EXHIBIT F
INVESTORS RIGHTS AGREEMENT
F-1
INVESTOR RIGHTS AGREEMENT
DATED AS OF NOVEMBER 26, 2002
AMONG
VITALSTREAM HOLDINGS, INC.,
AND THE
COMMON STOCKHOLDERS,
CONVERTIBLE NOTEHOLDERS
AND
WARRANT HOLDERS
OF
VITALSTREAM HOLDINGS, INC. REFERRED TO HEREIN
TABLE OF CONTENTS
1. DEFINITIONS................................................................... 2
2. PREEMPTIVE RIGHTS............................................................. 5
3. BOARD OF DIRECTORS............................................................ 6
4. BOARD OF DIRECTOR OBSERVATION RIGHTS.......................................... 7
5. REPRESENTATIONS AND WARRANTIES; COVENANTS..................................... 8
6. TRANSFERS..................................................................... 8
7. TRANSFERS IN VIOLATION OF AGREEMENT........................................... 8
8. LEGEND........................................................................ 8
9. ENTIRE AGREEMENT.............................................................. 9
10. SUCCESSORS AND ASSIGNS........................................................ 9
11. COUNTERPARTS.................................................................. 9
12. DESCRIPTIVE HEADINGS; INTERPRETATION.......................................... 9
13. NOTICES; BUSINESS DAYS........................................................ 9
14. AMENDMENT AND WAIVER; EFFECTIVENESS AND BINDING NATURE OF THIS AGREEMENT...... 10
15. SEVERABILITY.................................................................. 10
16. NO STRICT CONSTRUCTION........................................................ 10
17. GOVERNING LAW................................................................. 11
18. WAIVER OF RIGHT TO JURY TRIAL................................................. 11
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT, dated as of November 26, 2002
(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 Convertible Notes listed on the Schedule of Convertible
Noteholders attached hereto (including such other holders of Convertible 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.
RECITALS
WHEREAS, reference is made to that certain Asset Purchase
Agreement, dated as of November 1, 2002 (as amended and modified from time to
time, the "Asset Purchase Agreement"), by and among the Company, the Buyer and
Hosting pursuant to which the Buyer shall, subject to the closing of the
transaction contemplated by the Asset Purchase Agreement, acquire 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 Note and
Warrant Purchase Agreement, dated as of November 1, 2002 (as amended and
modified from time to time, the "Note and Warrant Purchase Agreement"), by and
among the Company and those purchasers of Convertible Notes and Warrants
referred to therein pursuant to which the Company sold and the purchasers
purchased the Convertible Notes and Warrants.
WHEREAS, pursuant to the Note and Warrant Purchase Agreement,
the Company issued shares of Common Stock to the purchasers of Convertible Notes
and Warrants referred to therein as payment of a commitment fee due and payable
upon the closing of the transactions contemplated by the Note and Warrant
Purchase Agreement.
WHEREAS, in order to induce the parties hereto to consummate
the transactions contemplated by each of the Asset Purchase Agreement and the
Note and Warrant Purchase Agreement, the Company, the Common 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 Note and
Warrant Purchase Agreement and Asset 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.
"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.
"Asset Purchase Agreement" has the meaning set forth in the
recitals of this Agreement.
"Board of Directors" means the board of directors of the
Company.
"Buyer" means VitalStream Broadcasting Corporation, a Nevada
corporation.
"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 any capital stock or other Equity Security of
any class of the Company (other than any Preferred Equity Securities or the
Series A Preferred) hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up 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.
"Convertible Notes" means the 10% Convertible Promissory Notes
of the Company issued pursuant to the Note and Warrant Purchase Agreement.
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"Debt Securities" means any note, bond, debenture or other
instrument or security evidencing Indebtedness.
"Dolphin" means Dolphin Fund II.
"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 II" means Dolphin Communications II and Dolphin
Parallel II.
"Dolphin Holders" means Dolphin and any Affiliate of Dolphin
that holds Stockholder Shares.
"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 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.
"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 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.
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"Laws" means all constitutions, statutes, laws, treaties,
codes, ordinances, regulations, rules, orders, judgments, writs, injunctions,
acts, determinations, directions or decrees of any Governmental Entity.
"Notes" means those certain 10% convertible promissory notes
issued by Company pursuant to the Note and Warrant Purchase Agreement.
"Note and Warrant Purchase Agreement" has the meaning set
forth in the preamble to this Agreement.
"Observer" has the meaning set forth in Section 4 of this
Agreement.
"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) 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.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal law then in force and the rules promulgated thereunder.
