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UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 19, 1999
LET'S TALK CELLULAR & WIRELESS, INC.
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(Exact Name of Company as Specified in its Charter)
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FLORIDA 0-23351 65-0292891
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(State or other jurisdiction of (Commission (I.R.S. Employer Identification
incorporation or organization) File Number) Number)
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800 BRICKELL AVE., STE. 400
MIAMI, FL 33131 33131
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (305) 358-8255
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(Former name, former address and fiscal year, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On August 4, 1999, Let's Talk Cellular & Wireless, Inc., a Florida
corporation (the "Company"), completed the previously announced formation of
LetsTalk.com, Inc., a Delaware corporation to design, develop and operate an
online wireless communications store named LetsTalk.com ("LetsTalk.com").
Under the terms of the Common Stock Purchase Agreement between the
Company and LetsTalk.com, effective as of August 4, 1999, the Company acquired
6,600,000 shares of LetsTalk.com Common Stock, par value $0.0001 in exchange
for certain intellectual property set forth in a License Agreement between the
Company and LetsTalk.com. The Common Stock Purchase Agreement and the License
Agreement are attached hereto as Exhibits 10.1 and 10.5 respectively.
LetsTalk.com raised $20 million dollars in financing from Brentwood
Venture Capital, H.I.G. Capital and Accel Partners (the "Investors") who
invested $20,000,000 in exchange for 8,000,000 shares of Series A Preferred
Stock, par value $0.0001 per share. In conjunction with the financing
transaction, the Investors, the Company and the founders
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of LetsTalk.com entered into a Voting Agreement, Right of First Refusal and
Co-Sale Agreement and Investors Rights Agreement which provide for various
rights of the parties as it relates to voting of LetsTalk.com stock,
restrictions and other rights concerning the sale of stock and certain
registration rights relating to shares of LetsTalk.com. The Voting Agreement,
Right of First Refusal and Co-Sale Agreement and Investors Rights Agreement are
attached hereto as Exhibits 10.2, 10.3 and 10.4 respectively.
The License Agreement grants to LetsTalk.com a worldwide, perpetual,
fully paid-up, non-transferable, exclusive, royalty free right and license to
use, modify, distribute, display, perform, reproduce and create derivative works
of certain trademarks, service marks, trade dress, logos and domain names of the
Company in connection with the business of selling communication and computing
products and services, and other consumer and business products and services via
on-line or ecommerce activity. The License Agreement is attached hereto as
Exhibit 10.5.
The Company signed a binding letter of intent to enter into an
Operating Agreement with LetsTalk.com (the "Operating Agreement"). The Operating
Agreement will be for a term of 5 years. The Company has agreed to provide
LetsTalk.com with certain purchasing and inventory management services, order
fulfillment, customer service, paging sales and service, carrier commission
receivables management and audit assistance in carrier contractual
relationships, advertising and general accounting services. Certain services
will be provided on a cost plus basis. The Letter of Intent is attached hereto
as Exhibit 10.6.
Members of the Company's Board of Directors, Messrs. Tamer, Mnaymneh,
Bolduc and Berman, have an investment in and are affiliated with the Company's
largest stockholder, HIG Investment Group, LP, H.I.G. Investment Group, LP is
affiliated with and controlled by the same persons as H.I.G. Capital, H.I.G.
Brickellbay, Inc. and H.I.G. Wireless Internet, Inc., shareholders of
LetsTalk.com, Inc.
Item 7. Financial Statements, Proforma Financial Statements and Exhibits.
Exhibits
10.1 Common Stock Purchase Agreement dated as of July 30, 1999 between Let's
Talk Cellular & Wireless, Inc. and LetsTalk.com, Inc.
10.2 Voting Agreement dated as of July 30, 1999 among LetsTalk.com, Inc.,
HIG Wireless Internet, Inc., Brentwood Associates IX, LP, Brentwood
Affiliates Fund III, LP; Accel VII, LP; Accel Internet Fund III, LP;
Accel Investors '99, LP; G&H Partners; Delly Tamer, Brett Beveridge,
Let's Talk Cellular & Wireless, Inc.; and HIG Brickellbay, Inc.
10.3 Right of First Refusal and Co-Sale Agreement dated as of July 30, 1999
among LetsTalk.com, Inc., HIG Wireless Internet, Inc., Brentwood
Associates IX, LP, Brentwood Affiliates Fund III, LP; Accel VII, LP;
Accel Internet Fund III, LP; Accel Investors '99, LP; G&H Partners;
Delly Tamer, Brett Beveridge, Let's Talk Cellular & Wireless, Inc.; and
HIG Brickellbay, Inc.
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10.4 Investor's Right Agreement dated as of July 30, 1999 among
LetsTalk.com, Inc., HIG Wireless Internet, Inc., Brentwood Associates
IX, LP, Brentwood Affiliates Fund III, LP; Accel VII, LP; Accel
Internet Fund III, LP; Accel Investors '99, LP; G&H Partners; Delly
Tamer, Brett Beveridge, Let's Talk Cellular & Wireless, Inc.; and HIG
Brickellbay, Inc.
10.5 License Agreement dated as of July 30, 1999 between Let's Talk Cellular
& Wireless, Inc. and LetsTalk.com, Inc.
10.6 Letter of Intent dated as of July 30, 1999 between Let's Talk Cellular
& Wireless, Inc. and LetsTalk.com, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LET'S TALK CELLULAR & WIRELESS, INC.
(Company)
August 19, 1999 By: /s/ David Eisenberg
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DAVID H. EISENBERG
Chief Executive Officer
August 19, 1999 By: /s/ Daniel Cammarata
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DANIEL CAMMARATA
Chief Financial Officer
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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
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1. Purchase and Sale of Stock....................................................................................1
1.1 Sale and Issuance of Common Stock...................................................................1
1.2 Closing.............................................................................................1
2. Representations and Warranties of the Company.................................................................1
2.1 Organization, Good Standing and Qualification.......................................................1
2.2 Capitalization and Voting Rights....................................................................2
2.3 Subsidiaries........................................................................................2
2.4 Authorization.......................................................................................2
2.5 Valid Issuance of Common Stock......................................................................3
2.6 Governmental Consents...............................................................................3
2.7 Offering............................................................................................3
2.8 Litigation..........................................................................................3
2.9 Proprietary Information Agreements..................................................................4
2.10 Compliance with Other Instruments..................................................................4
2.11 Agreements; Action.................................................................................4
2.12 Related-Party Transactions.........................................................................5
2.13 No Financial Statements............................................................................5
2.14 Taxes..............................................................................................6
2.15 Permits............................................................................................6
2.16 Disclosure.........................................................................................6
2.17 Registration Rights................................................................................6
2.18 Corporate Documents................................................................................6
2.19 Title to Property and Assets.......................................................................7
2.20 Manufacturing and Marketing Rights.................................................................7
2.21 Section 83(b) Elections............................................................................7
2.22 Qualified Small Business Stock.....................................................................7
3. Representations and Warranties of Purchaser...................................................................7
3.1 Authorization.......................................................................................7
3.2 Purchase Entirely for Own Account...................................................................8
3.3 Disclosure of Information...........................................................................8
3.4 Investment Experience...............................................................................8
3.5 Accredited Investor.................................................................................8
3.6 Restricted Securities...............................................................................8
3.7 Further Limitations on Disposition..................................................................8
3.8 Legends.............................................................................................9
4. Conditions of Purchaser's Obligations at Closing..............................................................9
4.1 Representations and Warranties......................................................................9
4.2 Performance.........................................................................................9
4.3 Officer's Certificates..............................................................................9
4.4 Qualifications.....................................................................................10
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4.5 Proceedings and Documents..........................................................................10
4.6 Proprietary Information and Inventions Agreement...................................................10
4.7 Board of Directors.................................................................................10
4.8 Rights Agreement...................................................................................10
4.9 Voting Agreement...................................................................................10
4.10 Co-Sale Agreement..................................................................................10
4.11 Operating Agreement................................................................................11
4.12 License Agreement..................................................................................11
4.13 Employment Agreements..............................................................................11
4.14 Sale and Issuance of Series A Preferred Stock......................................................11
5. Conditions of the Company's Obligations at Closing...........................................................11
5.1 Representations and Warranties.....................................................................11
5.2 Payment of Purchase Price..........................................................................11
5.3 Qualifications.....................................................................................11
6. Miscellaneous................................................................................................11
6.1 Survival...........................................................................................11
6.2 Successors and Assigns.............................................................................11
6.3 Governing Law......................................................................................11
6.4 Counterparts.......................................................................................12
6.5 Titles and Subtitles...............................................................................12
6.6 Notices............................................................................................12
6.7 Finder's Fee.......................................................................................12
6.8 Expenses...........................................................................................12
6.9 Amendments and Waivers.............................................................................12
6.10 Severability.......................................................................................13
6.11 Corporate Securities Law...........................................................................13
6.12 Aggregation of Stock...............................................................................13
6.13 Entire Agreement...................................................................................13
EXHIBIT A Amended and Restated Certificate of Incorporation
EXHIBIT B Rights Agreement
EXHIBIT C Voting Agreement
EXHIBIT D Right of First Refusal and Co-Sale Agreement
EXHIBIT E Bylaws of the Company
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LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 30th day of July, 1999,
by and among LetsTalk.com, Inc., a Delaware corporation (the "Company"), and
Let's Talk Cellular & Wireless, Inc., a Florida corporation (the "Purchaser.")
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock.
(a) On or prior to the Closing (as defined below), the Company
shall have authorized the sale and issuance to Purchaser of an aggregate of Six
Million Six Hundred Thousand (6,600,000) shares of the Common Stock, par value
$0.0001 of the Company (the "Common Stock").
(b) Subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase at the Closing and the Company agrees to sell and
issue to Purchaser at the Closing, Six Million Six Hundred Thousand (6,600,000)
shares of the Common Stock in exchange for certain intellectual property
pursuant to the terms of the License Agreement (as defined below). The fair
market value of the Common Stock as of the date hereof is $0.25 per share.
1.2 Closing. The purchase and sale of the Common Stock shall
take place at the offices of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP, 155 Constitution Drive, Menlo Park, California, at 10:00 A.M.,
on July 30, 1999, or at such other time and place as the Company and Purchaser
mutually agree upon orally or in writing (which time and place are designated as
the "Closing"). At the Closing the Company shall deliver to Purchaser a
certificate representing the Common Stock that such Purchaser is purchasing
against payment of the purchase price therefor by check, wire transfer,
cancellation of indebtedness, or any combination thereof.
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchaser that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") furnished Purchaser and
special counsel for the Purchaser, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as currently proposed to
be conducted. The Company is duly qualified to transact
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business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business or properties.
2.2 Capitalization and Voting Rights. The authorized capital of
the Company consists, or will consist immediately prior to the Closing, of:
(a) Preferred Stock. Twelve Million (12,000,000) shares of
Preferred Stock, par value $0.0001 (the "Preferred Stock"), Eight Million Eight
Hundred Thousand (8,800,000) of which shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock") and up to Eight Million
(8,000,000) of which will be sold pursuant to a Series A Preferred Stock
Purchase Agreement, by and among the Company and certain investors of the
Company dated the date hereof. The rights, privileges and preferences of the
Series A Preferred Stock will be as stated in the Company's Amended and Restated
Certificate of Incorporation attached hereto as Exhibit A (the "Restated
Certificate").
(b) Common Stock. Thirty-Six Million (36,000,000) shares of
common stock, par value $0.0001 ("Common Stock"), of which 2,150,000 shares are
issued and outstanding and 6,600,000 will be sold pursuant to this Agreement.
(c) The outstanding shares of Common Stock are owned by the
stockholders and in the numbers specified in the Schedule of Exceptions.
(d) The outstanding shares of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Act") and any relevant state securities laws, or
pursuant to valid exemptions therefrom.
(e) Except for (A) the conversion privileges of the Series A
Preferred Stock to be issued under this Agreement, (B) the rights provided in
Section 2.4 of the Rights Agreement, and (C) currently outstanding options to
purchase 440,000 shares of Common Stock granted to employees and other service
providers pursuant to the Company's 1999 Stock Plan, there are not outstanding
any options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company has reserved 2,410,000 shares of its Common Stock for
purchase upon exercise of options to be granted in the future under the
Company's 1999 Stock Plan. Except for the Voting Agreement (as defined below),
the Company is not a party or subject to any agreement or understanding, and, to
the best of the Company's knowledge, there is no agreement or understanding
between any persons and/or entities, which affects or relates to the voting or
giving of written consents with respect to any security or by a director of the
Company.
2.3 Subsidiaries. The Company does not presently own or control,
directly or indirectly, or hold any rights to acquire, any interest in any other
corporation, association, or other business entity nor has the Company ever held
such interest. The Company is not a participant in any joint venture,
partnership, or similar arrangement nor has the Company ever been a participant
in any such arrangement.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this
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Agreement, the Investors' Rights Agreement in the form attached hereto as
Exhibit B (the "Rights Agreement"), the Voting Agreement in the form attached
hereto as Exhibit C (the "Voting Agreement"), and the Right of First Refusal and
Co-Sale Agreement in the form attached hereto as Exhibit D (the "Co-sale
Agreement"), the performance of all obligations of the Company hereunder and
thereunder, the Restated Certificate and the authorization, issuance (or
reservation for issuance), sale and delivery of the Common Stock being sold
hereunder has been taken or will be taken prior to the Closing, and this
Agreement, the Rights Agreement, the Voting Agreement and the Co-sale Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws.
2.5 Valid Issuance of Common Stock. The Common Stock that is
being purchased by Purchaser hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and the Rights Agreement and under applicable state and federal
securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except the filing pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, which filing will be effected within 15 days of the sale of the
Common Stock hereunder, and such other filings pursuant to applicable federal
and state securities laws and blue sky laws, which filings will be effected
within the required statutory period.
2.7 Offering. Subject in part to the truth and accuracy of
Purchaser's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Preferred Stock as contemplated by this
Agreement are exempt from the registration requirements of any applicable state
and federal securities laws, and neither the Company nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
2.8 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of this Agreement, the Rights
Agreement, the Voting Agreement or the Co-Sale Agreement, or the right of the
Company to enter into such agreements, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition, affairs
or prospects of the Company, financially or otherwise, or any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis for the foregoing. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened
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(or any basis therefor known to the Company) involving the prior employment of
any of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 Proprietary Information Agreements. Each employee, officer
and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form provided to special counsel to Purchaser. The
Company, after reasonable investigation, is not aware that any of its employees,
officers or consultants are in violation thereof, and the Company will use its
best efforts to prevent any such violation.
2.10 Compliance with Other Instruments. The Company is not in
violation or default of any provision of its Restated Certificate or Bylaws, or
of any instrument, judgment, order, writ, decree or contract to which it is a
party or by which it is bound, or, to the best of its knowledge, of any
provision of any federal or state statute, rule or regulation applicable to the
Company. The execution, delivery and performance of this Agreement, the Rights
Agreement, the Voting Agreement and the Co-sale Agreement, and the consummation
of the transactions contemplated hereby and thereby will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event that results
in the creation of any lien, charge or encumbrance upon any assets of the
Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of
any material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties.
2.11 Agreements; Action.
(a) Except for the Rights Agreement, the Voting Agreement and
the Co-sale Agreement, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $5,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than the license of the Company's software
and products in the ordinary course of business), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect to infringements of proprietary rights.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $5,000 or, in the case of
indebtedness and/or liabilities individually less than $5,000, in
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excess of $25,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses, or (iv) sold,
exchanged or otherwise disposed of any of its assets or rights, other than the
sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) All of the contracts, agreements and instruments set forth
on the Schedule of Exceptions pursuant to this Section 2.12 are valid, binding
and enforceable in accordance with their respective terms. The Company has
performed all material obligations required to be performed by it and is not in
default under or in breach of nor in receipt of any claim of default or breach
under any contract, agreement or instrument and the Company does not have any
present expectation or intention of not fully performing all such obligations.
No event has occurred which with the passage of time or the giving of notice or
both would result in a default, breach or event of noncompliance by the Company
under any contract, agreement or instrument. The Company has no knowledge of any
breach or anticipated breach by the other parties to any contract, agreement,
instrument or commitment.
(f) The special counsel to Purchaser has been supplied with a
true and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral arrangements,
contracts and agreements that are referred to on the Schedule of Exceptions
pursuant to this Section 2.12, together with all amendments, waivers or other
changes thereto.
(g) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws that adversely affects its business as now
conducted or as proposed to be, its properties or its financial condition.
2.12 Related-Party Transactions. No employee, stockholder, officer,
or director of the Company or member of his or her immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, except that members of the immediate families of employees,
officers, stockholders or directors of the Company may own stock in publicly
traded companies that may compete with the Company. No member of the immediate
family of any officer or director of the Company is directly or indirectly
interested in any material contract with the Company.
2.13 No Financial Statements. The Company is a newly formed entity
and has not prepared any financial statements. Except as disclosed in the
Schedule of Exceptions, the Company does not have any liabilities and has not
entered into any contracts other than the
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contracts contemplated hereby. The Company has not conducted business or entered
into any transaction other than the transactions related to or contemplated
hereby.
2.14 Taxes. Except as set forth on the Schedule of Exceptions, (a)
The Company has timely filed all tax returns (federal, state and local) required
to be filed by it and all Taxes (as defined below), assessments and other
government charges imposed upon the Company, or upon any of the assets, income
or franchises of the Company, have been timely paid or, if not yet payable, are
adequately accrued on the Company's books and records; (b) there are no actual
or proposed Tax deficiencies, assessments or adjustments with respect to the
Company or any assets or operations of the Company; (c) no consent has been
given with respect to the Company to extend the time in which any Tax may be
assessed or collected by any taxing authority; (d) there are no ongoing or
pending Tax audits by any taxing authority against the Company; (e) the Company
has never filed a consent relating to any assets or property pursuant to Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"), relating
to collapsible corporations; and (f) none of the assets or income items of the
Company has been or potentially is subject to Tax under Code Section 1374 (or
any corresponding provision of state, local or foreign law). "Tax" or "Taxes"
means any federal, state, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall, profits, environmental, customs, capital stock, franchise, employees'
income withholding, foreign or domestic withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, alternative or add-on minimum or other similar tax,
governmental fee, governmental assessment or governmental charge of any kind
whatsoever, including any interest, penalties or additions to Tax or additional
amounts with respect to the foregoing.
2.15 Permits. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as planned to be conducted. The
Company is not in default in any material respect under any of such franchises,
permits, licenses, or other similar authority.
2.16 Disclosure. The Company has fully provided Purchaser with all
the information that such Purchaser has requested for deciding whether to
purchase the Common Stock and all information that the Company believes is
reasonably necessary to enable such Purchaser to make such decision. Neither
this Agreement, the Rights Agreement, the Voting Agreement, the Co-sale
Agreement nor any other statements or certificates made or delivered in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading.
2.17 Registration Rights. Except as provided in the Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.18 Corporate Documents. Except for amendments necessary to
satisfy representations and warranties or conditions contained herein (the form
of which amendments
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has been approved by Purchaser), the Restated Certificate and Bylaws of the
Company are in the form attached hereto as Exhibits A and E, respectively. The
minute books of the Company provided to Purchaser contain a complete summary of
all meetings of directors and stockholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.19 Title to Property and Assets. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens that arise in the ordinary course of
business, none of which, individually or in the aggregate, materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases and
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.20 Manufacturing and Marketing Rights. The Company has not
granted rights to manufacture, produce, assemble, license, market or sell its
products to any person and is not bound by any agreement that affects the
Company's exclusive right to develop, manufacture, assemble, distribute, market
or sell its products.
2.21 Section 83(b) Elections. All individuals who have purchased
unvested shares of the Company's Common Stock have timely filed elections under
Section 83(b) of the Code and any analogous provisions of applicable state tax
laws.
2.22 Qualified Small Business Stock. As of and immediately
following the date hereof: (i) the Company will be a domestic C corporation,
(ii) the Company's (and any predecessor's) aggregate gross assets, as defined by
Code Section 1202(d)(2), at no time between inception of the Company through the
date hereof, have exceeded $50 million, taking into account the assets of any
corporations required to be aggregated with the Company in accordance with Code
Section 1202(d)(3), (iii) the Company has not purchased more than five percent
(5%) of its own stock as described in Code Section 1202(c)(3)(B) during the
one-year period preceding the date hereof, (iv) the Company is an eligible
corporation, as defined by Code Section 1202 (e) (4), and (v) as of the Initial
Closing, at least eighty percent (by value) of the assets of the Company will,
in accordance with Code Section 1202(e)(6), be considered to be used in the
active conduct of a qualified trade or business.
3. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants that:
3.1 Authorization. Such Purchaser has full power and authority to
enter into this Agreement and the Rights Agreement, and each such agreement
constitutes its valid and legally binding obligation, enforceable in accordance
with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Rights Agreement may be limited by applicable federal or state securities
laws.
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<PAGE> 11
3.2 Purchase Entirely for Own Account. This Agreement is made with
such Purchaser in reliance upon such Purchaser's representation to the Company,
which by such Purchaser's execution of this Agreement such Purchaser hereby
confirms, that the Common Stock to be received by such Purchaser (collectively,
the "Securities") will be acquired for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that such Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, such Purchaser further represents that
such Purchaser does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Securities.
3.3 Disclosure of Information. Such Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Common Stock. Such Purchaser further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and the
business, properties, prospects and financial condition of the Company. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of Purchaser to rely
thereon.
3.4 Investment Experience. Such Purchaser is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Common
Preferred Stock. If other than an individual, Purchaser also represents it has
not been organized for the purpose of acquiring the Common Stock.
3.5 Accredited Investor. Such investor is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Purchaser understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Purchaser represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Purchaser further agrees not
to make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 3 and the Rights Agreement provided:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
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<PAGE> 12
(b) (i) Such Purchaser shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of Paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by an Purchaser that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his or her spouse or to
the siblings, lineal descendants or ancestors of such partner or his or her
spouse, if the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he or she were an original Purchaser hereunder.
3.8 Legends. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
4. Conditions of Purchaser's Obligations at Closing. The
obligations of Purchaser under subsection 1.1(c) of this Agreement are subject
to the fulfillment on or before the Closing of each of the following conditions,
the waiver of which shall not be effective against any Purchaser who does not
consent thereto:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
4.3 Officer's Certificates. The Company shall have delivered to
Purchaser all of the following documents:
(a) A Compliance Certificate, dated the date of the Closing,
stating that the conditions specified in Sections 5.1 and 5.2 have been
fulfilled and stating that there
9
<PAGE> 13
shall have been no adverse change in the business, affairs, operations,
properties, assets or condition of the Company since the date of the Company's
formation;
(b) Certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of this Agreement, the Rights Agreement, the Voting Agreement, the Co-sale
Agreement and each of the other agreements contemplated hereby, the filing of
the amendment and restatement of the Restated Certificate, the adoption of the
Company's bylaws, the issuance and sale of the Common Stock and the consummation
of all other transactions contemplated by this Agreement;
(c) Certified copies of the Restated Certificate and the
Company's bylaws, each as in effect at the Closing;
(d) Certificates of good standing issued by the secretary of
state for each state where the Company is authorized to do business; and
(e) Copies of all third party and governmental consents,
approvals and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law filings
and waivers of all preemptive rights and rights of first refusal).
4.4 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
4.5 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser's special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.6 Proprietary Information and Inventions Agreement. Each
employee of and consultant to the Company shall have entered into a Proprietary
Information and Inventions Agreement in the form previously provided to special
counsel for Purchaser.
4.7 Board of Directors. The directors of the Company shall be
Messrs. Berman, Beveridge, Brody, Eisenberg, Patmore, Tamer, and a
representative designated by HIG Capital Management.
4.8 Rights Agreement. The Company and Purchaser shall have entered
into the Rights Agreement.
4.9 Voting Agreement. The Company, LTCW, Messrs. Beveridge and
Tamer, and certain investors of the Company shall have entered into the Voting
Agreement.
4.10 Co-Sale Agreement. The Company, Purchaser, Messrs Beveridge
and Tamer, and certain investors of the Company shall have entered into the
Co-Sale Agreement.
10
<PAGE> 14
4.11 Operating Agreement. The Company and Purchaser shall have
entered into a binding Letter of Intent relating to an operating agreement in a
form satisfactory to Purchaser.
4.12 License Agreement. The Company and Purchaser shall have
entered into a license agreement in a form satisfactory to Purchaser (the
"License Agreement").
4.13 Employment Agreements. The Company and each of Delly Tamer
and Brett Beveridge shall have entered into an employment agreement in a form
satisfactory to Purchaser.
4.14 Sale and Issuance of Series A Preferred Stock. The Company
shall have sold and issued 8,000,000 shares of Series A Preferred Stock.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to Purchaser under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by
Purchaser:
5.1 Representations and Warranties. The representations and
warranties of Purchaser contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Payment of Purchase Price. The Purchaser shall have delivered
the purchase price specified in Section 1.2.
5.3 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6. Miscellaneous.
6.1 Survival. The warranties, representations and covenants of the
Company and Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of Purchaser or the Company.
