Investors' Rights Agreement
This Investors' Rights Agreement (the "Agreement") is made as of the 24th
day of August, 1999 by and among VOYAGER GROUP LTD, ., a Nevada corporation (the
"Company") and the Investors listed on Exhibit A hereto (the "Investors").
RECITALS
A. The Company and certain of the Investors have entered into a Series "J"
Convertible Preferred Stock 1999 (the "Purchase Agreement") of even date
herewith pursuant to which the Company will sell to such Investors and such
Investors will purchase from the Company shares of the Company's Series "J"
Convertable Preferred Stock 1999. In connection with entering into the (Purchase
Agreement), the Company and the Investors wish to enter into this Agreement in
order to provide the Investors with (i) certain rights to register shares of the
Company's Common Stock issuable upon conversion of the Series "J" Convertible
Preferred Stock held by the Investors, (ii) certain rights to receive and
inspect information pertaining to the Company, (iii) a Right of First Offer"
with respect to certain issuances by the Company of its securities, and (iv)
certain other covenants by the Company. The Company desire to induce the
Investors to purchase shares of Series J Convertiable preferred 1999 pursuant to
the (Purchase Agreement) by agreeing to the terms and conditions set forth
herein.
B. Pursuant to a Shareholders meeting Section 78.320 of Navada Corporate law Of
the company, this Agreement is being executed by the Company and the holders of
at least two-thirds (52%) of the shares Registrable Securities then outstanding,
here by agree to the entirety of this Agreement.
AGREEMENT
The parties hereby agree as follows:
1. Registration Rights. The Company 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 "J" Convertible
Preferred Stock, 1999, (iv) shares of Series "J" Convertible Preferred Stock
1999 issued or if nad wheb issued upon conversion pursuant to the Purchase
Agreement, and (ii) any other shares of Common Stock of the Company issued as
(or if and when issued 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), (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 an underwritten public
offering by the Company of shares of its Common Stock pursuant to a registration
statement under the Securities Act, which results in gross proceeds in excess of
$15,000,000 and the public offering price of which is at least $10.00 per share
(appropriately adjusted for any stock split, dividend, combination or other
re-capitalization ).
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier of
(i) January 01, 2003, or (ii) 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 on Form X-0, X-0 or any successor thereto),
a written request from the Holders of at least thirty-three percent (33%) of the
Registrable Securities then outstanding that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Securities, then the Company shall, within fifteen (15) 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 90 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 ten (10) days of the mailing of such
notice by the Company in accordance with Section 5.3.
(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 (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(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 once 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 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;
(iii) If the anticipated aggregate offering price to the
public would not be in excess of $5,000,000; or (iv) 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 on Form X-0, Xxxx X-0 or any
successors thereto, 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 fifteen (15) days after
mailing of such notice by the Company in accordance with Section 5.3, 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 a written
request or requests (i) from any Holder or Holders of at least twenty percent
(20%) of the Registrable Securities then outstanding holds Registrable
Securities with an aggregate offering price of at least $5,000,000 (five
Million), that, in each case, 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
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.4: (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders
propose to sell Registrable Securities at an aggregate price to the public 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 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 120 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
two registrations 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 all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for 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 (other than a registration
statement on Form S-3 pursuant to Section 1.4) 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.
(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 or market 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 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 underwriting
discounts and commissions, stock transfer taxes and fees of counsel to the
selling Holders in addition to that provided below) incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them with the approval of the Company, which approval shall not be
unreasonably withheld, 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 or reasonably foreseeable
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 underwriting
discounts and commissions, stock transfer taxes and fees of counsel to the
selling Holders in addition to that provided below) incurred in connection with
registrations, filings or qualifications of Registrable Securities pursuant to
Section 1.3 for each Holder, including (without limitation) all registration,
filing, and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders selected by them with the
approval of the Company, which approval shall not be unreasonably withheld,
shall be borne by the Company.
(c) Registration on Form S-3. All expenses (other than
underwriting discounts and commissions, stock transfer taxes and fees of counsel
to the selling Holders in addition to that provided below) incurred in
connection with a registration requested pursuant to Section 1.4, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of one counsel for the
selling Holder or Holders selected by them with the approval of the Company,
which approval shall not be unreasonably withheld, and counsel for the Company
shall be borne by the Company.
(d) Underwriting Discounts and Commissions. All underwriting
discounts and commissions incurred in connection with registrations in
connection with each registration statement under Section 1 shall be borne by
the participating sellers (and the Company, if the Company is a seller) in
proportion to the number of shares sold by each, or as they otherwise may agree.
