Exhibit 99.6
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 30, 2003
AMONG
VITALSTREAM HOLDINGS, INC.,
AND THE
COMMON STOCKHOLDERS,
PREFERRED STOCKHOLDERS,
CONVERTIBLE NOTEHOLDERS
AND
WARRANT HOLDERS
OF
VITALSTREAM HOLDINGS, INC. REFERRED TO HEREIN
TABLE OF CONTENTS
1. DEFINITIONS................................................................ 2
2. PREEMPTIVE RIGHTS.......................................................... 7
3. BOARD OF DIRECTORS......................................................... 7
4. BOARD OF DIRECTOR OBSERVATION RIGHTS....................................... 9
5. REPRESENTATIONS AND WARRANTIES; COVENANTS.................................. 10
6. TRANSFERS.................................................................. 10
7. TRANSFERS IN VIOLATION OF AGREEMENT........................................ 10
8. LEGEND..................................................................... 10
9. ENTIRE AGREEMENT........................................................... 11
10. SUCCESSORS AND ASSIGNS..................................................... 11
11. COUNTERPARTS............................................................... 11
12. DESCRIPTIVE HEADINGS; INTERPRETATION....................................... 11
13. NOTICES; BUSINESS DAYS..................................................... 11
14. AMENDMENT AND WAIVER; EFFECTIVENESS AND BINDING NATURE OF THIS AGREEMENT... 12
15. SEVERABILITY............................................................... 13
16. NO STRICT CONSTRUCTION..................................................... 13
17. GOVERNING LAW.............................................................. 13
18. WAIVER OF RIGHT TO JURY TRIAL.............................................. 13
19. WAIVER OF PREEMPTIVE RIGHTS; TERMINATION OF PRIOR AGREEMENT................ 14
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT, dated as
of September 30, 2003 (this "Agreement"), is by and among VitalStream Holdings,
Inc. a Nevada corporation (the "Company"), the holders of Common Stock listed on
the Schedule of Common Stockholders attached hereto (including such other
holders of Common Stock who may from time to time become parties hereto after
the date hereof and be listed on the Schedule of Common Stockholders) (the
"Common Stockholders"), the holders of shares of Series A Preferred and Series B
Preferred listed on the Schedule of Preferred Stockholders attached hereto
(including such other holders of Series A Preferred and Series B Preferred who
may from time to time become parties hereto after the date hereof and be listed
on the Schedule of Preferred Stockholders) (the "Preferred Stockholders"), the
holders of Amended and Restated Notes listed on the Schedule of Convertible
Noteholders attached hereto (including such other holders of Amended and
Restated Notes who may from time to time become parties hereto after the date
hereof and be listed on the Schedule of Convertible Noteholders attached hereto)
(the "Convertible Noteholders"), and the holders of Warrants listed on the
Schedule of Warrant Holders attached hereto (including such other holders of
Warrants who may from time to time become parties hereto after the date hereof
and be listed on the Schedule of Warrant Holders attached hereto) (the "Warrant
Holders"). Unless otherwise indicated herein, capitalized terms used in this
Agreement have the meanings set forth in Section 1 hereof. Capitalized terms
used but not defined herein have the meaning set forth in the Purchase
Agreement.
RECITALS
WHEREAS, reference is made to that certain Amended and
Restated Asset Purchase Agreement, dated as of January 15, 2003 (as amended,
restated and modified from time to time, the "Asset Purchase Agreement"), by and
among the Company, VitalStream Broadcasting Corporation and Hosting pursuant to
which VitalStream Broadcasting Corporation acquired substantially all of the
assets and assumed certain liabilities of Hosting in consideration for the
issuance of shares of Common Stock by the Company to Hosting.
WHEREAS, reference is also made to that certain Convertible
Note and Warrant Purchase Agreement, dated as of November 1, 2002 (as amended,
restated and modified from time to time, the "Initial Note Purchase Agreement"),
by and among the Company and those purchasers of Initial Convertible Notes and
Initial Warrants referred to therein pursuant to which the Company sold and the
purchasers purchased Initial Convertible Notes and Initial Warrants.
