EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of May 19, 2006 (this "Agreement"),
is by and among XXX.XXX, INC., a corporation organized under the laws of
Minnesota ("WEB"), Xxxx Xxxxx and Xxxxx Xxxxxxxx as representatives of the
Investors (the "Stockholders' Representatives") and each of the other parties
set forth on the signature pages hereto (each of whom, together with
Stockholders' Representatives may sometimes be referred to herein as and
"Investor" or the "Investors").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"), WebSource Media, LLC ("Web
Source") is merging with, and into, Web Astro Acquisition, L.P. ("Merger Sub")
and Merger Sub will be the surviving entity in that merger and, Investors'
membership interests in Web Source are being replaced with a right to receive
the Consideration (as such term is defined in the Merger Agreement; and
WHEREAS, the Consideration includes one million five hundred thousand
shares (the "Unrestricted Shares") of WEB's Common Stock, par value $.01 per
share ("Common Stock") and warrants for the purchase of one million shares of
Common Stock (the "Reserved Shares") at an exercise price of $6 per share (the
"Warrants") and WEB has agreed to give the Investors certain registration rights
with respect to such two million five hundred thousand shares.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1
GLOSSARY OF DEFINED TERMS
1.1. Definitions. Capitalized terms used herein and not defined shall have
the meanings given to them in the Merger Agreement. As used herein, the
following capitalized terms shall have the following meanings (terms defined in
the singular to have the same meanings when used in the plural and vice versa):
"Holder" shall mean the beneficial owner of WEB's Common Stock.
"NASDAQ" shall mean the NASDAQ National Market, on which WEB's Common Stock
is traded.
"Registrable Securities" shall mean the Unrestricted Shares and the
Reserved Shares acquired by any Holder at any time pursuant to the Merger
Agreement but shall not include any shares of Common Stock which have been
either sold by a Holder pursuant to an effective registration statement or Rule
144 of the Securities Act, or which are no longer outstanding.
1.2. Additional Definitions. The following terms defined elsewhere in this
Agreement shall have the respective meanings therein defined:
Term Section No.
---- -----------
"Agreement" Caption
"Exchange Act" 2.4
"Indemnitee" 3.1
"WEB" Caption
"WEB Indemnified Parties" 3.2
"Long-Form Registration" 2.1(b)(ii)
"Losses" 3.1(a)
"Reserved Shares" Preamble
"SEC" 2.4
"Short-Form Registration" 2.1(b)(ii)
"Stockholders' Representative" Caption
"Suspension Period" 2.8
"Termination Date" 2.3(a)(i)
"Unrestricted Shares" Preamble
"Warrants" Preamble
ARTICLE 2
REGISTRATION RIGHTS
2.1. Securities Subject to this Registration Rights Agreement;
Registration.
(a) Securities. The securities entitled to the benefits of this
Agreement are the Registrable Securities.
(b) Registration.
(i) No later than forty-five (45) days following the date hereof,
WEB will file a registration statement on Form S-3 that includes the Registrable
Securities as part of a shelf-registration pursuant to Rule 415 under the
Securities Act; provided however, that such 45-day period may be extended to the
extent of any delay in the receipt of the questionnaires from the Holders as
required by Section 2.6.
(ii) In the event that WEB is unable to include any portion of
the Registrable Securities in a Form S-3 registration statement then, no later
than twenty (20) days after each date of issuance of any Unrestricted Shares or
Warrants, as the case may be, which cannot be so included, WEB shall file a Form
S-4 or similar short form or "evergreen" registration statement (each, a
"Short-Form Registration") covering all such shares which it could not include.
If a Short-Form Registration is not available to WEB, then it shall promptly
prepare and file a registration statement on Form S-1 or any similar
registration statement ("Long-Form Registration") in the United States under the
Securities Act for the registration thereunder of any and all of the Registrable
Securities and WEB shall use commercially reasonable efforts to cause such
registration statement to become effective. WEB shall include in such
registration statement all Registrable Securities not previously registered
under this Section 2.1. The right granted hereunder shall not terminate with
respect to any Registrable Securities transferred in accordance with the terms
hereof.
