1
SELLING SHAREHOLDER AGREEMENT
AGREEMENT by and among High Speed Net Solutions, Inc., a Florida
corporation (the "Company"), and the holder of the Company's Common Stock whose
name is set forth on the signature page to this Agreement ("Selling
Shareholder").
WITNESSETH:
WHEREAS, the Company has granted the Selling Shareholder registration
rights pursuant to various agreements with respect to certain shares of the
Company's securities held by the Selling Shareholder; and
WHEREAS, the Company intends to register certain shares of the
Company's Common Stock and the Selling Shareholder desires that the Company
register certain shares as set forth on Schedule 1 hereto of the Company's
Common Stock held or to be held by Selling Shareholder (the "Shares") in such
registration; and
WHEREAS, the Selling Shareholder desires to terminate all prior
registration rights, rights of first refusal, pre-emptive rights and
anti-dilution protections granted by the Company to the Selling Shareholder and
settle all claims relating to such registration rights in consideration of the
Company's registering the Shares.
NOW THEREFORE, in consideration of the premises and the mutual terms
and provisions hereof, the parties hereto hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following respective meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute enacted hereafter, and the rules and regulations of
the Commission there under, all as the same shall be in effect from time to
time.
(b) "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Act.
(c) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of such
registration statement by the Commission.
2. PRIOR RIGHTS OF SELLING SHAREHOLDER. To the extent that the
Company has granted registration rights, pre-emptive rights, rights of first
refusal and anti-dilution protections to the Selling Shareholder in agreements
or other instruments executed prior to the date of this
2
Agreement, including but not limited to, the Agreements listed on Schedule 2
hereto, the provisions of such prior agreements shall be terminated as of the
date of this Agreement. The provisions set forth herein shall govern the
registration of any shares of capital stock held by the Selling Shareholder.
Except as set forth on Schedule 3 hereto, Selling Shareholder agrees that
Selling Shareholder has no right to receive additional securities of the Company
from the Company.
3. RELEASE. Selling Shareholder does hereby release and forever
discharge and agrees not to xxx the Company and its officers, directors,
shareholders, employees, agents, assigns, beneficiaries, insurers, successors,
and representatives, from and against any and all known and unknown, actions,
causes of action, claims, demands, damages, rights, equities, costs, expenses,
fiduciary duties, attorneys' fees, compensation, and all incidental,
consequential, special, punitive, nominal and other damages known and unknown,
past, present, or prospective of any kind or nature whatsoever which Selling
Shareholder may have, including claims in any way relating to, reflecting,
arising or in connection with any registration rights with respect to the
Shares. Selling Shareholder further represents that, as of the date of execution
of this Agreement, Selling Shareholder has not filed with any agency or court
any complaints or lawsuits against the Company, its officers, directors,
shareholders, employees, agents, assigns, beneficiaries, insurers, successors,
and representatives. Selling Shareholder agrees to indemnify the Company and its
officers, directors, shareholders, employees, agents, assigns, beneficiaries,
insurers, successors, and representatives from all claims, including all
attorneys' fees, costs and expenses arising out of Selling Shareholder's breach
of this Section 3 or any misrepresentation of fact made by Selling Shareholder
which is contained in or made the basis of this Section 3. Selling Shareholder
further agrees to execute at the Company's request, such additional waivers,
releases, indemnities or other instruments as such the Company shall deem
reasonably necessary to effectuate the provisions of this Section 3.
4. REGISTRATION. The Company shall register the Shares set forth
on Schedule 1 pursuant to a registration statement on Form S-1 covering the
resale of certain shares of the Company's Common Stock that the Company intends
to file. The Selling Shareholder acknowledges and understands that: (i) the
Company shall register only the Shares as set forth on Schedule 1 hereto in
fulfillment of its obligations to register the Selling Shareholder's securities
under this Agreement or any agreement; and (ii) the Company shall be under no
additional obligation to register any other securities of the Company held by
Selling Shareholder, including, without limitation, options or other rights of
the Selling Shareholder to acquire securities of the Company.
