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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Stock....................................................................................1
1.1 Sale and Issuance of Common Stock...................................................................1
1.2 Closing.............................................................................................1
2. Representations and Warranties of the Company.................................................................1
2.1 Organization, Good Standing and Qualification.......................................................1
2.2 Capitalization and Voting Rights....................................................................2
2.3 Subsidiaries........................................................................................2
2.4 Authorization.......................................................................................2
2.5 Valid Issuance of Common Stock......................................................................3
2.6 Governmental Consents...............................................................................3
2.7 Offering............................................................................................3
2.8 Litigation..........................................................................................3
2.9 Proprietary Information Agreements..................................................................4
2.10 Compliance with Other Instruments..................................................................4
2.11 Agreements; Action.................................................................................4
2.12 Related-Party Transactions.........................................................................5
2.13 No Financial Statements............................................................................5
2.14 Taxes..............................................................................................6
2.15 Permits............................................................................................6
2.16 Disclosure.........................................................................................6
2.17 Registration Rights................................................................................6
2.18 Corporate Documents................................................................................6
2.19 Title to Property and Assets.......................................................................7
2.20 Manufacturing and Marketing Rights.................................................................7
2.21 Section 83(b) Elections............................................................................7
2.22 Qualified Small Business Stock.....................................................................7
3. Representations and Warranties of Purchaser...................................................................7
3.1 Authorization.......................................................................................7
3.2 Purchase Entirely for Own Account...................................................................8
3.3 Disclosure of Information...........................................................................8
3.4 Investment Experience...............................................................................8
3.5 Accredited Investor.................................................................................8
3.6 Restricted Securities...............................................................................8
3.7 Further Limitations on Disposition..................................................................8
3.8 Legends.............................................................................................9
4. Conditions of Purchaser's Obligations at Closing..............................................................9
4.1 Representations and Warranties......................................................................9
4.2 Performance.........................................................................................9
4.3 Officer's Certificates..............................................................................9
4.4 Qualifications.....................................................................................10
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4.5 Proceedings and Documents..........................................................................10
4.6 Proprietary Information and Inventions Agreement...................................................10
4.7 Board of Directors.................................................................................10
4.8 Rights Agreement...................................................................................10
4.9 Voting Agreement...................................................................................10
4.10 Co-Sale Agreement..................................................................................10
4.11 Operating Agreement................................................................................11
4.12 License Agreement..................................................................................11
4.13 Employment Agreements..............................................................................11
4.14 Sale and Issuance of Series A Preferred Stock......................................................11
5. Conditions of the Company's Obligations at Closing...........................................................11
5.1 Representations and Warranties.....................................................................11
5.2 Payment of Purchase Price..........................................................................11
5.3 Qualifications.....................................................................................11
6. Miscellaneous................................................................................................11
6.1 Survival...........................................................................................11
6.2 Successors and Assigns.............................................................................11
6.3 Governing Law......................................................................................11
6.4 Counterparts.......................................................................................12
6.5 Titles and Subtitles...............................................................................12
6.6 Notices............................................................................................12
6.7 Finder's Fee.......................................................................................12
6.8 Expenses...........................................................................................12
6.9 Amendments and Waivers.............................................................................12
6.10 Severability.......................................................................................13
6.11 Corporate Securities Law...........................................................................13
6.12 Aggregation of Stock...............................................................................13
6.13 Entire Agreement...................................................................................13
EXHIBIT A Amended and Restated Certificate of Incorporation
EXHIBIT B Rights Agreement
EXHIBIT C Voting Agreement
EXHIBIT D Right of First Refusal and Co-Sale Agreement
EXHIBIT E Bylaws of the Company
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LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 30th day of July, 1999,
by and among LetsTalk.com, Inc., a Delaware corporation (the "Company"), and
Let's Talk Cellular & Wireless, Inc., a Florida corporation (the "Purchaser.")
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock.
(a) On or prior to the Closing (as defined below), the Company
shall have authorized the sale and issuance to Purchaser of an aggregate of Six
Million Six Hundred Thousand (6,600,000) shares of the Common Stock, par value
$0.0001 of the Company (the "Common Stock").
(b) Subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase at the Closing and the Company agrees to sell and
issue to Purchaser at the Closing, Six Million Six Hundred Thousand (6,600,000)
shares of the Common Stock in exchange for certain intellectual property
pursuant to the terms of the License Agreement (as defined below). The fair
market value of the Common Stock as of the date hereof is $0.25 per share.
1.2 Closing. The purchase and sale of the Common Stock shall
take place at the offices of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at 10:00 A.M.,
on July 30, 1999, or at such other time and place as the Company and Purchaser
mutually agree upon orally or in writing (which time and place are designated as
the "Closing"). At the Closing the Company shall deliver to Purchaser a
certificate representing the Common Stock that such Purchaser is purchasing
against payment of the purchase price therefor by check, wire transfer,
cancellation of indebtedness, or any combination thereof.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchaser that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") furnished Purchaser and
special counsel for the Purchaser, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as currently proposed to
be conducted. The Company is duly qualified to transact
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business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business or properties.
2.2 Capitalization and Voting Rights. The authorized capital of
the Company consists, or will consist immediately prior to the Closing, of:
(a) Preferred Stock. Twelve Million (12,000,000) shares of
Preferred Stock, par value $0.0001 (the "Preferred Stock"), Eight Million Eight
Hundred Thousand (8,800,000) of which shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock") and up to Eight Million
(8,000,000) of which will be sold pursuant to a Series A Preferred Stock
Purchase Agreement, by and among the Company and certain investors of the
Company dated the date hereof. The rights, privileges and preferences of the
Series A Preferred Stock will be as stated in the Company's Amended and Restated
Certificate of Incorporation attached hereto as Exhibit A (the "Restated
Certificate").
(b) Common Stock. Thirty-Six Million (36,000,000) shares of
common stock, par value $0.0001 ("Common Stock"), of which 2,150,000 shares are
issued and outstanding and 6,600,000 will be sold pursuant to this Agreement.
(c) The outstanding shares of Common Stock are owned by the
stockholders and in the numbers specified in the Schedule of Exceptions.
(d) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Act") and any relevant state securities laws, or
pursuant to valid exemptions therefrom.
(e) Except for (A) the conversion privileges of the Series A
Preferred Stock to be issued under this Agreement, (B) the rights provided in
Section 2.4 of the Rights Agreement, and (C) currently outstanding options to
purchase 440,000 shares of Common Stock granted to employees and other service
providers pursuant to the Company's 1999 Stock Plan, there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company has reserved 2,410,000 shares of its Common Stock for
purchase upon exercise of options to be granted in the future under the
Company's 1999 Stock Plan. Except for the Voting Agreement (as defined below),
the Company is not a party or subject to any agreement or understanding, and, to
the best of the Company's knowledge, there is no agreement or understanding
between any persons and/or entities, which affects or relates to the voting or
giving of written consents with respect to any security or by a director of the
Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, or hold any rights to acquire, any interest in any other
corporation, association, or other business entity nor has the Company ever held
such interest. The Company is not a participant in any joint venture,
partnership, or similar arrangement nor has the Company ever been a participant
in any such arrangement.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this
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Agreement, the Investors' Rights Agreement in the form attached hereto as
Exhibit B (the "Rights Agreement"), the Voting Agreement in the form attached
hereto as Exhibit C (the "Voting Agreement"), and the Right of First Refusal and
Co-Sale Agreement in the form attached hereto as Exhibit D (the "Co-sale
Agreement"), the performance of all obligations of the Company hereunder and
thereunder, the Restated Certificate and the authorization, issuance (or
reservation for issuance), sale and delivery of the Common Stock being sold
hereunder has been taken or will be taken prior to the Closing, and this
Agreement, the Rights Agreement, the Voting Agreement and the Co-sale Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws.
2.5 Valid Issuance of Common Stock. The Common Stock that is
being purchased by Purchaser hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and the Rights Agreement and under applicable state and federal
securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except the filing pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, which filing will be effected within 15 days of the sale of the
Common Stock hereunder, and such other filings pursuant to applicable federal
and state securities laws and blue sky laws, which filings will be effected
within the required statutory period.
2.7 Offering. Subject in part to the truth and accuracy of
Purchaser's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Preferred Stock as contemplated by this
Agreement are exempt from the registration requirements of any applicable state
and federal securities laws, and neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
2.8 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of this Agreement, the Rights
Agreement, the Voting Agreement or the Co-Sale Agreement, or the right of the
Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition, affairs
or prospects of the Company, financially or otherwise, or any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis for the foregoing. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened
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(or any basis therefor known to the Company) involving the prior employment of
any of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 Proprietary Information Agreements. Each employee, officer
and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form provided to special counsel to Purchaser. The
Company, after reasonable investigation, is not aware that any of its employees,
officers or consultants are in violation thereof, and the Company will use its
best efforts to prevent any such violation.
2.10 Compliance with Other Instruments. The Company is not in
violation or default of any provision of its Restated Certificate or Bylaws, or
of any instrument, judgment, order, writ, decree or contract to which it is a
party or by which it is bound, or, to the best of its knowledge, of any
provision of any federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance of this Agreement, the Rights
Agreement, the Voting Agreement and the Co-sale Agreement, and the consummation
of the transactions contemplated hereby and thereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties.
2.11 Agreements; Action.
(a) Except for the Rights Agreement, the Voting Agreement and
the Co-sale Agreement, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $5,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than the license of the Company's software
and products in the ordinary course of business), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $5,000 or, in the case of
indebtedness and/or liabilities individually less than $5,000, in
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excess of $25,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) All of the contracts, agreements and instruments set forth
on the Schedule of Exceptions pursuant to this Section 2.12 are valid, binding
and enforceable in accordance with their respective terms. The Company has
performed all material obligations required to be performed by it and is not in
default under or in breach of nor in receipt of any claim of default or breach
under any contract, agreement or instrument and the Company does not have any
present expectation or intention of not fully performing all such obligations.
No event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
under any contract, agreement or instrument. The Company has no knowledge of any
breach or anticipated breach by the other parties to any contract, agreement,
instrument or commitment.
(f) The special counsel to Purchaser has been supplied with a
true and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral arrangements,
contracts and agreements that are referred to on the Schedule of Exceptions
pursuant to this Section 2.12, together with all amendments, waivers or other
changes thereto.
(g) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws that adversely affects its business as now
conducted or as proposed to be, its properties or its financial condition.
2.12 Related-Party Transactions. No employee, stockholder, officer,
or director of the Company or member of his or her immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, except that members of the immediate families of employees,
officers, stockholders or directors of the Company may own stock in publicly
traded companies that may compete with the Company. No member of the immediate
family of any officer or director of the Company is directly or indirectly
interested in any material contract with the Company.
2.13 No Financial Statements. The Company is a newly formed entity
and has not prepared any financial statements. Except as disclosed in the
Schedule of Exceptions, the Company does not have any liabilities and has not
entered into any contracts other than the
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contracts contemplated hereby. The Company has not conducted business or entered
into any transaction other than the transactions related to or contemplated
hereby.
