EQUITY COMPENSATION AGREEMENT
This
Equity Compensation Agreement (this “Agreement”)
is
entered into as of September 22, 2006 by and between NET
PERCEPTIONS, INC.,
a
Delaware corporation (the “Company”);
and
(ii) KANDERS
& COMPANY, INC. (“Kanders”).
WHEREAS,
Kanders has provided a variety of valuable strategic, consulting, investment
banking and advisory services to the Company and has incurred substantial
out-of-pocket expenses in connection with the implementation of the Company’s
asset redeployment strategy and financing a portion of the Company’s operations
since April 21, 2004; and
WHEREAS,
Kanders has provided significant advisory and consulting services in connection
with the Company’s asset redeployment strategy, including the strategic
development of a global industrial business and, in connection therewith,
the
determination that the acquisition of the business of CRC Acquisition Co.
LLC
(the “Acquisition”)
and
the financing of such Acquisition (collectively, the “Redeployment
Services”)
would
be the initial step in implementing such global strategy; and
WHEREAS,
Kanders has not been compensated or reimbursed for various expenses in providing
the Redeployment Services; and
WHEREAS,
the Company has previously disclosed its intention to award Kanders equity
compensation upon the completion of an acquisition implementing the Company’s
asset redeployment strategy consistent with market practices; and
WHEREAS,
in order to compensate Kanders for the Redeployment Services, the Company
has
agreed to provide the rights set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, the parties hereby
agree
as follows:
1.
Definitions
As
used
in this Agreement, the following terms have the following meanings:
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Exchange
Act:
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The
Securities Exchange Act of 1934, as amended, and the rules and
regulations
of the SEC promulgated thereunder.
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Prospectus:
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The
prospectus included in any Registration Statement (including, without
limitation, a prospectus that discloses information previously
omitted
from a prospectus filed as part of an effective registration statement
in
reliance upon Securities Act Rule 430A), as amended or supplemented
by any
prospectus supplement, with respect to the terms of the offering
of any
portion of the Registrable Securities covered by such Registration
Statement and all other amendments and supplements to such prospectus,
including post-effective amendments, and all material incorporated
by
reference or deemed to be incorporated by reference in such
prospectus.
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Registrable
Securities:
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All
Equity Compensation Shares (as hereinafter defined) and any securities
issued or issuable in respect of any of the Equity Compensation
Shares
pursuant to any stock split, stock dividend, recapitalization,
or similar
event.
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Registration
Expenses:
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All
expenses in connection with the performance of or compliance with
Sections
3 and 4 hereof by the Company including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements
of
counsel and accountants for the Company, blue sky fees and
expenses.
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Registration
Statement:
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Any
registration statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including,
without limitation, the Prospectus, amendments and supplements
to such
registration statement (including, without limitation, post-effective
amendments), all exhibits, and all material incorporated by reference
or
deemed to be incorporated reference in such registration statement.
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Restricted
Securities:
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The
Equity Compensation Shares, until they are no longer required to
bear the
legend set forth on such securities pursuant to applicable
law.
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Rule
144:
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Rule
144 under the Securities Act, as such Rule may be amended from
time to
time, or any similar rule or regulation hereafter adopted by the
SEC
(excluding Rule 144A).
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Securities
Act:
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The
Securities Act of 1933, as amended, and the rules and regulations
promulgated by the SEC
thereunder.
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2. Equity
Compensation Grant.
The
Company hereby grants to Kanders 8,274,000 fully vested, unregistered shares
of
common stock of the Company, par value $0.0001 per share (“Common
Stock”)
without cost as compensation to Kanders for the Redeployment Services (the
“Equity
Compensation Shares”);
subject to the conditions set forth in Section 6 herein. For the avoidance
of
doubt, it is intended and understood that such Equity Compensation Shares
when
issued, shall constitute 19.99% of the total number of shares of Common Stock
to
be outstanding following the Acquisition and the issuance of the Equity
Compensation Shares, without giving effect to any shares issuable upon
conversion of the Note as hereinafter defined in Section 6(b)).
3. Registration
Rights.
(a) Request
for Registration.
If
Kanders submits a written request (a “Demand
Notice”)
to the
Company requesting that the Company register Registrable Securities under
and in
accordance with the Securities Act (a “Demand
Registration”),
upon
receipt of the Demand Notice, the Company shall, as soon as practicable
thereafter, use its reasonable efforts to effect the registration of such
Registrable Securities as may be so requested utilizing Form S-3 (or any
successor form) if then available to the Company and if not, Form S-1 (or
any
successor form).
