INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered
into as of January 26, 2005 by and among Usurf America, Inc., a Nevada
corporation (the "Company"), the shareholders of the Company who are listed on
Appendix 1 attached hereto (such shareholders, are referred to herein
collectively as the "Shareholders" and individually as a "Shareholder"), and
Xxxxxxx X. XxXxxxxx ("XxXxxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx Xxxxx
("Xxxxx"), and Xxxxx Xxxxxxx (together with XxXxxxxx, Xxxxxx and Xxxxx, the
"Current Directors").
WHEREAS, each of the Shareholders holds the Equity Securities
in the Company set forth opposite such Shareholder's name on Appendix 1;
WHEREAS, the Shareholders received their Equity Securities
pursuant to that certain Securities Purchase Agreement, dated January 26, 2005
(the "Purchase Agreement");
WHEREAS, the Current Directors are each members of the Board
of Directors of the Company, and each deems it to be in the best interest of the
Company to enter into this Agreement;
WHEREAS, the Company, the Shareholders and the Current
Directors desire to enter into this Agreement in order to provide for certain
rights and responsibilities as set forth herein; and
WHEREAS, capitalized terms used in this Agreement, except as
otherwise defined, shall have the meaning ascribed to them in ARTICLE 4 hereof.
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
1. DIRECTORS AND OFFICERS OF THE COMPANY
1.1. BOARD OF DIRECTORS
The Company, each Shareholder (for so long as such Shareholder
owns any Equity Securities) and each Current Director shall take or cause to be
taken all such action within their respective power and authority (including
without limitation the voting of shares of Equity Securities held by such
Shareholder or the taking of action by consent with respect to such shares) as
may be required:
1.1.1. to maintain the quorum requirements for actions of the
Board of Directors such that a quorum shall (a) consist of at least a majority
of the Directors and (b) include the Directors appointed pursuant to Sections
1.1.2 and 1.1.3 below; and to maintain the voting requirements for actions of
the Board of Directors at a majority of Directors present at a meeting at which
there is a quorum, except in respect of such matters as this Agreement, the
Articles of Incorporation, as amended, or the Bylaws of the Company may impose a
greater voting requirement;
1.1.2. to ensure that until the termination of the
Effectiveness Period (as defined in that certain Registration Rights Agreement
(the "Registration Rights Agreement") by and among the Company and the
Shareholders, dated the date hereof), Xx. Xx Xxxxxxx shall be a Director, and
that during such time period, upon his death or resignation, the Shareholders
holding a majority of the aggregate Common Stock issued to the Shareholders
pursuant to the Securities Purchase Agreement (including shares of Series B
Convertible Preferred Stock considered on an as if converted to Common Stock
basis) and held by such Shareholders at such time (the "Requisite Stock") shall
fill the vacancy created thereby;
1.1.3. to ensure that until the termination of the
Effectiveness Period, that in addition to Xx. Xx Xxxxxxx, one person nominated
by the Shareholders holding the Requisite Stock shall be a Director, and that
during such time period, any vacancy created by the death or resignation of such
Director shall be filled by the Shareholders holding the Requisite Stock;
1.1.4. to use its best efforts to prevent any action from
being taken by the Board of Directors of the Company during the pendency of any
vacancy due to death, resignation or removal of a Director, unless the
shareholders entitled to designate a person for election to fill such vacancy
shall have failed to do so within ten (10) days after being given written notice
of such vacancy, provided, however, that this Section 1.1.4 shall not apply in
circumstances in which action is required by the Board of Directors to protect
the best interests of the Company; and
1.1.5. to cause the Articles of Incorporation, as amended, and
Bylaws of the Company, as amended, to conform to, and to be consistent with, any
amendments to this Agreement.
