SPECTRANET INTERNATIONAL
FOUNDERS' SALE AGREEMENT
THIS FOUNDERS' SALE AGREEMENT (the "Agreement") is made as of January 31,
1997 by and among SpectraNet International, a California corporation (the
"Company"), purchasers of at least 100,000 shares of the Company's Series C
Preferred Stock under that certain Series C Preferred Stock Purchase
Agreement dated January 31, 1997 (collectively, the "Major Investors") and
Xxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx,
and Xxxxxx Xxxxxxx (each a "Founder" and collectively, the "Founders").
RECITALS
WHEREAS, the Major Investors have expressed an interest in acquiring
shares of the Company's Series C Preferred Stock (the "Series C Preferred").
WHEREAS, the Founders desire to grant the Major Investors certain rights
of first offer and rights to participate, upon the terms and conditions set
forth in this Agreement, in certain subsequent sales of the Company's capital
stock made by the Founders, in order to induce the Major Investors to acquire
shares of the Series C Preferred.
NOW, THEREFORE, in consideration of the foregoing and the promises and
covenants contained herein, the sufficiency of which is hereby acknowledged,
the parties agree as follows:
SECTION 1
DEFINITIONS
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the following meanings:
(a) "Common Stock Equivalents" shall mean the Company's Common
Stock and shares of Common Stock issued or issuable upon (i) exercise of
outstanding options, warrants or other securities convertible into or
exercisable for Common Stock, and (ii) conversion of the Company's
outstanding Preferred Stock.
(b) "Right of First Offer" means the right of first offer provided
for in Section 2.
(c) "Stock" means shares of any class or series of capital stock
of the Company now held or hereafter acquired by the Founders. The number
of shares of Stock owned
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by the Founders are set forth on Exhibit A, which Exhibit may be
amended from time to time by the Company to reflect changes in the
number of shares owned by the Founders.
(d) "Offered Stock" means all Stock proposed to be transferred
(other than by Exempt Transfer as defined below) by a Founder or Founders.
(e) "Exempt Transfer" shall mean:
(i) Any pledge of Stock made pursuant to a bona fide loan
transaction that creates a mere security interest; any transfer to any
Founder's ancestors, descendants or spouse or to trusts for the
benefit of such persons or the Founder; or any bona fide gift;
provided that the pledgee, transferee or donee shall enter into a
written agreement to be bound by and comply with all provisions of
this Agreement. Such transferred stock shall remain "Stock"
hereunder, and such pledgee, transferee or donee shall be treated as
a "Founder" for purposes of this Agreement;
(ii) Any transfer by a Founder pursuant to a transaction in
which the Company is merged or consolidated with or into any other
entity and where the shareholders of the Company immediately prior to
the transaction own less than 50% of the outstanding voting securities
of the Company or the surviving entity immediately after the
transaction;
(iii) Any transfer or transfers by a Founder to another Founder
("Transferee-Founder") of the Company so long as the Transferee-Founder
is, at the time of the transfer, employed by or acting as a consultant
or director of the Company; provided that the transferred stock shall
remain "Stock" hereunder.
(iv) Any sale to the Company;
(v) Any sale prior to which a Founder held less than 1% of the
Company's outstanding Common Stock; and
(vi) Any transfer or transfers by a Founder which in the
aggregate, over the term of this Agreement amount to no more than ten
thousand (10,000) shares of Stock held by a Founder as of the date
hereof.
(f) "Founder Pro Rata Share" shall be calculated as of the date of a
Selling Founder's Notice (as defined in Section 2.1) and shall be
determined by dividing:
(i) The number of outstanding shares of Common Stock
Equivalents then held by each Founder other than the Selling Founder;
by
(ii) The number of outstanding shares of Common Stock
Equivalents then held by all Founders other than the Selling Founder.
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(g) "Major Investor Pro Rata Share" shall be calculated as of the
date of the Selling Founder's Notice and shall be determined by dividing:
(i) The number of outstanding shares of Common Stock
Equivalents then held by each Major Investor; by
(ii) The number of outstanding shares of Common Stock
Equivalents then held by all Major Investors.