2.14 Taxes. Except as set forth on the Schedule of Exceptions, (a)
The Company has timely filed all tax returns (federal, state and local) required
to be filed by it and all Taxes (as defined below), assessments and other
government charges imposed upon the Company, or upon any of the assets, income
or franchises of the Company, have been timely paid or, if not yet payable, are
adequately accrued on the Company's books and records; (b) there are no actual
or proposed Tax deficiencies, assessments or adjustments with respect to the
Company or any assets or operations of the Company; (c) no consent has been
given with respect to the Company to extend the time in which any Tax may be
assessed or collected by any taxing authority; (d) there are no ongoing or
pending Tax audits by any taxing authority against the Company; (e) the Company
has never filed a consent relating to any assets or property pursuant to Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), relating
to collapsible corporations; and (f) none of the assets or income items of the
Company has been or potentially is subject to Tax under Code Section 1374 (or
any corresponding provision of state, local or foreign law). "Tax" or "Taxes"
means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall, profits, environmental, customs, capital stock, franchise, employees'
income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative or add-on minimum or other similar tax,
governmental fee, governmental assessment or governmental charge of any kind
whatsoever, including any interest, penalties or additions to Tax or additional
amounts with respect to the foregoing.
2.15 Permits. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted. The
Company is not in default in any material respect under any of such franchises,
permits, licenses, or other similar authority.
2.16 Disclosure. The Company has fully provided Purchaser with all
the information that such Purchaser has requested for deciding whether to
purchase the Common Stock and all information that the Company believes is
reasonably necessary to enable such Purchaser to make such decision. Neither
this Agreement, the Rights Agreement, the Voting Agreement, the Co-sale
Agreement nor any other statements or certificates made or delivered in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
2.17 Registration Rights. Except as provided in the Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.18 Corporate Documents. Except for amendments necessary to
satisfy representations and warranties or conditions contained herein (the form
of which amendments
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has been approved by Purchaser), the Restated Certificate and Bylaws of the
Company are in the form attached hereto as Exhibits A and E, respectively. The
minute books of the Company provided to Purchaser contain a complete summary of
all meetings of directors and stockholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.19 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens that arise in the ordinary course of
business, none of which, individually or in the aggregate, materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases and
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.20 Manufacturing and Marketing Rights. The Company has not
granted rights to manufacture, produce, assemble, license, market or sell its
products to any person and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products.
2.21 Section 83(b) Elections. All individuals who have purchased
unvested shares of the Company's Common Stock have timely filed elections under
Section 83(b) of the Code and any analogous provisions of applicable state tax
laws.
2.22 Qualified Small Business Stock. As of and immediately
following the date hereof: (i) the Company will be a domestic C corporation,
(ii) the Company's (and any predecessor's) aggregate gross assets, as defined by
Code Section 1202(d)(2), at no time between inception of the Company through the
date hereof, have exceeded $50 million, taking into account the assets of any
corporations required to be aggregated with the Company in accordance with Code
Section 1202(d)(3), (iii) the Company has not purchased more than five percent
(5%) of its own stock as described in Code Section 1202(c)(3)(B) during the
one-year period preceding the date hereof, (iv) the Company is an eligible
corporation, as defined by Code Section 1202 (e) (4), and (v) as of the Initial
Closing, at least eighty percent (by value) of the assets of the Company will,
in accordance with Code Section 1202(e)(6), be considered to be used in the
active conduct of a qualified trade or business.
3. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants that:
3.1 Authorization. Such Purchaser has full power and authority to
enter into this Agreement and the Rights Agreement, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Rights Agreement may be limited by applicable federal or state securities
laws.
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3.2 Purchase Entirely for Own Account. This Agreement is made with
such Purchaser in reliance upon such Purchaser's representation to the Company,
which by such Purchaser's execution of this Agreement such Purchaser hereby
confirms, that the Common Stock to be received by such Purchaser (collectively,
the "Securities") will be acquired for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, such Purchaser further represents that
such Purchaser does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities.
3.3 Disclosure of Information. Such Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Common Stock. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and the
business, properties, prospects and financial condition of the Company. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of Purchaser to rely
thereon.
3.4 Investment Experience. Such Purchaser is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Common
Preferred Stock. If other than an individual, Purchaser also represents it has
not been organized for the purpose of acquiring the Common Stock.
3.5 Accredited Investor. Such investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Purchaser understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Purchaser further agrees not
to make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 3 and the Rights Agreement provided:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
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(b) (i) Such Purchaser shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of Paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Purchaser that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his or her spouse or to
the siblings, lineal descendants or ancestors of such partner or his or her
spouse, if the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he or she were an original Purchaser hereunder.
3.8 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
4. Conditions of Purchaser's Obligations at Closing. The
obligations of Purchaser under subsection 1.1(c) of this Agreement are subject
to the fulfillment on or before the Closing of each of the following conditions,
the waiver of which shall not be effective against any Purchaser who does not
consent thereto:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
4.3 Officer's Certificates. The Company shall have delivered to
Purchaser all of the following documents:
(a) A Compliance Certificate, dated the date of the Closing,
stating that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled and stating that there
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shall have been no adverse change in the business, affairs, operations,
properties, assets or condition of the Company since the date of the Company's
formation;
(b) Certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of this Agreement, the Rights Agreement, the Voting Agreement, the Co-sale
Agreement and each of the other agreements contemplated hereby, the filing of
the amendment and restatement of the Restated Certificate, the adoption of the
Company's bylaws, the issuance and sale of the Common Stock and the consummation
of all other transactions contemplated by this Agreement;
(c) Certified copies of the Restated Certificate and the
Company's bylaws, each as in effect at the Closing;
(d) Certificates of good standing issued by the secretary of
state for each state where the Company is authorized to do business; and
(e) Copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law filings
and waivers of all preemptive rights and rights of first refusal).
4.4 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser's special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.6 Proprietary Information and Inventions Agreement. Each
employee of and consultant to the Company shall have entered into a Proprietary
Information and Inventions Agreement in the form previously provided to special
counsel for Purchaser.
4.7 Board of Directors. The directors of the Company shall be
Messrs. Berman, Beveridge, Brody, Eisenberg, Patmore, Tamer, and a
representative designated by HIG Capital Management.
4.8 Rights Agreement. The Company and Purchaser shall have entered
into the Rights Agreement.
4.9 Voting Agreement. The Company, LTCW, Messrs. Beveridge and
Tamer, and certain investors of the Company shall have entered into the Voting
Agreement.
4.10 Co-Sale Agreement. The Company, Purchaser, Messrs Beveridge
and Tamer, and certain investors of the Company shall have entered into the
Co-Sale Agreement.
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4.11 Operating Agreement. The Company and Purchaser shall have
entered into a binding Letter of Intent relating to an operating agreement in a
form satisfactory to Purchaser.
4.12 License Agreement. The Company and Purchaser shall have
entered into a license agreement in a form satisfactory to Purchaser (the
"License Agreement").
4.13 Employment Agreements. The Company and each of Delly Tamer
and Brett Beveridge shall have entered into an employment agreement in a form
satisfactory to Purchaser.
4.14 Sale and Issuance of Series A Preferred Stock. The Company
shall have sold and issued 8,000,000 shares of Series A Preferred Stock.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by
Purchaser:
5.1 Representations and Warranties. The representations and
warranties of Purchaser contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. The Purchaser shall have delivered
the purchase price specified in Section 1.2.
5.3 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. Miscellaneous.
6.1 Survival. The warranties, representations and covenants of the
Company and Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of Purchaser or the Company.
6.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
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6.4 Counterparts. 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.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
6.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Purchaser agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Purchaser or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless Purchaser from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
6.8 Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees of special counsel for Purchaser, not to exceed $15,000, and shall, upon
receipt of a bill therefor, reimburse the reasonable out-of-pocket expenses of
such counsel. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Rights Agreement, the Voting
Agreement, Co-Sale Agreement or the Restated Certificate, 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.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Purchaser. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
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6.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.11 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
6.12 Aggregation of Stock. All shares of the Common Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
6.13 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, CA 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------------
Name
-----------------------------------------
Title:
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, CA 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------------
Name David H. Eisenberg
-----------------------------------------
Title: CEO
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
19
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
20
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
---------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "WIRELESS NET, INC.", CHANGING ITS NAME FROM "WIRELESS NET, INC."
TO "LETS TALK.COM, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY OF JULY,
A.D. 1999, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/S/ EDWARD J. FREEL
[SEAL] --------------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
3063254 8100 AUTHENTICATION: 9894890
991314343 DATE: 07-29-29
21
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WIRELESS NET, INC.
(PURSUANT TO SECTIONS 242 AND 245 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
WIRELESS NET, INC., a corporation organized and existing under
and by virtue of the provisions of the General Corporation Law of the State of
Delaware (the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is WIRELESS NET, INC.
and that this corporation was originally incorporated pursuant to the General
Corporation Law on June 29, 1999 under the name WIRELESS NET, INC.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the Certificate of Incorporation of this
corporation, declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is LetsTalk.com, Inc.
ARTICLE II
The address of the registered office of this corporation in
the State of Delaware is 15 E. North Street, in the City of Dover, County of
Kent. The name of its registered agent at such address is Incorporating
Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
EILED 09:00AM 07/29/1999
991314363 - 3063254
22
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is Forty-Eight Million (48,000,000) shares. Thirty-Six Million (36,000,000)
shares shall be Common Stock and Twelve Million (12,000,000) shares shall be
Preferred Stock, each with a par value of $0.0001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Restated Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A Preferred
Stock, which series shall consist of Eight Million Eight Hundred Thousand
(8,800,000) shares (the "Series A Preferred Stock"), are as set forth below in
this Article IV(B). The Board of Directors is hereby authorized to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
additional series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or of any of them. Subject to
compliance with applicable protective voting rights that have been or may be
granted to the Preferred Stock or series thereof in Certificates of Designation
or this corporation's Certificate of Incorporation ("Protective Provisions"),
but notwithstanding any other rights of the Preferred Stock or any series
thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series (other than the Series A Preferred Stock), prior or
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
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1. Dividend Provisions. The holders of shares of Series A
Preferred Stock shall be entitled to receive dividends, out of any assets
legally available therefor, prior and in preference to any declaration or
payment of any dividend (payable other than in Common Stock or other securities
and rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of this corporation) on the
Common Stock of this corporation, at the rate of $0.20 per share per annum for
the Series A Preferred Stock (as adjusted for any stock splits, stock dividends,
recapitalizations or the like) or, if greater (as determined on a per annum
basis and on an as converted basis for the Series A Preferred Stock), an amount
equal to that paid on any other outstanding shares of this corporation, payable
when, as, and if declared by the Board of Directors. Such dividends shall not be
cumulative. The holders of the outstanding Series A Preferred Stock can waive
any dividend preference that such holders shall be entitled to receive under
this Section 1 upon the affirmative vote or written consent of the holders of at
least a majority of the Series A Preferred Stock then outstanding.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (i) $2.50 for each outstanding share of Series A Preferred Stock (the
"Original Series A Issue Price") and (ii) declared but unpaid dividends on such
share (subject to adjustment of such fixed dollar amounts for any stock splits,
stock dividends, combinations, recapitalizations or the like). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of this corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Preferred Stock
in proportion to the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution required by subsection
(a) of this Section 2 and any other distribution that may be required with
respect to series of Preferred Stock that may from time to time come into
existence, the remaining assets of this corporation available for distribution
to stockholders shall be distributed among the holders of Series A Preferred
Stock and Common Stock pro rata based on the number of shares of Common Stock
held by each (assuming full conversion of all such Series A Preferred Stock)
until with respect to the holders of Series A Preferred Stock, such holders
shall have received an aggregate of $5.00 per share (as adjusted for any stock
splits, stock dividends, recapitalizations or the like) (including amounts paid
pursuant to subsection (a) of this Section 2).