(iii) The Stockholders' Representatives and the Investors
acknowledge that, in connection with any registration statement that WEB may
file pursuant to this Agreement, certain other shareholders of WEB may have
piggyback registration rights or other rights to include themselves as "selling
shareholders" in such registration statement.
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2.2. Information. As a condition to the inclusion of a Holder's Registrable
Securities in any registration statement, such Holder will furnish in writing to
WEB such information with respect to such Holder as is required to be disclosed
in the registration statement (and the prospectus included therein) by the
applicable rules, regulations and guidelines of the SEC. Failure of a Holder to
furnish such information shall not affect the obligation of WEB under Section
2.1 to the remaining Holders of Registrable Securities.
2.3. Procedure. WEB will, at its own expense:
(a) Prepare and file with the SEC a registration statement or
registration statements (or amendments thereto) with respect to such Registrable
Securities and endeavor to cause such registration statement(s) to become and
remain effective until five (5) years from the date on which such registration
statement first becomes effective (the "Termination Date").
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement(s) and
the prospectus(es) used in connection therewith as may be necessary to keep such
registration statement(s) effective during all periods and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement(s) until the
Termination Date or (x) in the event that the registration statement(s) is filed
on Form S-1, or similar Long-Form Registration, for a period of three months
from the date of its effectiveness, or (y) in the event the registration
statement(s) is filed on Form S-3 or similar Short-Form Registration and
constitute a "shelf registration statement" pursuant to Rule 415 under the
Securities Act, for such time until all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement(s), until all of the
Registrable Securities covered thereby cease to be Registrable Securities, or
for such shorter period of time as to which the Stockholders' Representative
shall consent.
(c) Furnish to each Holder of Registrable Securities to be included in
any such registration, without charge, (A) a copy of the order of the SEC
declaring such registration statement and any post-effective amendment thereto
effective, (B) such reasonable number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including any documents incorporated therein by reference and all exhibits), (C)
such reasonable number of copies of the prospectus included in any such
registration statement (including such preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and (D)
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder.
(d) Use its best efforts to register or qualify such Registrable
Securities covered by such registration statement(s) under such other securities
or blue sky laws of such jurisdictions as a Holder shall reasonably request,
keep each such registration or qualification (or exemption therefrom) effective
for the period required pursuant to Section 2.3(a)(ii) above, and do any and all
other acts and things that may be reasonably necessary or advisable to enable
such Holders to consummate the disposition of the Registrable Securities owned
by such Holder, in such jurisdictions within such time periods (other than in
any jurisdiction where WEB would be required to execute a general consent to
service of process where it has not already filed such consent).
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(e) Use its best efforts to prevent the issuance of any stop order
suspending the effectiveness of such registration statement(s), or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification (or exemption from qualification) of any equity securities
included in such registration statement(s) for sale in any jurisdiction, and, if
such order is issued, use its best efforts to obtain the withdrawal of such
order at the earliest possible moment.
(f) Use its best efforts to cause such Registrable Securities covered
by such registration statement(s) to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
Holders or Investors to consummate the disposition of such Registrable
Securities and keep each such registration or approval effective for the period
required pursuant to Section 2.3(a)(ii) above.
(g) Immediately notify each Holder of Registrable Securities covered
by such registration statement(s), at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of any event the
happening of which results in the prospectus included in such registration
statement(s) including an untrue statement of a material fact or omitting to
state any 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, at the request of any such Holder, prepare and deliver a
reasonable number of copies of an amended or supplemental prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit 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.
(h) Otherwise comply with all applicable rules and regulations of the
SEC.
(i) Promptly inform each Holder of Registrable Securities of any and
all correspondence between WEB and the SEC with respect to such registration.
(j) Cause those Registrable Securities being registered and sold
pursuant to this Agreement to be listed on NASDAQ or such other national stock
exchange or trading system on which WEB's Common Stock is listed for trading in
the United States and for which the Registrable Securities are then eligible for
listing.