WHEREAS, reference is also made to that certain Amended and
Restated Convertible Note and Warrant Purchase Agreement, dated as of January
15, 2003 (as amended, restated and modified from time to time, the "Subsequent
Convertible Note Purchase Agreement"), by and among the Company and those
purchasers of Subsequent Convertible Notes referred to therein pursuant to which
the Company sold and the purchasers purchased Subsequent Convertible Notes.
WHEREAS, pursuant to the Initial Note Purchase Agreement and
the Subsequent Convertible Note Purchase Agreement, the Company issued shares of
Common Stock to the purchasers of Amended and Restated Notes and Warrants
referred to therein as payment of a commitment fee;
WHEREAS, reference is further made to that certain Securities
Exchange and Purchase Agreement dated as of September 30, 2003 (as amended and
modified from time to time, the "Purchase Agreement"), by and among the Company
and the Convertible Noteholders, Warrant Holders and Preferred Stockholders and
pursuant to which (a) the Company sold and the Preferred Stockholders purchased
the shares of Series A Preferred and Additional Warrants, and (b) the
Convertible Noteholders and Warrants Holders exchanged (the "Exchange") their
Initial Convertible Notes and Subsequent Converted Notes for Amended and
Restated Notes and their Initial Warrants for Amended and Restated Warrants
containing certain modifications.
WHEREAS, to induce the parties hereto to consummate the
transactions contemplated by the Purchase Agreement, the Company, the Common
Stockholders, the Preferred Stockholders, the Convertible Noteholders and the
Warrant Holders have agreed to enter into this Agreement for the purposes, among
others, of (a) establishing the composition of the Board of Directors and (b)
assuring continuity in the management and ownership of the Company. The
execution and delivery of this Agreement is a condition to the closing of the
transactions contemplated by the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Definitions.
"Additional Warrants" has the meaning set forth in the
Purchase Agreement.
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"Agreement" has the meaning set forth in the preamble of this
Agreement.
"Amended and Restated Notes" has the meaning set forth in the
Purchase Agreement.
"Amended and Restated Warrants" has the meaning set forth in
the Purchase Agreement.
"Asset Purchase Agreement" has the meaning set forth in the
recitals to this Agreement.
"Board of Directors" means the board of directors of the
Company.
-2-
"Commitment Shares" means the shares of Common Stock issued as
the "Commitment Fee" pursuant to the Initial Note Purchase Agreement and the
Subsequent Convertible Note Purchase Agreement.
"Common Stock" means (a) the Common Stock, par value $0.001
per share, of the Company as more fully described in the certificate of
incorporation of the Company and (b) any capital stock or other Equity
Securities issued or issuable directly or indirectly with respect to the Common
Stock referred to in clause (a) above by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
"Common Stockholders" has the meaning set forth in the
preamble to this Agreement.
"Company Security" means any Debt Security or Equity Security
of the Company.
"Company" has the meaning set forth in the preamble of this
Agreement.
"Convertible Noteholders" has the meaning set forth in the
preamble to this Agreement.
"Debt Securities" means any note, bond, debenture or other
instrument or security evidencing Indebtedness.
"Dolphin" means Dolphin Fund I and Dolphin Fund II.
"Dolphin Communications" means Dolphin Communications Fund,
L.P.
"Dolphin Communications II" means Dolphin Communications Fund
II, L.P.
"Dolphin Director" has the meaning set forth in Section 3 of
this Agreement.
"Dolphin Fund" means Dolphin Communications and Dolphin
Parallel.
"Dolphin Fund II" means Dolphin Communications II and Dolphin
Parallel II.
"Dolphin Holders" means any holder that is party to this
Agreement of Stockholder Shares initially issued to Dolphin (including Dolphin)
or any Affiliate thereof.
"Dolphin Parallel" means Dolphin Communications Parallel Fund,
L.P.
"Dolphin Parallel II" means Dolphin Communications Parallel
Fund II (Netherlands), L.P.
"Equity Securities" means (a) any capital stock or other
equity securities, (b) any securities, directly or indirectly, convertible into
or exchangeable for any capital stock or other equity securities or containing
any profit participation features, (c) any warrants, options or other
-3-
rights, directly or indirectly, to subscribe for or to purchase any capital
stock, other equity securities or securities containing any profit participation
features or, directly or indirectly, to subscribe for or to purchase any
securities, directly or indirectly, convertible into or exchangeable for any
capital stock, other equity securities or securities containing profit
participation features, or (d) any stock appreciation rights, phantom stock
rights or other similar rights.
