CAREER CENTRAL CORPORATION
THIRD AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Third Amended and Restated Investors' Rights Agreement (the
"AGREEMENT") is made effective as of September 27, 1999.
RECITALS
A. In connection with the sale and issuance of its Series A Preferred
Stock, Career Central Corporation, a California corporation (the "COMPANY"),
entered into that certain Registration Rights Agreement (the "SERIES A
REGISTRATION RIGHTS AGREEMENT") with Xxxxxxx Xxxxx ("XXXXX") and the purchasers
of such Series A Preferred Stock (such purchasers, the "SERIES A INVESTORS").
B. In connection with the sale and issuance of its Series B Preferred
Stock, the Company entered into that certain First Amended and Restated
Registration Rights Agreement dated July 26, 1996 (the "SERIES B REGISTRATION
RIGHTS AGREEMENT") with the purchasers of such Series B Preferred Stock (such
purchasers, the "SERIES B INVESTORS") and certain Series A Investors. The Series
B Registration Rights Agreement was an amendment and restatement of, and fully
replaced and superseded, the Series A Registration Rights Agreement.
C. In connection with the sale and issuance of its Series C Preferred
Stock, the Company entered into that certain Amended and Restated Investors'
Rights Agreement dated September 10, 1997 (the "INVESTORS' RIGHTS AGREEMENT")
with the purchasers of such Series C Preferred Stock (such purchasers, the
"SERIES C INVESTORS") and certain Series A Investors, Series B Investors and
other parties. The Investors' Rights Agreement was an amendment and restatement
of, and fully replaced and superseded, the Series B Registration Rights
Agreement.
D. In connection with the sale and issuance of its Series D Preferred
Stock, the Company entered into that certain Second Amended and Restated
Investors' Rights Agreement dated July 2, 1998 (the "SECOND INVESTORS' RIGHTS
AGREEMENT") with the purchasers of such Series D Preferred Stock (such
purchasers, the "SERIES D INVESTORS") and certain parties to the Investors'
Rights Agreement. The Second Investors' Rights Agreement was an amendment and
restatement of, and fully replaced and superseded, the Investors' Rights
Agreement.
E. The obligations of the Company and the purchasers of the Company's
Series E Preferred Stock (the "SERIES E INVESTORS") under that certain Series E
Preferred Stock and Warrant Purchase Agreement of even date herewith (the
"SERIES E STOCK AND WARRANT PURCHASE AGREEMENT") by and between the Company and
the Series E Investors are conditioned, among other
things, upon the execution and delivery of this Agreement by the Company and
the other parties necessary for the effectiveness of this Agreement.
F. Section 10 of the Second Investors' Rights Agreement provides that
the consent of the Company and holders (the "PRIOR HOLDERS") of a majority of
the outstanding or issuable Registrable Securities (as such term is defined
thereunder) is required to amend such agreement.
G. The Company, the Series E Investors and the undersigned Prior
Holders who together hold not less than a majority of the Registrable Securities
(as defined under the Second Investors' Rights Agreement) now desire to amend
and restate the Second Investors' Rights Agreement in its entirety as set forth
below in order to grant the Series E Investors the rights, and bind the Series E
Investors to the obligations, set forth herein and to make certain other changes
to the Second Investors' Rights Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants hereinafter set forth, all parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"ADVISORS" means Xxxxx Xxxxxxx, Xxxxx Ventures, L.L.C. and any
other advisor to the Company who was a party to the Series B Registration
Rights Agreement.
"COMMISSION" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"CONVERSION STOCK" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock.
"CLOSING DATE" means the effective date of this agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar Federal rule or statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"FOUNDER" OR "FOUNDERS" means Xxxxxxx Xxxxx and Xxx Xxxx.
"FOUNDERS' STOCK" means the Common Stock held by the Founders or
issuable upon the exercise of stock options granted to the Founders by the
Company.
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"HOLDER" means any Advisor, Founder, Series A Investor, Series B
Investor, Series C Investor, Series D Investor or Series E Investor holding
Registrable Securities, or any person holding Registrable Securities to whom
the rights under this Agreement have been transferred either (i) in
accordance with Section 5.10 hereof or, (ii) prior to the date hereof, in
accordance with the analogous transfer provisions of the Series A
Registration Rights Agreement, the Series B Registration Rights Agreement,
the Investors' Rights Agreement or the Second Investors' Rights Agreement.
