EXHIBIT 10.3
INVESTOR RIGHTS AGREEMENT
DATED AS OF [_____], 2002
AMONG
VITALSTREAM HOLDINGS, INC.,
AND THE
COMMON STOCKHOLDERS,
CONVERTIBLE NOTEHOLDERS
AND
WARRANT HOLDERS
OF
VITALSTREAM HOLDINGS, INC. REFERRED TO HEREIN
TABLE OF CONTENTS
1. DEFINITIONS..................................................................................................2
2. PREEMPTIVE RIGHTS............................................................................................5
3. BOARD OF DIRECTORS...........................................................................................6
4. BOARD OF DIRECTOR OBSERVATION RIGHTS.........................................................................7
5. REPRESENTATIONS AND WARRANTIES; COVENANTS....................................................................8
6. TRANSFERS....................................................................................................8
7. TRANSFERS IN VIOLATION OF AGREEMENT..........................................................................8
8. LEGEND.......................................................................................................8
9. ENTIRE AGREEMENT.............................................................................................9
10. SUCCESSORS AND ASSIGNS.......................................................................................9
11. COUNTERPARTS.................................................................................................9
12. DESCRIPTIVE HEADINGS; INTERPRETATION.........................................................................9
13. NOTICES; BUSINESS DAYS.......................................................................................9
14. AMENDMENT AND WAIVER; EFFECTIVENESS AND BINDING NATURE OF THIS AGREEMENT....................................10
15. SEVERABILITY................................................................................................10
16. NO STRICT CONSTRUCTION......................................................................................10
17. GOVERNING LAW...............................................................................................11
18. WAIVER OF RIGHT TO JURY TRIAL...............................................................................11
INVESTOR RIGHTS AGREEMENT
This
INVESTOR RIGHTS AGREEMENT, dated as of November 1, 2002 (this
"AGREEMENT"), is by and among VitalStream Holdings, Inc. a Nevada corporation
(the "COMPANY"), the holders of Common Stock listed on the Schedule of Common
Stockholders attached hereto (including such other holders of Common Stock who
may from time to time become parties hereto after the date hereof and be listed
on the Schedule of Common Stockholders) (the "COMMON STOCKHOLDERS"), the holders
of Convertible Notes listed on the Schedule of Convertible Noteholders attached
hereto (including such other holders of Convertible Notes who may from time to
time become parties hereto after the date hereof and be listed on the Schedule
of Convertible Noteholders attached hereto) (the "CONVERTIBLE NOTEHOLDERS"), and
the holders of Warrants listed on the Schedule of Warrant Holders attached
hereto (including such other holders of Warrants who may from time to time
become parties hereto after the date hereof and be listed on the Schedule of
Warrant Holders attached hereto) (the "WARRANT HOLDERS"). Unless otherwise
indicated herein, capitalized terms used in this Agreement have the meanings set
forth in SECTION 1 hereof.
RECITALS
WHEREAS, reference is made to that certain Asset Purchase Agreement,
dated as of November 1, 2002 (as amended and modified from time to time, the
"ASSET PURCHASE AGREEMENT"), by and among the Company, the Buyer and Hosting
pursuant to which the Buyer acquired substantially all of the assets and assumed
certain liabilities of Hosting in consideration for the issuance of shares of
Common Stock by the Company to Hosting.
WHEREAS, reference is also made to that certain Note and Warrant
Purchase Agreement, dated as of November 1, 2002 (as amended and modified from
time to time, the "NOTE AND WARRANT PURCHASE AGREEMENT"), by and among the
Company and those purchasers of Convertible Notes and Warrants referred to
therein pursuant to which the Company sold and the purchasers purchased the
Convertible Notes and Warrants.
WHEREAS, pursuant to the Note and Warrant Purchase Agreement, the
Company issued shares of Common Stock to the purchasers of Convertible Notes and
Warrants referred to therein as payment of a commitment fee due and payable upon
the closing of the transactions contemplated by the Note and Warrant Purchase
Agreement.
WHEREAS, in order to induce the parties hereto to consummate the
transactions contemplated by each of the Asset Purchase Agreement and the Note
and Warrant Purchase Agreement, the Company, the Common Stockholders, the
Convertible Noteholders and the Warrant Holders have agreed to enter into this
Agreement for the purposes, among others, of (a) establishing the composition of
the Board of Directors and (b) assuring continuity in the management and
ownership of the Company. The execution and delivery of this Agreement is a
condition to the closing of the transactions contemplated by the Note and
Warrant Purchase Agreement and Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. DEFINITIONS.
"AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "CONTROL" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"AGREEMENT" has the meaning set forth in the preamble of this
Agreement.
"ASSET PURCHASE AGREEMENT" has the meaning set forth in the recitals
of this Agreement.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUYER" means VitalStream Broadcasting Corporation, a Nevada
corporation.
"COMMON STOCK" means (a) the Common Stock, par value $0.001 per share,
of the Company as more fully described in the certificate of incorporation of
the Company and any capital stock or other Equity Security of any class of the
Company (other than any Preferred Equity Securities or the Series A Preferred)
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company and (b) any capital stock or other Equity Securities
issued or issuable directly or indirectly with respect to the Common Stock
referred to in clause (a) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization.
"COMMON STOCKHOLDERS" has the meaning set forth in the preamble to
this Agreement.
"COMPANY SECURITY" means any Debt Security or Equity Security of the
Company.
"COMPANY" has the meaning set forth in the preamble of this Agreement.
"CONVERTIBLE NOTEHOLDERS" has the meaning set forth in the preamble to
this Agreement.
"CONVERTIBLE NOTES" means the 10% Convertible Promissory Notes of the
Company issued pursuant to the Note and Warrant Purchase Agreement.
"DEBT SECURITIES" means any note, bond, debenture or other instrument
or security evidencing Indebtedness.
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"DOLPHIN" means Dolphin Fund II.
"DOLPHIN COMMUNICATIONS II" means Dolphin Communications Fund II, L.P.
"DOLPHIN DIRECTOR" has the meaning set forth in SECTION 3 of this
Agreement.
"DOLPHIN FUND II" means Dolphin Communications II and Dolphin Parallel
II.
"DOLPHIN HOLDERS" means Dolphin and any Affiliate of Dolphin that
holds Stockholder Shares.
"DOLPHIN PARALLEL II" means Dolphin Communications Parallel Fund II
(Netherlands), L.P.
"EQUITY SECURITIES" means (a) any capital stock or other equity
securities, (b) any securities, directly or indirectly, convertible into or
exchangeable for any capital stock or other equity securities or containing any
profit participation features, (c) any warrants, options or other rights,
directly or indirectly, to subscribe for or to purchase any capital stock, other
equity securities or securities containing any profit participation features or,
directly or indirectly, to subscribe for or to purchase any securities, directly
or indirectly, convertible into or exchangeable for any capital stock, other
equity securities or securities containing profit participation features, or (d)
any stock appreciation rights, phantom stock rights or other similar rights.
"GOVERNMENTAL ENTITY" means individually, and "GOVERNMENTAL ENTITIES"
means collectively, the United States of America, any foreign country and any
state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government, including any court.
"HOLDERS" means the Common Stockholders, the Convertible Noteholders
and the Warrant Holders.
"HOSTING" means Epoch Hosting, Inc., a Delaware corporation.
"INDEBTEDNESS" means, at a particular time, without duplication, (a)
any indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (b) any indebtedness evidenced by any Debt
Security, (c) any indebtedness for the deferred purchase price of property or
services with respect to which a Person is liable, contingently or otherwise, as
obligor or otherwise (other than trade payables and other current liabilities
incurred in the ordinary course of business), (d) any commitment by which a
Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (e) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guaranties in the form of an agreement to repurchase or reimburse),
(f) any obligations under capitalized leases and (g) any indebtedness secured by
a lien on a Person's assets.
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"LAWS" means all constitutions, statutes, laws, treaties, codes,
ordinances, regulations, rules, orders, judgments, writs, injunctions, acts,
determinations, directions or decrees of any Governmental Entity.
"NOTES" means those certain 10% convertible promissory notes issued by
Company pursuant to the Note and Warrant Purchase Agreement.
"NOTE AND WARRANT PURCHASE AGREEMENT" has the meaning set forth in the
preamble to this Agreement.
"OBSERVER" has the meaning set forth in SECTION 4 of this Agreement.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or any other similar entity or
organization or a governmental entity or any department, agency or political
subdivision thereof.