(h) "Major Investor Co-Sale Pro Rata Amount" shall be determined as
of the date of the Selling Founder's Notice set forth in Section 2.1 and
shall be determined by multiplying (x) the aggregate number of shares of
Offered Stock set forth in such Notice less the aggregate number of shares
of Offered Stock with respect to which the Founder's Right of First Offer
has been exercised as provided in Section 2.2, by (y) a fraction (i) the
numerator of which is the number of outstanding shares of Common Stock
Equivalents then held by the Major Investor exercising the Major Investor
Co-Sale Right (defined in Section 3.1) and (ii) the denominator of which
is the aggregate number of the then outstanding shares of Common Stock
Equivalents owned of record by all of the Major Investors plus the number
of the then outstanding shares of Common Stock Equivalents owned of record
by the Selling Founder.
SECTION 2
RIGHT OF FIRST OFFER
2.1 Notice of Proposed Transfer. Before any Founder may sell or
otherwise transfer (other than by an Exempt Transfer) any Offered Stock, such
Founder (the "Selling Founder") must comply with the provisions of this
Section 2 and of Section 3 below. Such Founder must give at the same time to
the Company, each of the other Founders and each of the Major Investors, a
written notice signed by the Selling Founder (the "Selling Founder's Notice")
stating (a) the Selling Founder's bona fide intention to transfer such
Offered Stock; (b) the number and type of shares of the Offered Stock; (c)
the bona fide cash price or, in reasonable detail, other consideration, per
share for which the Selling Founder proposes to transfer such Offered Stock
(the "Offered Price"); and (d) the name and address of the proposed third
party purchaser(s) or transferee(s) of the Offered Stock ("Third Party
Purchaser").
2.2 Founder's Right of First Offer.
(a) Founder's Pro Rata Rights. Each Founder will have the Right of
First Offer to purchase up to such Founder's Pro Rata Share of the Offered
Stock as follows. Any Founder desiring to purchase any or all of the
Offered Stock must, within the thirty (30) day period (the "Founder Refusal
Period") commencing on the date the Selling Founder's Notice is given by
the Selling Founder, give written notice to the Selling Founder and to the
Company of such Founder's election to purchase Offered Stock, and the number
of shares of Offered Stock (which may be less than or, in accordance with
Section 2.3(b), more than such Founder's Pro Rata Share of the Offered
Stock) that the Founder desires to purchase.
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(b) Founder's Over-Allotment Rights. If one or more Founders do not
elect to purchase their full Founder Pro Rata Share of the Offered Stock,
the portion that such Founders have not elected to purchase ("Excess Founder
Shares") will be allocated to each Founder electing to purchase in excess
of his Founder Pro Rata Share of the Offered Stock ("Electing Founder") in
accordance with the amount of Excess Founder Shares such Electing Founder
is willing to purchase as set forth in his notice delivered in accordance
with Section 2.2(a). Notwithstanding the preceding sentence, if there are
insufficient Excess Founder Shares such that an Electing Founder is unable
to purchase all of the Excess Founder Shares specified in his notice, the
Excess Founder Shares shall be allocated to each such Electing Founders up
to the number of Excess Founder Shares which such Electing Founder has
indicated that he is willing to purchase as set forth in his notice
delivered in accordance with Section 2.2(a), by multiplying the Excess
Founder Shares by a fraction, the numerator of which is the number of Common
Stock Equivalents then held by such Electing Founder, and the denominator of
which is the number of shares of Common Stock Equivalents then held by all
Electing Founders. Any remaining Excess Founder Shares will be reallocated
among the remaining Electing Founders on the same basis as set forth in the
preceding sentence, on an iterative basis until all Excess Founders Shares
have been allocated.
2.3 Major Investors Right of First Offer.
(a) If following the exercise of the Founder Right of First Offer as
indicated in Section 2.2, there are shares of Offered Stock remaining that
are not subject to purchase by the Founders other than the Selling Founder,
the Selling Founder shall notify the Major Investors in writing of such
remaining Offered Stock and each Major Investor will have the Right of First
Offer to purchase up to such Major Investor's Pro Rata Share of such
remaining Offered Stock (including any Co-Sale Shares substituted for any
Remaining Offered Stock pursuant to Section 3) ("Remaining Offered Stock").