(c) Upon the completion of the distribution required by
subsections (a) and (b) of this Section 2 and any other distribution that may be
required with respect to series of Preferred Stock that may from time to time
come into existence, if assets remain in this corporation, the holders of the
Common Stock of this corporation, shall receive an amount equal to $5.00 per
share (as adjusted for any stock splits, stock dividends, recapitalizations or
the like) (including amounts paid pursuant to subsection (b) of this Section 2);
thereafter, if assets remain in this corporation, all of the remaining assets of
this corporation available for distribution to
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stockholders shall be distributed among the holders of Series A Preferred Stock
and Common Stock pro rata based on the number of shares of Common Stock held by
each (assuming full conversion of all such Series A Preferred Stock).
(d) For purposes of this Section 2, a liquidation, dissolution or
winding up of this corporation shall be deemed to be occasioned by, or to
include (unless the holders of at least a majority of the Series A Preferred
Stock then outstanding shall determine otherwise), (A) the acquisition of this
corporation by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) or more of
the outstanding voting power of this corporation; or (B) a sale of all or
substantially all of the assets of this corporation.
(i) In any of such events, if the consideration received by
this corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the thirty (30)
day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
closing; and
(C) If there is no active public market, the value shall
be the fair market value thereof, as mutually determined by this corporation and
the holders of at least a majority of the voting power of all then outstanding
shares of Preferred Stock.
(ii) In the event the requirements of this subsection 2(d) are
not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time
as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(d)(iv) hereof.
(iii) This corporation shall give each holder of record of
Series A Preferred Stock written notice of such impending transaction not later
than twenty (20) days prior to the stockholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and this corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after this corporation has
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given the first notice provided for herein or sooner than ten (10) days after
this corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of all then outstanding shares of such Preferred Stock.
3. Redemption.
(a) At any time from July 28, 2006 through October 28, 2006,
upon the receipt by this corporation of a written request from the holders of
not less than a majority of the then outstanding Series A Preferred Stock that
all, but not less than all, of the shares of Series A Preferred Stock be
redeemed, and concurrently with surrender by such holders of the certificates
representing such shares, this corporation shall, within ninety (90) days of
such request and to the extent it may lawfully do so, redeem in three (3) annual
installments (each payment date being referred to herein as a "Redemption Date")
the shares of Series A Preferred Stock by paying in cash therefor a sum per
share equal to $2.50 per share of Series A Preferred Stock (as adjusted for any
stock splits, stock dividends, recapitalizations or the like) plus all declared
but unpaid dividends on such share (the "Series A Redemption Price"). The number
of shares of Series A Preferred Stock that this corporation shall be required to
redeem on any one Redemption Date shall be equal to the amount determined by
dividing (i) the aggregate number of shares of Series A Preferred Stock
outstanding immediately prior to such Redemption Date by (ii) the number of
remaining Redemption Dates (including the Redemption Date to which such
calculation applies). Any redemption of Series A Preferred Stock effected
pursuant to this subsection 3(a) shall be made on a pro rata basis among the
holders of the Series A Preferred Stock in proportion to the number of shares of
Series A Preferred Stock.
(b) At least fifteen (15) but no more than thirty (30) days
prior to each Redemption Date, written notice shall be mailed, first class
postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the Series A
Preferred Stock to be redeemed, at the address last shown on the records of this
corporation for such holder, notifying such holder of the redemption to be
effected on the applicable Redemption Date, specifying the number of shares to
be redeemed from such holder, the Redemption Date, the Redemption Price, the
place at which payment may be obtained and calling upon such holder to surrender
to this corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice"). Except as provided in subsection (3)(c), on or after each
Redemption Date, each holder of Series A Preferred Stock to be redeemed on such
Redemption Date shall surrender to this corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the applicable Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(c) From and after each Redemption Date, unless there shall
have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series A Preferred Stock designated for redemption on such
Redemption Date in the Redemption Notice
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as holders of Series A Preferred Stock (except the right to receive the
applicable Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such shares shall
not thereafter be transferred on the books of this corporation or be deemed to
be outstanding for any purpose whatsoever. If the funds of this corporation
legally available for redemption of shares of Series A Preferred Stock on a
Redemption Date are insufficient to redeem the total number of shares of Series
A Preferred Stock to be redeemed on such date, those funds that are legally
available will be used to redeem the maximum possible number of such shares
ratably among the holders of such shares to be redeemed such that each holder of
a share of Series A Preferred Stock receives the same percentage of the
applicable Series A Redemption Price. The shares of Series A Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. At any time thereafter when additional funds of this
corporation are legally available for the redemption of shares of Series A
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares that this corporation has become obliged to redeem on any Redemption
Date but that it has not redeemed.
4. Conversion. The holders of the Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share and on or prior to the fifth day prior to the
Redemption Date, if any, as may have been fixed in any Redemption Notice with
respect to such share of the Series A Preferred Stock, at the office of this
corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price; provided,
however, that the Conversion Price for the Series A Preferred Stock shall be
subject to adjustment as set forth in subsection 4(d).
(b) Automatic Conversion. Each share of Series A Preferred Stock
shall automatically be converted into shares of Common Stock at the Conversion
Price at the time in effect for such Series A Preferred Stock immediately upon
the earlier of (i) this corporation's sale of its Common Stock in a firm
commitment underwritten public offering at a market valuation of at least
$100,000,000 immediately prior to effectiveness of this corporation's
registration statement and pursuant to a registration statement on Form S-1 or
Form SB-2 under the Securities Act of 1933, as amended, the public offering
price of which is not less than $15,000,000 in the aggregate or (ii) the date
specified by written consent or agreement of the holders of two-thirds of the
then outstanding shares of Series A Preferred Stock.
(c) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he or she shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice to this corporation at
its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued.
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This corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Series A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the persons entitled to receive the
Common Stock upon conversion of the Series A Preferred Stock shall not be deemed
to have converted such Series A Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for
Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the
Series A Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) In the event this corporation should at any time or from
time to time after the date upon which any shares of Series A Preferred Stock
were first issued (the "Purchase Date") fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase of the aggregate
of shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(ii) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(i), then, in
each such case for the purpose of this subsection 4(e), the holders of the
Series A Preferred Stock shall be entitled to a proportionate share of any such
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distribution as though they were the holders of the number of shares of Common
Stock of this corporation into which their shares of Series A Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of Common Stock of this corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of the
Series A Preferred Stock shall thereafter be entitled to receive upon conversion
of the Series A Preferred Stock the number of shares of stock or other
securities or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(g) No Impairment. This corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series A Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this Section 4,
this corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such series of Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received upon the conversion of
a share of Series A Preferred Stock.
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(i) Notices of Record Date. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Preferred Stock, at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Preferred Stock, this corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging
in best efforts to obtain the requisite shareholder approval of any necessary
amendment to this Restated Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section
4 to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
corporation.
5. Voting Rights.
(a) General Voting Rights. The holder of each share of Series A
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. Fractional votes
shall not, however, be permitted and any fractional voting rights available on
an as-converted basis (after aggregating all shares into which shares of Series
A Preferred Stock held by each holder could be converted) shall be rounded to
the nearest whole number (with one-half being rounded upward).
(b) Voting for the Election of Directors. As long as at least a
majority of the shares of Series A Preferred Stock originally issued remain
outstanding, the holders of such shares of Series A Preferred Stock shall be
entitled to elect four (4) directors of this corporation at each annual election
of directors. The holders of Series A Preferred Stock and Common Stock (voting
together as a single class and not as separate series, and on an as-converted
basis) shall be entitled to elect any remaining directors of this corporation.
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30
In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director occurring among the directors elected by the holders of
a class or series of stock pursuant to this Section 5(b), the remaining
directors so elected by that class or series may by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting
of such stockholders duly called for that purpose or pursuant to a written
consent of stockholders, and any vacancy thereby created may be filled by the
holders of that class or series of stock represented at the meeting or pursuant
to unanimous written consent.
6. Protective Provisions. So long as any shares of Series A
Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least two-thirds of the then outstanding shares of Series A
Preferred Stock:
(a) sell, convey, or otherwise dispose of all or substantially all
of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of this corporation is disposed of;
(b) increase or decrease (other than by redemption or conversion)
the total number of authorized shares of Series A Preferred Stock;
(c) declare or pay dividends on or make any distribution on
account of the Common Stock;
(d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over, or being on a parity with, the
Series A Preferred Stock with respect to dividends, liquidation, redemption or
voting;
(e) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that this restriction shall not apply
to (i) the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for this corporation
or any subsidiary pursuant to agreements under which this corporation has the
option to repurchase such shares at cost or at cost upon the occurrence of
certain events, such as the termination of employment; provided further,
however, that the total amount applied to the repurchase of shares of Common
Stock shall not exceed $25,000 during any twelve (12) month period or (ii) the
redemption of any share or shares of Preferred Stock in accordance with Section
3;
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(f) permit any subsidiary of this corporation to sell its
securities to a third party;
(g) amend this corporation's Certificate of Incorporation to alter
or change the rights, preferences or privileges of the shares of Series A
Preferred Stock; or
(h) change the authorized number of directors of this corporation.
7. Status of Redeemed or Converted Stock. In the event any shares
of Series A Preferred Stock shall be redeemed or converted pursuant to Section 3
or Section 4 hereof, the shares so redeemed or converted shall be cancelled and
shall not be issuable by this corporation. The Restated Certificate of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in this corporation's authorized capital stock.
C. Common Stock. The rights, preferences, privileges and
restrictions granted to and imposed on the Common Stock are as set forth below
in this Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of this corporation, the assets of this corporation shall be
distributed as provided in Section 2 of Division (B) of Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote for each such share, and shall be entitled to notice
of any stockholders' meeting in accordance with the bylaws of this corporation,
and shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
Except as otherwise provided in this Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed
from time to time by a bylaw or amendment thereof duly adopted by the Board of
Directors or by the stockholders.
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ARTICLE VII
Elections of directors need not be by written ballot unless
the Bylaws of this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of this corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent
permitted by the General Corporation Law as it now exists or as it may hereafter
be amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or
the adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article IX, by the stockholders of this
corporation shall not apply to or adversely affect any right or protection of a
director of this corporation existing at the time of such amendment, repeal,
modification or adoption.
ARTICLE X
This corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this
corporation is authorized to provide indemnification of (and advancement of
expenses to) agents of this corporation (and any other persons to which General
Corporation Law permits this corporation to provide indemnification) through
bylaw provisions, agreements with such agents or other persons, vote of
stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject only to limits created by applicable General
Corporation Law (statutory or non-statutory), with respect to actions for breach
of duty to this corporation, its stockholders, and others.