"PREFERRED EQUITY SECURITIES" means any Equity Security of the Company
(other than the Series A Preferred) that ranks senior to the Common Stock as to
dividends or the distribution of assets upon any liquidation, dissolution or
winding up of the Company, or any Debt Security that is issued with any Equity
Security.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force and the rules promulgated thereunder.
"SERIES A PREFERRED" means the 2002 Series A Preferred Stock, $0.001
par value, of the Company.
"STOCKHOLDER SHARES" means (a) any Common Stock issued pursuant to the
Asset Purchase Agreement or the Note and Warrant Purchase Agreement, (b) any
Common Stock issued or issuable, directly or indirectly, upon conversion of the
Convertible Notes, (c) any Common Stock issued or issuable, directly or
indirectly, upon exercise of the Warrants, (d) any Common Stock purchased or
otherwise acquired by any holder of the Common Stock referred to in clauses (a),
(b) or (c) above and (e) any capital stock or other Equity Securities issued or
issuable directly or indirectly with respect to the Common Stock referred to in
clauses (a), (b), (c) or (d) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, (i) any Person who
holds Convertible Notes shall be deemed to be the holder of the Stockholder
Shares obtainable upon conversion of such Convertible Notes regardless of any
restriction or limitation on the conversion thereof and (ii) any Person who
holds Warrants shall be deemed to be the holder of the Stockholder Shares
obtainable upon exercise of such Warrants regardless of any restriction or
limitation on the exercise thereof and, with respect to both clause (i) and (ii)
above, such Stockholder Shares shall be deemed to be in existence, and such
Person shall be entitled to exercise the rights of a holder of Stockholder
Shares hereunder. In addition, for purposes of this Agreement, any Person who
holds Stockholder Shares as a result of a Transfer of Stockholder Shares shall
be deemed to be the holder of Stockholder Shares.
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"SUBSEQUENT CLOSING DATE" has the meaning set forth in the Note and
Warrant Purchase Agreement.
"SUBSIDIARY BOARD OF DIRECTORS" has the meaning set forth in SECTION 3
of this Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (b) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity. Notwithstanding the foregoing, "Subsidiary" shall not include any entity
that does not have any operations, assets or liabilities.
"TRANSFER" means a sale, assignment, transfer, pledge, encumbrance or
other disposition.
"WARRANT HOLDERS" has the meaning set forth in the preamble to this
Agreement.
"WARRANTS" means those certain warrants to purchase shares of the
Company's Common Stock issued pursuant to the Note and Warrant Purchase
Agreement.
2. PREEMPTIVE RIGHTS.
(a) If, at any time during the three-year period beginning on the
Subsequent Closing Date (or, if the Subsequent Closing is not consummated, the
date hereof), the Company shall issue any Preferred Equity Securities (including
Preferred Equity Securities issued or sold together with any Debt Security),
each Holder of Stockholder Shares shall be entitled to purchase the same
proportion of such Preferred Equity Securities to be issued necessary in order
that the aggregate shares of Common Stock beneficially held by such holder
constitute the same percentage of all Common Stock (assuming, in each case, the
conversion, exercise or exchange of all outstanding Company Securities,
including outstanding Company Securities held by such Holder), after the
issuance of such Preferred Equity Securities as before the issuance thereof.
(b) A Holder of Stockholder Shares may exercise his or its right
under this SECTION 2 to purchase Preferred Equity Securities by providing
written notice to the Company, and by paying the purchase price therefor at the
principal office of the Company within 45 days, after the receipt of notice from
the Company (which notice by the Company shall be given at
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least 45 days before the issuance of the Preferred Equity Securities) stating
the amount of Preferred Equity Securities the Company intends to issue and the
price and characteristics thereof. Each Holder of Stockholder Shares exercising
his or its rights under this SECTION 2 shall pay such purchase price in
immediately available funds. Each Holder of Stockholder Shares' contractual
preemptive rights under this SECTION 2 shall be deemed to be exercised
immediately prior to the close of business on the day of payment of the purchase
price in accordance with the foregoing provisions, and at such time such Holder
shall be treated for all purposes as the record holder of the Preferred Equity
Securities, as the case may be. As promptly as practicable (and in any event
within 10 days) on or after the purchase date, the Company shall issue and
deliver at its principal office a certificate or certificates for the number of
full shares or amount, whichever is applicable, of Preferred Equity Securities
together with cash for any fraction of a share or portion of a Preferred Equity
Security at the purchase price to which the Holder of Stockholder Shares is
entitled hereunder.
