O3B NETWORKS LIMITED PREEMPTIVE RIGHTS AGREEMENT
EXHIBIT
10.51
O3B NETWORKS LIMITED
This Preemptive Rights Agreement (the “Agreement”) is entered into as of the
4th day of January, 2008, by and among O3B Networks Limited, a private company
limited by shares organized under the laws of Jersey (the “Company”), LGI Ventures B.V.
(the “Preferred Investor”), and each of the persons and entities listed on Exhibit A hereto
(the “Initial Common Investors” and, together with the Preferred Investor, the “Investors”).
Recitals
Whereas, the Preferred Investor is purchasing Series A Preference Shares of the
Company (the “Series A Preference Shares”) pursuant to that certain Series A Preference Share
Purchase Agreement (the “Purchase Agreement”) of even date herewith (the “Investment”);
Whereas, the Preferred Investor’s entry into the Purchase Agreement is expressly
conditioned upon the execution and delivery of this Agreement by the other parties hereto; and
Whereas, in connection with the consummation of the Investment, the parties desire to
enter into this Agreement in order to grant preemptive rights to the Investors as set forth below.
Now, Therefore, in consideration of these premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. GENERAL.
1.1 Definitions. As used in this Agreement the following terms shall have the following
respective meanings:
(a) An “Affiliate” of the Preferred Investor shall mean any person or entity that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with, the Preferred Investor.
(b) “Common Shares” shall mean the Common Shares of the Company.
(c) “Non-U.S. Legal Requirements” shall mean, in the case of a public offering or registration
of any of the Company’s securities on a public securities exchange (whether regulated or otherwise)
in the United Kingdom or elsewhere in the world other than the United States all applicable laws,
regulations or other legal requirements necessary to permit the unrestricted sale of such
securities to be registered in such jurisdiction and on such market by the Company or the Holders
of such securities, as the case may be.
(d) “Qualified IPO” shall mean the first firmly underwritten public offering pursuant to an
effective Registration Statement under the Securities Act or Non-U.S. Legal Requirements (i)
covering the offer and sale of Common Shares for the account of the Company
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that values the Company at not less than €121,250,000 prior to the consummation of such
offering and in which the net cash proceeds to the Company (after underwriting discounts,
commissions and fees) are at least €34,750,000 (or its equivalent in U.S. dollars if such
offering is effected in the United States) and (ii) after which the Common Shares are listed on the
New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or a designated
offshore securities market (as defined in Regulation S under the Securities Act).
(e) “Registration Statement” shall mean (i) with respect to an offering of the Company’s
securities in the United States, a registration statement as defined in the Securities Act and (ii)
with respect to the offering of the Company’s securities in non-U.S. jurisdictions, the comparable
documents required under applicable Non-U.S. Legal Requirements for the relevant securities to be
registered, listed, admitted to trading or otherwise and includes, without limitation,
prospectuses, listing particulars and admission documents.
(f) “SEC” or “Commission” shall mean the U.S. Securities and Exchange Commission.
(g) “Securities Act” shall mean the U.S. Securities Act of 1933, as amended.
SECTION 2. PREEMPTIVE RIGHTS.
2.1 Subsequent Offerings. Each Investor shall have a preemptive right to purchase its pro
rata share of all Equity Securities (as defined below) that the Company may, from time to time,
propose to sell and issue after the date of this Agreement, other than the Equity Securities
excluded by Section 2.4 hereof. For this purpose, each Investor’s pro rata share is equal to the
ratio of (a) the number of Common Shares (including all Common Shares issuable or issued upon
conversion of the Series A Preference Shares or upon the exercise or conversion of outstanding
warrants or options or convertible securities) of which such Investor, together with its
Affiliates, is a holder or would be a holder upon conversion or exercise at the time notice of the
proposed issuance of such Equity Securities is given by the Company pursuant to Section 2.2 to
(b) the total number of Common Shares (including all Common Shares issued or issuable upon
conversion of the Series A Preference Shares or upon the exercise or conversion of any outstanding
warrants or options or convertible securities) outstanding immediately prior to the issuance of
such Equity Securities. The term “Equity Securities” shall mean (i) any Common Shares, Preference
Shares or other equity security of the Company, (ii) any security convertible into or exercisable
or exchangeable for, with or without consideration, any Common Shares, Preference Shares or other
equity security of the Company (including any option to purchase such a convertible security),
(iii) any security carrying any warrant or right to subscribe to or purchase any Common Shares,
Preference Shares or other equity security of the Company or (iv) any such warrant or right.
