EXHIBIT 10.18
Avenue A, Inc.
Registration Rights Agreement
Dated
as of
September 2, 1999
CONTENTS
1. Definitions...................................................... 1
2. Company Registration............................................. 2
3. Form S-3 Registration............................................ 3
4. Obligations of the Company....................................... 3
5. Furnish Information.............................................. 4
6. Expenses of Registration......................................... 5
7. Underwriting Requirements........................................ 5
8. Delay of Registration............................................ 5
9. Indemnification.................................................. 6
10. Assignment of Registration Rights................................ 8
11. "Market Standoff" Agreement...................................... 8
12. Miscellaneous.................................................... 9
12.1 Notices.................................................... 9
12.2 Amendments and Waivers..................................... 9
12.3 Governing Law.............................................. 9
12.4 Arbitration................................................ 9
12.5 Successors and Assigns..................................... 10
12.6 Severability............................................... 10
12.7 Entire Agreement; Counterparts............................. 10
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AVENUE A, INC.
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of
September 2, 1999, by and among Avenue A, Inc., a Washington corporation (the
"Company"), and the parties listed on Schedule A hereto.
RECITALS
A. The Company intends to enter into a Purchase Agreement with the
parties listed on Schedule A hereto (the "Members"), wherein the Company will
purchase from the Members all of the outstanding membership interests of I-Balls
LLC, a New York limited liability company ("I-Balls").
B. As partial consideration for such membership interests, the Company
intends to issue 500,000 shares of its common stock, par value $0.01 per share
(the "Common Stock"), to the Members.
C. The execution of this Agreement by the Members is a condition to the
obligation of each Member to enter into the Purchase Agreement.
D. The Company and the Members desire to enter into this Registration
Rights Agreement to facilitate the execution and delivery of the Purchase
Agreement.
AGREEMENT
1. Definitions
For purposes of this Agreement, the following terms have the following
meanings:
(a) "Form S-3" means such form under the Act as in effect on the date
hereof or any registration form under the Act subsequently adopted by the SEC
that similarly permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(b) "Holder" means any person owning or having the right to acquire
Registrable Securities who is a party to this Agreement as of the date hereof or
who may be added as a party pursuant to the terms of this Agreement, and any
assignee thereof.
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(c) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Act"), and the declaration or order of effectiveness of such registration
statement or document.
(d) "Registrable Securities" means the Common Stock, excluding in all
cases, however, any Common Stock sold by a person in a transaction in which such
person's rights under this Agreement are not assigned and any Common Stock which
the holder thereof is entitled to sell into the public market that is at the
time of registration, transferable by the holder thereof in a single brokerage
transaction under the provisions and within the volume limitations of Rule
144(e)(1) promulgated under the Act or any successor to such Rule.
(e) "Registrable Securities then outstanding" means the number of
shares of Common Stock outstanding which are Registrable Securities.
(f) "SEC" means the Securities and Exchange Commission.
2. Company Registration
If the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock plan or
compensatory contract, or a registration relating to a corporate reorganization
or other transaction under Rule 145 promulgated under the Act or any successor
rule, or a registration on any registration form that does not permit secondary
sales), the Company shall, at each such time, promptly give each Holder of
Registrable Securities written notice of such registration. Upon the written
request of each such Holder given within 10 days after the receipt of such
notice by such Holder, the Company shall, subject to the provisions of Section
7, use commercially reasonable efforts to cause to be registered under the Act
all of the Registrable Securities that each such Holder has requested to be
registered. In the event that the Company decides for any reason not to
complete the registration of shares of Common Stock other than Registrable
Securities, the Company shall have no obligation under this Section 2 to
continue with the registration of Registrable Securities. Any request pursuant
to this Section 2 to register Registrable Securities as part of an underwritten
public offering of Common Stock shall specify that such Registrable Securities
are to be included in the underwriting on the same terms and conditions as the
shares of Common Stock otherwise being sold through underwriters under such
registration. There is no limit as to the number of registrations in which a
Holder may participate pursuant to this Section 2.
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3. Form S-3 Registration
(a) If the Company shall receive a written request from the Holders of 25%
of the Registrable Securities then outstanding that the Company effect a
registration on Form S-3, then the Company shall, within 14 days after the
receipt of such request, give written notice of such request to all Holders and
shall, subject to the limitations set forth below, use commercially reasonable
efforts to effect as soon as practicable the registration under the Act of all
Registrable Securities that the Holders request to be registered in a written
request to be given within 30 days of the mailing of such notice by the Company.
(b) Notwithstanding the foregoing, the Company shall not be obligated to
effect any such registration pursuant to this Section 3 if (i) Form S-3 is not
available for such offering by the Holders; (ii) the Holders, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (before deduction of any
underwriters' discounts or commissions) of less than $1,500,000; (iii) the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 registration to be filed or effected at such
time, in which event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than 120 days after
receipt of the request of the Holders under this Section 3; or (iv) the Company
within the 12-month period preceding the date of such request has effected a
registration of securities in which the Holders of Registrable Securities
requesting registration pursuant to this Section 3 were entitled to participate
pursuant to Section 2.
