INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered
into as of January 26, 2005 by and among
Usurf America, Inc., a Nevada
corporation (the "Company"), the
shareholders of the Company who are listed on
Appendix 1 attached hereto (such
shareholders, are referred to herein
collectively as the "Shareholders" and
individually as a "Shareholder"), and
Douglas O. McKinnon ("McKinnon"), Richard
E. Wilson ("Wilson"), Byron Young
("Young"), and David Weisman (together with
McKinnon, Wilson and Young, the
"Current Directors").
WHEREAS, each of the Shareholders holds the Equity Securities
in the Company set forth opposite such
Shareholder's name on Appendix 1;
WHEREAS, the Shareholders received their Equity Securities
pursuant to that certain Securities
Purchase Agreement, dated January 26, 2005
(the "Purchase Agreement");
WHEREAS, the Current Directors are each members of the Board
of Directors of the Company, and each deems
it to be in the best interest of the
Company to enter into this Agreement;
WHEREAS, the Company, the Shareholders and the Current
Directors desire to enter into this
Agreement in order to provide for certain
rights and responsibilities as set forth
herein; and
WHEREAS, capitalized terms used in this Agreement, except as
otherwise defined, shall have the meaning
ascribed to them in ARTICLE 4 hereof.
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants and agreements
hereinafter set forth, the parties hereto
agree as follows:
1.
DIRECTORS AND OFFICERS OF THE COMPANY
1.1. BOARD
OF DIRECTORS
The Company, each Shareholder (for so long as such Shareholder
owns any Equity Securities) and each
Current Director shall take or cause to be
taken all such action within their
respective power and authority (including
without limitation the voting of shares of
Equity Securities held by such
Shareholder or the taking of action by
consent with respect to such shares) as
may be required:
1.1.1. to maintain the quorum requirements for actions of the
Board of Directors such that a quorum shall
(a) consist of at least a majority
of the Directors and (b) include the
Directors appointed pursuant to Sections
1.1.2 and 1.1.3 below; and to maintain the
voting requirements for actions of
the Board of Directors at a majority of
Directors present at a meeting at which
there is a quorum, except in respect of
such matters as this Agreement, the
Articles of Incorporation, as amended, or
the Bylaws of the Company may impose a
greater voting requirement;
1.1.2. to ensure that until the termination of the
Effectiveness Period (as defined in that
certain Registration Rights Agreement
(the "Registration Rights Agreement") by
and among the Company and the
Shareholders, dated the date hereof), Mr.
Ed Garneau shall be a Director, and
that during such time period, upon his
death or resignation, the Shareholders
holding a majority of the aggregate Common
Stock issued to the Shareholders
pursuant to the Securities Purchase
Agreement (including shares of Series B
Convertible Preferred Stock considered on
an as if converted to Common Stock
basis) and held by such Shareholders at
such time (the "Requisite Stock") shall
fill the vacancy created thereby;
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1.1.3. to ensure that until the termination of the
Effectiveness Period, that in addition to
Mr. Ed Garneau, one person nominated
by the Shareholders holding the Requisite
Stock shall be a Director, and that
during such time period, any vacancy
created by the death or resignation of such
Director shall be filled by the
Shareholders holding the Requisite Stock;
1.1.4. to use its best efforts to prevent any action from
being taken by the Board of Directors of
the Company during the pendency of any
vacancy due to death, resignation or
removal of a Director, unless the
shareholders entitled to designate a person
for election to fill such vacancy
shall have failed to do so within ten (10)
days after being given written notice
of such vacancy, provided, however, that
this Section 1.1.4 shall not apply in
circumstances in which action is required
by the Board of Directors to protect
the best interests of the Company; and
1.1.5. to cause the Articles of Incorporation, as amended, and
Bylaws of the Company, as amended, to
conform to, and to be consistent with, any
amendments to this Agreement.
1.2.
SPECIAL APPOINTMENT RIGHTS.
