EXHIBIT 10.11
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into as
of the- day of-, 2005, by and among Ad.Venture Partners, Inc., a Delaware
corporation (the "COMPANY") and each of the undersigned parties listed under
Insiders on the signature page hereto (each, an "INSIDER" and collectively, the
"INSIDERS").
WHEREAS, the Insiders, collectively, hold all of the issued and
outstanding securities of the Company as of the date hereof;
WHEREAS, the Insiders and the Company desire to enter into this Agreement
to provide the Insiders with certain rights relating to the registration of
shares of Common Stock (as defined below) held by them;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. The following capitalized terms used herein have the
following meanings:
"AGREEMENT" means this Agreement, as amended, restated,
supplemented, or otherwise modified from time to time.
"BUSINESS COMBINATION" means the acquisition by the Company, whether
by merger, capital stock exchange, asset acquisition or other similar business
combination, of one or more operating businesses in the technology, media or
telecommunications industries, having, collectively, a fair market value (as
calculated in accordance with the Company's Amended and Restated Certificate of
Incorporation) equal to at least 80% of the Company's net assets at the time of
such acquisition.
"BUSINESS DAY" means any day, except a Saturday, Sunday or legal
holiday on which the banking institutions in the City of New York are authorized
or obligated by law or executive order to close.
"COMMISSION" means the Securities and Exchange Commission, or such
successor federal agency or agencies as may be established in lieu thereof.
"COMMON STOCK" means the common stock, par value $0.0001 per share,
of the Company.
"COMPANY" is defined in the preamble to this Agreement.
"DEMAND REGISTRATION" is defined in Section 2.1.1.
"DEMANDING HOLDER" is defined in Section 2.1.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"FORM S-3" is defined in Section 2.3.
"INDEMNIFIED PARTY" is defined in Section 4.3.
"INDEMNIFYING PARTY" is defined in Section 4.3.
"INSIDER" is defined in the preamble to this Agreement.
"INSIDER INDEMNIFIED PARTY" is defined in Section 4.1.
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"INSIDER SHARES" mean all of the shares of Common Stock owned or
held by Insiders; provided, that such shares shall cease to be Insider Shares
when: (a) a Registration Statement with respect to the sale of such securities
shall have become effective under the Securities Act (as defined below) and such
securities shall have been sold, transferred, disposed of or exchanged in
accordance with such Registration Statement; (b) such securities shall have been
otherwise transferred pursuant to Rule 144 of the Securities Act (or any similar
provisions thereunder, but not Rule 144A), and new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration under the Securities Act; or (c) such securities shall have ceased
to be outstanding.
"MAXIMUM NUMBER OF SHARES" is defined in Section 2.1.4.
"NOTICES" is defined in Section 6.2.
"PIGGY-BACK REGISTRATION" is defined in Section 2.2.1.
"PROSPECTUS" means a prospectus relating to a Registration
Statement, as amended or supplemented, and all materials incorporated by
reference in such Prospectus.
"PURCHASE OPTION" means the option to purchase 750,000 units (each
consisting of one share of common stock and two warrants) issued to Wedbush
Xxxxxx Securities Inc. or its designees in connection with the Company's
initial public offering (as transferred from time to time in accordance with
its terms).
"PURCHASE OPTION SHARES" means the Purchase Option, the units
issuable thereof, the Common Stock and warrants included in such units and the
Common Stock issuable upon exercise of such warrants.
"REGISTER," "REGISTERED" and "REGISTRATION" mean a registration
effected by preparing and filing a registration statement or similar document
under the Securities Act and such registration statement becoming effective.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission in compliance with the Securities Act and the rules
and regulations promulgated thereunder for a public offering and sale of Common
Stock (other than a registration statement on Form S-4 or Form S-8, or their
successors, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another entity).