"Exchange" has the meaning set forth in the recitals to this
Agreement.
"Governmental Entity" means individually, and "Governmental
Entities" means collectively, the United States of America, any foreign country
and any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government, including any court.
"Holders" means the Common Stockholders, the Preferred
Stockholders, the Convertible Noteholders and the Warrant Holders.
"Hosting" means Epoch Hosting, Inc., a Delaware corporation.
"Indebtedness" means, at a particular time, without
duplication, (a) any indebtedness for borrowed money or issued in substitution
for or exchange of indebtedness for borrowed money, (b) any indebtedness
evidenced by any Debt Security, (c) any indebtedness for the deferred purchase
price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade payables
and other current liabilities incurred in the ordinary course of business), (d)
any commitment by which a Person assures a creditor against loss (including,
without limitation, contingent reimbursement obligations with respect to letters
of credit), (e) any indebtedness guaranteed in any manner by a Person
(including, without limitation, guaranties in the form of an agreement to
repurchase or reimburse), (f) any obligations under capitalized leases and (g)
any indebtedness secured by a lien on a Person's assets.
"Laws" means all constitutions, statutes, laws, treaties,
codes, ordinances, regulations, rules, orders, judgments, writs, injunctions,
acts, determinations, directions or decrees of any Governmental Entity.
"Initial Convertible Notes" means those certain 10%
Convertible Promissory Notes of VitalStream in the principal amount of $409,000
issued at the Initial Closing pursuant to the Initial Note Purchase Agreement.
"Initial Note Purchase Agreement" has the meaning set forth in
the recitals to this Agreement.
"Initial Warrants" means those certain Common Stock Purchase
Warrants of VitalStream issued on or about November 26, 2002 pursuant to the
Initial Note Purchase Agreement.
"Observer" has the meaning set forth in Section 4 of this
Agreement.
-4-
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or any other similar entity or
organization or a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Equity Securities" means any Equity Security of the
Company (other than the Series A Preferred or Series B Preferred) that ranks
senior to the Common Stock as to dividends or the distribution of assets upon
any liquidation, dissolution or winding up of the Company, or any Debt Security
that is issued with any Equity Security.
"Preferred Stockholders" has the meaning set forth in the
preamble to this Agreement.
"Public Distribution" means a distribution to a Person not
party to this Agreement pursuant to an offering registered under the Securities
Act or to the public through a broker, dealer or market maker on a securities
exchange or in the over-the-counter market pursuant to the provisions of Rule
144 adopted under the Securities Act.
"Purchase Agreement" has the meaning set forth in the recitals
to this Agreement.
"Rule 144" means Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal Law then in force and the rules promulgated thereunder.
"Securities and Exchange Commission" means the Securities and
Exchange Commission and any Governmental Entity succeeding to the functions
thereof.
"Series A Preferred" means the shares of 2003 Series A
Preferred Stock, $0.001 par value, of the Company.
"Series B Preferred" means the shares of 2003 Series B
Preferred Stock, $0.001 par value, of the Company.
