to use, Confidential Information
shall immediately terminate, and Employee shall return promptly to the Company, or destroy, at the
Company’s option, all tangible and electronic materials that disclose or embody Confidential
Information.

     2. Assignment of Work Product.

          (a) For purposes of this Agreement: “Technology” shall mean all ideas, concepts, inventions,
discoveries, developments, creations, methods, techniques, processes, machines, products, devices,
compositions of matter, improvements, modifications, designs, systems, specifications, schematics,
formulas, mask works, works of authorship, software, algorithms, data and know-how, whether or not
patentable or copyrightable, and all related notes, drawings, reports, manuals, notebooks,
summaries, memoranda and other documentation; “Intellectual Property Rights” shall mean all
worldwide intellectual property rights including, without limitation, all rights relating to the
protection of inventions, including patents, patent applications and certificates of invention; all
rights associated with works of authorship, including copyrights and moral rights; all rights
relating to the protection of trade secrets and confidential information; all rights related to the
protection of trademarks, logos and service marks; any rights analogous to those set forth herein,
and all other proprietary rights related to intangible property; and “Work Product” shall mean any
and all Technology made, conceived, designed, created, discovered, invented or reduced to practice
by Employee during the term of this Agreement that (i) results from Employee’s performance of
services for the Company, (ii) is related to the business of the Company or (iii) is based upon the
use of Confidential Information.

          (b) Employee agrees to promptly disclose to the Company in writing all Work Product upon the
development, conception or creation thereof by Employee, as well as, at any time, upon the request
of the Company.

          (c) Employee agrees that all Work Product shall be the sole and exclusive property of the
Company, and does hereby irrevocably and unconditionally transfer and assign to the Company, its
successors and assigns, all right, title and interest Employee may have or acquire in or to any
Work Product, including all Intellectual Property Rights therein. Employee further agrees that any
and all works of authorship created, authored or developed by Employee hereunder shall be deemed to
be “works made for hire” within the meaning of the United States copyright law and, as such, all
rights therein including copyright shall belong solely and exclusively to the Company from the time
of their creation. To the extent any such work of authorship may not be deemed to be a work made
for hire, Employee agrees to, and does hereby, irrevocably and unconditionally transfer and assign
to the Company all right, title, and interest including copyright in and to such work.

          (d) Upon request by the Company, Employee agrees to execute and deliver all such documents,
certificates, assignments and other writings, and take such other actions, as may be necessary or
desirable to vest in the Company ownership in all Work Product as provided in this Section 2,
including, but not limited to, the execution and delivery of all applications for securing all

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United States and foreign patents, copyrights and other Intellectual Property Rights relating to
Work Product. The Company shall reimburse Employee for any reasonable expenses incurred by
Employee at the Company’s request to secure title or legal protection on the Company’s behalf for
any such Work Product. In the event that the Company is unable to secure Employee’s signature to
any document, or if Employee otherwise fails to take any action deemed necessary by the Company to
protect or maintain the Company’s ownership of Work Product and Intellectual Property Rights
therein, then the Company may, and Employee hereby irrevocably designates and appoints the Company
and its duly authorized officers and agents as Employee’s agent and attorney-in-fact to act on and
in Employee’s behalf and stead to, execute and file any such applications and perform all other
lawfully permitted acts to perfect Employee’s assignment and transfer of ownership rights to the
Company with the same legal force and effect as if executed, filed and performed by Employee.

          (e) For purposes of this Section 2(e), “Background Technology” shall mean Technology owned by
or licensed to Employee as of the date that Employee was first employed by the Company or developed
or otherwise obtained by Employee following the that Employee was first employed by the Company
independently of the performance of services hereunder by Employee. The Company acquires no rights
in the Background Technology, except as specifically provided in this Agreement and, as between the
parties, Employee retains all rights therein. Employee hereby grants to Company a royalty-free,
worldwide, non-exclusive, perpetual, sublicensable and irrevocable right and license to use, for
all purposes in Company’s business, Background Technology that has been disclosed by Employee to
Company or that is embodied within or related to the use, operation or improvement of Work Product
created by Employee in connection with Employee’s performance of services for the Company.