6.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
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<PAGE> 15
6.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
6.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Purchaser agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which Purchaser or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless Purchaser from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
6.8 Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees of special counsel for Purchaser, not to exceed $15,000, and shall, upon
receipt of a bill therefor, reimburse the reasonable out-of-pocket expenses of
such counsel. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Rights Agreement, the Voting
Agreement, Co-Sale Agreement or the Restated Certificate, the prevailing party
shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
6.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Purchaser. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
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<PAGE> 16
6.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.11 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
6.12 Aggregation of Stock. All shares of the Common Stock held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
6.13 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
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<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, CA 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------------
Name
-----------------------------------------
Title:
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, CA 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------------
Name David H. Eisenberg
-----------------------------------------
Title: CEO
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
COMMON STOCK PURCHASE AGREEMENT
<PAGE> 19
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
<PAGE> 20
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
---------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "WIRELESS NET, INC.", CHANGING ITS NAME FROM "WIRELESS NET, INC."
TO "LETS TALK.COM, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY OF JULY,
A.D. 1999, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/S/ EDWARD J. FREEL
[SEAL] --------------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
3063254 8100 AUTHENTICATION: 9894890
991314343 DATE: 07-29-29
<PAGE> 21
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WIRELESS NET, INC.
(PURSUANT TO SECTIONS 242 AND 245 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
WIRELESS NET, INC., a corporation organized and existing under
and by virtue of the provisions of the General Corporation Law of the State of
Delaware (the "General Corporation Law"),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is WIRELESS NET, INC.
and that this corporation was originally incorporated pursuant to the General
Corporation Law on June 29, 1999 under the name WIRELESS NET, INC.
SECOND: That the Board of Directors duly adopted resolutions
proposing to amend and restate the Certificate of Incorporation of this
corporation, declaring said amendment and restatement to be advisable and in the
best interests of this corporation and its stockholders, and authorizing the
appropriate officers of this corporation to solicit the consent of the
stockholders therefor, which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this
corporation be amended and restated in its entirety as follows:
ARTICLE I
The name of this corporation is LetsTalk.com, Inc.
ARTICLE II
The address of the registered office of this corporation in
the State of Delaware is 15 E. North Street, in the City of Dover, County of
Kent. The name of its registered agent at such address is Incorporating
Services, Ltd.
ARTICLE III
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
EILED 09:00AM 07/29/1999
991314363 - 3063254
<PAGE> 22
ARTICLE IV
A. Classes of Stock. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares that this corporation is authorized to issue
is Forty-Eight Million (48,000,000) shares. Thirty-Six Million (36,000,000)
shares shall be Common Stock and Twelve Million (12,000,000) shares shall be
Preferred Stock, each with a par value of $0.0001 per share.
B. Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Restated Certificate of Incorporation may be
issued from time to time in one or more series. The rights, preferences,
privileges, and restrictions granted to and imposed on the Series A Preferred
Stock, which series shall consist of Eight Million Eight Hundred Thousand
(8,800,000) shares (the "Series A Preferred Stock"), are as set forth below in
this Article IV(B). The Board of Directors is hereby authorized to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
additional series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or of any of them. Subject to
compliance with applicable protective voting rights that have been or may be
granted to the Preferred Stock or series thereof in Certificates of Designation
or this corporation's Certificate of Incorporation ("Protective Provisions"),
but notwithstanding any other rights of the Preferred Stock or any series
thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase or decrease the number of
shares of any series (other than the Series A Preferred Stock), prior or
subsequent to the issue of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
that they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
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<PAGE> 23
1. Dividend Provisions. The holders of shares of Series A
Preferred Stock shall be entitled to receive dividends, out of any assets
legally available therefor, prior and in preference to any declaration or
payment of any dividend (payable other than in Common Stock or other securities
and rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of this corporation) on the
Common Stock of this corporation, at the rate of $0.20 per share per annum for
the Series A Preferred Stock (as adjusted for any stock splits, stock dividends,
recapitalizations or the like) or, if greater (as determined on a per annum
basis and on an as converted basis for the Series A Preferred Stock), an amount
equal to that paid on any other outstanding shares of this corporation, payable
when, as, and if declared by the Board of Directors. Such dividends shall not be
cumulative. The holders of the outstanding Series A Preferred Stock can waive
any dividend preference that such holders shall be entitled to receive under
this Section 1 upon the affirmative vote or written consent of the holders of at
least a majority of the Series A Preferred Stock then outstanding.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of
this corporation, either voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of this corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of (i) $2.50 for each outstanding share of Series A Preferred Stock (the
"Original Series A Issue Price") and (ii) declared but unpaid dividends on such
share (subject to adjustment of such fixed dollar amounts for any stock splits,
stock dividends, combinations, recapitalizations or the like). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of this corporation legally available for distribution
shall be distributed ratably among the holders of the Series A Preferred Stock
in proportion to the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution required by subsection
(a) of this Section 2 and any other distribution that may be required with
respect to series of Preferred Stock that may from time to time come into
existence, the remaining assets of this corporation available for distribution
to stockholders shall be distributed among the holders of Series A Preferred
Stock and Common Stock pro rata based on the number of shares of Common Stock
held by each (assuming full conversion of all such Series A Preferred Stock)
until with respect to the holders of Series A Preferred Stock, such holders
shall have received an aggregate of $5.00 per share (as adjusted for any stock
splits, stock dividends, recapitalizations or the like) (including amounts paid
pursuant to subsection (a) of this Section 2).
(c) Upon the completion of the distribution required by
subsections (a) and (b) of this Section 2 and any other distribution that may be
required with respect to series of Preferred Stock that may from time to time
come into existence, if assets remain in this corporation, the holders of the
Common Stock of this corporation, shall receive an amount equal to $5.00 per
share (as adjusted for any stock splits, stock dividends, recapitalizations or
the like) (including amounts paid pursuant to subsection (b) of this Section 2);
thereafter, if assets remain in this corporation, all of the remaining assets of
this corporation available for distribution to
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<PAGE> 24
stockholders shall be distributed among the holders of Series A Preferred Stock
and Common Stock pro rata based on the number of shares of Common Stock held by
each (assuming full conversion of all such Series A Preferred Stock).
(d) For purposes of this Section 2, a liquidation, dissolution or
winding up of this corporation shall be deemed to be occasioned by, or to
include (unless the holders of at least a majority of the Series A Preferred
Stock then outstanding shall determine otherwise), (A) the acquisition of this
corporation by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) or more of
the outstanding voting power of this corporation; or (B) a sale of all or
substantially all of the assets of this corporation.
(i) In any of such events, if the consideration received by
this corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the thirty (30)
day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
closing; and
(C) If there is no active public market, the value shall
be the fair market value thereof, as mutually determined by this corporation and
the holders of at least a majority of the voting power of all then outstanding
shares of Preferred Stock.
(ii) In the event the requirements of this subsection 2(d) are
not complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time
as the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Series A Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in subsection
2(d)(iv) hereof.
(iii) This corporation shall give each holder of record of
Series A Preferred Stock written notice of such impending transaction not later
than twenty (20) days prior to the stockholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 2, and this corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after this corporation has
4
<PAGE> 25
given the first notice provided for herein or sooner than ten (10) days after
this corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock that are entitled to such notice rights or
similar notice rights and that represent at least a majority of the voting power
of all then outstanding shares of such Preferred Stock.
3. Redemption.
(a) At any time from July 28, 2006 through October 28, 2006,
upon the receipt by this corporation of a written request from the holders of
not less than a majority of the then outstanding Series A Preferred Stock that
all, but not less than all, of the shares of Series A Preferred Stock be
redeemed, and concurrently with surrender by such holders of the certificates
representing such shares, this corporation shall, within ninety (90) days of
such request and to the extent it may lawfully do so, redeem in three (3) annual
installments (each payment date being referred to herein as a "Redemption Date")
the shares of Series A Preferred Stock by paying in cash therefor a sum per
share equal to $2.50 per share of Series A Preferred Stock (as adjusted for any
stock splits, stock dividends, recapitalizations or the like) plus all declared
but unpaid dividends on such share (the "Series A Redemption Price"). The number
of shares of Series A Preferred Stock that this corporation shall be required to
redeem on any one Redemption Date shall be equal to the amount determined by
dividing (i) the aggregate number of shares of Series A Preferred Stock
outstanding immediately prior to such Redemption Date by (ii) the number of
remaining Redemption Dates (including the Redemption Date to which such
calculation applies). Any redemption of Series A Preferred Stock effected
pursuant to this subsection 3(a) shall be made on a pro rata basis among the
holders of the Series A Preferred Stock in proportion to the number of shares of
Series A Preferred Stock.
(b) At least fifteen (15) but no more than thirty (30) days
prior to each Redemption Date, written notice shall be mailed, first class
postage prepaid, to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the Series A
Preferred Stock to be redeemed, at the address last shown on the records of this
corporation for such holder, notifying such holder of the redemption to be
effected on the applicable Redemption Date, specifying the number of shares to
be redeemed from such holder, the Redemption Date, the Redemption Price, the
place at which payment may be obtained and calling upon such holder to surrender
to this corporation, in the manner and at the place designated, his, her or its
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice"). Except as provided in subsection (3)(c), on or after each
Redemption Date, each holder of Series A Preferred Stock to be redeemed on such
Redemption Date shall surrender to this corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the applicable Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(c) From and after each Redemption Date, unless there shall
have been a default in payment of the Redemption Price, all rights of the
holders of shares of Series A Preferred Stock designated for redemption on such
Redemption Date in the Redemption Notice
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<PAGE> 26
as holders of Series A Preferred Stock (except the right to receive the
applicable Redemption Price without interest upon surrender of their certificate
or certificates) shall cease with respect to such shares, and such shares shall
not thereafter be transferred on the books of this corporation or be deemed to
be outstanding for any purpose whatsoever. If the funds of this corporation
legally available for redemption of shares of Series A Preferred Stock on a
Redemption Date are insufficient to redeem the total number of shares of Series
A Preferred Stock to be redeemed on such date, those funds that are legally
available will be used to redeem the maximum possible number of such shares
ratably among the holders of such shares to be redeemed such that each holder of
a share of Series A Preferred Stock receives the same percentage of the
applicable Series A Redemption Price. The shares of Series A Preferred Stock not
redeemed shall remain outstanding and entitled to all the rights and preferences
provided herein. At any time thereafter when additional funds of this
corporation are legally available for the redemption of shares of Series A
Preferred Stock, such funds will immediately be used to redeem the balance of
the shares that this corporation has become obliged to redeem on any Redemption
Date but that it has not redeemed.
4. Conversion. The holders of the Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any time after the date
of issuance of such share and on or prior to the fifth day prior to the
Redemption Date, if any, as may have been fixed in any Redemption Notice with
respect to such share of the Series A Preferred Stock, at the office of this
corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price; provided,
however, that the Conversion Price for the Series A Preferred Stock shall be
subject to adjustment as set forth in subsection 4(d).
(b) Automatic Conversion. Each share of Series A Preferred Stock
shall automatically be converted into shares of Common Stock at the Conversion
Price at the time in effect for such Series A Preferred Stock immediately upon
the earlier of (i) this corporation's sale of its Common Stock in a firm
commitment underwritten public offering at a market valuation of at least
$100,000,000 immediately prior to effectiveness of this corporation's
registration statement and pursuant to a registration statement on Form S-1 or
Form SB-2 under the Securities Act of 1933, as amended, the public offering
price of which is not less than $15,000,000 in the aggregate or (ii) the date
specified by written consent or agreement of the holders of two-thirds of the
then outstanding shares of Series A Preferred Stock.
(c) Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he or she shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice to this corporation at
its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued.
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<PAGE> 27
This corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series A Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
the conversion is in connection with an underwritten offering of securities
registered pursuant to the Securities Act of 1933, the conversion may, at the
option of any holder tendering Series A Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the persons entitled to receive the
Common Stock upon conversion of the Series A Preferred Stock shall not be deemed
to have converted such Series A Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for
Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the
Series A Preferred Stock shall be subject to adjustment from time to time as
follows:
(i) In the event this corporation should at any time or from
time to time after the date upon which any shares of Series A Preferred Stock
were first issued (the "Purchase Date") fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase of the aggregate
of shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(ii) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) Other Distributions. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4(d)(i), then, in
each such case for the purpose of this subsection 4(e), the holders of the
Series A Preferred Stock shall be entitled to a proportionate share of any such
7
<PAGE> 28
distribution as though they were the holders of the number of shares of Common
Stock of this corporation into which their shares of Series A Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of Common Stock of this corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2) provision shall be made so that the holders of the
Series A Preferred Stock shall thereafter be entitled to receive upon conversion
of the Series A Preferred Stock the number of shares of stock or other
securities or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(g) No Impairment. This corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series A Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock pursuant to this Section 4,
this corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustment and
readjustment, (B) the Conversion Price for such series of Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received upon the conversion of
a share of Series A Preferred Stock.
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<PAGE> 29
(i) Notices of Record Date. In the event of any taking by this
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
corporation shall mail to each holder of Series A Preferred Stock, at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock; and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of the
Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Preferred Stock, this corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes, including, without limitation, engaging
in best efforts to obtain the requisite shareholder approval of any necessary
amendment to this Restated Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section
4 to be given to the holders of shares of Series A Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of this
corporation.
5. Voting Rights.
(a) General Voting Rights. The holder of each share of Series A
Preferred Stock shall have the right to one vote for each share of Common Stock
into which such Series A Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the bylaws of this corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. Fractional votes
shall not, however, be permitted and any fractional voting rights available on
an as-converted basis (after aggregating all shares into which shares of Series
A Preferred Stock held by each holder could be converted) shall be rounded to
the nearest whole number (with one-half being rounded upward).
(b) Voting for the Election of Directors. As long as at least a
majority of the shares of Series A Preferred Stock originally issued remain
outstanding, the holders of such shares of Series A Preferred Stock shall be
entitled to elect four (4) directors of this corporation at each annual election
of directors. The holders of Series A Preferred Stock and Common Stock (voting
together as a single class and not as separate series, and on an as-converted
basis) shall be entitled to elect any remaining directors of this corporation.
9
<PAGE> 30
In the case of any vacancy (other than a vacancy caused by removal) in
the office of a director occurring among the directors elected by the holders of
a class or series of stock pursuant to this Section 5(b), the remaining
directors so elected by that class or series may by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting
of such stockholders duly called for that purpose or pursuant to a written
consent of stockholders, and any vacancy thereby created may be filled by the
holders of that class or series of stock represented at the meeting or pursuant
to unanimous written consent.
6. Protective Provisions. So long as any shares of Series A
Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least two-thirds of the then outstanding shares of Series A
Preferred Stock:
(a) sell, convey, or otherwise dispose of all or substantially all
of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of this corporation is disposed of;
(b) increase or decrease (other than by redemption or conversion)
the total number of authorized shares of Series A Preferred Stock;
(c) declare or pay dividends on or make any distribution on
account of the Common Stock;
(d) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over, or being on a parity with, the
Series A Preferred Stock with respect to dividends, liquidation, redemption or
voting;
(e) redeem, purchase or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose) any share or shares of Preferred
Stock or Common Stock; provided, however, that this restriction shall not apply
to (i) the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for this corporation
or any subsidiary pursuant to agreements under which this corporation has the
option to repurchase such shares at cost or at cost upon the occurrence of
certain events, such as the termination of employment; provided further,
however, that the total amount applied to the repurchase of shares of Common
Stock shall not exceed $25,000 during any twelve (12) month period or (ii) the
redemption of any share or shares of Preferred Stock in accordance with Section
3;
10
<PAGE> 31
(f) permit any subsidiary of this corporation to sell its
securities to a third party;
(g) amend this corporation's Certificate of Incorporation to alter
or change the rights, preferences or privileges of the shares of Series A
Preferred Stock; or
(h) change the authorized number of directors of this corporation.
7. Status of Redeemed or Converted Stock. In the event any shares
of Series A Preferred Stock shall be redeemed or converted pursuant to Section 3
or Section 4 hereof, the shares so redeemed or converted shall be cancelled and
shall not be issuable by this corporation. The Restated Certificate of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in this corporation's authorized capital stock.
C. Common Stock. The rights, preferences, privileges and
restrictions granted to and imposed on the Common Stock are as set forth below
in this Article IV(C).
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of this corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or
winding up of this corporation, the assets of this corporation shall be
distributed as provided in Section 2 of Division (B) of Article IV hereof.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote for each such share, and shall be entitled to notice
of any stockholders' meeting in accordance with the bylaws of this corporation,
and shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
Except as otherwise provided in this Certificate of
Incorporation, in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed
from time to time by a bylaw or amendment thereof duly adopted by the Board of
Directors or by the stockholders.
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<PAGE> 32
ARTICLE VII
Elections of directors need not be by written ballot unless
the Bylaws of this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of this corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent
permitted by the General Corporation Law as it now exists or as it may hereafter
be amended, not be personally liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to this
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law, or (iv) for any transaction from
which the director derived any improper personal benefit. If the General
Corporation Law is amended, after approval by the stockholders of this Article,
to authorize corporation action further eliminating or limiting the personal
liability of directors, then the liability of a director of this corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law, as so amended.
Any amendment, repeal or modification of this Article IX, or
the adoption of any provision of this Amended and Restated Certificate of
Incorporation inconsistent with this Article IX, by the stockholders of this
corporation shall not apply to or adversely affect any right or protection of a
director of this corporation existing at the time of such amendment, repeal,
modification or adoption.
ARTICLE X
This corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE XI
To the fullest extent permitted by applicable law, this
corporation is authorized to provide indemnification of (and advancement of
expenses to) agents of this corporation (and any other persons to which General
Corporation Law permits this corporation to provide indemnification) through
bylaw provisions, agreements with such agents or other persons, vote of
stockholders or disinterested directors or otherwise, in excess of the
indemnification and advancement otherwise permitted by Section 145 of the
General Corporation Law, subject only to limits created by applicable General
Corporation Law (statutory or non-statutory), with respect to actions for breach
of duty to this corporation, its stockholders, and others.
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<PAGE> 33
Any amendment, repeal or modification of the foregoing
provisions of this Article XI shall not adversely affect any right or protection
of a director, officer, agent, or other person existing at the time of, or
increase the liability of any director of this corporation with respect to any
acts or omissions of such director, officer or agent occurring prior to, such
amendment, repeal or modification.
* * *
THIRD: The foregoing amendment and restatement was approved by
the holders of the requisite number of shares of said corporation in accordance
with Section 228 of the General Corporation Law.
FOURTH: That said amendment and restatement was duly adopted
in accordance with the provisions of Section 242 and 245 of the General
Corporation Law.
13
<PAGE> 34
IN WITNESS WHEREOF, this Restated Certificate of Incorporation
has been executed by the President and the Assistant Secretary of this
corporation on this 29th day of July, 1999.
/S/ Delly Tamer
--------------------------------------------------
Delly Tamer, President and Chief Executive Officer
/S/ William E. Growney, Jr.
---------------------------------------------------
William E. Growney, Jr., Assistant Secretary
<PAGE> 35
EXHIBIT B
RIGHTS AGREEMENT
<PAGE> 36
INVESTORS' RIGHTS AGREEMENT
JULY 30, 1999
<PAGE> 37
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Registration Rights...........................................................................................1
1.1 Definitions.........................................................................................1
1.2 Request for Registration............................................................................2
1.3 Company Registration................................................................................4
1.4 Form S-3 Registration...............................................................................5
1.5 Obligations of the Company..........................................................................6
1.6 Information from Holder.............................................................................7
1.7 Expenses of Registration............................................................................7
1.8 Indemnification.....................................................................................8
1.9 Reports Under Securities Exchange Act of 1934......................................................10
1.10 Assignment of Registration Rights.................................................................10
1.11 Limitations on Subsequent Registration Rights.....................................................11
1.12 "Market Stand-Off"Agreement.......................................................................11
1.13 Termination of Registration Rights................................................................11
2. Covenants of the Company.....................................................................................11
2.1 Delivery of Financial Statements...................................................................11
2.2 Inspection.........................................................................................12
2.3 Termination of Information and Inspection Covenants................................................13
2.4 Right of First Offer...............................................................................13
2.5 Key Person Life Insurance..........................................................................14
2.6 Proprietary Information and Inventions Agreement...................................................14
2.7 Employee and Other Stock Arrangements..............................................................14
2.8 Qualified Small Business Stock.....................................................................14
2.9 Termination of Certain Covenants...................................................................15
3. Miscellaneous................................................................................................15
3.1 Successors and Assigns.............................................................................15
3.2 Governing Law......................................................................................15
3.3 Counterparts.......................................................................................15
3.4 Titles and Subtitles...............................................................................15
3.5 Notices............................................................................................15
3.6 Expenses...........................................................................................15
3.7 Entire Agreement: Amendments and Waivers...........................................................15
3.8 Severability.......................................................................................16
3.9 Aggregation of Stock...............................................................................16
</TABLE>
i
<PAGE> 38
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 30th day of
July, 1999, by and among LetsTalk.com, Inc., a Delaware corporation (the
"Company"), the investors listed on Schedule A hereto, each of which is herein
referred to as an "Investor," the holders of Common Stock listed on Schedule B
hereto, each of which is herein referred to as a "Common Holder," and the
founders listed on Schedule C hereto, each of which is herein referred to as a
"Founder."
RECITALS
WHEREAS, the Company and the Investors are parties to the
Series A Preferred Stock Purchase Agreement of even date herewith (the "Series A
Agreement");
WHEREAS, the Company and Let's Talk Cellular & Wireless, Inc.,
a Florida corporation ("LTC"), are parties to a license agreement and a binding
Letter of Intent with the Company which provide for, among other things, the
purchase of shares of Common Stock of the Company by LTC, the license by LTC of
certain technology to the Company and the provision of certain services for the
Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement of
even date herewith (the "Common Stock Purchase Agreement") which provides for,
among other things, the purchase by HIG of shares of Common Stock of the
Company; and
WHEREAS, in order to induce the Company, the Founders and the
Common Holder to approve the issuance of the Series A Preferred Stock to induce
the Investors to invest funds in the Company pursuant to the Series A Agreement,
to provide further inducement to LTC to enter into the LTC Agreements and
purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder, Investors, the
Founders, the Common Holder and the Company hereby agree that this Agreement
shall govern the rights of the Investors and the Common Holder to cause the
Company to register shares of Common Stock issued or issuable to them and
certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act
as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other
<PAGE> 39
documents filed by the Company with the SEC; provided, however, that Form S-3
shall not be deemed to include Form S-2 under the Act as in effect on the date
hereof.
(c) The term "Holder" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.10 hereof.
(d) The term "Initial Offering" means the Company's
first firm commitment underwritten public offering of its Common Stock under the
Act.
(e) The term "1934 Act" means the Securities Exchange
Act of 1934, as amended.
(f) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(g) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series A Preferred Stock,
(ii) the shares of Common Stock issued to the Common Holder; and (iii) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of,
the shares referenced in (i) and (ii) above, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned.
(h) The number of shares of "Registrable Securities"
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(i) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 Request for Registration.
(a) Subject to the conditions of this Section 1.2, if
the Company shall receive at any time six (6) months after the effective date of
the Initial Offering, a written request from the Holders of fifty percent (50%)
or more of the Registrable Securities then outstanding (the "Initiating
Holders") that the Company file a registration statement under the Act covering
the registration of Registrable Securities with an anticipated aggregate
offering price of at least $7,500,000, then the Company shall, within twenty
(20) days of the receipt thereof, give written notice of such request to all
Holders, and subject to the limitations of this Section 1.2, use all reasonable
efforts to effect, as soon as practicable, the registration under the Act of all
Registrable Securities that the Holders request to be registered in a written
request received by the Company within twenty (20) days of the mailing of the
Company's notice pursuant to this Section 1.2(a).
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<PAGE> 40
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Initiating Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities underwritten (including Registrable Securities), then the Company
shall so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in
the underwriting shall be allocated only to the Holders of such Registrable
Securities, on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 1.2:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required under the Act; or
(ii) after the Company has effected three (3)
registrations pursuant to this Section 1.2, and such registrations have been
declared or ordered effective; or
(iii) during the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of the
filing of, and ending on a date one hundred eighty (180) days following the
effective date of, a registration subject to Section 1.3 below, provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iv) if the Initiating Holders propose to dispose
of Registrable Securities that may be registered on Form S-3 pursuant to Section
1.4 hereof; or
(v) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Company's Chief Executive Officer or Chairman of the Board stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be effected at such time, in which event the Company
shall have the right to defer such filing for a period of not more than one
hundred
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twenty (120) days after receipt of the request of the Initiating Holders,
provided that such right to delay a request shall be exercised by the Company
not more than once in any twelve (12)-month period.
1.3 Company Registration.
(a) If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.3(c), use all reasonable efforts to cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.
(b) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 1.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration. The expenses
of such withdrawn registration shall be borne by the Company in accordance with
Section 1.7 hereof.
(c) Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters) and enter into an
underwriting agreement in customary form with an underwriter or underwriters
selected by the Company, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling Holders according to the total amount of securities entitled
to be included therein owned by each selling Holder or in such other proportions
as shall mutually be agreed to by such selling Holders), but in no event shall
(i) the amount of securities of the selling Holders included in the offering be
reduced below twenty percent (20%) of the total amount of securities included in
such offering, unless such offering is the initial public offering of the
Company's
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<PAGE> 42
securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other shareholder's
securities are included, (ii) the amount of securities of the selling Holders
included in the offering be reduced until all securities held by employees of
the Company or, after exclusion of all of any such employees' shares, other
stockholders of the Company have first been excluded from such offering, or
(iii) notwithstanding (i) or (ii) above, any shares being sold by a shareholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder that is a Holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling Holder,"
and any pro rata reduction with respect to such "selling Holder" shall be based
upon the aggregate amount of Registrable Securities owned by all such related
entities and individuals.
