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EXHIBIT 4.5
STAR VENDING, INC
INVESTOR RIGHTS AGREEMENT
July 25, 1996
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TABLE OF CONTENTS
Page
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1. Registration Rights......................................................................................1
1.1 Definitions......................................................................................1
1.2 Request for Registration.........................................................................2
1.3 Company Registration.............................................................................3
1.4 Obligations of the Company.......................................................................3
1.5 Furnish Information..............................................................................4
1.6 Expenses of Demand Registration..................................................................4
1.7 Expenses of Company Registration.................................................................4
1.8 Underwriting Requirements........................................................................5
1.9 Delay of Registration............................................................................5
1.10 Indemnification..................................................................................5
1.11 Reports Under Securities Exchange Act of 1934....................................................7
1.12 Form S-3 Registration............................................................................8
1.13 Assignment of Registration Rights................................................................9
1.14 Market Stand-Off Agreement.......................................................................9
1.15 Termination of Registration Rights..............................................................10
1.16 Limitations on Subsequent Registration Rights...................................................10
2 Covenants of the Company................................................................................10
2.1 Delivery of Financial Statements................................................................10
2.2 Termination of Covenants........................................................................11
2.3 Participation Right.............................................................................11
2.4 Inspection......................................................................................12
2.5 Board Expenses..................................................................................12
2.6 Observer Rights.................................................................................13
2.7 Future Issuances of Common Stock................................................................13
3. Miscellaneous...........................................................................................13
3.1 Successors and Assigns..........................................................................13
3.2 Governing Law...................................................................................13
3.3 Counterparts....................................................................................13
3.4 Titles and Subtitles............................................................................13
3.5 Notices.........................................................................................13
3.6 Expenses........................................................................................14
3.7 Amendments and Waivers..........................................................................14
3.8 Severability....................................................................................14
3.9 Aggregation of Stock............................................................................14
3.10 Entire Agreement................................................................................14
SCHEDULE A - Schedule of Investors
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INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT is made as of the 25th day of
July, 1996, by and between Star Vending, Inc., a Nevada corporation (the
"Company"), and the investors listed on the Schedule of Investors attached as
Schedule A hereto, each of which is herein referred to as an "Investor."
RECITALS
WHEREAS, the Company and the Investors are parties to that
certain Series A Preferred Stock Purchase Agreement of even date herewith (the
"Series A Agreement"); and
WHEREAS, in order to further induce the Investors to enter
into the Series A Agreement, the Company and the Investors hereby agree that
this Agreement shall govern the rights of the Investors to cause the Company to
register shares of Common Stock and certain other matters as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "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 "Act"), and the declaration or ordering
of effectiveness of such registration statement or document;
(b) The term "Registrable
Securities" means (1) the Common Stock of the Company issuable or issued upon
conversion of the Series A Preferred Stock issued pursuant to the Series A
Agreement, and (2) any Common Stock of the Company issued as (or issuable 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, such Series A Preferred Stock, or Common Stock;
(c) The number of shares of
"Registrable Securities then outstanding" shall be determined by the number of
shares of Common Stock then outstanding that are Registrable Securities, and the
number of shares of Common Stock issuable pursuant to then exercisable or
convertible securities that are Registrable Securities;
(d) The term "Initial Public
Offering" means the initial sale of the Company's Common Stock in an
underwritten public offering pursuant to a registration statement under the
Securities Act of 1933, as amended;
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(e) The term "Holder" means any
person owning or having the right to acquire Registrable Securities or any
assignee thereof in accordance with Section 1.13 hereof; and
(f) The term "Form S-3" means such
form under the Act as in effect on the date hereof or any registration form
under the Act subsequently adopted by the Securities and Exchange Commission
("SEC") which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
1.2 Request for Registration.
(a) If the Company shall receive at
any time after July 31, 1997, a written request from the Holders that the
Company file a registration statement under the Act for a public offering in
which the aggregate proceeds from the offering payable to such Holders would
exceed $10,000,000, then the Company shall use its commercially reasonable
efforts to, within ten (10) 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) hereof, effect as soon as practicable, and in any event shall use its
commercially reasonable efforts to effect within one hundred twenty (120) days
of the receipt of such request, the registration under the Act of all
Registrable Securities which the Holders request to be registered within twenty
(20) days of the mailing of such notice by the Company in accordance with
Section 3.5 hereof.
(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) hereof. 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 its
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
1.4(e) hereof) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. 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.
