SERIES A PREFERRED
STOCKHOLDERS' RIGHTS AGREEMENT
This Series A Preferred Stockholders' Rights Agreement (this
'AGREEMENT') is made as of __________, 1998 by and between Go2 Technologies,
Inc., a Delaware corporation (the 'COMPANY') and the entities listed on Exhibit
A hereto (each an 'INVESTOR' and together, the 'INVESTORS').
RECITALS
A. The Investors and the Company are parties to that certain Series A
Preferred Stock Purchase Agreement, of even date herewith (the 'SERIES A
PURCHASE AGREEMENT'), which provides for the sale of up to five hundred thousand
(500,000) shares of the Series A Preferred Stock.
B. The execution of this Agreement is a condition to the closing of the
transactions contemplated in the Series A Purchase Agreement.
C. In connection with the above, the Company and the Investors desire
to provide for certain rights and obligations of the Investors.
In consideration of the mutual promises and covenants hereinafter set
forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
'COMMISSION' means the Securities and Exchange Commission or
any successor agency.
'COMMON STOCK' means the Common Stock of the Company.
'FAMILY MEMBER' has the meaning set forth for it in Section 4.
'HOLDER' means any holder of outstanding Registrable
Securities (or Series A Preferred Stock convertible into Registrable Securities,
as the case may be) which have not been sold to the public.
'PARTIES' means the parties that are signatories of this
Agreement; 'PARTY' shall refer to any one of the Parties.
'QUALIFIED PUBLIC OFFERING' has the meaning set forth for it
in Section 5(a).
'RESTRICTED SECURITIES' means the securities of the Company
described in Section 3 hereof.
'REGISTRABLE SECURITIES' means (i) shares of the Common Stock
issued or issuable upon the conversion of the Series A Preferred Stock; and (ii)
any other shares of the Company's Common Stock issued as (or issuable upon
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
replacement of the Series A Preferred Stock.
The terms 'register,' 'registered' and 'registration' refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
'REGISTRATION EXPENSES' means all reasonable out-of-pocket
expenses incurred by the Company in complying with Sections 5 and 8 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and accounting fees of the Company.
'SECURITIES ACT' means the Securities Act of 1933, as amended.
'SELLING EXPENSES' means all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
'SERIES A PREFERRED STOCK' means the Series A Preferred Stock
of the Company.
2. Restrictions on Transferability. The Restricted Securities shall not
be transferable except upon the conditions specified in this Agreement
(including, without limitation, the provisions of Sections 4 and 18), which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act and other provisions. Each holder of Restricted
Securities will cause any proposed transferee of the Restricted Securities held
by such holder to agree in writing to take and hold such Restricted Securities
in accordance with the restrictions, obligations and conditions specified in
this Agreement (including, without limitation, the provisions of Sections 2, 3,
4, 11, 12 and 17) and to be bound by this Agreement in the same manner as the
transferring holder.
3. Restrictive Legend. Each certificate representing (i) shares of
Series A Preferred Stock, (ii) shares of Common Stock issued upon conversion of
the Series A Preferred Stock, and (iii) any other securities issued in respect
of the Series A Preferred Stock and Common Stock issued upon conversion of the
Series A Preferred Stock (any such securities listed in the preceding
subsections (i), (ii) or (iii), 'RESTRICTED SECURITIES), shall (unless otherwise
permitted by the provisions of Section 4 below) be stamped or otherwise
imprinted with a legend in the following form (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
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SECURITIES ACT OF 1933, AS AMENDED (THE 'SECURITIES ACT'). THESE SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT. COPIES OF THE
AGREEMENTS COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
4. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the holder thereof
shall give written notice to the Company of such holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall, if the Company so
requests, be accompanied (except in transactions in compliance with Rule 144) by
an unqualified written opinion of legal counsel who shall be reasonably
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, provided, however, that no opinion need
be obtained with respect to a transfer to (A) a partner, active or retired, of a
holder of Restricted Securities, (B) the estate of any such partner, (C) an
'affiliate' of a holder of Restricted Securities as that term is defined in Rule
405 promulgated by the Commission under the Securities Act (an'AFFILIATE'), or
(D) to the spouse, children, grandchildren or spouse of such children or
grandchildren of any holder or to trusts for the benefit of any Holder or such
persons where the holder is a natural person (each person or entity in this
subsection (D), a 'FAMILY MEMBER'), if the transferee agrees to be subject to
the terms hereof. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear the appropriate restrictive legend set
forth in Section 3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for the Company such legend is
not required in order to establish compliance with any provisions of the
Securities Act.