1.2. SPECIAL APPOINTMENT RIGHTS.
Notwithstanding any other provision of this Agreement, at any
time (i) on or after the first anniversary of this Agreement, the Company has
insufficient financial resources to meet its obligations, including without
limitation, an inability to pay any debt when due or having debts due and
accruing which exceed the value of its assets, (ii) the Board of Directors or a
court of competent jurisdiction determines that the Company has (A) made a
material misrepresentation in the Purchase Agreement or the transaction
documents related thereto, (B) breached a covenant of the Purchase Agreement
that has resulted in a material adverse effect on the operations, business or
financial condition of the Company, or (C) has committed fraud in connection
with either the Purchase Agreement (and the transaction documents related
thereto) or the transactions contemplated thereby, or (iii) it is discovered
that an undisclosed liability of the Company existed at the time of the Closing
(as defined in the Purchase Agreement) that exceeded ten (10) percent of the
Company's market value (calculated by multiplying the number of outstanding
shares of the Company's common stock, par value $.0001 (the "Common Stock") on
the Closing Date (defined in the Purchase Agreement) by the daily volume
weighted average price of the Common Stock for the Closing Date (or the nearest
preceding date) on the OTC Bulletin Board as reported by Bloomberg Financial
L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:00 p.m. Eastern
Time) using the VAP function), the Company, each Shareholder (for so long as
such Shareholder owns any Equity Securities) and each Current Director shall
take or cause to be taken all such action within their respective power and
authority (including without limitation the voting of shares of Equity
Securities held by such Shareholder or the taking of action by consent with
respect to such shares) to (X) increase the such number of members of the
Company's Board of Directors by the number of Directors that shall constitute a
minimum majority of the Board of Directors, and (Y) grant to the holders of the
Requisite Stock the right, to fill such newly created directorships, to remove
any individuals elected to such directorships and to fill any vacancies in such
directorships.
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2. COVENANTS OF THE COMPANY
The Company hereby covenants as set forth in this ARTICLE 2
with each Shareholder that, in addition to any provisions of Nevada law
requiring approval of an action by directors or shareholders of a Nevada
corporation, the Company shall comply with the covenants and agreements set
forth in this ARTICLE 2, and the Current Directors hereby covenant that they
will not take any action to cause the Company to take any action inconsistent
with this ARTICLE 2 unless the Shareholders holding the Requisite Stock shall
have consented otherwise in advance in writing. Each Shareholder (for so long as
such Shareholder owns any Equity Securities) and each Current Director shall
take or cause to be taken all such action within their respective power and
authority (including without limitation the voting of shares of Equity
Securities held by such Shareholder or the taking of action by consent with
respect to such shares) as may be required to cause the Company to comply with
the covenants and agreements of the Company set forth in this ARTICLE 2.
2.1. SPECIAL VOTING RIGHTS
Prior to the termination of the Effectiveness Period, the
Company shall not (in any case, by merger, consolidation, operation of law or
otherwise), and shall not permit Sovereign Partners, LLC, a Colorado limited
liability company ("Sovereign"), without first having provided written notice of
such proposed action to each Shareholder and having obtained the affirmative
vote or written consent of the Shareholders holding the Requisite Stock:
(i) declare or pay any dividends or make any distributions of
cash, property or securities in respect of its capital stock, or apply any of
its assets to the redemption (other than pursuant to Section 3 hereof),
retirement, purchase or other acquisition of its capital stock, directly or
indirectly, through Subsidiaries or otherwise;
(ii) reclassify any capital stock of the Company in a manner;
(iii) authorize or issue, or obligate itself to issue, any
equity securities, convertible debt or other debt with any equity participation,
or any securities convertible into or exercisable or exchangeable for any equity
securities at a price less than $0.10 per share, on an as converted to common
stock basis, except that the Company shall be permitted to issue up to
20,000,000 shares of Common Stock in exchange for debt obligations and
contingent liabilities, which issuance(s) shall be unrestricted and may be at a
price less than $0.10 per share;
(iv) permit any Subsidiary of the Company to issue any capital
stock, or securities convertible into or exercisable or exchangeable for capital
stock or other securities of such Subsidiary, to any person or entity other than
the Company;
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(v) amend, alter or repeal any provision of, or add any
provision to its Articles of Incorporation, as amended (including, without
limitation, increasing the total number of shares of Common Stock or any other
class of Equity Securities that the Company shall have the authority to issue,
except to increase the number of authorized shares of Common Stock, as may be
required to satisfy the Company's obligations under the Purchase Agreement and
the documents related thereto) or its Bylaws as in effect on the date hereof;
(vi) effect any merger, consolidation, or sale, transfer or
license of all or substantially all of its assets;
(vii) incur any indebtedness in excess of $100,000;
(viii) make any material investments or acquire any other
corporation or business concern, whether by acquisition of assets, capital stock
or otherwise, and whether in consideration of the payment of cash, the issuance
of capital stock or otherwise;
(ix) commence, or join with any Person or entity in
commencing, any bankruptcy, reorganization or insolvency case or proceeding
against the Company, Sovereign or any other Subsidiary;
(x) liquidate, dissolve or wind up the Company or Sovereign;
(xi) effectuate a Change of Ownership, Fundamental Change or
Organic Change;
(xii) increase its number of Directors (except as may required
by Section 1.2 hereof); or
(xiii) enter into any agreement to do any of the foregoing
that is not expressly made conditional on obtaining the affirmative vote or
written consent of the Shareholders holding the Requisite Stock.
