EXHIBIT 10.18
ASSET EXCHANGE, INC.
Investor Rights Agreement
September 10, 1999
ASSET EXCHANGE, INC.
Investor Rights Agreement
This Agreement (the "Agreement") is made as of September 10, 1999 by and
among Asset Exchange, Inc., a Delaware corporation (the "Company"), and the
Investors set forth on Exhibit A to the Stock Purchase Agreement (as identified
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in the first recital below) (the "Investors").
RECITALS
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and the Investors have entered into a Series A Preferred
Stock Purchase Agreement dated as of September 9, 1999 (as in effect from time
to time, the "Purchase Agreement") in connection with the issuance and sale by
the Company to the Investors of certain shares (the "Series A Shares") of the
Company's Series A Preferred Stock, $0.0001 par value per share; and
WHEREAS, it is a condition to the purchase of the Investors' Series A
Shares pursuant to the Purchase Agreement that the Company and the Investors
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Financial and Other Information.
1.1 Annual Financial Statements.
The Company will deliver to each Investor within one hundred twenty (120)
days after the end of each fiscal year a copy of the balance sheet of the
Company as of the end of such year, together with consolidated and consolidating
statements of income and of cash flows of the Company for such year, all in
reasonable detail, and prepared in accordance with generally accepted accounting
principles, consistently applied.
1.2 Monthly Financial Statements and Budgets.
The Company will furnish to each Investor, within thirty (30) days after
the end of each month, other than the last month of the fiscal year of the
Company, a copy of the unaudited consolidated balance sheet of the Company as of
the end of such month and unaudited consolidated statements of income and of
cash flows of the Company for such month. Each of the foregoing balance sheets
and statements should set forth in comparative form the corresponding figures
for the corresponding period during the prior fiscal year and, in comparative
form, the corresponding budgeted figures. The balance sheets and statements
should be in reasonable detail, and be prepared in accordance with generally
accepted accounting principles, consistently applied, except that such financial
statements need not contain all footnotes required under generally accepted
accounting principles.
1.3 Budget and Operating Plan.
The Company will furnish to each Investor, at least thirty (30) days prior
to the beginning of each fiscal year, a budget and operating plan for such
fiscal year which has been approved by the Company's Board of Directors.
2. Preemptive Rights.
2.1 Except as provided in Section 2.6, the Company shall not issue or
sell any of its equity securities (including securities convertible into equity
securities) (collectively, the "Future Shares") to any person without first
providing each Investor (each a "Holder") the right to subscribe for its
Proportionate Percentage (as defined in Section 2.4) of such Future Shares at
the same price and on the same terms (including the method of purchase;
provided, however, that the Holders shall have the option of purchasing Future
Shares with cash, regardless of the method of purchase offered to such person)
as shall be offered to such third party and which shall have been specified by
the Company in a writing delivered to each Holder (the "Proposal"). The
Proposal by its terms shall remain open and irrevocable for a period of fifteen
(15) days from the date it is delivered by the Company to each Holder (the
"Future Shares Exercise Period"). The Proposal shall also certify that the
Company has either (a) received a firm offer from a prospective purchaser, who
shall be identified in such certification, so that the Company in good faith
believes a binding agreement of sale is obtainable for consideration having a
fair market, cash equivalent or present value set forth in such certification;
or (b) intends in good faith to make an offering of its securities at the price
and on the terms set forth in such certification.
2.2 Notice of each Holder's acceptance, in whole or in part, of the
Proposal made pursuant to Section 2.1 hereof shall be evidenced by a writing
signed by such Holder delivered to the Company prior to the end of the Future
Shares Exercise Period setting forth that portion of the Future Shares, as the
case may be, which the Holder elects to purchase (the "Notice of Purchase"). If
a Holder does not deliver such written notice within the Future Shares Exercise
Period, such Holder shall be deemed to have elected not to purchase all or any
part of such Future Shares.