(b) Limitations
on Demand Rights.
Notwithstanding any other provision set forth in this Section 3, Kanders
shall not be entitled to deliver a Demand Notice within 90 days after the
effectiveness of any registration statement filed (i) by the Company
pursuant to an underwritten offering by the Company or (ii) on behalf of
any other holder of demand registration rights with respect to the Common
Stock.
Provided that all of the Registrable Securities set forth in Kanders’ Demand
Notice (or such lesser portion thereof as may be agreed by Kanders) are
registered under a Registration Statement, Kanders shall only have the right
to
issue one Demand Notice. In addition, and notwithstanding any provision hereof,
the Company shall not be required to register any Registrable Securities
pursuant to Section 3(a) for any holder of Registrable Securities who holds
less
than 1% of the outstanding stock of the Company at such time as all Registrable
Securities of such holder are freely tradable immediately in one transaction
pursuant to Rule 144 of the Securities Act.
(c) Deferral.
Notwithstanding the foregoing, the Company may defer the filing (but not
the
preparation) of a Registration Statement required to be filed by this
Section 3 until a date not later than 60 days after its receipt of a Demand
Notice if:
(x) at
the
time the Company receives the Demand Notice, there is (A) material
non-public information regarding the Company which the Board of Directors
of the
Company (the “Board”)
reasonably determines not to be in the Company’s interest to disclose and which
the Company is not otherwise required to disclose, or (B) there is a
significant business opportunity (including but not limited to the acquisition
or disposition of assets (other than in the ordinary course of business)
or any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board reasonably determines not to be in the Company’s
best interest to disclose; or
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(y) prior
to
receiving the Demand Notice, the Board had determined to effect an underwritten
offering.
A
deferral of the filing of a Registration Statement pursuant to this
Section 3(c) shall be lifted, and the requested Registration Statement
shall be filed forthwith, if, (1) in the case of a deferral pursuant to
clause (x)(A), the material non-public information is made public by the
Company or becomes no longer material, (2) in the case of a deferral
pursuant to clause (x)(B), the significant business opportunity is
disclosed by the Company or is terminated, or (3) in the case of a deferral
pursuant to clause (y), the proposed registration for the Company’s account
is abandoned. In order to defer the filing of a Registration Statement pursuant
to this Section 3(c), the Company shall promptly (but in any event within
20 days), upon determining to seek such deferral, deliver to Kanders a
certificate signed by an executive officer of the Company stating that the
Company is deferring such filing pursuant to this Section 3(c) and
containing an approximation of the anticipated delay.
4. Piggy-Back
Registration.
(a) Notice
of Registration.
If at
any time or from time to time, the Company shall determine to register or
shall
be required to register any of its common stock, whether or not for its own
account, other than a registration effected on Form S-4 (or its successor),
or a registration relating to employee benefit plans (whether effected on
Form S-8 or its successor), the Company shall:
(i) provide
to Kanders written notice thereof at least fifteen days prior to the filing
of
the Registration Statement by the Company in connection with such registration;
and
(ii) include
in such Registration Statement, and in any underwriting involved therein
(and on
the same terms and conditions provided under such underwriting, including
any
restrictions on sale thereunder), all those Registrable Securities specified
in
a written request by Kanders received by the Company within five days after
the
Company mails the written notice referred to above, subject to the provisions
of
Section 4(b) below. However, if a Registration Statement covered by this
Section 4 is an underwritten registration on behalf of the Company, and the
underwriters advise the Company in writing that in their opinion the number
of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company shall include in such registration: (1) first,
the securities the Company proposes to sell, (2) second, the Registrable
Securities and other securities requested to be included in such registration,
pro rata among Kanders and any other security holders that has requested
to sell
Company securities on the basis of the number of shares owned by each Kanders
and other selling security holders;
provided,
that the Company shall not be required to include in any Registration Statement
or in any underwriting, or provide notice with respect to, any Registrable
Securities pursuant to this Section 4 that are eligible for sale pursuant
to
Rule 144(k) of the Securities Act.
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(b) Right
to Terminate Registration.