5. FURNISH INFORMATION. The Selling Shareholder shall furnish to
the Company such information regarding Selling Shareholder, Selling
Shareholder's officers, directors, shareholders, family members, and affiliates,
as applicable, the Shares and the intended method of disposition of the Shares
as the Company shall reasonably request and as shall be required in connection
with the action to be taken by the Company.
2
3
6. SUSPENSION OF DISPOSITION OF SHARES. Selling Shareholder
agrees that, upon receipt of any notice from the Company, of (a) the happening
of any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, (b) any requests by the
Commission for amendments or supplements to the registration statement or the
prospectus or for additional information, (c) the issuance of any stop order
suspending the effectiveness of the registration statement, (d) the information
in the registration statement no longer being sufficient to permit continued
sales under the registration statement, or (e) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction, Selling Shareholder will forthwith discontinue
disposition of the Shares until the Company notifies the Selling Shareholder in
writing that sales of Shares may continue. If so directed by the Company, such
Selling Shareholder will deliver to the Company (at the expense of the Company)
all copies, other than permanent file copies then in such Selling Shareholder's
possession, of the prospectus covering such Shares current at the time of
receipt of such notice.
7. EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 4, including,
without limitation, all registration, listing and qualification fees, printers
and accounting fees and the fees and disbursements of counsel for the Company
shall be borne by the Company. The Selling Shareholder shall bear the fees and
disbursements of its own counsel.
8. LIMITATION OF THE COMPANY'S OBLIGATIONS. The Company shall not
be obligated under this Agreement to register or include in any registration
Shares that Selling Shareholder has requested to be registered if the Company
shall furnish Selling Shareholder with a written opinion of counsel reasonably
satisfactory to Selling Shareholder, that all Shares that Selling Shareholder
holds may be publicly offered, sold and distributed without registration under
the Act pursuant to Rule 144 promulgated by the Commission under the Act without
restriction as to the amount of securities that can be sold.
9. INDEMNIFICATION.
(a) Except in the case of a sale by Selling Shareholder
in violation of Section 6 hereof, the Company agrees to indemnify and hold
harmless Selling Shareholder, its directors, its officers and each person, if
any, who controls any Selling Shareholder within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
reasonable legal or other expenses incurred in connection with investigating or
defending any matter, including any action, that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement filed by the Company pursuant to Section 4, including any
preliminary prospectus or final prospectus contained therein (or any amendment
thereto), or caused by any
3
4
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading except
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Selling Shareholder furnished in writing
to the Company by such Selling Shareholder expressly for use therein.
(b) Selling Shareholder agrees to indemnify and hold
harmless the Company, its directors, its officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the registration statement filed
pursuant to Section 4, including any preliminary prospectus or final prospectus
contained therein (or any amendment thereto), or caused by 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, but only with
respect to losses, claims, damages, liabilities and judgments caused by an
untrue statement or omission or alleged untrue statement or omission based on
information relating to such Selling Shareholder furnished in by or on behalf of
such Selling Shareholder expressly for use in the registration statement filed
pursuant to Section 4, including any preliminary prospectus or final prospectus
contained therein (or any amendment thereto).