2.3 In the event that the Holders elect not to purchase all of such
Future Shares, the Company shall have 120 days from the expiration of the Future
Shares Exercise Period to offer and sell any part of such Future Shares not
elected to be purchased by the Holders (the "Refused Future Shares") to any
other person(s), but only upon terms and conditions in all respects (including,
without limitation, price, seniority, dividends and liquidation, redemption and
conversion rights) which are no more favorable to such other person(s) or less
favorable to the Company than those set forth in the Proposal; provided,
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however, that such sale be to the same person(s) or their affiliates identified
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in the Proposal, if so identified pursuant to Section 2.1. In the event that
the Company so sells the Refused Future Shares to such other person(s), the sale
to each Holder of the Future Shares in respect of which a Notice of Purchase was
delivered to the Company by such Holder shall occur upon the closing of the sale
to such other person(s) of Refused Future Shares (which closing shall include
full payment to the Company). If there are no Refused Future Shares, the sale
to such Holder of such Future Shares shall occur within 20 days of the
expiration of the Future Shares Exercise Period. In any event, the sale to such
Holder of such Future Shares shall be on the terms specified in the Proposal.
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Any Refused Future Shares not purchased by such other person(s) within a 120-day
period shall remain subject to this Section 2.
2.4 The term "Proportionate Percentage" shall mean, as to any Holder,
that percentage figure which expresses the ratio which (i) the aggregate number
of shares of Common Stock then (a) outstanding and owned by such Holder and (b)
issuable upon conversion or exercise of securities which are convertible into or
exercisable for Common Stock outstanding and owned by such Holder bears to (ii)
the aggregate number of shares of Common Stock (a) outstanding and owned by all
stockholders of the Company and (b) issuable upon conversion or exercise of
options, warrants, other securities and other rights which are convertible into
or exercisable for Common Stock outstanding and owned by all stockholders of the
Company.
2.5 For purposes solely of the computation required under Section
2.4, the Holders and other stockholders of the Company shall be treated as
having converted or exercised all options, warrants, other securities and other
rights which are convertible into or exercisable for shares of Common Stock at
the rate at which such securities are convertible into or exercisable for Common
Stock at the time of such computation.
2.6 Notwithstanding anything in Section 2.1 to the contrary, a Holder
shall not be entitled to any preemptive rights in connection with any issuance
of shares of Common Stock (i) securities issued upon conversion of any
outstanding shares of preferred stock; (ii) securities issued pursuant to the
acquisition of another business entity or business segment of any such entity by
the Company by merger, purchase of substantially all the assets or other
reorganization whereby the Company will own more than fifty percent (50%) of the
voting power of such business entity or business segment of any such entity;
(iii) any borrowings, direct or indirect, from financial institutions or other
persons by the Company, whether or not presently authorized, including any type
of loan or payment evidenced by and type of debt instrument, provided such
borrowings do not have any equity features including warrants, options or other
rights to purchase capital stock and are not convertible into capital stock of
the Company; (iv) securities issued to employees, consultants, officers or
directors of the Company pursuant to any stock option, stock purchase or stock
bonus plan, agreement or arrangement approved by the Board of Directors; (v)
securities issued to vendors or customers or to other persons in similar
commercial situations with the Company if such issuance is approved by the Board
of Directors; (vi) securities issued in connection with obtaining lease
financing, whether issued to a lessor, guarantor or other person; (vii)
securities issued in a public offering to the public of at least $7,5000,000 (a
"Qualified Public Offering"); (viii) securities issued in connection with any
stock split, stock dividend or recapitalization of the Company; (ix) securities
issued in connection with corporate partnering transactions on terms approved by
the Board of Directors; and (x) any right, option or warrant to acquire any
security convertible into the securities excluded from the definition of New
Securities pursuant to subsections (i) through (ix) above.
2.7 The obligations of the Company to comply with this Section 2
shall terminate upon a Qualified Public Offering.
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2.8 Investor shall have the right to assign the rights granted to the
Investors in this Section 2 to any transferee who is acquiring or receiving at
least 10,000 shares of the Company's Common Stock (assuming conversion of any
outstanding Preferred Stock).