"RELEASE DATE" means the date that is six months after the
consummation of a Business Combination.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"UNDERWRITER" means a securities dealer who purchases any Insider
Shares as principal in an underwritten offering and not as part of such dealer's
market-making activities.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
2.1.1 General Request for Registration. At any time and from
time to time on or after the Release Date, the holders of a majority-in-interest
of the Insider Shares held by the Insiders or the transferees of the Insider
Shares, may make a written demand for registration under the Securities Act of
all or part of their Insider Shares (a "DEMAND REGISTRATION"). Any demand for a
Demand Registration shall specify the number of Insider Shares proposed to be
sold and the intended method(s) of distribution thereof. The Company will notify
all holders of Insider Shares of any demand pursuant to this Section 2.1.1, or
pursuant to Section 2.1.2 below, as the case may be, within five (5) Business
Days, and each holder of Insider Shares who wishes to include all or a portion
of such
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holder's Insider Shares in such Demand Registration (each such holder including
shares of Insider Shares in such Demand Registration, a "DEMANDING HOLDER")
shall so notify the Company within ten (10) Business Days after the receipt by
the holder of the notice from the Company. Upon any such request, the Demanding
Holders shall be entitled to have their Insider Shares included in the Demand
Registration subject to Section 2.1.4 and the provisions set forth in Section
3.1.1. The Company shall not be obligated to effect more than an aggregate of
two (2) Demand Registrations under this Section 2.1.1 in respect of Insider
Shares.
2.1.2 Effective Registration. A registration will not count as
a Demand Registration until the Registration Statement filed with the Commission
with respect to such Demand Registration has been declared effective and the
Company has complied with all of its obligations under this Agreement with
respect thereto; provided, however, that if, after such Registration Statement
has been declared effective, the offering of Insider Shares pursuant to a Demand
Registration is interfered with by any stop order or injunction of the
Commission or any other governmental agency or court, the Registration Statement
with respect to such Demand Registration will be deemed not to have been
declared effective, unless and until, (i) such stop order or injunction is
removed, rescinded or otherwise terminated, and (ii) with respect to a Demand
Registration, a majority-in-interest of the Demanding Holders thereafter elect
to continue the offering; provided, further, that the Company shall not be
obligated to file a second Registration Statement until any such Registration
Statement that has been filed is counted as a Demand Registration or is
terminated.
2.1.3 Underwritten Offering. If a majority-in-interest of the
Demanding Holders so elect and such holders so advise the Company as part of
their written demand for a Demand Registration, the offering of such Insider
Shares pursuant to such Demand Registration shall be in the form of an
underwritten offering. In each such case, the right of any holder to include
such holder's Insider Shares in such registration shall be conditioned upon such
holder's participation in such underwriting and the inclusion of such holder's
Insider Shares in the underwriting to the extent provided herein. All Demanding
Holders who propose to distribute their Insider Shares through such an
underwriting shall enter into an underwriting agreement in customary form with
the Underwriter or Underwriters selected for such underwriting by a
majority-in-interest of the holders initiating the Demand Registration.
2.1.4 Reduction of Offering. If the managing Underwriter or
Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar amount
or number of shares of Insider Shares that the Demanding Holders desire to sell,
taken together with all other shares of Common Stock or other securities that
the Company desires to sell and the shares of Common Stock, if any, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights held by other holders of the Company's securities who desire
to sell securities, exceeds the maximum dollar amount or maximum number of
shares that can be sold in such offering without adversely affecting the
proposed offering price, the timing, the distribution method, or the probability
of success of such offering (such maximum dollar amount or maximum number of
shares, as applicable, the "MAXIMUM NUMBER OF SHARES"), then the Company shall
include in such registration: (i) first, the Insider Shares as to which the
Demand Registration has been requested together with all other shares of Common
Stock or other securities that the Company desires to sell and the shares of
Common Stock, if any, as to which registration has been requested pursuant to
the Purchase Option, that can be sold without exceeding the Maximum Number of
Shares (all pro rata in accordance with the number of such shares that the
Company or such holders shall have requested to be included in such
registration); (ii) second, to the extent that the Maximum Number of Shares has
not been reached under the foregoing clause (i), the shares of Common
Stock for the account of other persons that the Company is obligated to register
pursuant to written contractual arrangements with such persons and that can be
sold without exceeding the Maximum Number of Shares; and (iii), third, to the
extent that the Maximum Number of Shares have not been reached under the
foregoing clauses (i) and (ii), the shares of Common Stock that other
stockholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.