"INITIATING HOLDERS" means any Holder or Holders who, in the
aggregate, hold not less than twenty-five percent (25%) of the Registrable
Securities then outstanding.
"INVESTOR" means any Series A Investor, Series B Investor,
Series C Investor, Series D Investor or Series E Investor.
"PREFERRED STOCK" shall mean the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock of the Company.
"REGISTRABLE SECURITIES" means (i) the Conversion Stock, (ii)
the Founders' Stock, (iii) the Warrant Stock and (iv) any Common Stock of the
Company issued or issuable in respect of any of the foregoing upon any
conversion, stock split, stock dividend, recapitalization, or similar event;
PROVIDED, HOWEVER, that securities shall only be treated as Registrable
Securities if and for so long as (i) they have not been registered or sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, (ii) they have not been sold in a private
transaction in which the transferor's rights under this Agreement are not
properly assigned in accordance with the terms hereof and (iii) the
registration rights with respect to such securities have not terminated
pursuant to Section 5.11.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Sections
5.1, 5.2 and 5.3 hereof, including without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, fees of one special legal counsel
to the selling Holders as a group (not to exceed $10,000), blue sky fees and
expenses, and the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legends set forth in Section 3 hereof.
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"RULE 144" shall mean Rule 144 of the Securities Act or any
similar Federal rule or statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar Federal rule or statute and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel to any
Holder (other than up to $10,000 in fees and disbursements of one special
legal counsel to selling Holders as a group).
"WARRANT STOCK" shall mean the Common Stock issued or issuable
upon the exercise of options or warrants granted to Investors and/or Advisors.
2. RESTRICTIONS ON TRANSFERABILITY. The Preferred Stock, the
Conversion Stock, the Founder's Stock, the Warrant Stock and any other
securities issued in respect of such stock upon any stock split, stock
dividend, recapitalization, merger, or similar event, shall not be sold,
assigned, transferred or pledged except upon the conditions specified in this
Agreement, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each Holder or transferee will cause any
proposed purchaser, assignee, transferee, or pledgee of any such shares held
by the Holder or transferee to agree to take and hold such securities subject
to the restrictions and upon the conditions specified in this Agreement,
including without limitation the restrictions set forth in Section 8.
3. RESTRICTIVE LEGEND. Each certificate representing the Preferred
Stock, the Conversion Stock, the Founder's Stock, the Warrant Stock or any
other securities issued in respect of such stock upon any stock split, stock
dividend, recapitalization, merger, or similar event, shall (unless otherwise
permitted by the provisions of Section 4 below) be stamped or otherwise
imprinted with a legend in substantially the following form (in addition to
any legends required by agreement or by applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. SUCH SHARES GENERALLY MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT.
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP
PERIOD OF UP TO 180-DAYS FOLLOWING THE EFFECTIVE DATE OF CERTAIN
REGISTRATION STATEMENTS OF THE COMPANY FILED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER
AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCKUP PERIOD IS
BINDING ON TRANSFEREES OF THESE SHARES.
Each Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of its capital stock in
order to implement the restrictions on transfer established in this
Agreement. The Company shall be obligated to reissue a certificate without
such legends promptly at the request of any holder thereof if the holder
shall have obtained an opinion of counsel (which counsel may be counsel to
the Company) reasonably acceptable to the Company to the effect (i) that the
securities evidenced by such certificate may be lawfully disposed of without
registration or qualification and (ii) that the restrictions referred to in
such legends are no longer applicable to such holder or such holder's
transferees or assigns.