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Any amendment, repeal or modification of the foregoing
provisions of this Article XI shall not adversely affect any right or protection
of a director, officer, agent, or other person existing at the time of, or
increase the liability of any director of this corporation with respect to any
acts or omissions of such director, officer or agent occurring prior to, such
amendment, repeal or modification.
* * *
THIRD: The foregoing amendment and restatement was approved by
the holders of the requisite number of shares of said corporation in accordance
with Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted
in accordance with the provisions of Section 242 and 245 of the General
Corporation Law.
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IN WITNESS WHEREOF, this Restated Certificate of Incorporation
has been executed by the President and the Assistant Secretary of this
corporation on this 29th day of July, 1999.
/S/ Delly Tamer
--------------------------------------------------
Delly Tamer, President and Chief Executive Officer
/S/ William E. Growney, Jr.
---------------------------------------------------
William E. Growney, Jr., Assistant Secretary
35
EXHIBIT B
RIGHTS AGREEMENT
36
INVESTORS' RIGHTS AGREEMENT
JULY 30, 1999
37
TABLE OF CONTENTS
Page
1. Registration Rights...........................................................................................1
1.1 Definitions.........................................................................................1
1.2 Request for Registration............................................................................2
1.3 Company Registration................................................................................4
1.4 Form S-3 Registration...............................................................................5
1.5 Obligations of the Company..........................................................................6
1.6 Information from Holder.............................................................................7
1.7 Expenses of Registration............................................................................7
1.8 Indemnification.....................................................................................8
1.9 Reports Under Securities Exchange Act of 1934......................................................10
1.10 Assignment of Registration Rights.................................................................10
1.11 Limitations on Subsequent Registration Rights.....................................................11
1.12 "Market Stand-Off"Agreement.......................................................................11
1.13 Termination of Registration Rights................................................................11
2. Covenants of the Company.....................................................................................11
2.1 Delivery of Financial Statements...................................................................11
2.2 Inspection.........................................................................................12
2.3 Termination of Information and Inspection Covenants................................................13
2.4 Right of First Offer...............................................................................13
2.5 Key Person Life Insurance..........................................................................14
2.6 Proprietary Information and Inventions Agreement...................................................14
2.7 Employee and Other Stock Arrangements..............................................................14
2.8 Qualified Small Business Stock.....................................................................14
2.9 Termination of Certain Covenants...................................................................15
3. Miscellaneous................................................................................................15
3.1 Successors and Assigns.............................................................................15
3.2 Governing Law......................................................................................15
3.3 Counterparts.......................................................................................15
3.4 Titles and Subtitles...............................................................................15
3.5 Notices............................................................................................15
3.6 Expenses...........................................................................................15
3.7 Entire Agreement: Amendments and Waivers...........................................................15
3.8 Severability.......................................................................................16
3.9 Aggregation of Stock...............................................................................16
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INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 30th day of
July, 1999, by and among LetsTalk.com, Inc., a Delaware corporation (the
"Company"), the investors listed on Schedule A hereto, each of which is herein
referred to as an "Investor," the holders of Common Stock listed on Schedule B
hereto, each of which is herein referred to as a "Common Holder," and the
founders listed on Schedule C hereto, each of which is herein referred to as a
"Founder."
RECITALS
WHEREAS, the Company and the Investors are parties to the
Series A Preferred Stock Purchase Agreement of even date herewith (the "Series A
Agreement");
WHEREAS, the Company and Let's Talk Cellular & Wireless, Inc.,
a Florida corporation ("LTC"), are parties to a license agreement and a binding
Letter of Intent with the Company which provide for, among other things, the
purchase of shares of Common Stock of the Company by LTC, the license by LTC of
certain technology to the Company and the provision of certain services for the
Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement of
even date herewith (the "Common Stock Purchase Agreement") which provides for,
among other things, the purchase by HIG of shares of Common Stock of the
Company; and
WHEREAS, in order to induce the Company, the Founders and the
Common Holder to approve the issuance of the Series A Preferred Stock to induce
the Investors to invest funds in the Company pursuant to the Series A Agreement,
to provide further inducement to LTC to enter into the LTC Agreements and
purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder, Investors, the
Founders, the Common Holder and the Company hereby agree that this Agreement
shall govern the rights of the Investors and the Common Holder to cause the
Company to register shares of Common Stock issued or issuable to them and
certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other
39
documents filed by the Company with the SEC; provided, however, that Form S-3
shall not be deemed to include Form S-2 under the Act as in effect on the date
hereof.
(c) The term "Holder" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.10 hereof.
(d) The term "Initial Offering" means the Company's
first firm commitment underwritten public offering of its Common Stock under the
Act.
(e) The term "1934 Act" means the Securities Exchange
Act of 1934, as amended.
(f) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(g) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series A Preferred Stock,
(ii) the shares of Common Stock issued to the Common Holder; and (iii) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of,
the shares referenced in (i) and (ii) above, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned.
(h) The number of shares of "Registrable Securities"
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(i) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 Request for Registration.
(a) Subject to the conditions of this Section 1.2, if
the Company shall receive at any time six (6) months after the effective date of
the Initial Offering, a written request from the Holders of fifty percent (50%)
or more of the Registrable Securities then outstanding (the "Initiating
Holders") that the Company file a registration statement under the Act covering
the registration of Registrable Securities with an anticipated aggregate
offering price of at least $7,500,000, then the Company shall, within twenty
(20) days of the receipt thereof, give written notice of such request to all
Holders, and subject to the limitations of this Section 1.2, use all reasonable
efforts to effect, as soon as practicable, the registration under the Act of all
Registrable Securities that the Holders request to be registered in a written
request received by the Company within twenty (20) days of the mailing of the
Company's notice pursuant to this Section 1.2(a).
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(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Initiating Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities underwritten (including Registrable Securities), then the Company
shall so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in
the underwriting shall be allocated only to the Holders of such Registrable
Securities, on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 1.2:
(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, unless the Company is already subject to service in
such jurisdiction and except as may be required under the Act; or
(ii) after the Company has effected three (3)
registrations pursuant to this Section 1.2, and such registrations have been
declared or ordered effective; or
(iii) during the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of the
filing of, and ending on a date one hundred eighty (180) days following the
effective date of, a registration subject to Section 1.3 below, provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iv) if the Initiating Holders propose to dispose
of Registrable Securities that may be registered on Form S-3 pursuant to Section
1.4 hereof; or
(v) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Company's Chief Executive Officer or Chairman of the Board stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be effected at such time, in which event the Company
shall have the right to defer such filing for a period of not more than one
hundred
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twenty (120) days after receipt of the request of the Initiating Holders,
provided that such right to delay a request shall be exercised by the Company
not more than once in any twelve (12)-month period.
1.3 Company Registration.
(a) If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.3(c), use all reasonable efforts to cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.
(b) 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 has elected to include securities in such registration. The expenses
of such withdrawn registration shall be borne by the Company in accordance with
Section 1.7 hereof.
(c) Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling Holders according to the total amount of securities entitled
to be included therein owned by each selling Holder or in such other proportions
as shall mutually be agreed to by such selling Holders), but in no event shall
(i) the amount of securities of the selling Holders included in the offering be
reduced below twenty percent (20%) of the total amount of securities included in
such offering, unless such offering is the initial public offering of the
Company's
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securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other shareholder's
securities are included, (ii) the amount of securities of the selling Holders
included in the offering be reduced until all securities held by employees of
the Company or, after exclusion of all of any such employees' shares, other
stockholders of the Company have first been excluded from such offering, or
(iii) notwithstanding (i) or (ii) above, any shares being sold by a shareholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder that is a Holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling Holder,"
and any pro rata reduction with respect to such "selling Holder" shall be based
upon the aggregate amount of Registrable Securities owned by all such related
entities and individuals.
1.4 Form S-3 Registration. In case the Company shall receive
from the Holders of at least fifteen percent (15%) of the Registrable Securities
a written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all reasonable efforts to effect, as soon as
practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company, provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.4:
(i) if Form S-3 is not available for such
offering by the Holders;
(ii) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $2,500,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days
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after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period;
(iv) if the Company has, within the twelve (12)
month period preceding the date of such request, already effected two
registrations on Form S-3 for the Holders pursuant to this Section 1.4; or
(v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as requests for registration effected pursuant
to Section 1.2.
1.5 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred twenty (120) days or, if earlier, until the distribution contemplated in
the Registration Statement has been completed;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
(d) use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering, which
obligations shall include providing customary
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opinions of legal counsel and letters from accountants and paying certain
customary travel expenses in connection with the underwriters sales efforts;
(f) notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(g) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.6 Information from Holder. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7 Expenses of Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of one counsel for the selling Holders
shall be borne by the Company. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 or Section 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be requested in the withdrawn registration), unless, in
the case of a registration requested under Section 1.2, the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2, provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2 or 1.4. The
Company shall pay all legal expenses in connection with the preparation of
opinions of counsel necessary for sales of Registrable Securities pursuant to
Rule 144 of the Act unless counsel for the Company provides such opinions.
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1.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
shareholders of each Holder, legal counsel and accountants for each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws; and the Company will reimburse each such
Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection l.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided further, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, legal counsel and
accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information
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furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any person intended to be indemnified
pursuant to this subsection l.8(b), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.8(b) exceed the net proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section
1.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered
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into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this
Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.9 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the Initial Offering;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.10 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that (i) is a subsidiary, parent, partner, limited
partner, retired partner or shareholder of, or partnership under common control
with, a Holder, (ii) is a pledgee, or assignee of such pledgee, of Holder
pursuant to a bona fide loan transaction, (iii) is a Holder's family member or
trust for the benefit of an individual Holder, or (iv) after such assignment or
transfer, holds at least 100,000 shares of Registrable Securities (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.12 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
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1.11 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
1.12 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it will not, without the prior written consent of the managing underwriter,
during the period commencing on the date of the final prospectus relating to the
Company's initial public offering and ending on the date specified by the
Company and the managing underwriter (such period not to exceed one hundred
eighty (l80) days) (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are then owned by the Holder or are thereafter acquired), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The underwriters in connection with the Company's initial public
offering are intended third party beneficiaries of this Section 1.12 and shall
have the right, power and authority to enforce the provisions hereof as though
they were a party hereto.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Provided, that this Section 1.12 shall not apply to transfers
of securities by Holders to is a pledgee, or assignee of such pledgee, of Holder
pursuant to a bona fide loan transaction existing as of the date of such final
prospectus.
1.13 Termination of Registration Rights. No Holder shall be
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the Initial Offering or, as to any Holder,
such earlier time at which all Registrable Securities held by such Holder (and
any affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three (3)-month period without registration in
compliance with Rule 144 of the Act.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall
deliver to each Investor and Common Holder:
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(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
shareholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement, statement of
cash flows for such fiscal quarter and an unaudited balance sheet as of the end
of such fiscal quarter.