5. Company Registration.
(a) Notice of Registration. After the first firmly
underwritten public offering which is (i) pursuant to an effective registration
statement under the Securities Act covering the offer and sale of Common Stock
and (ii) the anticipated proceeds from such offering equals or exceeds
$5,000,000, such offering (a 'QUALIFIED PUBLIC OFFERING') if the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder, other than (A) a registration relating to employee
benefit plans or, (B) a registration relating to a Commission Rule 145 or
similar transaction, the Company will:
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(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within thirty (30) days after receipt of such written notice
from the Company, by any Holder, except as set forth in Section 5(b) below.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5(a)(i). In such event the right of any Holder to
registration pursuant to Section 5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 5, if the managing
underwriter advises the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter may limit to whatever extent necessary (including the complete
exclusion of all Registrable Securities) the number of Registrable Securities to
be included in the registration and underwriting by reducing the number of
Registrable Securities included on behalf of the Holders, on a pro-rata basis
based on the total number of Registrable Securities entitled to registration
held by each Holder. The Company shall advise all Holders of Registrable
Securities which would otherwise be registered and underwritten pursuant hereto
of any such limitations. If any Holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall not be included in such registration.
6. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 5 and Section 8 shall be borne by the Company. All Selling Expenses
relating to securities registered by the Holders shall be borne by the Holders
of such securities pro rata on the basis of the number of shares so registered.
7. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Effectiveness. Prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for at least
thirty (30) days or until the distribution described in the registration
statement has been completed; provided, however, that such thirty (30) day
period shall be extended for
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a period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company;
(b) Amendments. Prepare and file with the Commission 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;
(c) Copies of Documents. Furnish to the Holders participating
in such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(d) Blue Sky Laws. 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, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(e) Underwriting Agreement. 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; provided that each Holder participating in such underwriting shall
also enter into and perform its obligations under such underwriting agreement;
(f) Notification. 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 material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(g) Listing. Cause such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) Transfer Agent and Registrar. 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.
8. Registration on Form S-3. If the Holders holding at least fifty
percent (50%) of the total authorized Series A Preferred Stock request in
writing that the Company file a registration statement on
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Form S-3 (or any successor form thereto) for a public offering of shares of
Registrable Securities the reasonably anticipated aggregate price to the public
of which would exceed five hundred thousand dollars ($500,000), and the Company
is a registrant entitled to use Form S-3 to register securities for such an
offering, the Company shall use its commercially reasonable efforts to cause
such shares to be registered for the offering on such form (or any successor
thereto). Notwithstanding the foregoing, the Company may delay the filing of a
registration statement requested pursuant to this Section 8 once in any twelve
(12) month period for a period of up to ninety (90) days if the Company's Board
of Directors determines that such a filing would not be in the best interest of
the Company at the time of the request. The Company will promptly give written
notice of a request for the proposed registration to all other Holders and
include all Registrable Securities of any Holder or Holders joining in such
request as are specified in a written request received by the Company within
thirty (30) days after the date of such written notice from the Company. The
Company shall be required to file no more than two (2) such registration
statements on Form S-3 pursuant to this Section 8.
9. Termination of Registration Rights. Except as provided elsewhere in
this Agreement, the registration rights granted pursuant to this Agreement shall
terminate (i) as to all Holders on the third anniversary of the closing of a
Qualified Public Offering and (ii) as to any Holder, at such time as such Holder
is able to sell all of its Registrable Securities under Rule 144 in a three (3)
month period or such Holder is able to sell all Registrable Securities held by
it pursuant to Rule 144(k) promulgated under the Securities Act.
10. Indemnification.
(a) Company Indemnification. The Company will indemnify each
Holder, each of its officers, directors and partners and such Holder's legal
counsel and independent accountants, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any 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 any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of its officers, directors and partners and such Holder's legal counsel and
independent accountants, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that
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the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b) Holder Indemnification. Each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and its legal counsel and
independent accountants, each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act, and
each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, legal counsel, independent
accountants, underwriters or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of any such Holder hereunder shall be
limited to an amount equal to the gross proceeds before expenses and commissions
to such Holder of Registrable Securities sold as contemplated herein.