2.1.5 Withdrawal. If a majority-in-interest of the Demanding
Holders disapprove of the terms of any underwriting or are not entitled to
include all of their Insider Shares in any offering, such majority-
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in-interest of the Demanding Holders may elect to withdraw from such offering by
giving written notice to the Company and the Underwriter or Underwriters of
their request to withdraw prior to the effectiveness of the Registration
Statement filed with the Commission with respect to such Demand Registration. In
such event, the Company need not seek effectiveness of such Registration
Statement for the benefit of other Insiders. If the majority-in-interest of the
Demanding Holders withdraws from a proposed offering relating to a Demand
Registration then such registration shall not count as a Demand Registration
provided for in Section 2.1.1.
2.2 Piggy-Back Registration.
2.2.1 Piggy-Back Rights. If at any time on or after the
Release Date the Company proposes to file by Registration Statement, other than
a Registration Statement in connection with a transaction contemplated by Rule
145(a) promulgated under the Securities Act or pursuant to Form S-8, then the
Company shall (a) give written notice of such proposed filing to the holders of
Insider Shares as soon as practicable but in no event less than ten (10)
Business Days before the anticipated filing date, which notice shall describe
the amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering, and (b) offer to the holders of Insider
Shares in such notice the opportunity to register such number of Insider Shares
as such holders may request in writing within five (5) Business Days following
receipt of such notice (a "PIGGY-BACK REGISTRATION"). The Company shall cause
such Insider Shares to be included in such registration and shall use
commercially reasonable efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit the Insider Shares
requested to be included in a Piggy-Back Registration to be included on the same
terms and conditions as any similar securities of the Company and to permit the
sale or other disposition of such Insider Shares in accordance with the intended
method(s) of distribution thereof. All holders of Insider Shares who propose to
distribute securities through a Piggy-Back Registration that involves an
Underwriter or Underwriters shall enter into an underwriting agreement in
customary form with the Underwriter or Underwriters selected for such Piggy-Back
Registration.
2.2.2 Reduction of Offering. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering advises the Company and the holders of Insider Shares in writing that
the dollar amount or number of shares of Common Stock that the Company desires
to sell, taken together with shares of Common Stock, if any, as to which
registration has been demanded pursuant to written contractual arrangements with
persons other than the holders of Insider Shares hereunder, the Insider Shares
as to which registration has been requested under this Section 2.2, and the
shares of Common Stock, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other
shareholders of the Company, exceeds the Maximum Number of Shares, then the
Company shall include in any such registration:
(i) first, subject to the demand registration rights
granted to the holders of the Purchase Option Shares, the shares of Common
Stock or other securities that the Company desires to sell that can be sold
without exceeding the Maximum Number of Shares together with the Insider Shares
as to which registration has been requested and any other shares of Common
Stock or other securities as to which registration has been requested pursuant
to the Purchase Option (pro rata in accordance with the number of shares which
each such person has actually requested to be included in such registration
that can be sold without exceeding the Maximum Number of Shares),
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(ii) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (i), the shares of
Common Stock, if any, as to which registration has been requested pursuant to
written contractual piggy-back registration rights which other shareholders
desire to sell that can be sold without exceeding the Maximum Number of Shares,
and
(iii) third, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clauses (i) and (ii), the
shares of Common Stock, if any, that other stockholders desire to sell that can
be sold without exceeding the Maximum Number of Shares.
2.2.3 Withdrawal. Any holder of Insider Shares may elect to
withdraw such holder's request for inclusion of Insider Shares in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement. The Company may also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Insider Shares in connection with such Piggy-Back Registration as provided in
Section 3.3.