The
Company shall have the right to terminate or withdraw any Registration Statement
initiated by it under this Section 4 prior to the effectiveness of such
Registration Statement whether or not Kanders has elected to include Registrable
Securities in such Registration Statement.
5. Expenses
and Procedures
(a)
Expenses
of Registration.
All
Registration Expenses shall be paid by the Company. Selling commissions and
brokerage discounts of Kanders shall be paid solely by Kanders. The Company
shall pay the reasonable fees of counsel and advisors for Kanders.
(b)
Registration
Procedures.
Subject
to compliance by the Company with applicable securities laws, rules and
regulations, and the rules and regulations of the primary exchange on which
Common Stock is listed, in the case of each registration, qualification or
compliance effected by the Company pursuant to Section 3 or 4
hereof:
(i) The
Company will keep Kanders advised as to the initiation of registration,
qualification and compliance and as to the completion thereof. At its own
expense, the Company will furnish such number of conformed copies of the
Registration Statement and other documents incident thereto as Kanders from
time
to time may reasonably request.
(ii) To
the
extent necessary for the disposition of the Equity Compensation Shares, the
Company will use its commercially reasonable efforts to register or qualify
any
Registrable Securities under such state securities or blue sky laws of such
jurisdictions as Kanders shall reasonably request, and do any and all other
acts
and things which may be necessary or advisable to enable Kanders to consummate
the disposition in such jurisdictions of its Registrable Securities covered
by
the Registration Statement; provided,
however,
that
the Company shall not be obligated to file any general consent to service
of
process or to qualify as a foreign corporation or subject the Company to
taxation in any jurisdiction in which it is not so qualified.
(iii) The
Company will promptly notify each holder owning Registrable Securities covered
by any 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 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 seller prepare and furnish to such
seller, a reasonable number of copies of a supplement to or an amendment
of such
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.
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(iv) The
Company will use its commercially reasonable efforts to list such Registrable
Securities on the primary securities exchange on which the Common Stock is
then
listed, if such Registrable Securities are not already so listed.
(v) The
Company will provide a transfer agent and registrar for all Registrable
Securities on or before the date that the Equity Compensation Shares are
registered pursuant to a Registration Statement.
(vi) In
connection with the preparation and filing of the Registration Statement,
and
before filing the Registration Statement or any other document in connection
therewith, the Company will give Kanders the opportunity to review the
Registration Statement, each prospectus included therein or filed with the
SEC,
each amendment thereof of supplement thereto and give each of the aforementioned
Persons such opportunities to discuss the business of the Company with its
officers as shall be reasonably necessary to conduct a reasonable investigation
within the meaning of the Securities Act.
(c)
Information.
Kanders
shall furnish such information regarding the distribution of such Registrable
Securities as the Company may from time to time reasonably request, and the
Company may exclude from such registration the Registrable Securities of
Kanders
if it unreasonably fails to furnish such information after receiving such
request. Such information shall be true and complete and it shall not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
(d) Delay
or Suspension. Notwithstanding
anything herein to the contrary, the Company may, at any time, suspend the
effectiveness of any Registration Statement for a period of not more than
45
days in the aggregate in any period of twelve consecutive calendar months
(a
“Suspension
Period”)
by
giving notice to Kanders, if the Company shall have determined that the Company
may be required to disclose any material corporate development which disclosure
may have a material effect on the Company. Kanders agrees by acquisition
of such
Registrable Securities that, upon receipt of any notice from the Company
of a
Suspension Period, Kanders shall forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until Kanders (i) is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, (ii) have received copies of a
supplemental or amended prospectus, if applicable, and (iii) have received
copies of any additional or supplemental filings which are incorporated or
deemed to be incorporated by reference in such Prospectus. The Company shall
prepare, file and furnish to Kanders promptly upon the expiration of any
Suspension Period, appropriate supplements or amendments, if applicable,
to the
Prospectus and appropriate documents, if applicable, incorporated by reference
in the Registration Statement.
6. Conditions
Precedent.
The
grant of the Equity Compensation Shares shall be conditioned upon the
following:
(a) Kanders
on behalf of itself and all of its affiliates, waive all claims for accrued
consulting, investment banking, finders or other fees and expenses, and all
other claims for compensation or reimbursement of expenses of any kind that
is
or may be due or owing to Kanders from the Company in respect of Redeployment
Services previously rendered by Kanders, or any of its affiliates, other
than
arrangements contemplated by that certain Consulting Agreement by and between
Kanders and the Company dated the date hereof.