(c) The Company is obligated to effect only one registration pursuant to
this Section 3.
4. Obligations of the Company
Whenever required under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective.
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(b) Use commercially reasonable efforts to keep such registration
effective for a period of 120 days or until the Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs.
(c) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(d) Furnish to the Holders such number of prospectuses as the Holders
may reasonably request.
(e) Use commercially reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such registration shall also enter into and perform its
obligations under such an agreement.
(g) List the Registrable Securities being registered on any national
securities exchange on which a class of the Company's equity securities is
listed or qualify the Registrable Securities being registered for inclusion on
Nasdaq if the Company does not have a class of equity securities listed on a
national securities exchange.
(h) Provide a transfer agent and registrar for the securities being
registered and a CUSIP number, not later than the effective date of the
registration statement.
5. Furnish Information
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Agreement that the selling Holders shall furnish to
the Company such information regarding themselves, the Registrable Securities
held by them and the intended method of disposition of such securities as shall
be reasonably required to effect the registration of their Registrable
Securities and shall execute such
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documents in connection with such registration as the Company may reasonably
request.
6. Expenses of Registration
In connection with any registration pursuant to this Agreement, the Company
shall be responsible for the payment of all reasonable expenses of the
registration, with the exception of (a) underwriting discounts and commissions,
which shall be paid by the Company, the Holders and any other selling holders of
the Company's securities in proportion to the aggregate value of the securities
offered for sale by each of them, and (b) the fees and expenses of legal counsel
to any of the selling Holders, except as provided in the next sentence. The
expenses to be paid by the Company shall include all registration, filing and
qualification fees, printing and accounting fees, the fees and disbursements of
counsel for the Company and fees and disbursements of up to $10,000 for one
counsel representing all of the Holders; provided, however, that the Holders
shall pay the expenses of any registration proceeding begun pursuant to Section
3 if the registration request is subsequently withdrawn by such Holders.
7. Underwriting Requirements
The Company shall not be required under Section 2 to include any of the
Holders' securities in an underwritten offering of the Company's securities
unless such Holders accept the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it. If the underwriters advise the
Company that marketing factors require a limitation on the number of shares,
including Registrable Securities, to be included in such offering, then the
Company may limit or exclude such Registrable Securities from such offering in
its sole discretion, provided that if the Company limits the number of
Registrable Securities in such offering, then the number of shares included
shall be apportioned pro rata among the selling Holders according to the total
number of Registrable Securities requested to be sold in such offering by such
Holders.
8. Delay of Registration
No Holder shall have any right to obtain or seek an injunction restraining
or otherwise delaying any registration of the Company as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
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9. Indemnification
In the event any Registrable Securities are included in a registration
statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), against any actual expenses (including legal fees and costs),
losses, claims, damages (including settlement amounts) or liabilities (joint or
several) (collectively, "Losses") to which they may become subject under the
Act, the 1934 Act or other federal or state law, insofar as such Losses arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto, untrue in light of the circumstances under which they
were made, or (ii) the omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will
reimburse (as incurred) each such Holder, underwriter or controlling person for
any Losses reasonably incurred by them in connection with investigating or
defending any Violations; provided, however, that the indemnity agreement
contained in this Section 9(a) shall not apply to amounts paid in settlement of
any claims for Violations if such settlement is made without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any Losses that arise out of or are based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by,
or on behalf of, any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company and its officers, directors, agents and employees,
each underwriter and each other Holder selling securities in such registration
statement, and any person who controls any of the foregoing within the meaning
of the Act or the 1934 Act, against any Losses to which the Company or such
officer, director, agent, employee, or underwriter or other selling Holder or
controlling person may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such Losses arise out of or are based upon any
Violation that occurs in reliance upon and in conformity with written
information furnished by, or on behalf of, such Holder expressly for use in
connection with such registration; and each such Holder will reimburse (as
incurred) any Losses reasonably incurred by the Company
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or its officers, directors, agents, employees, or underwriters or other selling
Holders or controlling persons in connection with investigating or defending any
Violations; provided, however, that (i) the indemnity agreement contained in
this Section 9(b) shall not apply to amounts paid in settlement of any claims
for Violations if such settlement is made without the consent of the Holder,
which consent shall not be unreasonably withheld, and (ii) the obligations of
such Holders to make payments for Losses shall be limited to an amount equal to
the net proceeds to each such Holder from Registrable Securities sold as
contemplated herein.
(c) Promptly after receipt of notice of the commencement of any action
(including any governmental action), an indemnified party will, if a claim is to
be made against any indemnifying party under this Section 9, deliver to the
indemnifying party a written notice of the commencement, and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if, in the opinion of counsel for the indemnifying
party, representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in the proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable period of time after notice of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 9 to the extent such
failure is prejudicial to its ability to defend such action.
