EXHIBIT 7
NEXTNET, INC.
INVESTORS' RIGHTS AGREEMENT
September 21, 1998
TABLE OF CONTENTS
Page
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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 . . . . . . . . . . . . . . . . . . . 4
1.5 Obligations of the Company. . . . . . . . . . . . . . . . . 5
1.6 Furnish Information . . . . . . . . . . . . . . . . . . . . 6
1.7 Expenses of Registration. . . . . . . . . . . . . . . . . . 7
1.8 Underwriting Requirements . . . . . . . . . . . . . . . . . 7
1.9 Delay of Registration . . . . . . . . . . . . . . . . . . . 8
1.10 Indemnification. . . . . . . . . . . . . . . . . . . . . . 8
1.11 Reports Under Securities Exchange Act of 1934. . . . . . .10
1.12 Assignment of Registration Rights. . . . . . . . . . . . .11
1.13 Limitations on Subsequent Registration Rights. . . . . . .11
1.14 "Market Stand-Off" Agreement . . . . . . . . . . . . . . .12
1.15 Termination of Registration Rights . . . . . . . . . . . .12
2. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . .13
2.1 Delivery of Financial Statements. . . . . . . . . . . . . .13
2.2 Inspection. . . . . . . . . . . . . . . . . . . . . . . . .13
2.3 Stock Vesting . . . . . . . . . . . . . . . . . . . . . . .14
2.4 Founder Stock Vesting . . . . . . . . . . . . . . . . . . .14
2.5 Visitation Rights . . . . . . . . . . . . . . . . . . . . .14
2.6 Right of First Offer. . . . . . . . . . . . . . . . . . . .14
2.7 Certain Covenants Relating to SBA Matters . . . . . . . . .16
2.8 Termination of Covenants. . . . . . . . . . . . . . . . . .17
3. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . .17
3.1 Successors and Assigns. . . . . . . . . . . . . . . . . . .17
3.2 Amendments and Waivers. . . . . . . . . . . . . . . . . . .17
3.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .18
3.4 Severability. . . . . . . . . . . . . . . . . . . . . . . .18
3.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . .18
3.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . .18
3.7 Titles and Subtitles. . . . . . . . . . . . . . . . . . . .18
3.8 Aggregation of Stock. . . . . . . . . . . . . . . . . . . .18
3.9 Addition of Investors . . . . . . . . . . . . . . . . . . .18
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NEXTNET, INC.
INVESTORS' RIGHTS AGREEMENT
This Investors' Rights Agreement (the "AGREEMENT") is made as of the 21st
day of September, 1998, by and among NextNet, Inc., a Delaware corporation (the
"COMPANY"), Racotek, Inc. ("Racotek"), the investors listed on EXHIBIT A hereto,
each of which is herein referred to as an "INVESTOR," and Isaac Shpantzer, Vladi
Kelman, and Beverly Waldorf, each of whom is herein referred to as a "FOUNDER".
RECITALS
The Company and Racotek have entered into a Series A Preferred Stock
Purchase Agreement (the "SERIES A PURCHASE AGREEMENT") and the Company and the
Investors have entered into a Series B Preferred Stock Purchase Agreement (the
"SERIES B PURCHASE AGREEMENT") each of even date herewith, pursuant to which the
Company desires to sell to Racotek and the Investors, respectively, and Racotek
and the Investors, respectively, desire to purchase from the Company shares of
the Company's Series A and Series B Preferred Stock, respectively. A condition
to Racotek's and the Investors' obligations under the Purchase Agreements,
respectively, is that the Company, Racotek, the Founders and the Investors enter
into this Agreement in order to provide Racotek and the Investors with
(i) certain rights to register shares of the Company's Common Stock issuable
upon conversion of the Series A and Series B Preferred Stock held by them,
(ii) certain rights to receive or inspect information pertaining to the Company,
and (iii) a right of first offer with respect to certain issuances by the
Company of its securities. The Company and the Founders each desire to induce
Racotek and the Investors to purchase shares of Series A and Series B Preferred
Stock, respectively, pursuant to the Series A and Series B Purchase Agreements
by agreeing to the terms and conditions set forth herein.
AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company, Racotek and the Investors covenant
and agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "REGISTRABLE SECURITIES" means (i) the shares of
Common Stock issuable or issued upon conversion of the Series A Preferred Stock
issued pursuant to the
Series A Purchase Agreement, (ii) the shares of Common Stock issuable or issued
upon conversion of the Series B Preferred Stock issued pursuant to the Series B
Purchase Agreement, (iii) the shares of Common Stock issued to the Founders (the
"FOUNDERS' STOCK"), PROVIDED, HOWEVER, that for the purposes of Section 1.2, 1.4
or 1.13 the Founders' Stock shall not be deemed Registrable Securities and the
Founders shall not be deemed Holders, and (iv) any other shares of Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in (i) and (ii); PROVIDED, HOWEVER, that the foregoing definition
shall exclude in all cases any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not assigned.
Notwithstanding the foregoing, Common Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (A) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if any, are removed upon the consummation of such sale;
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "HOLDER" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12 of this Agreement;
(e) The term "FORM S-3" means such form under the Securities Act
as in effect on the date hereof or any successor form under the Securities Act;
(f) The term "SEC" means the Securities and Exchange Commission;
and
(g) The term "QUALIFIED IPO" means the initial public offering
by the Company of shares of its Common Stock; provided that all shares of the
Company's Preferred Stock are converted into Common Stock prior to or in
connection with such offering.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after six (6)
months after the effective date of the first registration statement for a public
offering of securities of the Company (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction), a written request from the Holders of at least 66 2/3% of the
Registrable Securities then outstanding that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Securities with an anticipated aggregate offering price, net of underwriting
discounts and commissions, exceeding $15,000,000, then the Company shall,
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within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of subsection 1.2(b), use
its best efforts to effect as soon as practicable, and in any event within 60
days of the receipt of such request, the registration under the Securities Act
of all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company in accordance with
Section 3.3.
(b) If the Holders initiating the registration request hereunder
("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
subsection 1.2(a). The underwriter will be selected by a majority in interest
of the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include his 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 to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company as
provided in subsection 1.5(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting.
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Holders shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; PROVIDED, HOWEVER, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish
to Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President 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 stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request of the
Initiating Holders; PROVIDED, HOWEVER, that the Company may not utilize this
right more than twice in any twelve-month period.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two (2)
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one
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hundred eighty (180) days after the effective date of, a registration subject to
Section 1.3 hereof; provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective; or
(iii) If the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 1.4 below.
1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.3, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
1.4 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders of not less than fifty percent (50%) of the Registrable
Securities then outstanding 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 will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 90 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 (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the
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Company, it would be seriously detrimental to the Company and its stockholders
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 90 days after receipt of the request of
the Holder or Holders under this Section 1.4; PROVIDED, HOWEVER, that the
Company shall not utilize this right 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 one registration on Form S-3 for the Holders
pursuant to this Section 1.4; (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; or (vi) during the period ending one hundred eighty (180) days after
the effective date of a registration statement subject to Section 1.3.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred twenty
(120) days.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably 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.
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(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. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(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 Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days.
(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.
(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.
(i) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.6 FURNISH INFORMATION. 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. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's
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obligation to initiate such registration as specified in subsection 1.2(a) or
subsection 1.4(b)(2), whichever is applicable.
1.7 EXPENSES OF REGISTRATION.
(a) DEMAND REGISTRATION. All expenses other than stock transfer
taxes and underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities pursuant to
Section 1.2 (which right may be assigned pursuant to Section 1.12), including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and
reasonable fees and disbursements of a single counsel for the Holders not to
exceed $15,000 shall be borne by the Company; PROVIDED, HOWEVER, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, 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.
(b) COMPANY REGISTRATION. All expenses other than stock
transfer taxes and underwriting discounts and commissions incurred in connection
with registrations, filings or qualifications of Registrable Securities pursuant
to Section 1.3 for each Holder (which right may be assigned as provided in
Section 1.12), including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and reasonable fees and disbursements of a single
counsel for the Holders not to exceed $15,000 shall be borne by the Company.
(c) REGISTRATION ON FORM S-3. All expenses incurred in
connection with a registration requested pursuant to Section 1.4, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and any underwriters' discounts or commissions associated with
Registrable Securities and reasonable fees and disbursements of a single counsel
for the Holders not to exceed $15,000 shall be borne by the Company.