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 Holders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, 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 the amount of securities of
the selling Holders included in the offering be reduced below thirty percent
(30%) 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. 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, any underwriter (as defined in the Securities
Act) for such Holder 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") and the partners, officers and
directors of any such Holder, 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; and the Company will pay to each
such Holder, 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
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 statements or omissions 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 such 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.
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:
(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 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 of at least 1,000,000 shares of such securities (appropriately adjusted
for any stock split, stock dividend, or other recapitalization) or to a partner
or affiliate (within the meaning of Rule 12b-2 of the Exchange Act) of the
Holder,provided that (i) the Company is, promptly 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; (ii) the transferee or assignee agrees to be bound by the terms and
conditions of this Agreement; and (iii) 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.
Notwithstanding the limitations set forth in the foregoing sentence regarding
the minimum number of shares that must be transferred, any Holder that is a
corporation may transfer such Holder's registration rights to its wholly-owned
subsidiaries without restriction as to the number of shares transferred.
1.13 Limitations on Subsequent Registration Rights. Except as provided
in Section 1.1(b) and Section 5.9, from and after the date of this Agreement,
the Company shall not, without the prior written consent of the Holders of a
majority of the 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 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, and all holders of
one percent or more of the Company's outstanding Common Stock (including shares
issuable upon conversion of Preferred Stock) 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 a 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)
one (1) 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-month period without
registration.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall deliver to
each Holder of at least 1,000,000 shares of Registrable Securities:
(a) as soon as practicable, but in any event within one hundred
twenty (120) 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 or otherwise reasonably acceptable
to Holders of a majority of the Registrable Securities then outstanding;
(b) within forty-five (45) days of the end of each quarter, an
unaudited income statement and a statement of cash flows and balance sheet for
and as of the end of such quarter, in reasonable detail; and
(c) as soon as practicable, but in any event at least fifteen
(15) days prior to the end of each fiscal year, an operating budget and business
plan for the next fiscal year.
2.2 Inspection. The Company shall permit each Holder of at least
1,000,000 shares of Registrable Securities, 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 Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which the Board of Directors
reasonably determines in good faith to be a trade secret or similar confidential
information.
2.3 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 1,000,000
shares of the Preferred Stock (or the Common Stock issued upon conversion
thereof). For purposes of this 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, any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail or
overnight courier ("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, each
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).
(c) The Company may, during the 60-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 capital stock (or options therefor) to
employees, consultants, officers or directors of the Company pursuant to stock
purchase or stock option plans or agreements approved by the Board of Directors
of the Company (including options granted prior to the date hereof), (ii) to the
issuance of securities in connection with bona fide acquisitions, mergers or
similar transactions, (iii) to the issuance of securities to financial
institutions or lessors in connection with commercial credit arrangements,
equipment financings or similar transactions, (iv) to the issuance and sale of
the Series D Preferred Stock under the Purchase Agreement and the Common Stock
issued upon conversion of the Series A, Series B, Series C or Series D Preferred
Stock, (v) to the issuance of securities in a public offering of securities
pursuant to a registration statement filed under the Securities Act, (vi) to the
issuance of securities pursuant tothe conversion or exercise of options,
warrants, notes, or other rights to acquire securities of the Company, or (vii)
to the issuance of securities pursuant to stock splits, stock dividends or like
transactions.
2.4 Employee Confidential Information and Invention Assignment
Agreements. The Company will require that all future employees, consultants and
officers having access to proprietary information execute Confidential
Information and Invention Assignment Agreements substantially in the form
currently used by the Company and that such form may not be altered in a manner
adverse to the Company without the approval of the Company's President.
2.5 Termination of Covenants.
(a) The covenants set forth in Sections 2.1 through Section 2.3
shall terminate as to each Investor and be of no further force or effect (i)
upon the consummation of a Qualified IPO, or (ii) when the Company shall (A)
sell, convey, or otherwise dispose of all or substantially all of its property
or business or merge or consolidate with any other corporation (other than a
wholly-owned subsidiary corporation) where the stockholders of the Company own
less than fifty percent (50%) of the voting power of the surviving entity after
such merger or consolidation or (B) 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 Company.
(b) The covenants set forth in Sections 2.1 and 2.2 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 2.5(a) above.