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(b) Olden
Acquisition LLC, an affiliate of Kanders (“Olden”),
waives the anti-dilution provisions contained in the 2% Convertible Subordinated
Note issued by the Company to Olden on April 21, 2004 (the “Note”)
with
respect to the issuance of the Equity Compensation Shares.
7. Transfer
of Shares.
Kanders
may transfer the Equity Compensation Shares to (i) an affiliate of Kanders
or
(ii) a non-affiliate transferee provided that any transfer to a non-affiliate
is
in connection with at least 10% of the Equity Compensation Shares originally
issued to Kanders; provided, however, that for all transfers (x) Kanders
provides the Company with 10 business days written notice of such intended
transfer, (y) Kanders provides the Company an opinion of counsel reasonably
satisfactory to the Company that such transfer is exempt from the registration
provisions of the Securities Act, and (z) any transferee agrees to be bound
to
all the terms and conditions contained in this Agreement.
8. Indemnification
(a) Indemnification
by the Company.
The
Company shall indemnify and hold harmless, to the fullest extent permitted
by
law, Kanders, its respective officers, members, managers, advisors, agents
and
employees, each person who controls Kanders (within the meaning of Section
15 of
the Securities Act or Section 20 of the Exchange Act), and the officers,
directors, stockholders, partners, members, managers, advisors, agents and
employees of any such controlling person, from and against all losses, claims,
damages, liabilities, costs (including, without limitation, all reasonable
attorneys’ fees) and expenses (collectively, “Losses”),
as
incurred, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement, Prospectus or preliminary prospectus, or arising
out of
or based upon any omission or alleged omission of a material fact required
to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made (in the case of any Prospectus)
not
misleading, except to the extent such untrue statement or omission is contained
in any information furnished in writing by Kanders to the Company for use
in
such Registration Statement, Prospectus or preliminary prospectus or any
amendment or supplement thereto; provided,
however,
that
the Company shall not be liable in any such case to the extent that any such
Loss arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus
or
Prospectus if (i) Kanders failed to send or deliver a copy of the Prospectus
or
Prospectus supplement with or prior to the delivery of written confirmation
of
the sale of Registrable Securities, and the Prospectus or any supplement
thereto
would have corrected such untrue statement or omission or (ii) Kanders sends
or
delivers a copy of the Prospectus or any supplement thereto after receiving
written notification from the Company that the Prospectus or any such supplement
contains an untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading. If requested, the
Company shall also indemnify selling brokers and similar securities industry
professionals participating in the distribution, their officers, directors,
agents and employees and each person who controls such persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification
of
Kanders. Such indemnifications shall remain in full force and effect regardless
of any investigation made by or on behalf of any Kanders and any of its
officers, directors, stockholders, partners, members, managers, advisors,
agents, employees or controlling persons (within the meaning of Section 15
of
the Securities Act or Section 20 of the Exchange Act) after the date hereof
and
shall survive any transfer of Registrable Securities.
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(b) Indemnification
by Kanders.
Kanders
hereby agrees to indemnify and hold harmless, to the fullest extent permitted
by
law, the Company, its officers, directors, stockholders, partners, members,
managers, advisors, agents and employees, each person who controls the Company
(within the meaning of Section 15 of the Securities Act or Section 20 of
the
Exchange Act) and the officers, directors, stockholders, partners, members,
managers, advisors, agents and employees of any such controlling person,
from
and against all Losses arising out of or based upon (y) any untrue statement
of
a material fact contained or incorporated by reference in any Registration
Statement, Prospectus or preliminary prospectus, or arising out of or based
upon
any omission of a material fact required to be stated therein or necessary
to
make the statements therein in light of the circumstances under which they
were
made (in the case of any Prospectus) not misleading, to the extent, but only
to
the extent, that such untrue statement or omission is contained in any
information furnished by Kanders to the Company for use in such Registration
Statement, Prospectus or preliminary prospectus or any amendment or supplement
thereto or (z) Kanders sending or delivering a copy of the Prospectus or
any
supplement thereto to another party after receiving written notification
from
the Company that the Prospectus or any such supplement contains an untrue
statement of a material fact or omits to state a material fact necessary
in
order to make the statements made, in the light of the circumstances under
which
they were made, not misleading. If requested, Kanders shall also indemnify
selling brokers and similar securities industry professionals participating
in
the distribution, their officers, directors, agents and employees and each
person who controls such persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the Company. The Company shall
be
entitled to receive indemnities from accountants, underwriters, selling brokers,
dealer managers and similar securities industry professionals participating
in
the distribution to the same extent as provided above with respect to
information so furnished by such persons for inclusion in any Registration
Statement, Prospectus or preliminary prospectus, provided
that the
failure of the Company to obtain any such indemnity shall not relieve the
Company of any of its obligations hereunder. Such indemnifications shall
remain
in full force and effect regardless of any investigation made by or on behalf
of
the Company of the information provided by Kanders prior to Closing, and
any of
their respective officers, directors, stockholders, partners, members, managers,
advisors, agents, employees or controlling persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) before
or
after the date hereof and shall survive any transfer of Registrable
Securities.