1.4 Form S-3 Registration. In case the Company shall receive
from the Holders of at least fifteen percent (15%) of the Registrable Securities
a written request or requests that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all reasonable efforts to effect, as soon as
practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company, provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.4:
(i) if Form S-3 is not available for such
offering by the Holders;
(ii) if the Holders, together with the holders of
any other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $2,500,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer or Chairman of the Board of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days
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<PAGE> 43
after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period;
(iv) if the Company has, within the twelve (12)
month period preceding the date of such request, already effected two
registrations on Form S-3 for the Holders pursuant to this Section 1.4; or
(v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as requests for registration effected pursuant
to Section 1.2.
1.5 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred twenty (120) days or, if earlier, until the distribution contemplated in
the Registration Statement has been completed;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(c) furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them;
(d) use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering, which
obligations shall include providing customary
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<PAGE> 44
opinions of legal counsel and letters from accountants and paying certain
customary travel expenses in connection with the underwriters sales efforts;
(f) notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(g) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
1.6 Information from Holder. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7 Expenses of Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of one counsel for the selling Holders
shall be borne by the Company. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 or Section 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be requested in the withdrawn registration), unless, in
the case of a registration requested under Section 1.2, the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2, provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2 or 1.4. The
Company shall pay all legal expenses in connection with the preparation of
opinions of counsel necessary for sales of Registrable Securities pursuant to
Rule 144 of the Act unless counsel for the Company provides such opinions.
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1.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
shareholders of each Holder, legal counsel and accountants for each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Act, the 1934 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities laws or any rule or regulation promulgated under the Act, the
1934 Act or any state securities laws; and the Company will reimburse each such
Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection l.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided further, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom the
person asserting any such losses, claims, damages or liabilities purchased
shares in the offering, if a copy of the prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Holder or underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the shares to such person, and if the
prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, legal counsel and
accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information
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<PAGE> 46
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any person intended to be indemnified
pursuant to this subsection l.8(b), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.8(b) exceed the net proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section
1.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered
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<PAGE> 47
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this
Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.9 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the Initial Offering;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.10 Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities that (i) is a subsidiary, parent, partner, limited
partner, retired partner or shareholder of, or partnership under common control
with, a Holder, (ii) is a pledgee, or assignee of such pledgee, of Holder
pursuant to a bona fide loan transaction, (iii) is a Holder's family member or
trust for the benefit of an individual Holder, or (iv) after such assignment or
transfer, holds at least 100,000 shares of Registrable Securities (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided: (a) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.12 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.
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1.11 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
1.12 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it will not, without the prior written consent of the managing underwriter,
during the period commencing on the date of the final prospectus relating to the
Company's initial public offering and ending on the date specified by the
Company and the managing underwriter (such period not to exceed one hundred
eighty (l80) days) (i) lend, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are then owned by the Holder or are thereafter acquired), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The underwriters in connection with the Company's initial public
offering are intended third party beneficiaries of this Section 1.12 and shall
have the right, power and authority to enforce the provisions hereof as though
they were a party hereto.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Provided, that this Section 1.12 shall not apply to transfers
of securities by Holders to is a pledgee, or assignee of such pledgee, of Holder
pursuant to a bona fide loan transaction existing as of the date of such final
prospectus.
1.13 Termination of Registration Rights. No Holder shall be
entitled to exercise any right provided for in this Section 1 after five (5)
years following the consummation of the Initial Offering or, as to any Holder,
such earlier time at which all Registrable Securities held by such Holder (and
any affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three (3)-month period without registration in
compliance with Rule 144 of the Act.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall
deliver to each Investor and Common Holder:
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(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
shareholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement, statement of
cash flows for such fiscal quarter and an unaudited balance sheet as of the end
of such fiscal quarter.
(c) within thirty (30) days of the end of each month, an
unaudited income statement and statement of cash flows and balance sheet for and
as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event at least
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year, prepared on a monthly basis, including balance
sheets, income statements and statements of cash flows for such months and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company certifying that such financials
were prepared in accordance with GAAP consistently applied with prior practice
for earlier periods (with the exception of footnotes that may be required by
GAAP) and fairly present the financial condition of the Company and its results
of operation for the period specified, subject to year-end audit adjustment; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or Common Holder or any assignee of thereof may from time to time
request, provided, however, that the Company shall not be obligated under this
subsection (f) or any other subsection of Section 2.1 to provide information
that it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each Investor or
Common Holder that holds at least 500,000 shares of Series A Preferred Stock
(and/or Common Stock issued upon conversion thereof) or Common Stock, at such
Investor's or Common Holder's expense, to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor or Common Holder; provided,
however, that the Company shall not be obligated pursuant to this Section 2.2 to
provide access to any information that it reasonably considers to be a trade
secret or similar confidential information.
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2.3 Termination of Information and Inspection Covenants. The
covenants set forth in Sections 2.1 and 2.2 shall terminate and be of no further
force or effect when the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the firm commitment
underwritten offering of its securities to the general public is consummated or
when the Company first becomes subject to the periodic reporting requirements of
Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
specified in this paragraph 2.4, the Company hereby grants to each Major
Investor (as hereinafter defined) a right of first offer with respect to future
sales by the Company of its Shares (as hereinafter defined). For purposes of
this Section 2.4, a Major Investor shall mean any Investor or transferee that
holds at least 100,000 shares of Series A Preferred Stock (or the Common Stock
issued upon conversion thereof) issued pursuant to the Series A Agreement (as
adjusted for stock splits, stock dividends, combinations and other
recapitalizations) or Common Holder or Founder that holds at least 100,000
shares of Common Stock. For purposes of this Section 2.4, Investor or Common
Holder includes any general partners and affiliates of such Investor or Common
Holder. An Investor or Common Holder shall be entitled to apportion the right of
first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exchangeable or exercisable for any shares of,
any class of its capital stock ("Shares"), the Company shall first make an
offering of such Shares to each Major Investor in accordance with the following
provisions.
(a) The Company shall deliver a notice in accordance with
Section 3.5 ("Notice") to the Major Investors stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered,
and (iii) the price and terms upon which it proposes to offer such Shares.
(b) By written notification received by the Company,
within twenty (20) calendar days after receipt of the Notice, the Major Investor
may elect to purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares that equals the proportion that the
number of shares of Common Stock issued and held, or issuable upon conversion of
the Series A Preferred Stock then held, by such Major Investor bears to the
total number of shares of Common Stock of the Company then outstanding (assuming
full conversion of all convertible securities excluding unvested options).
(c) If all Shares that Investors or Common Holders are
entitled to obtain pursuant to subsection 2.4(b) are not elected to be obtained
as provided in subsection 2.4(b) hereof, the Company may, during the ninety (90)
day period following the expiration of the period provided in subsection 2.4(b)
hereof, offer the unsubscribed portion of such Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within ninety (90) days of the execution thereof, the right provided
hereunder shall be deemed to
13
<PAGE> 51
be revived and such Shares shall not be offered unless first reoffered to the
Major Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.4 shall
not be applicable to (i) the issuance or sale of up to 5,000,000 shares of
Common Stock pursuant to the 1999 Stock Plan (or options therefor) to employees,
directors and consultants for the primary purpose of soliciting or retaining
their services; (ii) the issuance of securities pursuant to a bona fide, firmly
underwritten public offering of shares of Common Stock, registered under the
Act, resulting in proceeds to the Company of at least $25,000,000 in the
aggregate, (iii) the issuance of securities pursuant to the conversion or
exercise of convertible or exercisable securities, (iv) the issuance of
securities to a seller of a business in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise, or (v) the issuance of stock,
warrants or other securities or rights to persons or entities with which the
Company has business relationships provided such issuances are unanimously
approved by the Company's Board of Directors.
2.5 Key Person Life Insurance. The Company has as of the date
hereof or shall within 90 days of the date hereof use its best efforts to obtain
from financially sound and reputable insurers term life insurance on the life of
Delly Tamer in the amount of $1,000,000, except as otherwise decided in
accordance with policies adopted by the Company's Board of Directors. The
Company will cause to be maintained the term life insurance required by this
Section 2.5 hereof, except as otherwise decided in accordance with policies
adopted by the Company's Board of Directors. Such policies shall name the
Company as loss payee and shall not be cancelable by the Company without prior
approval of the Board of Directors.
2.6 Proprietary Information and Inventions Agreement. The
Company will cause each person now or hereafter employed by it or any subsidiary
with access to confidential information to enter into a proprietary information
and inventions agreement substantially in the form approved by the Board of
Directors.
2.7 Employee and Other Stock Arrangements. The Company will
not, without the approval of the Board of Directors, issue any of its capital
stock, or grant an option or rights to subscribe for, purchase or acquire any of
its capital stock, to any employee, consultant, officer or director of the
Company or a subsidiary except for the issuance of up to 5,000,000 shares of
Common Stock pursuant to the Company's 1999 Stock Plan. Each acquisition of any
shares of capital stock of the Company or any option or right to acquire any
shares of capital stock of the Company by an employee, officer or director of
the Company will be conditioned upon the execution and delivery by the Company
and such employee, officer or director of an agreement substantially in a form
approved by the Board of Directors of the Company.
2.8 Qualified Small Business Stock. The Company shall comply
with the reporting and record keeping requirements of Section 1202 of the Code,
any regulations promulgated thereunder and any similar state laws and
regulations, and agrees not to repurchase any stock of the Company if such
repurchase would constitute a "significant redemption" within the meaning of
Section 1202(c)(3)(B) of the Code with respect to the Series A Preferred Stock
being purchased hereunder without the consent of the Board of Directors of the
Company. In
14
<PAGE> 52
addition, within thirty days after an Investor's written request therefor, the
Company shall deliver to such Investor a written statement indicating whether
the shares continue to meet the qualifications for "qualified small business
stock" set forth is Section 2.27 of the Series A Agreement.
2.9 Termination of Certain Covenants. The covenants set forth
in Section 2 shall terminate and be of no further force or effect upon the
consummation of the sale of securities pursuant to a bona fide, firmly
underwritten public offering of shares of common stock, registered under the
Act, resulting in proceeds to the Company of at least $25,000,000.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Entire Agreement: Amendments and Waivers. This Agreement
(including the Exhibits hereto, if any) constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof. Any term of this Agreement
15
<PAGE> 53
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities each future holder of all such Registrable Securities,
and the Company.
3.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
16
<PAGE> 54
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
--------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 55
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 56
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
-----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 57
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
-----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 58
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gary S. Wohl
--------------------------------------
Name: Gary S. Wohl
------------------------------------
Title: Partner
-----------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 59
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
General Partner
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 60
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------------
Name: Eisenberg, David
-----------------------------------------
Title: CEO
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 61
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 62
FOUNDERS:
/s/ Delly Tamer
-----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
-----------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 63
FOUNDERS:
-----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
-----------------------------------------
Brett Beveridge
4775 Pine Dr.
Miami, FL 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 64
SCHEDULE A
Schedule of Investors
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
<PAGE> 65
SCHEDULE B
Holders of Common Stock
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
<PAGE> 66
SCHEDULE C
Schedule of Founders
DELLY TAMER
BRETT BEVERIDGE
<PAGE> 67
EXHIBIT C
VOTING AGREEMENT
<PAGE> 68
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered
into as of July 30, 1999, by and among LetsTalk.com, Inc., a Delaware
corporation (the "Company"), the holders of the Company's Series A Preferred
Stock (the "Series A Stock") listed on the Schedule of Investors attached as
Schedule A hereto (the "Investors"), and the holders of Common Stock of the
Company (the "Founders") listed on the Schedule of Founders attached as Schedule
B hereto. The Company, the Founders and the Investors are individually each
referred to herein as a "Party" and are collectively referred to herein as the
"Parties." The Company's Board of Directors is referred to herein as the
"Board."
WITNESSETH:
WHEREAS, the Company and certain of the Investors have entered
into that certain Series A Preferred Stock Purchase Agreement of even date
herewith (the "Purchase Agreement"), which provides for, among other things, the
purchase by the Investors of shares of the Series A Stock;
WHEREAS, the Company and Let's Talk Cellular & Wireless, Inc.,
a Florida corporation and a Founder ("LTC"), are parties to a license agreement
and a binding Letter of Intent with the Company which provide for, among other
things, the purchase of shares of Common Stock of the Company by LTC, the
license by LTC of certain technology to the Company and the provision of certain
services for the Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement of
even date herewith (the "Common Stock Purchase Agreement") which provides for,
among other things, the purchase by HIG of shares of Common Stock of the
Company;
WHEREAS, the Company's Certificate of Incorporation provides
that (a) holders of shares of the Company's Series A Stock, voting together as a
class, shall elect four (4) members of the Board (the "Series A Directors"), and
(b) holders of shares of Common Stock and the holders of shares of Series A
Stock, voting together as a class, shall be entitled to elect the three (3)
remaining members of the Board ("Common Directors"); and
WHEREAS, to induce certain Investors to enter into the
Purchase Agreement and purchase shares of Series A Stock thereunder, to induce
HIG to enter the Common Stock Purchase Agreement and to induce LTC to enter into
the LTC Agreements and purchase shares of Common Stock of the Company
thereunder, the Company and the Founders desire to enter into this Agreement
with such Investors; and
NOW, THEREFORE, in consideration of the foregoing premises and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
1
<PAGE> 69
1. Agreement to Vote. Each Investor, as a holder of Series A Stock,
hereby agrees on behalf of itself and any transferee or assignee of any such
shares of the Series A Stock, to hold all of the shares of Series A Stock
registered in its name (and any securities of the Company issued with respect
to, upon conversion of, or in exchange or substitution of the Series A Stock,
and any other voting securities of the Company subsequently acquired by such
Investor) (hereinafter collectively referred to as the "Investor Shares")
subject to, and to vote the Investor Shares at a regular or special meeting of
stockholders (or by written consent) in accordance with, the provisions of this
Agreement. Each Founder, as a holder of Common Stock of the Company, hereby
agrees on behalf of itself and any transferee or assignee of any such shares of
Common Stock, to hold all of such shares of Common Stock and any other
securities of the Company acquired by such Founder in the future (and any
securities of the Company issued with respect to, upon conversion of, or in
exchange or substitution for such securities) (the "Founder Shares") subject to,
and to vote the Founder Shares at a regular or special meeting of stockholders
(or by written consent) in accordance with, the provisions of this Agreement.
2. Board Size. The holders of Investor Shares and Founder Shares shall
vote at a regular or special meeting of stockholders (or by written consent)
such shares that they own (or as to which they have voting power) to ensure that
the size of the Board shall be set and remain at seven (7) directors; provided,
however, that such Board size may be subsequently increased or decreased
pursuant to an amendment of this Agreement in accordance with Section 15 hereof.
3. Election of Directors.
(a) In any election of directors of the Company to elect the Common
Directors, the Parties holding shares of Series A Stock or Common Stock shall
each vote at any regular or special meeting of stockholders (or by written
consent) such number of shares of Series A Stock or Common Stock then owned by
them (or as to which they then have voting power) as may be necessary to elect
one (1) director nominated by Let's Talk Cellular & Wireless and two (2)
directors that are employees of the Company, one of which directors shall be the
Company's chief executive officer and the other of which shall be Brett
Beveridge for so long as Mr. Beveridge is an employee of the Company and
thereafter shall be an individual designated by the Company's chief executive
officer.
(b) In any election of directors of the Company to elect the Series
A Directors, the Parties holding shares of Series A Stock shall each vote at any
regular or special meeting of stockholders (or by written consent) such number
of shares of Series A Stock then owned by them (or as to which they then have
voting power) as may be necessary to elect two (2) directors nominated by HIG
Capital Management and two (2) directors nominated by Brentwood Venture Capital;
in each case for so long as such Investor or its affiliates own at least fifty
percent (50%) of the Common Stock issued or issuable upon conversion of the
Series A Stock purchased by such Investor pursuant to the Purchase Agreement.
4. Removal. Any director of the Company may be removed from the board
in the manner allowed by law and the Company's Certificate of Incorporation and
Bylaws, but
2
<PAGE> 70
with respect to a director designated pursuant to subsections 3(a)
and 3(b) above, only upon the vote or written consent of the stockholders
entitled to designate such director.
5. Legend on Share Certificates. Each certificate representing any
Shares shall be endorsed by the Company with a legend reading substantially as
follows:
"The Shares evidenced hereby are subject to a Voting Agreement
(a copy of which may be obtained upon written request from the
issuer), and by accepting any interest in such shares the
person accepting such interest shall be deemed to agree to and
shall become bound by all the provisions of said Voting
Agreement."
6. Covenants of the Company. The Company agrees to use its best
efforts to ensure that the rights granted hereunder are effective and that the
Parties hereto enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company's best efforts to cause the nomination and
election of the directors as provided above. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all of the provisions of this Agreement
and in the taking of all such actions as may be necessary, appropriate or
reasonably requested by the holders of a majority of the outstanding voting
securities held by the Parties hereto assuming conversion of all outstanding
securities in order to protect the rights of the Parties hereunder against
impairment.
7. No Liability for Election of Recommended Directors. Neither the
Company, the Founders, the Investors, nor any officer, director, stockholder,
partner, employee or agent of such Party, makes any representation or warranty
as to the fitness or competence of the nominee of any Party hereunder to serve
on the Company's Board by virtue of such Party's execution of this Agreement or
by the act of such Party in voting for such nominee pursuant to this Agreement.
8. Grant of Proxy. Should the provisions of this Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
9. Specific Enforcement. It is agreed and understood that monetary
damages would not adequately compensate an injured Party for the breach of this
Agreement by any Party, that this Agreement shall be specifically enforceable,
and that any breach or threatened breach of this Agreement shall be the proper
subject of a temporary or permanent injunction or restraining order. Further,
each Party hereto waives any claim or defense that there is an adequate remedy
at law for such breach or threatened breach.
10. Execution by the Company. The Company, by its execution in the
space provided below, agrees that it will cause the certificates evidencing the
shares of Common Stock and Series A Stock to bear the legend required by Section
5 herein, and it shall supply, free of charge, a copy of this Agreement to any
holder of a certificate evidencing shares of capital stock of the Company upon
written request from such holder to the Company at its principal office.
3
<PAGE> 71
The parties hereto do hereby agree that the failure to cause the certificates
evidencing the shares of Common Stock and Series A Stock to bear the legend
required by Section 5 herein and/or failure of the Company to supply, free of
charge, a copy of this Agreement as provided under this Section 5 shall not
affect the validity or enforcement of this Agreement.
11. Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
12. Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be sent prepaid registered or certified mail, return
receipt requested, addressed to the other Party at the address shown below or at
such other address for which such Party gives notice hereunder. Such notice
shall be deemed to have been given three (3) days after deposit in the mail.
13. Term. This Agreement shall terminate and be of no further force or
effect upon (a) the Company's sale of its Common Stock in a firm commitment
underwritten public offering at a market valuation of at least $100,000,000
immediately prior to effectiveness of the Company's registration statement and
pursuant to a registration statement on Form S-1 or Form SB-2 under the
Securities Act of 1933, as amended, the public offering price of which is not
less than $15,000,000 in the aggregate), (b) the acquisition of the Company by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of the Company or a sale of all or substantially all of the assets
of the Company, or (c) the written consent of the holders of a majority of the
then outstanding Founders Shares and the holders of a majority of the then
outstanding Preferred Shares.
14. Manner of Voting. The voting of shares pursuant to this Agreement
may be effected in person, by proxy, by written consent, or in any other manner
permitted by applicable law.
15. Amendments and Waivers. Any term hereof may be amended and the
observance of any term hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the holders of a majority of the then outstanding voting securities
held by the Party or Parties for whose benefit such term has been included. Any
amendment or waiver so effected shall be binding upon the Parties hereto.
16. Stock Splits, Stock Dividends, etc. In the event of any issuance of
shares of the Company's voting securities hereafter to any of the Parties hereto
(including, without limitation, in connection with any stock split, stock
dividend, recapitalization, reorganization, or the like), such shares shall
become subject to this Agreement and shall be endorsed with the legend set forth
in Section 5.
17. 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
4
<PAGE> 72
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
18. Binding Effect. In addition to any restriction or transfer that may
be imposed by any other agreement by which any Party hereto may be bound, this
Agreement shall be binding upon the Parties, their respective heirs, successors
and assigns and to such additional individuals or entities that may become
stockholders of the Company and that desire to become Parties hereto.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflicts
of law principles thereof.
20. Entire Agreement. This Agreement is intended to be the sole
agreement of the Parties as it relates to this subject matter and does hereby
supersede all other agreements of the Parties relating to the subject matter
hereof.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5
<PAGE> 73
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
----------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 74
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 75
INVESTORS:
H.I.G. WIRELESS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 76
INVESTORS:
H.I.G. WIRELESS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
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c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, L.P.
By: Brentwood IX Ventures, L.L.C.
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 77
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
General Partner
Address for Notices:
Accel Partners
428 University Avenue
Palto Alto, CA 94301
Attn: Theresia Gouw Ranzetta and
James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 78
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gary W. Wohl
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Name: Gary S. Wohl
----------------------------------------
Title: Partner
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SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 79
FOUNDERS:
/s/ Delly Tamer
--------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
--------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 80
FOUNDERS:
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
4775 Pine Drive
Miami, FL 33143
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 81
FOUNDERS:
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/David H. Eisenberg
---------------------------------------
Name: Eisenberg, David
---------------------------------------
Title: CEO
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 82
FOUNDERS
H.I.G. BRICKELLBAY, INC.
By: /s/
---------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 83
SCHEDULE A
LIST OF INVESTORS
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
<PAGE> 84
SCHEDULE B
LIST OF FOUNDERS
DELLY TAMER
BRETT BEVERIDGE
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
<PAGE> 85
EXHIBIT D
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
<PAGE> 86
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
This RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is entered into as of
the 30th day of July, 1999 by and among LetsTalk.com, Inc., a Delaware
corporation (the "Company"), Let's Talk Cellular & Wireless, Inc., a Florida
corporation ("LTC"), H.I.G. Brickellbay, Inc., a Cayman Islands corporation
("HIG"), Delly Tamer and Brett Beveridge (each, a "Founder"), and the
undersigned holders (the "Purchasers") of Series A Preferred Stock of the
Company (the "Preferred Shares").
W I T N E S S E T H :
WHEREAS, the Company and the Purchasers are parties to the Series A
Preferred Stock Purchase Agreement of even date herewith, pursuant to which the
Purchasers are purchasing shares of the Company's Series A Preferred Stock (the
"Stock Purchase Agreement");
WHEREAS, the Company and LTC are parties to a license agreement and a
binding Letter of Intent with the Company which provide for, among other things,
the purchase of shares of Common Stock of the Company by LTC, the license by LTC
of certain technology to the Company and the provision of certain services for
the Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and HIG are parties to a Common Stock Purchase
Agreement of even date herewith (the "Common Stock Purchase Agreement"), which
provides for, among other things, the purchase by HIG of shares of Common Stock
of the Company;
WHEREAS, the Founders are the beneficial owners of shares of Common
Stock of the Company; and
WHEREAS, the Founders, LTC, HIG and each of the Purchasers (each a
"Stockholder") desire to enter into this Agreement to provide further inducement
to the Purchasers to purchase the Preferred Shares, and Purchasers wish to
provide further inducement to Founders to approve the Stock Purchase Agreement,
to provide further inducement to LTC to enter into the LTC Agreements and
purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth in this Agreement;
THE PARTIES AGREE AS FOLLOWS:
1. Restrictions on Transfer of Shares by Holders. Except as
otherwise provided in this Agreement, each Holder (as defined below) agrees that
it will not sell, assign, transfer, pledge, hypothecate, or otherwise encumber
or dispose of in any way (a "Transfer"), all or any part of or any interest in
the Equity Securities (as defined below) now or hereafter owned
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<PAGE> 87
or held by such Holder. Any Transfer of Equity Securities not made in
conformance with this Agreement shall be null and void, shall not be recorded on
the books of the Company and shall not be recognized by the Company.
2. Definitions.
(a) Equity Securities. For purposes of this Agreement, the
term "Equity Securities" shall mean any securities having voting rights in the
election of the Board of Directors of the Company not contingent upon default,
or any securities evidencing an ownership interest in the Company, or any
securities convertible into or exercisable for any shares of the foregoing, or
any agreement or commitment to issue any of the foregoing.
(b) Holders. For purposes of this Agreement, the term
"Holders" shall mean the Stockholders, or persons who have acquired shares from
any of such persons or their transferees or assignees in accordance with the
provisions of this Agreement.
3. Agreements Among the Company and the Holders.
3.1 Rights of Refusal.
(a) Transfer Notice. If at any time a Holder proposes to
Transfer Equity Securities to one or more third parties, then such Holder (a
"Transferring Holder") shall give the Company and each other Holder written
notice of such Transferring Holder's intention to make the Transfer (the
"Transfer Notice"), which Transfer Notice shall include (i) a description of the
Equity Securities to be transferred ("Offered Shares"), (ii) the identity of the
prospective transferee(s) and (iii) the consideration and the material terms and
conditions upon which the proposed Transfer is to be made. The Transfer Notice
shall certify that the Transferring Holder has received a firm offer from the
prospective transferee(s) and in good faith believes a binding agreement for the
Transfer is obtainable on the terms set forth in the Transfer Notice. The
Transfer Notice shall also include a copy of any written proposal, term sheet or
letter of intent or other agreement or draft thereof relating to the proposed
Transfer.