"Stockholder Shares" means (a) any Common Stock issued
pursuant to the Asset Purchase Agreement or the Purchase Agreement, (b) the
Commitment Shares, (c) any Common Stock issued or issuable, directly or
indirectly, upon conversion of the Amended and Restated Notes, (d) any Common
Stock issued or issuable, directly or indirectly, upon conversion of the Series
A Preferred, (d) any Common Stock issued or issuable, directly or indirectly,
upon conversion of the Series B Preferred, (e) any Common Stock issued or
issuable, directly or indirectly, upon exercise of the Warrants, (f) any Equity
Securities purchased or otherwise acquired by any holder of Stockholder Shares
referred to in clauses (a), (b), (c), (d) or (e) above and (g) any capital stock
or other Equity Securities issued or issuable directly or indirectly with
respect to the Common Stock referred to in clauses (a), (b), (c), (d), (e) or
(f) above by way of conversion, stock dividend or stock split or in connection
with a combination of shares,
-5-
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, (i) any Person who holds Amended and Restated Notes shall be
deemed to be the holder of the Stockholder Shares obtainable upon conversion of
such Amended and Restated Notes regardless of any restriction or limitation on
the conversion thereof, (ii) any Person who holds Series A Preferred shall be
deemed to be the holder of the Stockholder Shares obtainable upon conversion of
such Series A Preferred regardless of any restriction or limitation on the
conversion thereof, (iii) any Person who holds Series B Preferred shall be
deemed to be the holder of the Stockholder Shares obtainable upon conversion of
such Series B Preferred regardless of any restriction or limitation on the
conversion thereof (iv) any Person who holds Warrants shall be deemed to be the
holder of the Stockholder Shares obtainable upon exercise of such Warrants
regardless of any restriction or limitation on the exercise thereof and, with
respect to clauses (i), (ii) (iii) and (iv) above, such Stockholder Shares shall
be deemed to be in existence, and such Person shall be entitled to exercise the
rights of a holder of Stockholder Shares hereunder. In addition, for purposes of
this Agreement, any Person party to this Agreement who holds Stockholder Shares
as a result of a Transfer of Stockholder Shares, other than in a Public
Distribution permitted by this Agreement, shall be deemed to be the holder of
Stockholder Shares.
"Subsequent Convertible Notes" means those certain 10%
Convertible Promissory Notes of VitalStream in the principal amount of $691,000
issued on or about January 15, 2003 pursuant to the Subsequent Convertible Note
Purchase Agreement.
"Subsequent Convertible Note Purchase Agreement" has the
meaning set forth in the recitals to this Agreement.
"Subsidiary Board of Directors" has the meaning set forth in
Section 3 of this Agreement.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (a) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (b) if a limited liability company, partnership, association or other
business entity, a majority of the limited liability company, partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons shall be
deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such limited liability company,
partnership, association or other business entity. Notwithstanding the
foregoing, "Subsidiary" shall not include any entity that does not have any
operations, assets or liabilities.
"Transfer" means a sale, assignment, transfer, pledge,
encumbrance or other disposition.
-6-
"Underlying Common Stock" has the meaning set forth in the
Amended and Restated Notes.
"Warrant Holders" has the meaning set forth in the preamble to
this Agreement.
"Warrants" means the Additional Warrants and the Amended and
Restated Warrants.
2. Preemptive Rights.
(a) If, at any time during the three-year period beginning on
the date first set forth above, the Company shall issue any Preferred Equity
Securities (including Preferred Equity Securities issued or sold together with
any Debt Security), each Dolphin Holder of Stockholder Shares shall be entitled
to purchase the same proportion of such Preferred Equity Securities to be issued
necessary in order that the aggregate shares of Underlying Common Stock
beneficially held by such holder constitute the same percentage of all Common
Stock (assuming, in each case, the conversion, exercise or exchange of all
outstanding Company Securities, including outstanding Company Securities held by
such Holder), after the issuance of such Preferred Equity Securities as before
the issuance thereof.
(b) A Dolphin Holder of Stockholder Shares may exercise his or
its right under this Section 2 to purchase Preferred Equity Securities by
providing written notice to the Company, and by paying the purchase price
therefor at the principal office of the Company, within 20 days after the
receipt of notice from the Company (which notice by the Company shall be given
at least 20 days before the issuance of the Preferred Equity Securities) stating
the amount of Preferred Equity Securities the Company intends to issue and the
price and characteristics thereof. Each Dolphin Holder of Stockholder Shares
exercising his or its rights under this Section 2 shall pay such purchase price
in immediately available funds. Each Dolphin Holder of Stockholder Shares'
contractual preemptive rights under this Section 2 shall be deemed to be
exercised immediately prior to the close of business on the day of payment of
the purchase price in accordance with the foregoing provisions, and at such time
such Dolphin Holder shall be treated for all purposes as the record holder of
the Preferred Equity Securities, as the case may be. As promptly as practicable
(and in any event within ten (10) days) on or after the purchase date, the
Company shall issue and deliver at its principal office a certificate or
certificates for the number of full shares or amount, whichever is applicable,
of Preferred Equity Securities together with cash for any fraction of a share or
portion of a Preferred Equity Security at the purchase price to which the
Dolphin Holder of Stockholder Shares is entitled hereunder.