Any Major Investor desiring to purchase any or all of the Remaining Offered
Stock must, within the fifteen (15) day period (the "Major Investor Refusal
Period") commencing on the date the notice is given by the Selling Founder
pursuant to this Section 2.3(a), give written notice to the Selling Founder,
the other Major Investors and to the Company of such Major Investor's
election to purchase Remaining Offered Stock, and the number of shares of
Remaining Offered Stock (which may be less than or, in accordance with
Section 2.3(b), more than such Major Investor's Pro Rata Share of the
Offered Stock) that the Major Investor desires to purchase.
(b) Major Investor Over-Allotment Rights. To the extent that one or
more Major Investors do not exercise their right to purchase their full Major
Investor Pro Rata Share of the Remaining Offered Stock, the portion that such
Major Investors have not elected to purchase ("Excess Major Investor Shares")
will be allocated to each Major Investor electing to purchase in excess of
its Major Investor Pro Rata Share of the Remaining Offered Stock ("Electing
Major Investor") in accordance with the number of Excess Major Investor
Shares such Major Investor has indicated it is willing to purchase as stated
in its notice delivered in accordance with Section 2.3(a). Notwithstanding
the preceding sentence, if there are insufficient Excess Major Investor
Shares such that an Electing Major Investor is unable to purchase all of the
Excess Major
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Investor Shares specified in its notice, the Excess Major Investor Shares
shall be allocated to each Electing Major Investor, up to the number of
Excess Major Investor Shares which such Major Investor has indicated it is
willing to purchase as stated in its notice delivered in accordance with
Section 2.3(a), by multiplying the Excess Major Investor Shares by a
fraction, the numerator of which is the number of multiplying the Excess
Major Investor Shares by a fraction, the numerator of which is the number
of Common Stock Equivalents then held by such Electing Major Investor and
the denominator of which is the number of shares of Common Stock Equivalents
then held by all Electing Major Investors. Any remaining Excess Major
Investor Shares will be reallocated among the remaining Electing Major
Investors on the same basis as set forth in the preceding sentence, on an
iterative basis until all Excess Major Investor Shares have been allocated.
2.4 Purchase Price. The purchase price for the Offered Stock to be
purchased by the Founders and Major Investors exercising their Right of First
Offer under this Agreement will be the Offered Price, and will be payable as
set forth in Section 2.5 hereof.
2.5 Payment. Payment of the purchase price for the Offered Stock
purchased by the Founders exercising their Right of First Offer will be made
within seven (7) days after the close of the Founder Refusal Period. Payment
of the purchase price for the Offered Stock purchased by the Major Investors
exercising their Right of First Offer will be made within seven (7) days
after the close of the Major Investor Refusal Period. Payment of the
purchase price will be made at the option of the Selling Founder (i) in cash,
by check or by promissory note, (ii) by cancellation of indebtedness of the
Selling Founder to such purchasing Founder or purchasing Major Investor, or
(iii) by any combination of the foregoing.
2.6 Selling Founder's Right to Transfer. If the Founders and the Major
Investors do not elect to purchase all of the Offered Stock, then, subject to
Section 3, the Selling Founder may, not later than 120 days following
delivery to the Company and each of the Major Investors of the Selling
Founder's Notice, transfer that portion of the Offered Stock not purchased by
the purchasing Founders or purchasing Major Investors, to any Third Party
Purchaser named in the Selling Founder's Notice, on terms and conditions not
more favorable to the Selling Founder than those described in the Selling
Founder's Notice. Any proposed transfer on terms and conditions more
favorable to the Selling Founder than those described in the Selling
Founder's Notice, as well as any subsequent proposed transfer of any Stock by
the Selling Founder, shall again be subject to the Right of First Offer. If
the Offered Stock is transferred in accordance with the terms and conditions
of this Agreement, then the transferee(s) of the Offered Stock (other than a
Founder) will thereafter hold such Offered Stock free of the Right of First
Offer and Co-Sale Right. If the Offered Stock is not so transferred during
such 120-day period, then the Selling Founder will not transfer any of such
Offered Stock without complying again in full with the provisions of this
Agreement.