3. BOARD OF DIRECTORS.
(a) At any time and from time to time until the Notes have been paid
in full, each Holder shall vote all of its Company Securities now or hereafter
owned by such Holder with voting rights or over which such Holder has voting
control, and shall take all other necessary or desirable actions within its
control (whether in its capacity as a stockholder, director, member of the Board
of Directors or any committee thereof (but not if such action would be a breach
of any fiduciary duty imposed by applicable Law), officer of the Company or
otherwise, and including, without limitation, attendance at meetings in person
or by proxy for purposes of obtaining a quorum and execution of written consents
in lieu of meetings), and the Company shall take all necessary or desirable
actions within its control (including, without limitation, calling special Board
of Directors and stockholder meetings), so that:
(i) one individual (who initially shall be ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇) designated by the Dolphin Holders owning a majority of the
Stockholder Shares held by all Dolphin Holders (the "DOLPHIN DIRECTOR")
shall be nominated for election and elected to the Board of Directors at
the Company's next annual meeting, which shall be held no later than
January 31, 2003, for a term of three (3) years;
(ii) in the event that on the date of termination of the
Dolphin Director's three (3) year term pursuant to SECTION 3(a)(i), payment
in full of all obligations under the Notes has not been made, then the
Dolphin Director shall be elected to the Board of Directors for a second
term which shall begin on the date of termination of the initial three-year
term referred to in clause (i) above and continue until payment in full of
all obligations under the Notes has been made (at which time such Dolphin
Director shall, if requested by the Company, resign);
(iii) at any time the Dolphin Director is entitled to serve on
the Board of Directors, the composition of the board of directors of each
of the Company's Subsidiaries (each, a "SUBSIDIARY BOARD OF DIRECTORS")
shall include the Dolphin Director;
(iv) to the extent permitted under applicable Law and any
exchange on which any Company Securities may be listed, any committees of
the Board of Directors
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or a Subsidiary Board of Directors shall be created only upon the unanimous
approval of the members of the Board of Directors and the composition of
each such committee (if any) shall be proportionately equivalent to that of
the Board of Directors;
(v) to the extent permitted under applicable Law and any
exchange on which any Company Securities may be listed, the removal from
the Board of Directors or any Subsidiary Board of Directors (with or
without cause) of the Dolphin Director shall be at the written request of
the Dolphin Holders holding a majority of the Stockholder Shares held by
all Dolphin Holders but only upon such written request and under no other
circumstances; and
(vi) in the event that the Dolphin Director ceases to serve as
a member of the Board of Directors or any Subsidiary Board of Directors
during his term of office (whether by death, resignation or removal), the
resulting vacancy on the Board of Directors shall be filled by an
individual designated by the Dolphin Holders owning a majority of the
Stockholder Shares held by all Dolphin Holders.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by the Dolphin Director in connection with attending the meetings of
the Board of Directors, any Subsidiary Board of Directors and any committee of
any of the foregoing.
(c) If the Dolphin Holders owning a majority of the Stockholder
Shares held by all Dolphin Holders fail to designate an individual to fill the
Dolphin directorship pursuant to the terms of this SECTION 3, the individual
previously holding such directorship shall be elected to such position, or if
such individual fails or declines to serve, the election of an individual to
such directorship shall be accomplished in accordance with the Company's bylaws
and applicable law; provided that each Holder shall vote all Company Securities
now or hereafter owned by such Holder with voting rights or over which such
Holder has voting control to remove such individual if the party which failed to
designate such directorship so directs.
(d) In the event that any Holder shall fail to vote all shares of
Company Securities now or hereafter owned by such Holder with voting rights over
which such Holder has voting control so as to achieve any election or removal of
an Dolphin Director, as set forth in this SECTION 3, such Holder shall be deemed
immediately upon the existence of such a breach to have granted to the Chairman
of the Board of Directors (or, if no Chairman of the Board of Directors has been
elected, the chief executive officer of the Company), a proxy to all shares of
Company Securities now or hereafter owned by such Holder with voting rights or
over which such Holder has voting control to ensure that all such shares or
other securities will be voted as prescribed in this SECTION 3 of this
Agreement. Each Holder acknowledges that each proxy granted hereby, including
any successive proxy, is given to secure the performance of a duty and shall be
irrevocable until the duty is performed.