3. Standstill Agreement.
3.1 No Increase of Ownership Interest. At any time following the date
of this Agreement, except with the prior written consent of a majority of the
Company's Board of Directors (excluding the vote of any director(s) appointed by
the respective Investor or otherwise affiliated with such Investor), no Major
Investor, together with any persons or entities affiliated with such Major
Investor (collectively, the "Standstill Investor"), shall acquire beneficial
ownership (as defined in Rule 13d-3 of the Exchange Act) of any securities of
the Company entitled to vote with respect to the election of any directors of
the Company ("Voting Securities"), any security convertible into, exchangeable
for, or exercisable for, or that may become any Voting Securities or any other
right to acquire Voting Securities (such Voting Securities and rights to acquire
Voting Securities are collectively referred to herein as "Securities"), if after
such acquisition, the Voting Securities then beneficially owned by the
Standstill Investor represent more than the Standstill Investor's Threshold
Percentage (defined below) of the Company's then outstanding Voting Securities
(assuming the conversion, exchange and/or exercise of all convertible,
exchangeable and exercisable securities, including all securities reserved for
issuance under the Company's stock plans); provided
however, that if at any time the Voting Securities beneficially owned by a
Standstill Investor shall represent less than or the same as the Standstill
Investor's Threshold Percentage, and, subsequently and solely as a result of the
Company's repurchases of Voting Securities or a recapitalization of all the
Company's capital stock, the Voting Securities beneficially owned by a
Standstill Investor shall then represent more than the Standstill Investor's
Threshold Percentage, then such Standstill Investor shall not be deemed in
violation of this Section 3.1 for so long as such Standstill Investor does not
purchase or acquire additional Voting Securities. For purposes of this
Agreement, the "Standstill Investor's Threshold Percentage" shall be equal to
40.0% for each Standstill Investor. Notwithstanding the foregoing, for purposes
of this Section 3.1 and for purposes of Sections 3.2, 3.3, 3.4 and 3.5 only,
Xxxx Xxxxxxxxxxx and xxxxxx Xxxxxxx shall not be considered a "Major Investor"
and shall not be deemed a "Standstill Investor".
3.2 Notice of Voting Securities Purchases. Each Standstill Investor
shall notify the Company as to any future acquisition of beneficial ownership of
Voting Securities, or rights thereto, within ten (10) business days after such
action in order for the Company to monitor compliance with the terms of this
Agreement.
3.3 Acts in Concert with Others. The Standstill Investor shall not
join a partnership, limited partnership, syndicate or other group, or otherwise
act in concert with any third person, for the purpose of acquiring any
Securities that would exceed such Standstill Investor's Threshold Percentage.
3.4 Termination of Standstill Agreement. The covenants set forth in
this Section 3 shall terminate as to each Standstill Investor on the earlier of
(i) August 10, 2000 or (ii) when the Company shall (A) sell, convey, or
otherwise dispose of all or substantially all of its property or business or
merge or consolidate with any other corporation (other than a wholly-owned
subsidiary corporation) where the stockholders of the Company own less than
fifty percent (50%) of the voting power of the surviving entity after such
merger or consolidation or (B) 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, except in each case a merger effected exclusively for
the purpose of changing the domicile of the Company.
3.5 Permitted Transaction. Notwithstanding the provisions of this
Section 3, on and after the eleventh business day after the commencement of a
proxy contest, tender offer or exchange offer which could result in a "Change of
Control Transaction" (as defined below) for outstanding Securities or on or
after the public announcement that the Company has entered into an agreement
with a third party not affiliated with the Company that would result in a Change
of Control Transaction, the Standstill Investor shall be permitted to make a
proposal to the Company's Board of Directors or shareholders or to tender or
exchange any Securities beneficially owned by it pursuant to such transaction.
As used herein, "Change of Control Transaction" shall mean (A) any tender or
exchange offer, merger, consolidation, re-capitalization or other business
combination or transaction pursuant to which either (i) the holders of the
outstanding voting power immediately prior to the transaction would hold less
than 50% of the outstanding voting power outstanding immediately after the
transaction or (ii)50% of the assets of the Company would be transferred to or
controlled by a third party not affiliated with the Company, except in each case
a merger effected exclusively for the purpose of changing the domicile of the
Company, or (B) any action by the shareholders of the Company that results in
the directors, who as of the date of Closing constitute the Company's Board of
Directors (the "Incumbent Board"), ceasing to constitute
at least a majority of the Company's Board of Directors; provided, however, that
any individual becoming a director subsequent to the date of Closing whose
nomination for election by the shareholders of the Company was approved by the
vote of the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board.
4. Sales Xx. Xxxx Xxxxxxxxxxx or Xx. Xxxxxx Xxxxxxx
4.1 Right of First Refusal. Before any shares of the Company's capital
stock ("Stock") held by Xxxx Xxxxxxxxxxx or Xxxxxx Xxxxxxx (including its
affiliated funds) each a "ROFR Investor") may be sold or otherwise transferred,
the Company or its permitted assignee under Section 4.2 shall have a right of
first refusal to purchase such Stock on the terms and conditions set forth in
this Section 4 (the "Right of First Refusal").