     3. Representation. Employee hereby represents to the Company that the Work Product
Employee creates under the Employment Agreement will be original, and that Employee’s performance
of services under the Employment Agreement and the Company’s use of Employee’s Work Product will
not breach any agreement Employee has with any third party or the intellectual property rights or
other rights of any third party.

     4. Return of Materials. All documents, records, apparatus, equipment and other
physical property, whether or not pertaining to Confidential Information, which are furnished to
Employee by the Company or are produced by Employee in connection with Employee’s services will be
and remain the sole property of the Company. Employee will return to the Company all such
materials and property as and when requested by the Company. In any event, Employee will return
all such materials and property immediately upon termination of Employee’s services for any reason.
Employee will not retain any such material or property or any copies thereof upon such
termination.

     5. Competitive Activities. From the date hereof until the six (6) month anniversary
of the later of the date on which Employee no longer is employed by the Company, serves as a
consultant to the Company or serves as a member of the Board of Directors of the Company (the
“Non-Compete Restricted Period”), Employee will not, directly or indirectly, whether as owner,
partner, shareholder, director, agent, employee, co-venturer, consultant, independent distributor
or otherwise, without the written consent of the Company, engage, participate, invest in, or
provide services to, any multi-level marketing business that indirectly or directly competes with
the Company in recruiting for independent distributors (collectively, the “Competitive
Activities”). The prohibition set forth in this Section 5 shall not restrict Employee from (a)
owning or holding up to two percent (2%) of the shares of stock of any company registered or sold
on any recognized stock exchange or sold in the over-the-counter

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market or (b) providing services that do not involve management, marketing or sales or
consulting with the management, marketing or sales personnel. Employee understands and agrees that
the restrictions set forth in this Section 5 are intended to protect the Company’s reasonable
competitive business interests, its interest in its Confidential Information and established and
prospective customer relationships and goodwill, and agree that such restrictions are reasonable
and appropriate for this purpose.

     6. Nonsolicitation of Customers and Distributors. During the Non-Compete Restricted
Period plus six (6) months (the “Nonsolicitation Period”), Employee will not, in any capacity,
directly or indirectly:

	 	(a)	 	solicit business or patronage of any customer or prospective
customer (collectively, “Customer”), or distributor or prospective distributor
(collectively, “Distributor”) of the Company in connection with any Competitive
Activity;
	 
	 	(b)	 	divert, entice, or otherwise take away from the Company the
business or patronage of any Customer or Distributor, or attempt to do so;
	 
	 	(c)	 	solicit, induce or assist any Customer, Distributor or supplier
to terminate or reduce its relationship with the Company;
	 
	 	(d)	 	assist with the provision of any services to a Customer or
Distributor (except in Employee’s capacity as an employee of the Company); or
	 
	 	(e)	 	refer a Customer, Distributor or supplier to another person
engaged (or to be engaged) in Competitive Activities.

     7. Nonsolicitation of Employees. During the Nonsolicitation Period, Employee will
not:

	 	(a)	 	hire or employ, directly or indirectly through any enterprise
with which Employee is associated, any current employee of the Company or any
individual who had been employed by the Company within one (1) year preceding
Employee’s termination (other than persons whose employment by the Company was
terminated by or at the request of the Company); or
	 
	 	(b)	 	recruit, solicit or induce (or in any way assist another person
or enterprise in recruiting, soliciting or inducing) any employee or director of
the Company to terminate his or her employment or other relationship with the
Company.

     8. Acknowledgments. Employee acknowledges and agrees that the restrictions set forth
in this Agreement are intended to protect the Company’s interest in Confidential Information and
its commercial relationships and goodwill (with its Customers, Distributors, vendors, directors and
employees), and are reasonable and appropriate for these purposes.

     9. Disclosure of Agreement. Employee will disclose the existence and terms of this
Agreement to any prospective employer, partner, co-venturer, investor or lender prior to entering
into an employment, partnership or other business relationship with such person or entity.

4

 

     10. Third-Party Agreements and Rights. Employee hereby confirms that Employee is not
bound by the terms of any agreement with any previous employer or other party which restricts in
any way Employee’s use or disclosure of information or Employee’s engagement in any business,
except as may be disclosed in Schedule A attached to this Agreement prior to its acceptance
by the Company. Employee has delivered to the Company true and complete copies of any agreements
listed on Schedule A. Employee represents to the Company that Employee’s execution of this
Agreement, Employee’s employment with the Company and the performance of Employee’s proposed duties
for the Company will not violate any obligations Employee may have to any such previous employer or
other party. In Employee’s work for the Company, Employee will not disclose or make use of any
information in violation of any agreements with or rights of any such previous employer or other
party, and Employee will not bring to the premises of the Company any copies or other tangible
embodiments of non-public information belonging to or obtained from any such previous employment or
other party.

