EXHIBIT 4.1
INTERPACKET GROUP, INC.
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of
November 12, 1999 by and among InterPacket Group, Inc., a Delaware corporation
(the "Company"), the entities listed on the Schedule of Purchasers attached to
this Agreement as EXHIBIT A (collectively, the "Purchasers") and Jonathan Gans,
Peter Zimble, Julie Spira, James E. Kolsrud, Norman J. Pattiz, Jeffrey C.
Barbakow, Joseph T. Arsenio II and Delaware Charter Guarantee & Trust Company
TTEE FBO: Joseph T. Arsenio II (collectively, the "Stockholders").
RECITALS
WHEREAS, the Company and the Purchasers are entering into that certain
Series A Convertible Preferred Stock Purchase Agreement dated of even date
herewith (the "Series A Purchase Agreement") providing for, among other things,
the sale by the Company to the Purchasers of shares of the Company's Series A
Convertible Preferred Stock, $.001 par value per share (the "Series A
Preferred");
WHEREAS, the sale of the Series A Preferred to the Purchasers is
conditioned upon the rights set forth herein being extended to each such
Purchaser, and the Company desires to extend such rights herein; and
WHEREAS, the Company and the Purchasers desire to extend certain rights
herein to the Stockholders.
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. DEFINITIONS.
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange
Commission of the United States or any other U.S. federal agency at the time
administering the Securities Act.
"COMMON STOCK" shall mean the Company's common stock, $.001
par value per share.
"COMMON STOCK EQUIVALENTS" means and includes all shares of
Common Stock issued and outstanding at the relevant time plus (i) all shares of
Common Stock that may be
issued upon exercise of any options, warrants and other rights of any kind that
are then exercisable, and (ii) all shares of Common Stock that may be issued
upon conversion or exchange of (A) any convertible securities, including without
limitation, the Series A Preferred and all other preferred stock and debt
securities then outstanding, which are by their terms then convertible into or
exchangeable for Common Stock, or (B) any such convertible securities issuable
upon exercise of options, warrants or other rights that are then exercisable.
"HOLDER" shall mean each of the Purchasers (and their
transferees as permitted by Section 1.6) holding Registrable Securities or
securities convertible into or exercisable for Registrable Securities.
"INITIATING HOLDERS" shall mean Holders who in the aggregate
hold at least thirty percent (30%) of the Registrable Securities and join in a
request referred to in Section 1.2(a).
"OTHER HOLDERS" shall mean holders of Company securities,
other than Holders, having rights or obligations arising from, or proposing to
distribute their securities pursuant to, a registration referred to in this
Agreement, including the Stockholders.
"REGISTRABLE SECURITIES" means (i) any Common Stock now held
or hereafter acquired by any Holder and (ii) any Common Stock issued or issuable
on conversion of the Series A Preferred now held or hereafter acquired by any
Holder. Shares of Common Stock or other securities shall only be treated as
Registrable Securities if they have not been (A) sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a single transaction exempt from the registration
and prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, excluding
Selling Expenses (as defined below), incurred by the Company in complying with
Sections 1.2, 1.3 or 1.4 hereof, including, without limitation, all
registration, qualification and filing fees, accounting fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company and reasonable
fees and disbursements of one counsel for the Holders selected by the Holders
(or if no Holders shall be participating in such registration, then the one
counsel for and selected by a majority of those participating Other Holders) and
approved by the Company (which approval shall not be unreasonably withheld),
blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar United States federal statute.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by Holders and Other Holders. Such expenses shall be borne by
Holders and Other Holders.
"SELLING HOLDERS" shall mean each Holder and Other Holder
holding securities of the Company that are included in a registration statement
under the Securities Act pursuant to this Agreement.
1.2 REGISTRATION RIGHTS.
(a) REQUEST FOR REGISTRATION. In case the Company
shall receive from Initiating Holders a written request that the Company effect
any registration, qualification or compliance with respect to not less than
thirty percent (30%) of the then outstanding Registrable Securities with an
anticipated aggregate offering price, net of any underwriting discounts and
commissions, in excess of $5,000,000 (a "Registration Notice"), the Company
will:
(i) promptly give written notice of the
proposed registration, qualification or compliance to all other Holders and
the Other Holders; and
(ii) as soon as practicable, use its best
efforts to effect such registration, qualification or compliance (including,
without limitation, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder and securities of
the same class and series held by any Other Holder joining in such request as
are specified in a written request received by the Company from any Holder or
Other Holder within twenty (20) days after such Holder's or Other Holder's
receipt of such written notice from the Company. Notwithstanding the
foregoing, the Company shall not be obligated to take any action to effect
any such registration, qualification or compliance pursuant to this Section
1.2:
(A) In any particular jurisdiction in
which the Company would be required to execute a general consent to service
of process in effecting such registration, qualification or compliance unless
the Company is already subject to service in such jurisdiction and except as
may be required by the Securities Act;
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(B) Prior to six (6) months after
the effective date of the Company's first registered public offering of its
stock, if the underwriters of such public offering shall (1) release an
aggregate of at least 50,000 shares of Common Stock but less than 200,000 shares
of Common Stock from the applicable Lock Up Period (as defined below), then,
subject to the other provisions of this Section 1.2(a)(ii), the Company shall be
obligated at such time to effect a registration, qualification or compliance
under this Section 1.2 with respect to the same percentage of Registrable
Securities held by the Holders that such released shares represent in proportion
to the total number of shares of Common Stock held by all of the holders of such
released shares, (2) release an aggregate of 200,000 or more shares of Common
Stock from the applicable Lock Up Period, then the limitations set forth in this
clause (B) shall cease with respect to the transactions contemplated by such
Registration Notice or (3) shorten such Lock Up Period with respect to all
parties subject thereto (any of the foregoing releases, a "Lock Up Release"), in
which case the six-month restriction set forth in this clause (B) shall be
shortened to terminate simultaneously with such shortened Lock Up Period;
(C) During the period starting with
the date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date three (3) months immediately following the effective date of,
any registration statement pertaining to securities of the Company sold by the
Company (other than with respect to a registration statement relating solely to