3. Registration Rights.
3.1 Definitions.
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(a) The terms "Form X-0," "Xxxx X-0," "Form S-4" and "Form S-8" mean
such respective forms under the Securities Act of 1933, as amended (the "1933
Act") as in effect on the date hereof or any successor registration forms to
Form X-0, Xxxx X-0, Form S-4 and Form S-8, respectively, under the 1933 Act
subsequently adopted by the Securities and Exchange Commission (the "SEC").
(b) The term "Holder" means any person owning Registrable Securities
(as defined below) or any assignee thereof in accordance with Section 3.10
hereof.
(c) The term "Immediate Family" means, with respect to any natural
person, each of such person's spouse, father, mother, brothers, sisters and
lineal descendants and ancestors.
(d) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the automatic
effectiveness or the declaration or ordering of effectiveness of such
registration statement or document.
(e) The term "Registrable Securities" means any shares of Common Stock
issuable upon conversion of Series A Preferred Stock held by an Investor or any
Common Stock issued as a dividend or other distribution with respect to, in
exchange for, or in replacement of such stock; provided, however, that any
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shares previously sold pursuant to a registered public offering or pursuant to
an exemption from the registration requirements of the 1933 Act under which the
transferee does not receive "restricted securities" shall cease to be
Registrable Securities.
3.2 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
capital stock or other securities under the 1933 Act in connection with the
public offering of such securities solely for cash (other than a registration on
Form S-8 relating solely to the sale of securities to participants in a Company
stock plan or a registration on Form S-4 or a Rule 145 transaction), the Company
shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of any Holder given within 20 days after
mailing of such notice by the Company, the Company shall, subject to the
provisions of Section 3.6, cause a registration statement covering all of the
Registrable Securities that each such Holder has requested to be registered to
become effective under the 0000 Xxx.
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3.3 Obligations of the Company. Whenever required under this Section
3 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible, prepare and file with the SEC a
registration statement with respect to such Registrable Securities and cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 90 days or until such earlier
time at which such Holders have informed the Company in writing that the
distribution of their securities has been completed (such 90-day or shorter
period, the "Effectiveness Period"). In addition, the Company shall:
(a) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement, and cause each such amendment and supplement to
become effective, as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement during the Effectiveness Period.
(b) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the 1933 Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by
them.
(c) Register or qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such states and
jurisdictions as shall be reasonably requested by the Holders, except that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business, subject itself to taxation or file a
general consent to service of process in any such state or jurisdiction.
(d) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an underwriting agreement, including furnishing any
opinion of counsel or entering into a lock-up agreement reasonably
requested by the managing underwriter.
(e) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the 1933 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 and promptly file such amendments and supplements which may be
required pursuant to Section 3.3(a) on account of such event and use its
best efforts to cause each such amendment and supplement to become
effective.
(f) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 3, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 3, if such
securities are being sold through underwriters, or, if such securities are
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not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an opinion
or opinions, dated such date, of the counsel representing the Company for
the purposes of such registration, in form and substance as is customarily
given by company counsel to the underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a letter dated
such date, from the independent certified public accountant of the Company,
in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
(g) Apply for listing and list the Registrable Securities being
registered on any national securities exchange on which a class of the
Company's equity securities is listed or, if the Company does not have a
class of equity securities listed on a national securities exchange, apply
for qualification and use its best efforts to qualify the Registrable
Securities being registered for inclusion on the automated quotation system
of the National Association of Securities Dealers, Inc.
3.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 in
respect of the Registrable Securities of any selling Holder that such selling
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of its
Registrable Securities.
3.5 Expenses of Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to any registration
pursuant to Section 3.2 for each Holder, including, without limitation, all
registration, filing and qualification fees, printing and accounting fees, fees
and disbursements of counsel for the Company excluding the fees and
disbursements of counsel for the selling Holders. The Holders will bear and pay
ratably all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to any registration
pursuant to Section 3.9 for each Holder, including, without limitation, all
registration, filing and qualification fees, printing and accounting fees, fees
and disbursements of counsel for the Company. Underwriting discounts and
commissions relating to Registrable Securities included in any registration
effected pursuant to Section 3.2 or 3.9 will be borne and paid ratably by the
Holders of such Registrable Securities.