2.2 Exercise of Rights. If the Company proposes to issue any Equity Securities, it shall give
each Investor written notice of its intention, describing the Equity Securities and the price and
other terms and conditions upon which the Company proposes to issue the same. Each Investor shall
have ten (10) days from the date such notice is deemed given to exercise its right to purchase its
pro rata share of the Equity Securities on the terms and conditions specified in the notice by
giving written notice thereof to the Company. Notwithstanding the foregoing, the
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Company shall not be required to offer or sell such Equity Securities to any Investor if doing
so would cause the Company to be in violation of applicable securities laws by virtue of such offer
or sale.
2.3 Issuance of Equity Securities to Other Persons. The Company shall have ninety (90) days
after the end of the aforementioned 10-day period to sell the Equity Securities in respect of which
the Investor’s rights were not exercised, at a price not lower and upon terms and conditions not
more favorable to the purchasers thereof than specified in the Company’s notice to the Investors
pursuant to Section 2.2 hereof. If the Company has not sold such Equity Securities within ninety
(90) days after the end of the aforementioned 10-day period the Company shall not thereafter issue
or sell any Equity Securities without first offering such securities to the Investors in the manner
provided above.
2.4 Excluded Securities. The preemptive rights established by this Section 2 shall have no
application to any of the following Equity Securities:
(a) Common Shares and/or options, warrants or other Common Share purchase rights and the
Common Shares issued pursuant to such options, warrants or other rights issued or to be issued
after the date hereof to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary, pursuant to share purchase or share option plans or other arrangements
that are approved by the Company’s Board of Directors (the “Board”);
(b) shares issued upon conversion of the Series A Preference Shares and shares issued pursuant
to any rights, agreements, options or warrants granted after the date of this Agreement, so long as
the preemptive rights established by this Section 2 were complied with, waived, or were
inapplicable pursuant to any provision of this Section 2.4 with respect to the initial sale or
grant by the Company of such rights, agreements, options or warrants;
(c) any Equity Securities issued pursuant to an acquisition by the Company of the capital
stock or assets of another company (including by way of merger or consolidation), provided such
acquisition is approved by the Board;
(d) any Equity Securities issued in connection with any share split, share dividend on or
recapitalization of the outstanding Equity Securities of the Company;
(e) any Equity Securities representing in the aggregate not more than 1.0% of the outstanding
Common Shares issued pursuant to arrangements with the Company’s vendors or suppliers, any
equipment loan or leasing arrangement, real property leasing arrangement, or debt financing from a
bank or similar financial or lending institution, in each case provided that such arrangement or
financing is approved by the Board;
(f) any Equity Securities that are issued by the Company pursuant to a Qualified IPO or in a
transaction that closes on or before June 30, 2008 and values the outstanding equity of the Company
immediately prior to such transaction at not less than €346,000,000;
(g) any Equity Securities issued by the Company pursuant to the terms of Section 3 of the
Purchase Agreement;
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(h) any Common Shares sold on or prior to February 15, 2008 at a price of not less than
€4,754 per share and for an aggregate purchase price not to exceed €1,765,206; provided that
the Company has presented the Preferred Investor a list of the proposed purchasers of such Common
Shares on or prior to January 15, 2008 (which purchasers may include Xxxxxxx Xxxxx and members of
his immediate family); and
(i) any Equity Securities representing in the aggregate, on an as converted or as exercised
basis if applicable, not more than 10.0% of the outstanding Common Shares of the Company on a pro
forma basis after giving effect to the issuance of all Common Shares issuable or issued upon
conversion of the Series A Preference Shares or other outstanding convertible securities; provided
that such sale of Equity Securities pursuant to this paragraph (i) is completed on or prior to June
30, 2008 at a Common Share equivalent price per share equal to or greater than 1.5 times the
quotient of (A) the sum of (x) €51,965,666 plus (y) the proceeds actually received by the
Company from the issuance of any Common Shares pursuant to Section 2.4(h) plus (z) the proceeds
actually received by the Company from the issuance of any Series A Preference Shares issued
pursuant to Section 3 of the Purchase Agreement, divided by (B) the number of outstanding Common
Shares (including all Common Shares issuable or issued upon conversion of the Series A Preference
Shares or other outstanding convertible securities) immediately prior to such sale.
SECTION 3. MISCELLANEOUS.
3.1 Governing Law. This Agreement shall be governed by and construed under the laws of the
State of New York in all respects as such laws are applied to agreements among New York residents
entered into and to be performed entirely within New York, without reference to conflicts of laws
or principles thereof. The parties agree that any action brought by either party under or in
relation to this Agreement, including without limitation to interpret or enforce any provision of
this Agreement, shall be brought in, and each party agrees to and does hereby submit to the
jurisdiction and venue of, any state or federal court located in the City and County of New York.