(b) Company's Option. The Company shall have an option for a
period of ten (10) days from receipt of the Transfer Notice to elect to purchase
the Offered Shares at the same price and subject to the same material terms and
conditions as described in the Transfer Notice. The Company may, by vote of a
majority of the Board of Directors not including directors designated by such
Transferring Holder, exercise such purchase option and, thereby, purchase all
(or a portion of) the Offered Shares by notifying the Transferring Holder in
writing before expiration of the such ten (10) day period as to the number of
such shares which it wishes to purchase. If the Company gives the Transferring
Holder notice that it desires to purchase such shares, then payment for the
Offered Shares shall be by check or wire transfer, against delivery of the
Offered Shares to be purchased at a place agreed upon between the parties and at
the time of the scheduled closing therefor, which shall be no later than
forty-five (45) days after the Company's receipt of the Transfer Notice, unless
the Transfer Notice contemplated a later closing with the prospective third
party transferee(s) or unless the value of the purchase price has not yet been
established pursuant to Section 3.1(e). If the Company fails to purchase all of
the Offered Shares by exercising the option granted in this Section 3.1(b)
within the period
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<PAGE> 88
provided, the Offered Shares shall be subject to the options granted to the
non-transferring Holders (each, a "Non-Transferring Holder") pursuant to this
Agreement.
(c) Additional Transfer Notice. Subject to the Company's right
set forth in Section 3.1(b), if at any time the Transferring Holder proposes a
Transfer, then, after the Company has declined to purchase all, or a portion of,
the Offered Shares, the Transferring Holder shall give each other Holder an
"Additional Transfer Notice" which shall include all of the information and
certifications required in a Transfer Notice and shall additionally identify the
Offered Shares which the Company has declined to purchase (the "Remaining
Shares") and briefly describe such other Holders' rights of first refusal and
co-sale rights with respect to the proposed Transfer.
(d) Holders' Option. The Non-Transferring Holders shall have
an option for a period of ten (10) days from the Holder's receipt of the
Additional Transfer Notice from the Transferring Holder set forth in Section
3.1(c) to elect to purchase their respective pro rata shares of the Remaining
Shares at the same price and subject to the same material terms and conditions
as described in the Additional Transfer Notice. Each such Non-Transferring
Holder may exercise such purchase option and, thereby, purchase all or any
portion of his, her or its pro rata share (with any reallotments as provided
below) of the Remaining Shares, by notifying the Transferring Holder and the
Company in writing, before expiration of the twenty (20) day period as to the
number of such shares which he, she or it wishes to purchase (including any
reallotment). Each Non-Transferring Holder's pro rata share of the Remaining
Shares shall be a fraction of the Remaining Shares, of which the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by such Non-Transferring Holder on the
date of the Transfer Notice shall be the numerator and the total number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) held by the Transferring Holder and all other
Non-Transferring Holders on the date of the Transfer Notice shall be the
denominator. Each Non-Transferring Holder shall have a right of reallotment such
that, if any other Non-Transferring Holder fails to exercise the right to
purchase its full pro rata share of the Remaining Shares, the other
participating Non-Transferring Holders may exercise an additional right to
purchase, on a pro rata basis, the Remaining Shares not previously purchased.
Each Non-Transferring Holder shall be entitled to apportion Remaining Shares to
be purchased among its partners and affiliates, provided that such apportionment
does not cause the Company to be subject to the public company reporting
requirements under the Securities Exchange Act, of 1934, as amended) number of
partners and affiliates not exceed ten, and provided further that such
Non-Transferring Holder notifies the Transferring Holder of such allocation. If
a Non-Transferring Holder gives the Transferring Holder notice that it desires
to purchase its pro rata share of the Remaining Shares and, as the case may be,
its reallotment, then payment for the Remaining Shares shall be by check or wire
transfer, against delivery of the Remaining Shares to be purchased at a place
agreed upon between the parties and at the time of the scheduled closing
therefor, which shall be no later than forty-five (45) days after the Company's
receipt of the Transfer Notice, unless the Transfer Notice contemplated a later
closing with the prospective third party transferee(s) or unless the value of
the purchase price has not yet been established pursuant to Section 3.1(e).
(e) Valuation of Property. Should the purchase price specified
in the Transfer Notice or Additional Transfer Notice be payable in property
other than cash or
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<PAGE> 89
evidences of indebtedness, the Company (or the Non-Transferring Holders) shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If the Transferring Holder and the Company (or the
Non-Transferring Holders) cannot agree on such cash value within ten (10) days
after the Company's receipt of the Transfer Notice (or the Non-Transferring
Holders' receipt of the Additional Transfer Notice), the valuation shall be
made by an appraiser of recognized standing selected by the Transferring Holder
and the Company (or the Non-Transferring Holders) or, if they cannot agree on
an appraiser within twenty (20) days after the Company's receipt of the
Transfer Notice (or the Non-Transferring Holders' receipt of the Additional
Transfer Notice), each shall select an appraiser of recognized standing and the
two appraisers shall designate a third appraiser of recognized standing, whose
appraisal shall be determinative of such value. The cost of such appraisal
shall be shared equally by the Transferring Holder and the Company (or the
Non-Transferring Holders), with the half of the cost borne by the Company and
the Non-Transferring Holders borne pro rata by each based on the number of
shares such parties were interested in purchasing pursuant to this Section 3.
If the time for the closing of the Company's purchase or the Non-Transferring
Holders' purchase has expired but for the determination of the value of the
purchase price offered by the prospective transferee(s), then such closing
shall held on or prior to the fifth business day after such valuation shall
have been made pursuant to this subsection.
3.2 Right of Co-Sale.
(a) To the extent the Company and the Non-Transferring Holders
do not exercise their respective rights of refusal as to all of the Offered
Shares pursuant to Section 3.1, then each Non-Transferring Holder (a "Selling
Holder" for purposes of this subsection 3.2) which notifies the Transferring
Holder in writing within thirty (30) days after receipt of the Transfer Notice
referred to in Section 3.1(a), shall have the right to participate in such sale
of Equity Securities on the same terms and conditions as specified in the
Transfer Notice and for the same total consideration per share as is received by
other Holders. Such Selling Holder's notice to the Transferring Holder shall
indicate the number of shares of Equity Securities the Selling Holder wishes to
sell under his, her or its right to participate. To the extent one or more of
the Non-Transferring Holders exercise such right of participation in accordance
with the terms and conditions set forth below, the number of shares of Equity
Securities that the Transferring Holder may sell in the Transfer shall be
correspondingly reduced.
(b) Each Selling Holder may sell all or any part of that
number of shares of Equity Securities equal to the product obtained by
multiplying (i) the aggregate number of shares of Equity Securities covered by
the Transfer Notice by (ii) a fraction, the numerator of which is the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by the Selling Holder on the date of the
Transfer Notice and the denominator of which is the total number of shares of
Common Stock (including shares of Common Stock issuable upon conversion of
Preferred Shares) owned by Transferring Holder and all of the Selling Holders on
the date of the Transfer Notice.
(c) Each Selling Holder shall effect its participation in the
sale by promptly delivering to the Transferring Holder for transfer to the
prospective purchaser one or more certificates, properly endorsed for transfer,
which represent:
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<PAGE> 90
(i) the type and number of shares of Equity Securities
which such Selling Holder elects to sell; or
(ii) that number of shares of Equities Securities which
are at such time convertible into the number of shares of Common Stock which
such Selling Holder elects to sell; provided, however, that if the prospective
third-party purchaser objects to the delivery of Equity Securities in lieu of
Common Stock, such Selling Holder shall convert such Equity Securities into
Common Stock and deliver Common Stock as provided in this Section 3.2. The
Company agrees to make any such conversion concurrent with the actual transfer
of such shares to the purchaser and contingent on such transfer.
(d) The stock certificate or certificates that the Selling
Holder delivers to the Transferring Holder pursuant to Section 3.2(d) shall be
transferred to the prospective purchaser in consummation of the sale of the
Equity Securities pursuant to the terms and conditions specified in the Transfer
Notice, and the Transferring Holder shall concurrently therewith remit to such
Selling Holder that portion of the sale proceeds to which such Selling Holder is
entitled by reason of its participation in such sale. To the extent that any
prospective purchaser or purchasers prohibits such assignment or otherwise
refuses to purchase shares or other securities from a Selling Holder exercising
its rights of co-sale hereunder, the Transferring Holder shall not sell to such
prospective purchaser or purchasers any Equity Securities unless and until,
simultaneously with such sale, the Transferring Holder shall purchase such
shares or other securities from such Selling Holder for the same consideration
and on the same terms and conditions as the proposed transfer described in the
Transfer Notice and for the same total consideration per share as received by
all other Holders.
3.3 Non-Exercise of Rights. To the extent that the Company and the
Holders have not exercised their rights to purchase the Offered Shares or the
Remaining Shares within the time periods specified in Section 3.1 and the
Holders have not exercised their rights to participate in the sale of the
Offered Shares or the Remaining Shares within the time periods specified in
Section 3.2, the Transferring Holder shall have a period of thirty (30) days
from the expiration of such rights in which to sell the Offered Shares or the
Remaining Shares, as the case may be, upon terms and conditions (including the
purchase price) no more favorable than those specified in the Transfer Notice to
the third-party transferee(s) identified in the Transfer Notice. The third-party
transferee(s) shall acquire the Remaining Shares subject to this Agreement. In
the event a Transferring Holder does not consummate the sale or disposition of
the Remaining Shares within the thirty (30) day period from the expiration of
these rights, the Company's first refusal rights and the Holders' first refusal
rights and co-sale rights shall continue to be applicable to any subsequent
disposition of the Offered Shares or the Remaining Shares by Transferring Holder
until such right lapses in accordance with the terms of this Agreement.
Furthermore, the exercise or non-exercise of the rights of the Company and the
Holders under this Section 3 to purchase Equity Securities from the Transferring
Holder or participate in sales of Equity Securities by the Transferring Holder
shall not adversely affect their rights to make subsequent purchases from the
Transferring Holder of Equity Securities or subsequently participate in sales of
Equity Securities by the Transferring Holder.
3.4 Limitations to Rights of Refusal and Co-Sale. Notwithstanding
the provisions of Section 3.1 and 3.2 of this Agreement, a Transferring Holder
may sell or otherwise
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<PAGE> 91
assign, with or without consideration, Equity Securities to (i) a subsidiary,
parent, partner, limited partner, retired partner, affiliated partnership or
stockholder of such Transferring Holder, (ii) a transferee who is a pledgee, or
assignee of such pledgee, of Holder pursuant to a bona fide loan transaction, or
(iii) any spouse or member of Transferring Holder's immediate family, or to a
custodian, trustee (including a trustee of a voting trust), executor, or other
fiduciary for the account of the Transferring Holder's spouse or members of the
Transferring Holder's immediate family, or to a trust for the Transferring
Holder's own self, or a charitable remainder trust, provided that each such
transferee or assignee, prior to the completion of the sale, transfer, or
assignment shall have executed documents assuming the obligations of the
Transferring Holder under this Agreement with respect to the transferred
securities.
3.5 Prohibited Transfers.
(a) In the event the Transferring Holder should sell any
Equity Securities in contravention of the co-sale rights of the Non-Transferring
Holders under Section 3.2 (a "Prohibited Transfer"), the Non-Transferring
Holders, in addition to such other remedies as may be available at law, in
equity or hereunder, shall have the put option provided below, and the
Transferring Holder shall be bound by the applicable provisions of such option.
(b) In the event of a Prohibited Transfer, each
Non-Transferring Holder shall have the right to sell to the Transferring Holder
the type and number of shares of Equity Securities equal to the number of shares
each Non-Transferring Holder would have been entitled to transfer to the
third-party transferee(s) under Section 3.2 hereof had the Prohibited Transfer
been effected pursuant to and in compliance with the terms hereof. Such sale
shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be
sold to the Transferring Holder shall be equal to the price per share paid by
the third-party transferee(s) to the Transferring Holder in the Prohibited
Transfer. The Transferring Holder shall also reimburse each Non-Transferring
Holder for any and all fees and expenses, including legal fees and expenses,
incurred pursuant to the exercise or the attempted exercise of the
Non-Transferring Holder's rights under Section 3.
(ii) Within ninety (90) days after the later of the dates
on which the Non-Transferring Holder (A) received notice of the Prohibited
Transfer or (B) otherwise become aware of the Prohibited Transfer, each
Non-Transferring Holder shall, if exercising the option created hereby, deliver
to the Transferring Holder the certificate or certificates representing shares
to be sold, each certificate to be properly endorsed for transfer.
(iii) The Transferring Holder shall, upon receipt of the
certificate or certificates for the shares to be sold by a Non-Transferring
Holder, pursuant to this Section 3.5, pay the aggregate purchase price therefor
and the amount of reimbursable fees and expenses, as specified in subparagraph
3.5(b)(i), in cash or by other means acceptable to the Holder.
(iv) Notwithstanding the foregoing, any attempt by the
Transferring Holder to transfer Equity Securities in violation of Section 3
hereof shall be void
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<PAGE> 92
and the Company agrees it will not effect such a transfer nor will it treat any
alleged transferee(s) as the holder of such shares without the written consent
of a majority in interest of the Non-Transferring Holders.
4. Bring Along Provision In the event that (i) a consolidation or
merger of the Company with or into any other corporation or corporations in
which 100% of the voting securities are disposed of, or (ii) a sale of all or
substantially all of the assets or business of the Company in one or more
related transactions (such events referred to herein collectively as a "Sale of
the Company"), is approved by (A) two-thirds of the Board of Directors of the
Company and (B) holders of at least 50% of the voting securities of the Company,
then, provided that (x) the consideration to be received by the stockholders of
the Company is cash or freely tradable marketable securities (not including any
escrowed securities) of a Company with a market capitalization of at least
$200,000,000, and (y) each stockholder of the Company receives the same
consideration per share (including any fees or compensation paid to other
stockholders of the Company except as specifically provided in bona fide
employment agreements between such stockholders and the acquiring entity but not
including any liquidation preferences paid on shares of Preferred Stock of the
Company) each of the parties hereto hereby agree to:
(a) vote that number of shares of the capital stock of the
Company as to which they have beneficial ownership as of the time of the record
date in favor of such Sale of the Company;
(b) not exercise any dissenters' rights under applicable law
at any time for such Sale of the Company;
(c) refrain from transferring any securities of the Company,
the acquirer, or any other applicable company during any period prohibited by
then applicable "pooling of interests" accounting treatment rules, whether
before or after the Sale of the Company, provided that such period of
restriction prior to the closing of a Sale of the Company shall not exceed one
hundred twenty (120) days; and
(d) after receiving proper notice of such meeting, be present,
in person or by proxy, along with any of their respective affiliated entities,
as holders of shares of voting securities, at all meetings of stockholders of
the Company to vote on the approval of a Sale of the Company so that all shares
of voting securities beneficially owned by such stockholders and/or their
affiliated entities may be counted for the purposes of determining the presence
of a quorum at such meetings.
5. Assignments and Transfers; No Third Party Beneficiaries. 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, but shall not otherwise be for the benefit of any third
party. The rights of the Holders hereunder are only assignable (i) by each of
such Holders to any other Holder, (ii) to a partner or other affiliate of such
Holder or (iii) to an assignee or transferee who acquires all of the Equity
Securities purchased by a Stockholder or at least 100,000 shares of Common Stock
(including shares of Common Stock issuable upon conversion of Preferred Shares).
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6. Legend. Each existing or replacement certificate for shares
now owned or hereafter acquired by each Holder shall bear the following legend
upon its face:
"THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY
AND BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF
STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
7. Effect of Change in Company's Capital Structure. Appropriate
adjustments shall be made in the number and class of shares in the event of a
stock dividend, stock split, reverse stock split, combination, reclassification
or like change in the capital structure of the Company.
8. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission, nationally recognized overnight
courier service, or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
9. Further Instruments and Actions. The parties agree to execute
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement. Each party hereto agrees to
cooperate affirmatively with each other party hereto to the extent reasonably
requested by such other parties to enforce rights and obligations pursuant
hereto.
10. Term. This Agreement shall terminate upon the earlier of (i)
the Company's sale of its Common Stock in a firm commitment underwritten public
offering at a market valuation of at least $100,000,000 immediately prior to
effectiveness of the Company's registration statement and pursuant to a
registration statement on Form S-1 or Form SB-2 under the Securities Act of
1933, as amended, the public offering price of which is not less than
$15,000,000 in the aggregate), and (ii) the closing of the Company's sale of all
or substantially all of its assets or the acquisition of the Company by another
entity by means of merger, consolidation or other transaction or series of
related transactions resulting in the exchange of the outstanding shares of the
Company's capital stock such that the stockholders of the Company prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity.
11. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all other agreements between or among any of the parties with respect
to the subject matter hereof and cannot be
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altered or otherwise amended except pursuant to an instrument in writing signed
by each of the parties to this Agreement. This Agreement shall be interpreted
under the laws of the State of California without reference to conflicts of law
provisions.
12. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the written
consent of the holders of more than 50% of the Common Stock issued and held by
the Founders and the written consent of the holders of more than 50% of the
Common Stock issued or issuable upon conversion of the Preferred Shares then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon, the Company, the Founders and all Purchasers and their
respective successors and assigns.
13. Separability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14. Attorney's Fees. In the event that any dispute among the
parties to this Agreement should result in litigation, 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.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
9
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
LETSTALK.COM, INC.
By: /S/ Delly Tamer
-------------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 96
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisen??
----------------------------
Name: Eisen??, D.
----------------------------
Title: CEO
----------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 97
LET'S TALK CELLULAR & WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 98
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 99
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
4775 Pine Dr
Miami, Fl 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 100
PURCHASERS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 101
PURCHASERS:
H.I.G. WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------------
Name: Jeffrey Brody
--------------------------------------------
Title: Managing Member
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 102
PURCHASERS:
H.I.G. WIRELESS, INC.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
----------------------------------------------
Name: Jeffrey Brody
--------------------------------------------
Title: Managing Member
-------------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 103
PURCHASERS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gay S. Wohl
-------------------------------------------
Name: Gay S. Wohl
-----------------------------------------
Title: Partner
----------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 104
PURCHASERS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors *99 L.P.
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and Janes R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 105
EXHIBIT E
BYLAWS OF THE COMPANY
<PAGE> 106
BYLAWS
OF
WIRELESS NET, INC.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Dover, County of Kent, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held
either at the principal executive office of the corporation or at any other
place within or without the State of Delaware designated by the Board of
Directors or, subject to the power of the Board of Directors to designate the
place of the meeting, the person or persons calling the meeting. In absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
Section 2. Annual meetings of stockholders, shall be held at
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect by
a plurality vote a board of directors, and transact such other business as may
properly be brought before the meeting.
<PAGE> 107
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not fewer than ten (10) nor more than sixty (60) days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
Board of Directors or by the written request of holders of fifty percent (50%)
or more of the outstanding shares of capital stock. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not fewer than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to vote
at such meeting.
2
<PAGE> 108
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of fifty percent (50%) of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no
3
<PAGE> 109
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors that shall constitute the
whole Board of Directors shall be determined by resolution of the Board of
Directors or by the stockholders at the annual meeting of the stockholders,
except as provided in Section 3.2 of this Article, and each director elected
shall hold office until his successor is elected and qualified. Directors need
not be stockholders.
Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be
4
<PAGE> 110
held in the manner provided by statute. If, at the time of filling any vacancy
or any newly created directorship, the directors then in office shall constitute
less than a majority of the whole board (as constituted immediately prior to any
such increase), the Court of Chancery may, upon application of any stockholder
or stockholders holding at least ten percent of the total number of the shares
at the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
Section 3. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
5
<PAGE> 111
Section 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the
president on ten (10) days' notice to each director by mail, by fax or e-mail,
personally or by telegram; special meetings shall be called by the president or
secretary in like manner, and on like notice on the written request of two
directors unless the board consists of only one director, in which case special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation of these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of
6
<PAGE> 112
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
In the absence of disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to
7
<PAGE> 113
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or bylaw, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the
8
<PAGE> 114
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the Board of Directors and shall be a president, chief financial officer and a
secretary. The Board of Directors may elect from among its members a Chairman of
the Board. The Board of Directors may also choose one or more vice-presidents.
Any number of offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a president, a chief financial
officer, and a secretary and may choose vice presidents.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or appointed
by the Board of Directors may be
9
<PAGE> 115
removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the corporation shall be
filled by the Board of Directors.
THE CHAIRPERSON OF THE BOARD
Section 6. The Chairperson of the Board, if any, shall preside
at all meetings of the Board of Directors and of the stockholders at which
he/she shall be present. He/She shall have and may exercise such powers as are,
from time to time, assigned to him/her by the Board and as may be provided by
law.
Section 7. In the absence of the Chairman of the Board at a
meeting, a member of the Board of Directors elected by a majority of such
members present at such meeting shall preside at such meeting provided he/she
shall be present at such meeting. He/She shall have and may exercise such powers
as are, from time to time, assigned to him/her by the Board and as may be
provided by law.
THE PRESIDENT AND VICE-PRESIDENTS
Section 8. The president shall be the chief executive officer
of the corporation; and in the absence of the Chairman he/she shall preside at
all meetings of the stockholders and the Board of Directors; he/she shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect.
Section 9. He/She shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
10
<PAGE> 116
Section 10. In the absence of the president or in the event of
his inability or refusal to act, a majority of the directors may designate
another officer of the corporation to perform such duties and exercise such
powers, shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY
Section 11. The secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the Board of Directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He/she shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or president, under whose supervision he/she shall be. He/she shall
have custody of the corporate seal of the corporation and he/she shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his/her signature. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his/her signature.
Section 12. In the absence of the secretary or in the event of
his inability or refusal to act, perform the duties and exercise the powers of
the secretary, a majority of the directors may designate another officer of the
corporation to perform such duties and exercise such powers.
11
<PAGE> 117
THE CHIEF FINANCIAL OFFICER
Section 13. The chief financial officer shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 14. He/she shall disburse the funds of the corporation
as may be ordered by the president, taking proper vouchers for such
disbursements, and shall render to the president or when the Board of Directors
so requires, an account of all his/her transactions as chief financial officer
and of the financial condition of the corporation.
Section 15. If required by the Board of Directors, he/she
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his/her office and
for the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his/her possession or under his/her control
belonging to the corporation.
Section 16. In the absence of the chief financial officer or
in the event of his/her inability or refusal to act, perform the duties and
exercise the powers of the chief financial officer, a majority of the directors
may designate another officer of the corporation to perform such duties and
exercise such powers.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairperson of the Board of
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<PAGE> 118
Directors, or the president and the chief financial officer, or the secretary of
the corporation, certifying the number of shares owned by him in the
corporation.
Certificates may be issued for partly paid shares and in such
case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid therefor,
and the amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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<PAGE> 119
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than
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<PAGE> 120
sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for
15
<PAGE> 121
such other purposes as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal
having inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
INDEMNIFICATION
Section 6. The corporation shall, to the fullest extent
authorized under the laws of the State of Delaware, as those laws may be amended
and supplemented from time to time, indemnify any director made, or threatened
to be made, a party to an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of being a director of the
corporation or a predecessor corporation or, at the corporation's request, a
director or officer of another corporation, provided, however, that the
corporation shall indemnify any such agent in connection with a proceeding
initiated by such agent only if such proceeding was authorized by the Board of
Directors of the corporation. The indemnification provided for in this Section 6
16
<PAGE> 122
shall: (i) not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a person who has ceased to be a director, and (iii) inure to the
benefit of the heirs, executors and administrators of such a person. The
corporation's obligation to provide indemnification under this Section 6 shall
be offset to the extent of any other source of indemnification or any otherwise
applicable insurance coverage under a policy maintained by the corporation or
any other person.
Expenses incurred by a director of the corporation in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is or was a director of the corporation (or was serving at the
corporation's request as a director or officer of another corporation) shall be
paid by the corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation as authorized by relevant sections of the
General Corporation Law of Delaware. Notwithstanding the foregoing, the
corporation shall not be required to advance such expenses to an agent who is a
party to an action, suit or proceeding brought by the corporation and approved
by a majority of the Board of Directors of the corporation which alleges willful
misappropriation of corporate assets by such agent, disclosure of confidential
information in violation of such agent's fiduciary or contractual obligations to
the corporation or any other willful and deliberate breach in bad faith of such
agent's duty to the corporation or its stockholders.
The foregoing provisions of this Section 6 shall be deemed to
be a contract between the corporation and each director who serves in such
capacity at any time while this
17
<PAGE> 123
bylaw is in effect, and any repeal or modification thereof shall not affect any
rights or obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore or thereafter
brought based in whole or in part upon any such state of facts.
The Board of Directors in its discretion shall have power on
behalf of the corporation to indemnify any person, other than a director, made a
party to any action, suit or proceeding by reason of the fact that he, his
testator or intestate, is or was an officer or employee of the corporation.