4. NOTICE OF PROPOSED TRANSFERS. In addition to other restrictions
on transfer which such holder, by agreement or otherwise, may be subject, the
holder of each certificate representing Restricted Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Section
4. Without in any way limiting the immediately preceding sentence, no sale,
assignment, transfer or pledge of Restricted Securities shall be made by any
holder thereof to any person unless such person shall first agree in writing
to be bound by the restrictions of this Agreement including, without
limitation, Section 8 and this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is
in effect a registration statement under the Securities Act covering the
proposed transfer, the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer, sale, assignment
or pledge. Each such notice shall describe the manner and circumstances of
the proposed transfer, sale, assignment or pledge in sufficient detail, and,
if reasonably requested by the Company, the holder shall also provide, at
such holder's expense, either (i) a written opinion of legal counsel who
shall be, and whose legal opinion shall be, reasonably satisfactory to the
Company addressed to the Company, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission to the
effect that the transfer of such securities without registration will not
result in a recommendation by the staff of the Commission that action be
taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the
Company; PROVIDED, HOWEVER, that the Company shall not request an opinion of
counsel or "no action" letter with respect to (i) a transfer not involving a
change in beneficial ownership, (ii) a transaction involving the distribution
without consideration of Restricted Securities by the holder to any of its
constituent partners, former partners, members or former members, (iii) a
transaction involving the transfer without consideration of
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Restricted Securities by an individual holder during such holder's lifetime
by way of gift or on death by will or intestacy or (iv) a transaction
involving the transfer without consideration of Restricted Securities by a
holder that is a partnership to another partnership under common control with
such holder (such transferee, an "AFFILIATED PARTNERSHIP"). It is agreed that
the Company will not require opinions of counsel for transactions made
pursuant to Rule 144 except in unusual circumstances, provided that the
Company receives from the holder such representations and documentation as is
reasonably necessary to demonstrate that such disposition complies with Rule
144. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule
144, the appropriate restrictive legend set forth in Section 3 above, except
that such certificate shall not bear such restrictive legend if in the
opinion of counsel for such holder and counsel for the Company such legend is
not required in order to establish compliance with any provision of the
Securities Act. Notwithstanding the foregoing, each holder of Restricted
Securities agrees that it will not request that a transfer of the Restricted
Securities be made or that the legend set forth in Section 3 be removed from
the certificate representing the Restricted Securities, solely in reliance on
Rule 144(k) if as a result thereof, the Company would be rendered subject to
the reporting requirements of the Exchange Act.
5. REGISTRATION.
5.1 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration with respect to shares of Registrable Securities, the Company
will:
(i) promptly, and in no event later than ten (10)
days from receipt of such written request, give written notice of the
proposed registration to all other Holders; and
(ii) as soon as practicable, and in any event within
ninety (90) days after receipt of such written request, use its best efforts
to effect such registration as part of a firm commitment underwritten public
offering (including, without limitation, appropriate qualification under
applicable state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining
in such request by delivering a written notice to such effect to the Company
within twenty (20) days after the date of such written notice from the
Company.
Notwithstanding the foregoing, the Company shall not be obligated to
take any action to effect or complete any such registration pursuant to this
Section 5.1:
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(A) Prior to the earlier of (i) six (6) months after
the effective date of the Company's first firm commitment underwritten
registered public offering of shares of its capital stock or (ii) three years
after the Closing Date;
(B) Unless the aggregate offering price to the
public of all Registrable Securities sought to be registered by all Holders
are reasonably anticipated to exceed $10,000,000;
(C) During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on
the date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided the Company intends in good faith to file on
the estimated date, and provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(D) After the Company has effected two registrations
pursuant to this subparagraph 5.1(a), and such registrations have been
declared or ordered effective; or
(E) If the Company shall furnish to the Initiating
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for a registration statement
to be filed at such time. In such case, the Company's obligation to use its
best efforts to register, qualify or comply under this Section 5.1(a) shall
be deferred for a period not to exceed one hundred and twenty (120) days from
the date of receipt of the written request from the Initiating Holders,
provided that the Company may not exercise this deferral right more than once
per twelve month period or twice during the term of this Agreement.
(b) UNDERWRITING. In the event of a registration pursuant
to Section 5.1, the Company shall advise the Holders as part of the notice
given pursuant to Section 5.1(a)(i) that the right of any Holder to
registration pursuant to Section 5.1 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 5.1,
and the inclusion of such Holder's Registrable Securities in the underwriting
to the extent requested shall be limited to the extent provided herein. A
Holder may elect to include in such underwriting all or a part of the
Holder's Registrable Securities.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 5.1, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so
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advise all Holders requesting to be included in the registration and
underwriting and the number of shares of Registrable Securities that may be
included in the registration and underwriting (for purposes of this sentence,
the "INCLUDABLE SHARES") shall be allocated as follows: (i) first, up to
fifty percent (50%) of the Includable Shares shall be allocated among all
Holders other than Founders requesting to be included in the registration and
underwriting in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by them at the time of filing the
registration statement and (ii) next, all remaining Includable Shares shall
be allocated among all Holders (including Founders) requesting to be included
in the registration and underwriting in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by them at the time
of filing the registration statement net of amounts included pursuant to
clause (i) of this sentence. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may
round the number of shares allocated to any Holder to the nearest one hundred
(100) shares. If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company.
