EXHIBIT 10.40
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is made as of June 7,
2000, by and among XxxxxxXxxxx.xxx, a Nevada corporation ("Global") with its
principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0 Xxxxxx, and XxXxxxx.xxx ("OnRadio") a California corporation with its
principal place of business at 0000 Xxxxx Xxxxx Xxxx, Xxxxxx Xxxxxx, XX 00000.
A. OnRadio and Global have entered into an Asset Purchase Agreement dated
as of June 6, 2000 (the "Asset Purchase Agreement") pursuant to which Global has
agreed to issue shares of Global's common stock, par value $0.0001 per share
(the "Shares") to OnRadio on the terms and conditions set forth in the Asset
Purchase Agreement.
B. The Asset Purchase Agreement provides that OnRadio shall be granted
certain registration rights, all as more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. For purposes of this Agreement:
(a) REGISTRATION. The terms "REGISTER," "REGISTRATION" and
"REGISTERED" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
(b) REGISTRABLE SECURITIES. The term "REGISTRABLE SECURITIES"
means: (1) all the shares of Common Stock of Global issued under the Asset
Purchase Agreement as such agreement may hereafter be amended from time to time
and (2) any shares of Common Stock of Global issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, any such shares of Common Stock described in clause (1) of this
subsection (b); EXCLUDING in all cases, however, any Registrable Securities sold
by a person in a transaction in which rights under this Section 1 are not
assigned in accordance with this Agreement or any Registrable Securities sold to
the public or sold pursuant to Rule 144 promulgated under the Securities Act.
(c) HOLDER. For purposes of Sections 1 and 2 hereof, the term
"HOLDER" means any person owning of record Registrable Securities that have not
been sold to the public or pursuant to Rule 144 promulgated under the Securities
Act or any
assignee of record of such Registrable Securities to whom rights under this
Section 1 have been duly assigned in accordance with this Agreement.
(d) FORM S-3. The term "FORM S-3" means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC, which permits
inclusion or incorporation of substantial information by reference to other
documents filed by Global with the SEC.
(e) SEC. The term "SEC" or "COMMISSION" means the U.S.
Securities and Exchange Commission.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Asset Purchase Agreement.
1.2 Mandatory Registration.
(a) FILING. The Company shall prepare, and, on or prior to the
date (the "FILING DATE") which is ninety (90) days after the Initial Closing
Date under the Asset Purchase Agreement file with the SEC a registration
statement on Form S-3, if eligible, or on Form SB-2 or Form S-1 covering the
resale of the Registrable Securities. The number of shares of Common Stock
initially included in such registration statement shall be no less than the
maximum number of Shares that are or may be issued under the terms of the Asset
Purchase Agreement; provided, however, that if under the rules and regulations
or applicable interpretations of the SEC the Company is precluded from including
in such registration statement Shares issuable under Section 2.3(b) or (c) or
Section 2.4 of the Asset Purchase Agreement (which have not been actually issued
prior to the Filing Date), then (i) the number of shares of Common Stock
initially included in such registration statement shall be no less than the
actual number of Shares issued to OnRadio under the Asset Purchase Agreement
prior to the Filing Date, and (ii) if any additional Shares are, after the
Filing Date through and including the Second Filing Date (as hereinafter
defined), issued to OnRadio pursuant to the terms of Section 2.2 (b) or (c)
and/or Section 2.4 of the Asset Purchase Agreement, the Company shall be
obligated to prepare and, on or prior to the date (the "SECOND FILING DATE")
which is thirty (30) days after the Final Closing Date, file with the SEC an
additional registration statement on Form S-3, if eligible, or on Form SB-2 or
Form S-1 covering the resale of such additional Shares and (iii) if any Shares
are, after the Second Filing Date, issued to OnRadio pursuant to the terms of
Section 2.4 of the Asset Purchase Agreement, the Company shall be obligated to
prepare and, on or prior to the date (the "THIRD FILING DATE") which is ninety
(90) days after the date which is six months after the Initial Closing Date,
file with the SEC an additional registration statement on Form S-3, if eligible,
or on Form SB-2 or Form S-1 covering the resale of such additional Shares.