(c) within thirty (30) days of the end of each month, an
unaudited income statement and statement of cash flows and balance sheet for and
as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event at least
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, including balance
sheets, income statements and statements of cash flows for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company certifying that such financials
were prepared in accordance with GAAP consistently applied with prior practice
for earlier periods (with the exception of footnotes that may be required by
GAAP) and fairly present the financial condition of the Company and its results
of operation for the period specified, subject to year-end audit adjustment; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or Common Holder or any assignee of thereof may from time to time
request, provided, however, that the Company shall not be obligated under this
subsection (f) or any other subsection of Section 2.1 to provide information
that it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each Investor or
Common Holder that holds at least 500,000 shares of Series A Preferred Stock
(and/or Common Stock issued upon conversion thereof) or Common Stock, at such
Investor's or Common Holder's expense, to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor or Common Holder; provided,
however, that the Company shall not be obligated pursuant to this Section 2.2 to
provide access to any information that it reasonably considers to be a trade
secret or similar confidential information.
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2.3 Termination of Information and Inspection Covenants. The
covenants set forth in Sections 2.1 and 2.2 shall terminate and be of no further
force or effect when the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the firm commitment
underwritten offering of its securities to the general public is consummated or
when the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
specified in this paragraph 2.4, the Company hereby grants to each Major
Investor (as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). For purposes of
this Section 2.4, a Major Investor shall mean any Investor or transferee that
holds at least 100,000 shares of Series A Preferred Stock (or the Common Stock
issued upon conversion thereof) issued pursuant to the Series A Agreement (as
adjusted for stock splits, stock dividends, combinations and other
recapitalizations) or Common Holder or Founder that holds at least 100,000
shares of Common Stock. For purposes of this Section 2.4, Investor or Common
Holder includes any general partners and affiliates of such Investor or Common
Holder. An Investor or Common Holder shall be entitled to apportion the right of
first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
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 each Major Investor in accordance with the following
provisions.
(a) The Company shall deliver a notice in accordance with
Section 3.5 ("Notice") to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms 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, the Major Investor
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 and held, or issuable upon conversion of
the Series A Preferred Stock then held, by such Major Investor bears to the
total number of shares of Common Stock of the Company then outstanding (assuming
full conversion of all convertible securities excluding unvested options).
(c) If all Shares that Investors or Common Holders are
entitled to obtain pursuant to subsection 2.4(b) are not elected to be obtained
as provided in subsection 2.4(b) hereof, the Company may, during the ninety (90)
day period following the expiration of the period provided in subsection 2.4(b)
hereof, offer the 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
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be revived and such Shares shall not be offered unless first reoffered to the
Major Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.4 shall
not be applicable to (i) the issuance or sale of up to 5,000,000 shares of
Common Stock pursuant to the 1999 Stock Plan (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
Act, resulting in proceeds to the Company of at least $25,000,000 in the
aggregate, (iii) the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities, (iv) the issuance of
securities to a seller of a business 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 unanimously
approved by the Company's Board of Directors.
2.5 Key Person Life Insurance. The Company has as of the date
hereof or shall within 90 days of the date hereof use its best efforts to obtain
from financially sound and reputable insurers term life insurance on the life of
Delly Tamer in the amount of $1,000,000, except as otherwise decided in
accordance with policies adopted by the Company's Board of Directors. The
Company will cause to be maintained the term life insurance required by this
Section 2.5 hereof, except as otherwise decided in accordance with policies
adopted by the Company's Board of Directors. Such policies shall name the
Company as loss payee and shall not be cancelable by the Company without prior
approval of the Board of Directors.
2.6 Proprietary Information and Inventions Agreement. The
Company will cause each person now or hereafter employed by it or any subsidiary
with access to confidential information to enter into a proprietary information
and inventions agreement substantially in the form approved by the Board of
Directors.
2.7 Employee and Other Stock Arrangements. The Company will
not, without the approval of the Board of Directors, issue any of its capital
stock, or grant an option or rights to subscribe for, purchase or acquire any of
its capital stock, to any employee, consultant, officer or director of the
Company or a subsidiary except for the issuance of up to 5,000,000 shares of
Common Stock pursuant to the Company's 1999 Stock Plan. Each acquisition of any
shares of capital stock of the Company or any option or right to acquire any
shares of capital stock of the Company by an employee, officer or director of
the Company will be conditioned upon the execution and delivery by the Company
and such employee, officer or director of an agreement substantially in a form
approved by the Board of Directors of the Company.
2.8 Qualified Small Business Stock. The Company shall comply
with the reporting and record keeping requirements of Section 1202 of the Code,
any regulations promulgated thereunder and any similar state laws and
regulations, and agrees not to repurchase any stock of the Company if such
repurchase would constitute a "significant redemption" within the meaning of
Section 1202(c)(3)(B) of the Code with respect to the Series A Preferred Stock
being purchased hereunder without the consent of the Board of Directors of the
Company. In
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addition, within thirty days after an Investor's written request therefor, the
Company shall deliver to such Investor a written statement indicating whether
the shares continue to meet the qualifications for "qualified small business
stock" set forth is Section 2.27 of the Series A Agreement.
2.9 Termination of Certain Covenants. The covenants set forth
in Section 2 shall terminate and be of no further force or effect upon the
consummation of the sale of securities pursuant to a bona fide, firmly
underwritten public offering of shares of common stock, registered under the
Act, resulting in proceeds to the Company of at least $25,000,000.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3 Counterparts. 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.
3.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6 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 attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Entire Agreement: Amendments and Waivers. This Agreement
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof. Any term of this Agreement
15
53
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities each future holder of all such Registrable Securities,
and the Company.
3.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
16
54
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
--------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
55
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
56
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
-----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
57
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
-----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
58
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gary S. Wohl
--------------------------------------
Name: Gary S. Wohl
------------------------------------
Title: Partner
-----------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
59
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
General Partner
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
60
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------------
Name: Eisenberg, David
-----------------------------------------
Title: CEO
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
61
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
62
FOUNDERS:
/s/ Delly Tamer
-----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
-----------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
63
FOUNDERS:
-----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
-----------------------------------------
Brett Beveridge
4775 Pine Dr.
Miami, FL 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
64
SCHEDULE A
Schedule of Investors
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
65
SCHEDULE B
Holders of Common Stock
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
66
SCHEDULE C
Schedule of Founders
DELLY TAMER
BRETT BEVERIDGE
67
EXHIBIT C
VOTING AGREEMENT
68
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered
into as of July 30, 1999, by and among LetsTalk.com, Inc., a Delaware
corporation (the "Company"), the holders of the Company's Series A Preferred
Stock (the "Series A Stock") listed on the Schedule of Investors attached as
Schedule A hereto (the "Investors"), and the holders of Common Stock of the
Company (the "Founders") listed on the Schedule of Founders attached as Schedule
B hereto. The Company, the Founders and the Investors are individually each
referred to herein as a "Party" and are collectively referred to herein as the
"Parties." The Company's Board of Directors is referred to herein as the
"Board."
WITNESSETH:
WHEREAS, the Company and certain of the Investors have entered
into that certain Series A Preferred Stock Purchase Agreement of even date
herewith (the "Purchase Agreement"), which provides for, among other things, the
purchase by the Investors of shares of the Series A Stock;
WHEREAS, the Company and Let's Talk Cellular & Wireless, Inc.,
a Florida corporation and a Founder ("LTC"), are parties to a license agreement
and a binding Letter of Intent with the Company which provide for, among other
things, the purchase of shares of Common Stock of the Company by LTC, the
license by LTC of certain technology to the Company and the provision of certain
services for the Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement of
even date herewith (the "Common Stock Purchase Agreement") which provides for,
among other things, the purchase by HIG of shares of Common Stock of the
Company;
WHEREAS, the Company's Certificate of Incorporation provides
that (a) holders of shares of the Company's Series A Stock, voting together as a
class, shall elect four (4) members of the Board (the "Series A Directors"), and
(b) holders of shares of Common Stock and the holders of shares of Series A
Stock, voting together as a class, shall be entitled to elect the three (3)
remaining members of the Board ("Common Directors"); and
WHEREAS, to induce certain Investors to enter into the
Purchase Agreement and purchase shares of Series A Stock thereunder, to induce
HIG to enter the Common Stock Purchase Agreement and to induce LTC to enter into
the LTC Agreements and purchase shares of Common Stock of the Company
thereunder, the Company and the Founders desire to enter into this Agreement
with such Investors; and
NOW, THEREFORE, in consideration of the foregoing premises and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
1
69
1. Agreement to Vote. Each Investor, as a holder of Series A Stock,
hereby agrees on behalf of itself and any transferee or assignee of any such
shares of the Series A Stock, to hold all of the shares of Series A Stock
registered in its name (and any securities of the Company issued with respect
to, upon conversion of, or in exchange or substitution of the Series A Stock,
and any other voting securities of the Company subsequently acquired by such
Investor) (hereinafter collectively referred to as the "Investor Shares")
subject to, and to vote the Investor Shares at a regular or special meeting of
stockholders (or by written consent) in accordance with, the provisions of this
Agreement. Each Founder, as a holder of Common Stock of the Company, hereby
agrees on behalf of itself and any transferee or assignee of any such shares of
Common Stock, to hold all of such shares of Common Stock and any other
securities of the Company acquired by such Founder in the future (and any
securities of the Company issued with respect to, upon conversion of, or in
exchange or substitution for such securities) (the "Founder Shares") subject to,
and to vote the Founder Shares at a regular or special meeting of stockholders
(or by written consent) in accordance with, the provisions of this Agreement.
2. Board Size. The holders of Investor Shares and Founder Shares shall
vote at a regular or special meeting of stockholders (or by written consent)
such shares that they own (or as to which they have voting power) to ensure that
the size of the Board shall be set and remain at seven (7) directors; provided,
however, that such Board size may be subsequently increased or decreased
pursuant to an amendment of this Agreement in accordance with Section 15 hereof.
3. Election of Directors.
(a) In any election of directors of the Company to elect the Common
Directors, the Parties holding shares of Series A Stock or Common Stock shall
each vote at any regular or special meeting of stockholders (or by written
consent) such number of shares of Series A Stock or Common Stock then owned by
them (or as to which they then have voting power) as may be necessary to elect
one (1) director nominated by Let's Talk Cellular & Wireless and two (2)
directors that are employees of the Company, one of which directors shall be the
Company's chief executive officer and the other of which shall be Brett
Beveridge for so long as Mr. Beveridge is an employee of the Company and
thereafter shall be an individual designated by the Company's chief executive
officer.
(b) In any election of directors of the Company to elect the Series
A Directors, the Parties holding shares of Series A Stock shall each vote at any
regular or special meeting of stockholders (or by written consent) such number
of shares of Series A Stock then owned by them (or as to which they then have
voting power) as may be necessary to elect two (2) directors nominated by HIG
Capital Management and two (2) directors nominated by Brentwood Venture Capital;
in each case for so long as such Investor or its affiliates own at least fifty
percent (50%) of the Common Stock issued or issuable upon conversion of the
Series A Stock purchased by such Investor pursuant to the Purchase Agreement.
4. Removal. Any director of the Company may be removed from the board
in the manner allowed by law and the Company's Certificate of Incorporation and
Bylaws, but
2
70
with respect to a director designated pursuant to subsections 3(a)
and 3(b) above, only upon the vote or written consent of the stockholders
entitled to designate such director.