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(c) The Company is obligated to
effect only two (2) such registrations pursuant to this Section 1.2.
(d) 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 Chief Executive
Officer 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 shareholders 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 taking action with respect to such filing for a period
of not more than one hundred twenty (120) days after receipt of the request of
the Initiating Holders. This right shall not be utilized more than once in any
twelve month period.
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 shareholders other than the
Holders) any of its stock or other securities under the Act in connection with
the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a 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 twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.5
hereof, the Company shall, subject to the provisions of Section 1.8 hereof,
cause to be registered under the Act all of the Registrable Securities that each
such Holder has requested to be registered.
1.4 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 its
commercially 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.
(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 Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Holders such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
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(d) Use its reasonable 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 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.
1.5 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.
1.6 Expenses of Demand Registration. All expenses
other than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2 hereof,
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 (not to exceed $25,000.00) and disbursements of
one counsel for the selling Holders 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 hereof 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 hereof; provided further, however, that if at the time
of such withdrawal, the Holders have learned of a material adverse change in the
condition or business of the Company from that known to the Holders at the time
of their request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2 hereof.
1.7 Expenses of Company Registration. The Company
shall bear and pay all expenses incurred in connection with any registration,
filing, or qualification of Registrable Securities with respect to the
registrations pursuant to Section 1.3 hereof for each Holder, including (without
limitation) all registration, filing, and qualification fees, printers and
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accounting fees relating or apportionable thereto and the fees (not to exceed
$25,000.00) and disbursements of counsel for the selling Holders hereunder, but
excluding underwriting discounts and commissions relating to the Registrable
Securities.
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 hereof 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 shareholders 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 shareholders according to
the total amount of securities proposed to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders) 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.
Notwithstanding the foregoing sentence, if such offering is the Company's
Initial Public Offering the selling shareholders may be excluded entirely if the
underwriters make the determination described above and no other shareholder's
securities are included. For purposes of the preceding parenthetical concerning
apportionment, for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners, and shareholders 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 shareholder," and
any pro-rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," 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 Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses,
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claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, or the 1934 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 Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 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 in any such case
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 such Holder, underwriter, or controlling person.
(b) To the extent permitted by law,
each selling Holder, severally and not jointly, 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 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
Act, or the 1934 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 gross proceeds from
the offering received by such Holder.
(c) Within 30 days 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
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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 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 proceedings. The failure to deliver written
notice to the indemnifying party within such 30-day period, 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. The indemnifying party shall not be
liable for any settlement of any proceeding without its written consent or, in
the alternative, without full release of its liability.
(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. 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 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:
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(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;
(b) take such action, including the
voluntary registration of its Common Stock under Section 12 of the 1934 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 Act and
the 1934 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
Act, and the 1934 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 Form S-3 Registration. In case the Company shall
receive from any Holder or Holders of the Registrable Securities then
outstanding a written request or requests that 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 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 1.12: (1) if Form S-3 is not available for such
offering; (2) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public (net of any underwriters' discounts or commissions) of less than
$2,500,000; (3) if the Company shall furnish to the Holders a certificate signed
by the Chief
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Executive Officer 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 shareholders 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 1.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve-month period; (4) if the Company has already effected one
registration on Form S-3 for the Holders pursuant to this Section 1.12 within
the prior twelve-month period; or (5) 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.
(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. All expenses incurred in
connection with a registration requested pursuant to this Section 1.12,
including (without limitation) all registration, filing, qualification,
printer's and accounting fees and the reasonable fees (not to exceed $25,000.00)
and disbursements of counsel for the selling Holder or Holders, but excluding
any underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the Company.
1.13 Assignment of Registration Rights. Subject to
the Company's prior written consent, 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 such
securities, provided that 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 Act. Notwithstanding the
foregoing, a Holder may assign registration rights to its partners or limited
partners, including spouses and ancestors, lineal descendants, and siblings of
such partners or spouses who acquire Registrable Securities by gift, will, or
intestate succession.
1.14 "Market Stand-Off" Agreement. Each of the
Investors hereby agrees that, during the period of duration (not to exceed 180
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the effective date of the Initial Public
Offering, 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 all
officers and directors of the Company, and all other 1% shareholders 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
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
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1.15 Termination of Registration Rights. No Holder
shall be entitled to exercise any rights provided for in this Section 1 on such
date after the closing of the Initial Public Offering if all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder may immediately be sold under Rule 144(k) during any 90-day period.