a Commission Rule 145 transaction or a stock option or other employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective, and
provided further that, if such registration statement relates to an underwritten
offering, then if a Lock Up Release shall be given, then the three-month
restriction set forth in this clause (C) shall terminate or be reduced
proportionately in accordance with the procedures set forth in Section
1.2(a)(ii)(B);
(D) After the Company has effected
two (2) registrations pursuant to this Section 1.2, and the second of such
registrations has been declared or ordered effective; or
(E) If the Company shall furnish to
such Holders a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of a majority of the Outside Directors
(as defined in the Series A Purchase Agreement) of the Board of Directors it
would be detrimental to the Company or its stockholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to register, qualify or comply under this Section 1.2 shall be
deferred for a period not to exceed ninety (90) days from the date of receipt of
written request from the Initiating Holders, provided, however, that the Company
shall not utilize this right more than once in any twelve (12) month period.
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Subject to the foregoing clauses (A) through (E), the Company shall
file a registration statement covering the Registrable Securities and the
securities held by the Other Holders so requested to be registered as soon as
practicable, after receipt of the request or requests of the Initiating Holders.
(b) UNDERWRITING. In the event that a registration
pursuant to this Section 1.2 is for a registered public offering involving an
underwriting, the Company shall so advise the Holders and Other Holders as part
of the Registration Notice. In such event, the right of any Holder or Other
Holder to registration pursuant to Section 1.2 shall be conditioned upon such
Holder's or Other Holder's participation in the underwriting arrangements
required by this Section 1.2, and the inclusion of such Holder's Registrable
Securities or such Other Holder's securities in the underwriting to the extent
requested shall be limited to the extent provided herein. The Company shall
(together with all Holders and Other Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company, but subject to the reasonable approval of the Holders holding a
majority of the Registrable Securities held by all Holders participating in the
offering. Notwithstanding any other provision of this Section 1.2, if the
managing underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders and Other Holders proposing to
distribute their securities through such underwriting, and the number of shares
that may be included in the registration and underwriting shall be allocated,
FIRST, among all participating Holders in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities on an as-converted basis
held by such Holders at the time of filing the registration statement and,
SECOND, among any Other Holders in proportion to the number of shares proposed
to be included in such registration by such Other Holders. No Registrable
Securities or other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If
any Holder or Other Holder disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
managing underwriter and the Initiating Holders. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration, and
shall not be transferred in a public distribution prior to one hundred eighty
(180) days after the effective date of the registration statement relating
thereto, or such other shorter period of time as the underwriters may require
pursuant to Section 1.11 or to the extent that any entity or person
participating in the offering is released, in whole or in part, from its "market
standoff" agreement (in which event any time restriction of Purchaser will be
released in a similar manner), and the Company shall use reasonable efforts to
include in the related underwriting agreement language to reflect the foregoing
provisions of this sentence.
1.3 COMPANY REGISTRATIONS.
(a) NOTICE OF REGISTRATION. If at any time or from
time to time the Company shall determine to register any of its securities of
the same series and class as any of
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the Registrable Securities or any securities held by the Stockholders (or any
securities convertible into or exchangeable or exercisable for shares of such
series and class) either for its own account or the account of a security holder
or holders, other than (i) a registration relating solely to a stock option or
other employee benefit plan, (ii) a registration relating solely to a Commission
Rule 145 transaction, or (iii) with respect to the Company's registration of
shares of Common Stock in its initial public offering, the Company will:
(A) promptly give to each Holder and Other
Holder written notice thereof; and
(B) include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities and shares held by
the Other Holders specified in a written request or requests received by the
Company from any Holder or any Other Holder within twenty (20) days after such
Holder's or Other Holder's receipt of such written notice from the Company.
(b) UNDERWRITING. If the registration of which
the Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders and Other Holders as a
part of the written notice given pursuant to Section 1.3(a)(i). In such event
the right of any Holder and/or any Other Holder to registration pursuant to this
Section 1.3 shall be conditioned upon such Holder's and/or Other Holder's
participation in such underwriting and the inclusion of their securities in the
underwriting to the extent provided herein. All Holders and Other Holders
proposing to distribute their securities through such underwriting shall,
together with the Company, enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.3, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
securities to be included in such registration. The Company shall so advise all
Holders and Other Holders, and the number of shares that may be included in the
registration and underwriting shall be allocated, FIRST, to the Company (if the
registration has been initiated by the Company), SECOND, among all the
participating Holders in proportion to the respective amounts of Registrable
Securities held by such Holders at the time of filing of the registration
statement, and, THIRD, among the Other Holders in proportion to the number of
shares proposed to be included in such registration by such Other Holders,
provided that in no event shall the number of Registrable Securities included in
any such offering be reduced below 20% of the total number of securities in the
offering. If any Holder or Other Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration, and shall not
be transferred in a public distribution prior to one hundred eighty (180) days
with respect to the Company's initial public offering and 90 days otherwise
after the effective date of the registration statement relating thereto, or such
other shorter period of time as the underwriters may require
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pursuant to Section 1.11 or to the extent that any entity or person
participating in the offering is released, in whole or in part, from its "market
standoff" agreement (in which event any time restriction of Purchaser will be
released in a similar manner), and the Company shall use reasonable efforts to
include in the related underwriting agreement language to reflect the foregoing
provisions of this sentence.