3.2 Successors and Assigns. The provisions hereof shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and permitted assigns; provided
that, except for an assignment by the Preferred Investor to an Affiliate of the Preferred Investor,
no party hereto may assign its rights under this Agreement without the consent of the other parties
hereto whose rights have not terminated pursuant to Section 3.5.
3.3 Entire Agreement. This Agreement, the Purchase Agreement and the other documents
delivered pursuant thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound to any other in
any manner by any oral or written representations, warranties, covenants and agreements except as
specifically set forth herein and therein. Each party expressly represents and warrants that it is
not relying on any oral or written representations, warranties, covenants or agreements outside of
this Agreement.
3.4 Severability. In the event one or more of the provisions of this Agreement should, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
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invalidity, illegality, or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
3.5 Term. This Agreement shall continue in full force and effect from the date hereof through
the closing of a Qualified IPO; provided that the preemptive rights of the Investors set forth in
Section 2 shall terminate as to any such Investor in the event that such Investor does not exercise
in full its preemptive rights set forth in Section 2.2 in connection with any issuance of Equity
Securities by the Company pursuant to which it is entitled to do so.
3.6 Amendment and Waiver. This Agreement may be amended or modified, and the rights or
obligations of the parties hereunder may be waived, only upon the written consent of: (i) the
Company, (ii) the Preferred Investor and (iii) the holders of a majority of the Common Shares held
by the Initial Common Investors at such time; provided that no such consent shall be required from
the Company or any Investor in the event that such party’s preemptive rights have terminated in
accordance with Section 3.5. Any amendment or waiver effected in accordance with the previous
sentence of this Section 3.6 shall be binding upon each of the Investors.
3.7 Delays or Omissions. Subject to Section 3.5, it is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any party, upon any breach, default or
noncompliance by another party under this Agreement shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It
is further agreed that any waiver, permit, consent, or approval of any kind or character on any
party’s part of any breach, default or noncompliance under the Agreement or any waiver on such
party’s part of any provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under
this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not
alternative.
3.8 Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be notified, or (b) upon
receipt of confirmation of delivery to the party to be notified by Federal Express, DHL, UPS or a
similar reputable international overnight courier service. All communications shall be sent to the
party to be notified at the address as set forth on the signature pages hereof or at such other
address as such party may designate by written notice to the other parties hereto.
3.9 Attorneys’ Fees. In the event that any suit or action is instituted under or in relation
to this Agreement, including without limitation to enforce any provision in this Agreement, the
prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
3.10 Titles and Subtitles. The titles of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in construing this Agreement.
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3.11 Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one instrument.
3.12 Pronouns. All pronouns contained herein, and any variations thereof, shall be deemed to
refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties
hereto may require.
3.13 Subsequent Preemptive Rights. The Company shall not grant to the purchasers of any
Equity Securities issued pursuant to Section 2.4(h) or (i) or to Xxxx Xxxxx as a purchaser of
Common Shares acquired from Xxxxxxx Xxxxx preemptive rights more favorable than the preemptive
rights granted to the Investors hereunder.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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In Witness Whereof, the parties hereto have executed this Preemptive Rights
Agreement as of the date set forth in the first paragraph hereof.
COMPANY:
|
PREFERRED INVESTOR: | |
O3B NETWORKS LIMITED
|
LGI VENTURES B.V. |
By: |
/s/ Xxxx Xxxxx | By: | /s/ Xxxxxx Xxx Xxx | |||||||||||||
| Name: | Xxxx Xxxxx | Name: | ||||||||||||||
| Title: | CEO | Title: | ||||||||||||||
| By: | /s/ Xxxxx Xxxxx | |||||||||||||||
| 03B Networks Limited | Address: | |||||||||||||||
| Xxxxxxx Xxxxx, Xxxxx Xxxxxx | ||||||||||||||||
| Xx. Xxxxxx, Xxxxxx XX0 0XX | ||||||||||||||||
| INITIAL COMMON INVESTORS: | ||||||||||||||||
/s/ Xxxx Xxxxx |
||||||||||||||||
| XXXXXXX XXXXX | ||||||||||||||||
| P.O. Box 025250 #60714 | ||||||||||||||||
| Xxxxx, Xxxxxxx 00000-0000 | ||||||||||||||||
/s/
Xxxx Xxxx |
||||||||||||||||
| XXXX XXXX | ||||||||||||||||
| Address: | St. John’s Manor | |||||||||||||||
| Jersey, C.I. JE3 4EH | ||||||||||||||||
Exhibit A
Initial Common Investors
Xxxx Xxxx
Xxxx Xxxxx
Xxxx Xxxxx