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SECTION 3
CO-SALE RIGHT
3.1 Major Investor Co-Sale Right. Prior to the Transfer of any of the
Offered Stock to a Major Investor or a Third Party Purchaser, each Major
Investor who has not exercised its Right of First Offer under Section 2 shall
have a right to participate in the transfer of any Offered Stock to a Major
Investor or a Third Party Purchaser ("Major Investor Co-Sale Right") to the
extent of (but not to a greater extent than) such Major Investor's Co-Sale
Pro Rata Amount. Each Major Investor desiring to exercise the major Investor
Co-Sale Right must, within the Major Investor Refusal Period, give written
notice (the "Exercise Notice") to the Company and the Selling Founder of such
Major Investor's exercise of the Major Investor Co-Sale Right. The Major
Investor shall specify in the Exercise Notice the number of shares (up to its
Major Investor Co-Sale Pro Rata Amount) such Major Investor desires to sell.
The Selling Founder shall inform each Major Investor of the decision of each
other Major Investor promptly upon learning it. The Major Investors agree to
advise each other of their intentions under this Section 3 as soon as
reasonably feasible after receiving the Selling Founder's Notice.
3.2 Sale of Co-Sale Shares.
(a) The Selling Founder shall assign to each Major Investor which
exercises its Right of Co-Sale hereunder as much of his interest in the
agreement of sale with the transferee as such Major Investor shall be
entitled to and shall accept hereunder. To the extent that any transferee
prohibits such assignment or otherwise refuses to purchase shares or other
securities from a Major Investor exercising its Right of Co-Sale hereunder,
the Selling Founder shall not sell to such transferee any stock unless and
until, simultaneously with such sale, the Selling Founder shall purchase
such shares or other securities from such Major Investor for the same
consideration and on the same terms and conditions as the proposed transfer
described in the Selling Founder's Notice.
(b) Each Major Investor which elects to exercise its Co-Sale Right
pursuant to Section 3.1 above shall effect its participation in the sale by
promptly delivering to the Selling Founder for transfer to the transferee
one or more certificates, properly endorsed for transfer, which represent:
(i) the type and number of shares of stock which such Selling
Founder is selling; or
(ii) that number of shares of Series C Preferred Stock which is
at such time convertible into the number of shares of Common Stock
which such Major Investor elects to sell; provided that if the
transferee objects to the delivery of Series C Preferred Stock in lieu
of Common Stock, such Major Investor shall convert such Series C
Preferred Stock into Common Stock and deliver Common Stock as provided
in this Section 3.2(b). The Founders agree to take such actions as may
be necessary to cause the Company to make any such conversion
concurrent with the actual transfer of shares of Co-Sale Shares to
the transferee.
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The stock certificate or certificates that the Major Investor delivers to
the Selling Founder as provided above shall be transferred to the transferee
in consummation of the sale of the Co-Sale Shares pursuant to the terms and
conditions specified in the Exercise Notice, and the Selling Founder shall
concurrently therewith remit to the participating Major Investor that portion
of the sale proceeds to which such Major Investor is entitled by reason of
its participation in such sale.
3.3 Transfer of Shares Upon Failure to Exercise Right of Co-Sale. If
none of the Major Investors elects to exercise the Co-Sale Right with respect
to the offered Stock, the Selling Founder may, not later than 120 days
following delivery to the Company and each of the Major Investors of the
Selling Founder's Notice conclude a transfer of the Offered Stock on terms
and conditions not more favorable to the Selling Founder than those described
in the Selling Founder's Notice. Any proposed transfer on terms and
conditions more favorable to the Selling Founder than those described in the
Selling Founder's Notice, as well as any subsequent proposed transfer of any
Stock by the Selling Founder, shall again be subject to the Right of Co-Sale.