"Series A Preferred" means the 2002 Series A 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 Note and Warrant Purchase
Agreement, (b) any Common Stock issued or issuable, directly or indirectly, upon
conversion of the Convertible Notes, (c) any Common Stock issued or issuable,
directly or indirectly, upon exercise of the Warrants, (d) any Common Stock
purchased or otherwise acquired by any holder of the Common Stock referred to in
clauses (a), (b) or (c) above and (e) 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) or (d) above by way of stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. For purposes of this Agreement,
(i) any Person who holds Convertible Notes shall be deemed to be the holder of
the Stockholder Shares obtainable upon conversion of such Convertible Notes
regardless of any restriction or limitation on the conversion thereof and (ii)
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 both
clause (i) and (ii) 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 who holds Stockholder Shares as a result of a Transfer of Stockholder
Shares shall be deemed to be the holder of Stockholder Shares.
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"Subsequent Closing Date" has the meaning set forth in the
Note and Warrant Purchase 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.
"Warrant Holders" has the meaning set forth in the preamble to
this Agreement.
"Warrants" means those certain warrants to purchase shares of
the Company's Common Stock issued pursuant to the Note and Warrant Purchase
Agreement.
2. Preemptive Rights.
(a) If, at any time during the three-year period
beginning on the Subsequent Closing Date (or, if the Subsequent Closing is not
consummated, the date hereof), the Company shall issue any Preferred Equity
Securities (including Preferred Equity Securities issued or sold together with
any Debt Security), each 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 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 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 45 days, after the
receipt of notice from the Company (which notice by the Company shall be given
at
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least 45 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 Holder of Stockholder Shares
exercising his or its rights under this Section 2 shall pay such purchase price
in immediately available funds. Each 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 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 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 Holder of
Stockholder Shares is entitled hereunder.
3. Board of Directors.
(a) At any time and from time to time until the Notes
have been paid in full, 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 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 initially shall be
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 at the Company's next annual meeting, which shall
be held no later than January 31, 2003, for a term of three (3) years;
(ii) in the event that on the date of termination
of the Dolphin Director's three (3) year term pursuant to Section
3(a)(i), payment in full of all obligations under the Notes has not
been made, then the Dolphin Director shall be elected to the Board of
Directors for a second term which shall begin on the date of
termination of the initial three-year term referred to in clause (i)
above and continue until payment in full of all obligations under the
Notes has been made (at which time such Dolphin Director shall, if
requested by the Company, resign);
(iii) 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 (each, a "Subsidiary
Board of Directors") shall include the Dolphin Director;
(iv) to the extent permitted under applicable Law
and any exchange on which any Company Securities may be listed, any
committees of the Board of Directors
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or a Subsidiary Board of Directors shall be created only upon the
unanimous approval of the members of the Board of Directors and the
composition of each such committee (if any) shall be proportionately
equivalent to that of the Board of Directors;
(v) 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
(vi) 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, 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 if the party
which failed to designate such directorship so directs.
(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 an 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
prior to the payment in full of the Notes that (i) any Dolphin Holders continue
to hold any Stockholder Shares and (ii) the Dolphin Director is not a member of
the Board of Directors, 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,
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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.
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 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, 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,
Convertible Notes and Warrants held by a Person who is a signatory to this
Agreement, and each instrument issued in exchange for or upon the Transfer of
any Stockholder Shares, Convertible Notes and Warrants 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 INVESTOR RIGHTS AGREEMENT, DATED AS OF NOVEMBER 26, 2002,
AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND THE
STOCKHOLDERS OF THE COMPANY REFERRED TO THEREIN, AS AMENDED
AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH INVESTOR RIGHTS
AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE
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COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
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 Stockholder Shares, Convertible Notes or Warrants and the respective
successors and assigns of each of them, so long as they hold any Stockholder
Shares, Convertible 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 Convertible Noteholder at the address indicated on the Schedule of Convertible
Noteholders, (c) a Warrant Holder at the address indicated on the Schedule of
Warrant Holders and (d) the Company at the address indicated below:
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VitalStream Holdings, Inc.
Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx, Chief Operating Officer
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 holders of a majority of the
Common Stock (other than any Common Stock which constitute Stockholder Shares)
and (c) the Dolphin Holders owning a majority of the Stockholder Shares held by
all Dolphin Holders. Notwithstanding the foregoing, 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. 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.
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,
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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.
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.
* * * * *
-11-
IN WITNESS WHEREOF, the parties have executed this Investor
Rights Agreement as of the date first written above.
VITALSTREAM HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: President
COMMON STOCKHOLDERS
EPOCH HOSTING, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------
Name: Xxxxx Xxxxxx
Title: Secretary
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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
COMMON STOCKHOLDERS (CONT'D)
/s/ Xxxx Xxxxxxx
-------------------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
-2-
[SIGNATURE PAGE TO 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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
-3-
[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
-4-