5.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time
to time the Company shall determine to register any of its equity securities,
either for its own account or the account of a Holder or other holders, other
than (i) a registration relating solely to employee benefit plans, (ii) a
registration relating solely to a Rule 145 transaction, or (iii) a
registration in which the only equity security being registered is Common
Stock issuable upon conversion of convertible debt securities which are also
being registered, the Company will:
(i) promptly, and in no event later than ten (10)
days give to each Holder written notice thereof; and
(ii) include in such registration (and any related
qualifications including compliance with Blue Sky laws), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after the date of
such written notice from the Company, by any Holder.
(b) UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the
written notice given pursuant to Section 5.2(a)(i). In such event, the right
of any Holder to registration pursuant to Section 5.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting shall be limited to the extent
provided herein.
All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such
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underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 5.2, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration (i) in the case of
the Company's initial public offering, to zero, and (ii) in the case of any
other offering, to an amount no less than 30% of all shares to be included in
such offering. In such event, the Company shall so advise all Holders
requesting to be included in the registration and underwriting and the number
of shares of Registrable Securities that may be included in the registration
and underwriting (for purposes of this sentence, the "INCLUDABLE SHARES")
shall be allocated as follows: (i) first, up to fifty percent (50%) of the
Includable Shares shall be allocated among all Holders other than Founders
requesting to be included in the registration and underwriting in proportion,
as nearly as practicable, to the respective amounts of Registrable Securities
held by them at the time of filing the registration statement and (ii) next,
all remaining Includable Shares shall be allocated among all Holders
(including Founders) requesting to be included in the registration and
underwriting in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by them at the time of filing the
registration statement net of amounts included pursuant to clause (i) of this
sentence. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest one hundred (100) shares. If any
Holder disapproves of the terms of any such underwriting, such person may
elect to withdraw therefrom by written notice to the Company.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall
have the right to terminate or withdraw any registration initiated by it
under this Section 5.2 prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration.
5.3 REGISTRATION ON FORM S-3.
(a) REQUEST FOR REGISTRATION. After its initia public
offering, the Company shall use its best efforts to qualify for registration
on Form S-3 or any comparable or successor form or forms. The Holders shall
have the right to request registrations on Form S-3. In case the Company
shall receive from a Holder or Holders of Registrable Securities a written
request that the Company file a registration statement on Form S-3 (or any
successor form to Form S-3) or any related qualification or compliance for a
public offering of shares of the Registrable Securities the aggregate price
to the public of which is reasonably anticipated to exceed $1,000,000, and
the Company is a registrant entitled to use Form S-3 to register the
Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the
offering on such form and to cause such Registrable Securities to be
qualified in such jurisdictions as such Holder or Holders may reasonably
request; provided, however, that the Company shall not be required to effect
more than one registration pursuant to this Section 5.3 in any six (6) month
period. If such offer is to be an underwritten offer, the underwriters must
be acceptable to both such Holder or Holders and the Company. The Company
shall promptly give written notice to the other Holders of the proposed
registration and offer them upon at least twenty
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(20) days written notice the opportunity to participate. If registration is
proposed to be part of a firm commitment underwritten public offering, the
substantive provisions of Section 5.1(b) shall be applicable to each such
registration initiated under this Section 5.3. The Company shall cause each such
registration on Form S-3 to be maintained in effect until the earlier to occur
of 180 days or the date the shares under the S-3 are sold.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 5.3:
(i) If the Company, within ten (10) days of the
receipt of the request described in Section 5.3(a), gives notice of its bona
fide intention to effect the filing of a registration statement with the
Commission within ninety (90) days of receipt of such request (other than
with respect to a registration statement relating to a Rule 145 transaction,
an offering solely to employees or any other registration which is not
appropriate for the registration of Registrable Securities) provided that the
Company is actively employing in good faith all reasonable efforts to cause
such filing;
(ii) During the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on
the date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective; or
(iii) If the Company shall furnish to the Holder or
Holders who delivered the request described in Section 5.3(a) a certificate
signed by the President of the Company stating that, in the good faith
judgment of the Board of Directors, it would be seriously detrimental to the
Company or its shareholders for registration statements to be filed at such
time, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed one
hundred and twenty (120) days from the receipt of the request to file such
registration by such Holder or Holders, provided that the Company may not
exercise this deferral right more than once per twelve month period.