2.3 Registrations on Form S-3. The holders of Insider Shares may at
any time and from time to time after the Release Date, request in writing that
the Company register the resale of any or all of such Insider Shares on Form S-3
or any similar short-form registration that may be available at such time ("FORM
S-3"); provided, however, that: (a) the Company shall not be obligated to effect
such request through an underwritten offering and (b) the Company shall not be
obligated to effect such a request if the Company has within the preceding
twelve (12) month period effected two (2) registrations on Form S-3. Upon
receipt of such written request, the Company will promptly give written notice
of the proposed registration to all other holders of Insider Shares and, as soon
as practicable thereafter, effect the registration of all or such portion of
such holder's or holders' Insider Shares, as the case may be, as are specified
in such request, together with all or such portion of the Insider Shares of any
other holder or holders joining in such request as are specified in a written
request given within five (5) Business Days after receipt of such written notice
from the Company; provided, however, that the Company shall not be obligated to
effect any such registration pursuant to this Section 2.3: (i) if Form S-3 is
not available for such offering; or (ii) if the holders of the Insider Shares,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Insider Shares and such other
securities (if any) at any aggregate price to the public of less than $500,000.
Registrations effected pursuant to this Section 2.3 shall not be counted as
Demand Registrations effected pursuant to Section 2.1.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required to effect
the registration of any Insider Shares pursuant to Section 2, the Company shall
use commercially reasonable efforts to effect the registration and sale of such
Insider Shares in accordance with the intended method(s) of distribution thereof
as expeditiously as practicable, and in connection with any such request:
3.1.1 Filing Registration Statement. The Company shall, as
expeditiously as possible and in any event within sixty (60) days after receipt
of a request for a Demand Registration pursuant to Section 2.1, prepare and file
with the Commission a Registration Statement on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate and which
form shall be available for the sale of all Insider Shares to be registered
thereunder in accordance with the intended method(s) of distribution thereof,
and shall use commercially reasonable efforts to cause such Registration
Statement to become and remain effective for the period required by Section
3.1.3; provided, however, that the Company shall have the right to defer any
Demand Registration for up to ninety (90) days, and any Piggy-Back Registration
for such period as may be applicable to deferment of any demand registration to
which such Piggy-Back Registration relates, in each case if the Company shall
furnish to the holders a certificate signed by the Chief Executive Officer of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be materially detrimental to the Company and its
shareholders for such Registration Statement to be effected at such time;
provided further, however, that the Company shall not have the right to exercise
the right set forth in the immediately preceding proviso more than once in any
365-day period in respect of a Demand Registration hereunder.
3.1.2 Copies. The Company shall, prior to filing a
Registration Statement or
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Prospectus, or any amendment or supplement thereto, furnish without charge to
the holders of Insider Shares included in such registration, and such holders'
legal counsel, copies of such Registration Statement as proposed to be filed,
each amendment and supplement to such Registration Statement (in each case
including all exhibits thereto and documents incorporated by reference therein),
the Prospectus included in such Registration Statement (including each
preliminary Prospectus), and such other documents as the holders of Insider
Shares included in such registration or legal counsel for any such holders may
reasonably request in order to facilitate the disposition of the Insider Shares
owned by such holders.
3.1.3 Amendments and Supplements. The Company shall prepare
and file with the Commission such amendments, including post-effective
amendments, and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and in compliance with the provisions of the Securities Act
until all Insider Shares, and all other securities covered by such Registration
Statement, have been disposed of in accordance with the intended method(s) of
distribution set forth in such Registration Statement (which period shall not
exceed the sum of one hundred eighty (180) days plus any period during which any
such disposition is interfered with by any stop order or injunction of the
Commission or any governmental agency or court) or such securities have been
withdrawn.
3.1.4 Notification. After the filing of a Registration
Statement, the Company shall promptly, and in no event more than two (2)
Business Days after such filing, notify the holders of Insider Shares included
in such Registration Statement of such filing, and shall further notify such
holders promptly and confirm such advice in writing in all events within two (2)
Business Days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective amendment
to such Registration Statement becomes effective; (iii) the issuance or
threatened issuance by the Commission of any stop order (and the Company shall
take all actions required to prevent the entry of such stop order or to remove
it if entered); and (iv) any request by the Commission for any amendment or
supplement to such Registration Statement or any Prospectus relating thereto or
for additional information or of the occurrence of an event requiring the
preparation of a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of the securities covered by such
Registration Statement, such Prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and promptly make
available to the holders of Insider Shares included in such Registration
Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or Prospectus or any amendment or supplement
thereto, including documents incorporated by reference, the Company shall
furnish to the holders of Insider Shares included in such Registration Statement
and to the legal counsel for any such holders, copies of all such documents
proposed to be filed sufficiently in advance of filing to provide such holders
and legal counsel with a reasonable opportunity to review such documents and
comment thereon, and the Company shall not file any Registration Statement or
Prospectus or amendment or supplement thereto, including documents incorporated
by reference, to which such holders or their legal counsel shall reasonably
object.