(c) RIGHT TO TERMINATE REGISTRATION. 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 or Other Holder has elected to include securities in such
registration; provided, however, if the Holders elect to use their demand
registration right pursuant to Section 1.2 hereof, then such registration shall
be governed by Section 1.2 and it shall not be terminated.
1.4 REGISTRATIONS ON FORM S-3.
(a) REQUEST FOR REGISTRATION. If at any time or
from time to time any Holder requests that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for a public offering
of shares of the Registrable Securities with a reasonably anticipated aggregate
price to the public of at least $1,000,000, and the Company is a registrant
entitled to use Form S-3 to register the Registrable Securities for such an
offering, the Company shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as the
participating Holders may reasonably request. The substantive provisions of
Section 1.3(b) shall be applicable to each such registration initiated under
this Section 1.4 involving an underwriting.
(b) LIMITATIONS. Notwithstanding the foregoing,
the Company shall not be obligated to take any action pursuant to this Section
1.4:
(i) in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(ii) if the Company, within ten (10)
days of the receipt of the request of any Holder requesting registration
under this Section 1.4, gives notice of its bona fide intention to effect the
filing of a registration statement with the Commission within ninety (90)
days of receipt of such request (other than with respect to a registration
statement relating solely to a Commission Rule 145 transaction or a stock
option or other employee benefit plan), provided that if the Company fails to
effect such filing within such 90-day period, then the limitations set forth
in this clause (ii) shall cease with respect to such Holder's request and,
subject to the provisions of Sections 1.4(b)(i), (iii) and (iv), the Company
shall be obligated to effect the registration in accordance with Section
1.4(a);
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(iii) within a three (3) month period
immediately following the effective date of any registration statement
pertaining to securities of the Company (other than with respect to a
registration statement relating solely to a Commission Rule 145 transaction
or a stock option or other employee benefit plan), provided that, if such
registration statement relates to an underwritten offering, then if a Lock Up
Release shall be given, then the three-month restriction set forth in this
clause (iii) shall terminate or be reduced proportionately in accordance with
the procedures set forth in Section 1.2(a)(ii)(B); or
(iv) if the Company shall furnish to the
participating Holders a certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment of a majority of the
Outside Directors (as defined in the Series A Purchase Agreement) of the
Board of Directors it would be detrimental to the Company or its stockholders
for a registration statement to be filed in the near future, then the
Company's obligation to use its best efforts to file a registration statement
shall be deferred for a period not to exceed ninety (90) days from the
receipt of the request to file such registration by such Holder; provided,
however, that the Company shall not utilize this right more than once in any
twelve (12) month period.
1.5 EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. The Company shall
bear all Registration Expenses incurred in connection with all registrations
pursuant to Sections 1.2 and 1.3 and the first registration pursuant to Section
1.4. The Holders, pro rata based on the number of shares registered, shall bear
all Registration Expenses incurred in connection with all registrations, other
than the first such registration, pursuant to Section 1.4. In the event any
Initiating Holders withdraw a Registration Notice, abandon a registration
statement or, following an effective registration pursuant to Section 1.2
hereof, do not sell Registrable Securities, then all Registration Expenses in
respect of such Registration Notice shall be borne, at the Initiating Holders'
option, either by the Initiating Holders or by the Company. If borne by the
Company, such withdrawn or abandoned registration shall be deemed to be an
effective registration for purposes of Section 1.2(a)(ii)(D) hereof only if the
reason for such abandonment or withdrawal was due to any cause within the
control of Purchasers.
(b) SELLING EXPENSES. Unless otherwise stated,
all Selling Expenses relating to securities registered on behalf of the Holders
and Other Holders shall be borne by the Holders and Other Holders pro rata on
the basis of the number of shares so registered.