5.4 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company
shall not enter into any agreement granting any holder or prospective holder
of any securities of the Company registration rights superior to the rights
granted hereunder without the written consent of the holders of a majority of
the Registrable Securities.
5.5 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with (i) all registrations pursuant to Section 5.1,
(ii) all registrations pursuant to Section 5.2, and (iii) four (4)
registrations pursuant to Section 5.3 shall be borne by the Company.
Notwithstanding the foregoing, in the event that Initiating Holders cause the
Company to begin a registration pursuant to Section 5.1 or Section 5.3, and
the request for such registration is subsequently withdrawn by the
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Holders requesting such registration or such registration is not completed
due to failure to meet the net proceeds requirement set forth in such section
or is otherwise not successfully completed due to no fault of the Company,
all Holders shall be deemed to have forfeited their right to a registration
under Section 5.1, or a registration at the expense of the company under
Section 5.3, as applicable, unless such requesting Holders pay for, or
reimburse the Company for, the Registration Expenses incurred in connection
with such withdrawn or incomplete registration. Unless otherwise stated, all
Selling Expenses relating to securities registered on behalf of the Holders
and all other registration expenses shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered or
proposed to be so registered.
5.6 REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep
each Holder advised in writing as to the initiation of such registration and
as to the completion thereof. The Company will, as expeditiously as
reasonably possible:
(a) Prepare and file with the Commission a registration
statement, the prospectus, and such amendments and supplements as may be
necessary and use its best efforts to cause such registration statement to
become and remain effective for at least one hundred and eighty (180) days or
until the distribution described in the registration statement has been
completed, whichever first occurs.
(b) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents, including any
amendment or supplement to the prospectus, as such underwriters and Holders
may reasonably request in order to facilitate the public offering of such
securities.
(c) Use its best efforts to register and qualif the
securities covered by such registration statement under the securities laws
of such jurisdictions as shall be reasonably appropriate for the distribution
of the securities covered by the registration statement, 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 jurisdiction, and provided further that (anything in this
Agreement to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the securities shall be qualified
shall require that expenses incurred in connection with the qualification of
the securities in that jurisdiction be borne by selling shareholders, then
such expenses shall be payable by the selling Holders pro rata, to the extent
required by such jurisdiction if such Holders do not elect to withdraw from
the registration after notice of such requirement.
(d) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement with
terms generally satisfactory to the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
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(e) 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 Securities Act of 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.
(f) Cause all such Registrable Securities registered
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(g) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such registration statement and
a CUSIP number for all such Registrable Securities, in each case not later
than the effective date of such registration.
5.7 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of
its officers and directors and partners, legal counsel and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof) (including, without
limitation, reasonable attorney's fees and expenses and expenses related to
charges, proceedings, demands and judgments), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, preliminary or final prospectus,
offering circular or other document, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance (including,
without limitation, any qualification and compliance activities incident to any
such registration), or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, as amended, state securities law or any rule
or regulation promulgated under such laws applicable to the Company in
connection with any such registration, and the Company will reimburse each such
Holder, each of its officers and directors, legal counsel and each person
controlling such Holder, for any legal and any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or controlling person, and
stated to be specifically for use in connection with such registration;
provided, however, that the foregoing indemnity Agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission
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made in a preliminary prospectus on file with the Commission at the time the
registration statement becomes effective or the amended prospectus filed with
the Commission pursuant to Rule 424(b) (the "FINAL PROSPECTUS"), such
indemnity Agreement shall not inure to the benefit of any Holder, if a copy
of the Final Prospectus was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act, provided that selling Holders and/or their agents and
representatives were solely responsible for providing such Final Prospectus,
and if the Final Prospectus would have cured the defect giving rise to the
loss, liability, claim or damage.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration is
being effected, indemnify the Company, each of its directors and officers,
legal counsel and any underwriter of the Company's securities covered by such
a registration statement, each person who controls the Company within the
meaning of Section 15 of the Securities Act, and each other such Holder, each
of its officers and directors and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading. The indemnification obligations of the
Holders under this Section 5.7(b) shall only apply to the extent that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly stating that
such information may be included in such document. Each Holder will reimburse
each person entitled to indemnification by such Holder hereunder for any
legal or any other expenses reasonably incurred, as such expenses are
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action, Notwithstanding the foregoing, the liability of
each Holder under this subsection 5.7(b) shall be limited to an amount equal
to the initial public offering price per share of the shares sold by such
Holder times the number of shares sold by Holder, unless such liability
arises out of or is based on willful misconduct by such Holder. The
obligation of any Holder pursuant to this Section 5.7(b) to indemnify the
parties identified herein shall not apply to amounts paid in settlement of
any such losses, claims, damages or liabilities (or actions in respect
thereof) if such settlement is effected without the consent of such Holder,
such consent not to be unreasonably withheld.