1.16 Limitations on Subsequent Registration Rights.
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 Sections 1.2 or 1.3 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 the date set forth in
subsection 1.2(a) or within one hundred eighty (180) days of the effective date
of any registration effected pursuant to Section 1.2.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company
shall furnish the following information to Investors:
(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 shareholder'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 by nationally recognized independent
accountants;
(b) within forty-five (45) days of
the end of each quarter, an unaudited income statement and statement of cash
flows and balance sheet for and as of the end of such month and each of the two
previous months, in reasonable detail;
(c) as soon as practicable, but in
any event thirty (30) days prior to the end of each fiscal year, a budget for
the next fiscal year, prepared on a monthly basis, including balance sheets and
statements of cash flows for such months and, as soon as prepared, any other
budgets or revised budgets prepared by the Company;
(d) with respect to the financial
statements called for in subsection (b) of this Section 2.1, an instrument
executed by the Chief Financial Officer or President of the Company and
certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the exception
of footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period specified,
subject to year-end audit adjustment; and
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(e) such other information relating
to the financial condition, business or corporate affairs of the Company as the
Investors or any assignee of the Investors may from time to time reasonably
request, provided, however, that the Company shall not be obligated under this
subsection (e) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
The information provided pursuant to this subsection
2.1 shall be used by each Investor or any permitted assignee of each Investor
solely in furtherance of its interests as an investor in the Company, and such
Investor and any permitted assignee of such Investor shall maintain the
confidentiality of all information of the Company obtained under this subsection
2.1, unless such information (i) was known by such Investor or permitted
assignee prior to its disclosure to them by the Company, (ii) is disclosed to
such Investor or permitted assignee without restriction as a matter of right by
a third party not affiliated with or working for the Company, or (iii) has
become publicly available through no fault of such Investor or permitted
assignee. Notwithstanding the foregoing, an Investor may disclose, if
applicable, (i) to Investor's general and limited partners, or (ii) Investor's
Board of Directors or executive officers such information provided that such
general or limited partners, or such Board of Directors or executive officers
agree to be bound by the terms of this Section 2.1.
2.2 Termination of Covenants. The covenants set forth
in Sections 2.1, 2.3, 2.4, 2.5, 2.6 and 2.7 hereof shall terminate as to the
Investors and be of no further force or effect following the Company's Initial
Public Offering, or when the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever
event shall first occur.
2.3 Participation Right. Subject to the terms and
conditions specified in this Section 2.3, the Company hereby grants to each
Investor a participation right with respect to future sales by the Company of
its Shares (as hereinafter defined). Each Investor shall be entitled to
apportion the participation right hereby granted it among itself, its partners,
and 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 Investor in
accordance with the following provisions:
(a) The Company shall deliver a
notice pursuant to Section 3.5 hereof ("Notice") to the Investor 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 20 calendar days after
receipt of the Notice, each Investor may elect to purchase, 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 or exercise of convertible or exercisable securities
then held by such Investor bears to the total number of shares of Common Stock
of the Company then outstanding (assuming full conversion of all outstanding
convertible securities). The
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Company shall promptly, in writing, inform each Investor which purchases all the
shares available to it ("Fully-Exercising Investor") of any other Investor's
failure to do likewise. During the ten-day period commencing after receipt of
such information, each Fully-Exercising Investor shall be entitled to obtain
that portion of the Shares for which Investors are entitled to subscribe but
which are not subscribed for by the Investors which is equal to the proportion
that the number of shares of Common Stock issued and held, or issuable upon
conversion or exercise of convertible or exercisable securities then held, by
such Fully-Exercising Investor bears to the total number of shares of Common
Stock issued and held, or issuable upon conversion or exercise of convertible or
exercisable securities then held, by all Fully-Exercising Investors who wish to
purchase some of the unsubscribed shares.
(c) If all Shares which an Investor
is entitled to obtain pursuant to subsection 2.3(b) hereof are not elected to be
obtained as provided in subsection 2.3(b) hereof, 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 such 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 30 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 Investors in accordance herewith.