(d) If the indemnification provided for in this Section 9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any Losses, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the Violations
that resulted in such Losses as well as any other relevant equitable
considerations; provided, however, that in no event shall any such contribution
by a Holder under this Section 9(d) exceed the net proceeds to each such Holder
from Registrable Securities sold as contemplated herein. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the Violation resulting in such Losses
relates to information supplied by the indemnifying party or by the indemnified
party and the
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parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such Violation.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(f) The obligations of the Company and Holders under this Section 9
shall survive the completion of any offering of Registrable Securities.
10. Assignment of Registration Rights
The rights to cause the Company to register Registrable Securities pursuant
to this Agreement may be assigned by a Holder to a transferee or assignee of
such securities who shall, upon such transfer or assignment, be deemed a
"Holder" under this Agreement; provided that the Company is, within a reasonable
period of time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act and that such transferee or assignee is (a) a member of
the immediate family or a trust for the benefit of any Holder that is an
individual; (b) a transferee or assignee that after the transfer or assignment
holds (i) all of the Registrable Securities of the transferor, (ii) Registrable
Securities prior to the transfer, or (iii) at least 50,000 shares of Registrable
Securities of the Company immediately after such transfer; or (c) in the case of
shares of Registrable Securities transferred by gift by Xxxxxxx X. Xxxxx
("Xxxxx") or Xxxxxxx Xxxxx ("Xxxxx"), an employee of I-Balls, provided that
Xxxxx and Xxxxx may transfer in the aggregate no more than 3025,000 shares of
Registrable Securities to employees of I-Balls, and may transfer such shares to
no more than five employees of I-Balls.
11. "Market Standoff" Agreement
The Holders hereby agree that they shall not, to the extent requested by
the Company and an underwriter of Common Stock (or other securities) of the
Company, sell or otherwise transfer or dispose (other than to donees who agree
to be similarly bound) of any securities of the Company for 180 days following
the effective date of a registration statement of the Company filed under the
Act, provided that such agreement shall only apply to the first such
registration statement of the Company (the "Initial Registration Statement").
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To enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the securities of the Holders (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.
12. Miscellaneous
12.1 Notices
Any notice required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given (a) upon personal delivery to the
party to be notified, (b) upon confirmation of receipt by fax by the party to be
notified, (c) one business day after deposit with a reputable overnight courier,
prepaid for overnight delivery and addressed as set forth in (d), or (d) three
days after deposit with the United States Post Office, postage prepaid,
registered or certified with return receipt requested and addressed to the party
to be notified at the address indicated for such party on the signature page, or
at such other address as such party may designate by 10 days' advance written
notice to the other parties given in the foregoing manner.
12.2 Amendments and Waivers
Any term of this Agreement may be amended and the observance of any term
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 66% of the Registrable Securities then outstanding.
12.3 Governing Law
This Agreement shall be governed by and construed under the laws of the
state of Washington without regard to principles of conflict of laws.
12.4 Arbitration
Any controversies or claims arising out of or relating to this Agreement
shall be fully and finally settled by arbitration in New York City, New York in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect (the "AAA_Rules"), conducted by one arbitrator either
mutually agreed upon by the parties thereto or chosen in accordance with the AAA
Rules, except that the parties thereto shall have any right to discovery as
would be permitted by the Federal Rules of Civil Procedure for a period of 90
days following the commencement of such arbitration and the arbitrator thereof
shall resolve any dispute which arises in connection with such discovery. The
prevailing party shall be entitled to costs, expenses and reasonable attorneys'
fees, and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
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12.5 Successors and Assigns
The terms and conditions of this Agreement shall inure to the benefit of
and be binding on the respective successors and assigns of the parties as
provided herein.
12.6 Severability
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
12.7 Entire Agreement; Counterparts
This Agreement constitutes the entire agreement between the parties about
its subject and supersedes all prior agreements. This Agreement may be executed
in two or more counterparts, which together shall constitute one instrument.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
AVENUE A, INC.
By: /s/ XXXXXX X. XXXXXXXX
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Its:
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Address:
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Fax:
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Phone:
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MEMBERS:
/s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Address:
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Fax:
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Phone:
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/s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx
Address:
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Fax:
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Phone:
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/s/ XXXXXXXX XXXX
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Xxxxxxxx Xxxx
Address:
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Fax:
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Phone:
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/s/ XXXXXXX XXXXXXXXXXX
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Xxxxxxx Xxxxxxxxxxx
Address:
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Fax:
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Phone:
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/s/ XXXXXXXX XXXXX
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Xxxxxxxx Xxxxx
Address:
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Fax:
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Phone:
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/s/ XXXXXX XXXXXX
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Xxxxxx XxXxxx
Address:
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Fax:
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Phone:
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Schedule A
to Registration Rights Agreement
Holder Name Number of Shares
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Xxxxxxx X. Xxxxx 315,000
Xxxxxxx Xxxxx 125,000
Xxxxxxxx Xxxx 25,000
Xxxxxxx Xxxxxxxxxxx 25,000
Xxxxxxxx Xxxxx 5,000
Xxxxxx XxXxxx 5,000
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