3. Board of Directors.
(a) At any time and from time to time until the earlier to
occur of (x) the date that the Underlying Common Stock constitutes no more than
seven (7) percent of the Company's outstanding Common Stock or (y) January 15,
2007, each Holder shall vote all of its Company Securities now or hereafter
owned by such Holder with voting rights or over which such Holder has voting
control, and shall take all other necessary or desirable actions within its
control (whether in its capacity as a stockholder, director, member of the Board
of Directors or any
-7-
committee thereof (but not if such action would be a breach of any fiduciary
duty imposed by applicable Law), officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary or desirable actions within
its control (including, without limitation, calling special Board of Directors
and stockholder meetings), so that:
(i) one individual (who currently is Xxxxxxxxx
Xxxxxxxxx) designated by the Dolphin Holders owning a majority of the
Stockholder Shares held by all Dolphin Holders (the "Dolphin Director")
shall be nominated for election and elected to the Board of Directors;
(ii) at any time the Dolphin Director is entitled
to serve on the Board of Directors, the composition of the board of
directors of each of the Company's Subsidiaries, if any (each, a
"Subsidiary Board of Directors") shall, to the extent requested by the
Dolphin Holders owning a majority of the Stockholder Shares held by all
Dolphin Holders, include the Dolphin Director;
(iii) so long as Xxxxxxxxx Xxxxxxxxx continues to
be the Dolphin Director, no executive committee or similar committee of
the Board of Directors with broad authority to approve any transaction
or series of transactions material to the Company or any Subsidiary or
the conduct of their business (any such committee, an "Executive
Committee"), is created unless, to the extent permitted under
applicable Law and any exchange on which any Company Securities may be
listed, such Executive Committee includes the Dolphin Director;
provided, however, that the Dolphin Director shall not be entitled to
participate in the discussion by any Executive Committee of any matter
in which the Dolphin Director, Dolphin or any Affiliate of Dolphin or
the Dolphin Director has a direct or indirect financial or other
interest;
(iv) to the extent permitted under applicable Law
and any exchange on which any Company Securities may be listed, the
removal from the Board of Directors or any Subsidiary Board of
Directors (with or without cause) of the Dolphin Director shall be at
the written request of the Dolphin Holders holding a majority of the
Stockholder Shares held by all Dolphin Holders but only upon such
written request and under no other circumstances; and
(v) in the event that the Dolphin Director
ceases to serve as a member of the Board of Directors or any Subsidiary
Board of Directors during his term of office (whether by death,
resignation or removal), the resulting vacancy on the Board of
Directors shall be filled by an individual designated by the Dolphin
Holders owning a majority of the Stockholder Shares held by all Dolphin
Holders.
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by the Dolphin Director in connection with attending the
meetings of the Board of Directors to the extent such expenses are pre-approved
by the Company or comply with a written expense
-8-
reimbursement policy of the Company, any Subsidiary Board of Directors and any
committee of any of the foregoing.
(c) If the Dolphin Holders owning a majority of the
Stockholder Shares held by all Dolphin Holders fail to designate an individual
to fill the Dolphin directorship pursuant to the terms of this Section 3, the
individual previously holding such directorship shall be elected to such
position, or if such individual fails or declines to serve, the election of an
individual to such directorship shall be accomplished in accordance with the
Company's bylaws and applicable law; provided that each Holder shall vote all
Company Securities now or hereafter owned by such Holder with voting rights or
over which such Holder has voting control to remove such individual at that time
when the Dolphin Holders owning a majority of the Stockholder Shares held by all
Dolphin Holders desire to designate an individual to fill the Dolphin
directorship.
(d) In the event that any Holder shall fail to vote all shares
of Company Securities now or hereafter owned by such Holder with voting rights
over which such Holder has voting control so as to achieve any election or
removal of a Dolphin Director, as set forth in this Section 3, such Holder shall
be deemed immediately upon the existence of such a breach to have granted to the
Chairman of the Board of Directors (or, if no Chairman of the Board of Directors
has been elected, the chief executive officer of the Company), a proxy to all
shares of Company Securities now or hereafter owned by such Holder with voting
rights or over which such Holder has voting control to ensure that all such
shares or other securities will be voted as prescribed in this Section 3 of this
Agreement. Each Holder acknowledges that each proxy granted hereby, including
any successive proxy, is given to secure the performance of a duty and shall be
irrevocable until the duty is performed.