4. BOARD OF DIRECTOR OBSERVATION RIGHTS. At any time prior to the
payment in full of the Notes that (i) any Dolphin Holders continue to hold any
Stockholder Shares and (ii) the Dolphin Director is not a member of the Board of
Directors, VitalStream shall give Dolphin written notice of each meeting of the
Board of Directors (and any committees thereof), at the same time and in the
same manner as notice is given to the directors of the Board of Directors,
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and VitalStream shall permit one representative selected by Dolphin (the
"OBSERVER") to attend, as an observer, all such meetings. The Observer shall be
entitled to receive all written materials and other information (including,
without limitation, copies of meeting minutes) given to directors of the Board
of Directors (and any committees thereof) in connection with such meetings at
the same time such materials and information are given to such directors.
VitalStream shall provide a copy of any proposed action by written consent in
lieu of a meeting of directors of VitalStream to the Observer prior to the
effective date upon delivery to the members of the Board of Directors of such
consent describing in reasonable detail the nature and substance of such action.
5. REPRESENTATIONS AND WARRANTIES; COVENANTS. Each Holder represents
and warrants that (a) as of the date hereof such Holder is the record owner of
the number of shares or principal amount of the Company Securities held by such
Holder as of the date hereof as set forth in the Schedules to this Agreement;
(b) this Agreement has been duly authorized, executed and delivered by such
Holder and constitutes the valid and binding obligation of such Holder,
enforceable in accordance with its terms; and (c) such Holder has not granted
and is not a party to any proxy, voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.
No Holder shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with, conflicts with or violates any provision
of this Agreement.
6. TRANSFERS. Prior to transferring any Company Securities to any
Person, the transferring Holder shall cause the prospective transferee to be
bound by this Agreement and to execute and deliver to the Company and the
Holders a counterpart signature page of this Agreement. So long as any such
Transfer is made in accordance with the provisions of this Agreement, the
transferee shall be deemed a Holder of such Company Securities within the
meaning of this Agreement.
7. TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or attempted
Transfer of any Holder in violation of any provision of this Agreement shall be
void, and the Company shall not record such Transfer on its books or treat any
purported transferee of such Company Security as the owner of such Company
Security for any purpose.
8. LEGEND. Each instrument evidencing Common Stock, Convertible
Notes and Warrants held by a Person who is a signatory to this Agreement, and
each instrument issued in exchange for or upon the Transfer of any Stockholder
Shares, Convertible Notes and Warrants and held by a Person who is a signatory
to this Agreement shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT
TO AN
INVESTOR RIGHTS AGREEMENT, DATED AS OF [_____], 2002,
AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND THE
STOCKHOLDERS OF THE COMPANY REFERRED TO THEREIN, AS AMENDED
AND MODIFIED FROM TIME TO TIME. A COPY OF SUCH
INVESTOR
RIGHTS AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE
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COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
9. ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
10. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Holders and any subsequent
holders of Stockholder Shares, Convertible Notes or Warrants and the respective
successors and assigns of each of them, so long as they hold any Stockholder
Shares, Convertible Notes or Warrants.
11. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
12. DESCRIPTIVE HEADINGS; INTERPRETATION. Section headings used
herein are for convenience only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement. The use of the word
"including" or any variation or derivative thereof in this Agreement is by way
of example rather than by limitation.
13. NOTICES; BUSINESS DAYS. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally to the recipient or when sent by facsimile followed by
delivery by reputable overnight courier service (charges prepaid), one day after
being sent to the recipient by reputable overnight courier service (charges
prepaid) or five days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Any notice,
demand or other communication hereunder may be given by any other means
(including telecopy or electronic mail), but shall not be deemed to have been
duly given unless and until it is actually received by the intended recipient.
Such notices, demands and other communications shall be sent to (a) a Common
Stockholder at the address indicated on the Schedule of Common Stockholders, (b)
a Convertible Noteholder at the address indicated on the Schedule of Convertible
Noteholders, (c) a Warrant Holder at the address indicated on the Schedule of
Warrant Holders and (d) the Company at the address indicated below:
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VitalStream Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Operating Officer
with a copy (which shall not constitute notice to the Company)
to:
Stoel Rives LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party. If
any time period for giving notice or taking action expires on a day which is a
Saturday, Sunday or legal holiday in the state in which the Company's
chief-executive office is located, the time period shall automatically be
extended to the business day immediately following such Saturday, Sunday or
legal holiday.