     11. Injunction. Employee agrees that it would be difficult to measure any damages
caused to the Company which might result from any breach by Employee of the promises set forth in
this Agreement, and that in any event money damages would be an inadequate remedy for any such
breach. Accordingly, Employee agrees that if Employee breaches, or proposes to breach, any portion
of this Agreement, the Company shall be entitled, in addition to all other remedies that it may
have, to an injunction or other appropriate equitable relief to restrain any such breach without
showing or proving any actual damage to the Company.

     12. Binding Effect. This Agreement will be binding upon Employee and Employee’s
heirs, executors, administrators and legal representatives and will inure to the benefit of the
Company, any subsidiary of the Company, and its and their respective successors and assigns.

     13. Enforceability. If any portion or provision of this Agreement is to any extent
declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this
Agreement, or the application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, will not be affected thereby, and each portion
and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by
law. In the event that any provision of this Agreement is determined by any court of competent
jurisdiction to be unenforceable by reason of excessive scope as to geographic, temporal or
functional coverage, such provision will be deemed to extend only over the maximum geographic,
temporal and functional scope as to which it may be enforceable.

     14. Entire Agreement. This Agreement constitutes the entire agreement between the
Company and Employee with respect to the subject matter hereof, and supersedes all prior
representations and agreements with respect to such subject matter. This Agreement may not be
amended, modified or waived except by a written instrument duly executed by the person against whom
enforcement of such amendment, modification or waiver is sought. The failure of any party to
require the performance of any term or obligation of this Agreement, or the waiver by any party of
any breach of this Agreement, in any particular case will not prevent any subsequent enforcement of
such term or obligation or to be deemed a waiver of any separate or subsequent breach.

     15. Notices. Any notices, requests, demands and other communications provided for by
this Agreement will be sufficient if in writing and delivered in person or sent by registered or
certified mail, postage prepaid, to Employee at the last address which Employee has filed in
writing with the

5

 

Company or, in the case of any notice to the Company, at its main offices, to the attention of
the undersigned officer.

     16. Governing Law. The validity, interpretation, performance and enforcement of this
agreement shall be governed by the laws of the State of Texas, without applying the conflict of
laws provisions thereof.

     17. Arbitration. All disputes between Parties in connection with or arising out of
the existence, validity, construction, performance and termination of this Agreement shall be
finally settled by arbitration. The arbitration shall be held in the Dallas, Texas in accordance
with the Rules of the American Arbitration Association by one or more arbitrators appointed in
accordance with the said Rules and the award of such arbitrators shall be final and binding upon
the Parties. The non-prevailing party shall pay for all reasonable costs and expenses incurred in
connection with such dispute, including filing and arbitrator fees as well as the reasonable costs
and expenses of opposing legal counsel.

     18. Escrow. If Employee is terminated for cause and, within 30 days of such
termination, initiates an arbitration proceeding disputing that the termination was for cause, then
the Company will either (a) on each regular pay day of the Company occurring following the
expiration of 10 days after such arbitration is commenced, pay into an escrow account an amount
equal to the Severance Payment (net of payroll taxes) that would be due to Employee under the
Employment Agreement if the termination was without cause until six months of such Severance
Payments have been made, or (b) release Employee from any remaining obligations under Section 5, 6
or 7 of this Agreement. If the Company fails to make any such escrow payment, then the Company
will be deemed to have released Employee from any further obligation under Section 5, 6 or 7 of
this Agreement.

     19. Prior Material Breach. Notwithstanding anything to the contrary in this
Agreement, the failure of the Company to make any payment to Employee that is required under the
Employment Agreement or this Agreement shall, if such failure is not excused (as provided below)
and continues for five business days after written notice to the Company of such failure, excuse
Employee from complying with Sections 5, 6 and 7 of this Agreement. The failure of the Company to
pay Employee under the Employment Agreement shall be excused by Employee’s prior material breach of
this Agreement or the Employment Agreement.

EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT AFFECTS IMPORTANT RIGHTS. EMPLOYEE HAS READ IT CAREFULLY
AND IS SATISFIED THAT EMPLOYEE UNDERSTANDS IT COMPLETELY.

	 	 	 	 	 	 	 
	NATURAL HEALTH TRENDS CORP.	 	EMPLOYEE
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	     /s/ Chris Sharng
	 	By:
	 	     /s/ Curtis Broome
	 

	 	 
	 	 	 	 
	 

	 	Name: Chris Sharng

Title:   President
	 	 	 	Name: Curtis Broome
	 
	 	 	 	 	 	 
	Dated:

	 	 	 	Dated:	 	 
	 

	 	 
	 	 	 	 

6

 

Schedule A

[None]exv4w6

 

Exhibit 4.6

Execution Version

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (the “Agreement”) is entered into as of April 12,
2007, by and among Akamai Technologies, Inc., a Delaware corporation (the “Buyer”), and the
individuals and entities listed on Exhibit A attached hereto (the “Principal
Shareholders”). The Buyer, the Principal Shareholders and the other Company Shareholders who
agree to be bound by the terms of this Agreement by executing a Selling Stockholder Questionnaire
in the form attached hereto as Exhibit C (a “Questionnaire”) are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”.

     WHEREAS, the Buyer has entered into an Agreement and Plan of Merger (the “Merger
Agreement”), dated March 23, 2007, pursuant to which, among other things, the Buyer will
exchange shares of Common Stock of the Buyer, $0.01 par value per share (the “Buyer Common
Shares”), for the shares of capital stock of Red Swoosh, Inc. (the “Company”) owned of record
by the Company Shareholders (as defined below); and

     WHEREAS, the Buyer and the Company Shareholders desire to provide for certain arrangements
with respect to the registration of the Buyer Common Shares issued to the Company Shareholders
under the Securities Act (as defined below);

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Certain Definitions. For purposes of this Agreement, each of the following terms
shall have the meaning set forth below.

     “Company Common Stock” shall mean the common stock, $0.001 par value per share, of the
Company.

     “Company Shareholders” shall mean individuals and entities listed on Exhibit B
attached hereto.

     “Merger Shares” shall mean the Buyer Common Shares (i) issued to the Company
Shareholders in exchange for the shares of the Company’s capital stock pursuant to the terms and
conditions of the Merger Agreement and (ii) issuable to the Company Shareholders holding Warrants
upon the exercise of such Warrants assumed by the Buyer pursuant to the terms and conditions of the
Merger Agreement.

     “Options” shall mean each option to purchase or acquire shares of Company Common Stock
assumed by the Buyer pursuant to the terms and conditions of the Merger Agreement.

     “Reasonable Best Efforts” shall mean best efforts, to the extent commercially reasonable.

     “SEC” shall mean the United States Securities and Exchange Commission.

 

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Shareholder Registration Statement” shall mean a registration statement on Form S-3
pursuant to Rule 415 of the Securities Act covering the continuous resale to the public by the
Company Shareholders of the Merger Shares.

“Warrant” shall mean each warrant to purchase or acquire shares of Company Common Stock
assumed by the Buyer pursuant to the terms and conditions of the Merger Agreement.

ARTICLE II

REGISTRATION STATEMENTS

     2.1 Registration Statement on Form S-8. Within ten (10) business days after the date
of this Agreement, the Buyer shall file with the SEC a Registration Statement on Form S-8 (or any
successor form) under the Securities Act with respect to all Buyer Common Shares subject to the
Options that may be registered on a Registration Statement on Form S-8, and shall use its
Reasonable Best Efforts to maintain the effectiveness of such Registration Statement for so long as
such Options remain outstanding.

     2.2 Shareholder Registration Statement. Within ten (10) business days after the date
of this Agreement, the Buyer shall file with the SEC the Shareholder Registration Statement. The
Shareholder Registration Statement will, when filed, comply as to form in all material respects
with the applicable provisions of the Securities Act and the rules and regulations thereunder. The
Buyer shall use its Reasonable Best Efforts to cause the Shareholder Registration Statement to
become effective immediately upon filing with the SEC or as promptly thereafter as practicable.
The Buyer shall cause the Shareholder Registration Statement to remain effective until the date one
year after the date of this Agreement or such earlier time as all of the Merger Shares covered by
the Shareholder Registration Statement have been sold pursuant thereto.