Notwithstanding any other provision of this Agreement, at any
time (i) on or after the first anniversary
of this Agreement, the Company has
insufficient financial resources to meet
its obligations, including without
limitation, an inability to pay any debt
when due or having debts due and
accruing which exceed the value of its
assets, (ii) the Board of Directors or a
court of competent jurisdiction determines
that the Company has (A) made a
material misrepresentation in the Purchase
Agreement or the transaction
documents related thereto, (B) breached a
covenant of the Purchase Agreement
that has resulted in a material adverse
effect on the operations, business or
financial condition of the Company, or (C)
has committed fraud in connection
with either the Purchase Agreement (and the
transaction documents related
thereto) or the transactions contemplated
thereby, or (iii) it is discovered
that an undisclosed liability of the
Company existed at the time of the Closing
(as defined in the Purchase Agreement) that
exceeded ten (10) percent of the
Company's market value (calculated by
multiplying the number of outstanding
shares of the Company's common stock, par
value $.0001 (the "Common Stock") on
the Closing Date (defined in the Purchase
Agreement) by the daily volume
weighted average price of the Common Stock
for the Closing Date (or the nearest
preceding date) on the OTC Bulletin Board
as reported by Bloomberg Financial
L.P. (based on a Trading Day from 9:30 a.m.
Eastern Time to 4:00 p.m. Eastern
Time) using the VAP function), the Company,
each Shareholder (for so long as
such Shareholder owns any Equity
Securities) and each Current Director shall
take or cause to be taken all such action
within their respective power and
authority (including without limitation the
voting of shares of Equity
Securities held by such Shareholder or the
taking of action by consent with
respect to such shares) to (X) increase the
such number of members of the
Company's Board of Directors by the number
of Directors that shall constitute a
minimum majority of the Board of Directors,
and (Y) grant to the holders of the
Requisite Stock the right, to fill such
newly created directorships, to remove
any individuals elected to such
directorships and to fill any vacancies in such
directorships.
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2.
COVENANTS OF THE COMPANY
The Company hereby covenants as set forth in this ARTICLE 2
with each Shareholder that, in addition to
any provisions of Nevada law
requiring approval of an action by
directors or shareholders of a Nevada
corporation, the Company shall comply with
the covenants and agreements set
forth in this ARTICLE 2, and the Current
Directors hereby covenant that they
will not take any action to cause the
Company to take any action inconsistent
with this ARTICLE 2 unless the Shareholders
holding the Requisite Stock shall
have consented otherwise in advance in
writing. Each Shareholder (for so long as
such Shareholder owns any Equity
Securities) and each Current Director shall
take or cause to be taken all such action
within their respective power and
authority (including without limitation the
voting of shares of Equity
Securities held by such Shareholder or the
taking of action by consent with
respect to such shares) as may be required
to cause the Company to comply with
the covenants and agreements of the Company
set forth in this ARTICLE 2.
2.1.
SPECIAL VOTING RIGHTS
Prior to the termination of the Effectiveness Period, the
Company shall not (in any case, by merger,
consolidation, operation of law or
otherwise), and shall not permit Sovereign
Partners, LLC, a Colorado limited
liability company ("Sovereign"), without
first having provided written notice of
such proposed action to each Shareholder
and having obtained the affirmative
vote or written consent of the Shareholders
holding the Requisite Stock:
(i) declare or pay any dividends or make any distributions of
cash, property or securities in respect of
its capital stock, or apply any of
its assets to the redemption (other than
pursuant to Section 3 hereof),
retirement, purchase or other acquisition
of its capital stock, directly or
indirectly, through Subsidiaries or
otherwise;
(ii) reclassify any capital stock of the Company in a manner;
(iii) authorize or issue, or obligate itself to issue, any
equity securities, convertible debt or
other debt with any equity participation,
or any securities convertible into or
exercisable or exchangeable for any equity
securities at a price less than $0.10 per
share, on an as converted to common
stock basis, except that the Company shall
be permitted to issue up to
20,000,000 shares of Common Stock in
exchange for debt obligations and
contingent liabilities, which issuance(s)
shall be unrestricted and may be at a
price less than $0.10 per share;
(iv) permit any Subsidiary of the Company to issue any capital
stock, or securities convertible into or
exercisable or exchangeable for capital
stock or other securities of such
Subsidiary, to any person or entity other than
the Company;
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(v) amend,
alter or repeal any provision of, or add any
provision to its Articles of Inc