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Sections 9(a) and
9(b) (the "Indemnified Party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all reasonable fees and expenses of such counsel, as
incurred. Any Indemnified Party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party unless
(i) the employment of such counsel shall have been specifically authorized in
writing by the Indemnifying Party, (ii) the Indemnifying Party shall have failed
to assume the defense of such action or employ counsel reasonably satisfactory
to the Indemnified Party or (iii) the named parties to any such action
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised by such
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Indemnifying Party (in
which case the Indemnifying Party shall not have the right to assume the defense
of such action on behalf of the Indemnified Party). In any such case, the
Indemnifying Party shall not, in connection with any one action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for (i) the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for (x) the Company, its directors, its officers and all
persons, if any, who control the Company
4
5
within the meaning of either such Section, and (iii) the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for the Selling Shareholders, and all such fees and expenses shall be
reimbursed as they are incurred. The Indemnifying Party shall indemnify and hold
harmless the Indemnified Party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
Indemnifying Party shall have received a written request from the Indemnified
Party for reimbursement for the fees and expenses of counsel (in any case where
such fees and expenses are at the expense of the Indemnifying Party) and, prior
to the date of such settlement, the Indemnifying Party shall have failed to
comply with such reimbursement request. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the Indemnified Party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the Indemnified Party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the Indemnified Party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the Indemnified Party.
(d) To the extent the indemnification provided for in
this Section 9 is unavailable (other than in accordance with the terms hereof)
to an Indemnified Party or insufficient in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying Party
or parties on the one hand and the Indemnified Party or parties on the other
hand from the offering of the Shares or (ii) if the allocation provided by
clause 9(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
9(d)(i) above but also the relative fault of the Indemnifying Party or parties
on the one hand and the Indemnified Party or parties on the other hand in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the Selling
Shareholder 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 Company
or the Selling Shareholder, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses incurred by such Indemnified
Party in connection with investigating or defending any matter, including any
action, that could have given rise to such losses, claims, damages, liabilities
or judgments. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act)
5
6
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 9 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or in equity.
10. AGREEMENTS OF THE SELLING SHAREHOLDER. Selling Shareholder
agrees, whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
reasonable expenses incident to the performance of the Selling Shareholder's
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of Selling Shareholder's counsel in connection with the registration
and delivery of the Shares under the Act, (ii) all costs and expenses related to
the transfer and delivery of the Shares, including any transfer or other taxes
payable thereon, and (iii) all other costs and expenses incident to the
performance of the obligations of the Selling Shareholder hereunder for which
provision is not otherwise made in this Section. The provisions of this Section
shall not supersede or otherwise affect any separate agreement that the Company
and any Selling Shareholder may have for allocation of such expenses among
themselves.
11. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may be given, by written consent of the Company and the Selling Shareholder.
12. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mall, telex, telecopier, or air courier guaranteeing overnight
delivery:
(a) if to Selling Shareholder, at the most current address given
by such Selling Shareholder to the Company in accordance with the provisions of
this Section 12, which address initially shall be the address given to the
Company upon acquisition of the Shares unless the Selling Shareholder has
notified the Company of a change of address; and
(b) if to the Company, initially at its address set forth below
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 12:
High Speed Net Solutions, Inc.
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: President
6
7
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
14. HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
15. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
16. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
17. ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Shares. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter. Nothing
in this Agreement shall preclude the Company from entering into any other
agreement having the same or different terms with any holder of the Company's
securities or any third party with respect to registration rights or related
matters.
18. PARTIES BENEFITTED. Nothing in this Agreement, express or
implied, is intended to confer upon any third party any rights, remedies,
obligations or liabilities.
(the remainder of this page is left intentionally blank)
7
8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HIGH SPEED NET SOLUTIONS, INC.
By:
---------------------------------------
Title:
SELLING STOCKHOLDER:
-------------------------------------------
Name:
8
9
SCHEDULE 1
SHARES TO BE REGISTERED
-------------------------------- shares of Common Stock of the Company.
-------------------------------- shares of Common Stock of the Company
underlying vested options to purchase
shares of the Company's Common Stock.
9
10
SCHEDULE 2
PRIOR AGREEMENTS GRANTING RIGHTS
10
11
SCHEDULE 3
STOCK OWNERSHIP
Selling Shareholder owns ______________ shares of the Company's Common
Stock and options to purchase _______________ shares of the Company's Common
Stock.
Selling Shareholder owns and holds rights to receive no other shares of
the Company's capital stock except as set forth above.
11
