Exhibit E
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of
August 19, 2002 by and between The Bluebook International Holding Company, a
Delaware corporation (the "Company"), and Cotelligent, Inc., a Delaware
corporation ("Cotelligent" or "Investor").
RECITALS
In order to induce Investor to enter into the Note Purchase Agreement,
dated as of July 25, 2002 (the "Bridge Loan Agreement") and the Series C
Redeemable Preferred Stock Agreement (the "Series C Agreement") of even date
herewith between the Company and the Investor, the Company has agreed to provide
the registration rights provided for in this Agreement. The execution of this
Agreement is a condition to the closing of the transactions contemplated by the
Series C Agreement.
NOW, THEREFORE, the parties agree as follows:
Section 1: Certain Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:
1.1 "Bridge Loan Agreement" shall have the meaning assigned thereto in the
Recitals above.
1.2 "Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.
1.3 "Common Stock" shall mean the common stock of the Company, or any other
capital stock of the Company into which such stock is reclassified or
reconstituted.
1.4 "Convertible Note" shall mean the convertible note of the Company to be
issued and sold to the Investor pursuant to the Bridge Loan Agreement and any
convertible notes issued in exchange therefor or in lieu thereof.
1.5 "Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
1.6 "Person" shall mean a corporation, association, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
1.7 "Piggyback Registrable Securities" shall have the meaning assigned
thereto in Section 2.1 hereof.
1.8 "Piggyback Registration Statement" shall have the meaning assigned
thereto in Section 2.1 hereof.
1.9 "Piggyback Request" shall have the meaning assigned thereto in Section
2.1 hereof.
1.10 "Piggyback Underwriting Agreement" shall have the meaning assigned
thereto in Section 2.2 hereof.
1.11 "Series C Preferred" shall mean the Series C convertible redeemable
preferred stock to be issued by the Company to Investor pursuant to the Series C
Agreement.
1.12 "Series C Agreement" shall have the meaning assigned thereto in the
Recitals above.
1.13 "Registrable Securities" means the Shares and any securities issued in
respect of the Shares as a result of any stock split, stock dividend,
recapitalization or similar transaction.
1.14 "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
1.15 "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
1.16 "Shares" means the shares of Common Stock (a) issued or issuable upon
conversion of (i) the Convertible Note; (ii) the Series C Preferred issued upon
conversion of the Convertible Note; and (iii) the Series C Preferred issued
pursuant to the Series C Agreement; and (b) otherwise acquired by Investor
pursuant to the Convertible Note, the Series C Agreement or the conversion
rights of the Series C Preferred.
Section 2: Piggyback Registration.
2.1 If at any time from and after the date hereof, the Company shall
determine to register any of its securities, whether for sale for its own
account or for the account of any other Person, other than registration
statements relating to (i) employee, consultant or director compensation or
incentive arrangements, including employee benefit plans, or other registrations
on Form S-8 or any successor form, or (ii) acquisitions or any transaction or
transactions under Rule 145 under the Securities Act or any successor rule with
similar effect, then the Company will promptly give the Investor written notice
thereof and include in such registration statement (a "Piggyback Registration
Statement") and in any underwriting involved therein, all Registrable Securities
specified (the "Piggyback Registrable Securities") in a written request made by
Investor (a "Piggyback Request") within 10 (ten) business days (or such later
time as the underwriters may allow in writing) after receipt of such written
notice from the Company.
2.2 If the Piggyback Registration Statement of which the Company gives
notice is for an underwritten offering or the Company proposes to do an
underwritten take down from an unallocated or universal shelf registration, the
Company shall so advise Investor as a part of the written notice given pursuant
to Section 2.1. In such event, the right of Investor to registration pursuant to
this Section 2 (or to participate in an underwritten take down in the case of an
unallocated or universal shelf registration) shall be conditioned upon the
agreement of Investor to participate in such underwriting and in the inclusion
of such Piggyback Registrable Securities
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in the underwriting to the extent provided herein. Investor shall (together with
the Company and any other holders distributing securities in such Piggyback
Registration Statement, if any) enter into an underwriting agreement (the
"Piggyback Underwriting Agreement") in customary form with the underwriter or
underwriters selected for such underwriting by the Company. If Investor
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the managing underwriters. Any
Piggyback Registrable Securities excluded from such underwriting shall be
excluded from such Piggyback Registration Statement, and the Company shall not
be obligated to otherwise register such Piggyback Registrable Securities.