(c) Notification of Claim. Each party entitled to
indemnification under this Section 10 (the 'INDEMNIFIED PARTY') shall give
notice to the party required to provide indemnification (the 'INDEMNIFYING
PARTY') promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnified Party (together with all other Indemnified Parties that may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its
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obligations under this Agreement, except to the extent, but only to the extent,
that the Indemnifying Party's ability to defend against such claim or litigation
is impaired as a result of such failure to give notice. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in
paragraphs (a) and (b) of this Section 10 is unavailable or insufficient to hold
harmless an Indemnified Party thereunder, then each Indemnifying Party
thereunder shall contribute to the account paid or payable by such Indemnified
Party as a result of the losses, claims, damages, costs, expenses, liabilities
or actions referred to in paragraphs (a) and (b) of this Section 10 in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other in connection with
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Indemnifying Party or the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statements or omission. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this paragraph (d) of Section 10
were to be determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this paragraph (d) of Section 10. The
amount paid by an Indemnified Party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this paragraph (d) of
Section 10 shall be deemed to include any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any action or claim which is the subject of this paragraph (d) of Section 10.
Promptly after receipt by an Indemnified Party of notice of the commencement of
any action against such party in respect of which a claim for contribution may
be made against an Indemnifying Party under this paragraph (d) of Section 10,
such Indemnified Party shall notify the Indemnifying Party in writing of the
commencement thereof if the notice specified in paragraph (c) of this Section 10
has not been given with respect to such action; provided that the omission so to
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability which it may have to any Indemnified Party otherwise under this
paragraph (d) of Section 10, except to the extent that the Indemnifying Party is
actually prejudiced by such failure to give notice. The parties hereto agree
with each other and shall agree with the underwriters of the Common Stock of the
Company pursuant to the terms hereof, if requested by such underwriters, that
(a) the underwriters' portion of such contribution shall not exceed the
underwriting discount, commission and other compensation and (b) except for the
Company, the amount of such contribution shall not exceed an amount equal to the
proceeds received by such Indemnifying Party from the sale of securities in the
offering to which the losses, claims, damages or liabilities of the indemnified
parties relate. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act)
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shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
11. Lock-up Agreement. In consideration for the Company agreeing to its
obligations under this Agreement, each Holder of Registrable Securities and each
transferee pursuant to Section 14 hereof agrees, in connection with a Qualified
Public Offering, upon request of the Company or the underwriters managing such
offering, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Registrable Securities or other
securities of the Company (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration as the Company or the
underwriters may specify. Each Holder agrees that the Company may instruct its
transfer agent to place stop transfer notations in its records to enforce the
provisions of this Section 11.
12. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
13. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Public Information. Make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(b) Filings with SEC. Use its best efforts to then file with
the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Securities Exchange Act of 1934, as
amended (at any time after it has become subject to such reporting
requirements); and
(c) Compliance Statement. Furnish to Holders of Registrable
Securities forthwith upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time after ninety
(90) days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as a Holder of Registrable Securities may reasonably
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request in availing itself of any rule or regulation of the Commission allowing
such Holder to sell any such securities without registration.
14. Information Rights. Upon request, the Company will furnish to any
Party, after the end of each fiscal year, unaudited, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and unaudited, consolidated statements of income and unaudited, consolidated
statements of cash flows of the Company and its subsidiaries, if any, for such
year, each signed by the principal financial or accounting officer of the
Company; provided, however, that such Party first executes a confidentiality
agreement in a form provided by the Company. The information rights set forth in
this Section 14 shall expire upon the closing date of a Qualified Public
Offering.
15. Transfer of Registration Rights and Information Rights. The right
granted hereunder to cause the Company to register securities or to participate
in a registration of the Company or to receive information of the Company
pursuant to Section 14 may not be assigned to any transferee or assignee of
Restricted Securities unless such transferee or assignee receives and thereafter
holds at least two hundred thousand (200,000) shares of Common Stock (as
adjusted for stock splits, combinations and the like) issued or issuable upon
conversion of the Series A Preferred Stock.
16. Right to Maintain.
(a) General. Until the closing date of a Qualified Public
Offering, if the Company desires to issue and sell shares of its capital stock
or rights, options or other securities exercisable for or convertible into
shares of its capital stock, then the Company shall first notify each Party of
the material terms of such proposed sale (such notice, a 'COMPANY ISSUANCE
NOTICE'). The Company shall then permit each Party to acquire, at the time of
the closing of such sale, such number of the shares of capital stock or other
securities as would enable such Party to maintain its percentage of equity
ownership (calculated on a fully diluted basis, assuming the conversion of all
series of the Company's Preferred Stock and exercise of all options and other
rights to acquire Common Stock) in the Company following such issuance at a
level held by it immediately prior to such issuance. The Parties shall each have
ten (10) days after the delivery of any Company Issuance Notice to elect by
notice to the Company to purchase such shares or securities at the time of the
closing of such sale.