(c) Each party entitled to indemnification under this
Section 5.7 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
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Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
there are separate and different defenses. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party (whose consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this Section
5.7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability 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 other in connection with the
violation(s) that resulted in such loss, claim, damage or liability, as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a
court of law 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;
provided, that in no event shall any contribution by a Holder hereunder
exceed the net proceeds from the offering received by such Holder.
5.8 INFORMATION BY HOLDER. The Holder or Holders of
Registrable Securities included in any registration shall furnish to the
Company such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration referred to in this Agreement.
5.9 EXCHANGE ACT REPORTS. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public pursuant to a
registration on Form S-3 or without registration, in each case, after such
time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144, at all times after the
effective date that the Company becomes subject to the reporting requirements
of the Securities Act or the Exchange Act;
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(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such
reporting requirements);
(c) Take such other action as may be necessary to allow
the Holders to utilize Form S-3 for the resale of their Registrable
Securities; and
(d) So long as a Holder owns any Restricted Securities, to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities
to the general public), and of the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), that it
qualifies as a registrant whose securities may be resold pursuant to a
registration statement on Form S-3, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable
by the Company as the Holder may reasonably request in availing itself of any
rule or regulation of the Commission allowing the Holder to sell any such
securities without registration.
5.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register securities granted Holders under Sections 5.1, 5.2 and
5.3 may be assigned to a transferee or assignee in connection with any
transfer or assignment of Registrable Securities by the Holder provided that:
(i) such transfer is otherwise effected in accordance with applicable
securities laws and the terms of this Agreement, (ii) such assignee or
transferee is reasonably acceptable to the Company and acquires at least
250,000 shares of Registrable Securities, (iii) written notice is promptly
given to the Company and (iv) such transferee agrees to be bound by the
provisions of this Agreement. Notwithstanding the foregoing, the rights to
cause the Company to register securities may be assigned without compliance
with item (ii) above to (x) any constituent partner, former partner,
Affiliated Partnership, member or former member, or shareholder of a Holder
which is a partnership, limited liability company or corporation or (y) a
family member of a Holder or trust for the benefit of a Holder, the spouse of
a Holder or issue of a Holder. Registrable Securities acquired by two or more
transferees which are affiliates of each other shall be aggregated for the
purpose of determining the requirement set forth in item (ii) above.
5.11 TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to
any Holder upon the earlier of (i) the date five years after the effective
date of the Company's initial public offering and (ii) such time as a public
market for the Company's Common Stock exists that the Holder may sell all
Registrable Securities held by the Holder during any three-month period under
Rule 144.
-15-
6. FINANCIAL INFORMATION AND INSPECTION RIGHTS.
(a) The Company will provide the following reports to (i)
each Investor or Advisor (or affiliated group of Investors) who holds an
aggregate of at least 95,000 shares of Preferred Stock, Common Stock and
Conversion Stock and (ii) each Founder who continues to hold at least 100,000
shares of Founders' Stock, in each case, as adjusted for stock splits, stock
dividends, stock combinations and the like:
(i) As soon as practicable after the end
of the fiscal year ending December 31, 1999 and each fiscal year thereafter, and
in any event within ninety (90) days after the end of each such fiscal year,
consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of operations and
consolidated statements of cash flows and shareholders' equity of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited by independent public accountants of national standing
selected by the Company, and a capitalization table in reasonable detail for
such fiscal year;
(ii) As soon as practicable after the end of each of
the first three quarters of each fiscal year of the Company and in any event
within forty-five (45) days thereafter, a consolidated balance sheet of the
Company and its subsidiaries, if any, as of the end of each such quarterly
period, and consolidated statements of operations and consolidated statements
of cash flows of the Company and its subsidiaries, if any, for such period
and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles (other than accompanying notes),
subject to changes resulting from year-end audit adjustments, in reasonable
detail and signed by the principal financial or accounting officer of the
Company, and a capitalization table in reasonable detail for such quarterly
period; and
(iii) At least 30 days prior to the beginning of each
fiscal year, commencing with the fiscal year beginning January 1, 2000, a
budget as adopted by the Company's Board of Directors for the following
fiscal year.