     2.3 Limitations on Registration Rights.

          (a) The Buyer may, by written notice to the Company Shareholders, (i) delay the filing of the
Shareholder Registration Statement for no more than 90 days in the aggregate or (ii) suspend the
Shareholder Registration Statement for no more than 90 days in the aggregate after effectiveness
and require that the Company Shareholders immediately cease sales of shares pursuant to the
Shareholder Registration Statement, in the event that (A) the Buyer files a registration statement
(other than a registration statement on Form S-4 or Form S-8 or their successor forms) with the SEC
for a public offering of its securities, (B) the Buyer is engaged in any activity or transaction or
preparations or negotiations for any activity or transaction that the Buyer desires to keep
confidential for business reasons, if the Buyer determines in good faith that the public disclosure
requirements imposed on the Buyer under the Securities Act in connection with the Shareholder
Registration Statement would require disclosure of such activity, transaction, preparations or
negotiations, or (C) the Buyer fails to meet the SEC requirements, as set forth in the General
Instructions to Form S-3, for use of the Shareholder Registration Statement.

-2-

 

          (b) If the Buyer delays or suspends the Shareholder Registration Statement or requires the
Company Shareholders to cease sales of shares pursuant to paragraph (a) above, the Buyer shall, as
promptly as practicable following the termination of the circumstance which entitled the Buyer to
do so, take such actions as may be necessary to file or reinstate the effectiveness of the
Shareholder Registration Statement and/or give written notice to all Company Shareholders
authorizing them to resume sales pursuant to the Shareholder Registration Statement. If as a
result thereof the prospectus included in the Shareholder Registration Statement has been amended
to comply with the requirements of the Securities Act, the Buyer shall enclose such revised
prospectus with the notice to Company Shareholders given pursuant to this paragraph (b), and the
Company Shareholders shall make no offers or sales of shares pursuant to the Shareholder
Registration Statement other than by means of such revised prospectus.

     2.4 Registration Procedures.

          (a) In connection with the filing by the Buyer of the Shareholder Registration Statement, the
Buyer shall furnish to each Company Shareholder a copy of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act.

          (b) The Buyer shall use its Reasonable Best Efforts to register or qualify the Merger Shares
covered by the Shareholder Registration Statement under the securities laws of each state of the
United States; provided, however, that the Buyer shall not be required in
connection with this paragraph (b) to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.

          (c) If the Buyer has delivered preliminary or final prospectuses to the Company Shareholders
and after having done so the prospectus is amended or supplemented to comply with the requirements
of the Securities Act, the Buyer shall promptly notify the Company Shareholders and, if requested
by the Buyer, the Company Shareholders shall immediately cease making offers or sales of shares
under the Shareholder Registration Statement and return all prospectuses to the Buyer. The Buyer
shall promptly provide the Company Shareholders with revised or supplemented prospectuses and,
following receipt of the revised or supplemented prospectuses, the Company Shareholders shall be
free to resume making offers and sales under the Shareholder Registration Statement.

          (d) The Buyer shall pay the expenses incurred by it in complying with its obligations under
this Agreement, including all registration and filing fees, exchange listing fees, fees and
expenses of counsel for the Buyer, and fees and expenses of accountants for the Buyer, but
excluding (i) any brokerage fees, selling commissions or underwriting discounts incurred by the
Company Shareholders in connection with sales under the Shareholder Registration Statement and (ii)
the fees and expenses of any counsel retained by Company Shareholders.

     2.5 Requirements of Company Shareholders. The Buyer shall not be required to include
any Merger Shares in the Shareholder Registration Statement on behalf of the Company Shareholder
unless:

-3-

 

          (a) the Company Shareholder owning or entitled to receive such Merger Shares furnishes to the
Buyer in writing such information regarding such Company Shareholder and the proposed sale of
Merger Shares by such Company Shareholder as contemplated by the Questionnaire or as shall be
required in connection therewith by the SEC or any state securities law authorities;

          (b) such Company Shareholder shall have provided to the Buyer its written agreement:

               (i) on a several and not joint liability basis, to indemnify the Buyer and each of its
directors and officers against, and hold the Buyer and each of its directors and officers harmless
from, any losses, claims, damages, expenses or liabilities (including reasonable attorneys fees) to
which the Buyer or such directors and officers may become subject by reason of any statement or
omission in the Shareholder Registration Statement made in reliance upon, or in conformity with, a
written statement by such Company Shareholder furnished pursuant to this Section 2.5; and

               (ii) to report to the Buyer sales made pursuant to the Shareholder Registration Statement.