4. Board of Director Observation Rights. At any time the
Dolphin Director is not a member of the Board of Directors and before the
earlier to occur of (x) the date that the Underlying Common Stock constitutes no
more than three (3) percent of the Company's outstanding Common Stock or (y) at
any time after January 15, 2006, the date that no Amended and Restated Notes
remain outstanding, VitalStream shall give Dolphin written notice of each
meeting of the Board of Directors (and any committees thereof), at the same time
and in the same manner as notice is given to the directors of the Board of
Directors, and VitalStream shall permit one representative selected by Dolphin
(the "Observer") to attend, as an observer, all such meetings. The Observer
shall be entitled to receive all written materials and other information
(including, without limitation, copies of meeting minutes) given to directors of
the Board of Directors (and any committees thereof) in connection with such
meetings at the same time such materials and information are given to such
directors. VitalStream shall provide a copy of any proposed action by written
consent in lieu of a meeting of directors of VitalStream to the Observer prior
to the effective date upon delivery to the members of the Board of Directors of
such consent describing in reasonable detail the nature and substance of such
action. In connection with the attendance of any meeting, or the receipt of any
materials and other information by the Observer, to the extent required by
Regulation FD promulgated under the Securities Act or any other applicable
securities law or regulation that would, absent such confidentiality agreement,
require public disclosure of the information learned by the Observer at such
meeting or through the receipt of such information or materials, the Observer
shall sign a
-9-
confidentiality agreement in form and substance reasonably satisfactory to the
Observer and the Company.
5. Representations and Warranties; Covenants. Each Holder
represents and warrants that (a) as of the date hereof such Holder is the record
owner of the number of shares, warrants or principal amount of the Company
Securities held by such Holder as of the date hereof as set forth in the
Schedules to this Agreement; (b) this Agreement has been duly authorized,
executed and delivered by such Holder and constitutes the valid and binding
obligation of such Holder, enforceable in accordance with its terms; and (c)
such Holder has not granted and is not a party to any proxy, voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. No Holder shall grant any proxy or become party to
any voting trust or other agreement which is inconsistent with, conflicts with
or violates any provision of this Agreement.
6. Transfers. Prior to transferring any Company Securities to
any Person, other than through a Public Distribution, the transferring Holder
shall cause the prospective transferee to be bound by this Agreement and to
execute and deliver to the Company and the Holders a counterpart signature page
of this Agreement. So long as any such Transfer is made in accordance with the
provisions of this Agreement, the transferee shall be deemed a Holder of such
Company Securities within the meaning of this Agreement.
7. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Holder in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Company Security as the owner of such
Company Security for any purpose.
8. Legend. Each instrument evidencing Common Stock, Series A
Preferred, Amended and Restated Notes, Series B Preferred, Warrants or
Stockholder Shares held by a Person who is a signatory to this Agreement, and
each instrument issued in exchange for or upon the Transfer of any Common Stock,
Series A Preferred, Amended and Restated Notes, Series B Preferred, Warrants or
Stockholder Shares and held by a Person who is a signatory to this Agreement
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS
INSTRUMENT ARE SUBJECT TO AN AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT, DATED AS
OF SEPTEMBER 30, 2003, AMONG THE ISSUER OF
SUCH SECURITIES (THE "COMPANY") AND THE
STOCKHOLDERS OF THE COMPANY REFERRED TO
THEREIN, AS FURTHER AMENDED, RESTATED AND
MODIFIED FROM TIME TO TIME. A COPY OF SUCH
AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE
BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST."
-10-
9. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
10. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Holders and any subsequent
holders of Common Stock, Stockholder Shares, Series A Preferred, Series B
Preferred, Amended and Restated Notes or Warrants (other than holders acquiring
such securities in a Public Distribution) and the respective successors and
assigns of each of them, so long as they hold any Common Stock, Stockholder
Shares, Series A Preferred, Series B Preferred, Amended and Restated Notes or
Warrants.