(b) The Company will afford to (i) each Investor who
continues to hold an aggregate of at least 200,000 shares of Preferred Stock
and Conversion Stock and (ii) each Founder who continues to hold 200,000
shares of Founder's Stock, in each case, as adjusted for stock splits, stock
dividends, stock combinations and the like: reasonable access during normal
business hours to the Company's accounting books and records and minutes of
proceedings of the shareholders and the Board of Directors and committees of
the Board of Directors, and all information distributed to the Board of
Directors, for a purpose reasonably related to such shareholder's interests
as a shareholder of the Company. The Company shall not be required to
disclose details of transactions where to do so would violate confidentiality
obligations of the Company. The Company will afford to (i) each Investor who
continues to hold an aggregate of at least 200,000 shares of Preferred Stock
and Conversion Stock and (ii) each Founder who continues to hold 200,000
shares of Founder's Stock, in
-16-
each case, as adjusted for stock splits, stock dividends, stock combinations
and the like: the right to meet periodically with the Company's executive
officers during normal business hours to discuss and make recommendations
regarding the conduct of the Company's business and affairs.
(c) For purposes of determining the minimum holdings
pursuant to this Section 6, (i) any Investor that is a partnership or limited
liability company shall be deemed to hold any Preferred Stock originally
purchased by such Investor and subsequently distributed to constituent
partners or members of such Investor, but which have not been resold by such
partners or members and (ii) securities held by two or more holders which are
affiliates of each other shall be aggregated. If the partnership or limited
liability company is still in existence, the Company may satisfy any
obligation to distribute reports to individual partners of the partnership or
members of a limited liability company by delivering a single copy of each
report to the partnership or limited liability company as agent for the
constituent partners or members.
(d) The rights granted pursuant to Section 6 may be
assigned to any transferee or group of affiliated transferees, other than a
competitor or potential competitor of the Company (as reasonably determined
by the Company's Board of Directors), if such transferee or group acquires at
least the minimum amounts of Preferred Stock and/or Conversion Stock provided
in Sections 6(a) and 6(b) above and such transferee or group agrees in
writing to be bound by the provisions of Section 6(e), below.
(e) Each Holder or transferee of rights under this Section
6 acknowledges and agrees that any information obtained pursuant to this
Section 6 which may reasonably be considered material nonpublic information,
trade secrets of the Company or similar proprietary or confidential
information of the Company will be maintained in confidence by such Holder or
transferee and will not be utilized by such Investor or transferee in
connection with purchases or sales of the Company's securities except in
compliance with applicable state and Federal securities laws.
7. TERMINATION OF COVENANTS. The covenants of the Company set
forth above in Section 6 shall terminate and be of no further force or effect
upon the closing of a firm commitment underwritten public offering or at such
time as the Company is required to file reports pursuant to Section 13 or
15(d) of the Exchange Act, whichever shall occur first.
8. LOCKUP AGREEMENT. Each Investor, Founder, Holder and transferee
hereby agrees that, in connection with each registration of the offering of
any securities of the Company under the Securities Act for the account of the
Company, if so requested by the Company or any representative of the
underwriters (the "MANAGING UNDERWRITER"), such Investor, Founder, Holder or
transferee shall not sell or otherwise transfer any Registrable Securities of
the Company during the period specified by the Company's Board of Directors
at the request of the Managing Underwriter, with such period not to exceed
one hundred and eighty (180) days in the case of the first such registration
and not to exceed ninety (90) days in all other cases (the "MARKET STANDOFF
Period"), following the effective date of a registration statement of the
Company filed under the Securities Act; PROVIDED,
-17-
HOWEVER, that the restriction contained in this Section 8 shall not apply
unless all officers and directors of the Company are bound by similar lockup
provisions as of the time of such registration. Notwithstanding the
foregoing, the restriction contained in this Section 8 shall only apply (i)
to Series C Investors, Series D Investors and Series E Investors in
connection with the first such registration and (ii) to Series D Investors
and Series E Investors if (A) all Series A Investors, Series B Investors,
Series C Investors and holders holding not less than 1% of the capital stock
of the Company are bound by similar lockup provisions as of the time of such
registration and (B) such lockup provisions provide that any discretionary
waiver or termination of the restrictions of such provisions by the Company
or the Managing Underwriter apply to all persons subject to such lockup
provisions pro rata based on those persons' holdings on an as converted to
Common Stock basis. The Company may impose stop-transfer instructions with
respect to securities subject to the restrictions contained in this Section 8
until the end of such Market Standoff Period. Notwithstanding the foregoing,
the provisions of this Section 8 shall not apply to any registration relating
solely to employee benefit plans on Form S-1 or Form S-8 or similar forms
which may be promulgated in the future, or a registration relating solely to
a transaction within Rule 145 of the Securities Act on Form S-4 or similar
form which may be promulgated in the future.