3.1.5 State Securities Laws Compliance. The Company shall use
commercially reasonable efforts to (i) register or qualify the Insider Shares
covered by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions in the United States as the holders of Insider Shares
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Insider Shares covered by the Registration Statement to be registered with or
approved by such other federal or state authorities as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the holders of
Insider Shares included in such Registration Statement to consummate the
disposition of such Insider Shares in such jurisdictions; provided, however,
that in no event shall the Company be required to register the Insider Shares in
a jurisdiction in which such registration would cause (i) the Company to be
obligated to qualify to do business in any such jurisdiction, or would subject
the Company to taxation as a foreign corporation doing business in such
jurisdiction or (ii) the principal stockholders of the Company to be obligated
to escrow their shares of capital stock of the Company (except to the extent
such shares are already subject to an escrow in such jurisdiction).
3.1.6 Agreements for Disposition. The Company shall enter into
customary agreements (including, if applicable, an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Insider Shares. The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any
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Underwriters, to the extent applicable, shall also be made to and for the
benefit of the holders of Insider Shares included in such registration
statement. No holder of Insider Shares included in such registration statement
shall be required to make any representations or warranties in the underwriting
agreement except as reasonably requested by the Company and, if applicable, with
respect to such holder's organization, good standing, authority, title to
Insider Shares, lack of conflict of such sale with such holder's material
agreements and organizational documents, and with respect to written information
relating to such holder that such holder has furnished in writing expressly for
inclusion in such Registration Statement. Holders of Insider Shares shall agree
to such covenants and indemnification and contribution obligations for selling
stockholders as are customarily contained in agreements of that type. Further,
such holders shall cooperate fully in the preparation of the registration
statement and other documents relating to any offering in which they include
securities pursuant to Section 2 hereof. Each holder shall also furnish to the
Company such information regarding itself, the Insider Shares held by such
holder, and the intended method of disposition of such securities as shall be
reasonably required to effect the registration of the Insider Shares.
3.1.7 Cooperation. The principal executive officer of the
Company, the principal financial officer of the Company, the principal
accounting officer of the Company and all other officers and members of the
management of the Company shall cooperate fully in any offering of Insider
Shares hereunder, which cooperation shall include, without limitation, the
preparation of the Registration Statement with respect to such offering and all
other offering materials and related documents, and participation in meetings
with Underwriters, attorneys, accountants and potential investors.
3.1.8 Records. The Company shall make available for inspection
by the holders of Insider Shares included in such Registration Statement, any
Underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
holder of Insider Shares included in such Registration Statement or any
Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any of them in
connection with such Registration Statement.
3.1.9 Opinions and Comfort Letters. The Company shall furnish
to each holder of Insider Shares included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Insider Shares included in such Registration
Statement, at any time that such holder elects to use a Prospectus, an opinion
of counsel to the Company to the effect that the Registration Statement
containing such Prospectus has been declared effective and that no stop order is
in effect.
3.1.10 Earnings Statement. The Company shall comply with all
applicable rules and regulations of the Commission and the Securities Act, and
make available to its shareholders, as soon as practicable, an earnings
statement covering a period of twelve (12) months, beginning within six (6)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
3.1.11 Listing. The Company shall use commercially reasonable
efforts to cause all Insider Shares included in any registration to be listed on
such exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory to
the holders of a majority of the Insider Shares that are included in such
registration.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3.1.4(iv), or, in the case of a resale registration on Form S-3 pursuant to
Section 2.3 hereof, upon any suspension by the Company, pursuant to a written
xxxxxxx xxxxxxx compliance program adopted by the Company's Board of Directors,
of the ability of all "insiders" covered by such program to transact in the
Company's securities because of the existence of material non-public
information, each holder of Insider Shares included in any registration shall
immediately discontinue disposition of such Insider Shares pursuant to the
Registration Statement covering such Insider Shares until such holder receives
the supplemented or
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amended Prospectus contemplated by Section 3.1.4(iv) or the restriction on the
ability of "insiders" to transact in the Company's securities is removed, as
applicable, and, if so directed by the Company, each such holder will deliver to
the Company all copies, other than permanent file copies then in such holder's
possession, of the most recent Prospectus covering such Insider Shares at the
time of receipt of such notice.