1.6 REGISTRATION AND QUALIFICATION. If and whenever the
Company is required to use its best efforts to effect the registration of any
securities under the Securities Act pursuant to this Agreement, the Company will
as promptly as is practicable:
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(a) prepare and file with the Commission and use
its best efforts to cause to become effective, a registration statement under
the Securities Act relating to the securities to be offered on such form as the
Initiating Holders, or if not filed pursuant to Section 1.2 or Section 1.4
hereof, the Company, determines and for which the Company then qualifies;
(b) prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities until the earlier of such time as all of such securities have been
disposed of in accordance with the intended methods of disposition set forth in
such registration statement or the expiration of one hundred twenty (120) days
after such registration statement becomes effective; provided that such one
hundred twenty (120) day period shall be extended in the case of a registration
pursuant to Section 1.2 hereof for such number of days that equals the number of
days elapsing from (i) the date the written notice contemplated by Section
1.6(f) hereof is given by the Company to (ii) the date on which the Company
delivers to the Selling Holders the supplement or amendment contemplated by
Section 1.6(f) hereof;
(c) furnish to the Selling Holders and to any
underwriter of such securities such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such registration
statement or prospectus, and such other documents, as the Selling Holders or
such underwriter may reasonably request;
(d) make every reasonable effort to prevent the
issuance of any stop order suspending the effectiveness of such registration
statement or to obtain the withdrawal of any order suspending the effectiveness
of such registration statement as early as possible;
(e) if requested by an Initiating Holder, (i)
furnish to each Selling Holder an opinion of counsel for the Company addressed
to each Selling Holder and dated the date of the closing under the underwriting
agreement (if any) (or if such offering is not underwritten, dated the effective
date of the registration statement), and (ii) use its best efforts to furnish to
each Selling Holder a "comfort" or "special procedures" letter addressed to each
Selling Holder and signed by the independent public accountants who have audited
the Company's financial statements included in such registration statement, in
each such case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities and
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such other matters as an Initiating Holder may reasonably request and, in the
case of such accountants' letter, with respect to events subsequent to the date
of such financial statements;
(f) immediately notify the Selling Holders in
writing (i) at any time when a prospectus relating to a registration hereunder
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 any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) of any request by the Commission or any other
regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or other document relating to such
offering, and in either such case (i) or (ii) at the request of a Selling Holder
prepare and furnish to such Selling Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading;
(g) use its best efforts either (A) to cause all
such Registrable Securities to be listed on a national securities exchange (if
such securities are not already so listed) and on each additional national
securities exchange on which similar securities issued by the Company are then
listed, if the listing of such securities is then permitted under the rules of
such exchange, or (B) to secure designation of all such Registrable Securities
as a NASDAQ "national market system security" within the meaning of Rule 11Aa2-1
of the Commission or, failing that, to secure listing on NASDAQ for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two (2) market makers to register as such with respect to
Registrable Securities with the National Association of Securities Dealers,
Inc.;
(h) upon the transfer of shares by a Selling
Holder in connection with a registration hereunder, furnish unlegended
certificates representing ownership of such securities being sought in such
denominations as shall be requested by the Selling Holders or the underwriters;
(i) use its best 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
appropriate for the distribution of the securities covered by the registration
statement;
(j) provide a transfer agent for the Common
Stock no later than the effective date of the first registration of any
Registrable Securities;
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(k) enter into such customary agreements
(including an underwriting agreement in customary form) and take such other
actions as the selling Holders of Registrable Securities shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities;
(l) make available for inspection by any selling
Holder of Registrable Securities, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any
attorney, accountant or other agent retained by any such selling Holder or any
such underwriter, all pertinent financial and other records and pertinent
corporate documents and properties of the Company, and cause all of the
Company's officers, directors and employees to supply all information reasonably
requested by any such selling Holder, underwriter, attorney, accountant or agent
in connection with such registration statement;
(m) make such representations and warranties to
the selling Holders of Registrable Securities and the underwriters as are
customarily made by issuers to selling stockholders and underwriters, as the
case may be, in primary underwritten public offerings; and
(n) deliver promptly to each Holder
participating in the offering and each underwriter, if any, copies of all
correspondence between the Commission and the Company, its counsel and auditors
relating to discussions with the Commission and its staff with respect to the
registration statement.
1.7 INDEMNIFICATION.
(a) BY THE COMPANY. In the event of any
registration of any securities of the Company under the Securities Act pursuant
to this Agreement, the Company will and hereby does indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, each of its officers,
fiduciaries, employees, stockholders, directors and general and limited partners
(and the officers, fiduciaries, employees, stockholders and directors thereof),
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification or compliance
has been effected pursuant to this Agreement, and each underwriter or Qualified
Independent Underwriter, if any, and each person who controls any underwriter or
Qualified Independent Underwriter within the meaning of Section 15 of the
Securities Act, against all costs, expenses, claims, losses, damages,
liabilities, actions or proceedings (whether commenced or threatened) in respect
thereof ("Claims") (including any Claims incurred in settlement of any
litigation, commenced or threatened) to which each such indemnified party may be
subject under the Securities Act or otherwise insofar as such Claims arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements
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therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final or summary prospectus or any
amendment or supplement thereto, together with the documents incorporated by
reference therein, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or (iii) any violation by the Company of any federal,
state or common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse each Holder, each of its officers,
fiduciaries, employees, stockholders, directors and partners, each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such Claim, provided
that the Company will not be liable in any such case to the extent that any such
Claim, arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
such Holder, controlling person or underwriter and stated to be specifically for
use therein. If the Holders are represented by counsel other than counsel for
the Company, the Company will not be obligated under this subsection (a) to
reimburse legal fees and expenses of more than one separate counsel for the
Holders. Such indemnity and reimbursement of expenses shall remain in full force
and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
Holder.