     2.6 Indemnification. The Buyer agrees to indemnify and hold harmless each Company
Shareholder, and its officers, directors, partners and each person controlling such Company
Shareholder, whose Merger Shares are included in the Shareholder Registration Statement against any
losses, claims, damages, expenses or liabilities to which such Company Shareholder may become
subject by reason of any untrue statement of a material fact contained in the Shareholder
Registration Statement or any omission to state therein a fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such losses, claims,
damages, expenses or liabilities arise out of or are based upon information furnished to the Buyer
in writing by or on behalf of a Company Shareholder and stated to be for use in the Shareholder
Registration Statement. The Buyer shall have the right to assume the defense, with counsel if its
choice, and settlement of any claim or suit for which the Buyer may be responsible for
indemnification under this Section 2.6; provided, however, if the defendants in any such action
include both the Company Shareholders and the Buyer and the Company Shareholders shall have
reasonably concluded, based on the opinion of counsel reasonably satisfactory to the Buyer, that
there is a conflict of interest between the positions of the Buyer and the Company Shareholders in
conducting the defense of any such action, the Company Shareholders shall have the right to select
one separate counsel to assume such legal defenses on behalf of all of the Company Shareholders and
to otherwise participate in the defense of such action on behalf of such Company Shareholders.

     2.7 Assignment of Rights. A Company Shareholder may not assign any of its rights
under this Article II except in connection with the transfer of some or all of his, her or its
Merger Shares to a child or spouse, or trust for their benefit or, in the case of a partnership,
limited liability company or corporation, to its partners, members or shareholders, respectively,
pursuant to a pro rata distribution of its Merger Shares, provided each such transferee
agrees in a written instrument delivered to the Buyer to be bound by the provisions of this Article
II.

-4-

 

ARTICLE III I

MISCELLANEOUS

     3.1 Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement among the Parties and supersedes any prior understandings,
agreements or representations by or among the Parties, written or oral, with respect to the subject
matter hereof; provided that the Nondisclosure Agreement dated August 18, 2006, between the Buyer
and the Company, shall remain in effect in accordance with its terms.

     3.2 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns. No Party may assign
either this Agreement or any of its rights, interests or obligations hereunder without the prior
written approval of the other Parties.

     3.3 Counterparts and Facsimile Signature. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed by facsimile signature.

     3.4 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

     3.5 Notices. All notices and other communications hereunder shall be in writing. Any
notice, request, demand, claim or other communication hereunder shall be deemed duly delivered two
business days after it is sent by registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent for next business day delivery via a reputable
nationwide overnight courier service, to the Company Shareholders at the address set forth below
their respective names on Exhibit B attached hereto, and in the case of the Buyer, as set
forth below:

	 	 	 	 	 
	To the Buyer:	 	with a copy to:
	 
	 	 	 	 
	Akamai Technologies, Inc.	 	Wilmer Cutler Pickering Hale and Dorr LLP
	8 Cambridge Center	 	60 State Street
	Cambridge, MA 02142	 	Boston, MA 02109
	Attn:

	Melanie Haratunian,
	 	Attn: Susan W. Murley, Esq.
	 

	Vice President and General Counsel
	 	Telecopy: (617) 526-5000
	Telecopy: (617) 444-3001	 	Telephone: (617) 526-6000
	Telephone: (617) 444-3000	 	 

Any Party may give any notice or other communication hereunder using any other means (including
personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail

-5-

 

or electronic mail), but no such notice or other communication shall be deemed to have been duly
given unless and until it actually is received by the party for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other communications hereunder
are to be delivered by giving the other notice in the manner herein set forth.

     3.6 Governing Law. All matters arising out of or relating to this Agreement and the
transactions contemplated hereby (including without limitation its interpretation, construction,
performance and enforcement) shall be governed by and construed in accordance with the internal
laws of the State of Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would cause the application
of laws of any jurisdictions other than those of the State of Delaware.