2.4. Rule 144. WEB covenants that it will timely file all reports required
to be filed by it under the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations adopted by
the Securities and Exchange Commission ("SEC") thereunder, and it will take such
further action as a Holder of Registrable Securities may reasonably request, all
to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of a Holder of
Registrable Securities, WEB will deliver to such holder a written statement as
to whether it has complied with such requirements.
2.5. Expenses. As to all registrations under this Section 2, WEB shall pay
all costs, fees and expenses incident to the performance and compliance by WEB
with this Registration Rights Agreement, including without limitation, (A) all
registration and filing fees (including fees payable to NASDAQ); (B) all
printing expenses; (C) all fees and disbursements of counsel and independent
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public accountants for WEB; (D) all blue sky fees and expenses (including fees
and expenses of counsel in connection with blue sky surveys); (E) all transfer
taxes; (F) the entire expense of any audits incident to such registration
required by the rules and regulations of the SEC; (G) the cost of distributing
the prospectuses in preliminary and final form as well as any supplements
thereto; (H) internal expenses of WEB, reasonable messenger, telephone,
duplication, word processing and delivery expenses incurred by WEB in the
performance of its obligations hereunder, but excluding underwriting fees and
commissions incurred by the Holders of the Registrable Securities; and (I)
reimbursement of attorneys' fees on behalf of the Stockholders' Representatives
but only to the extent of ten thousand dollars ($10,000).
2.6. Holders' Requirements. In connection with the registration of any
Registrable Securities pursuant to any registration statement, each of the
Holders shall:
(a) within ten (10) days of the date hereof, complete and deliver to
WEB a selling security holder questionnaire to include the information required
under Section 2.2 hereof.
(b) if notified by WEB of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of material fact or omits to state a material fact, or of any stop order or
other order suspending the effectiveness of such registration statement,
immediately discontinue any sale or other disposition of Registrable Securities
pursuant to such registration statement until the filing of an amendment or
supplement to the registration statement or the withdrawal or the stop order or
such other order;
(c) deliver a prospectus to the purchaser of such Registrable
Securities;
(d) promptly notify WEB when such Holder has sold such Registrable
Securities; and
(e) promptly notify WEB in the event that any information supplied by
such Holder in writing for inclusion in such registration statement or related
prospectus or any document referred to therein is untrue or omits to state a
material fact required to be stated therein or necessary to make such
information not misleading.
2.7. Black-Out Period. Each Holder of Registrable Securities agrees not to
effect any offer or sale of Registrable Securities, if so requested by WEB in
connection with any proposal or plan by WEB to engage in any material financing
or material acquisition or disposition by WEB or any subsidiary thereof of the
capital stock or substantially all the assets of any other person (other than in
the ordinary course of business), any tender offer or any merger, consolidation,
corporate reorganization, strategic partnership arrangement or restructuring or
other similar transaction material to WEB and its subsidiaries taken as a whole,
provided WEB has made the same request of all of its officers and directors, as
well. The period during which WEB fails to keep a shelf registration statement
effective and usable for resales of Registrable Securities, or pursuant to this
Section 2.7 requires that the Holders of Registrable Securities not effect sales
of Registrable Securities pursuant to a shelf registration statement, or
otherwise, is hereafter referred to as the "Suspension Period." The Suspension
Period shall not exceed twenty (20) days, or with the consent of the
Stockholders' Representative, sixty (60) days, and WEB shall have the right to
call for only two such Suspension Periods in any twelve (12) month period, even
if a Suspension Period shall be less than sixty (60) days. Notwithstanding the
foregoing, each Holder agrees to refrain from selling or otherwise disposing of
any Registrable Securities in violation of WEB's Xxxxxxx Xxxxxxx Policy, a copy
of which is attached hereto as Exhibit A and as the same may be in effect from
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time to time. Periods during which the Holder cannot trade due to the Holder's
status as an insider of WEB under the Xxxxxxx Xxxxxxx Policy shall not be
counted for purposes of the length of a Suspension Period.