3.3 Registration Expenses. The Company shall bear all customary
costs and expenses incurred in connection with any Demand Registration pursuant
to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any
registration on Form S-3 effected pursuant to Section 2.3, and all reasonable
expenses incurred in performing or complying with its other obligations under
this Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Insider Shares, subject to the limit set forth in paragraph (ix) below); (iii)
printing expenses; (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees); (v) the
fees and expenses incurred in connection with the listing of the Insider Shares,
as required by Section 3.1.11; (vi) National Association of Securities Dealers,
Inc. fees; (vii) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company
(including the expenses or costs associated with the delivery of any opinions or
comfort letters requested pursuant to Section 3.1.9); (viii) the fees and
expenses of any special experts retained by the Company in connection with such
registration and (ix) the fees and expenses of one legal counsel selected by the
holders of a majority-in-interest of the Insider Shares that are included in
such registration (not to exceed, including the fees and disbursements to
counsel in clause (ii) of this Section 3.3, $[20,000]). The Company shall have
no obligation to pay any underwriting discounts or selling commissions
attributable to the Insider Shares being sold by the holders thereof, which
underwriting discounts or selling commissions shall be borne solely by such
holders. Additionally, in an underwritten offering, all selling shareholders and
the Company shall bear the expenses of the underwriter pro rata in proportion to
the respective amount of shares each is selling in such offering.
3.4 Information. The holders of Insider Shares shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Insider Shares under the Securities Act pursuant to Section
2 and in connection with the Company's obligation to comply with federal and
applicable state securities laws.
3.5 Holder Obligations. No holder of Insider Shares may participate
in any underwritten offering pursuant to this Section 3 unless such holder (i)
agrees to sell only such holder's Insider Shares on the basis reasonably
provided in any underwriting agreement, and (ii) completes, executes and
delivers any and all questionnaires, powers of attorney, custody agreements,
indemnities, underwriting agreements and other documents reasonably required by
or under the terms of any underwriting agreement or as reasonably requested by
the Company.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to indemnify
and hold harmless each Insider and each other holder of Insider Shares, and each
of their respective officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person, if any, who controls an Insider
and each other holder of Insider Shares (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, an "INSIDER INDEMNIFIED
PARTY"), from and against any expenses, losses, judgments, claims, damages or
liabilities, whether joint or several, arising out of or based upon any untrue
statement (or allegedly untrue statement) of a material fact contained in any
Registration Statement under which the sale of such Insider Shares was
registered under the Securities Act, any preliminary Prospectus, final
Prospectus or summary Prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arising out of or
based upon any omission (or alleged omission) to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such expense, loss, claim, damage or liability arises out of
or is based upon any untrue statement or allegedly untrue statement or omission
or alleged omission made in such Registration Statement, preliminary Prospectus,
final Prospectus, or summary Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by such selling holder expressly for use therein; provided, however,
that the foregoing indemnity shall not inure to the
8
benefit of any holder (or to the benefit of any person controlling such holder)
from whom the person asserting such losses, claims or liabilities purchased the
Insider Shares, if a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such holder to such person, if required by law
so to have been delivered at or prior to the written confirmation of the sale of
the Insider Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 3.1.3 hereof. The Company also shall indemnify the
Underwriter, their officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person who controls the Underwriter on
substantially the same basis as that of the indemnification provided above in
this Section 4.1.
