Exhibit 4.1
PREEMPTIVE RIGHTS AGREEMENT
This PREEMPTIVE RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this 13th day of August, 1998, by and among ALLIN
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company") and those
persons whose names appear on the signature page hereof (each a "Subscriber,"
and collectively, the "Subscribers").
W I T N E S S E T H:
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WHEREAS, concurrently with the execution of this Agreement and
pursuant to the terms of certain Subscription Agreements (the "Subscription
Agreements), Subscribers have agreed to purchase from the Company, and the
Company has agreed to sell and issue to Subscribers, shares of Series B
Redeemable Preferred Stock, par value $.01 per share, of the Company (the
"Series B Preferred Stock") and warrants (the "Warrants") to purchase shares of
common stock, par value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, the parties believe it to be to their mutual benefit to
provide for a plan for certain terms of future equity financings by the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
independent covenants contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
INTERPRETATION OF THIS AGREEMENT
1.1 Certain Defined Terms. As used in this Agreement:
"Approved Stock Plan" means (i) the Company's 1996 Stock Plan and (ii)
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the Company's 1997 Stock Plan.
"Board" means the board of directors of the Company.
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"Capital Stock" means the capital stock of the Company.
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"Capital Stock Equivalents" means options or rights to acquire any
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shares of Capital Stock or any securities convertible into or exchangeable for
Capital Stock.
"Person" means an individual, corporation, partnership, joint venture,
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trust or unincorporated organization or association, joint stock company or
other similar organization,
government or any political subdivision thereof, court, or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Underlying Shares" means shares of Capital Stock issuable upon
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exercise, exchange or conversion of Capital Stock Equivalents.
1.2 Headings. The article and section titles herein are for
convenience only and do not define, limit or construe the contents of such
articles and sections.
ARTICLE II
PREEMPTIVE RIGHTS
2.1 Grant of Rights. If at any time following the date hereof the
Company proposes to sell any shares of Capital Stock or Capital Stock
Equivalents, the Company will first offer to each Subscriber the right to
purchase up to the number of shares of Capital Stock (or in the case of a sale
of Capital Stock Equivalents, such Capital Stock Equivalents whose Underlying
Shares are) equal to the product of (a) the number of shares of Capital Stock
(or Underlying Shares with respect to the Capital Stock Equivalents) proposed to
be sold by the Company multiplied by (b) a fraction, the numerator of which is
the number of shares of Series B Preferred Stock purchased by the Subscriber on
the date hereof and the denominator of which is the total number of shares of
Series B Preferred Stock issued as of the date hereof, for the same price and on
the same economic terms as the securities are being offered in such transaction.
If noncash consideration is proposed to be received for the securities, the
price for purposes of the preceding sentence shall be the sum of any cash to be
received plus the fair market value of the noncash property to be received, as
determined in good faith by the Board.
2.2 Notice to Subscribers. The Company will cause to be given to
each Subscriber a written notice directed to each Subscriber setting forth a
description of the securities being offered, the price and other economic terms
at which the Subscriber may purchase such securities and the calculation made as
to the number of securities that the Subscriber has the right to purchase,
whereupon the Subscriber shall have a period of two (2) business days from the
date such notice is given to give written notice to the Company that he or it
desires to exercise his or its right to purchase the securities. Capital Stock
or any Capital Stock Equivalents which have been offered in accordance with this
Article II to each Subscriber and with respect to which, within the applicable
period specified above, a Subscriber has not given notice to the Company that he
or it desires to exercise its right to purchase, may thereafter, for a period
not exceeding three months following the expiration of such period, be issued,
sold or subjected to rights or options to any other Person at a price not less
than that at which they were offered to the declining Subscriber. Any such
securities not so issued, sold or subjected to rights or options to others
during such three-month period will thereafter again be subject to the first
refusal rights provided for in this Article II.
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2.3 Exceptions. Anything in this Agreement to the contrary
notwithstanding, the provisions of this Article II shall not be applicable to
(i) the granting of options or the issuance of Capital Stock pursuant to an
Approved Stock Plan, (ii) the issuance of the Series B Preferred Stock and the
Warrants pursuant the Subscription Agreements, (iii) the issuance of Capital
Stock pursuant to the declaration or payment of any dividend on the Capital
Stock payable in shares of Capital Stock, (iv) the issuance of Capital Stock to
a seller as consideration for the purchase of equity interests or assets of an
entity unaffiliated with the Company whether pursuant to a merger or otherwise,
(v) the issuance of Underlying Shares or (vi) securities offered to all holders
of a particular class of outstanding Capital Stock on a pro rata basis whether
pursuant to an exchange offer or otherwise.
2.4 Termination of Preemptive Rights. Anything in this Agreement to
the contrary notwithstanding, the provisions of this Article II shall terminate
and be of no force or effect on the earliest of (i) the first anniversary of the
date hereof or (ii) with respect to any particular Subscriber, such time as such
Subscriber shall have declined to exercise his or its preemptive rights in
connection with two separate and distinct proposed sales, with respect to which
(a) the Subscriber received notices in accordance with Section 2.2 and (b) the
Company actually sold securities to other Persons in accordance with the terms
set forth in such notices and in accordance with this Article II.
ARTICLE III
MISCELLANEOUS
3.1 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Subscribers holding a majority of the outstanding shares of Series B Preferred
Stock and outstanding shares of Common Stock into which shares of Series B
Preferred Stock have been converted; provided, however, that no amendment,
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modification or supplement or waiver or consent to the departure with respect to
the provisions of Article II hereof shall be effective as against any Subscriber
unless consented to in writing by such Subscriber.
3.2 Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective representatives, administrators, heirs, successors and permitted
assigns, as applicable; provided, however, that no Subscriber may assign, by
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operation of law or otherwise, to any Person his or its rights hereunder without
the prior written consent of the Company.
3.3 Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
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if to the Company, to:
Allin Communications Corporation
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
if to a Subscriber, to:
the most recent address of such Subscriber on the books of the
Company
All such notices and communications shall be deemed to have been given or
made (i) when delivered by hand, (ii) two business days after being
deposited in the mail, postage prepaid, (iii) when telexed, answer-back
received or (iv) when telecopied, receipt acknowledged.
3.4 Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of such provision, paragraph, word, clause, phrase or sentence in
every other respect and of the remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
3.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
3.6 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, without
regard to the conflicts of laws rules thereof.
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IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
ALLIN COMMUNICATIONS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: Chairman and Chief Executive Officer
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SUBSCRIBERS
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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