(a) Exercise of Right of First Refusal. At any time within
fifteen (15) business days after receipt of the Seller Notice, the Company or
its assignee may, by giving written notice to the Seller, elect to purchase all
of the Stock proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.
(b) Purchase. The purchase price ("Purchase Price") for the Stock
purchased by the Company or its assignee under this Section 4 shall be the
Offered Price. If the Offered Price includes consideration other than cash, the
cash equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith. Payment of the Purchase Price
shall be made, at the option of the Company or its assignee(s), in cash (by
check), by cancellation of all or a portion of any outstanding indebtedness of
the Seller to the Company (or, in the case of purchase by an assignee, to the
assignee), or by any combination thereof within 30 days after the Company or its
assignee provides the written notice to the Seller as provided in subsection (b)
above.
(d) Seller's Right to Transfer. If the Stock proposed in the
Seller Notice to be transferred is not purchased by the Company or its assignee
as provided in this Section 4, then the Seller may sell or otherwise transfer
such Stock to that Proposed Transferee at the Offered Price or at a higher
price, provided that such sale or other transfer is consummated within 90 days
after the date of the Seller Notice and provided further that any such sale or
other transfer is effected in accordance with any applicable securities laws. If
any Stock described in the Seller Notice is not transferred to the Proposed
Transferee within such period, or if the Seller proposes to change the price or
other terms to make them more favorable to the Proposed Transferee, a new Seller
Notice shall be given to the Company and the other Investor, and the Company
and/or its assignee shall again be offered the Right of First Refusal before any
Stock held by the Seller may be sold or otherwise transferred.
(e) Reissuance of Repurchased Shares. Any Stock purchased by the
Company under this Section 4 from Investor may be retired by the Company or held
by the Company as treasury stock, but such Stock may not be reissued by the
Company without the prior written consent of the non-selling Investor (the
"Non-Selling Investor").
4.2 Assignment of Right of First Refusal. In the case of proposed
sales or transfers of Stock by a Investor, the Company agrees that in the event
that the Company declines to exercise the Right of First Refusal, the Company
will provide the Non-Selling Investor with notice of such determination at least
five (5) business days prior to the end of the period in which the Right of
First Refusal expires under Section 4.1(b). The Non-Selling Investor shall then
have the right, exercisable by notice prior to the end of such
period, to exercise such Right of First Refusal as the Company's assignee. Any
Stock purchased by a Investor under this Section 4.2 shall not be deemed Voting
Securities under Section 3.1 for purposes of calculating the Standstill
Investor's Threshold Percentage. The Right of First Refusal is not otherwise
assignable by the Company.
4.3 Permitted Transactions. The provisions of this Section 4 shall
not pertain or apply to:
(i) Stock sold pursuant to a registration statement filed
under the Securities Act;
(ii) Distributions of Stock by xxxx xxxxxxxxxxx or xxxxxx
Xxxxxxx to its businesspartners and
subsequent resales of such Stock;
4.5 Legended Certificates. Each certificate representing shares of
Stock of the Company now or hereafter owned by the Investors or issued to any
Permitted Transferee pursuant to Section 4.3(iii) shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN RIGHT OF FIRST REFUSAL BY AND BETWEEN THE STOCKHOLDER,
THE CORPORATION AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN
REQUEST TO THE SECRETARY OF THE CORPORATION."
The foregoing legend shall be removed upon termination of the Right of
First Refusal in accordance with the provisions of Section 4.6.
4.6 Termination of Right of First Refusal. The Right of First Refusal
under this Section 4 shall terminate at such time as the covenants set forth in
Section 3 shall have terminated pursuant to Section 3.4 above.
5. Miscellaneous.
5.1 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. 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. A Holder that is
a corporation may assign or transfer such Holder's rights and obligations to its
wholly-owned subsidiaries without restriction as to the number of shares
acquired.
5.2 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 two-thirds (2/3) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance 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.
5.3 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 forty-eight (48) hours 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
below or on Exhibit A hereto or as subsequently modified by written notice.
5.4 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.
5.5 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 Navada, without giving effect to principles of
conflicts of laws.
5.6 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.
5.7 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.
The parties have executed this Investors' Rights Agreement as of the date
first above written.
COMPANY: INVESTORS:
VOYAGER GROUP LTD Xxxxxxx Xxxxxxxxxxx
By: Xxxxxxx Xxxxxxx By: Xxxx Xxxxxxxxxxx
--------------------- ------------------
Vice president
By: Xxxxxx Xxxxxxx
-------------------
INVESTORS RIGHTS AGREEMENT
EXHIBIT A
INVESTORS
Name and Address
---------------------------------------
Xxxx Xxxxxxxxxxx
ADDRESS
Xxxxxx Xxxxxxx
ADDRESS