(b) BY THE HOLDERS. In the event of any
registration of any securities of any Holder under the Securities Act pursuant
to this Agreement, each Holder will and hereby does indemnify and hold harmless,
to the fullest extent permitted by law, the Company and each other Holder, and
each of their respective officers, fiduciaries, employees, stockholders,
directors and general and limited partners (and the officers, fiduciaries,
employees, stockholders and directors thereof), and each person controlling the
Company and such other Holder within the meaning of Section 15 of the Securities
Act, with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter or Qualified
Independent Underwriter, if any, and each person who controls any underwriter or
Qualified Independent Underwriter within the meaning of Section 15 of the
Securities Act, against all Claims (including any Claims incurred in settlement
of any litigation, commenced or threatened) to which each such indemnified party
may be subject under the Securities Act or otherwise insofar as such Claims
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under which
such securities were registered under the Securities Act or 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 (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact
12
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by such Holder of any federal, state or
common law rule or regulation applicable to such Holder and relating to action
required of or inaction by such Holder in connection with any such registration,
and such Holder will reimburse the Company and each other Holder, and each of
their respective officers, fiduciaries, employees, stockholders, directors and
partners, each person controlling the Company or such other Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such Claim, provided that, in each case only to the
extent that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) or violation is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the net proceeds from the
shares sold by such Holder. Such indemnity and reimbursement of expenses shall
remain in full force and effect regardless of any investigation made by or on
behalf of such indemnified party and shall survive the transfer of such
securities by such Holder.
(c) PROCEDURE FOR INDEMNIFICATION. Each party
indemnified under paragraph (a) or (b) of this Section 1.7 (the "Indemnified
Party") shall, promptly after receipt of notice of any claim or the commencement
of any action against such Indemnified Party in respect of which indemnity may
be sought, notify the party required to provide indemnification (the
"Indemnifying Party") in writing of the claim or the commencement thereof;
provided that the failure of the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which it may
have to an Indemnified Party on account of the indemnity agreement contained in
paragraph (a) or (b) of this Section 1.7, unless the Indemnifying Party was
materially prejudiced by such failure, and in no event shall relieve the
Indemnifying Party from any other liability which it may have to such
Indemnified Party. If any such claim or action shall be brought against an
Indemnified Party, it shall notify the Indemnifying Party thereof and the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable (except to the extent the proviso to this
sentence is applicable, in which event it will be so liable) to the Indemnified
Party under this Section 1.7 for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided that each Indemnified Party
shall have the right to employ separate counsel to represent it and assume its
defense (in which case, the Indemnifying Party shall not represent it) if (i)
upon the advice of counsel, the representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them, (ii) in the event the Indemnifying Party has not assumed the
defense
13
thereof within ten (10) days of receipt of notice of such claim or commencement
of action, and in which case the fees and expenses of one such separate counsel
shall be paid by the Indemnifying Party or (iii) if such Indemnified Party who
is a defendant in any action or proceeding which is also brought against the
Indemnifying Party reasonably shall have concluded that there may be one or more
legal defenses available to such Indemnified Party which are not available to
the Indemnifying Party. If any Indemnified Party employs such separate counsel
it will not enter into any settlement agreement which is not approved by the
Indemnifying Party, such approval not to be unreasonably withheld. If the
Indemnifying Party so assumes the defense thereof, it may not agree to any
settlement of any such claim or action as the result of which any remedy or
relief, other than monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party. In any action
hereunder as to which the Indemnifying Party has assumed the defense thereof
with counsel reasonably satisfactory to the Indemnified Party, the Indemnified
Party shall continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but, except as set forth above, the Indemnifying
Party shall not be obligated hereunder to reimburse the Indemnified Party for
the costs thereof.
If the indemnification provided for in this Section
1.7 shall for any reason be unavailable to an Indemnified Party in respect of
any loss, claim, damage or liability, or any action in respect thereof, referred
to therein, then each Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability, or action in respect
thereof, in such proportion as shall be appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied specifically for use in any registration statement, prospectus,
offering circular or other similar document by the Indemnifying Party on the one
hand or the Indemnified Party on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission, but not by reference to any Indemnified Party's
stock ownership in the Company. If, however, the allocation provided in the
second preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 1.7 were to be determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 1.7. In no
event, however, shall a Holder be required to contribute in excess of the amount
of the net proceeds received by such Selling Holder in
14
connection with the sale of securities in the offering which is the subject of
such loss, claim, damage or liability. The amount paid or payable by an
Indemnified Party as a result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this paragraph shall be deemed to
include, for purposes of this paragraph, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The indemnification and contribution agreements contained
herein shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of the Registrable Securities by any such party.
1.8 INFORMATION BY SELLING HOLDERS. The Holders in any
registration shall furnish to the Company such information regarding such
Holders as shall be necessary to enable the Company to comply with the
provisions hereof in connection with any registration, qualification or
compliance referred to in this Agreement.
1.9 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of securities of the Company to the public without
registration, after such time as a public market exists for the Common Stock,
the Company agrees to use its best efforts to:
(a) Make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act,
at all times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(b) File with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) Furnish to any Holder forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the effective
date of the first registration statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company and other
information in the possession of or reasonably obtainable by the Company as such
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such Holder to sell any such securities without
registration.
15
1.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Holders under Sections 1.2, 1.3 and 1.4
and Stockholders under Section 1.3 may be assigned in connection with any
transfer or assignment of Registrable Securities by a Holder or securities by a
Stockholder provided that: (a) such transfer may otherwise be effected in
accordance with applicable securities laws, (b) such transfer is effected in
compliance with the restrictions on transfer contained in any agreement between
the Company and the Holder or the Stockholder and (c) such assignee or
transferee agrees in writing to be bound by the terms of this Agreement and
assumes all of the obligations of the transferring Holder or Stockholder
hereunder. Subject to the terms of Section 1.12, no transfer or assignment will
divest a Holder or Stockholder or any subsequent owner of such rights and powers
unless all Registrable Securities held thereby, in the case of a Holder or a
transferee thereof, are transferred or assigned.