SECTION 4
ADDITIONAL PROVISIONS
4.1 Termination. The rights of the Major Investors (and each Major
Investor individually) under this Agreement shall terminate upon (i) that
point in time when such Major Investor no longer owns 100,000 shares of
Series C Preferred Stock of the Company (as adjusted for subdivisions,
conversions and stock splits), (ii) the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock of the Company to the public, or (iii) the occurrence of a
merger or consolidation of the Company with or into, or the sale of all or
substantially all of the Company's assets to another entity, unless the
shareholders of the Company shall own at least 51% of the capital stock of
the surviving entity immediately after such merger, consolidation or sale.
4.2 Legends. Each certificate representing shares of Common Stock owned
by a Founder shall be endorsed with the following legend:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A FOUNDERS' SALE AGREEMENT BY AND AMONG THE SHAREHOLDER,
THE CORPORATION AND CERTAIN OTHER SHAREHOLDERS OF THE
CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST OF THE SECRETARY OF THE CORPORATION."
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4.3 Legend Removal. The legend referred to in Section 4.2 shall be
removed upon termination of this Agreement in accordance with the provisions
of Section 4.1 above.
4.4 Stop Transfer Instructions. Each Founder agrees, to ensure
compliance with the restrictions referred to herein, that the Company may
issue appropriate "stop transfer" certificates or instructions and that, if
the Company transfers its own securities, it may make appropriate notations
to the same effect in its records.
SECTION 5
MISCELLANEOUS
5.1 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
5.2 Notice. All notices and other communications required or permitted
hereunder to a Major Investor or the Founders shall be in writing and be
deemed to have been duly given when deposited in the United States mail by
registered, certified or express mail or deposited with Federal Express or
United Parcel Service for overnight delivery, addressed to such Major
Investor's or Founder's address as shall have been furnished to the Company
in writing.
5.3 Successors and Assigns. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
5.4 Amendments or Waivers. This Agreement may not be amended, waived,
discharged or terminated other than by written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or
termination is sought; provided, however, that the Major Investors who are
holders of a majority of the shares of Series C Preferred held by the Major
Investors may waive, discharge, terminate, modify or amend, on behalf of all
Major Investors, any provision hereof.
5.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one instrument, and each
of which may be executed by less than all of the parties to this Agreement.
5.6 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision. In such event, the parties shall negotiate, in good
faith, a valid, legal and enforceable substitute provision which most nearly
effects the intent of the parties in entering into this Agreement.
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5.7 Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to agreements
between California residents entered and performed in California.
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IN WITNESS WHEREOF, the parties have executed this Founders' Sale
Agreement as of the date first above written.
COMPANY:
SPECTRANET INTERNATIONAL
/s/ XXXXXX X. XXXX
---------------------------------
By: Xxxxxx X. Xxxx
Title: President and Chief Executive Officer
FOUNDERS:
/s/ XXXXXX X. XXXX
---------------------------------
Xxxxxx Xxxx
/s/ XXXXX XXXXXX
---------------------------------
Xxxxx Xxxxxx
/s/ XXXXXX XXXXXXXX
---------------------------------
Xxxxxx Xxxxxxxx
/s/ XXXXXX XXXXXXX
---------------------------------
Xxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXX
---------------------------------
Xxxxxxx Xxxxxxx
/s/ XXXXXX XXXXXXX
---------------------------------
Xxxxxx Xxxxxxx
MAJOR INVESTORS:
COLORADO SPECTRA ONE, LLC
/s/ XXXXXX XXXXX
---------------------------------
By: Xxxxxx Xxxxx, Managing Member
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BKP PARTNERS, L.P.
/s/ XXX X. XXXX
---------------------------------
By: Xxx X. Xxxx
Title: General Partner
XXXXXXX XXXXXXXXX TRUST
/s/ XXXXXXX XXXXXXXXX
---------------------------------
By: Xxxxxxx Xxxxxxxxx, Trustee
/s/ XXXXXX XXXXXXX
---------------------------------
Xxxxxx Xxxxxxx
/s/ XXXXX XXXXXXX
---------------------------------
Xxxxx Xxxxxxx
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