9. EFFECTIVENESS; AMENDMENT AND RESTATEMENT OF THE SECOND
INVESTORS' RIGHTS AGREEMENT. This Agreement constitutes an amendment and
restatement of the Second Investors' Rights Agreement pursuant to Section 10
thereof and shall become effective and binding on all parties thereto and
persons bound by the terms thereof upon obtaining the consent, evidenced by
execution of this Agreement, of the Company and holders of a majority of the
outstanding or issuable Registrable Securities (as such term is defined in
the Second Investors' Rights Agreement). Without limiting the generality of
the foregoing, the Company and the undersigned Prior Holders hereby consent
to the grant of the rights contained herein to the Series E Investors.
10. AMENDMENT. Except as otherwise provided above, any provision
of this Agreement may be amended or the observance thereof 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 then outstanding. Notwithstanding
the foregoing, no amendment shall be made to this Agreement which by its
terms adversely affects, or which was motivated primarily by an intent to
adversely affect, a particular Holder or class of Holders (i.e., Founders or
Investors) in a manner differently from the other Holders without the written
consent of such adversely affected Holder or a majority of the Registrable
Securities held by the Holders in such adversely affected class. Any
amendment or waiver effected in accordance with Section 5.4 or Section 10, as
applicable, shall be binding upon each Investor, Founder, Holder of
Registrable Securities at the time outstanding, each future holder of any of
such securities, and the Company. Notwithstanding the foregoing, no term or
provision of Section 8 of this Agreement expressly set forth for the benefit
of the Series D Investors or Series E Investors shall be amended or waived
without the unanimous written consent of the affected Series D Investors and
Series E Investors.
-18-
11. GOVERNING LAW. This Agreement shall be governed in all
respects by the internal laws of the State of California without regard to
conflict of laws provisions.
12. AGGREGATION OF SHARES. Notwithstanding anything to the
contrary contained herein, a Holder may, for the purpose of exercising any
right herein, the exercise of which is conditioned upon such Holder holding a
minimum number of shares of Registrable Securities, aggregate all such shares
of Registrable Securities owned by such Holder, its affiliates, partners or
members to meet or otherwise satisfy such minimum holding requirement.
13. ENTIRE AGREEMENT. This Agreement together, in the case of the
Series E Investors, with the Series E Stock and Warrant Purchase Agreement
and other documents referred to herein or therein constitutes the full and
entire understanding and Agreement among the parties regarding the matters
set forth herein. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon the
successors, assigns, heirs, executors and administrators of the parties
hereto.
14. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission with written confirmation, by hand, by overnight delivery or by
messenger, addressed:
(a) if to a Holder, at such Holder's address or addresses
as set forth in EXHIBIT A, or at such other address as such Holder shall have
furnished to the Company.
(b) if to the Company, to:
Career Central Corporation
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Fax: (000) 000-0000
or at such other address as the Company shall have furnished to the Holders,
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxxxx, Esq.
Fax: (000) 000-0000
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally or by facsimile transmission, or, if sent by mail, at the
earlier of its receipt or seventy-two (72) hours after the same
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has been deposited in a regularly maintained receptacle for the deposit of
the United States mail, addressed and mailed as aforesaid.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written below.
THE COMPANY:
Career Central Corporation,
a California corporation
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Xxxxxxx Xxxxx. President
PRIOR HOLDERS:
SERIES E INVESTORS:
[COUNTERPART SIGNATURE PAGE TO CAREER CENTRAL THIRD AMENDED AND
RESTATED INVESTORS' RIGHTS AGREEMENT]