(b) EXPENSES. All expenses incurred in connection with any
registration pursuant to this Section 1.2, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for
Global, (but excluding underwriters' discounts and commissions and fees and
disbursements of counsel to the selling Holders), shall be borne by Global. Each
Holder participating in a registration pursuant to this Section 1.2 shall bear
such Holder's proportionate share (based on the total number of shares sold in
such registration other than for the account of Global) of all discounts,
commissions or other amounts payable to underwriters or brokers in connection
with such offering and its own fees and disbursements of counsel.
1.3 OBLIGATIONS OF GLOBAL. Whenever required to effect the
registration of any Registrable Securities under this Agreement, Global shall
use commercially reasonable efforts to:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and cause such registration statement to
become effective, and to keep such Registration Statement effective pursuant to
Rule 415 for up to two hundred seventy 270 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that
Global shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
(e) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of Global to take any action pursuant to Section 1.2 that the
selling Holders shall furnish to Global such information regarding themselves,
the Registrable Securities
held by them, and the intended method of disposition of such securities as shall
be required to timely effect the registration of their Registrable Securities.
1.5 DELAY OF REGISTRATION. No Holder shall have any right to obtain
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.6 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 1.2 :
(a) BY GLOBAL. To the extent permitted by law, Global will
indemnify and hold harmless each Holder, the partners, officers and directors of
each Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the "1934 ACT"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the l934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations whether
actual or alleged (collectively, "VIOLATIONS" and, individually, a "VIOLATION"):
(1) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(2) 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, or
(3) any violation or alleged violation by Global of the
Securities Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act or any federal or
state securities law in connection with the offering covered by such
registration statement; and Global will reimburse each such Holder, partner,
officer or director, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED HOWEVER, that the indemnity agreement contained in this subsection
1.6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of Global (which consent shall not be unreasonably withheld or delayed), nor
shall Global be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, underwriter or controlling person of
such Holder.
(b) BY SELLING HOLDERS. To the extent permitted by law, each
selling Holder, if Registrable Securities held by such Holder are included in
the securities as to which such registration is being effected, will indemnify
and hold harmless Global, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls Global
within the meaning of the Securities Act, any underwriter and any other Holder
selling securities under such registration statement or any of such other
Holder's partners, directors or officers or any person who controls such Holder
within the meaning of the Securities Act or the 1934 Act, against any losses,
claims, damages or liabilities (joint or several) to which Global or any such
director, officer, controlling person, underwriter or other such Holder, partner
or director, officer or controlling person of such other Holder may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation arising out of any statement
made by such Holder in the applicable registration statement, prospectus or
offering circular; and each such Holder will reimburse any legal or other
expenses reasonably incurred by Global or any such director, officer,
controlling person, underwriter or other Holder, partner, officer, director or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that the indemnity agreement contained in this subsection 1.6(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld or delayed; and PROVIDED FURTHER,
that the total amounts payable in indemnity by a Holder under this Section
1.6(b) in respect of any Violation shall not exceed the net proceeds received by
such Holder in the registered offering out of which such Violation arises.
(c) NOTICE. Promptly after receipt by an indemnified party under
this Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.6, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.6.
(d) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing
indemnity agreements of Global and Holders are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL
PROSPECTUS"), such indemnity agreement shall not inure to the benefit of any
person who otherwise would be indemnified hereunder, if a copy of the Final
Prospectus was furnished to such indemnified party and was not furnished to the
person asserting the loss, liability, claim or damage (the "INJURED PARTY") at
or prior to the time such action is required by the Securities Act where such
indemnified party had a legal obligation to deliver or cause to be delivered the
Final Prospectus to the Injured Party.
(e) CONTRIBUTION. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (1) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 1.6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 1.6 provides
for indemnification in such case, or (2) if the Securities Act requires
contribution and invalidates indemnification under this Section 1.6; then Global
and such Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that such Holder is responsible for the portion represented
by the percentage that the public offering price of its Registrable Securities
offered by and sold under the registration statement bears to the public
offering price of all securities offered by and sold under such registration
statement, and Global and other selling Holders are responsible for the
remaining portion; PROVIDED, HOWEVER, that, in any such case, (A) no such Holder
will be required to contribute any amount in excess of the public offering price
of all such Registrable Securities offered and sold by such Holder pursuant to
such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(f) SURVIVAL. The obligations of Global and Holders under this
Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
1.7 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of Global, Global
agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the
effective date of the first registration under the Securities Act filed by
Global for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and
other documents required of Global under the Securities Act and the 1934 Act (at
any time after it has become subject to such reporting requirements); and
(c) So long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by Global as to
its compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by Global for an offering of its securities to the general public), and of the
Securities Act and the 1934 Act (at any time after it has become subject to the
reporting requirements of the 1934 Act), a copy of the most recent annual or
quarterly report of Global, and such other reports and documents of Global as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration (at any time after Global has become subject to the reporting
requirements of the 1934 Act).