ARTICLE 3
INDEMNIFICATION
3.1. General. WEB will, and it hereby agrees to, indemnify and hold
harmless, to the extent permitted by law, each Holder owning any Registrable
Securities covered by such registration statement, its directors and officers,
employees or agents, each other person who participates as an underwriter in the
offering or sale of such securities and each other person, if any, who controls
such Holder or any such underwriter within the meaning of the Securities Act
(each, an "Indemnitee"), as follows:
(a) against any and all loss, liability, claim, damage or expense
whatsoever including, without limitation, expenses contemplated by subparagraph
(iii) below (collectively, "Losses") arising out of or based upon an untrue
statement or alleged untrue statement of a material fact contained in any
registration statement (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or other document related to
compliance, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or arising out of an untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus or prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein not
misleading or any violation (or alleged violation) of the Securities Act or
other securities laws in connection with any such registration or compliance;
(b) against any and all Losses to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written consent
of WEB; and
(c) against any and all expenses reasonably incurred by them in
connection with investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (a) or (b) above
provided, however, that this indemnity does not apply to any Loss incurred by an
Indemnitee, to the extent arising out of an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to WEB by or on behalf of any such
Indemnitee expressly for use in the preparation of any registration statement
(or any amendment thereto) or any preliminary prospectus or prospectus (or any
amendment or supplement thereto) such information to include but not be limited
to the questionnaire referenced in Section 2.2 hereof; and provided, further,
that WEB will not be liable to any person who participates as an underwriter in
the offering or sale of Registrable Securities or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, under the
indemnity agreement in this Section 3.1 with respect to any preliminary
prospectus or final prospectus or final prospectus as amended or supplemented,
as the case may be, to the extent that any such Loss of such underwriter or
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controlling person results from the fact that such underwriter offered or sold
Registrable Securities to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if WEB has previously furnished copies thereof to such underwriter. Such
indemnity shall survive the transfer of such securities by such Indemnitee.
3.2. Indemnification by Holders. Each Holder of Registrable Securities
participating in any registration hereunder shall severally and not jointly,
indemnify and hold harmless, to the fullest extent permitted by law, WEB, its
directors, officers, employees, affiliates and agents, and each Person who
controls WEB (within the meaning of the Securities Act) (collectively, "WEB
Indemnified Parties") against all losses, claims, damages, liabilities and
expenses, joint or several (including reasonable fees of counsel and any amounts
paid in settlement effected with such Holder's consent, which consent shall not
be unreasonably delayed or withheld) to which any WEB Indemnified Party may
become subject under the Securities Act, the Exchange Act, any other federal
law, any state or common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) are caused by (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement in which such Holder's Registrable Securities were included or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary, final or summary prospectus any statement or alleged statement
in or omission or alleged omission from such registration statement, any
preliminary, final or summary prospectus (as amended or supplemented if WEB
shall have filed with the Commission any amendment thereof or supplement
thereto), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and in the cases described in clauses (i) and (ii) of this Section
3.2, to the extent, but only to the extent, that such untrue statement or
omission is contained in any information furnished in writing by such Holder
relating to such Holder specifically stating that it is for use in the
preparation of the documents described in such clauses (i) and (ii) and WEB does
not know, at the time such information is included in the Registration
Statement, prospectus, preliminary prospectus, amendment or supplement that such
information is false or misleading; (iii) any violation by such Holder of the
Securities Act, the Exchange Act, any other federal law, any state or common
law, or any rule or regulation promulgated thereunder applicable to such Holder
and relating to action of or inaction by such Holder in connection with any such
registration; and (iv) with respect to any preliminary prospectus delivered in a
non-underwritten offering, the fact that such Holder sold Registrable Securities
to a person to whom there was not sent or given, at or before the written
confirmation of such sale, a copy of the prospectus (excluding the documents
incorporated by reference) or of the prospectus as then amended or supplemented
(excluding documents incorporated by reference) if WEB has previously furnished
copies thereof to such Holder in compliance with this Agreement and the loss,
claim, damage, liability or expense of such WEB Indemnified Party results from
an untrue statement or omission of a material fact relating to information
provided by such Holder contained in such preliminary prospectus which was
corrected in the prospectus (or the prospectus as amended or supplemented);
provided, however, that the liability of such Holder under this Section 3.2
shall be limited to the net proceeds received by such Holder in the offering
giving rise to such liability. Such indemnity obligation shall remain in full
force and effect regardless of any investigation made by or on behalf of WEB
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Indemnified Parties (except as provided above) and shall survive the transfer of
such securities by such Holder.