1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 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 then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold
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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, which the underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders) but in no event shall (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
securities, in which case, the selling stockholders may be excluded if the
underwriters make the determination described above and no other stockholder's
securities are included or (ii) any securities held by a Founder be included if
any securities held by any other selling Holder are excluded. For purposes of
the preceding parenthetical concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "SELLING STOCKHOLDER," and any pro-rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, each of its directors or general partners, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law;
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and the Company will pay to each such Holder, each of its directors or general
partners, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED, HOWEVER,
that the indemnity agreement contained in this subsection 1.10(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable to any Holder, underwriter or controlling person for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 1.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action, PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; PROVIDED, that in no event shall any indemnity under this
subsection 1.10(b) exceed the net proceeds from the offering received by such
Holder, except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
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indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 1.10, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the Violation(s) that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations;
PROVIDED, that in no event shall any contribution by a Holder under this
Subsection 1.10(d) exceed the net proceeds from the offering received by such
Holder, except in the case of willful fraud by the Holder. The relative fault
of the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by claimant or plaintiff to such Indemnified party of a
release from all liability in respect to such claim or litigation.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best efforts 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 first registration statement filed by the
Company for the offering of its securities to
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the general public so long as the Company remains subject to the periodic
reporting requirements under Sections 13 or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the Exchange Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the offering
of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to any Holder, 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 Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee who acquires at least 125,000 shares of such securities or to partners;
which is an affiliated partnership managed by the same manager or managing
partner or management company, or managed by an entity controlling, controlled
by, or under common control with, such manager or managing partner or management
company; who is a parent, child or spouse of the Holder; or which is the
Holder's estate, PROVIDED the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and PROVIDED, FURTHER, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee, the
holdings of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided that all assignees and transferees who would
not qualify individually for assignment of registration rights shall have a
single attorney-in-fact for the purpose of exercising any rights, receiving
notices or taking any action under Section 1.
1.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders
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of the outstanding Registrable Securities, enter into any agreement with any
holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder (a) to include such securities in any
registration filed under Section 1.2 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 his securities will
not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in subsection 1.2(a) or within one hundred twenty (120)
days of the effective date of any registration effected pursuant to Section 1.2.
1.14 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that,
during the period of duration (up to, but not exceeding, 180 days) specified by
the Company and an underwriter of Common Stock or other securities of the
Company, following the effective date of a registration statement of the Company
filed under the Securities Act, it shall not, to the extent requested by the
Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
PROVIDED, HOWEVER, that:
(a) such agreement shall be applicable only with respect to the
first such registration statement of the Company which covers Common Stock (or
other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) all officers and directors of the Company, all one-percent
securityholders, and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements.
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, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.14.
Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.
1.15 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled
to exercise any right provided for in this Section 1 after the earlier of
(i) four (4) years following the consummation of a Qualified IPO, or (ii) such
time as Rule 144 or another similar exemption under the Securities Act is
available for the sale of all of such Holder's shares during a three (3)-month
period without registration; provided that (i) the Company has completed its IPO
and is subject to the Exchange Act provisions and (ii) such Holder (together
with its affiliates) holds
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less than one percent (1%) of the Company's outstanding Common Stock (on an as
converted basis).
2. COVENANTS OF THE COMPANY.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver to
each Holder of at least 125,000 shares of Registrable Securities (other than a
Holder reasonably deemed by the Company to be a competitor of the Company):
(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 stockholder's
equity as of the end of such year, and a statement of cash flows for such year,
such year-end financial reports to be in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
and certified by an independent public accounting firm of nationally recognized
standing selected by the Company;
(b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the three (3) quarters of each fiscal year of
the Company, an unaudited profit or loss statement, a statement of cash flows
for such fiscal quarter and an unaudited balance sheet as of the end of such
fiscal quarter;
(c) within thirty (30) days of the end of each month, a monthly
report in a form agreed to by the Board of Directors;
(d) as soon as practicable, but in any event 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, an updated list of all stockholders of
the Company that includes the name of each stockholder and the number and class
of shares held by each stockholder, and, as soon as prepared, any other budgets
or revised budgets prepared by the Company; and
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so.
2.2 INSPECTION. The Company shall permit each Holder of at least
125,000 shares of Registrable Securities (except for a Holder reasonably deemed
by the Company to be a competitor of the Company), at such 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
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Investor; PROVIDED, HOWEVER, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
2.3 STOCK VESTING. Unless approved by the Board of Directors, all
stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (a) twenty-five percent (25%) of such stock
shall vest at the end of the first year following the earlier of the date of
issuance or such person's services commencement date with the company, and (b)
seventy-five percent (75%) of such stock shall vest monthly over the remaining
three (3) years. With respect to any shares of stock purchased by any such
person, the Company's repurchase option shall provide that upon such person's
termination of employment or service with the Company, with or without cause,
the Company or its assignee (to the extent permissible under applicable
securities laws and other laws) shall have the option to purchase at cost any
unvested shares of stock held by such person.