5. Legend on Share Certificates. Each certificate representing any
Shares shall be endorsed by the Company with a legend reading substantially as
follows:
"The Shares evidenced hereby are subject to a Voting Agreement
(a copy of which may be obtained upon written request from the
issuer), and by accepting any interest in such shares the
person accepting such interest shall be deemed to agree to and
shall become bound by all the provisions of said Voting
Agreement."
6. Covenants of the Company. The Company agrees to use its best
efforts to ensure that the rights granted hereunder are effective and that the
Parties hereto enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company's best efforts to cause the nomination and
election of the directors as provided above. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all of the provisions of this Agreement
and in the taking of all such actions as may be necessary, appropriate or
reasonably requested by the holders of a majority of the outstanding voting
securities held by the Parties hereto assuming conversion of all outstanding
securities in order to protect the rights of the Parties hereunder against
impairment.
7. No Liability for Election of Recommended Directors. Neither the
Company, the Founders, the Investors, nor any officer, director, stockholder,
partner, employee or agent of such Party, makes any representation or warranty
as to the fitness or competence of the nominee of any Party hereunder to serve
on the Company's Board by virtue of such Party's execution of this Agreement or
by the act of such Party in voting for such nominee pursuant to this Agreement.
8. Grant of Proxy. Should the provisions of this Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
9. Specific Enforcement. It is agreed and understood that monetary
damages would not adequately compensate an injured Party for the breach of this
Agreement by any Party, that this Agreement shall be specifically enforceable,
and that any breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining order. Further,
each Party hereto waives any claim or defense that there is an adequate remedy
at law for such breach or threatened breach.
10. Execution by the Company. The Company, by its execution in the
space provided below, agrees that it will cause the certificates evidencing the
shares of Common Stock and Series A Stock to bear the legend required by Section
5 herein, and it shall supply, free of charge, a copy of this Agreement to any
holder of a certificate evidencing shares of capital stock of the Company upon
written request from such holder to the Company at its principal office.
3
71
The parties hereto do hereby agree that the failure to cause the certificates
evidencing the shares of Common Stock and Series A Stock to bear the legend
required by Section 5 herein and/or failure of the Company to supply, free of
charge, a copy of this Agreement as provided under this Section 5 shall not
affect the validity or enforcement of this Agreement.
11. Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
12. Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent prepaid registered or certified mail, return
receipt requested, addressed to the other Party at the address shown below or at
such other address for which such Party gives notice hereunder. Such notice
shall be deemed to have been given three (3) days after deposit in the mail.
13. Term. This Agreement shall terminate and be of no further force or
effect upon (a) the Company's sale of its Common Stock in a firm commitment
underwritten public offering at a market valuation of at least $100,000,000
immediately prior to effectiveness of the Company's registration statement and
pursuant to a registration statement on Form S-1 or Form SB-2 under the
Securities Act of 1933, as amended, the public offering price of which is not
less than $15,000,000 in the aggregate), (b) the acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of the Company or a sale of all or substantially all of the assets
of the Company, or (c) the written consent of the holders of a majority of the
then outstanding Founders Shares and the holders of a majority of the then
outstanding Preferred Shares.
14. Manner of Voting. The voting of shares pursuant to this Agreement
may be effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
15. Amendments and Waivers. Any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the holders of a majority of the then outstanding voting securities
held by the Party or Parties for whose benefit such term has been included. Any
amendment or waiver so effected shall be binding upon the Parties hereto.
16. Stock Splits, Stock Dividends, etc. In the event of any issuance of
shares of the Company's voting securities hereafter to any of the Parties hereto
(including, without limitation, in connection with any stock split, stock
dividend, recapitalization, reorganization, or the like), such shares shall
become subject to this Agreement and shall be endorsed with the legend set forth
in Section 5.
17. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any
4
72
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
18. Binding Effect. In addition to any restriction or transfer that may
be imposed by any other agreement by which any Party hereto may be bound, this
Agreement shall be binding upon the Parties, their respective heirs, successors
and assigns and to such additional individuals or entities that may become
stockholders of the Company and that desire to become Parties hereto.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflicts
of law principles thereof.
20. Entire Agreement. This Agreement is intended to be the sole
agreement of the Parties as it relates to this subject matter and does hereby
supersede all other agreements of the Parties relating to the subject matter
hereof.
21. Counterparts. 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.
5
73
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
----------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
74
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
75
INVESTORS:
H.I.G. WIRELESS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
76
INVESTORS:
H.I.G. WIRELESS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
77
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
General Partner
Address for Notices:
Accel Partners
428 University Avenue
Palto Alto, CA 94301
Attn: Theresia Gouw Ranzetta and
James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
78
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gary W. Wohl
------------------------------------------
Name: Gary S. Wohl
----------------------------------------
Title: Partner
---------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
79
FOUNDERS:
/s/ Delly Tamer
--------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
--------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
80
FOUNDERS:
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
4775 Pine Drive
Miami, FL 33143
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
81
FOUNDERS:
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/David H. Eisenberg
---------------------------------------
Name: Eisenberg, David
---------------------------------------
Title: CEO
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
82
FOUNDERS
H.I.G. BRICKELLBAY, INC.
By: /s/
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
83
SCHEDULE A
LIST OF INVESTORS
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
84
SCHEDULE B
LIST OF FOUNDERS
DELLY TAMER
BRETT BEVERIDGE
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
85
EXHIBIT D
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
86
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
This RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is entered into as of
the 30th day of July, 1999 by and among LetsTalk.com, Inc., a Delaware
corporation (the "Company"), Let's Talk Cellular & Wireless, Inc., a Florida
corporation ("LTC"), H.I.G. Brickellbay, Inc., a Cayman Islands corporation
("HIG"), Delly Tamer and Brett Beveridge (each, a "Founder"), and the
undersigned holders (the "Purchasers") of Series A Preferred Stock of the
Company (the "Preferred Shares").
W I T N E S S E T H :
WHEREAS, the Company and the Purchasers are parties to the Series A
Preferred Stock Purchase Agreement of even date herewith, pursuant to which the
Purchasers are purchasing shares of the Company's Series A Preferred Stock (the
"Stock Purchase Agreement");
WHEREAS, the Company and LTC are parties to a license agreement and a
binding Letter of Intent with the Company which provide for, among other things,
the purchase of shares of Common Stock of the Company by LTC, the license by LTC
of certain technology to the Company and the provision of certain services for
the Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and HIG are parties to a Common Stock Purchase
Agreement of even date herewith (the "Common Stock Purchase Agreement"), which
provides for, among other things, the purchase by HIG of shares of Common Stock
of the Company;
WHEREAS, the Founders are the beneficial owners of shares of Common
Stock of the Company; and
WHEREAS, the Founders, LTC, HIG and each of the Purchasers (each a
"Stockholder") desire to enter into this Agreement to provide further inducement
to the Purchasers to purchase the Preferred Shares, and Purchasers wish to
provide further inducement to Founders to approve the Stock Purchase Agreement,
to provide further inducement to LTC to enter into the LTC Agreements and
purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement;
THE PARTIES AGREE AS FOLLOWS:
1. Restrictions on Transfer of Shares by Holders. Except as
otherwise provided in this Agreement, each Holder (as defined below) agrees that
it will not sell, assign, transfer, pledge, hypothecate, or otherwise encumber
or dispose of in any way (a "Transfer"), all or any part of or any interest in
the Equity Securities (as defined below) now or hereafter owned
11
87
or held by such Holder. Any Transfer of Equity Securities not made in
conformance with this Agreement shall be null and void, shall not be recorded on
the books of the Company and shall not be recognized by the Company.
2. Definitions.
(a) Equity Securities. For purposes of this Agreement, the
term "Equity Securities" shall mean any securities having voting rights in the
election of the Board of Directors of the Company not contingent upon default,
or any securities evidencing an ownership interest in the Company, or any
securities convertible into or exercisable for any shares of the foregoing, or
any agreement or commitment to issue any of the foregoing.
(b) Holders. For purposes of this Agreement, the term
"Holders" shall mean the Stockholders, or persons who have acquired shares from
any of such persons or their transferees or assignees in accordance with the
provisions of this Agreement.
3. Agreements Among the Company and the Holders.
3.1 Rights of Refusal.
(a) Transfer Notice. If at any time a Holder proposes to
Transfer Equity Securities to one or more third parties, then such Holder (a
"Transferring Holder") shall give the Company and each other Holder written
notice of such Transferring Holder's intention to make the Transfer (the
"Transfer Notice"), which Transfer Notice shall include (i) a description of the
Equity Securities to be transferred ("Offered Shares"), (ii) the identity of the
prospective transferee(s) and (iii) the consideration and the material terms and
conditions upon which the proposed Transfer is to be made. The Transfer Notice
shall certify that the Transferring Holder has received a firm offer from the
prospective transferee(s) and in good faith believes a binding agreement for the
Transfer is obtainable on the terms set forth in the Transfer Notice. The
Transfer Notice shall also include a copy of any written proposal, term sheet or
letter of intent or other agreement or draft thereof relating to the proposed
Transfer.
(b) Company's Option. The Company shall have an option for a
period of ten (10) days from receipt of the Transfer Notice to elect to purchase
the Offered Shares at the same price and subject to the same material terms and
conditions as described in the Transfer Notice. The Company may, by vote of a
majority of the Board of Directors not including directors designated by such
Transferring Holder, exercise such purchase option and, thereby, purchase all
(or a portion of) the Offered Shares by notifying the Transferring Holder in
writing before expiration of the such ten (10) day period as to the number of
such shares which it wishes to purchase. If the Company gives the Transferring
Holder notice that it desires to purchase such shares, then payment for the
Offered Shares shall be by check or wire transfer, against delivery of the
Offered Shares to be purchased at a place agreed upon between the parties and at
the time of the scheduled closing therefor, which shall be no later than
forty-five (45) days after the Company's receipt of the Transfer Notice, unless
the Transfer Notice contemplated a later closing with the prospective third
party transferee(s) or unless the value of the purchase price has not yet been
established pursuant to Section 3.1(e). If the Company fails to purchase all of
the Offered Shares by exercising the option granted in this Section 3.1(b)
within the period
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provided, the Offered Shares shall be subject to the options granted to the
non-transferring Holders (each, a "Non-Transferring Holder") pursuant to this
Agreement.
(c) Additional Transfer Notice. Subject to the Company's right
set forth in Section 3.1(b), if at any time the Transferring Holder proposes a
Transfer, then, after the Company has declined to purchase all, or a portion of,
the Offered Shares, the Transferring Holder shall give each other Holder an
"Additional Transfer Notice" which shall include all of the information and
certifications required in a Transfer Notice and shall additionally identify the
Offered Shares which the Company has declined to purchase (the "Remaining
Shares") and briefly describe such other Holders' rights of first refusal and
co-sale rights with respect to the proposed Transfer.