     3.7 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the Buyer and Company Shareholders owning
at least fifty percent (50%) of the Buyer Common Shares then held by the all of the Company
Shareholders. No waiver of any right or remedy hereunder shall be valid unless the same shall be
in writing and signed by the Party giving such waiver. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or provision.

     3.8 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a term or provision that
is valid and enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable as so modified.

     3.9 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of any
state or federal court sitting in the Commonwealth of Massachusetts in any action or proceeding
arising out of or relating to this Agreement, (b) agrees that all claims in respect of such action
or proceeding may be heard and determined in any such court, (c) waives any claim of inconvenient
forum or other challenge to venue in such court, (d) agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court, and (e) waives any right it may
have to a trial by jury with respect to any action or proceeding arising out of or relating to this
Agreement.

[Remainder of the Page Intentionally Left Blank]

-6-

 

Execution Version

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	AKAMAI TECHNOLOGIES, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Paul Sagan	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Paul Sagan	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President	 	 
	 

	 	 	 	 	 	 

-Signature Page to Registration Rights Agreement-

 

 

	 	 	 	 	 	 	 
	 	 	PRINCIPAL SHAREHOLDERS:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TRAVIS KALANICK	 	 
	 
	 
	 	/s/ Travis Kalanick 	 	 	 	 
	 	 	 	 	 
	 
	 	 	CROSSLINK VENTURES V, L.P.	 	 
	 
	 
	 	 	 	 	 	 
	 
	 	By: Crosslink Ventures V Holdings, L.L.C.,

       its General Partner	 	 	 	 
	 
	 
	 	/s/ Gerri Grossman 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	Gerri Grossman 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	Member	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	OFFSHORE CROSSLINK VENTURES V UNIT TRUST	 	 
	 
	 	 	 	 	 	 
	 
	 	By: Crosslink Ventures V Holdings, L.L.C.,

       its Investment Manager	 	 	 	 
	 
	 
	 	/s/ Gerri Grossman 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	Gerri Grossman 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	Member 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CROSSLINK BAYVIEW V, L.L.C.	 	 
	 
	 
	 	/s/ Gerri Grossman 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	Gerri Grossman 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	Authorized Signatory 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CROSSLINK CROSSOVER FUND IV, L.P.	 	 
	 
	 	 	 	 	 	 
	 
	 	By: Crossover Fund IV Management, L.L.C.,
       its General Partner	 	 	 	 
	 
	 
	 	/s/ Gerri Grossman 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	Gerri Grossman 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	Member 	 	 
	 

	 	 	 	 	 	 

-Signature Page to Registration Rights Agreement-

 

 

	 	 	 	 	 	 	 
	 	 	AUGUST CAPITAL III, L.P. for itself and as nominee for August Capital
Strategic Partners III, L.P.
August Capital III Founders Fund, L.P., and
Certain Individuals thereof

By: August Capital Management III, L.L.C.,
        its general partner	 	 
	 
	 
	 	/s/ Sydney Lagier	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	Sydney Lagier 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	Member 	 	 
	 

	 	 	 	 	 	 

-Signature Page to Registration Rights Agreement-

 

 

Execution Version

Exhibit A

Principal Shareholders

Name and address

TRAVIS KALANICK

685 Tennessee Street , Apt. #4

San Francisco, CA 94107

CROSSLINK VENTURES V, L.P.

Two Embarcadero Center

Suite 200

San Francisco, CA 94111

ATTN: Gerri Grossman

OFFSHORE CROSSLINK VENTURES V UNIT TRUST

Two Embarcadero Center

Suite 200

San Francisco, CA 94111

ATTN: Gerri Grossman

CROSSLINK BAYVIEW V, L.L.C.

Two Embarcadero Center

Suite 200

San Francisco, CA 94111

ATTN: Gerri Grossman

CROSSLINK CROSSOVER FUND IV, L.P.

Two Embarcadero Center

Suite 200

San Francisco, CA 94111

ATTN: Gerri Grossman

AUGUST CAPITAL III, L.P.

2480 Sand Hill Road, #101

Menlo Park, CA 94025

I-1

 

Execution Version

Exhibit B

Company Shareholders

Name and Address

 

 

Exhibit C

Selling Stockholder Questionnaire

-2-

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