14. AMENDMENT AND WAIVER; EFFECTIVENESS AND BINDING NATURE OF THIS
AGREEMENT. Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement shall be effective against the Company
or the Holders unless such modification, amendment or waiver is approved in
writing by (a) the Company, (b) the holders of a majority of the Common Stock
(other than any Common Stock which constitute Stockholder Shares) and (c) the
Dolphin Holders owning a majority of the Stockholder Shares held by all Dolphin
Holders. Notwithstanding the foregoing, without the consent of any other Person,
the Company may restate any schedule to this Agreement so that it more
accurately reflects the holders of securities of the type in question and/or to
change the addresses for notice to any Person at such Person's request. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
15. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
16. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto,
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and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Agreement.
17. GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEVADA SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS SECURITYHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF
NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF
NEW YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS,
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
18. WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND EACH OF THE
HOLDERS HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY
in any litigation in any court with respect to, in connection with, or arising
out of this Agreement or the validity, protection, interpretation, collection or
enforcement hereof; AND THE COMPANY AND EACH OF THE HOLDERS HEREBY WAIVE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE ANY SETOFF in
connection with any such litigation, irrespective of the nature of such setoff,
counterclaim or cross-claim except to the extent that the failure so to assert
any such setoff would permanently preclude the prosecution of or recovery upon
same. THE COMPANY AGREES THAT THIS SECTION 18 IS A SPECIFIC AND MATERIAL ASPECT
OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE HOLDERS WOULD NOT HAVE ENTERED INTO
THIS AGREEMENT IF THIS SECTION 18 WERE NOT PART OF THIS AGREEMENT.
* * * * *
-11-
IN WITNESS WHEREOF, the parties have executed this
Investor Rights
Agreement as of the date first written above.
VITALSTREAM HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
COMMON STOCKHOLDERS
EPOCH HOSTING, INC.
By:
-------------------------------------
Name:
Title:
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
DOLPHIN COMMUNICATIONS PARALLEL FUND II
(NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO
INVESTOR RIGHTS AGREEMENT]
COMMON STOCKHOLDERS (CONT'D)
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
[SIGNATURE PAGE TO
INVESTOR RIGHTS AGREEMENT]
CONVERTIBLE NOTEHOLDERS
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
DOLPHIN COMMUNICATIONS PARALLEL FUND II
(NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO
INVESTOR RIGHTS AGREEMENT]
WARRANT HOLDERS
DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
DOLPHIN COMMUNICATIONS PARALLEL FUND II
(NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SCHEDULE OF COMMON STOCKHOLDERS
NUMBER OF SHARES OF
NAME AND ADDRESS COMMON STOCK
------------------------------------------------ -----------------------
(1) Epoch Hosting, Inc. [_____]
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice
to Hosting) to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(2) Dolphin Communications Fund II, L.P. [_____]
Dolphin Communications Parallel Fund II
(Netherlands), L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice
to the Dolphin) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citigroup Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(3) ▇▇▇▇ ▇▇▇▇▇▇▇ [_____]
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
NUMBER OF SHARES OF
NAME AND ADDRESS COMMON STOCK
------------------------------------------------ -----------------------
(4) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ [_____]
▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(5) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [_____]
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(6) ▇▇▇▇▇ ▇▇▇▇▇ [_____]
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(7) ▇▇▇▇▇ ▇▇▇▇▇▇ [_____]
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE OF CONVERTIBLE NOTEHOLDERS
PRINCIPAL AMOUNT OF
NAME AND ADDRESS CONVERTIBLE NOTES
------------------------------------------------------- -----------------------
Dolphin Communications Fund II, L.P. $[_____]
Dolphin Communications Parallel Fund II $[_____]
(Netherlands), L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to the
Dolphin) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citigroup Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE OF WARRANT HOLDERS
NUMBER OF SHARES
OF UNDERLYING
NAME AND ADDRESS COMMON STOCK
------------------------------------------------------- -----------------------
Dolphin Communications Fund II, L.P. [_____]
Dolphin Communications Parallel Fund II [_____]
(Netherlands), L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice to the
Dolphin) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citigroup Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