Further, the Company shall not, by reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities, agreement or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company. The Company shall at all times in good faith
assist in the carrying out of all the provisions of this Section 2. Any
successor to the Company shall agree in writing, as a condition to such
succession, to carry out and observe the obligations of the Company hereunder.
3. EFFECTIVENESS OF AGREEMENT
This Agreement is effective for all purposes as of the date
first set forth above.
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4. DEFINITIONS
Capitalized terms used in this Agreement shall have the
meaning ascribed to them as follows:
"Agreement" shall mean this Investor Rights Agreement.
"Change of Ownership" means any sale, transfer or issuance or
series of sales, transfers and/or issuances of shares of the capital stock by
the Company or any holders thereof which results in any Person or group of
Persons (as the term "group" is used under the Securities Exchange Act of 1934,
as amended), other than the holders of capital stock of the Company immediately
prior to such sale, transfer or issuance owning capital stock of the Company
possessing the voting power (under ordinary circumstances) to elect a majority
of the Company's Board.
"Company" shall mean Usurf America, Inc., a Nevada
corporation.
"Common Stock" shall mean the common stock of the Company, par
value $.0001 per share.
"Current Director" shall have the meaning ascribed to that
term in the Recitals of this Agreement.
"Director" shall have the meaning ascribed to that term in
SECTION 1.1.1.
"Equity Security(ies)" shall mean any share of any class or
series of capital stock of the Company or any right or option to acquire any
share of capital stock of the Company and shall include the Common Stock and
Series B Convertible Preferred Stock.
"Fundamental Change" means: (a) any sale or transfer of more
than fifty percent (50%) of the assets of the Company and its Subsidiaries on a
consolidated basis (measured either by book value in accordance with generally
accepted accounting principles consistently applied or by fair market value
determined in the reasonable good faith judgment of the Board) in any
transaction or series of transactions (other than sales in the ordinary course
of business); and (b) any merger or consolidation to which the Company is a
party, except for a merger in which the Company is the surviving corporation,
and after giving effect to such merger, the holders of the Company's outstanding
capital stock possessing a majority of the voting power (under ordinary
circumstances) to elect a majority of the Company's Board immediately prior to
the merger shall continue to own the Company's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the Company's Board.
"Organic Change" shall mean any recapitalization,
reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets or other transaction, in each case
which is effected in such a manner that the holders of Common Stock are entitled
to receive (either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock.
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"Person" means an individual, a partnership, a corporation, a
limited liability company, a limited liability, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof.
"Series B Convertible Preferred Stock" shall mean the Series B
Convertible Preferred Stock of the Company, par value $.0001 per share.
"Shareholder" shall have the meaning ascribed to that term in
the Recitals of this Agreement.
"Sovereign" shall have the meaning ascribed to that term in
SECTION 2.1.
"Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by the Person.
5. MISCELLANEOUS
5.1. ADDITIONAL ACTIONS AND DOCUMENTS
Each of the parties hereto hereby agrees to take or cause to
be taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments, and to
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement.
5.2. ASSIGNMENT
Neither the Company nor any Shareholder shall assign this
Agreement, in whole or in part, whether by operation of law or otherwise, (a)
unless such person shall have obtained the prior written consent of all the
other parties, or (b) unless and to the extent that such assignment is in
connection with a transfer of Equity Securities. Any purported assignment of
this Agreement contrary to the terms hereof shall be null and void and of no
force and effect.
5.3. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Appendices and Exhibits hereto
and other writings referred to herein or delivered pursuant hereto, constitutes
the entire agreement among the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.
No amendment, modification or discharge of this Agreement shall be valid or
binding unless set forth in writing and duly executed by the all of the
Shareholders.
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5.4. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instruments given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default or
any acquiescence therein. No single or partial exercise of any such right, power
or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by the
party against whom enforcement of such waiver is sought and then only to the
extent expressly specified therein.
5.5. LIMITATION ON BENEFIT
It is the explicit intention of the parties hereto that no
person or entity other than the parties hereto is or shall be entitled to bring
any action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
5.6. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
5.7. GOVERNING LAW
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Colorado (excluding the
choice of law rules thereof).