3.3. Actions. Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a claim
referred to in this Article 3, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Article 3, except to the extent that the indemnifying party has been materially
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim (in which case the indemnifying party
shall not be liable for the fees and expenses of more than one firm of counsel
in addition to appropriate local counsel chosen by the Stockholders'
Representative, or more than one firm of counsel for the underwriters in
connection with any one action or separate but similar or related actions), the
indemnifying party will be entitled by giving written notice of its intention to
do so within 20 days of the date it receives notice of such claim from the
indemnified party to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it may
wish with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless: (i) the
indemnifying party agrees to pay such fees and expenses; or (ii) the
indemnifying party fails promptly to assume and/or to vigorously maintain the
defense of such proceeding or fails to employ counsel satisfactory to such
indemnified party; or (iii) the named parties to any such proceeding (including
any impleaded parties) include both such indemnified party and the indemnifying
party or an affiliate of the indemnifying party, and there may be one or more
defenses available to such indemnified party that are in addition to, or in
conflict with, those available to the indemnifying party or affiliate or
controlling person (in which case, if such indemnified party, notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such proceeding on behalf of such indemnified
party), it being understood, however, that the indemnifying party shall not, in
connection with any one such proceeding or separate but substantially similar or
related proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such indemnified party. If any Holder(s) is the indemnified party, then
the Stockholders' Representative shall be authorized to take all actions on
behalf of any such Holder(s) under this Section 3.3 and it shall receive copies
of all notices to any Holder hereunder.
3.4. Underwriter Indemnification. WEB and each Holder including Registrable
Securities on a registration statement shall provide for the foregoing indemnity
(with appropriate modifications) in any underwriting agreement with respect to
any required registration or other qualification of securities under any federal
or state law or regulation of any governmental authority.
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3.5. Contribution. In order to provide for just and equitable contribution
in circumstances under which the indemnity contemplated by Article 3 is for any
reason not available (or not sufficient to hold such indemnified party
harmless), the parties required to indemnify by the terms thereof shall
contribute to the aggregate Losses incurred by the indemnified party. In
determining the amounts which the respective parties shall contribute, there
shall be considered the relative fault of WEB on the one hand, and of the
indemnified or indemnifying party, on the other hand, in connection with the
actions, statements or omissions that resulted in such Losses, the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations appropriate under
the circumstances. The relative fault of WEB, on the one hand, and of an
indemnified or indemnifying party, on the other hand, shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact has been taken by, or relates to information
supplied by, WEB or by an indemnified or indemnifying party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent any such action, statement or omission; provided, that no Holder
indemnified party shall be required to contribute any amount in excess of the
amount such indemnified party would have been required to pay to an indemnified
party if the indemnity under Article 3 were available. WEB and each such Holder
agree with each other and the underwriters of the Registrable Securities, if
requested by such underwriters, that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation (even if
the underwriters were treated as one entity for such purpose) or for the
underwriters' portion of such contribution to exceed the percentage that the
underwriting discount bears to the initial public offering price of the
Registrable Securities or any other method that does not take account of the
equitable considerations referred to in this Section. For purposes of this
Section 3.5, each person, if any, who controls an underwriter within the meaning
of Section 15 of the Securities Act shall have the same rights to contribution
as such underwriter, and each director and each officer of WEB who signed the
registration statement, and each person, if any, who controls WEB or a seller of
Registrable Securities within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as WEB or a Holder including
Registrable Securities on a registration statement, as the case may be.
ARTICLE 4
MISCELLANEOUS
4.1. Liability; Injunctive Relief. Except as otherwise provided herein, the
termination of Agreement shall not relieve any party of any liability for breach
of this Agreement prior to the date of termination. Each of the parties hereto
waives their right to punitive, consequential or exemplary damages for breach of
this Agreement by the other party. Moreover, each party shall be entitled to
injunctive or other equitable relief to enjoin any termination of this Agreement
not in accordance with the terms hereof or to require any other party to perform
its obligations hereunder.