(b) Exceptions. The rights set forth in Section 16(a) shall
not apply to the issuance of (i) shares or grant of options (including shares
issuable upon exercise of such options) under any Company stock purchase and/or
stock option plans or arrangements approved by the Company's Board of Directors,
(ii) shares of Common Stock issued upon conversion of any series of preferred
stock of the Company, (iii) shares of the Company's capital stock or rights,
options or other securities issued pursuant to a stock split of the Common Stock
or Company declared dividend, (iv) Company securities (including, without
limitation, options, warrants and preferred stock) issued in connection with a
merger or acquisition or strategic partnering or joint venture agreement, (v)
Company securities (including, without limitation, options, warrants and
preferred stock) issued to banks, lenders, equipment financiers
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and the like, (vi) shares of Common Stock sold in a Qualified Public Offering,
or (vii) shares of the Company's Series B Preferred Stock.
17. Right of First Refusal. Prior to the closing date of a Qualified
Public Offering, before there can be a valid sale or transfer for consideration
of any Restricted Securities by any holder thereof, such holder shall first
offer those Restricted Securities to the Company in the following manner:
(a) Notice. The holder of the Restricted Securities shall
deliver a written notice to the Company stating the price, terms, and conditions
of such proposed sale or transfer, the number and type of Restricted Securities
to be sold or transferred, and his intention to so sell or transfer such
Restricted Securities. Within thirty (30) days thereafter, the Company shall
have the prior right to purchase any and all of the Restricted Securities
offered at the price and upon the terms and conditions stated in such notice (it
being understood that the Company may assign this right in its sole discretion).
(b) Sale. If none or only a part of the Restricted Securities
in such holder's notice is purchased by the Company (or an assignee of the
Company) within a thirty (30) day period from the date of delivery of the notice
by such holder to the Company, the holder may sell or transfer to any person or
persons all Restricted Securities referred to in his notice that were not
purchased by the Company, but only within a period of one hundred twenty (120)
days from the date of his first notice; and provided that he shall not sell or
transfer such Restricted Securities at a lower price or on terms more favorable
to the purchaser or transferee than those specified in his notice to the
company. After said one hundred and twenty (120) day period, the foregoing
procedure for first offering the Restricted Securities to the Company shall
again apply.
(c) Restrictions. Any sale or transfer or purported sale or
transfer of the Restricted Securities of the Company shall be null and void
unless the terms, conditions, and provisions of Sections 2, 14 and this Section
17 are strictly observed and followed.
(d) Exception. The Parties expressly acknowledge that a
distribution of Restricted Securities by any holder thereof to a Family Member
or any Affiliate which is a partner of such holder shall not be considered a
'sale or transfer for consideration' which triggers the rights and obligations
described in this Section 17.
18. Governing Law. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the exclusive jurisdiction and venue of the United States District Court for the
Northern District of California with respect to the breach or interpretation of
this Agreement or the enforcement of any and all rights, duties, liabilities,
obligations, powers, and other relations between the parties arising under this
Agreement.
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19. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding rights to
registration. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
20. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and deemed given on the business day
following delivery to the recipient in person or by overnight courier service or
by facsimile (with acknowledgment of transmission), and addressed (a) if to a
Series A Preferred Holder, to such holder's address set forth below, or at such
other address as such holder shall have furnished to the Company in writing, or
until any such holder so furnishes an address to the Company, then to the
address of the last holder of such securities who has so furnished an address to
the Company, or (b) if to the Company, to its address set forth on the signature
page of this Agreement, to the attention of the Chief Executive Officer, or at
such other address as the Company shall have furnished to the Holders.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one and
the same instrument.
22. Amendment. Any provision of this Agreement may be amended, waived,
modified, discharged or terminated only with the written consent of the Company
and with the written consent of the Party against whom enforcement is sought.
23. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
24. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
* * * *
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IN WITNESS WHEREOF, the undersigned have executed this Series A
Preferred Stockholders' Rights Agreement as of the date set forth above.
'COMPANY' 'INVESTOR'
GO2 TECHNOLOGIES, INC.
a Delaware Corporation Name of Investor
By:
--------------------------------------
Title:
-----------------------------------
By: Address:
---------------------------- ----------------------------------
Title:
--------------------------- ----------------------------------
[Signature pages to Series A Preferred Stockholders' Rights Agreement]
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EXHIBIT A
SCHEDULE OF INVESTORS
Diane Kaplan
Kenneth Keer
Bill Gross' idealab!
Bruce Hendricks
Series A Preferred Stockholders' Rights Agreement - Go2 Technologies Inc. and idealab!
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