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3.6 Underwriting Requirements. In connection with any offering
involving an underwriting of securities being issued by the Company, the Company
shall not be required under Section 3.2 to include any of the Holders'
securities in such underwriting unless such Holders accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity, if any, as in the reasonable opinion of the
underwriters, marketing factors allow. If the managing underwriter for the
offering shall advise the Company in writing that the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities to be sold other than
by the Company that marketing factors allow, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the managing underwriter believes marketing
factors allow (the securities so included to be reduced as follows: (a) all
securities which stockholders other than the Company and the Holders seek to
include in the offering shall be excluded from the offering to the extent
limitation on the number of shares included in the underwriting is required, and
(b) if further limitation on the number of shares to be included in the
underwriting is required, then the number of shares held by Holders that may be
included in the underwriting shall be reduced so that the number of shares
included in the underwriting are pro rata in accordance with the number of
shares of Registrable Securities held by each such Holder), but in no event
shall the amount of securities of the selling Holders included in the offering
be reduced below 25% of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities in which case the selling Holders may be excluded if the managing
underwriter makes the determination described above and no securities other than
those of the Company are included.
3.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) The Company will indemnify and hold harmless each Holder, the
officers, directors, partners, members, agents and employees of each
Holder, any underwriter (as defined in the 0000 Xxx) for such Holder and
each person, if any, who controls or is deemed to control such Holder or
underwriter within the meaning of the 1933 Act or the 1934 Act, against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the 1933 Act, the 1934 Act or any other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (each a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, or (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the 1933 Act, the 1934 Act or any state
securities law in connection with any matter relating to such registration
statement. The Company will reimburse each such Holder, officer, director,
partner, member, agent, employee, underwriter or controlling person or
person who is deemed to control for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability, or action. The indemnity agreement
contained in this Section 3.7(a) shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable to a
Holder in any such case for any such loss, claim,
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damage, liability or action (1) to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by or on behalf of such Holder, underwriter or controlling
person or (2) in the case of a sale directly by a Holder of Registrable
Securities (including a sale of such Registrable Securities through any
underwriter retained by such Holder engaging in a distribution solely on
behalf of such Holder), such untrue statement or alleged untrue statement
or omission or alleged omission was contained in a preliminary prospectus
and corrected in a final or amended prospectus, and such Holder failed to
deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the Registrable Securities to the person
asserting any such loss, claim, damage or liability in any case in which
such delivery is required by the 0000 Xxx.
(b) Each Holder which includes any Registrable Securities in any
registration statement will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Company within the meaning
of the 1933 Act, each employee, agent, and any underwriter for the Company,
and any other Holder or other stockholder selling securities in such
registration statement or any of its directors, officers, partners,
members, agents or employees or any person who controls such Holder or such
other stockholder or such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, employee, agent, or underwriter or
controlling person, or other such Holder, stockholder, director, officer or
controlling person may become subject, under the 1933 Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by or on behalf of such Holder expressly for use in
connection with such registration, and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, agent or underwriter or controlling
person, other Holder or other stockholder, officer, director, partner,
member, agent, employee, or controlling person in connection with
investigating or defending any such loss,claim, damage, liability, or
action; provided, however, that the liability of any Holder hereunder shall
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be limited to the amount of net proceeds (after deduction of all
underwriters' discounts and commissions paid by such Holder in connection
with the registration in question) received by such Holder, in the offering
giving rise to the Violation; and provided, further, that the indemnity
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agreement contained in this Section 3.7(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld or delayed nor, in the case of a sale
directly by the Company of its securities (including a sale of such
securities through any underwriter retained by the Company to engage in a
distribution solely on behalf of the Company), shall the Holder be liable
to the Company in any case in which
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such untrue statement or alleged untrue statement or omission or alleged
omission was contained in a preliminary prospectus and corrected in a final or
amended prospectus, and the Company failed to deliver a copy of the final or
amended prospectus at or prior to the confirmation of the sale of the securities
to the person asserting any such loss, claim, damage or liability in any case in
which such delivery is required by the 0000 Xxx. The obligations of the Holders
hereunder are several, and not joint.
(c) Promptly after receipt by an indemnified party under this Section
3.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 3.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and control the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
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indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests, as reasonably
determined by either party, between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 3.7 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 3.7.