(d) Holders' Option. The Non-Transferring Holders shall have
an option for a period of ten (10) days from the Holder's receipt of the
Additional Transfer Notice from the Transferring Holder set forth in Section
3.1(c) to elect to purchase their respective pro rata shares of the Remaining
Shares at the same price and subject to the same material terms and conditions
as described in the Additional Transfer Notice. Each such Non-Transferring
Holder may exercise such purchase option and, thereby, purchase all or any
portion of his, her or its pro rata share (with any reallotments as provided
below) of the Remaining Shares, by notifying the Transferring Holder and the
Company in writing, before expiration of the twenty (20) day period as to the
number of such shares which he, she or it wishes to purchase (including any
reallotment). Each Non-Transferring Holder's pro rata share of the Remaining
Shares shall be a fraction of the Remaining Shares, of which the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by such Non-Transferring Holder on the
date of the Transfer Notice shall be the numerator and the total number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) held by the Transferring Holder and all other
Non-Transferring Holders on the date of the Transfer Notice shall be the
denominator. Each Non-Transferring Holder shall have a right of reallotment such
that, if any other Non-Transferring Holder fails to exercise the right to
purchase its full pro rata share of the Remaining Shares, the other
participating Non-Transferring Holders may exercise an additional right to
purchase, on a pro rata basis, the Remaining Shares not previously purchased.
Each Non-Transferring Holder shall be entitled to apportion Remaining Shares to
be purchased among its partners and affiliates, provided that such apportionment
does not cause the Company to be subject to the public company reporting
requirements under the Securities Exchange Act, of 1934, as amended) number of
partners and affiliates not exceed ten, and provided further that such
Non-Transferring Holder notifies the Transferring Holder of such allocation. If
a Non-Transferring Holder gives the Transferring Holder notice that it desires
to purchase its pro rata share of the Remaining Shares and, as the case may be,
its reallotment, then payment for the Remaining Shares shall be by check or wire
transfer, against delivery of the Remaining Shares to be purchased at a place
agreed upon between the parties and at the time of the scheduled closing
therefor, which shall be no later than forty-five (45) days after the Company's
receipt of the Transfer Notice, unless the Transfer Notice contemplated a later
closing with the prospective third party transferee(s) or unless the value of
the purchase price has not yet been established pursuant to Section 3.1(e).
(e) Valuation of Property. Should the purchase price specified
in the Transfer Notice or Additional Transfer Notice be payable in property
other than cash or
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89
evidences of indebtedness, the Company (or the Non-Transferring Holders) shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If the Transferring Holder and the Company (or the
Non-Transferring Holders) cannot agree on such cash value within ten (10) days
after the Company's receipt of the Transfer Notice (or the Non-Transferring
Holders' receipt of the Additional Transfer Notice), the valuation shall be
made by an appraiser of recognized standing selected by the Transferring Holder
and the Company (or the Non-Transferring Holders) or, if they cannot agree on
an appraiser within twenty (20) days after the Company's receipt of the
Transfer Notice (or the Non-Transferring Holders' receipt of the Additional
Transfer Notice), each shall select an appraiser of recognized standing and the
two appraisers shall designate a third appraiser of recognized standing, whose
appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by the Transferring Holder and the Company (or the
Non-Transferring Holders), with the half of the cost borne by the Company and
the Non-Transferring Holders borne pro rata by each based on the number of
shares such parties were interested in purchasing pursuant to this Section 3.
If the time for the closing of the Company's purchase or the Non-Transferring
Holders' purchase has expired but for the determination of the value of the
purchase price offered by the prospective transferee(s), then such closing
shall held on or prior to the fifth business day after such valuation shall
have been made pursuant to this subsection.
3.2 Right of Co-Sale.
(a) To the extent the Company and the Non-Transferring Holders
do not exercise their respective rights of refusal as to all of the Offered
Shares pursuant to Section 3.1, then each Non-Transferring Holder (a "Selling
Holder" for purposes of this subsection 3.2) which notifies the Transferring
Holder in writing within thirty (30) days after receipt of the Transfer Notice
referred to in Section 3.1(a), shall have the right to participate in such sale
of Equity Securities on the same terms and conditions as specified in the
Transfer Notice and for the same total consideration per share as is received by
other Holders. Such Selling Holder's notice to the Transferring Holder shall
indicate the number of shares of Equity Securities the Selling Holder wishes to
sell under his, her or its right to participate. To the extent one or more of
the Non-Transferring Holders exercise such right of participation in accordance
with the terms and conditions set forth below, the number of shares of Equity
Securities that the Transferring Holder may sell in the Transfer shall be
correspondingly reduced.
(b) Each Selling Holder may sell all or any part of that
number of shares of Equity Securities equal to the product obtained by
multiplying (i) the aggregate number of shares of Equity Securities covered by
the Transfer Notice by (ii) a fraction, the numerator of which is the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by the Selling Holder on the date of the
Transfer Notice and the denominator of which is the total number of shares of
Common Stock (including shares of Common Stock issuable upon conversion of
Preferred Shares) owned by Transferring Holder and all of the Selling Holders on
the date of the Transfer Notice.
(c) Each Selling Holder shall effect its participation in the
sale by promptly delivering to the Transferring Holder for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent:
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90
(i) the type and number of shares of Equity Securities
which such Selling Holder elects to sell; or
(ii) that number of shares of Equities Securities which
are at such time convertible into the number of shares of Common Stock which
such Selling Holder elects to sell; provided, however, that if the prospective
third-party purchaser objects to the delivery of Equity Securities in lieu of
Common Stock, such Selling Holder shall convert such Equity Securities into
Common Stock and deliver Common Stock as provided in this Section 3.2. The
Company agrees to make any such conversion concurrent with the actual transfer
of such shares to the purchaser and contingent on such transfer.
(d) The stock certificate or certificates that the Selling
Holder delivers to the Transferring Holder pursuant to Section 3.2(d) shall be
transferred to the prospective purchaser in consummation of the sale of the
Equity Securities pursuant to the terms and conditions specified in the Transfer
Notice, and the Transferring Holder shall concurrently therewith remit to such
Selling Holder that portion of the sale proceeds to which such Selling Holder is
entitled by reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or otherwise
refuses to purchase shares or other securities from a Selling Holder exercising
its rights of co-sale hereunder, the Transferring Holder shall not sell to such
prospective purchaser or purchasers any Equity Securities unless and until,
simultaneously with such sale, the Transferring Holder shall purchase such
shares or other securities from such Selling Holder for the same consideration
and on the same terms and conditions as the proposed transfer described in the
Transfer Notice and for the same total consideration per share as received by
all other Holders.
3.3 Non-Exercise of Rights. To the extent that the Company and the
Holders have not exercised their rights to purchase the Offered Shares or the
Remaining Shares within the time periods specified in Section 3.1 and the
Holders have not exercised their rights to participate in the sale of the
Offered Shares or the Remaining Shares within the time periods specified in
Section 3.2, the Transferring Holder shall have a period of thirty (30) days
from the expiration of such rights in which to sell the Offered Shares or the
Remaining Shares, as the case may be, upon terms and conditions (including the
purchase price) no more favorable than those specified in the Transfer Notice to
the third-party transferee(s) identified in the Transfer Notice. The third-party
transferee(s) shall acquire the Remaining Shares subject to this Agreement. In
the event a Transferring Holder does not consummate the sale or disposition of
the Remaining Shares within the thirty (30) day period from the expiration of
these rights, the Company's first refusal rights and the Holders' first refusal
rights and co-sale rights shall continue to be applicable to any subsequent
disposition of the Offered Shares or the Remaining Shares by Transferring Holder
until such right lapses in accordance with the terms of this Agreement.
Furthermore, the exercise or non-exercise of the rights of the Company and the
Holders under this Section 3 to purchase Equity Securities from the Transferring
Holder or participate in sales of Equity Securities by the Transferring Holder
shall not adversely affect their rights to make subsequent purchases from the
Transferring Holder of Equity Securities or subsequently participate in sales of
Equity Securities by the Transferring Holder.
3.4 Limitations to Rights of Refusal and Co-Sale. Notwithstanding
the provisions of Section 3.1 and 3.2 of this Agreement, a Transferring Holder
may sell or otherwise
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91
assign, with or without consideration, Equity Securities to (i) a subsidiary,
parent, partner, limited partner, retired partner, affiliated partnership or
stockholder of such Transferring Holder, (ii) a transferee who is a pledgee, or
assignee of such pledgee, of Holder pursuant to a bona fide loan transaction, or
(iii) any spouse or member of Transferring Holder's immediate family, or to a
custodian, trustee (including a trustee of a voting trust), executor, or other
fiduciary for the account of the Transferring Holder's spouse or members of the
Transferring Holder's immediate family, or to a trust for the Transferring
Holder's own self, or a charitable remainder trust, provided that each such
transferee or assignee, prior to the completion of the sale, transfer, or
assignment shall have executed documents assuming the obligations of the
Transferring Holder under this Agreement with respect to the transferred
securities.
3.5 Prohibited Transfers.
(a) In the event the Transferring Holder should sell any
Equity Securities in contravention of the co-sale rights of the Non-Transferring
Holders under Section 3.2 (a "Prohibited Transfer"), the Non-Transferring
Holders, in addition to such other remedies as may be available at law, in
equity or hereunder, shall have the put option provided below, and the
Transferring Holder shall be bound by the applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each
Non-Transferring Holder shall have the right to sell to the Transferring Holder
the type and number of shares of Equity Securities equal to the number of shares
each Non-Transferring Holder would have been entitled to transfer to the
third-party transferee(s) under Section 3.2 hereof had the Prohibited Transfer
been effected pursuant to and in compliance with the terms hereof. Such sale
shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be
sold to the Transferring Holder shall be equal to the price per share paid by
the third-party transferee(s) to the Transferring Holder in the Prohibited
Transfer. The Transferring Holder shall also reimburse each Non-Transferring
Holder for any and all fees and expenses, including legal fees and expenses,
incurred pursuant to the exercise or the attempted exercise of the
Non-Transferring Holder's rights under Section 3.
(ii) Within ninety (90) days after the later of the dates
on which the Non-Transferring Holder (A) received notice of the Prohibited
Transfer or (B) otherwise become aware of the Prohibited Transfer, each
Non-Transferring Holder shall, if exercising the option created hereby, deliver
to the Transferring Holder the certificate or certificates representing shares
to be sold, each certificate to be properly endorsed for transfer.
(iii) The Transferring Holder shall, upon receipt of the
certificate or certificates for the shares to be sold by a Non-Transferring
Holder, pursuant to this Section 3.5, pay the aggregate purchase price therefor
and the amount of reimbursable fees and expenses, as specified in subparagraph
3.5(b)(i), in cash or by other means acceptable to the Holder.
(iv) Notwithstanding the foregoing, any attempt by the
Transferring Holder to transfer Equity Securities in violation of Section 3
hereof shall be void
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92
and the Company agrees it will not effect such a transfer nor will it treat any
alleged transferee(s) as the holder of such shares without the written consent
of a majority in interest of the Non-Transferring Holders.