4.2 Indemnification by Holders of Insider Shares. Each selling
holder of Insider Shares will, with respect to any Registration Statement where
Insider Shares were registered under the Securities Act, indemnify and hold
harmless the Company, each of its directors and officers, each underwriter, if
any, and each other person, if any, who controls such selling holder, such
underwriter or the Company (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), against any losses, claims, judgments,
damages or liabilities, whether joint or several, insofar as such losses,
claims, judgments, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale of
such Insider Shares was registered under the Securities Act, any preliminary
Prospectus, final Prospectus or summary Prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or the alleged omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by such
selling holder expressly for use therein, and shall reimburse the Company, its
directors and officers, and each such controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigation or
defending any such loss, claim, damage, liability or action. Each selling
holder's indemnification obligations hereunder shall be several and not joint
and shall be limited to the amount of any net proceeds actually received by such
selling holder in connection with the sale of the Insider Shares by such selling
holder pursuant to the Registration Statement containing such untrue statement
or allegedly untrue statement.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt
by any person of any notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such person (the "INDEMNIFIED PARTY") shall, if a claim in respect thereof
is to be made against any other person for indemnification hereunder, promptly
notify such other person (the "INDEMNIFYING PARTY") in writing of the loss,
claim, judgment, damage, liability or action. If the Indemnified Party is
seeking indemnification with respect to any claim or action brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it elects jointly with all
other Indemnifying Parties, to assume control of the defense thereof with
counsel satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume control of
the defense of such claim or action, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal or other expenses subsequently incurred
by the Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. In any such proceeding, the Indemnified Party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnified Party and the Indemnifying Party shall have mutually agreed to the
retention of such counsel, or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interest between them. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or there
is a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an Indemnified Party shall have requested an Indemnifying Party to
reimburse the Indemnified Party for fees and expenses of counsel as contemplated
in this Section 4.3, the Indemnifying Party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than thirty (30) days after receipt by such
Indemnifying Party of the aforesaid request, and (ii) such Indemnifying Party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement (other than
9
reimbursement for fees and expenses the Indemnifying Party is contesting in good
faith). No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, consent to entry of judgment or effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such judgment or settlement includes
an unconditional release of such Indemnified Party from all liability arising
out of such claim or proceeding.
4.4 Contribution.
4.4.1 If the indemnification provided for in the foregoing
Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of
any loss, claim, damage, liability or action referred to herein, then each such
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 loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative benefits received by the Indemnified Parties
on the one hand and the Indemnifying Parties on the other from the offering. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the Indemnified Party failed to give the
notice required under Section 4.3 above, then each Indemnifying Party shall
contribute to such amount paid or payable by such Indemnified Party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Indemnified Parties on the one hand and the
Indemnifying Parties on the other in connection with the actions or omissions
which resulted in such loss, claim, damage, liability or action, as well as any
other relevant equitable considerations. The relative fault of any Indemnified
Party and any Indemnifying Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such Indemnified Party or such Indemnifying Party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
4.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding Section
4.4.1. The amount paid or payable by an Indemnified Party as a result of any
loss, claim, damage, liability or action referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.4, no holder of Insider Shares
shall be required to contribute any amount in excess of the dollar amount of the
net proceeds (after payment of any underwriting fees, discounts, commissions or
taxes) actually received by such holder from the sale of Insider Shares which
gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file any reports
required to be filed by it under the Securities Act and the Exchange Act and
shall take such further action as the holders of Insider Shares may reasonably
request, all to the extent required from time to time to enable such holders to
sell Insider Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities Act, or
any similar provision thereto, but not Rule 144A.
6. MISCELLANEOUS.
6.1 Assignment; No Third Party Beneficiaries. This Agreement and the
rights, duties and obligations of the Company hereunder may not be assigned or
delegated by the Company in whole or in part. This Agreement and the rights,
duties and obligations of the holders of Insider Shares hereunder may be freely
assigned or delegated by such holder of Insider Shares in conjunction with and
to the extent of any permitted transfer of Insider Shares by any such holder in
accordance with applicable law. This Agreement and the provisions hereof shall
be binding upon and shall inure to the benefit of each of the parties and their
respective successors and the permitted assigns of the Insider or holder of
Insider Shares or of any assignee of the Insider or holder of Insider
10
Shares. This Agreement is not intended to confer any rights or benefits on any
persons that are not party hereto other than as expressly set forth in Section 4
and this Section 6.1.