11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
12. Descriptive Headings; Interpretation. Section headings
used herein are for convenience only and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement. The use of
the word "including" or any variation or derivative thereof in this Agreement is
by way of example rather than by limitation.
13. Notices; Business Days. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally to the recipient or when sent by facsimile followed by
delivery by reputable overnight courier service (charges prepaid), one day after
being sent to the recipient by reputable overnight courier service (charges
prepaid) or five days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Any notice,
demand or other communication hereunder may be given by any other means
(including telecopy or electronic mail), but shall not be deemed to have been
duly given unless and until it is actually received by the intended recipient.
Such notices, demands and other communications shall be sent to (a) a Common
Stockholder at the address indicated on the Schedule of Common Stockholders, (b)
a Preferred Stockholder at the address indicated on the Schedule of Preferred
Stockholders, (c) a Convertible Noteholder at the address indicated on the
Schedule of Convertible Noteholders, (d) a Warrant Holder at the address
indicated on the Schedule of Warrant Holders and (e) the Company at the address
indicated below:
-11-
VitalStream Holdings, Inc.
Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Chief Operating Officer
Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy (which shall not constitute notice to the
Company) to:
Stoel Rives LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party. If
any time period for giving notice or taking action expires on a day which is a
Saturday, Sunday or legal holiday in the state in which the Company's
chief-executive office is located, the time period shall automatically be
extended to the business day immediately following such Saturday, Sunday or
legal holiday.
14. Amendment and Waiver; Effectiveness and Binding Nature of
this Agreement. Except as otherwise provided herein, no modification, amendment
or waiver of any provision of this Agreement shall be effective against the
Company or the Holders unless such modification, amendment or waiver is approved
in writing by (a) the Company, (b) the Common Stockholders of a majority of the
Common Stock held by the Common Stockholders, (c) the holders of a majority of
the Series A Preferred and Series B Preferred held by the Preferred Stockholders
and (d) the Dolphin Holders owning a majority of the Stockholder Shares held by
all Dolphin Holders. Notwithstanding the foregoing, (i) without the consent of
any other Person, the Company may restate any schedule to this Agreement so that
it more accurately reflects the holders of securities of the type in question
and/or to change the addresses for notice to any Person at such Person's
request, and (ii) without the consent of any other Person, this Agreement may be
amended or modified by written action of the Company and the Dolphin Holders
owning a majority of the Stockholder Shares held by all Dolphin Holders if such
amendment or modification could not reasonably be expected to have a material
adverse effect on any party to this Agreement that would be borne
disproportionately by such party relative to other parties (unless such party
consents in writing thereto). The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
-12-
15. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
16. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
-13-
17. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEVADA
SHALL GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS SECURITYHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
18. WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND EACH OF THE
HOLDERS HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY
in any litigation in any court with respect to, in connection with, or arising
out of this Agreement or the validity, protection, interpretation, collection or
enforcement hereof; AND THE COMPANY AND EACH OF THE HOLDERS HEREBY WAIVE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE ANY SETOFF IN
CONNECTION WITH ANY SUCH LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF,
COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO THE EXTENT THAT THE FAILURE SO TO ASSERT
ANY SUCH SETOFF WOULD PERMANENTLY PRECLUDE THE PROSECUTION OF OR RECOVERY UPON
SAME. THE COMPANY AGREES THAT THIS SECTION 18 IS A SPECIFIC AND MATERIAL ASPECT
OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE HOLDERS WOULD NOT HAVE ENTERED INTO
THIS AGREEMENT IF THIS SECTION 18 WERE NOT PART OF THIS AGREEMENT.
19. Waiver of Preemptive Rights; Termination of Prior
Agreement. This Agreement supersedes and replaces the Investor Rights Agreement
dated November 26, 2002 (the "Prior Investor Rights Agreement") among the
Company and certain of the Common Stockholders, Convertible Noteholders and
Warrant Holders. Upon the execution of this Agreement by all parties to the
Prior Investor Rights Agreement, the Prior Investor Rights Agreement shall
immediately and automatically terminate. In addition, by executing this
Agreement, all parties to the Prior Investor Rights Agreement waive any rights
that may arise or have arisen under Section 2 of the Prior Investor Rights
Agreement with respect to any transaction contemplated by the Purchase
Agreement.