4.2. Assignment. No party hereto may assign or transfer its rights or
obligations arising under this Agreement, without the prior written consent of
the other parties hereto.
4.3. Notices. All notices, claims, waivers, consents and other
communications provided for herein shall be in writing and shall be deemed to
have been duly given if personally delivered, sent by facsimile transmission,
mailed, registered or certified mail, return receipt requested, postage prepaid
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or by reputable overnight delivery service (a) if to WEB, to it at 000 Xxxxxxxxx
Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000, attention: Chief Executive
Officer, telecopier number (000) 000-0000, with a copy to its General Counsel at
the same office. If to the Investors, to them c/o Investors Representatives,
WebSource Media, 00000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 with copies (which
shall not constitute notice), to Xxxxxx X. Xxxxxx, Xxxxxxx Xxxxxx Xxxxx Xxxxxxxx
& Xxxx, P.C., Xxxxx Fargo Plaza, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000 or, as to any party, at such other address as shall be designated by such
party in a notice to the other parties hereto given in accordance with the
provisions of this Section 4.3. All notices and other communications hereunder
shall be deemed to have been duly given when sent by overnight mail, on the next
Business Day, when transmitted by telecopier, upon receipt of electronic
confirmation of receipt, or personally delivered on the day sent or delivered,
or, in the case of a mailed notice, two (2) Business Days after the date mailed,
in each case when sent, delivered or mailed to the intended recipient as
aforesaid.
4.4. Choice of Law; Submission to Jurisdiction; Jury Waiver. This Agreement
shall be governed and construed in accordance with the laws of the State of
Georgia, without regard to any applicable principles of conflicts of law. EACH
PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTION
DOCUMENTS, THE REGISTRABLE SECURITIES OR ANY OTHER AGREEMENT OR TRANSACTION
CONTEMPLATED HEREBY SHALL ONLY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA
OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA AND
HEREBY EXPRESSLY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF
SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER
VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM. EACH PARTY
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS
SET FORTH IN SECTION 4.3, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
MAILING.
4.5. Entire Agreement; Amendment; Waiver. This Registration Rights
Agreement and other agreements between the parties referred to herein, contain
the entire understanding between the parties hereto concerning the subject
matter hereof and supersedes any and all prior representations, warranties,
undertakings, covenants and agreements between the parties. This Registration
Rights Agreement may not be changed, modified, altered or terminated except by
an agreement in writing executed by WEB and the Stockholders' Representatives.
4.6. Remedies Cumulative. Each and all of the rights and remedies in this
Registration Rights Agreement, and each and all of the rights and remedies
allowed at law and in equity in like case, shall be cumulative, and the exercise
of one right or remedy shall not be exclusive of the right to exercise or resort
to any and all other rights or remedies provided in this Registration Rights
Agreement or at law or in equity.
4.7. No Third Party Beneficiaries. Except as provided herein, this
Registration Rights Agreement shall inure to the benefit of the parties and
their respective successors and permitted assigns only.
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4.8. Counterparts. This Registration Rights Agreement may be executed in
any number of separate counterpart copies, each of which shall be deemed an
original but all of which taken together shall constitute a single instrument.
4.9. Separability. If any provision of this Registration Rights Agreement
is invalid or unenforceable, the balance of this Registration Rights Agreement
shall remain in effect.
4.10. Publicity. Except as required by applicable law or by a stock
exchange, no party shall issue any press release or other public statement
regarding the transactions contemplated by this Registration Rights Agreement
without the prior written consent of the other party.
4.11. Further Assurances. Each party agrees that it will execute and
deliver, or cause to be executed and delivered, on or after the date of this
Registration Rights Agreement, any further instruments, and will take all
commercially reasonable actions, as may be necessary to transfer to consummate
the transactions contemplated hereby, and to effectuate the provisions and
purposes hereof.