(c) Conduct
of Indemnification Proceedings.
If any
action or proceeding (including any governmental investigation or inquiry)
shall
be brought or any claim shall be asserted against, without limitation, any
Person entitled to indemnity hereunder (an “Indemnified
Party”),
such
Indemnified Party shall promptly notify the party from which such indemnity
is
sought (the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with the defense
thereof; provided,
however,
that
the failure or delay of an Indemnified Party to so notify the Indemnifying
Party
shall release the Indemnifying Party from its obligations hereunder only
if and
then only to the extent the Indemnifying Party is prejudiced by such failure
or
delay. All such fees and expenses (including, without limitation, any fees
and
expenses incurred in connection with investigating or preparing to defend
such
action or proceeding) shall be paid to the Indemnified Party, as incurred,
within 20 days of written notice thereof to the Indemnifying Party; provided,
however,
that if
the Indemnifying Party is subsequently determined not to have been liable
to the
Indemnified Party in accordance with this Section 8, such fees and expenses
shall be returned promptly to the Indemnifying Party. Any such Indemnified
Party
shall have the right to employ separate counsel if any such action, claim
or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be borne solely by such Indemnified Party unless (i)
the
Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed promptly to assume the defense of such
action, claim or proceeding and to employ counsel reasonably satisfactory
to the
Indemnified Party in any such action, claim or proceeding or (iii) the named
parties to any such action, claim or proceeding (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party,
and
such Indemnified Party shall have been advised by counsel that there may
be one
or more legal defenses available to it that are different from or additional
to
those available to the Indemnifying Party (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 action, claim
or
proceeding on behalf of such indemnified party, it being understood, however,
that the Indemnifying Party shall not, in connection with anyone such action,
claim or proceeding or separate but substantially similar or related actions,
claims or 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 counsel (together with appropriate local counsel) at any time for all
such
Indemnified Parties, unless in the opinion of counsel for such Indemnified
Party
a conflict of interest may exist between such Indemnified Party and any other
of
such Indemnified Parties with respect to such action, claim or proceeding,
in
which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel or counsels). No Indemnifying Party will
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the release of such Indemnified
Party
from all liability in respect to such claim or litigation without the written
consent (which consent will not be unreasonably withheld) of the indemnified
party. No Indemnified Party shall consent to entry of any judgment or enter
into
any settlement without the written consent (which consent will not be
unreasonably withheld) of the Indemnifying Party from which indemnity or
contribution is sought.
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(d) Contribution.
If the
indemnification provided for in this Section 8 is unavailable to an Indemnified
Party under Section 8(a) or (b) hereof (other than by reason of exceptions
provided in those Sections) in respect of any Losses, then each applicable
Indemnifying Party in lieu of indemnifying such Indemnified Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with
the
actions, statements or omissions that resulted in such Losses as well as
any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and the Indemnified Party shall be determined by reference to, among
other
things, whether any action in question, including any untrue statement or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result
of any Losses shall be deemed to include, subject to the limitations set
forth
in Section 8(c) hereof, any legal or other fees or expenses reasonably incurred
by such party in connection with any action, suit, claim, investigation or
proceeding.
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The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method
of
allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph. 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.