1.11 "MARKET STAND-OFF" AGREEMENT. Each Holder and Stockholder
hereby agrees that, during the period of duration specified by the Company or by
an underwriter of Common Stock or other securities of the Company, following the
date of the first sale to the public pursuant to a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period (such period, whether or not it relates to such a first
sale to the public, is referred to elsewhere in this Agreement as a "Lock Up
Period"), except the securities included in such registration; provided,
however, that:
(a) all officers and directors of the Company
and all other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements; and
(b) such market stand-off time period shall not
(i) exceed one hundred eighty (180) days in connection with the first
registration statement of the Company which covers Common Stock or other
securities to be sold on its behalf to the public, and (ii) exceed ninety (90)
days with respect to any subsequent registration statement, provided that if an
underwriting agreement entered into in connection with an offering has a shorter
market stand-off period than that period set forth in this clause (b), then such
period shall be reduced to the shorter period, and provided further that, no
Holder shall be subject to any such market stand-off period under this clause
(b)(ii) with respect to any such subsequent registration statement unless any
securities of the Company held by the Holder are included in such registration
statement.
Notwithstanding the foregoing, the obligations described in
this Section 1.11 shall not apply to a registration relating solely to stock
option or other employee benefit plans on Form S-8 or similar forms which may be
promulgated in the future, or a registration
16
relating solely to a Commission Rule 145 transaction on Form S-4, Form S-14 or
Form S-15 or similar forms which may be promulgated in the future. In the event
that the underwriter or underwriters of such offering of Common Stock shall
release any shares of Common Stock from any stand-off contained in an
underwriting agreement or similar agreements, such release will apply to the
similar restrictions herein on a pro-rata basis among all holders of Common
Stock subject to such agreement or similar agreements.
This Section 1.11 shall be binding on all transferees or
assignees of Registrable Securities or securities previously held by a
Stockholder, whether or not such persons are entitled to registration rights
pursuant to Section 1.10, and if requested by the Company, any such transferee
or assignee shall confirm in writing its agreement to be bound by the provisions
hereof.
1.12 TERMINATION OF REGISTRATION RIGHTS. Except for the
provisions of Section 1.11, the registration rights granted in Sections 1.2, 1.3
and 1.4 shall terminate, with respect to each Holder and Stockholder, as
applicable, at such time as either (a) all Registrable Securities or securities
of the Company held by such Holder or Stockholder, respectively, can be sold
pursuant to Rule 144(k) without compliance with the registration requirements of
the Securities Act or (b) all Registrable Securities or securities of the
Company held by such Holder or Stockholder, respectively, constitute less than
one percent (1.0%) of the fully diluted voting securities of the Company and can
be sold without volume limitations under Rule 144. The respective indemnities,
representations and warranties of the Holders, Stockholders and the Company
shall survive such termination.
1.13 NO INCONSISTENT AGREEMENTS. The rights granted to the
holders of Registrable Securities hereunder do not in any way conflict with and
are not inconsistent with any other agreements to which the Company is a party
or by which it is bound. Without the prior written consent of the Purchasers
holding a majority of the Registrable Securities, the Company will not on or
after the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted in this Agreement or
otherwise conflicts with the provisions hereof, other than any lock-up agreement
with the underwriters in connection with any registered offering effected
hereunder, pursuant to which the Company shall agree not to register for sale,
and the Company shall agree not to sell or otherwise dispose of, Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
for a specified period following the registered offering. The Company further
agrees that if any other registration rights agreement entered into after the
date of this Agreement with respect to any of its securities contains terms
which are more favorable to, or less restrictive on, the other party thereto
than the terms and conditions in this Agreement are (insofar as they are
applicable) to the Purchasers, then the terms and conditions of this Agreement
shall immediately be deemed to have been amended without further action by the
Company or any of the Holders of Registrable Securities so that the Purchasers
shall be entitled to the benefit of any such more favorable or less restrictive
terms or conditions.
17
1.14 RIGHT OF FIRST OFFER BY THE COMPANY. The Company hereby
grants to each Holder a right of first offer with respect to future sales by the
Company of its Shares (as hereinafter defined). Each time the Company proposes
to offer any shares of, or securities convertible into or exchangeable or
exercisable for any shares of, any class of its capital stock ("Shares"), the
Company shall first make an offering of such Shares to the Holders in accordance
with the following provisions.
(a) The Company shall deliver a notice
("Notice") to the Holders 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 upon which it proposes to offer such Shares.
(b) By written notification received by the
Company, within twenty (20) calendar days after receipt of the Notice, each
Holder may elect to purchase or obtain, at the price and on the terms specified
in the Notice, up to that portion of such Shares that equals the proportion that
the number of shares of Common Stock issued to and held by that Holder bears to
the total number of shares of Common Stock then outstanding (assuming full
conversion of all convertible securities).
(c) If all Shares that the Holders are entitled
to obtain pursuant to subsection 1.14(b) are not elected to be obtained as
provided in such subsection, the Company may, during the ninety (90) day period
following the expiration of the period provided in subsection 1.14(b) hereof,
offer the remaining unsubscribed portion of such 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 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 ninety (90) days of 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 Holders in accordance herewith.