(d) The participation right in this
paragraph 2.3 shall not be applicable (i) to the future issuance or sale of
shares of Common Stock (or options therefor) to Company employees, directors,
officers, or consultants for the primary purpose of soliciting or retaining
their employment or services (excluding options to purchase shares of the
Company's Common Stock outstanding as of the date hereof), provided such number
of shares shall not exceed 360,000 unless unanimously approved by the Company's
Board of Directors, (ii) the issuance of Series A Preferred Stock pursuant to
the Series A Agreement, (iii) to or after consummation of the Company's Initial
Public Offering, (iv) the issuance of Common Stock pursuant to the conversion of
the Series A Preferred Stock, and (v) the issuance of securities in connection
with a bona fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock, or otherwise.
2.4 Inspection. The Company shall permit each
Investor, at such Investor'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 2.4 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
2.5 Board Expenses. Unless otherwise approved by the
Board of Directors, the Company shall reimburse members of the Company's Board
of Directors, within thirty (30) days after the Company's receipt of a xxxx
therefor, for all reasonable expenses (including coach class travel expenses)
incurred by such members to attend meetings of the Company's Board of Directors.
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2.6 Observer Rights. The Company shall invite a
representative of Xxxxxxxxx & Xxxxx and Partech International to attend all
meetings of its Board of Directors in a nonvoting observer capacity and, in this
respect, shall give such representative copies of all notices, minutes,
consents, and other materials that it provides to its directors; provided,
however, that such representative shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information so provided;
and, provided further, that the Company reserves the right to withhold any
information and to exclude such representative from any meeting or portion
thereof if access to such information or attendance at such meeting could
adversely affect the attorney-client privilege between the Company and its
counsel or would result in disclosure of trade secret to such representative of
if such Investor or its representative is a direct competitor of the Company.
2.7 Future Issuances of Common Stock. Without the
consent of the Board of Directors, including the consent of the director elected
by, or a representative for, the holders of the Company's Series A Preferred
Stock, the Company shall not issue Common Stock (or options therefore) to
Company employees, directors, officers, or consultants for the primary purpose
of soliciting or retaining their employment or services, in excess of 22,900
shares.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any shares of Registrable Securities). 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.
3.2 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of California as applied to
agreements among California residents entered into and to be performed entirely
within California.
3.3 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.
3.4 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.
3.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery or facsimile to the party to
be notified or five (5) days following deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party on the signature
page hereof, or
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at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled.
3.7 Amendments and Waivers. Any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Each Investor
acknowledges and agrees that any amendment or waiver effected in accordance with
this paragraph shall be binding upon all holders of any Registrable Securities,
each future holder of all such Registrable Securities, and the Company, whether
or not such holder in fact consented to such amendment or waiver.
3.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable
Securities held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
3.10 Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.
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IN WITNESS WHEREOF, the parties have executed this Investor
Rights Agreement as of the date first above written.
STAR VENDING, INC.
By:_____________________________________
Xxxxx Xxxxxxxx, President
and Chief Executive Officer
Address: 000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxxx, XX 00000
INVESTORS:
________________________________________
Please Print or Type Name of Investor
By:_____________________________________
Signature
___________________________________
Please print name
___________________________________
Title, if applicable
Address: _______________________________
_______________________________
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Schedule of Investors
NAME NUMBER OF SHARES
---- ----------------
US Growth Fund Partners CV 121,516
Parvest US Partners II CV 91,137
Partech US Partners III CV 60,758
Nippon Investment & Finance Co. Ltd. 36,455
Threecedars S.A. 36,455
Double Black Diamond II LLC 9,114
Partech International Salary Deferral Plan 2,430
U/A dtd. 1/1/92 FBO:
Xxxxxx X. XxXxxxxx
Partech International Salary Deferral Plan 2,430
U/A dtd. 1/1/92 FBO:
Xxxxxx X. Van der Meer
Tradeinvest Limited 2,430
Multinvest Limited 1,822
H&Q Star Vending Investors, L.P. 243,031
Xxxxx X. Xxxxxxxx 5,314
Pacific Star Telecommunications Limited 25,946
Xxxxx Xxxxxxx and Xxxxx Xxxxxxx 50,000
Xxxxx Xxxxxx, Trustee of the Xxxxxx Xxxxx Trust "B" 18,227
Xxxxxx X. Xxxxx 18,227
Bancommerce Capital Corporation 50,000
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Xxxxxx X. Xxxxxxxxx 12,151
Xxxxx and Xxxxx Xxxxx Revocable Trust 10,000
Xxxxxxx X. Xxxxxxxxx 8,000
Xxxxxxx X. Xxxxxxxx 100,000
Xxxxxx Xxxxxxx 5,924
TOTAL: 911,367
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