2. LIMITATION ON SALE OF HOLDERS.
Each Holder hereby agrees that it shall not, during any three
month period while any registration statement hereunder is in effect, sell any
Registrable Securities, which, when added to the number of shares of Registrable
Securities in excess of the greater of (i) one percent of the shares of Common
Stock of Global outstanding as shown by the most recent quarterly report on Form
10-Q or annual report on Form 10-K as of the date of determination or (ii) the
average weekly reported volume of trading in Global's Common Stock reported
through Nasdaq Stock Market during the four calendar weeks prior to the date of
determination, or, (iii) if applicable, the average weekly volume of trading in
Global's Common Stock reported through the consolidated transaction reporting
system contemplated by Rule 11Aa3-1 of the 1934 Act. All certificates evidencing
Registrable Securities shall bear a legend referring to this restriction on
transfer.
3. ASSIGNMENT AND AMENDMENT.
3.1 ASSIGNMENT. Notwithstanding anything herein to the contrary
the registration rights of a Holder under Section 1 hereof may be assigned only
to a party who acquires at least 250,000 shares of the Registrable Securities
issued under the Asset Purchase Agreement; PROVIDED, HOWEVER that no party may
be assigned any of the foregoing rights unless Global is given written notice by
the assigning party at the time of such assignment stating the name and address
of the assignee and identifying the securities of Global as to which the rights
in question are being assigned; and PROVIDED FURTHER that any such assignee
shall receive such assigned rights subject to all the terms and conditions of
this Agreement, including without limitation the provisions of Section 2 and
this Section 3.1.
3.2 AMENDMENT OF RIGHTS. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of Global and OnRadio (and/or any of their permitted successors
or assigns) holding shares representing and/or convertible into a majority of
all OnRadio' Shares (as defined below).
4. GENERAL PROVISIONS.
4.1 NOTICES. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, as follows:
(a) if to an Investor, at such Investor's respective
address as set forth on Exhibit A hereto; and
(b) if to Global, at the address set forth below Global's
signature page to this Agreement.
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder. Notice shall conclusively be
deemed to have been given when personally delivered or when deposited in the
mail in the manner set forth above.
4.2 ENTIRE AGREEMENT. This Agreement, together with all the
Exhibits hereto, constitutes and contains the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.
4.3 GOVERNING LAW. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State of
California as applied to agreements among California residents entered into and
to be performed entirely within California, excluding that body of law relating
to conflict of laws and choice of law.
4.4 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
4.5 THIRD PARTIES. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this Agreement.
4.6 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section
4.1, the provisions of this Agreement shall inure to the benefit of, and shall
be binding upon, the successors and permitted assigns of the parties hereto.
4.7 CAPTIONS. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall not be
used to construe or interpret this Agreement.
4.8 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 COSTS AND ATTORNEYS' FEES. In the event that any action,
suit or other proceeding is instituted concerning or arising out of this
Agreement or any transaction contemplated hereunder, the prevailing party shall
recover all of such party's costs and attorneys' fees incurred in each such
action, suit or other proceeding, including any and all appeals or petitions
therefrom.
4.10 ADJUSTMENTS FOR STOCK SPLITS, ETC. Wherever in this
Agreement there is a reference to a specific number of shares of Common Stock of
Global, then, upon the occurrence of any subdivision, combination or stock
dividend of such class or series of stock, the specific number of shares so
referenced in this Agreement shall automatically be proportionally adjusted to
reflect the affect on the outstanding shares of such class or series of stock by
such subdivision, combination or stock dividend.
4.11 AGGREGATION OF STOCK. All shares held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first written above.
XXXXXXXXXXX.XXX,
A Nevada corporation
By: /s/ L. Xxxxx Xxxxxx
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Name:
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Title: Chief Financial Officer
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XXXXXXX.XXX,
A California corporation
By: /s/ Xxxxxxx Xxxx
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Name:
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Title: President
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