To assure indemnification under this Section 6 of all
directors, officers and employees who are determined by the corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the corporation which may exist from time to time, Section 145 of the General
Corporation Law of Delaware shall, for the purposes of this Section 6, be
interpreted as follows: an "other enterprise" shall be deemed to include such an
employee benefit plan, including without limitation, any plan of the corporation
which is governed by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time; the corporation shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to such Act of Congress shall be deemed
"fines."
18
<PAGE> 124
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or
new bylaws may be adopted by the stockholders or by the Board of Directors, when
such power is conferred upon the Board of Directors by the certificate of
incorporation at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal bylaws is conferred upon the Board of Directors by the
certificate or incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal bylaws.
19
<PAGE> 125
CERTIFICATE OF OFFICER
OF
WIRELESS NET, INC.
The undersigned, William E Growney, Jr. hereby certifies that he is the
duly elected and acting Assistant Secretary of Wireless Net, Inc., a Delaware
corporation (the "Corporation"), and that the Bylaws attached hereto constitute
the Bylaws of said Corporation as duly adopted by Unanimous Written Consent of
the Board of Directors on July __, 1999.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name
this __st day of July, 1999.
William E Growney, Jr.
Assistant Secretary
<PAGE> 1
Exhibit 10.2
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered
into as of July 30, 1999, by and among LetsTalk.com, Inc., a Delaware
corporation (the "Company"), the holders of the Company's Series A Preferred
Stock (the "Series A Stock") listed on the Schedule of Investors attached as
Schedule A hereto (the "Investors"), and the holders of Common Stock of the
Company (the "Founders") listed on the Schedule of Founders attached as
Schedule B hereto. The Company, the Founders and the Investors are individually
each referred to herein as a "Party" and are collectively referred to herein as
the "Parties." The Company's Board of Directors is referred to herein as the
"Board."
WITNESSETH:
WHEREAS, the Company and certain of the Investors have
entered into that certain Series A Preferred Stock Purchase Agreement of even
date herewith (the "Purchase Agreement"), which provides for, among other
things, the purchase by the Investors of shares of the Series A Stock;
WHEREAS, the Company and Let's Talk Cellular & Wireless,
Inc., a Florida corporation and a Founder ("LTC"), are parties to a license
agreement and a binding Letter of Intent with the Company which provide for,
among other things, the purchase of shares of Common Stock of the Company by
LTC, the license by LTC of certain technology to the Company and the provision
of certain services for the Company by LTC (collectively, the "LTC
Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement
of even date herewith (the "Common Stock Purchase Agreement") which provides
for, among other things, the purchase by HIG of shares of Common Stock of the
Company;
WHEREAS, the Company's Certificate of Incorporation provides
that (a) holders of shares of the Company's Series A Stock, voting together as
a class, shall elect four (4) members of the Board (the "Series A Directors"),
and (b) holders of shares of Common Stock and the holders of shares of Series A
Stock, voting together as a class, shall be entitled to elect the three (3)
remaining members of the Board ("Common Directors"); and
WHEREAS, to induce certain Investors to enter into the
Purchase Agreement and purchase shares of Series A Stock thereunder, to induce
HIG to enter the Common Stock Purchase Agreement and to induce LTC to enter
into the LTC Agreements and purchase shares of Common Stock of the Company
thereunder, the Company and the Founders desire to enter into this Agreement
with such Investors; and
NOW, THEREFORE, in consideration of the foregoing premises
and certain other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:
1
<PAGE> 2
1. Agreement to Vote. Each Investor, as a holder of Series A
Stock, hereby agrees on behalf of itself and any transferee or assignee of any
such shares of the Series A Stock, to hold all of the shares of Series A Stock
registered in its name (and any securities of the Company issued with respect
to, upon conversion of, or in exchange or substitution of the Series A Stock,
and any other voting securities of the Company subsequently acquired by such
Investor) (hereinafter collectively referred to as the "Investor Shares")
subject to, and to vote the Investor Shares at a regular or special meeting of
stockholders (or by written consent) in accordance with, the provisions of this
Agreement. Each Founder, as a holder of Common Stock of the Company, hereby
agrees on behalf of itself and any transferee or assignee of any such shares of
Common Stock, to hold all of such shares of Common Stock and any other
securities of the Company acquired by such Founder in the future (and any
securities of the Company issued with respect to, upon conversion of, or in
exchange or substitution for such securities) (the "Founder Shares") subject
to, and to vote the Founder Shares at a regular or special meeting of
stockholders (or by written consent) in accordance with, the provisions of this
Agreement.
2. Board Size. The holders of Investor Shares and Founder
Shares shall vote at a regular or special meeting of stockholders (or by
written consent) such shares that they own (or as to which they have voting
power) to ensure that the size of the Board shall be set and remain at seven
(7) directors; provided, however, that such Board size may be subsequently
increased or decreased pursuant to an amendment of this Agreement in accordance
with Section 15 hereof.
3. Election of Directors.
(a) In any election of directors of the Company to elect
the Common Directors, the Parties holding shares of Series A Stock or Common
Stock shall each vote at any regular or special meeting of stockholders (or by
written consent) such number of shares of Series A Stock or Common Stock then
owned by them (or as to which they then have voting power) as may be necessary
to elect one (1) director nominated by Let's Talk Cellular & Wireless and two
(2) directors that are employees of the Company, one of which directors shall
be the Company's chief executive officer and the other of which shall be Brett
Beveridge for so long as Mr. Beveridge is an employee of the Company and
thereafter shall be an individual designated by the Company's chief executive
officer.
(b) In any election of directors of the Company to elect
the Series A Directors, the Parties holding shares of Series A Stock shall each
vote at any regular or special meeting of stockholders (or by written consent)
such number of shares of Series A Stock then owned by them (or as to which they
then have voting power) as may be necessary to elect two (2) directors
nominated by HIG Capital Management and two (2) directors nominated by
Brentwood Venture Capital; in each case for so long as such Investor or its
affiliates own at least fifty percent (50%) of the Common Stock issued or
issuable upon conversion of the Series A Stock purchased by such Investor
pursuant to the Purchase Agreement.
4. Removal. Any director of the Company may be removed from
the board in the manner allowed by law and the Company's Certificate of
Incorporation and Bylaws, but
2
<PAGE> 3
with respect to a director designated pursuant to subsections 3(a) and 3(b)
above, only upon the vote or written consent of the stockholders entitled to
designate such director.
5. Legend on Share Certificates. Each certificate
representing any Shares shall be endorsed by the Company with a legend reading
substantially as follows:
"The Shares evidenced hereby are subject to a Voting
Agreement (a copy of which may be obtained upon written
request from the issuer), and by accepting any interest in
such shares the person accepting such interest shall be
deemed to agree to and shall become bound by all the
provisions of said Voting Agreement."
6. Covenants of the Company. The Company agrees to use its
best efforts to ensure that the rights granted hereunder are effective and that
the Parties hereto enjoy the benefits thereof. Such actions include, without
limitation, the use of the Company's best efforts to cause the nomination and
election of the directors as provided above. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all of the provisions of this
Agreement and in the taking of all such actions as may be necessary,
appropriate or reasonably requested by the holders of a majority of the
outstanding voting securities held by the Parties hereto assuming conversion of
all outstanding securities in order to protect the rights of the Parties
hereunder against impairment.
7. No Liability for Election of Recommended Directors.
Neither the Company, the Founders, the Investors, nor any officer, director,
stockholder, partner, employee or agent of such Party, makes any representation
or warranty as to the fitness or competence of the nominee of any Party
hereunder to serve on the Company's Board by virtue of such Party's execution
of this Agreement or by the act of such Party in voting for such nominee
pursuant to this Agreement.
8. Grant of Proxy. Should the provisions of this Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
9. Specific Enforcement. It is agreed and understood that
monetary damages would not adequately compensate an injured Party for the
breach of this Agreement by any Party, that this Agreement shall be
specifically enforceable, and that any breach or threatened breach of this
Agreement shall be the proper subject of a temporary or permanent injunction or
restraining order. Further, each Party hereto waives any claim or defense that
there is an adequate remedy at law for such breach or threatened breach.
10. Execution by the Company. The Company, by its execution
in the space provided below, agrees that it will cause the certificates
evidencing the shares of Common Stock and Series A Stock to bear the legend
required by Section 5 herein, and it shall supply, free of charge, a copy of
this Agreement to any holder of a certificate evidencing shares of capital
stock of the Company upon written request from such holder to the Company at
its principal office.
3
<PAGE> 4
The parties hereto do hereby agree that the failure to cause the certificates
evidencing the shares of Common Stock and Series A Stock to bear the legend
required by Section 5 herein and/or failure of the Company to supply, free of
charge, a copy of this Agreement as provided under this Section 5 shall not
affect the validity or enforcement of this Agreement.
11. Captions. The captions, headings and arrangements used in
this Agreement are for convenience only and do not in any way limit or amplify
the terms and provisions hereof.
12. Notices. Any notice required or permitted by this
Agreement shall be in writing and shall be sent prepaid registered or certified
mail, return receipt requested, addressed to the other Party at the address
shown below or at such other address for which such Party gives notice
hereunder. Such notice shall be deemed to have been given three (3) days after
deposit in the mail.
13. Term. This Agreement shall terminate and be of no further
force or effect upon (a) the Company's sale of its Common Stock in a firm
commitment underwritten public offering at a market valuation of at least
$100,000,000 immediately prior to effectiveness of the Company's registration
statement and pursuant to a registration statement on Form S-1 or Form SB-2
under the Securities Act of 1933, as amended, the public offering price of
which is not less than $15,000,000 in the aggregate), (b) the acquisition of
the Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) or more of
the outstanding voting power of the Company or a sale of all or substantially
all of the assets of the Company, or (c) the written consent of the holders of
a majority of the then outstanding Founders Shares and the holders of a
majority of the then outstanding Preferred Shares.
14. Manner of Voting. The voting of shares pursuant to this
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.
15. Amendments and Waivers. Any term hereof may be amended
and the observance of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the holders of a majority of the then outstanding voting
securities held by the Party or Parties for whose benefit such term has been
included. Any amendment or waiver so effected shall be binding upon the Parties
hereto.
16. Stock Splits, Stock Dividends, etc. In the event of any
issuance of shares of the Company's voting securities hereafter to any of the
Parties hereto (including, without limitation, in connection with any stock
split, stock dividend, recapitalization, reorganization, or the like), such
shares shall become subject to this Agreement and shall be endorsed with the
legend set forth in Section 5.
17. 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
4
<PAGE> 5
provision of this Agreement shall be held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
18. Binding Effect. In addition to any restriction or
transfer that may be imposed by any other agreement by which any Party hereto
may be bound, this Agreement shall be binding upon the Parties, their
respective heirs, successors and assigns and to such additional individuals or
entities that may become stockholders of the Company and that desire to become
Parties hereto.
19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereof.
20. Entire Agreement. This Agreement is intended to be the
sole agreement of the Parties as it relates to this subject matter and does
hereby supersede all other agreements of the Parties relating to the subject
matter hereof.
21. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
---------------------------------------
Delly Tamer
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 7
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 8
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
---------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 9
INVESTORS:
HIG WIRELESS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
---------------------------------------
Name: Jeffrey Brody
-------------------------------------
Title: Managing Member
------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 10
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
----------------------------------------
G. Carter Sednaoui
General Partner
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn:Theresia Gouw Ranzetta and James R. Swartz
Tel:(650) 614-4800
Fax:(650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn:G. Carter Sednaoui
Tel:(609) 683-4500
Fax:(609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 11
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/
---------------------------------------
Name:
-------------------------------------
Title: Partner
------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 12
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 13
FOUNDERS:
/s/ Delly Tamer
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 14
FOUNDERS:
------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
------------------------------------------
Brett Beveridge
4775 Pine Dr.
Miami, FL 33143
LET'S TALK CELLULAR & WIRELESS, INC.
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 15
FOUNDERS:
-------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
-------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
----------------------------------
Name: Eisenberg, David
--------------------------------
Title: CEO
-------------------------------
800 Bricknell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 16
FOUNDERS:
H.I.G. BRICKELLBAY, INC.
By: /s/
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
VOTING AGREEMENT
<PAGE> 17
SCHEDULE A
LIST OF INVESTORS
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
<PAGE> 18
SCHEDULE B
LIST OF FOUNDERS
DELLY TAMER
BRETT BEVERIDGE
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
<PAGE> 1
Exhibit 10.3
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
This RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is entered
into as of the 30th day of July, 1999 by and among LetsTalk.com, Inc., a
Delaware corporation (the "Company"), Let's Talk Cellular & Wireless, Inc., a
Florida corporation ("LTC"), H.I.G. Brickellbay, Inc., a Cayman Islands
corporation ("HIG"), Delly Tamer and Brett Beveridge (each, a "Founder"), and
the undersigned holders (the "Purchasers") of Series A Preferred Stock of the
Company (the "Preferred Shares").
W I T N E S S E T H :
WHEREAS, the Company and the Purchasers are parties to the
Series A Preferred Stock Purchase Agreement of even date herewith, pursuant to
which the Purchasers are purchasing shares of the Company's Series A Preferred
Stock (the "Stock Purchase Agreement");
WHEREAS, the Company and LTC are parties to a license
agreement and a binding Letter of Intent with the Company which provide for,
among other things, the purchase of shares of Common Stock of the Company by
LTC, the license by LTC of certain technology to the Company and the provision
of certain services for the Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and HIG are parties to a Common Stock
Purchase Agreement of even date herewith (the "Common Stock Purchase
Agreement"), which provides for, among other things, the purchase by HIG of
shares of Common Stock of the Company;
WHEREAS, the Founders are the beneficial owners of shares of
Common Stock of the Company; and
WHEREAS, the Founders, LTC, HIG and each of the Purchasers
(each a "Stockholder") desire to enter into this Agreement to provide further
inducement to the Purchasers to purchase the Preferred Shares, and Purchasers
wish to provide further inducement to Founders to approve the Stock Purchase
Agreement, to provide further inducement to LTC to enter into the LTC Agreements
and purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual promises set forth in this Agreement;
THE PARTIES AGREE AS FOLLOWS:
1. Restrictions on Transfer of Shares by Holders. Except
as otherwise provided in this Agreement, each Holder (as defined below) agrees
that it will not sell, assign, transfer, pledge, hypothecate, or otherwise
encumber or dispose of in any way (a "Transfer"), all or any part of or any
interest in the Equity Securities (as defined below) now or hereafter owned
<PAGE> 2
or held by such Holder. Any Transfer of Equity Securities not made in
conformance with this Agreement shall be null and void, shall not be recorded on
the books of the Company and shall not be recognized by the Company.
2. Definitions.
(a) Equity Securities. For purposes of this
Agreement, the term "Equity Securities" shall mean any securities having voting
rights in the election of the Board of Directors of the Company not contingent
upon default, or any securities evidencing an ownership interest in the Company,
or any securities convertible into or exercisable for any shares of the
foregoing, or any agreement or commitment to issue any of the foregoing.
(b) Holders. For purposes of this Agreement, the
term "Holders" shall mean the Stockholders, or persons who have acquired shares
from any of such persons or their transferees or assignees in accordance with
the provisions of this Agreement.
3. Agreements Among the Company and the Holders.
3.1 Rights of Refusal.
(a) Transfer Notice. If at any time a Holder
proposes to Transfer Equity Securities to one or more third parties, then such
Holder (a "Transferring Holder") shall give the Company and each other Holder
written notice of such Transferring Holder's intention to make the Transfer (the
"Transfer Notice"), which Transfer Notice shall include (i) a description of the
Equity Securities to be transferred ("Offered Shares"), (ii) the identity of the
prospective transferee(s) and (iii) the consideration and the material terms and
conditions upon which the proposed Transfer is to be made. The Transfer Notice
shall certify that the Transferring Holder has received a firm offer from the
prospective transferee(s) and in good faith believes a binding agreement for the
Transfer is obtainable on the terms set forth in the Transfer Notice. The
Transfer Notice shall also include a copy of any written proposal, term sheet or
letter of intent or other agreement or draft thereof relating to the proposed
Transfer.
(b) Company's Option. The Company shall have an
option for a period of ten (10) days from receipt of the Transfer Notice to
elect to purchase the Offered Shares at the same price and subject to the same
material terms and conditions as described in the Transfer Notice. The Company
may, by vote of a majority of the Board of Directors not including directors
designated by such Transferring Holder, exercise such purchase option and,
thereby, purchase all (or a portion of) the Offered Shares by notifying the
Transferring Holder in writing before expiration of the such ten (10) day period
as to the number of such shares which it wishes to purchase. If the Company
gives the Transferring Holder notice that it desires to purchase such shares,
then payment for the Offered Shares shall be by check or wire transfer, against
delivery of the Offered Shares to be purchased at a place agreed upon between
the parties and at the time of the scheduled closing therefor, which shall be no
later than forty-five (45) days after the Company's receipt of the Transfer
Notice, unless the Transfer Notice contemplated a later closing with the
prospective third party transferee(s) or unless the value of the purchase price
has not yet been established pursuant to Section 3.1(e). If the Company fails to
purchase all of the Offered Shares by exercising the option granted in this
Section 3.1(b) within the period
2
<PAGE> 3
provided, the Offered Shares shall be subject to the options granted to the
non-transferring Holders (each, a "Non-Transferring Holder") pursuant to this
Agreement.
(c) Additional Transfer Notice. Subject to the
Company's right set forth in Section 3.1(b), if at any time the Transferring
Holder proposes a Transfer, then, after the Company has declined to purchase
all, or a portion of, the Offered Shares, the Transferring Holder shall give
each other Holder an "Additional Transfer Notice" which shall include all of the
information and certifications required in a Transfer Notice and shall
additionally identify the Offered Shares which the Company has declined to
purchase (the "Remaining Shares") and briefly describe such other Holders'
rights of first refusal and co-sale rights with respect to the proposed
Transfer.
(d) Holders' Option. The Non-Transferring
Holders shall have an option for a period of ten (10) days from the Holder's
receipt of the Additional Transfer Notice from the Transferring Holder set forth
in Section 3.1(c) to elect to purchase their respective pro rata shares of the
Remaining Shares at the same price and subject to the same material terms and
conditions as described in the Additional Transfer Notice. Each such
Non-Transferring Holder may exercise such purchase option and, thereby, purchase
all or any portion of his, her or its pro rata share (with any reallotments as
provided below) of the Remaining Shares, by notifying the Transferring Holder
and the Company in writing, before expiration of the twenty (20) day period as
to the number of such shares which he, she or it wishes to purchase (including
any reallotment). Each Non-Transferring Holder's pro rata share of the Remaining
Shares shall be a fraction of the Remaining Shares, of which the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by such Non-Transferring Holder on the
date of the Transfer Notice shall be the numerator and the total number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) held by the Transferring Holder and all other
Non-Transferring Holders on the date of the Transfer Notice shall be the
denominator. Each Non-Transferring Holder shall have a right of reallotment such
that, if any other Non-Transferring Holder fails to exercise the right to
purchase its full pro rata share of the Remaining Shares, the other
participating Non-Transferring Holders may exercise an additional right to
purchase, on a pro rata basis, the Remaining Shares not previously purchased.
Each Non-Transferring Holder shall be entitled to apportion Remaining Shares to
be purchased among its partners and affiliates, provided that such apportionment
does not cause the Company to be subject to the public company reporting
requirements under the Securities Exchange Act, of 1934, as amended) number of
partners and affiliates not exceed ten, and provided further that such
Non-Transferring Holder notifies the Transferring Holder of such allocation. If
a Non-Transferring Holder gives the Transferring Holder notice that it desires
to purchase its pro rata share of the Remaining Shares and, as the case may be,
its reallotment, then payment for the Remaining Shares shall be by check or wire
transfer, against delivery of the Remaining Shares to be purchased at a place
agreed upon between the parties and at the time of the scheduled closing
therefor, which shall be no later than forty-five (45) days after the Company's
receipt of the Transfer Notice, unless the Transfer Notice contemplated a later
closing with the prospective third party transferee(s) or unless the value of
the purchase price has not yet been established pursuant to Section 3.1(e).
(e) Valuation of Property. Should the purchase
price specified in the Transfer Notice or Additional Transfer Notice be payable
in property other than cash or
3
<PAGE> 4
evidences of indebtedness, the Company (or the Non-Transferring Holders) shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If the Transferring Holder and the Company (or the
Non-Transferring Holders) cannot agree on such cash value within ten (10) days
after the Company's receipt of the Transfer Notice (or the Non-Transferring
Holders' receipt of the Additional Transfer Notice), the valuation shall be made
by an appraiser of recognized standing selected by the Transferring Holder and
the Company (or the Non-Transferring Holders) or, if they cannot agree on an
appraiser within twenty (20) days after the Company's receipt of the Transfer
Notice (or the Non-Transferring Holders' receipt of the Additional Transfer
Notice), each shall select an appraiser of recognized standing and the two
appraisers shall designate a third appraiser of recognized standing, whose
appraisal shall be determinative of such value. The cost of such appraisal shall
be shared equally by the Transferring Holder and the Company (or the
Non-Transferring Holders), with the half of the cost borne by the Company and
the Non-Transferring Holders borne pro rata by each based on the number of
shares such parties were interested in purchasing pursuant to this Section 3. If
the time for the closing of the Company's purchase or the Non-Transferring
Holders' purchase has expired but for the determination of the value of the
purchase price offered by the prospective transferee(s), then such closing shall
held on or prior to the fifth business day after such valuation shall have been
made pursuant to this subsection.
3.2 Right of Co-Sale.
(a) To the extent the Company and the
Non-Transferring Holders do not exercise their respective rights of refusal as
to all of the Offered Shares pursuant to Section 3.1, then each Non-Transferring
Holder (a "Selling Holder" for purposes of this subsection 3.2) which notifies
the Transferring Holder in writing within thirty (30) days after receipt of the
Transfer Notice referred to in Section 3.1(a), shall have the right to
participate in such sale of Equity Securities on the same terms and conditions
as specified in the Transfer Notice and for the same total consideration per
share as is received by other Holders. Such Selling Holder's notice to the
Transferring Holder shall indicate the number of shares of Equity Securities the
Selling Holder wishes to sell under his, her or its right to participate. To the
extent one or more of the Non-Transferring Holders exercise such right of
participation in accordance with the terms and conditions set forth below, the
number of shares of Equity Securities that the Transferring Holder may sell in
the Transfer shall be correspondingly reduced.
(b) Each Selling Holder may sell all or any part
of that number of shares of Equity Securities equal to the product obtained by
multiplying (i) the aggregate number of shares of Equity Securities covered by
the Transfer Notice by (ii) a fraction, the numerator of which is the number of
shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares) owned by the Selling Holder on the date of the
Transfer Notice and the denominator of which is the total number of shares of
Common Stock (including shares of Common Stock issuable upon conversion of
Preferred Shares) owned by Transferring Holder and all of the Selling Holders on
the date of the Transfer Notice.
(c) Each Selling Holder shall effect its
participation in the sale by promptly delivering to the Transferring Holder for
transfer to the prospective purchaser one or more certificates, properly
endorsed for transfer, which represent:
4
<PAGE> 5
(i) the type and number of shares of
Equity Securities which such Selling Holder elects to sell; or
(ii) that number of shares of Equities
Securities which are at such time convertible into the number of shares of
Common Stock which such Selling Holder elects to sell; provided, however, that
if the prospective third-party purchaser objects to the delivery of Equity
Securities in lieu of Common Stock, such Selling Holder shall convert such
Equity Securities into Common Stock and deliver Common Stock as provided in this
Section 3.2. The Company agrees to make any such conversion concurrent with the
actual transfer of such shares to the purchaser and contingent on such transfer.
(d) The stock certificate or certificates that
the Selling Holder delivers to the Transferring Holder pursuant to Section
3.2(d) shall be transferred to the prospective purchaser in consummation of the
sale of the Equity Securities pursuant to the terms and conditions specified in
the Transfer Notice, and the Transferring Holder shall concurrently therewith
remit to such Selling Holder that portion of the sale proceeds to which such
Selling Holder is entitled by reason of its participation in such sale. To the
extent that any prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase shares or other securities from a Selling Holder
exercising its rights of co-sale hereunder, the Transferring Holder shall not
sell to such prospective purchaser or purchasers any Equity Securities unless
and until, simultaneously with such sale, the Transferring Holder shall purchase
such shares or other securities from such Selling Holder for the same
consideration and on the same terms and conditions as the proposed transfer
described in the Transfer Notice and for the same total consideration per share
as received by all other Holders.
3.3 Non-Exercise of Rights. To the extent that the
Company and the Holders have not exercised their rights to purchase the Offered
Shares or the Remaining Shares within the time periods specified in Section 3.1
and the Holders have not exercised their rights to participate in the sale of
the Offered Shares or the Remaining Shares within the time periods specified in
Section 3.2, the Transferring Holder shall have a period of thirty (30) days
from the expiration of such rights in which to sell the Offered Shares or the
Remaining Shares, as the case may be, upon terms and conditions (including the
purchase price) no more favorable than those specified in the Transfer Notice to
the third-party transferee(s) identified in the Transfer Notice. The third-party
transferee(s) shall acquire the Remaining Shares subject to this Agreement. In
the event a Transferring Holder does not consummate the sale or disposition of
the Remaining Shares within the thirty (30) day period from the expiration of
these rights, the Company's first refusal rights and the Holders' first refusal
rights and co-sale rights shall continue to be applicable to any subsequent
disposition of the Offered Shares or the Remaining Shares by Transferring Holder
until such right lapses in accordance with the terms of this Agreement.