4.12. Headings. Headings and captions used herein are included herein for
convenience of reference only and shall not constitute a part of this
Registration Rights Agreement for any other purpose or be given any substantive
effect.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
XXX.XXX, INC. STOCKHOLDER REPRESENTATIVES
By: /s/ Xxxxxxxx X. Xxxxxx /s/ Xxxx Xxxxx
Name: Xxxxxxxx X. Xxxxxx -----------------------------
Title: Senior Vice President Xxxx Xxxxx
/s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
INVESTORS
/s/ Xxxx Xxxxx /s/ Xxxxx Xxxxxxxx
_____________________________ _____________________________
Xxxx Xxxxx Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx /s/ Xxxxxxxx Xxxxxxx
_____________________________ _____________________________
Xxxxx Xxxxxxx Xxxxxxxx Xxxxxxx
_____________________________ _____________________________
Xxxx Xxxxx Xxx Xxxxxx
Attachments
-----------
Exhibit A Xxxxxxx Xxxxxxx Policy
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EXHIBIT A
XXXXXXX XXXXXXX POLICY
Xxxxxxx Xxxxxxx Policy
This xxxxxxx xxxxxxx policy applies to all transactions in Securities of
Xxx.xxx, Inc. (the "Company"). For purposes of this policy, the term
"Securities" includes common stock, options for common stock, and other
securities that may be issued from time to time such as convertible debentures
or preferred stock, as well as derivative securities relating to a company's
stock, such as exchange-traded options. This policy applies to all officers,
directors, team members, consultants, representatives, and contractors of the
Company ("Insiders").
Policy Contents:
Statement of Policy
Potential Liability and Disciplinary Action
Certain Exemptions
"Trade-Restricted" Insiders
Trading Calendar
Restrictions on Speculative Transactions Regarding Trade-Restricted Insiders
Preclearance of Trades
Additional Requirements Regarding Section 16 Reporting Persons
Inquiries
I. Provisions Applicable to All Insiders
A. Statement of Policy
1. Company policy prohibits the unauthorized disclosure of any nonpublic
information acquired in the workplace and the use of Material Nonpublic
Information (described below) in Securities trading. It is the policy of this
Company that any Insider who has Material Nonpublic Information may not buy or
sell Securities of the Company nor engage in any other action to take advantage
of, or pass on to others, that information.
2. Material Nonpublic Information includes information that has not been
released and is otherwise not available to the general public and is reasonably
likely to be considered important to an investor in making an investment
decision regarding the purchase or sale of the Company's Securities. Either
positive or negative information may be material. Examples of Material Nonpublic
Information include, but are not limited to: financial results, projections of
future earnings or losses, changes in manufacturing productivity, news of a
proposed merger or acquisition, impending bankruptcy, gain or loss of a
substantial customer, significant new product announcements, parts shortages,
changes in dividend policy, stock splits, significant litigation exposure, stock
or debt offerings, and significant changes in senior management.
3. No Insider and no member of the immediate family or household of any such
person shall engage in any transaction involving a purchase or sale of the
Company's Securities about which the Insider possesses Material Nonpublic
Information during any period commencing with the date that he or she possesses
Material Nonpublic Information, and ending at the close of business on the
second trading day following the public disclosure of such information, or at
such time as such information is no longer material.
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4. Insiders must not disclose Material Nonpublic Information except to those
individuals within the Company whose jobs require them to have the information.
Insiders must not disclose sensitive or nonpublic information to anyone outside
the Company. The Company has standard procedures for the release of material
information. No disclosure should be made without following these procedures.
B. Potential Liability and Disciplinary Action
1. Individuals who trade on Material Nonpublic Information (or disclose such
information to others) may be subject to penalties under federal and state
securities laws, including: criminal fines up to $1,000,000 and imprisonment for
up to 10 years; a civil penalty of up to three times the profit gained or the
losses avoided on the transaction; and disgorgement of profits gained or losses
avoided on the transaction. Insiders who violate this policy may also be subject
to suit by persons who purchased or sold the Securities at the same time as the
Insiders. Persons who disclose Material Nonpublic Information to others who then
trade in Securities while in possession of that information may be liable for
the profits or avoided losses of those to whom the information was disclosed, as
well as subject to civil penalties.