(d) The obligations of the Company and the Holders under this Section
3.7 shall survive the conversion, if any, of the Registrable Securities and the
completion of any offering of Registrable Securities in a registration statement
whether under this Section 3 or otherwise.
3.8 Reports Under Securities Exchange Act of 1934.
(a) Resales Under Rule 144; Form S-3 Registration. With a view to
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making available to the Holders the benefits of Rule 144 promulgated under the
1933 Act ("Rule 144") and any other rule or regulation of the SEC that may at
any time permit a Holder to sell securities of the Company to the public without
registration, and with a view to making it possible for Holders to have the
resale of the Registrable Securities registered pursuant to a registration
statement on Form S-3, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after 90 days
after the effective date of the first registration statement filed by
the Company for the offering of its securities to the general public;
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(ii) concurrently with the first registered public offering,
take such action, including the voluntary registration of its Common
Stock under Section 12 of the 1934 Act or compliance with the
reporting requirements of Section 15(d) of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of
their Registrable Securities;
(iii) after the first registered public offering, file with the
SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act; and
(iv) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (1) a written statement
by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company for the offering of
the securities to the general public), the 1933 Act and the 1934 Act
(at any time after it has become subject to such reporting
requirements), or as to its qualification as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (2) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company, and (3) such other documents as may be reasonably requested
in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or
pursuant to such form.
3.9 Form S-3 Registration.
(a) In case the Company shall receive from any Holder or Holders a
written request or requests that the Company effect a registration on Form
S-3 (or on any successor form to Form S-3 regardless of its designation)
and any related qualification or compliance with respect to all or a part
of the Registrable Securities owned by such Holder or Holders, the Company
will:
(i) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(ii) effect, as soon as practicable, such registration (and to
keep such registration effective for up to 90 days), qualification or
compliance as may be so requested and as would permit or facilitate
the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a
written request given within 20 days after receipt of such written
notice from the Company; provided, however, that the Company shall not
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be obligated to effect any such registration, qualification or
compliance pursuant to this Section 3.9 if: (1) Form S-3 (or any
successor form to Form S-3 regardless of its designation) is not
available for such offering by the Holders; (2) the aggregate net
offering price (after deduction of anticipated underwriting discounts
and commissions) of the Registrable Securities specified in such
request is not at least $500,000; (3) the
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Company has already effected one registration on Form S-3 within the
previous twelve-month period; or (4) 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, it would
not be in the best interests of the Company and its stockholders for
such Form S-3 registration to be effected at such time, in which event
the Company shall have the right to defer the filing of the Form S-3
registration for a period of not more than 90 days after receipt of
the request of the Holder or Holders under this Section 3.9; provided,
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however, that the Company shall not utilize this right more than once
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in any twelve-month period.
3.10 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 3 may be
assigned by any Holder to a permitted transferee, and by such transferee to a
subsequent permitted transferee, but only if such rights are transferred in
connection with the sale or other transfer of not fewer than an aggregate of
10,000 Registrable Securities (as adjusted for stock splits, combinations, stock
dividends and recapitalizations) or some lesser number, if such lesser number
represents all the Registrable Securities then held by such Holder. Any
transferee to whom rights under this Agreement are transferred shall (i) as a
condition to such transfer, deliver to the Company a written instrument by which
such transferee agrees to be bound by the obligations imposed upon Holders under
this Agreement to the same extent as if such transferee were a Holder under this
Agreement and (ii) be deemed to be a Holder hereunder.
4. Lock-up.
If requested by the Company and the managing underwriter, each Holder
agrees to enter into a lock-up agreement pursuant to which Holder will not, for
a period of no more than 180 days following the effective date of the first
registration statement for a public offering of the Company's securities, offer,
sell or otherwise dispose of the or other equity securities of the Company
without the prior consent of the Company and the underwriter.
5. Miscellaneous.
5.1 Notices.
All notices, requests, consents and demands shall be in writing and shall
be personally delivered (effective upon receipt), mailed, postage prepaid
(effective three business days after dispatch), emailed, telecopied or
telegraphed (effective upon receipt of the transmission in complete, readable
form), or sent via a reputable overnight courier service (effective the
following business day following dispatch), to the Company at:
Asset Exchange, Inc.