Furthermore, the exercise or non-exercise of the rights of the Company and the
Holders under this Section 3 to purchase Equity Securities from the Transferring
Holder or participate in sales of Equity Securities by the Transferring Holder
shall not adversely affect their rights to make subsequent purchases from the
Transferring Holder of Equity Securities or subsequently participate in sales of
Equity Securities by the Transferring Holder.
3.4 Limitations to Rights of Refusal and Co-Sale.
Notwithstanding the provisions of Section 3.1 and 3.2 of this Agreement, a
Transferring Holder may sell or otherwise
5
<PAGE> 6
assign, with or without consideration, Equity Securities to (i) a subsidiary,
parent, partner, limited partner, retired partner, affiliated partnership or
stockholder of such Transferring Holder, (ii) a transferee who is a pledgee, or
assignee of such pledgee, of Holder pursuant to a bona fide loan transaction, or
(iii) any spouse or member of Transferring Holder's immediate family, or to a
custodian, trustee (including a trustee of a voting trust), executor, or other
fiduciary for the account of the Transferring Holder's spouse or members of the
Transferring Holder's immediate family, or to a trust for the Transferring
Holder's own self, or a charitable remainder trust, provided that each such
transferee or assignee, prior to the completion of the sale, transfer, or
assignment shall have executed documents assuming the obligations of the
Transferring Holder under this Agreement with respect to the transferred
securities.
3.5 Prohibited Transfers.
(a) In the event the Transferring Holder should
sell any Equity Securities in contravention of the co-sale rights of the
Non-Transferring Holders under Section 3.2 (a "Prohibited Transfer"), the
Non-Transferring Holders, in addition to such other remedies as may be available
at law, in equity or hereunder, shall have the put option provided below, and
the Transferring Holder shall be bound by the applicable provisions of such
option.
(b) In the event of a Prohibited Transfer, each
Non-Transferring Holder shall have the right to sell to the Transferring Holder
the type and number of shares of Equity Securities equal to the number of shares
each Non-Transferring Holder would have been entitled to transfer to the
third-party transferee(s) under Section 3.2 hereof had the Prohibited Transfer
been effected pursuant to and in compliance with the terms hereof. Such sale
shall be made on the following terms and conditions:
(i) The price per share at which the
shares are to be sold to the Transferring Holder shall be equal to the price per
share paid by the third-party transferee(s) to the Transferring Holder in the
Prohibited Transfer. The Transferring Holder shall also reimburse each
Non-Transferring Holder for any and all fees and expenses, including legal fees
and expenses, incurred pursuant to the exercise or the attempted exercise of the
Non-Transferring Holder's rights under Section 3.
(ii) Within ninety (90) days after the
later of the dates on which the Non-Transferring Holder (A) received notice of
the Prohibited Transfer or (B) otherwise become aware of the Prohibited
Transfer, each Non-Transferring Holder shall, if exercising the option created
hereby, deliver to the Transferring Holder the certificate or certificates
representing shares to be sold, each certificate to be properly endorsed for
transfer.
(iii) The Transferring Holder shall, upon
receipt of the certificate or certificates for the shares to be sold by a
Non-Transferring Holder, pursuant to this Section 3.5, pay the aggregate
purchase price therefor and the amount of reimbursable fees and expenses, as
specified in subparagraph 3.5(b)(i), in cash or by other means acceptable to the
Holder.
(iv) Notwithstanding the foregoing, any
attempt by the Transferring Holder to transfer Equity Securities in violation of
Section 3 hereof shall be void
6
<PAGE> 7
and the Company agrees it will not effect such a transfer nor will it treat any
alleged transferee(s) as the holder of such shares without the written consent
of a majority in interest of the Non-Transferring Holders.
4. Bring Along Provision In the event that (i) a
consolidation or merger of the Company with or into any other corporation or
corporations in which 100% of the voting securities are disposed of, or (ii) a
sale of all or substantially all of the assets or business of the Company in one
or more related transactions (such events referred to herein collectively as a
"Sale of the Company"), is approved by (A) two-thirds of the Board of Directors
of the Company and (B) holders of at least 50% of the voting securities of the
Company, then, provided that (x) the consideration to be received by the
stockholders of the Company is cash or freely tradable marketable securities
(not including any escrowed securities) of a Company with a market
capitalization of at least $200,000,000, and (y) each stockholder of the Company
receives the same consideration per share (including any fees or compensation
paid to other stockholders of the Company except as specifically provided in
bona fide employment agreements between such stockholders and the acquiring
entity but not including any liquidation preferences paid on shares of Preferred
Stock of the Company) each of the parties hereto hereby agree to:
(a) vote that number of shares of the capital
stock of the Company as to which they have beneficial ownership as of the time
of the record date in favor of such Sale of the Company;
(b) not exercise any dissenters' rights under
applicable law at any time for such Sale of the Company;
(c) refrain from transferring any securities of
the Company, the acquirer, or any other applicable company during any period
prohibited by then applicable "pooling of interests" accounting treatment rules,
whether before or after the Sale of the Company, provided that such period of
restriction prior to the closing of a Sale of the Company shall not exceed one
hundred twenty (120) days; and
(d) after receiving proper notice of such
meeting, be present, in person or by proxy, along with any of their respective
affiliated entities, as holders of shares of voting securities, at all meetings
of stockholders of the Company to vote on the approval of a Sale of the Company
so that all shares of voting securities beneficially owned by such stockholders
and/or their affiliated entities may be counted for the purposes of determining
the presence of a quorum at such meetings.
5. Assignments and Transfers; No Third Party
Beneficiaries. 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, but shall not otherwise be for
the benefit of any third party. The rights of the Holders hereunder are only
assignable (i) by each of such Holders to any other Holder, (ii) to a partner or
other affiliate of such Holder or (iii) to an assignee or transferee who
acquires all of the Equity Securities purchased by a Stockholder or at least
100,000 shares of Common Stock (including shares of Common Stock issuable upon
conversion of Preferred Shares).
7
<PAGE> 8
6. Legend. Each existing or replacement certificate for
shares now owned or hereafter acquired by each Holder shall bear the following
legend upon its face:
"THE SALE, PLEDGE, HYPOTHECATION, ASSIGNMENT OR TRANSFER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT BY AND BETWEEN THE STOCKHOLDER, THE
CORPORATION AND CERTAIN HOLDERS OF STOCK OF THE CORPORATION.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE CORPORATION."
7. Effect of Change in Company's Capital Structure.
Appropriate adjustments shall be made in the number and class of shares in the
event of a stock dividend, stock split, reverse stock split, combination,
reclassification or like change in the capital structure of the Company.
8. Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon personal delivery to the party to be notified
or upon delivery by confirmed facsimile transmission, nationally recognized
overnight courier service, or upon deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party on the signature page
hereof, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.
9. Further Instruments and Actions. The parties agree to
execute such further instruments and to take such further action as may
reasonably be necessary to carry out the intent of this Agreement. Each party
hereto agrees to cooperate affirmatively with each other party hereto to the
extent reasonably requested by such other parties to enforce rights and
obligations pursuant hereto.
10. Term. This Agreement shall terminate upon the earlier
of (i) the Company's sale of its Common Stock in a firm commitment underwritten
public offering at a market valuation of at least $100,000,000 immediately prior
to effectiveness of the Company's registration statement and pursuant to a
registration statement on Form S-1 or Form SB-2 under the Securities Act of
1933, as amended, the public offering price of which is not less than
$15,000,000 in the aggregate), and (ii) the closing of the Company's sale of all
or substantially all of its assets or the acquisition of the Company by another
entity by means of merger, consolidation or other transaction or series of
related transactions resulting in the exchange of the outstanding shares of the
Company's capital stock such that the stockholders of the Company prior to such
transaction own, directly or indirectly, less than 50% of the voting power of
the surviving entity.
11. Entire Agreement. This Agreement contains the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all other agreements between or among any of the parties with respect
to the subject matter hereof and cannot be
8
<PAGE> 9
altered or otherwise amended except pursuant to an instrument in writing signed
by each of the parties to this Agreement. This Agreement shall be interpreted
under the laws of the State of California without reference to conflicts of law
provisions.
12. Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the written
consent of the holders of more than 50% of the Common Stock issued and held by
the Founders and the written consent of the holders of more than 50% of the
Common Stock issued or issuable upon conversion of the Preferred Shares then
outstanding. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon, the Company, the Founders and all Purchasers and their
respective successors and assigns.
13. Separability. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
14. Attorney's Fees. In the event that any dispute among
the parties to this Agreement should result in litigation, 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.
15. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
16. Governing Law. This Agreement shall be governed by
and construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-----------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 11
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-----------------------------------------
Name: Eisenberg
---------------------------------------
Title: CEO
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 12
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 13
FOUNDERS:
/s/ Delly Tamer
--------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
--------------------------------------------
Brett Beveridge
4775 Pine Dr.
Miami, FL. 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 14
FOUNDERS:
/s/ Delly Tamer
--------------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
--------------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 15
PURCHASERS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 16
PURCHASERS:
HIG WIRELESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California, 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 17
PURCHASERS:
HIG WIRELESS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
-----------------------------------------
Name: Jeffrey Brody
---------------------------------------
Title: Managing Member
--------------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California, 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 18
PURCHASERS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gay S. Wohl
-----------------------------------------
Name: Gay S. Wohl
---------------------------------------
Title: Partner
--------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 19
PURCHASERS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III
Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investor '99 L.P.
By: /s/ G. Carter Sednaoui
-----------------------------------------
G. Carter Sednaoui
General Partner
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and
James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
CO-SALE AGREEMENT
<PAGE> 1
EXHIBIT 10.4
INVESTORS' RIGHTS AGREEMENT
JULY 30, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Registration Rights...........................................................................................1
1.1 Definitions.........................................................................................1
1.2 Request for Registration............................................................................2
1.3 Company Registration................................................................................4
1.4 Form S-3 Registration...............................................................................5
1.5 Obligations of the Company..........................................................................6
1.6 Information from Holder.............................................................................7
1.7 Expenses of Registration............................................................................7
1.8 Indemnification.....................................................................................8
1.9 Reports Under Securities Exchange Act of 1934......................................................10
1.10 Assignment of Registration Rights.................................................................10
1.11 Limitations on Subsequent Registration Rights.....................................................11
1.12 "Market Stand-Off"Agreement.......................................................................11
1.13 Termination of Registration Rights................................................................11
2. Covenants of the Company.....................................................................................11
2.1 Delivery of Financial Statements...................................................................11
2.2 Inspection.........................................................................................12
2.3 Termination of Information and Inspection Covenants................................................13
2.4 Right of First Offer...............................................................................13
2.5 Key Person Life Insurance..........................................................................14
2.6 Proprietary Information and Inventions Agreement...................................................14
2.7 Employee and Other Stock Arrangements..............................................................14
2.8 Qualified Small Business Stock.....................................................................14
2.9 Termination of Certain Covenants...................................................................15
3. Miscellaneous................................................................................................15
3.1 Successors and Assigns.............................................................................15
3.2 Governing Law......................................................................................15
3.3 Counterparts.......................................................................................15
3.4 Titles and Subtitles...............................................................................15
3.5 Notices............................................................................................15
3.6 Expenses...........................................................................................15
3.7 Entire Agreement: Amendments and Waivers...........................................................15
3.8 Severability.......................................................................................16
3.9 Aggregation of Stock...............................................................................16
</TABLE>
i
<PAGE> 3
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 30th day of
July, 1999, by and among LetsTalk.com, Inc., a Delaware corporation (the
"Company"), the investors listed on Schedule A hereto, each of which is herein
referred to as an "Investor," the holders of Common Stock listed on Schedule B
hereto, each of which is herein referred to as a "Common Holder," and the
founders listed on Schedule C hereto, each of which is herein referred to as a
"Founder."
RECITALS
WHEREAS, the Company and the Investors are parties to the
Series A Preferred Stock Purchase Agreement of even date herewith (the "Series A
Agreement");
WHEREAS, the Company and Let's Talk Cellular & Wireless, Inc.,
a Florida corporation ("LTC"), are parties to a license agreement and a binding
Letter of Intent with the Company which provide for, among other things, the
purchase of shares of Common Stock of the Company by LTC, the license by LTC of
certain technology to the Company and the provision of certain services for the
Company by LTC (collectively, the "LTC Agreements");
WHEREAS, the Company and H.I.G. Brickellbay, Inc., a Cayman
Islands corporation ("HIG"), are parties to a Common Stock Purchase Agreement of
even date herewith (the "Common Stock Purchase Agreement") which provides for,
among other things, the purchase by HIG of shares of Common Stock of the
Company; and
WHEREAS, in order to induce the Company, the Founders and the
Common Holder to approve the issuance of the Series A Preferred Stock to induce
the Investors to invest funds in the Company pursuant to the Series A Agreement,
to provide further inducement to LTC to enter into the LTC Agreements and
purchase shares of Common Stock of the Company thereunder, and to provide
further inducement to HIG to enter into the Common Stock Purchase Agreement and
purchase shares of Common Stock of the Company thereunder, Investors, the
Founders, the Common Holder and the Company hereby agree that this Agreement
shall govern the rights of the Investors and the Common Holder to cause the
Company to register shares of Common Stock issued or issuable to them and
certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and
agrees as follows:
1.1 Definitions. For purposes of this
Section 1:
(a) The term "Act" means the Securities
Act of 1933, as amended.
(b) The term "Form S-3" means such form
under the Act as in effect on the date hereof or any registration form under the
Act subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other
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documents filed by the Company with the SEC; provided, however, that Form S-3
shall not be deemed to include Form S-2 under the Act as in effect on the date
hereof.
(c) The term "Holder" means any person
owning or having the right to acquire Registrable Securities or any assignee
thereof in accordance with Section 1.10 hereof.
(d) The term "Initial Offering" means
the Company's first firm commitment underwritten public offering of its Common
Stock under the Act.
(e) The term "1934 Act" means the
Securities Exchange Act of 1934, as amended.
(f) The term "register," "registered,"
and "registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(g) The term "Registrable Securities"
means (i) the Common Stock issuable or issued upon conversion of the Series A
Preferred Stock, (ii) the shares of Common Stock issued to the Common Holder;
and (iii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued
as) a dividend or other distribution with respect to, or in exchange for, or in
replacement of, the shares referenced in (i) and (ii) above, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which his rights under this Section 1 are not assigned.
(h) The number of shares of
"Registrable Securities" outstanding shall be determined by the number of shares
of Common Stock outstanding that are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities that are,
Registrable Securities.
(i) The term "SEC" shall mean the
Securities and Exchange Commission.
1.2 Request for Registration.
(a) Subject to the conditions of this
Section 1.2, if the Company shall receive at any time six (6) months after the
effective date of the Initial Offering, a written request from the Holders of
fifty percent (50%) or more of the Registrable Securities then outstanding (the
"Initiating Holders") that the Company file a registration statement under the
Act covering the registration of Registrable Securities with an anticipated
aggregate offering price of at least $7,500,000, then the Company shall, within
twenty (20) days of the receipt thereof, give written notice of such request to
all Holders, and subject to the limitations of this Section 1.2, use all
reasonable efforts to effect, as soon as practicable, the registration under the
Act of all Registrable Securities that the Holders request to be registered in a
written request received by the Company within twenty (20) days of the mailing
of the Company's notice pursuant to this Section 1.2(a).
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(b) If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 1.2 and the Company shall include such information in
the written notice referred to in Section 1.2(a). In such event the right of any
Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company (which underwriter or underwriters
shall be reasonably acceptable to a majority in interest of the Initiating
Holders). Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Company that marketing factors require a limitation of
the number of securities underwritten (including Registrable Securities), then
the Company shall so advise all Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated only to the Holders of such
Registrable Securities, on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required
to effect a registration pursuant to this Section 1.2:
(i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, unless the Company is
already subject to service in such jurisdiction and except as may be required
under the Act; or
(ii) after the Company has
effected three (3) registrations pursuant to this Section 1.2, and such
registrations have been declared or ordered effective; or
(iii) during the period starting
with the date sixty (60) days prior to the Company's good faith estimate of the
date of the filing of, and ending on a date one hundred eighty (180) days
following the effective date of, a registration subject to Section 1.3 below,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or
(iv) if the Initiating Holders
propose to dispose of Registrable Securities that may be registered on Form S-3
pursuant to Section 1.4 hereof; or
(v) if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the Company's Chief Executive Officer or Chairman
of the Board stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than one hundred
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twenty (120) days after receipt of the request of the Initiating Holders,
provided that such right to delay a request shall be exercised by the Company
not more than once in any twelve (12)-month period.
1.3 Company Registration.
(a) If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its stock or other securities under the Act in connection with the public
offering of such securities (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration
relating to a corporate reorganization or other transaction under Rule 145 of
the Act, a registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities, or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after mailing of
such notice by the Company in accordance with Section 3.5, the Company shall,
subject to the provisions of Section 1.3(c), use all reasonable efforts to cause
to be registered under the Act all of the Registrable Securities that each such
Holder has requested to be registered.
(b) Right to Terminate Registration.
The Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 1.3 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such
registration. The expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 1.7 hereof.
(c) Underwriting Requirements. In
connection with any offering involving an underwriting of shares of the
Company's capital stock, the Company shall not be required under this Section
1.3 to include any of the Holders' securities in such underwriting unless they
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters) and enter into an underwriting agreement in customary form with an
underwriter or underwriters selected by the Company, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in their sole discretion
will not jeopardize the success of the offering (the securities so included to
be apportioned pro rata among the selling Holders according to the total amount
of securities entitled to be included therein owned by each selling Holder or in
such other proportions as shall mutually be agreed to by such selling Holders),
but in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of securities included in such offering, unless such offering is the
initial public offering of the Company's
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securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other shareholder's
securities are included, (ii) the amount of securities of the selling Holders
included in the offering be reduced until all securities held by employees of
the Company or, after exclusion of all of any such employees' shares, other
stockholders of the Company have first been excluded from such offering, or
(iii) notwithstanding (i) or (ii) above, any shares being sold by a shareholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling shareholder that is a Holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and shareholders of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling Holder,"
and any pro rata reduction with respect to such "selling Holder" shall be based
upon the aggregate amount of Registrable Securities owned by all such related
entities and individuals.
1.4 Form S-3 Registration. In case the Company
shall receive from the Holders of at least fifteen percent (15%) of the
Registrable Securities a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company shall:
(a) promptly give written notice of the
proposed registration, and any related qualification or compliance, to all other
Holders; and
(b) use all reasonable efforts to
effect, as soon as practicable, such registration and all such qualifications
and compliances as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holders joining in such request as
are specified in a written request given within fifteen (15) days after receipt
of such written notice from the Company, provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this section 1.4:
(i) if Form S-3 is not
available for such offering by the Holders;
(ii) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less than $2,500,000;
(iii) if the Company shall
furnish to the Holders a certificate signed by the Chief Executive Officer or
Chairman of the Board of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than one hundred
twenty (120) days
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after receipt of the request of the Holder or Holders under this Section 1.4;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period;
(iv) if the Company has, within
the twelve (12) month period preceding the date of such request, already
effected two registrations on Form S-3 for the Holders pursuant to this Section
1.4; or
(v) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the
Company shall file a registration statement covering the Registrable Securities
and other securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders. Registrations effected
pursuant to this Section 1.4 shall not be counted as requests for registration
effected pursuant to Section 1.2.
1.5 Obligations of the Company. Whenever
required under this Section 1 to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use all
reasonable efforts to cause such registration statement to become effective,
and, upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for a period
of up to one hundred twenty (120) days or, if earlier, until the distribution
contemplated in the Registration Statement has been completed;
(b) prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement;
(c) furnish to the Holders such numbers
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(d) use all reasonable efforts to
register and qualify the securities covered by such registration statement under
such other securities or "blue sky" laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions;
(e) in the event of any underwritten
public offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering, which obligations shall include providing customary
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opinions of legal counsel and letters from accountants and paying certain
customary travel expenses in connection with the underwriters sales efforts;
(f) notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Act or the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(g) cause all such Registrable
Securities registered pursuant hereunder to be listed on each securities
exchange on which similar securities issued by the Company are then listed; and
(h) provide a transfer agent and
registrar for all Registrable Securities registered pursuant hereunder and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration.
1.6 Information from Holder. It shall be a
condition precedent to the obligations of the Company to take any action
pursuant to this Section 1 with respect to the Registrable Securities of any
selling Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to effect the
registration of such Holder's Registrable Securities.
1.7 Expenses of Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of one counsel for the selling Holders
shall be borne by the Company. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 or Section 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be requested in the withdrawn registration), unless, in
the case of a registration requested under Section 1.2, the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2, provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2 or 1.4. The
Company shall pay all legal expenses in connection with the preparation of
opinions of counsel necessary for sales of Registrable Securities pursuant to
Rule 144 of the Act unless counsel for the Company provides such opinions.
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1.8 Indemnification. In the event any
Registrable Securities are included in a registration statement under this
Section 1:
(a) To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners or officers,
directors and shareholders of each Holder, legal counsel and accountants for
each Holder, any underwriter (as defined in the Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the 1934 Act, against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the Act, the 1934 Act
or any state securities laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities laws or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities laws;
and the Company will reimburse each such Holder, underwriter or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection l.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person; provided further, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Holder or underwriter, or any
person controlling such Holder or underwriter, from whom the person asserting
any such losses, claims, damages or liabilities purchased shares in the
offering, if a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Holder or underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the shares to such person, and if the prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability.
(b) To the extent permitted by law,
each selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Act, legal
counsel and accountants for the Company, any underwriter, any other Holder
selling securities in such registration statement and any controlling person of
any such underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons may become
subject, under the Act, the 1934 Act or any state securities laws, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information
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furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any person intended to be indemnified
pursuant to this subsection l.8(b), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.8(b) exceed the net proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an
indemnified party under this Section 1.8 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 1.8, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for
in this Section 1.8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to
the extent that the provisions on indemnification and contribution contained in
the underwriting agreement entered
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into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and
Holders under this Section 1.8 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.9 Reports Under Securities Exchange Act of
1934. With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) make and keep public information
available, as those terms are understood and defined in SEC Rule 144, at all
times after ninety (90) days after the effective date of the Initial Offering;
(b) file with the SEC in a timely
manner all reports and other documents required of the Company under the Act and
the 1934 Act; and
(c) furnish to any Holder, so long as
the Holder owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
SEC Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.10 Assignment of Registration Rights. The
rights to cause the Company to register Registrable Securities pursuant to this
Section 1 may be assigned (but only with all related obligations) by a Holder to
a transferee or assignee of such securities that (i) is a subsidiary, parent,
partner, limited partner, retired partner or shareholder of, or partnership
under common control with, a Holder, (ii) is a pledgee, or assignee of such
pledgee, of Holder pursuant to a bona fide loan transaction, (iii) is a Holder's
family member or trust for the benefit of an individual Holder, or (iv) after
such assignment or transfer, holds at least 100,000 shares of Registrable
Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations), provided: (a) the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (b) such transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement, including without limitation the provisions of
Section 1.12 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
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1.11 Limitations on Subsequent Registration
Rights. From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holders of a majority of the
Registrable Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company that would allow such holder or
prospective holder (a) to include such securities in any registration filed
under Section 1.3 hereof, unless under the terms of such agreement, such holder
or prospective holder may include such securities in any such registration only
to the extent that the inclusion of such securities will not reduce the amount
of the Registrable Securities of the Holders that are included or (b) to demand
registration of their securities.
1.12 "Market Stand-Off" Agreement. Each Holder
hereby agrees that it will not, without the prior written consent of the
managing underwriter, during the period commencing on the date of the final
prospectus relating to the Company's initial public offering and ending on the
date specified by the Company and the managing underwriter (such period not to
exceed one hundred eighty (l80) days) (i) lend, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(whether such shares or any such securities are then owned by the Holder or are
thereafter acquired), or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The underwriters in connection with the
Company's initial public offering are intended third party beneficiaries of this
Section 1.12 and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Provided, that this Section 1.12 shall not apply to transfers
of securities by Holders to is a pledgee, or assignee of such pledgee, of Holder
pursuant to a bona fide loan transaction existing as of the date of such final
prospectus.
1.13 Termination of Registration Rights. No
Holder shall be entitled to exercise any right provided for in this Section 1
after five (5) years following the consummation of the Initial Offering or, as
to any Holder, such earlier time at which all Registrable Securities held by
such Holder (and any affiliate of the Holder with whom such Holder must
aggregate its sales under Rule 144) can be sold in any three (3)-month period
without registration in compliance with Rule 144 of the Act.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The
Company shall deliver to each Investor and Common Holder:
11
<PAGE> 14
(a) as soon as practicable, but in any
event within ninety (90) days after the end of each fiscal year of the Company,
an income statement for such fiscal year, a balance sheet of the Company and
statement of shareholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any
event within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Company, an unaudited income statement,
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter.