2. In addition, any Insider who violates this policy will be subject to
disciplinary action by the Company, including dismissal or termination for
cause. The Company may also be entitled to pursue legal action against any
person who violates this policy. Where appropriate, the Company may also report
violations of this policy to appropriate government agencies, including the
Securities and Exchange Commission and the United States Department of Justice.
3. For purposes of this policy, the Compliance Officer shall be the Company's
General Counsel or any attorney in the Company's legal department serving as the
General Counsel's designee.
C. Certain Exemptions For purposes of this policy,
(i) purchases of shares under the Company's Employee Stock Purchase Plan and
(ii) the exercise of options in which the option exercise price is paid by the
employee and the resulting shares are held by the employee and not sold are
exempt from this policy. In addition, bona fide gifts and interspousal transfers
are similarly exempt from this policy. However, all sales of shares purchased
under the Employee Stock Purchase Plan and all sales of shares issued as the
result of an option exercise are subject to this policy.
II. Provisions Applicable to Trade-Restricted Insiders
A. "Trade-Restricted" Insiders
"Trade-Restricted" Insiders means all officers and members of the board of
directors of the Company and certain other Insiders designated as
"Trade-Restricted" by the officer to whom they report or by the Compliance
Officer (Insiders designated as "Trade-Restricted" have been or will be notified
of such designation).
B. Trading Calendar
No Trade-Restricted Insider shall engage in any transaction involving the
purchase or sale of the Company's Securities during the last three weeks of any
fiscal quarter through the close of business on the second trading day following
public disclosure of the Company's quarterly or annual financial results. The
Company may designate additional periods during which transactions by
Trade-Restricted Insiders are prohibited. The Company will publish a trading
calendar annually and make the calendar available to all Trade-Restricted
Insiders.
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C. Restrictions on Speculative Transactions Regarding Trade-Restricted Insiders
Trade-Restricted Insiders shall not engage in speculative transactions involving
the Company's Securities, including short sales of the Company's Common Stock,
or puts, calls, covered calls, or other options on the Company's Common Stock.
III. Provisions Applicable to Section 16 Reporting Persons
A. Preclearance of Trades
1. "Section 16 Reporting Person" means any of the following, all of whom are
subject to the reporting requirements of Section 16 of the Securities and
Exchange Act of 1934, as amended: all members of the board of directors,
officers, beneficial owners of more than 10% of any class of equity Securities,
and Insiders performing significant policy-making functions for the Company.
Section 16 Reporting Persons may trade in the Company's stock only when they
have approval for any trade from the Company's Compliance Officer or his
designee. In evaluating a request for approval, the Compliance Officer or his
designee will base the determination on whether Material Nonpublic Information
exists. The Compliance Officer or his designee will respond to any request to
trade within 24 hours of receiving such request. Approved trades must then be
concluded within 24 hours of the approval, but may not be concluded if during
that period the affected Insider becomes aware of Material Nonpublic
Information.
B. Additional Requirements Regarding Section 16 Reporting Persons
Section 16 Reporting Persons must also comply with the reporting obligations and
limitations on short-swing transactions set forth in Section 16 of the
Securities and Exchange Act of 1934, as amended. The practical effect of these
provisions is that Section 16 Reporting Persons who purchase and sell the
Company's Securities within a six-month period must disgorge all profits to the
Company whether or not they had knowledge of any Material Nonpublic Information.
Under these provisions, and so long as certain other criteria are met, neither
the receipt of an option under the Company's option plan, nor the exercise of
that option, nor the receipt of stock under the Company's employee stock
purchase plan is deemed to be a purchase under Section 16; however, the sale of
any such shares is a sale under Section 16. The Company has provided or will
provide separate memoranda and other appropriate materials to its Section 16
Reporting Persons regarding compliance with Section 16 and its rules.
IV. Inquiries
If you have any doubts whatsoever as to whether you possess Material Nonpublic
Information or whether any trading would be a violation of this policy or if you
have any other questions regarding this policy in general, please contact the
General Counsel or Compliance Officer.
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