5.8. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand-delivered
or mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram, telecopy, facsimile
transmission or telex, addressed as follows:
(i) If to the Company: Usurf America, Inc.
000 Xxxxxxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
(ii) If to a Shareholder:
To such Shareholder's address on Appendix 1 hereto.
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Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be hand-delivered,
mailed transmitted, telecopied or telexed in the manner described above, or
which shall be delivered to a telegraph company, shall be deemed sufficiently
given, served, sent, received or delivered for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery receipt, or
the answerback being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
5.9. HEADINGS
Article and Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
5.10. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party appear on one or
more of the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Agreement to be duly executed on their behalf, as
of the day and year first hereinabove set forth.
USURF AMERICA, INC.
By:/s/ Xxxxxxx X. XxXxxxxx
---------------------------------------
Name: Xxxxxxx X. XxXxxxxx
-------------------------------------
Title: President & CEO
------------------------------------
SHAREHOLDERS:
DD FAMILY PROPERTIES, L.L.C.
BY: /s/ Xxxxxxx X Xxxxxxx
---------------------------------------
NAME: XXXXXXX X XXXXXXX
TITLE: LLC MANAGER
THUNDERBIRD MANAGEMENT LIMITED PARTNERSHIP
BY: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------------
NAME: XXXXX X. XXXXXXXXXX
TITLE: GENERAL PARTNER
XXXXXX FAMILY, LLLP
BY: /s/ Xxxxxx Xxxxxx
---------------------------------------
NAME: XXXXXX XXXXXX
TITLE: GENERAL PARTNER
XXXXXX FAMILY, LLLP
BY: /s/ Xxxxxxx Xxxxxx
---------------------------------------
NAME: XXXXXXX XXXXXX
TITLE: GENERAL PARTNER
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DOLPHIN BAY, LLC
BY: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
NAME: XXXXXXX X. XXXXXX
TITLE: LLC MANAGER
NEW OPPORTUNITIES, LLC
BY: /s/ Xxxx X. Xxxxxxx
---------------------------------------
NAME: XXXX X. XXXXXXX
TITLE: LLC MANAGER
/s/ Xxxxxxx Xxxxxx
-----------------------------------
XXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxxx
-------------------------------------
XXXXXXX XXXXXXXX
/s/ Xxxxxx Xxxx
-------------------------------------
XXXXXX XXXX
/s/ Xxxxx X. Xxxxx
-------------------------------------
XXXXX X. XXXXX
/s/ Xxxx Xxxxxx
-------------------------------------
XXXX XXXXXX
/s/ Xxxxx Xxxx
-------------------------------------
XXXXX XXXX
/s/ Xxxx X. Xxxxxxx
-------------------------------------
XXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------
XXXXXXX X. XXXXXXXXX
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CURRENT DIRECTORS:
/s/ Xx Xxxxxxx
-------------------------------------
Xx Xxxxxxx
/s/ Xxxxxxx X. XxXxxxxx
-------------------------------------
Xxxxxxx X. XxXxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxx
-------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------
Xxxxx Xxxxxxx
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APPENDIX 1
SHAREHOLDERS AND COMPANY SECURITIES HOLDINGS
SHAREHOLDER COMPANY SECURITIES HOLDINGS
----------- ---------------------------
DD FAMILY PROPERTIES, LLC 27.777%
THUNDERBIRD MANAGEMENT LIMITED PARTNERSHIP 9.522%
XXXXXX FAMILY, LLLP 10.708%
XXXXXX FAMILY, LLLP 8.924%
DOLPHIN BAY, LLC 8.567%
NEW OPPORTUNITIES, LLC 2.838%
XXXXXXX XXXXXX 22.639%
XXXXXXX XXXXXXXX 1.345%
XXXXXX XXXX 2.500%
XXXXX X. XXXXX 2.500%
XXXX XXXXXX 1.000%
XXXXX XXXX 1.000%
XXXX X. XXXXXXX 0.340%
XXXXXXX X. XXXXXXXXX 0.340%
00
XXXXXXXX XXXXXX XXXXXXXXX
XXXXX
XXXXX XXXXXXX, INC.,
A NEVADA CORPORATION
AND
THE SHAREHOLDERS OF THE COMPANY
LISTED ON APPENDIX 1, ATTACHED HERETO
JANUARY 26, 2005
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