(c) within thirty (30) days of the end
of each month, an unaudited income statement and statement of cash flows and
balance sheet for and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any
event at least thirty (30) days prior to the end of each fiscal year, a budget
and business plan for the next fiscal year, prepared on a monthly basis,
including balance sheets, income statements and statements of cash flows for
such months and, as soon as prepared, any other budgets or revised budgets
prepared by the Company;
(e) with respect to the financial
statements called for in subsections (b) and (c) of this Section 2.1, an
instrument executed by the Chief Financial Officer or President of the Company
certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the exception
of footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period specified,
subject to year-end audit adjustment; and
(f) such other information relating to
the financial condition, business, prospects or corporate affairs of the Company
as the Investor or Common Holder or any assignee of thereof may from time to
time request, provided, however, that the Company shall not be obligated under
this subsection (f) or any other subsection of Section 2.1 to provide
information that it deems in good faith to be a trade secret or similar
confidential information.
2.2 Inspection. The Company shall permit each
Investor or Common Holder that holds at least 500,000 shares of Series A
Preferred Stock (and/or Common Stock issued upon conversion thereof) or Common
Stock, at such Investor's or Common Holder's expense, to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor or Common Holder; provided,
however, that the Company shall not be obligated pursuant to this Section 2.2 to
provide access to any information that it reasonably considers to be a trade
secret or similar confidential information.
12
<PAGE> 15
2.3 Termination of Information and Inspection
Covenants. The covenants set forth in Sections 2.1 and 2.2 shall terminate and
be of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
2.4 Right of First Offer. Subject to the terms
and conditions specified in this paragraph 2.4, the Company hereby grants to
each Major Investor (as hereinafter defined) a right of first offer with respect
to future sales by the Company of its Shares (as hereinafter defined). For
purposes of this Section 2.4, a Major Investor shall mean any Investor or
transferee that holds at least 100,000 shares of Series A Preferred Stock (or
the Common Stock issued upon conversion thereof) issued pursuant to the Series A
Agreement (as adjusted for stock splits, stock dividends, combinations and other
recapitalizations) or Common Holder or Founder that holds at least 100,000
shares of Common Stock. For purposes of this Section 2.4, Investor or Common
Holder includes any general partners and affiliates of such Investor or Common
Holder. An Investor or Common Holder shall be entitled to apportion the right of
first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exchangeable or exercisable for any shares of,
any class of its capital stock ("Shares"), the Company shall first make an
offering of such Shares to each Major Investor in accordance with the following
provisions.
(a) The Company shall deliver a notice
in accordance with Section 3.5 ("Notice") to the Major Investors stating (i) its
bona fide intention to offer such Shares, (ii) the number of such Shares to be
offered, and (iii) the price and terms upon which it proposes to offer such
Shares.
(b) By written notification received by
the Company, within twenty (20) calendar days after receipt of the Notice, the
Major Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Shares that equals the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Series A Preferred Stock then held, by such
Major Investor bears to the total number of shares of Common Stock of the
Company then outstanding (assuming full conversion of all convertible securities
excluding unvested options).
(c) If all Shares that Investors or
Common Holders are entitled to obtain pursuant to subsection 2.4(b) are not
elected to be obtained as provided in subsection 2.4(b) hereof, the Company may,
during the ninety (90) day period following the expiration of the period
provided in subsection 2.4(b) hereof, offer the unsubscribed portion of such
Shares to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If the Company does
not enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within ninety (90) days of the execution
thereof, the right provided hereunder shall be deemed to
13
<PAGE> 16
be revived and such Shares shall not be offered unless first reoffered to the
Major Investors in accordance herewith.
(d) The right of first offer in this
paragraph 2.4 shall not be applicable to (i) the issuance or sale of up to
5,000,000 shares of Common Stock pursuant to the 1999 Stock Plan (or options
therefor) to employees, directors and consultants for the primary purpose of
soliciting or retaining their services; (ii) the issuance of securities pursuant
to a bona fide, firmly underwritten public offering of shares of Common Stock,
registered under the Act, resulting in proceeds to the Company of at least
$25,000,000 in the aggregate, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) the
issuance of securities to a seller of a business in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise, or (v) the issuance of
stock, warrants or other securities or rights to persons or entities with which
the Company has business relationships provided such issuances are unanimously
approved by the Company's Board of Directors.
2.5 Key Person Life Insurance. The Company has
as of the date hereof or shall within 90 days of the date hereof use its best
efforts to obtain from financially sound and reputable insurers term life
insurance on the life of Delly Tamer in the amount of $1,000,000, except as
otherwise decided in accordance with policies adopted by the Company's Board of
Directors. The Company will cause to be maintained the term life insurance
required by this Section 2.5 hereof, except as otherwise decided in accordance
with policies adopted by the Company's Board of Directors. Such policies shall
name the Company as loss payee and shall not be cancelable by the Company
without prior approval of the Board of Directors.
2.6 Proprietary Information and Inventions
Agreement. The Company will cause each person now or hereafter employed by it or
any subsidiary with access to confidential information to enter into a
proprietary information and inventions agreement substantially in the form
approved by the Board of Directors.
2.7 Employee and Other Stock Arrangements. The
Company will not, without the approval of the Board of Directors, issue any of
its capital stock, or grant an option or rights to subscribe for, purchase or
acquire any of its capital stock, to any employee, consultant, officer or
director of the Company or a subsidiary except for the issuance of up to
5,000,000 shares of Common Stock pursuant to the Company's 1999 Stock Plan. Each
acquisition of any shares of capital stock of the Company or any option or right
to acquire any shares of capital stock of the Company by an employee, officer or
director of the Company will be conditioned upon the execution and delivery by
the Company and such employee, officer or director of an agreement substantially
in a form approved by the Board of Directors of the Company.
2.8 Qualified Small Business Stock. The Company
shall comply with the reporting and record keeping requirements of Section 1202
of the Code, any regulations promulgated thereunder and any similar state laws
and regulations, and agrees not to repurchase any stock of the Company if such
repurchase would constitute a "significant redemption" within the meaning of
Section 1202(c)(3)(B) of the Code with respect to the Series A Preferred Stock
being purchased hereunder without the consent of the Board of Directors of the
Company. In
14
<PAGE> 17
addition, within thirty days after an Investor's written request therefor, the
Company shall deliver to such Investor a written statement indicating whether
the shares continue to meet the qualifications for "qualified small business
stock" set forth is Section 2.27 of the Series A Agreement.
2.9 Termination of Certain Covenants. The
covenants set forth in Section 2 shall terminate and be of no further force or
effect upon the consummation of the sale of securities pursuant to a bona fide,
firmly underwritten public offering of shares of common stock, registered under
the Act, resulting in proceeds to the Company of at least $25,000,000.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise
provided herein, the terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any shares of Registrable Securities). Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be
governed by and construed under the laws of the State of California as applied
to agreements among California residents entered into and to be performed
entirely within California.
3.3 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any
notice required or permitted under this Agreement shall be given in writing and
shall be deemed effectively given upon personal delivery to the party to be
notified or upon delivery by confirmed facsimile transmission, nationally
recognized overnight courier service, or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed to
the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
3.6 Expenses. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
3.7 Entire Agreement: Amendments and Waivers.
This Agreement (including the Exhibits hereto, if any) constitutes the full and
entire understanding and agreement among the parties with regard to the subjects
hereof and thereof. Any term of this Agreement
15
<PAGE> 18
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities each future holder of all such Registrable Securities,
and the Company.
3.8 Severability. If one or more provisions of
this Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of
Registrable Securities held or acquired by affiliated entities or persons shall
be aggregated together for the purpose of determining the availability of any
rights under this Agreement.
16
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------
Delly Tamer,
President and Chief Executive Officer
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 20
INVESTORS:
H.I.G. WIRELESS INTERNET, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
----------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 21
INVESTORS:
HIG WIRELESS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Associates IX, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
-------------------------------------
Name: Jeffrey Brody
-----------------------------------
Title: Managing Member
----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 22
INVESTORS:
HIG WIRELESS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
c/o Doug Berman
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
Brentwood Affiliates Fund III, LP
By: Brentwood IX Ventures, LLC
Its General Partner
By: /s/ Jeffrey Brody
-------------------------------------
Name: Jeffrey Brody
-----------------------------------
Title: Managing Member
----------------------------------
c/o Barry Patmore
3000 Sand Hill Road
Bldg. 1, Suite 260
Menlo Park, California 94025
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 23
INVESTORS:
G & H Partners
155 Constitution Drive
Menlo Park, California 94025
By: /s/ Gary S. Wohl
-------------------------------------
Name: Gary S. Wohl
-----------------------------------
Title: Partner
----------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 24
INVESTORS:
Accel VII L.P.
By: Accel VII Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Internet Fund III L.P.
By: Accel Internet Fund III Associates L.L.C.
Its General Partner
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
Managing Member
Accel Investors '99 L.P.
By: /s/ G. Carter Sednaoui
------------------------------------------
G. Carter Sednaoui
General Partner
Addresses for Notices:
Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: Theresia Gouw Ranzetta and
James R. Swartz
Tel: (650) 614-4800
Fax: (650) 614-4880
and
Accel Partners
One Palmer Square
Princeton, NJ 08542
Attn: G. Carter Sednaoui
Tel: (609) 683-4500
Fax: (609) 683-0384
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 25
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------
Name: Eisenberg, David
-----------------------------------
Title: CEO
----------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 26
COMMON HOLDER:
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
800 Brickell Avenue, Suite 400
Miami, Florida 33131
H.I.G. BRICKELLBAY, INC.
By: /s/
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
1001 Brickell Bay Drive
Twenty-Seventh Floor
Miami, Florida 33131
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 27
FOUNDERS:
/s/ Delly Tamer
----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
----------------------------------------
Brett Beveridge
970 Chestnut Street
San Francisco, California 94109
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 28
FOUNDERS:
----------------------------------------
Delly Tamer
970 Chestnut Street
San Francisco, California 94109
/s/ Brett Beveridge
----------------------------------------
Brett Beveridge
4775 Pine Dr.
Miami, FL 33143
SIGNATURE PAGE TO LETSTALK.COM, INC.
INVESTORS' RIGHTS AGREEMENT
<PAGE> 29
SCHEDULE A
Schedule of Investors
H.I.G. WIRELESS INTERNET, INC.
BRENTWOOD ASSOCIATES IX, LP
BRENTWOOD AFFILIATES FUND III, LP
ACCEL VII L.P.
ACCEL INTERNET FUND III, L.P.
ACCEL INVESTORS '99 L.P.
G & H PARTNERS
<PAGE> 30
SCHEDULE B
Holders of Common Stock
LET'S TALK CELLULAR & WIRELESS, INC.
H.I.G. BRICKELLBAY, INC.
<PAGE> 31
SCHEDULE C
Schedule of Founders
DELLY TAMER
BRETT BEVERIDGE
<PAGE> 1
EXHIBIT 10.5
LICENSE AGREEMENT
LICENSE AGREEMENT, made as of July 30, 1999, between Let's
Talk Cellular and Wireless, Inc., a Florida corporation having its principal
place of business at 800 Brickell Avenue, Suite 400, Miami, Florida 33131
("LTCW"), and LetsTalk.com, Inc., a Delaware corporation having its principal
place of business at 970 Chestnut Street, San Francisco, California 94109
("LTCC").
WHEREAS, LTCW is the owner of the trademarks, service marks,
trade dress, logos and domain names listed on Annex I hereto (the "LTCW Marks");
WHEREAS, LTCC is in the business of selling communications and
computing products and services, and other consumer and business products and
services (collectively, the "Products") via on-line or ecommerce activity
(including but not limited to the Internet and any and all successors to the
Internet) (the "Sales Channel"); (the definition of Products not to include any
products which taken as a whole are: sexually-oriented; inconsistent with
ethical business standards and practices; or primarily associated with illegal
or criminal activities; or as to which reasonable people would regard as being
immoral or unethical; or as subsequently mutually agreed upon by the parties);
WHEREAS, LTCC desires to hereby obtain a license, in
connection with its sale of the Products through the Sales Channel, to use the
LTCW Marks and content and other related materials developed by or for LTCW now,
and/or such LTCW Marks and content and other related materials related to
computing and/or communications products and/or services developed by or for
LTCW in the future, including, without limitation, web pages, computer code,
advertising materials, visual displays and editorial content (the "LTCW
Content");
WHEREAS, LTCW is entering into this License Agreement for
6,600,000 shares of the Common Stock, $0.0001 par value, of LTCC;
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as follows:
1. Licenses Granted. (a) LTCW, subject to the terms and
conditions of this Agreement, grants to LTCC and LTCC hereby accepts from LTCW a
worldwide, perpetual (subject to Section 5 hereof), fully paid-up,
non-transferable, exclusive (even as against LTCW), royalty free right and
license (the "Licenses") during the Term (as defined below) to: (1) use, modify,
distribute (directly or indirectly), display, perform, reproduce, have
reproduced, and create derivative works of the LTCW Content and (2) use the LTCW
Marks and the goodwill associated therewith (collectively the LTCW Marks and the
LTCW Content shall be referred to as the "LTCW Material") in connection with the
sale of Products through the Sales Channel and to display such material in
connection therewith on any LTCC site on the World Wide Web or any successor or
other online or ecommerce presence (an "LTCC's Site"), as well as any promotion
or advertising with respect to the operation of LTCC's business (it being
understood that Annex I hereto shall (i) be updated, modified and supplemented
from time to time as the parties hereto shall reasonably agree, for use in
connection herewith and (ii) include all Updates). "Updates" shall mean all
trademarks, service marks, trade dress, logos and domain names of
<PAGE> 2
LTCW created or developed by or for LTCW existing now, or in the future as it
relates to the Products, to the extent LTCW can grant licenses in such
trademarks, service marks, trade dress, logos and domain names (provided that
LTCW shall not license or use any of the foregoing that LTCW cannot license to
LTCC). All Updates shall be added to LTCW Marks. Subject to the provisions of
this Agreement, LTCC may in connection with a partnership, alliance, joint
venture, distribution, advertising or similar arrangement or the like that is
directly related to LTCC's business, grant permission to such other party to use
the "LETSTALK.COM" logo on such other party's website or other promotional
materials as a hyperlink or to otherwise indicate the relationship between LTCC
and the other party. LTCW will deliver, per LTCC's reasonable request, all
embodiments of the LTCW Material to LTCC promptly after execution of this
Agreement. LTCC shall have the right to sublicense its rights under the
agreement subject to the terms and conditions hereof either (1) provided the
sublicensee agrees to be bound to the terms of this Agreement for the benefit of
LTCW (as a third party beneficiary) and provides the executed sublicense
agreement to LTCW to review for compliance with the foregoing or (2) pursuant to
a "short form" written agreement with the sublicensee of a form to be mutually
agreed by the parties as quickly as possible.
(b) LTCW retains and reserves all rights in and to the LTCW
Material not specifically and expressly granted hereunder.
(c) The Licenses apply to editorial text, advertisements,
photographs, diagrams and illustrations of any kind. If the use of any LTCW
Content requires consent from or payment to third parties under agreement
existing prior to any threat or claim by such third parties and prior to
provision of such content to LTCC, LTCW will use diligent efforts to assist LTCC
in obtaining such consent at LTCC's sole cost. Upon either party becoming aware
that any such consent or payment is required to be obtained, such party shall
promptly notify the other party thereof.
(d) Other than specifically and expressly set forth herein,
LTCW makes no representations or warranties to LTCC with respect to the LTCW
Material and LTCC accepts the Licenses with such understanding.
(e) LTCC acknowledges that each of the LTCW Marks is a valid
mark of LTCW and agrees not to challenge, contest or act in a manner
inconsistent with LTCW's ownership of the LTCW Marks. Any rights that LTCC may
now have or hereafter acquire in any of the LTCW Marks shall be promptly
assigned to LTCW. LTCC shall have no rights of ownership in the LTCW Marks and
no right to make any filing for registration of the LTCW Marks on its own behalf
or in its own name without LTCW's prior written consent. LTCC's use of the LTCW
Marks shall inure solely to the benefit of LTCW, and the good will appurtenant
to the LTCW Marks shall belong exclusively to LTCW. LTCC shall assist and
cooperate with LTCW in taking all such actions as LTCW may reasonably request
from time to time in order to secure to LTCW all rights in the LTCW Marks. All
rights in each of the LTCW Marks that are not hereby expressly granted by LTCW
to LTCC are reserved to LTCW.
(f) As to the use of the LTCW Marks in connection with the
offering by LTCC of any product or service currently offered by LTCW, any use of
the LTCW Marks shall reasonably conform in all material respects or exceed the
level of quality and service
2
<PAGE> 3
employed by LTCW. As to the use of LTCW Marks in connection with the offering by
LTCC of any product or service not currently offered by LTCW, any use of the
LTCW Marks shall reasonably conform in all material respects or exceed the level
of quality and service employed by major marketers or manufacturers in that
industry. In no event shall LTCC act to materially denigrate or diminish the
value of the LTCW Marks. LTCC and LTCW shall only employ a high level of
business standards and ethics in connection with which they are using the LTCW
Marks; this includes, without limitation, not selling products or services
excluded from the definition of Products by the parenthetical in the second
whereas clause above. However, in no event will higher standards be applied to
LTCC than are actually applied to any other licensee and followed by LTCW.
(g) Recognizing LTCC's interest in the continuing viability
and reputation of the LTCW Marks, LTCW agrees that it will abide by its own
standards and its quality and service shall reasonably conform in all material
respects or exceed the level of quality and service employed by major marketers
and manufacturers in its industries and in any event will not act to materially
denigrate or diminish the value of the LTCW Marks.
(h) At LTCW's request, LTCC shall submit for LTCW's approval a
sample or samples of LTCC's use or proposed use of an LTCW Mark to evaluate
conformance to the appropriate level of quality hereunder.
(i) Insofar as LTCC desires to offer services not within the
definition of Products, LTCC shall have the right to request that additional
service or services be added to the definition of Products and LTWC shall
promptly respond to such request. LTCW shall not unreasonably withhold its
consent to the addition of such service.
(j) LTCC shall not have the right to modify any of the LTCW
Marks, provided, however, that LTCC shall have the right to create and make any
modifications to a logo consisting of the LETSTALK.COM mark, so long as the
".COM" portion of the mark is prominent in the logo, and the logo contains
substantial design elements apart from the word mark itself. Any such modified
marks shall be included as Updates.
2. Copyrights and Trademarks. Each party shall promptly notify
the other party if it becomes aware of any infringement of any copyright,
trademark, service mark or trade dress included in the Licenses. LTCC shall
assist LTCW in investigating or prosecuting any action against the infringing
parties. For infringements within the scope of LTCC's exclusive license, LTCC
shall have the first opportunity to bring, prosecute and settle any
infringement, unfair competition and/or similar proceeding relating to the
subject matter in which rights are granted by LTCW under this Agreement and
provided LTCC pays all costs and legal fees, LTCC will recover all damage
awards. If LTCC opts not to bring such action, LTCW may do so at its sole
discretion. If LTCW brings such action, it will be entitled to recover all
damage awards. Each party shall provide the other all assistance to the other in
investigating or prosecuting any such action including but not limited to
signing all documents and participating in the proceeding as a nominal party.
3. Cessation of Maintenance of LTCW Marks. Nothing in this
Agreement shall be construed as requiring the LTCW Marks to continue being
maintained by LTCW, it
3
<PAGE> 4
being expressly understood that any of the LTCW Marks may be abandoned,
discontinued, sold or otherwise disposed of by LTCW at any time. Sufficiently
prior to any LTCW actions or inactions in connection with abandonment or
discontinuance of such LTCW Marks, LTCW shall assign all right, title, and
interest (including but not limited to all associated goodwill) in such LTCW
Marks to LTCC. In the event that any LTCW Mark is sold or otherwise transferred
to a third party, LTCW agrees and shall ensure that all of LTCC's rights under
this Agreement shall continue in effect and LTCW shall ensure that such third
party is bound in writing with respect to the foregoing.
4. Exclusivity. (a) LTCW hereby agrees that during the term of
this Agreement, it shall not license the LTCW Marks or assist or promote any
other company that sells or intends to sell wireless products or services by
means of the Internet or any successor inter-network computer system or
otherwise via on-line or ecommerce channels. LTCW may, during the term of this
Agreement, license the LTCW Marks or assist or promote any other company that
sells or intends to sell wireless products or services by means of television or
telephone so long as such other company does not sell or intend to sell wireless
products or services by means of the Internet or any successor inter-network
computer system or otherwise via on-line or ecommerce channels. LTCW shall not
provide services to any other party similar to the services set forth in the
Letter of Intent between LTCW and LTCC dated July 30, 1999. Notwithstanding
anything to the contrary, LTCW may offer for sale in its stores and advertise
(for in-store sale only) the products and services of any provider of Products
that are available for sale at LTCW's stores.
5. Term and Termination. (a) The term of this Agreement shall
commence as of the date hereof and shall continue in perpetuity (the "Term"),
unless otherwise terminated as provided herein. Either party may terminate this
Agreement for cause if the other party has materially breached this Agreement
and has not cured said breach within 30 days of receipt of specific written
notice of the same, provided, however, that if the breaching party is using
reasonable efforts to cure said breach during said 30 day period, it shall
receive another 30 days, if requested, to cure such breach prior to termination.
In the event of a dispute as to whether there has been a material breach or cure
thereof, the Agreement will not be terminated until the dispute is finally
resolved pursuant to the arbitration procedure set forth below and, if
necessary, LTCC has failed to materially cure the breach within 30 days
thereafter. If the breach cannot be cured, cessation of the offending activity
will be deemed to be a cure of such breach without prejudice to the recover of
damages pertaining to such breach; provided, however, that if an arbitrator
determines that such party intentionally breached the Agreement, it may be
terminated by the other party. Such dispute will be settled by arbitration
(which arbitration shall be binding and enforceable in any court of competent
jurisdiction for purposes of this Agreement only) in accordance with the rules
of the American Arbitration Association (AAA). The arbitration will be conducted
by a single arbitrator selected by the AAA in accordance with its rules. Each
party will have five (5) days to present its case (presentation shall be made on
a date selected by the arbitrator reasonably acceptable to the parties which
shall be at least fifteen (15) and no more than thirty (30) days after selection
of the arbitrator). The arbitrator shall have twenty (20) days from completion
of such presentation to render its decision. Such arbitration shall be informal
and need not conform to AAA or other established procedures but reasonable rules
shall be determined by the arbitrator with the intention that the arbitration
shall be completed and the
4
<PAGE> 5
decision rendered within sixty (60) days. In any action or proceeding to enforce
rights under this Agreement, the prevailing party will be entitled to recover
costs and attorneys fees.
(b) LTCW may terminate this Agreement (i) upon the acquisition
of LTCC by a Competitor for an amount less than $350,000,000 (for avoidance of
doubt, if LTCC is acquired by any Competitor (as defined below) for an amount in
excess of $350,000,000 or if LTCC is acquired by a third-party other than a
Competitor, this License Agreement shall remain in effect and the Licenses shall
transfer to the acquiring party) (a "Competitor" shall mean any other "brick and
mortar" retailer of cellular and wireless communication devices or services);
(ii)(A) if any voluntary or involuntary proceeding is commenced against LTCC or
any of its material subsidiaries under any reorganization, bankruptcy,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency,
liquidation or similar law of any jurisdiction (and not dismissed within 120
days), (B) if LTCC or any of its material subsidiaries suffer any appointment of
any custodian or the like for it or any substantial part of its assets (and not
dismissed within 120 days) or (C) if LTCC or any of its material subsidiaries
makes a general assignment for the benefit of creditors; (iii) if LTCC entirely
ceases to use the LTCW Marks for the purpose of selling the Products through the
Sales Channel for a period of greater than 180 days in any 18-month period.
(c) Upon termination or expiration of this Agreement, all
rights granted to LTCC with respect to the LTCW Material shall immediately
revert to LTCW. At such time, LTCC agrees to immediately discontinue all use of
the LTCW Material and to destroy, or obscure or cover over the LTCW Marks on,
all Products or other materials related thereto upon which any of the LTCW Marks
have been affixed, and shall deliver a letter signed by a duly authorized
officer of LTCC certifying compliance with such requirement. The foregoing will
not prevent LTCC from taking appropriate action consistent with the remainder of
this Agreement to sell off pre-existing inventory and orders that have been
placed and otherwise meet its pre-existing commitments to customers and vendors
provided that all use of the LTCW Marks shall cease within 120 days of
termination.
(d) The following provisions will survive any termination or
expiration of this Agreement: Sections 8, 10, and 11.
6. Assignment. Neither LTCW nor LTCC shall assign this Agreement,
in whole or in part, without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, either party may
assign this Agreement and the rights and obligations granted hereunder, in
connection with any merger, consolidation, reorganization or restructuring, or
the sale of substantially all of the assets or business or equity securities of
such party. This Agreement shall inure to the benefit of and bind any successors
or permitted assigns of each party.
7. Representations and Warranties. (a) LTCC represents and
warrants (i) that it is a corporation in good standing under the laws of
Delaware with full power and authority to enter into and perform the terms and
obligations of this Agreement and (ii) that its entry into this Agreement does
not violate any agreement with any other party.