* * * * *
-14-
[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Investor Rights Agreement as of the date first written above.
VITALSTREAM HOLDINGS, INC.
By: __________________________________
Name: Xxxx Xxxxxxx
Title: President
COMMON STOCKHOLDERS
EPOCH HOSTING, INC.
By: __________________________________
Name:
Title:
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
DOLPHIN COMMUNICATIONS PARALLEL FUND
II (NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
COMMON STOCKHOLDERS (CONT'D)
______________________________________
Xxxx Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxx
______________________________________
Xxxxx X. Xxxxxxxx
______________________________________
Xxxxx Xxxxx
______________________________________
Xxxxx Xxxxxx
[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
CONVERTIBLE NOTEHOLDERS
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
DOLPHIN COMMUNICATIONS PARALLEL FUND
II (NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT]
PREFERRED STOCKHOLDERS
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
DOLPHIN COMMUNICATIONS PARALLEL FUND
II (NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
______________________________________
Xxxxxx X. Xxxxxx
______________________________________
Xxxxx Xxxxx
______________________________________
Xxxxx Xxxxxx
[SIGNATURE PAGE TO AMENDED AND RESTATED INVESTOR RIGHTS
AGREMENT]
WARRANT HOLDERS
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
DOLPHIN COMMUNICATIONS PARALLEL FUND
II (NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: ____________________________
Name:
Title:
______________________________________
Xxxxxx X. Xxxxxx
______________________________________
Xxxxx Xxxxx
______________________________________
Xxxxx Xxxxxx
SCHEDULE OF COMMON STOCKHOLDERS
NUMBER OF SHARES OF
NAME AND ADDRESS COMMON STOCK
---------------- -------------------
(1) Epoch Hosting, Inc. 3,848,760
000 Xxxxx Xxxxxxxxx
Xxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
(2) Dolphin Communications Fund II, L.P. 95,889
Dolphin Communications Parallel Fund II 9,650
(Netherlands), L.P.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute
notice to the Dolphin) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
(3) Xxxx Xxxxxxx (held in trust) 3,804,444
5 Running Xxxxx Xxxxx
Xxxx xx Xxxx XX 00000
Telephone: (000) 000-0000
(4) Xxxxxx X. Xxxxxx 3,804,444
0 Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
(5) Xxxxx X. Xxxxxxxx 568,944
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
NUMBER OF SHARES OF
NAME AND ADDRESS COMMON STOCK
---------------- -------------------
(6) Xxxxx Xxxxx 534,786
0000 X. Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
(7) Xxxxx Xxxxxx 510,353
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
SCHEDULE OF CONVERTIBLE NOTEHOLDERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS AMENDED AND RESTATED NOTES
---------------- --------------------------
Dolphin Communications Fund II, L.P. $988,900
Dolphin Communications Parallel Fund II (Netherlands), L.P. $111,100
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to the Dolphin)
to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
SCHEDULE OF PREFERRED STOCKHOLDERS
NUMBER OF SHARES OF NUMBER OF SHARES OF
NAME AND ADDRESS SERIES A PREFERRED SERIES B PREFERRED
---------------- ------------------- --------------------
Dolphin Communications Fund II, L.P. 550
Dolphin Communications Parallel Fund II
(Netherlands), L.P.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice
to the Dolphin) to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxx 50
7 Cavaillon
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Xxxxx Xxxxx 25
0000 X. Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
Xxxxx Xxxxxx 50
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
SCHEDULE OF WARRANT HOLDERS
NUMBER OF SHARES
NUMBER OF SHARES OF UNDERLYING
OF UNDERLYING COMMON STOCK
COMMON STOCK (AMENDED AND
(ADDITIONAL RESTATED
NAME AND ADDRESS WARRANTS) WARRANTS)
---------------- ---------------- ----------------
Dolphin Communications Fund II, L.P. 458,333 Number of shares as
Dolphin Communications Parallel Fund II (Netherlands), L.P. determined in accordance
000 Xxxxxxxxx Xxxxxx with the Warrant
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice to the Dolphin)
to:
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxx 41,667 -
7 Cavaillon
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Xxxxx Xxxxx 20,833 -
0000 X. Xxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
Xxxxx Xxxxxx 41,667
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