Attn: Xxxxx Xxxxxx, President
0000 XX Xxxxx Xxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax number: (000) 000-0000
with a copy to:
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Xxxxxx Xxxx LLP
Attn: Xxxxxxx XxXxxxxxx
1600 Pioneer Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax Number: (000) 000-0000
or to each Investor at:
Net Value Holdings Inc.
Attn: Xxxxxxx X. Xxxxx
0 Xxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Fax Number: (000) 000-0000 (OR)
Email: xxxx@xxxxx.xxx
and
Treeside Incorporated
Attn: Xxxxxxx X. XxXxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax Number: 248/000-0000 (call first)
Email: xxxxxxx@xxxxxxxx.xxx
5.2 Entire Agreement.
This Agreement and the Purchase Agreement constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede any and all prior understandings and agreements, whether
written or oral, with respect to such subject matter.
5.3 Amendments, Waivers and Consents.
Any provision in this Agreement to the contrary notwithstanding,
modifications or amendments to this Agreement may be made, and compliance with
any covenant or provision herein set forth may be omitted or waived, if the
Company shall agree thereto, and (a) the Company shall obtain consent thereto in
writing from persons holding a majority of the Series A Preferred Stock then
outstanding and (b) the Company shall, in each such case, deliver copies of such
consent in writing to any Holders who did not execute the same; provided,
---------
however, that no Holder shall, without its consent, be adversely affected by any
-------
such modification, amendment or waiver in any manner in which the other Holders
are not likewise adversely affected. Without the consent of the Investors, this
Agreement shall be amended to reflect any additional investors that become
parties to this Agreement pursuant to the rights of the Company to sell shares
of the Company's Series A Preferred if not all of the authorized shares have
been sold as of the closing
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under the Purchase Agreement. The new investors shall execute a signature page
to this Agreement.
5.4 Binding Effect; Assignment.
This Agreement shall be binding upon and inure to the benefit of the
personal representatives, successors and permitted assigns of the respective
parties hereto.
5.5 General.
The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
In this Agreement the singular includes the plural, the plural includes the
singular, and reference to any gender includes the neuter, masculine and
feminine genders. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon. Any action brought between the
parties may be brought only in the state or federal courts located in Oregon,
and in no other place unless the parties expressly agree in writing to waive
this requirement.
5.6 Severability.
If any provision of this Agreement shall be found by any court of competent
jurisdiction to be invalid or unenforceable, the parties hereby waive such
provision to the extent that it is found to be invalid or unenforceable. Such
provision shall, to the maximum extent allowable by law, be modified by such
court so that it becomes enforceable, and, as modified, shall be enforced as any
other provision hereof, all the other provisions hereof continuing in full force
and effect.
5.7 Counterparts.
This Agreement may be executed in counterparts, all of which together shall
constitute one and the same agreement.
5.8 Dispute Resolution.
Any controversy, claim, or dispute arising out of or relating to this
Agreement or the breach thereof shall be settled, if possible, through good
faith negotiations between the parties. If the matter is not resolved within 60
days after initiation by either party of good faith negotiations, such
controversy, claim or dispute shall be resolved by arbitration administered by
the American Arbitration Association in accordance with its Commercial
Arbitration Rules. Such arbitration shall take place in Portland, Oregon. The
arbitration award shall be final and binding regardless of whether one of the
parties fails or refuses to participate in the arbitration. Judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The prevailing party shall be entitled to an award of
reasonable attorney fees.
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IN WITNESS WHEREOF, the Company and the Investors have executed this Agreement
as of the date and year first above written.
ASSET EXCHANGE, INC.
By: _____________________________
Xxxxxxx X. Xxx, CEO
Net Value Holdings Inc.
By: _____________________________
Xxxxxx X. Xxxxx
Its: President and Chief Executive
Officer
Treeside Incorporated
By: _____________________________
Xxxxxxx X. XxXxxxxx
Its: Chairman of the Board
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