2.4 FOUNDER STOCK VESTING. All stock options and other stock
equivalents issued to Beverly Waldorf and Isaac Shpantzer as of the date of this
Agreement shall be subject to vesting as follows: (a) 70.83% shall initially be
subject to a repurchase option by the Company and (b) 1/34th of such stock shall
vest monthly thereafter. All stock options and other stock equivalents issued
to Vladi Kelman, Eric Dunn, Stuart Froelich, Kerry Shore and Tony Klein as of
the date of this Agreement shall be subject to vesting as follows: (a) 83.33%
shall initially be subject to a repurchase option by the Company and (b) 1/40th
of such stock shall vest monthly thereafter. With respect to any shares of
stock purchased by any such person, the Company's repurchase option shall
provide that upon such person's termination of employment or service with the
Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person.
2.5 VISITATION RIGHTS. The Company shall allow one representative
designated by the Star Ventures (or its affiliates) to attend all meetings of
the Company's Board of Directors in a nonvoting capacity, and in connection
therewith, the Company shall give such representative copies of all notices,
minutes, consents and other materials, financial or otherwise, which the Company
provides to its Board of Directors; provided, however, that the Company reserves
the right to exclude such representative from access to any material or meeting
or portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information or for other similar
reasons.
2.6 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 2.3, 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 2.3, a "MAJOR INVESTOR" shall mean any person who holds at least 125,000
shares of the Series A and/or Series B Preferred Stock (or the Common Stock
issued upon conversion thereof) issued pursuant to the Purchase Agreement. For
purposes of this
-14-
Section 2.3, Major Investor includes any general partners and affiliates of a
Major Investor. A Major Investor who chooses to exercise the right of first
offer may designate as purchasers under such right itself or its partners or
affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, Preferred Stock, Common Stock
or other security of the Company ("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 by certified mail
("NOTICE") to the Major Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) Within 15 calendar days after delivery 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 which equals the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Major Investor bears to the total number of shares
of Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). The Company shall promptly, in writing,
inform each Major Investor that purchases all the shares available to it (each,
a "FULLY-EXERCISING INVESTOR") of any other Major Investor's failure to do
likewise. During the ten (10)-day period commencing after receipt of such
information, each Fully-Exercising Investor shall be entitled to obtain that
portion of the Shares for which Major Investors were entitled to subscribe but
which were not subscribed for by the Major Investors that is equal to the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Fully-Exercising Investor bears to the total
number of shares of Common Stock then outstanding (assuming full conversion and
exercise of all convertible or exercisable securities).
(c) The Company may, during the 45-day period following the
expiration of the period provided in subsection 2.3(b) hereof, offer the
remaining unsubscribed portion of the Shares to any person or persons at a price
not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for
the sale of the Shares within such period, or if such agreement is not
consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.3 shall not be
applicable (i) to the issuance or sale of Common Stock (or options therefor) to
employees, consultants and directors, pursuant to plans or agreements approved
by the Board of Directors for the primary purpose of soliciting or retaining
their services, (ii) to or after consummation of a Qualified IPO, (iii) to the
issuance of securities pursuant to the conversion or exercise of convertible or
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exercisable securities so long as this right of first offers in this Section 2
applied with respect to the initial sale or grant by the Company of such
security, (iv) to the issuance of securities in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, (v) to the issuance of
securities to financial institutions or lessors in connection with commercial
credit arrangements, equipment financings, or similar transactions approved by
the Board, (vi) to the issuance pursuant to currently outstanding options,
warrants, notes or other rights to acquire securities of the Company or (vii) to
issuances of securities in connection with stock splits, stock dividends or like
transactions; (viii) to the issuance or sale of the Series B Preferred Stock
pursuant to the Purchase Agreement.