4. Bring Along Provision In the event that (i) a consolidation or
merger of the Company with or into any other corporation or corporations in
which 100% of the voting securities are disposed of, or (ii) a sale of all or
substantially all of the assets or business of the Company in one or more
related transactions (such events referred to herein collectively as a "Sale of
the Company"), is approved by (A) two-thirds of the Board of Directors of the
Company and (B) holders of at least 50% of the voting securities of the Company,
then, provided that (x) the consideration to be received by the stockholders of
the Company is cash or freely tradable marketable securities (not including any
escrowed securities) of a Company with a market capitalization of at least
$200,000,000, and (y) each stockholder of the Company receives the same
consideration per share (including any fees or compensation paid to other
stockholders of the Company except as specifically provided in bona fide
employment agreements between such stockholders and the acquiring entity but not
including any liquidation preferences paid on shares of Preferred Stock of the
Company) each of the parties hereto hereby agree to:
(a) vote that number of shares of the capital stock of the
Company as to which they have beneficial ownership as of the time of the record
date in favor of such Sale of the Company;
(b) not exercise any dissenters' rights under applicable law
at any time for such Sale of the Company;
(c) refrain from transferring any securities of the Company,
the acquirer, or any other applicable company during any period prohibited by
then applicable "pooling of interests" accounting treatment rules, whether
before or after the Sale of the Company, provided that such period of
restriction prior to the closing of a Sale of the Company shall not exceed one
hundred twenty (120) days; and
(d) after receiving proper notice of such meeting, be present,
in person or by proxy, along with any of their respective affiliated entities,
as holders of shares of voting securities, at all meetings of stockholders of
the Company to vote on the approval of a Sale of the Company so that all shares
of voting securities beneficially owned by such stockholders and/or their
affiliated entities may be counted for the purposes of determining the presence
of a quorum at such meetings.
5. Assignments and Transfers; No Third Party Beneficiaries. This
Agreement and the rights and obligations of the parties hereunder shall inure to
the benefit of, and be binding upon, their respective successors, assigns and
legal representatives, but shall not otherwise be for the benefit of any third
party. The rights of the Holders hereunder are only assignable (i) by each of
such Holders to any other Holder, (ii) to a partner or other affiliate of such
Holder or (iii) to an assignee or transferee who acquires all of the Equity
Securities purchased by a Stockholder or at least 100,000 shares of Common Stock
(including shares of Common Stock issuable upon conversion of Preferred Shares).
7
93
6. Legend. Each existing or replacement certificate for shares
now owned or hereafter acquired by each Holder shall bear the following legend
upon its face:
"THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY
AND BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF
STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
7. Effect of Change in Company's Capital Structure. Appropriate
adjustments shall be made in the number and class of shares in the event of a
stock dividend, stock split, reverse stock split, combination, reclassification
or like change in the capital structure of the Company.
8. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
9. Further Instruments and Actions. The parties agree to execute
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement. Each party hereto agrees to
cooperate affirmatively with each other party hereto to the extent reasonably
requested by such other parties to enforce rights and obligations pursuant
hereto.
10. Term. This Agreement shall terminate upon the earlier of (i)
the Company's sale of its Common Stock in a firm commitment underwritten public
offering at a market valuation of at least $100,000,000 immediately prior to
effectiveness of the Company's registration statement and pursuant to a
registration statement on Form S-1 or Form SB-2 under the Securities Act of
1933, as amended, the public offering price of which is not less than
$15,000,000 in the aggregate), and (ii) the closing of the Company's sale of all
or substantially all of its assets or the acquisition of the Company by another
entity by means of merger, consolidation or other transaction or series of
related transactions resulting in the exchange of the outstanding shares of the
Company's capital stock such that the stockholders of the Company prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity.
11. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all other agreements between or among any of the parties with respect
to the subject matter hereof and cannot be
8
94
altered or otherwise amended except pursuant to an instrument in writing signed
by each of the parties to this Agreement. This Agreement shall be interpreted
under the laws of the State of California without reference to conflicts of law
provisions.
12. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the written
consent of the holders of more than 50% of the Common Stock issued and held by
the Founders and the written consent of the holders of more than 50% of the
Common Stock issued or issuable upon conversion of the Preferred Shares then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon, the Company, the Founders and all Purchasers and their
respective successors and assigns.
13. Separability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14. Attorney's Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
15. Counterparts. 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.
16. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
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95
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
LETSTALK.COM, INC.
By: /S/ Delly Tamer
-------------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
96
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisen??
----------------------------
Name: Eisen??, D.
----------------------------
Title: CEO
----------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
97
LET'S TALK CELLULAR & WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
98
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
99
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
4775 Pine Dr
Miami, Fl 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
100
PURCHASERS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
101
PURCHASERS:
H.I.G. WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------------
Name: Jeffrey Brody
--------------------------------------------
Title: Managing Member
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
102
PURCHASERS:
H.I.G. WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------------
Name: Jeffrey Brody
--------------------------------------------
Title: Managing Member
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
103
PURCHASERS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gay S. Wohl
-------------------------------------------
Name: Gay S. Wohl
-----------------------------------------
Title: Partner
----------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
104
PURCHASERS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors *99 L.P.
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and Janes R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
105
EXHIBIT E
BYLAWS OF THE COMPANY
106
BYLAWS
OF
WIRELESS NET, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Dover, County of Kent, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held
either at the principal executive office of the corporation or at any other
place within or without the State of Delaware designated by the Board of
Directors or, subject to the power of the Board of Directors to designate the
place of the meeting, the person or persons calling the meeting. In absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
Section 2. Annual meetings of stockholders, shall be held at
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
107
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not fewer than ten (10) nor more than sixty (60) days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
Board of Directors or by the written request of holders of fifty percent (50%)
or more of the outstanding shares of capital stock. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not fewer than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
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Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of fifty percent (50%) of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no
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proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors that shall constitute the
whole Board of Directors shall be determined by resolution of the Board of
Directors or by the stockholders at the annual meeting of the stockholders,
except as provided in Section 3.2 of this Article, and each director elected
shall hold office until his successor is elected and qualified. Directors need
not be stockholders.
Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be
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held in the manner provided by statute. If, at the time of filling any vacancy
or any newly created directorship, the directors then in office shall constitute
less than a majority of the whole board (as constituted immediately prior to any
such increase), the Court of Chancery may, upon application of any stockholder
or stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
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Section 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
president on ten (10) days' notice to each director by mail, by fax or e-mail,
personally or by telegram; special meetings shall be called by the president or
secretary in like manner, and on like notice on the written request of two
directors unless the board consists of only one director, in which case special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation of these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of
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conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to
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authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or bylaw, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the
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time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the Board of Directors and shall be a president, chief financial officer and a
secretary. The Board of Directors may elect from among its members a Chairman of
the Board. The Board of Directors may also choose one or more vice-presidents.
Any number of offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a president, a chief financial
officer, and a secretary and may choose vice presidents.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the Board of Directors may be
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removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
THE CHAIRPERSON OF THE BOARD
Section 6. The Chairperson of the Board, if any, shall preside
at all meetings of the Board of Directors and of the stockholders at which
he/she shall be present. He/She shall have and may exercise such powers as are,
from time to time, assigned to him/her by the Board and as may be provided by
law.
Section 7. In the absence of the Chairman of the Board at a
meeting, a member of the Board of Directors elected by a majority of such
members present at such meeting shall preside at such meeting provided he/she
shall be present at such meeting. He/She shall have and may exercise such powers
as are, from time to time, assigned to him/her by the Board and as may be
provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
Section 8. The president shall be the chief executive officer
of the corporation; and in the absence of the Chairman he/she shall preside at
all meetings of the stockholders and the Board of Directors; he/she shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect.
Section 9. He/She shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
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Section 10. In the absence of the president or in the event of
his inability or refusal to act, a majority of the directors may designate
another officer of the corporation to perform such duties and exercise such
powers, shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY
Section 11. The secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He/she shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision he/she shall be. He/she shall
have custody of the corporate seal of the corporation and he/she shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his/her signature. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his/her signature.
Section 12. In the absence of the secretary or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the secretary, a majority of the directors may designate another officer of the
corporation to perform such duties and exercise such powers.
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THE CHIEF FINANCIAL OFFICER
Section 13. The chief financial officer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 14. He/she shall disburse the funds of the corporation
as may be ordered by the president, taking proper vouchers for such
disbursements, and shall render to the president or when the Board of Directors
so requires, an account of all his/her transactions as chief financial officer
and of the financial condition of the corporation.
Section 15. If required by the Board of Directors, he/she
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his/her office and
for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his/her possession or under his/her control
belonging to the corporation.
Section 16. In the absence of the chief financial officer or
in the event of his/her inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer, a majority of the directors
may designate another officer of the corporation to perform such duties and
exercise such powers.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairperson of the Board of
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Directors, or the president and the chief financial officer, or the secretary of
the corporation, certifying the number of shares owned by him in the
corporation.
Certificates may be issued for partly paid shares and in such
case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor,
and the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than
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sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for
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such other purposes as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal
having inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent
authorized under the laws of the State of Delaware, as those laws may be amended
and supplemented from time to time, indemnify any director made, or threatened
to be made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of being a director of the
corporation or a predecessor corporation or, at the corporation's request, a
director or officer of another corporation, provided, however, that the
corporation shall indemnify any such agent in connection with a proceeding
initiated by such agent only if such proceeding was authorized by the Board of
Directors of the corporation. The indemnification provided for in this Section 6
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shall: (i) not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a person who has ceased to be a director, and (iii) inure to the
benefit of the heirs, executors and administrators of such a person. The
corporation's obligation to provide indemnification under this Section 6 shall
be offset to the extent of any other source of indemnification or any otherwise
applicable insurance coverage under a policy maintained by the corporation or
any other person.
Expenses incurred by a director of the corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director of the corporation (or was serving at the
corporation's request as a director or officer of another corporation) shall be
paid by the corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding the foregoing, the
corporation shall not be required to advance such expenses to an agent who is a
party to an action, suit or proceeding brought by the corporation and approved
by a majority of the Board of Directors of the corporation which alleges willful
misappropriation of corporate assets by such agent, disclosure of confidential
information in violation of such agent's fiduciary or contractual obligations to
the corporation or any other willful and deliberate breach in bad faith of such
agent's duty to the corporation or its stockholders.
The foregoing provisions of this Section 6 shall be deemed to
be a contract between the corporation and each director who serves in such
capacity at any time while this
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bylaw is in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought based in whole or in part upon any such state of facts.
The Board of Directors in its discretion shall have power on
behalf of the corporation to indemnify any person, other than a director, made a
party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all
directors, officers and employees who are determined by the corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the corporation which may exist from time to time, Section 145 of the General
Corporation Law of Delaware shall, for the purposes of this Section 6, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including without limitation, any plan of the corporation
which is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time; the corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines."
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ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or
new bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the Board of Directors by the
certificate or incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
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CERTIFICATE OF OFFICER
OF
WIRELESS NET, INC.
The undersigned, William E Growney, Jr. hereby certifies that he is the
duly elected and acting Assistant Secretary of Wireless Net, Inc., a Delaware
corporation (the "Corporation"), and that the Bylaws attached hereto constitute
the Bylaws of said Corporation as duly adopted by Unanimous Written Consent of
the Board of Directors on July __, 1999.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name
this __st day of July, 1999.
William E Growney, Jr.
Assistant Secretary