5
<PAGE> 6
(b) LTCW represents and warrants (i) that it is a corporation
in good standing under the laws of Florida with full power and authority to
enter into and perform the terms and obligations of this Agreement and (ii) that
its entry into this Agreement does not violate any agreement with any other
party and (iii) LTCW is the sole owner of all rights, title and interest in the
LTCW Marks and (iv) LTCW has not assigned, transferred, licensed, pledged or
otherwise encumbered any LTCW Marks, (v) LTCW is not aware of any actual or
potential violation, infringement or misappropriation of any third party's
rights (or any claim or potential claim thereof) by the use of the LTCW Marks
and, except as previously disclosed to LTCC in writing, the other LTCW Materials
in the same manner as used by LTCW to date. LTCW shall, at the reasonable
request of LTCC, provide any and all information available to LTCW with respect
to the nature and extent of LTCW's rights in the LTCW Material.
8. Indemnification. (a) LTCC shall indemnify LTCW and its
employees and contractors and hold them harmless from and against any and all
damages, costs (including reasonable attorneys' fees), and losses of any kind
awarded to a third party by a final court judgment arising out of or relating to
such third party claim or lawsuit relating to (i) LTCC's posting, publication or
distribution of the LTCW Material (except with respect to claims that the LTCW
Material, in the form originally delivered to LTCC by LTCW, infringed the
copyright or trademark rights of a third party), or (ii) the breach of this
Agreement, including the representations in Section 7(a) above, by LTCC, or
(iii) infringement of the copyright, trademark or other intellectual property
rights or the defamation or libel of a third party by the LTCW Material in
connection with the sale of LTCC's Products except for claims that the LTCW
Material, in the form originally delivered to LTCC by LTCW, defamed or libeled a
third party or infringed the copyright, trademark or other intellectual property
rights of a third party; provided LTCC is promptly notified of any and all
threats, claims and proceedings related thereto and LTCW furnishes to LTCC, on
LTCC's request, information available to LTCW for such defense and LTCC has sole
control over the defense and all negotiations for a settlement or compromise.
LTCW shall not admit any such claim without prior consent of LTCC.
(b) LTCW shall indemnify LTCC and its employees and
contractors and hold them harmless from and against any and all third party
claims, damages, costs (including reasonable attorneys' fees), liabilities and
losses of any kind arising out of or relating to (i) infringement of the
copyright, trademark or other intellectual property rights, or the defamation or
libel of a third party (except as exempted above) by the LTCW Material in the
form originally delivered to LTCC by LTCW or (ii) the breach of this Agreement,
including the representations and warranties in Section 7 above, by LTCW.
(c) Each party makes no express or implied warranties or
representations to the other party with respect to LTCC's Site or any LTCC
Product (including, without limitation, warranties of fitness, merchantability,
non-infringement, or any implied warranties arising out of course of
performance, dealing or trade usage unless otherwise expressly given, in
writing, by LTCW).
(d) NEITHER LTCC, NOR LTCW AND ITS LICENSORS SHALL IN ANY CASE
BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE
DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6
<PAGE> 7
9. Notices. All notices required or permitted to be given under
this Agreement will be writing and shall be deemed given when delivered
personally or sent by air mail or air courier to the parties at the following
addresses:
If to LTCW:
800 Brickell Avenue, Suite 400
Miami, FL 33131
Attention: Lazarus Rothstein, Esq.
with a copy to:
White & Case LLP
First Union Financial Center
200 South Biscayne Boulevard
Miami, FL 33131
Telefax: 305-358-5744
Attention: Jorge Freeland, Esq.
If to LTCC:
970 Chestnut Street
San Francisco, CA 94109
Attention: Delly Tamer
with a copy to:
Gunderson Dettmer et al.
155 Constitution Dr.
Menlo Park, CA 94025
Telefax: 650-321-2800
Attention: Scott Dettmer, Esq.
or such other address as either party may hereinafter communicate in writing to
the other in accordance with the provisions hereof.
10. Confidential Information. (a) Each of LTCW and the LTCC hereby
acknowledges and agrees that it will have access to, or become acquainted with,
the Confidential Information of the other party. For the purposes of this
Agreement, "Confidential Information" shall mean any information of LTCW or
LTCC, respectively, which relates to the matters contemplated by this Agreement,
including but not limited to the LTCW Material and any forecast or product
related information (whether or not incorporated in whole or in part in other
material), and whether or not developed by LTCW or LTCC, as the case may be,
including, but not limited to pre-existing or new information. Confidential
Information does not include any information that (i) is or becomes part of the
public domain through no act or violation of any obligation on the part of LTCW
in the case of LTCC's Confidential Information or LTCC in the case of LTCW's
Confidential Information; (ii) is required to be disclosed by court order or
operation of law or (iii) was acquired by LTCW in the case of LTCC's
Confidential Information or by LTCC in the case of LTCW's Confidential
Information, from a third party who did not acquire it under a confidential
relationship directly or indirectly from the other party hereto.
(b) Each of LTCW and LTCC hereby acknowledges and agrees that
the Confidential Information of the other party constitutes valuable trade
secrets of such party.
7
<PAGE> 8
Except as contemplated herein, each of LTCW and LTCC shall keep all Confidential
Information of the other party in confidence and shall not, at any time during
or after the term of this Agreement, without the prior written consent of such
other party disclose or otherwise make available, directly or indirectly, any
item of Confidential Information of such party to anyone. Each of LTCW and LTCC
shall use the Confidential Information of the other party only in connection
with the Agreement and for no other purpose.
11. General. (a) Neither this Agreement nor any provision hereof
may be amended or waived except in a writing signed by the party to be charged
with such amendment or waiver.
(b) The failure by either party to insist upon strict
performance of any of the terms of this Agreement, or a delay by either party in
exercising any of its rights or remedies hereunder, will not constitute a waiver
of such terms and conditions or of such rights or remedies, and no waiver of any
right hereunder will be deemed a waiver of any other right.
(c) This Agreement will be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
rules regarding choice or conflicts of law. Any controversy or claim arising out
of or relating to this Agreement or the breach hereof or the subject matter of
this Agreement, except for an action for injunctive relief, shall be settled by
arbitration held in New York City in the state of New York in accordance with
the Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Any action for injunctive relief hereunder shall be submitted to the
exclusive jurisdiction of the State and Federal courts in the State of New York.
The parties agree that the service of any legal process issued by the above
arbitrators or from said courts and delivered personally to a party hereto or
sent by air courier, return receipt requested, addressed to the parties at the
addresses herein above set forth shall be good and sufficient service to confer
personal jurisdiction upon the parties in such arbitration or court.
(d) This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior discussions, communications and agreements between them upon such subject
between the parties. This Agreement is binding upon and will inure to the
benefit of the parties and their respective successors and permitted assigns.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
LETSTALK.COM, INC.
By: /s/ Delly Tamer
-------------------------------------------
Delly Tamer,
President and Chief Executive Officer
LET'S TALK CELLULAR & WIRELESS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
LICENSE AGREEMENT
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
LETSTALK.COM, INC.
By:
-------------------------------------------
Delly Tamer,
President and Chief Executive Officer
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
-------------------------------------------
Name: David H. Eisenberg
-----------------------------------------
Title: CEO
----------------------------------------
SIGNATURE PAGE TO LETSTALK.COM, INC.
LICENSE AGREEMENT
<PAGE> 11
LTCW MARKS
<TABLE>
<CAPTION>
Mark Application Date Registration Date Serial Number
---- ---------------- ----------------- -------------
<S> <C> <C> <C>
Let's Talk Cellular - for January 11, 1994 1,816,762
communications services
Let's Talk Cellular (special February 15, 1994 1,821,719
logo) - for communications
services
Let's Talk Cellular - for October 31, 1995 1,931,056
communications apparatus
Let's Talk Wireless - for August 1994 Pending Service Mark
communications services and Trademark
and apparatus
Let's Talk - miscellaneous December 1995 Pending Service Mark
design (rainbow) - for and Trademark -
communications services Serial No. 012,369
and apparatus
Let's Talk - logo (as December 1995 Pending Service Mark
displayed on the Company's and Trademark -
business cards) - for Serial No. 012,370
communications services
and apparatus
Let's Talk Cellular & August 11, 1997 Pending Service and
Wireless - for Trademark
communications services
and apparatus
Peach - miscellaneous November 24, 1995 Pending Service Mark -
design for service Serial No. 75-023,838
provider for cellular
services, phones and
accessories
Wireless ToGo - for retail May 16, 1996 August 12, 1997 2,087,304
store services featuring
cellular telephones and
accessories
Cellular Unlimited January 13, 1997 Pending Trademark -
Serial No. 75-224,516
</TABLE>
<PAGE> 1
EXHIBIT 10.6
[LETTERHEAD OF LTCW]
July 30, 1999
LetsTalk.com, Inc.
970 Chestnut Street
San Francisco, California 94109
Gentlemen:
We have been discussing with you the proposed operating agreement
pursuant to which we have agreed to provide certain operational and fulfillment
services to you at the rates specified below (which the parties determine to be
fair market value) through a mutually acceptable agreement (the "Operating
Agreement"). This letter sets forth our understanding in principle with respect
to our relationship and will govern our relationship until we execute a
definitive Operating Agreement.
I. GENERAL
Parties agree in good faith to negotiate and document an Operating
Agreement based on the terms contained herein and to finalize such
agreement within 60 days of the signing of this Letter of Intent.
If either party so requests, the parties agree to use the services of
Andersen Consulting or another firm acceptable to both parties to
assist in the development of the comprehensive Operating Agreement. The
parties shall split the cost of these services equally, provided that
neither party shall be required to pay more than $25,000.
A. Term
The initial term shall be 5 years. Subject to earlier termination as
provided below, this agreement shall be automatically renewed for
additional one-year periods, provided that (1) LTCC provide notice of
its intent to renew at least six months prior to the end of the
then-current term and (2) within 60 days after such notice, LTCW does
not object to such renewal.
The arrangement shall be cancelable by either party if the other party
materially breaches the agreement and does not materially cure the
breach within 60 days of receiving written notice of the breach.
<PAGE> 2
LetsTalk.com ("LTCC") shall have the right to discontinue using any one
or more of the services provided by Let's Talk Cellular and Wireless,
Inc. ("LTCW") for any reason upon 6 months written notice. Unless such
discontinuation is for a material breach, LTCW shall be reimbursed for
its reasonable direct termination costs using the following procedure.
After receiving such notice, LTCW shall within 60 days provide a
written estimate of the reasonable direct costs it estimates in good
faith it will incur as a result of the discontinuation, consisting of
direct labor costs, direct materials/equipment costs, direct costs of
segregated space specifically purchased/leased for use by LTCC, and
reasonable severance costs that LTCC agrees to. Costs associated with
long term contracts not previously approved by LTCC will be excluded.
LTCC agrees (at its discretion) to either pay reasonable termination
costs up to the limit of the estimate or continue to utilize LTCW to
provide these services. LTCW shall use best efforts to minimize such
termination costs.
Either party may terminate the agreement upon the bankruptcy of the
other party. LTCW may terminate the agreement six months after the sale
of LTCC if LTCC is sold to a competitor in the "bricks and mortar"
retail business. In any event, whether upon termination of this
Agreement or termination of a service, LTCW will use best efforts to
achieve a smooth transition of services to LTCC.
B. Exclusivity
The provisions of this Section B shall survive any termination of the
agreement. LTCW shall not provide similar services to or assist or
promote any other company that sells or intends to sell wireless
products or services on the Internet.
LTCW shall not assist, or sell or advertise its products or services
via, any other commerce-enabled website. LTCW shall not operate an
ecommerce-enabled website.
LTCC shall not own or operate "bricks and mortar" retail stores.
Subject to the foregoing, LTCW has the right to have a website that is
descriptive only. LTCC shall create and maintain for LTCW, LTCW
descriptive information on LTCC's website consisting of a listing of
LTCW stores, a locator function (either zip code driven or comparable
locator function as mutually agreed upon), and a company history, a
company profile, a general description of product categories,
biographies of senior management, press releases, a customer service
policy, and three store pictures (one kiosk, one inline store, and one
shopping center). LTCW may request that LTCC delete this information at
any time, but LTCC shall provide this service if so requested by LTCW
at no charge for the term of this agreement. If the parties mutually
agree that LTCC will include anything on LTCC's website in addition to
the foregoing, LTCW shall pay for the additional items on a Cost Plus
basis. Each page of such LTCW website shall contain a prominent link to
LTCC's website, along with a brief one sentence description of LTCC's
offerings that is mutually agreed upon.
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<PAGE> 3
LTCC shall not give any space or other benefits on its site to any
competitive products of any other "brick and mortar" retailer in the
business of providing wireless phones or services which competes with
the then-current LTCW wireless phone service offerings.
C. Development by LTCW of Additional Capabilities required by
LTCC
Except as otherwise specified in this agreement, if it is necessary for
LTCW to expend resources to modify or enhance its systems, distribution
facilities, procedures, or employee capabilities in order to
accommodate the business requirements and growth of LTCC, then LTCW
shall provide LTCC with a detailed proposal which clearly outlines the
proposed capability to be developed, estimated cost, and an approximate
timing. If it agrees and provides written approval, LTCC agrees to pay
for these resources as set forth on the proposal, such costs not to
exceed the estimate provided unless agreed to by both parties in
writing.
"Cost Plus" shall mean that fees are determined as provided in the
remainder of this Section C.
All fees for personnel from LTCW who have been authorized to work for
LTCC shall be billed using the following methodology and is subject to
modification as provide below:
Hourly Salary Cost (based on 2000 hours)
plus
20% of Hourly Salary Cost for benefits
plus, 25% of Hourly Salary Cost for overhead absorption
For purposes of this agreement, overhead absorption is deemed to
reimburse LTCW for providing LTCC with substantially the same
administrative, systems and support services it performs for its
employees, which LTCW hereby agrees to do, including: including payroll
processing, deposits, payroll tax returns, payroll related audits and
preparing W-2 and 1099 forms, HR services, insurance, employee
benefits, communications services (excluding dedicated lines to LTCC
remote locations such as San Francisco), computer workstation support
services, normal costs associated with office space, office equipment
use, and senior management supervision.
Six months after LTCC's site launch, both parties will have the
opportunity to reassess the overhead rate and agree on a revised rate
under the principle that LTCW should be able to recover its incremental
direct costs over the long term.
No fees shall be charged for the time of vice presidents or above.
Direct travel, related travel expenditures and professional service
fees shall be billed at actual cost plus a 4% administrative fee.
If LTCC pays for equipment or other items, LTCC shall own such
equipment and items unless otherwise agreed.
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<PAGE> 4
Direct equipment and incremental distribution center non-payroll costs
shall be billed at actual cost plus a 10% administrative fee.
LTCW will invoice LTCC on a monthly basis with 15 day payment terms.
Six months after an IPO or the sale of LTCC, LTCW shall have the right
to increase the fee for its services to include a profit margin of 10%
over the Cost Plus pricing except for direct equipment, travel, and
professional services.
D. Inspection
LTCC and its accountants, agents and representatives, shall have the
right to examine the books and records of LTCW that relate to the costs
and expenses referred to in this agreement, provided that such
examination may be conducted during normal business hours and upon
reasonable notice.
E. Provision of General Accounting Services
For the first 6 months of this agreement, LTCW shall provide general
accounting services to LTCC on a Cost Plus basis. LTCC shall retain all
responsibility for its financial statements.
F. MIS and Administrative Support
LTCW will provide support and will exert all diligent efforts to
satisfy the requirements specified by LTCC on a Cost Plus basis. LTCW
shall adopt reasonable time reporting procedures to accurately capture
time and expenses chargeable to LTCC.
G. Dispute Resolution
Dispute resolution clause will be agreed during development of the
Operating Agreement. Consider mediation by an accountant.
H. Other
LTCW recognizes that one of LTCC's key success factors is its ability
to build an effective operation in a matter of a few months and will
assist in training of LTCC personnel. LTCW shall identify and train up
to a reasonable number (determined by LTCC) of liaison personnel
responsible for ensuring that LTCW is providing the necessary services
and working at resolving the inevitable bugs and problems.
II. PURCHASING/INVENTORY MANAGEMENT
LTCW shall provide to LTCC a sufficient segregated space in the Dallas
distribution center for storage of LTCC's inventory, and all movement
of inventory in and out of this space by LTCW will utilize business
practices and systems designed to provide effective control and
tracking of the LTCC inventory. If either party has a stock-out, it can
request
-4-
<PAGE> 5
a transfer from the other party's inventory and the parties will work
in good faith to transfer inventory unless it adversely affects one
party's operations.
LTCW purchasing department shall communicate with the LTCC Operations
Liaison to determine recommended optimal inventory levels and
recommended purchases. LTCC shall submit purchase orders to LTCW, who
shall place orders with its vendors on behalf of LTCC and according to
instructions of LTCC.
LTCC (at its discretion) can place orders directly with vendors, and in
such cases shall provide LTCW with sufficient information to facilitate
the receiving and inventory management process.
LTCC will use diligent efforts to establish its own credit lines with
vendors. If unable to do so, LTCC may (at the reasonable discretion of
LTCW management) utilize LTCW credit lines if invoice amounts are paid
to LTCW 5 days prior to being due. However, if LTCW does not have
adequate availability on its credit lines, LTCC shall pay C.O.D.
For inventory ordered by LTCW, LTCC shall pay a fee equal to 4% of the
net invoiced cost from the vendor. This fee is intended to cover LTCW's
costs related to purchasing, warehousing, insurance, utilities, MIS,
and receiving. For inventory ordered by LTCC, LTCC shall pay a fee of
2.5%. These percentages will be reviewed for possible adjustment six
months after launch.
LTCC is entitled to receive the same terms as LTCW on orders placed
through LTCW ("Order Terms"). These terms include price protection,
return capabilities, warranties, and stock balancing. In addition, LTCC
shall be entitled to receive its pro rata portion of any MDF funds
earned on its purchases of inventory. At LTCC's request, LTCW shall use
best efforts to assist LTCC in obtaining the Order Terms in a separate
agreement between LTCC and a third party with whom LTCW has an
agreement.
For items that are difficult to obtain, the parties shall have an
"allocation formula" that will be proportional to the volume of the
item that each party has on order; provided that for the first year of
this agreement, LTCC will receive at least a 30% allocation of these
items.
III. ORDER FULFILLMENT
LTCW employees at the distribution center will provide customer
fulfillment services. These services include picking the items when an
order is received, programming the telephone or pager, packing the item
purchased, and shipping.
LTCW will use best efforts to create an order fulfillment capability
designed to ship all in-stock orders received by 2 P.M. CST the same
day.
LTC shall charge "Cost Plus" pricing for fulfillment services.
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<PAGE> 6
IV. CUSTOMER SERVICE
Both parties will work together to create the most efficient customer
relationship management process. This process will be based on the
principles of mutual respect for and responsiveness to each other's
customers.
The Operating Agreement will define a mutually agreeable process which
will address the following transactions; but in any event LTCW will
provide such services without charge (other than direct out-of-pocket
costs) during the six month period following launch and thereafter at a
mutually agreeable fee that does not exceed Cost Plus.
-LTCC customers returning merchandise to LTCW stores
-LTCC customers obtaining refunds at stores
-LTCC customers exchanging merchandise at stores
-LTCC customers picking up their orders at stores
-Follow-on sales at the stores to LTCC customers
-Loaner phones
For telephone/email customer service, LTCW will hire one or more
customer service rep(s) and provide training to those person(s), in
Dallas, as reasonably requested by LTCC. All training costs, as well as
the costs of actually performing customer service at the distribution
center, will be billed to LTCC on a Cost Plus basis. Notwithstanding
the foregoing, during the first six months from the launch, LTCC shall
not be obligated to pay LTCW any commissions with respect to the
foregoing services. After the first six months, such services will
continue but the parties shall mutually agree upon a reasonable method
(other than sales commissions) for compensating LTCW employees or
consultants for customer service.
V. PAGING SALES AND SERVICE
LTCC currently intends to aggressively sell pagers on its site. Like
LTCW, LTCC may be a paging reseller, and may purchase numbers from LTCW
under its paging contracts, at LTCC's discretion.
LTCW shall provide a complete "turn-key" management of LTCC's paging
operations. This will include activation, billing, collection, and
customer service.
LTCW shall charge LTCC a one-time activation fee per pager sold, a
monthly fee per pager for processing, plus all airtime costs invoiced
from its carriers at cost. These fees (excluding airtime costs) will be
set at the "average cost" per pager for LTCW for the previous quarter
plus 10%.
LTCW shall make a monthly remittance of the LTCC paging revenues
collected, net of the charge for services provided.
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VI. CARRIER COMMISSION RECEIVABLES MANAGEMENT AND AUDIT
LTCW will provide commission processing services. These services will
include verifying the accuracy of commission paid, disconnects charged,
customer disconnect recoveries, co-op earned and accounts receivable
management. LTCW will forward the commission, etc. earned on LTCC
activations to LTCC within 10 days of receipt from the carriers.
LTCW will provide these services on a Cost Plus basis.
LTCC will employ a "Revenue Management' liaison to coordinate with LTCW
on these functions. Initially, at LTCC's discretion, this liaison may
be LTCW employees billed to LTCC on a Cost Plus basis.
VII. CARRIER CONTRACTS
LTCC will attempt to negotiate its own carrier relationships and
contracts. LTCW shall provide all assistance requested by LTCC with
respect to the foregoing (including providing contacts at the carrier).
When allowed under carrier agreement, LTCC may activate customers under
the LTCW agreements and vice versa. LTCW will use its best effort to
obtain the rights to allow this. Both parties shall use their best
efforts to obtain the rights for LTCC to have the same carrier
relationships and contracts that LTCW has.
LTCC will be responsible for managing its carrier relationships and
contracts, and LTCW shall provide all assistance requested by LTCC with
respect to the foregoing.
Any services provided by LTCW employees in relation to LTCC carrier
agreements will be billed to LTCC on a Cost Plus basis.
Both parties will use all diligent efforts to ensure that LTCC is able
to activate wireless customers in all geographies within the
continental United States in which it desires to do so.
LTCW will assist LTCC with respect to equipment and paging vendor and
service provider contracts and relationships to the same extent as
provided in this Section VII with respect to carriers.
VIII. ADVERTISING
General
LTCC will be entitled to utilize 5% of the space/time of all LTCW
advertising. LTCW will have the right to reasonably review/reject any
content to be included in its advertising, but it may do so only
reasonably and for good cause.
If LTCC wants more than 5% of any space/time in an advertising
campaign, LTCW shall provide more space as long as it does not, in the
opinion of LTCW management, interfere with the effectiveness of the
LTCW advertising. In these cases, LTCC will pay its pro
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<PAGE> 8
rata share of the advertising cost (net invoiced cost, including
production), less its 5% "free" space ("Claims").
Claims will be reimbursed as follows:
- Claims must be submitted to LTCC within 90 days of the
advertising run.
- Claims must include a copy of the invoice including run dates
and a sample of the advertising.
- Payment will be rendered by LTCC within 10 days of invoice for
an undisputed claim.
- If prepayment is required, LTCC will be notified of this prior
to committing to the advertising, and will prepay its pro rata
share if it decides to participate.
Print
LTCC will be included under the LTCW logo with a mutually reasonably
agreeable tag line determined by LTCC (e.g., visit...) on all print,
POP material, and in-store promotional materials.
LTCC will be entitled to one 8 1/2 x 14 permanent promotional sign at
kiosks, and two 22" x 28" permanent promotional signs at in-line stores
(3 at the non-mall stores). LTCC has the right to approve all signs,
which approval shall not be unreasonably withheld, and LTCC will pay
all costs of designing and producing the signs.
LTCC will be entitled to have its address included on all LTCW bags,
business cards, and stationery and the like at no cost as these item
are re-ordered.
Radio
LTCC will be entitled to 5% of the airtime unless it decides to
participate at a higher level.
Television
LTCC will have its logo displayed at least 25% of the size of the LTCW
logo for an equal amount of time at no extra charge.
X. BINDING NATURE
This Letter of Intent is a binding contract between the parties hereto
and will govern their working relationship unless and until the
anticipated definitive Operating Agreement is executed. If the parties
cannot negotiate and document a definitive Operating Agreement prior to
60 days from the date hereof, then the parties shall submit to
mediation to finalize the Operating Agreement, but if no definitive
Operating Agreement is reached, this LOI will continue in effect
according to its terms.
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<PAGE> 9
XI. CONSENT TO JURISDICTION; GOVERNING LAW
This letter of intent and Operating Agreement will provide that it will
be governed by the laws of the State of New York.
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<PAGE> 10
If the foregoing correctly sets forth our understanding, please sign
all copies of this Letter of Intent where indicated below and return at least
one copy to __________________________.
Very truly yours,
LETSTALK.COM,INC.
By: /s/ Delly Tamer
-----------------------------------------
Delly Tamer
President and Chief Executive Officer
Accepted as of the date
first above written:
LET'S TALKCELLULAR & WIRELESS, INC.
By:
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Name:
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Title:
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SIGNATURE PAGE TO LETSTALK.COM, INC.
LETTER OF INTENT
<PAGE> 11
If the foregoing correctly sets forth our understanding, please sign
all copies of this Letter of Intent where indicated below and return at least
one copy to __________________________.
Very truly yours,
LETSTALK.COM,INC.
By:
-----------------------------------------
Delly Tamer
President and Chief Executive Officer
Accepted as of the date
first above written:
LET'S TALKCELLULAR & WIRELESS, INC.
By: /s/ David H. Eisenberg
------------------------------------------------------
Name: David H. Eisenberg
----------------------------------------------------
Title: CEO
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SIGNATURE PAGE TO LETSTALK.COM, INC.
LETTER OF INTENT