(e) ASSIGNMENT OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal pursuant to this Section 2.6 may be assigned (but only with all related
obligations) by a holder to a transferee or assignee who acquires at least
125,000 shares of such securities or to partners; which is an affiliated
partnership managed by the same manager or managing partner or management
company, or managed by an entity controlling, controlled by, or under common
control with, such manager or managing partner or management company; who is a
parent, child or spouse of the holder; or which is the Holder's estate, PROVIDED
the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
and PROVIDED, FURTHER, that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act. For the
purposes of determining the number of shares held by a transferee or assignee,
the holders of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquired Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided that all assignees and transferees who would
not qualify individually for assignment of registration rights shall have a
single attorney-in-fact for the purpose of exercising any rights, receiving
notices or taking any action under Section 2.6.
2.7 CERTAIN COVENANTS RELATING TO SBA MATTERS.
(a) USE OF PROCEEDS. The Company intends to use the proceeds
from the sale of the shares of Series B Preferred Stock of the Company to the
Investors for general purposes including working capital, product development,
capital investments and expansion of distribution and marketing capabilities.
(b) COMPLIANCE WITH REGULATIONS. The Company agrees to use
reasonable efforts to complete any forms and provide any information required by
Investor in connection with its status as a small business investment company,
PROVIDED, HOWEVER, that any material expenses incurred by the Company in
completing such forms or providing such information shall be promptly reimbursed
by Investor.
-16-
(c) POTENTIAL NON-COMPLIANCE WITH REGULATIONS. To the extent
that Investor discovers that it does not, or will not in the near future, comply
with the regulations of the SBIA because of its holdings in the Company, the
Company agrees to cooperate with Investor and use reasonable efforts to enter
into transactions such that after such transactions, Investor is in compliance
with the SBIA and the regulations thereunder and the Company, Investor and the
other purchasers of Series B Preferred Stock are in as similar an economic
position relative to one another as is reasonably practicable with respect to
Investor's investment in the Company, subject to any necessary approvals by the
Company's Board of Directors and shareholders and by any third parties.
2.8 TERMINATION OF COVENANTS.
(a) The covenants set forth in Sections 2.1 through Section 2.7
shall terminate as to each Holder and be of no further force or effect
(i) immediately prior to the consummation of a Qualified IPO, or (ii) when the
Company shall 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 other
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, provided that this
subsection (ii) shall not apply to a merger effected exclusively for the purpose
of changing the domicile of the Corporation.
(b) The covenants set forth in Sections 2.1, 2.2 and 2.4 shall
terminate as to each Holder and be of no further force or effect when the
Company first becomes subject to the periodic reporting requirements of
Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events
described in Section 2.4(a) above.
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties (including transferees of any of the Series A or Series B Preferred
Stock or any Common Stock issued upon conversion thereof). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of at least 66 2/3% of the Registrable Securities then outstanding, not
including the Founders' Stock; provided, that if such amendment has the effect
of affecting the Founders' Stock (i) in a manner different than securities
issued to the Investors and (ii) in a manner adverse to the interests of the
holders of the Founders' Stock, then such amendment shall require the consent of
the holder or holders of a majority of the Founders' Stock. Any amendment or
waiver effected in accordance
-17-
with this paragraph shall be binding upon each holder of any Registrable
Securities then outstanding, each future holder of all such Registrable
Securities, and the Company.
3.3 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or 10 days after being deposited in the U.S. mail, as certified
or registered mail, with postage prepaid, and addressed to the party to be
notified at such party's address or fax number as set forth on the signature
page on EXHIBIT A hereto or as subsequently modified by written notice.
3.4 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
3.5 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflicts of laws.
3.6 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.
3.7 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.
3.8 AGGREGATION OF STOCK. All shares of the Preferred Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
3.9 ADDITION OF INVESTORS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Series B
Preferred Stock pursuant to the Purchase Agreement, any purchaser of such shares
of Series B Preferred Stock may become a party to this Agreement by executing
and delivering an additional counterpart signature page to this Agreement. In
such event, such purchaser shall be deemed a "Holder", such shares purchased
shall be deemed "Series B Preferred Stock", and the shares of Common Stock
issuable or issued upon conversion of such shares of Series B Preferred Stock
shall be deemed to be "Registrable Securities", for all purposes of this
Agreement.
[Signature Page Follows]
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The parties have executed this Investors' Rights Agreement as of the date
first above written.
COMPANY:
NextNet, Inc.