9. Reports
Under Exchange Act
With
a
view to making available to Kanders the benefits of Rule 144 or any successor
rule adopted by the SEC, in the event a Registration Statement with respect
to
the Equity Compensation Shares is not then effective with the SEC, the Company
agrees to:
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(a)
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use
its commercially reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule
144;
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(b)
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use
its commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company
under the
Securities Act or the Exchange Act;
and
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(c)
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furnish
to Kanders within a reasonable time following receipt of a written
request
therefor (1) a written statement by the Company as to its compliance
with
the reporting requirements of Rule 144, the Securities Act and
the
Exchange Act, (2) a copy of the most recent annual or quarterly
report of
the Company and such other reports and documents so filed by the
Company
and (3) such other information as may be reasonably requested in
availing
Kanders to sell Equity Compensation Shares pursuant to Rule
144.
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10. Representations
and Warranties by Kanders.
Kanders
hereby represents and warrants as follows:
(a) Kanders
understands, acknowledges and agrees that the Equity Compensation Shares
being
acquired pursuant to this Agreement are not registered under the Securities
Act,
or any applicable state securities law, that the Equity Compensation Shares
may
not be transferred or sold except pursuant to the registration provisions
of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant
to
applicable state securities laws and regulations, that the Equity Compensation
Shares being issued to Kanders pursuant to this Agreement and in connection
with
the transactions contemplated hereby will bear appropriate legends to that
effect, and that no federal or state agency has passed upon the Equity
Compensation Shares or made any findings or determination as to the fairness
of
an investment in the Equity Compensation Shares.
-10-
(b) The
Equity Compensation Shares being received by Kanders pursuant to this Agreement
and in connection with the transactions contemplated hereby are being acquired
for Kanders’ own account, for the purpose of investment and without a view to
the distribution or resale of such Equity Compensation Shares or any interest
therein to the public in violation of the Securities Act. Kanders does not
have
any agreement or understanding with any other person to sell or otherwise
distribute the Equity Compensation Shares. Kanders has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Equity Compensation Shares
and is
capable of bearing the economic risk of such investment. Kanders understands
that the acquisition of the Equity Compensation Shares involves substantial
risk. Kanders has been provided, to its satisfaction, the opportunity to
ask
questions concerning the terms and conditions of the issuance of the Equity
Compensation Shares pursuant to this Agreement, has had all such questions
answered to its satisfaction and has been supplied all additional information
deemed necessary by it to verify the accuracy of the information furnished
to
Kanders.
(c) Kanders
has had the opportunity to consult with counsel, tax and other professionals
of
its choosing in connection with its investment in the Equity Compensation
Shares
and has relied solely upon the advice of its advisors with respect to the
tax
and other legal aspects of this investment in the Equity Compensation Shares.
(d) Kanders
is
an
“accredited investor” as such term is defined under Rule 501 of Regulation D of
the Securities Act. Kanders
understands that the Equity Compensation Shares being offered and granted
to
Kanders is in reliance on specific exemptions from the registration and
qualification requirements of United States federal and state securities
laws
and that the Company is relying upon the truth and accuracy of, and Kanders’
compliance with the representations, warranties, agreements, acknowledgements
and understandings set forth herein in order to determine the availability
of
such exemptions and Kanders’ eligibility to acquire the Equity Compensation
Shares.
11. Miscellaneous
(a)
Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence,
may not
be amended, modified or supplemented without the written consent of those
holders of at least a majority in interest of the Registrable Securities.
No
waiver of any provision of this Agreement shall be deemed or shall constitute
a
waiver of any other provision hereof (whether or not similar), shall constitute
a continuing waiver unless otherwise expressly provided nor shall be effective
unless in writing and executed by the waiving party.
-11-
(b) Notices.
All
notices and other communications hereunder will be in writing and will be
deemed
received (a) the date delivered if delivered personally, (b) three (3) Business
Days after being mailed by registered or certified mail (return receipt
requested), (c) one (1) Business Day after being delivered to any reputable
nationwide overnight courier service and (d) upon confirmation of delivery,
if
delivered by facsimile, at the following addresses (or at such other address
for
a party as will be specified by like notice):
(i) If
to the
Company, to:
Net
Perceptions, Inc.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇.
▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with
a
required copy to:
▇▇▇▇
▇▇▇▇▇▇▇, P.C.
1350
Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇
Fax:
(▇▇▇)
▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
State
Street Financial Center
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
(ii) If
to
Kanders:
Kanders
& Company, Inc.