(d) The right of first offer in this Section
1.14 shall not be applicable to (i) the issuance or sale of shares of Common
Stock (or options therefor) to employees, directors and consultants for the
primary purpose of soliciting or retaining their services; (ii) the issuance
of securities pursuant to a bona fide, firmly underwritten public offering of
shares of Common Stock, registered under the Securities Act; (iii) the
issuance of securities pursuant to the conversion or exercise of convertible
or exercisable securities as to which the Holders have previously been
afforded a right to purchase under this Section 1.14; (iv) the issuance of
securities in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange
of stock or otherwise; or (v) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has
business relationships, provided such issuances are for other than primarily
equity financing purposes and provided that at the time of any such issuance,
the aggregate of such issuance and similar issuances in the preceding twelve
month period do not exceed 1% of the then outstanding Common Stock (assuming
full conversion and exercise of all convertible
18
and exercisable securities) and provided, further, that the aggregate of all
such issuances referred to in this Section 1.14(d) shall not exceed 3.1 million
shares of Common Stock (before making applicable or appropriate adjustment for
any stock splits, stock dividends and the like following the date of this
Agreement) and any such issuances in excess of such amount shall be otherwise
subject to the terms of this Section 1.14.
2. MISCELLANEOUS.
2.1 WAIVERS AND AMENDMENTS. With the written consent of the
Company and the Purchasers holding more than 75% of the Registrable Securities,
the obligations of the Company and the rights of the Purchasers under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent, the Company, when authorized by
resolution of the Board of Directors, may amend this Agreement or enter into a
supplementary agreement for the purpose of adding any provisions to this
Agreement; provided, however, that no such waiver or supplemental agreement
shall reduce the above percentage of Registrable Securities, the holders of
which are required to consent to any waiver or supplemental agreement, without
the consent of the record or beneficial holders of 75% of the Registrable
Securities. Neither this Agreement nor any provisions hereof may be changed,
waived, discharged or terminated orally, but only by a signed statement in
writing. Any amendment, waiver or supplementary agreement effected in accordance
with this paragraph shall be binding upon each Purchaser, each future holder of
any Registrable Securities, each Stockholder and the Company.
2.2 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (or in the form of a facsimile
(confirmed in writing) to be given only during the recipient's normal business
hours unless arrangements have otherwise been made to receive such notice by
facsimile outside of normal business hours) and shall be mailed by registered or
certified mail or by a nationally recognized overnight courier, postage prepaid,
or otherwise delivered by hand, messenger, or facsimile (as provided above)
addressed (a) if to a Purchaser, at the address or facsimile number for such
Purchaser set forth on the signature pages hereto or at such other address or
facsimile number as such Purchaser shall have furnished to the Company in
writing, (b) if to any Stockholder, at the address or facsimile number for such
Stockholder set forth on the signature pages hereto, (c) if to any other holder
of securities of the Company entitled to notices and other communications
hereunder, at such address or facsimile number as such holder shall have
furnished the Company in writing or, until any such holder so furnishes an
address or facsimile number to the Company, then to and at the address or
facsimile number of the last holder of such securities who has so furnished an
address or facsimile number to the Company, or (d) if to the Company, to 1901
Main Street, 2nd Floor, Santa Monica, California 90405 addressed to the
attention of the Corporate Secretary (or at such other address as the Company
shall have furnished in writing to the Purchasers) with a copy to Riordan &
McKinzie, 300 South Grand Avenue, 29th Floor, Los Angeles, California 90071,
Attention: Timothy F. Sylvester, Esq.
19
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered, if
delivered personally, or, if sent by mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid, or, if by nationally recognized overnight courier, the
following business day after it has been timely delivered to or deposited with
such courier, addressed and mailed as aforesaid, or, if by facsimile, pursuant
to the above, when received.
2.3 DESCRIPTIVE HEADINGS. The descriptive headings herein have
been inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
2.4 GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the State of Delaware as applied to agreements
among California residents, made and to be performed entirely within the State
of Delaware.
2.5 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument, but only one of
which need be produced.
2.6 FACSIMILE SIGNATURES. Any signature page delivered by a
fax machine or telecopy machine shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party which requires it.
2.7 EXPENSES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.8 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided in this Agreement, this Agreement shall benefit and bind the
successors, assigns, heirs, executors and administrators of the parties to this
Agreement.
2.9 ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter of this Agreement.
2.10 SEPARABILITY; SEVERABILITY. Unless expressly provided in
this Agreement, the rights of each Purchaser and Stockholder under this
Agreement are several rights, not rights jointly held with any other Purchasers
or Stockholders. Any invalidity, illegality or limitation on the enforceability
of this Agreement with respect to any Purchaser or Stockholder
20
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Purchasers or Stockholders. In the event that any provision
of this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, invalid, unenforceable or void, this Agreement shall continue in
full force and effect without said provision.
2.11 STOCK SPLITS. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination or other recapitalization of shares by the Company occurring after
the date of this Agreement.
2.12 REMEDIES. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition to any
other remedy to which it may be entitled at law or in equity, shall be entitled
to injunctive relief, including specific performance, to enforce such
obligations without the posting of any bond, and, if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties hereto shall raise the defense that there is an adequate remedy at
law.
2.13 FURTHER ASSURANCES. Each party hereto shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments,
and documents as any other party hereto reasonably may request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
21
SIGNATURE PAGE FOR INTERPACKET GROUP, INC.