By: /s/ Isaac Shpantzer
------------------------------
Isaac Shpantzer, President
Address:
11173 Meg Grace Lane
Eden Prairie, MN 55344
SIGNATURE PAGE TO INVESTOR'S RIGHTS AGREEMENT
FOUNDERS:
/s/ Isaac Shpantzer
- ---------------------------------
Isaac Shpantzer
/s/ Vladimir Kelman
- ---------------------------------
Vladimir Kelman
/s/ Beverly Waldorf
- ---------------------------------
Beverly Waldorf
SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT
RACOTEK, INC.
By: /s/ Mike Fabiaschi
---------------------------------
Name: Mike Fabiaschi
Title: President & CEO
Address:
7301 Ohms Lane
Suite 200
Minneapolis, MN 55439
INVESTORS:
DOLL TECHNOLOGY INVESTMENT FUND,
A CALIFORNIA LIMITED PARTNERSHIP
By: Doll Technology Investment Managment, LLC,
its General Partner
By: \s\ Dixon R. Doll
Name: Dixon R. Doll
Address:
3000 Sand Hill Road
Building 3, Suite 225
Menlo Park, CA 94025
SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT
INVESTORS:
DOLL TECHNOLOGY AFFILIATES FUND, L.P.
By: Doll Technology Investment Managment, LLC,
its General Partner
By: \s\ Dixon R. Doll
Name: Dixon R. Doll
Address:
3000 Sand Hill Road
Building 3, Suite 225
Menlo Park, CA 94025
SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT
INVESTORS:
DOLL TECHNOLOGY SIDE FUND, L.P.
By: Doll Technology Investment Managment, LLC,
its General Partner
By: \s\ Dixon R. Doll
Name: Dixon R. Doll
Address:
3000 Sand Hill Road
Building 3, Suite 225
Menlo Park, CA 94025
INVESTORS:
SVM STAR VENTURES MANAGEMENTGESELLSCHAFT MBH NR. 3
& CO. BETEILIGUNGS KG NR. 2
By: SVM Star Ventures Management-
gesellschaft mbH No. 3
By: \s\ Dr. Meir Barel
Dr. Meir Barel
Address:
Posartstrasse 9
D-81679 Munich, Germany
Facsimile: 49-89-419-43030
INVESTORS:
SVE STAR VENTURES ENTERPRISES NO. VII, A GERMAN
CIVIL LAW PARTNERSHIP (with limitation of
liability)
By: SVM Star Ventures Management-
gesellschaft mbH No. 3
By: \s\ Dr. Meir Barel
Dr. Meir Barel
Address:
Posartstrasse 9
D-81679 Munich, Germany
Facsimile: 49-89-419-43030
INVESTORS:
STAR SEED ENTERPRISES, A GERMAN CIVIL LAW
PARTNERSHIP (with limitation of liability)
By: Star-Seed Managementgesellschaft mbH
By: \s\ Dr. Meir Barel
Dr. Meir Barel
Address:
Posartstrasse 9
D-81679 Munich, Germany
Facsimile: 49-89-419-43030
INVESTORS:
JAFCO Co., Ltd.
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Attorney-in-fact
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
JAFCO G-6 (A) Investment Enterprise Partnership
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Attorney-in-fact
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
JAFCO G-6 (B) Investment Enterprise Partnership
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Attorney-in-fact
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
JAFCO G-7 (A) Investment Enterprise Partnership
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Attorney-in-fact
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
JAFCO G-7 (B) Investment Enterprise Partnership
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Attorney-in-fact
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
JAFCO USIT Fund III, L.P.
By: \s\ Hitoshi Imuta
Name: Hitoshi Imuta
Chairman
JAFCO America Ventures, Inc.
Its Executive Partner
Address:
JAFCO America Ventures, Inc.
505 Hamilton Avenue
Suite 310
Palo Alto, CA 94301
INVESTORS:
DON GREEN
By: \s\ Don Green
Don Green
Address:
1 Willowbrook Court
Petaluma, CA 94954
INVESTORS
____________________________________
Dovrat, Shrem & Co., Ltd.
____________________________________
Horizon Fund Ltd.
____________________________________
Dovrat, Shrem-Skies Fund 92' Ltd.
____________________________________
Dovrat, Shrem-Rainbow Fund, Ltd.
____________________________________
Canada Israel Opportunity Fund L.P.
_____________________________________
The Canada-Israel Opportunity Fund II
____________________________________
Dovrat, Shrem Founders Group,
Limited Partnership
Address:
Dovrat, Shrem & Co.
Shaul Hamelech Avenue #37
Tel Aviv 64928
ISRAEL