6.2 Notices. All notices, demands, requests, consents, approvals or
other communications (collectively, "NOTICES") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice provided in accordance with this
Section 6.2. Notice shall be deemed given on the date of service or transmission
if personally served or transmitted by telegram, telex or facsimile; provided,
that if such service or transmission is not on a Business Day or is after normal
business hours, then such notice shall be deemed given on the next Business Day.
Notice otherwise sent as provided herein shall be deemed given on the next
Business Day following timely delivery of such notice to a reputable air courier
service with an order for next-day delivery.
To the Company:
Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
To an Insider, to the address set forth below such Insider's name on the
signature pages hereof.
with a copy to:
Xxxxxx Godward LLP
Xxx Xxxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
6.3 Severability. This Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
6.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
6.5 Entire Agreement. This Agreement (including all agreements
entered into pursuant hereto and all certificates and instruments delivered
pursuant hereto and thereto) constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions
between the parties, whether oral or written.
6.6 Modifications and Amendments. No amendment, modification or
termination of this Agreement shall be binding upon any party unless executed in
writing by such party.
6.7 Titles and Headings. Titles and headings of sections of this
Agreement are for
11
convenience only and shall not affect the construction of any provision of this
Agreement.
6.8 Waivers and Extensions. Any party to this Agreement may waive
any right, breach or default which such party has the right to waive, provided,
that such waiver will not be effective against the waiving party unless it is in
writing, is signed by such party, and specifically refers to this Agreement.
Waivers may be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be conditional. No waiver
of any breach of any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof nor of any other agreement
or provision herein contained. No waiver or extension of time for performance of
any obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.9 Remedies Cumulative. In the event that the Company fails to
observe or perform any covenant or agreement to be observed or performed under
this Agreement, the Insider or any other holder of Insider Shares may proceed to
protect and enforce its rights by suit in equity or action at law, whether for
specific performance of any term contained in this Agreement or for an
injunction against the breach of any such term or in aid of the exercise of any
power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to
post a bond. None of the rights, powers or remedies conferred under this
Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
6.10 Governing Law. This Agreement shall be governed by and
interpreted and construed in accordance with the laws of the State of New York
applicable to contracts formed and to be performed entirely within the State of
New York, without regard to the conflicts of law provisions thereof to the
extent such principles or rules would require or permit the application of the
laws of another jurisdiction. The Company and the holders of the Insider Shares
irrevocably and unconditionally submit to the exclusive jurisdiction of the
United States District Court for the Southern District of New York or, if such
court does not have jurisdiction, the New York State Supreme Court in the
Borough of Manhattan, in any action arising out of or relating to this
Agreement, agree that all claims in respect of the action may be heard and
determined in any such court and agree not to bring any action arising out of or
relating to this Agreement in any other court. In any action, the Company and
the holders of the Insider Shares irrevocably and unconditionally waive and
agree not to assert by way of motion, as a defense or otherwise any claims that
it is not subject to the jurisdiction of the above court, that such action is
brought in an inconvenient forum or that the venue of such action is improper.
Without limiting the foregoing, the Company and the holders of the Insider
Shares agree that service of process at each parties respective addresses as
provided for in Section 6.2 above shall be deemed effective service of process
on such party.
6.11 Waiver of Trial by Jury. Each party hereby irrevocably and
unconditionally waives the right to a trial by jury in any action, suit,
counterclaim or other proceeding (whether based on contract, tort or otherwise)
arising out of, connected with or relating to this Agreement, the transactions
contemplated hereby, or the actions of the Insider in the negotiation,
administration, performance or enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed and delivered by their duly authorized representatives
as of the date first written above.
AD.VENTURE PARTNERS, INC.
By: __________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
INSIDERS:
By: __________________________________
Xxxxxx X. Xxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxxx X. Xxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxxxxxxx X. Xxxxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xx. Xxxxxx Xxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxxxxx Xxxxxx
12.
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxx Xxxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxxxxxx Xxxxxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: __________________________________
Xxxxxx Xxxxxxxxxx
c/o Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
13.