INVESTOR RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Investor Rights
Agreement as of the date first above written.
COMPANY: INTERPACKET GROUP, INC., a
Delaware corporation
By: /s/ Jonathan Gans
-------------------------------
Name: Jonathan Gans
Title: Chief Executive Officer
Address: 1901 Main Street
Santa Monica, CA 90405
Fax: (310) 382-3310
PURCHASERS: PEQUOT PRIVATE EQUITY FUND II, L.P., a
Delaware limited partnership
By: /s/ Amiel Peratz
-------------------------------
Name: Amiel Peratz
Title: Chief Operating
Officer--Pequot Capital
Management, as Investment
Manager
Address: 500 Nyala Farm Road
Westport, CT 06880
Fax: (203) 429-2400
INTEL CORPORATION, a
Delaware corporation
By: /s/ Arvind Sodhani
-------------------------------
Name: Arvind Sodhani
Title: Vice President & Treasurer
Address: 2200 Mission College Blvd.
Santa Clara, CA 95052
Attn: M&A Portfolio
Manager - M/S RN6-46
Fax No. (408) 765-6038
With copies to:
Intel Corporation
2200 Mission College Blvd.
Santa Clara, CA 95052
Attention: General Counsel
Fax No. (408) 765-1859
BAYSTAR CAPITAL, L.P., a
Delaware limited partnership
By: BayStar Capital Management LLC,
its General Partner
By: /s/ Steven M. Lamar
-----------------------
Name: Steven M. Lamar
Title: Vice President
Address: 1500 West Market Street,
Suite 200
Mequon, WI 53092
Fax: (415) 835-3777
H&Q INTERPACKET GROUP INVESTORS, LLC
By: /s/ Robert N. Savoie
------------------------------
Name: Robert N. Savoie
Title: Tax Director,
Attorney-in-Fact
Address: One Bush Street
San Francisco, CA 94104
HAMBRECHT & QUIST CALIFORNIA
By: /s/ Robert N. Savoie
-----------------------------------
Name: Robert N. Savoie
Title: Tax Director, Attorney-in-Fact
Address: One Bush Street
San Francisco, CA 94104
HAMBRECHT & QUIST EMPLOYEE VENTURE
FUND, L.P. II
By: H&Q Venture Management, L.L.C.,
its General Partner
By: /s/ Robert N. Savoie
---------------------------
Name: Robert N. Savoie
Title: Tax Director,
Attorney-in-Fact
Address: One Bush Street
San Francisco, CA 94104
ACCESS TECHNOLOGY PARTNERS, L.P.
By: Access Technology Management, L.L.C.,
its General Partner
By: H&Q Venture Management, L.L.C.,
its Managing Member
By: /s/ Robert N. Savoie
-----------------------
Name: Robert N. Savoie
Title: Tax Director,
Attorney-in-Fact
Address: One Bush Street
San Francisco, CA 94104
ACCESS TECHNOLOGY PARTNERS BROKERS
FUND, L.P.
By: H&Q Venture Management, L.L.C.,
its General Partner
By: /s/ Robert N. Savoie
----------------------------
Name: Robert N. Savoie
Title: Tax Director,
Attorney-in-Fact
Address: One Bush Street
San Francisco, CA 94104
STOCKHOLDERS: /s/ Jonathan Gans
----------------------------------------------
Jonathan Gans
Address:
--------------------------
--------------------------
/s/ Peter Zimble
----------------------------------------------
Peter Zimble
Address:
--------------------------
--------------------------
/s/ Julie Spira
----------------------------------------------
Julie Spira
Address: 13219 Fiji Wy. #F
--------------------------
Marina del Rey, CA 90292
--------------------------
/s/ James E. Kolsrud
----------------------------------------------
James E. Kolsrud
Address: 1021 23rd St.
--------------------------
Santa Monica, CA 90403
--------------------------
/s/ Norman J. Pattiz
----------------------------------------------
Norman J. Pattiz
Address:
--------------------------
--------------------------
/s/ Jeffrey C. Barbakow
----------------------------------------------
Jeffrey C. Barbakow
Address:
--------------------------
--------------------------
/s/ Joseph T. Arsenio II
----------------------------------------------
Joseph T. Arsenio II
Address:
--------------------------
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DELAWARE CHARTER GUARANTEE & TRUST
COMPANY TTEE FBO: JOSEPH T. ARSENIO II
By: /s/ Kathleen Grunewald
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Name: Kathleen Grunewald
Title: IRA Controller,
Per Limited Power
of Attorney
Address: One Bush Street, 13th Floor
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San Francisco, CA 94121
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PURCHASERS: BAYSTAR INTERNATIONAL LTD, a
British Virgin Island corporation
By: BayStar International Management, LLC,
its General Partner
By: /s/ Steven M. Lamar
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Name: Steven M. Lamar
Title: Vice President
Address: 1500 West Market Street, Suite 200
Mequon, WI 53092
Fax: (415) 835-3777
EXHIBIT A
Pequot Private Equity Fund II, L.P.
Intel Corporation
BayStar Capital, L.P.
BayStar International Ltd.
H&Q InterPacket Group Investors, LLC
Hambrecht & Quist California
Hambrecht & Quist Employee Venture Fund, L.P. II
Access Technology Partners, L.P.
Access Technology Partners Brokers Fund, L.P.