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(c) Governing
Law, Venue and Waiver of Jury Trial.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER AND IN ACCORDANCE WITH
THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCLUDING ANY CHOICE OF LAW RULES
THAT
MAY DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
-12-
EACH
PARTY TO THIS AGREEMENT, BY ITS EXECUTION HEREOF, (I) HEREBY IRREVOCABLY
SUBMITS, TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK (OR IF JURISDICTION THERETO IS NOT
PERMITTED BY LAW, THE STATE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW
YORK
COUNTY FOR THE PURPOSE OF ANY ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN
CONTRACT, TORT OR OTHERWISE), INQUIRY PROCEEDING OR INVESTIGATION ARISING
OUT OF
OR BASED UPON THIS AGREEMENT OR RELATING TO THE SUBJECT MATTER HEREOF, (II)
HEREBY WAIVES, AND AGREES TO CAUSE EACH OF ITS SUBSIDIARIES TO WAIVE, TO
THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, AND AGREES
NOT TO ALLOW ANY OF ITS SUBSIDIARIES TO ASSERT, BY WAY OF MOTION, AS A DEFENSE
OR OTHERWISE, IN ANY SUCH ACTION, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY
TO
THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR
IMMUNE FROM ATTACHMENT OR EXECUTION, THAT ANY SUCH PROCEEDING BROUGHT IN
ONE OF
THE ABOVE-NAMED COURTS IS IMPROPER, OR THAT THIS AGREEMENT OR THE SUBJECT
MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT AND (III) HEREBY AGREES NOT
TO
COMMENCE OR TO PERMIT ANY OF ITS SUBSIDIARIES TO COMMENCE ANY ACTION, CLAIM,
CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY PROCEEDING
OR
INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR RELATING TO
THE
SUBJECT MATTER HEREOF OTHER THAN BEFORE ONE OF THE ABOVE-NAMED COURTS NOR
TO
MAKE ANY MOTION OR TAKE ANY OTHER ACTION SEEKING OR INTENDING TO CAUSE THE
TRANSFER OR REMOVAL OF ANY SUCH ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN
CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION TO ANY
COURT
OTHER THAN ONE OF THE ABOVE-NAMED COURTS WHETHER ON THE GROUNDS OF INCONVENIENT
FORUM OR OTHERWISE. EACH PARTY HEREBY CONSENTS TO SERVICE OF PROCESS IN ANY
SUCH
PROCEEDING IN ANY MANNER PERMITTED BY NEW YORK LAW, AND AGREES THAT SERVICE
OF
PROCESS BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, AT ITS
ADDRESS SPECIFIED PURSUANT TO SECTION 11(b) IS REASONABLY CALCULATED TO GIVE
ACTUAL NOTICE.
EACH
OF
THE PARTIES HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN
RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT,
TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR
BASED
UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED
WITH OR
RELATED OR INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING. EACH OF THE PARTIES AGREE AND
ACKNOWLEDGE THAT IT HAS BEEN INFORMED THAT THIS SECTION 11(c) CONSTITUTES
A
MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HERETO ARE RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT AND ANY OTHER AGREEMENTS RELATING HERETO
OR
CONTEMPLATED HEREBY. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR
A COPY
OF THIS SECTION 11(c) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
EACH
SUCH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
-13-
(d)
Counterparts.
This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be
deemed
to be an original and all of which taken together shall constitute one and
the
same Agreement.
(e) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
(f)
Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of
the terms, provisions, covenants and restrictions set forth herein shall
remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find
and
employ an alternative means to achieve the same or substantially the same
result
as that contemplated by such term, provision, covenant or restriction. It
is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, void
or
unenforceable.
(g) Successors
and Assigns.
All of
the terms and provisions of this Agreement shall be binding upon and shall
inure
to the benefit of the successors and permitted assigns of the parties
hereto;
provided, however, that no party shall be able to transfer or assign any
of
their rights and obligations hereunder without the prior written consent
of the
other party hereto except as otherwise provided in Section 7
herein.
(h) Entire
Agreement.
Kanders
acknowledges that this Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersede all
prior
and contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties with respect to such subject matter.
[signature
page follows]
-14-
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
first
written above.
|
The
Company:
|
NET PERCEPTIONS, INC. | |
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Chief Administrative Officer
|
||
| Kanders: | KANDERS & COMPANY, INC. | |
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
President
|
||