2.3 Notwithstanding any other provision of this Agreement, if the managing
underwriters of any underwritten offering pursuant to a Piggyback Request
determine, in their sole discretion that, after including all the shares
proposed to be offered by the Company and all the shares of any other Persons
entitled to registration rights with respect to such Piggyback Registration
Statement (pursuant to other agreements with the Company), marketing factors
require a limitation of the number of Piggyback Registrable Securities to be
underwritten, in the event that such registration is on behalf of the Company,
the Company shall include in the registration (i) first, the securities that the
Company proposes to sell, (ii) second, the Piggyback Registrable Securities
requested to be included in the registration and securities, if any, requested
to be included by others having these rights, pro rata among the holders of the
Piggyback Registrable Securities which are to be registered and sold pursuant to
such Piggyback Registration Statement and others exercising these rights, on the
basis of the number of the Piggyback Registrable Securities requested to be
included by holders of such Piggyback Registrable Securities, and others
exercising these rights; provided, however, in no event shall the amount of
Piggyback Registrable Securities of the Investor included in the underwriting on
behalf of the Company (together with any other securities of the Investor being
included in the underwriting pursuant to other agreements with the Company) be
reduced below thirty-three percent (33%) of the total amount of securities
included in such offering.
2.4 Except to the extent specifically provided in this Section 2 hereof,
the procedures to be followed by the Company and the Investor, and the
respective rights and obligations of the Company and the Investor, with respect
to the distribution of any Piggyback Registrable Securities by Investor pursuant
to any Piggyback Registration Statement filed by the Company shall be as set
forth in the Piggyback Underwriting Agreement, or any other agreement or
agreements governing the distribution of such Piggyback Registrable Securities
pursuant to such Piggyback Registration Statement.
2.5 Notwithstanding the foregoing, however, nothing in this Section 2, or
any other provision of this Agreement, shall be construed to limit the absolute
right of the Company, for any reason and in its sole discretion (i) to delay,
suspend or terminate the filing of any Piggyback Registration Statement; (ii) to
delay the effectiveness of any Piggyback Registration Statement; or (iii) to
withdraw such Piggyback Registration Statement.
Section 3: Piggyback Registration Procedures, Rights and Obligations. The
procedures to be followed by the Company and the Investor, and the respective
rights and obligations of the Company and the Investor, with respect to the
preparation, filing and effectiveness of Piggyback
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Registration Statements, and the distribution of Piggyback Registrable
Securities pursuant thereto, are as follows:
3.1 The Company shall furnish to the Investor and to each underwriter
engaged in an underwritten offering of Registrable Securities a signed
counterpart, addressed to the Investor or such underwriter, of (i) an opinion or
opinions of counsel to the Company (with respect to the Company and securities
law compliance by the Company) and (ii) a comfort letter or comfort letters from
the Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Investor or the managing underwriters may
reasonably request.
3.2 The Company shall use its best efforts to cause all Registrable
Securities to be listed on each securities exchange on which similar securities
of the Company are then listed.
3.3 The Company shall provide, in connection with the filing of a
registration statement pursuant to this Agreement, a transfer agent and
registrar for all Registrable Securities registered thereunder and a CUSIP
number for all such Registrable Securities not later than the effective date of
such registration.
3.4 With a view to making available to the Investor the benefits of Rule
144 promulgated under the Act and any other rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to the Investor, so long as the Investor owns any
Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC
Rule 144 (at any time after ninety (90) days after the effective date of
the first registration statement filed by the Company), the Act and the
1934 Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) 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 (iii) at
Investor's sole cost and expense, such other information as may be
reasonably requested in availing the Investor of any rule or regulation of
the SEC that permits the selling of any such securities without
registration or pursuant to such form; provided, however, that the Company
will pay all of its own costs, including attorneys fees, associated with
any reasonable request made by Investor in connection with the above, such
as a request that the Company review a form of opinion of Investor's
counsel related to the sale of Registrable Securities pursuant to Rule 144.
3.5 The Company shall take all such other actions either reasonably
necessary or desirable to permit the Registrable Securities held by Investor to
be registered and disposed of in accordance with the methods of disposition
described herein.
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Section 4: Registration Expenses. The Company agrees to bear and to pay or cause
to be paid promptly upon request being made therefor all expenses incident to
the Company's performance of or compliance with this Agreement, including,
without limitation, (i) all Commission and any NASD registration and filing fees
and expenses, (ii) all fees and expenses in connection with the qualification of
the Registrable Securities for offering and sale under any state securities and
blue sky laws, including reasonable fees and disbursements of counsel for the
placement or sales agent or underwriters in connection with such qualifications,
(iii) all fees and expenses in connection with the approval for trading of the
Shares or other shares of Common Stock on the Nasdaq National Market or other
appropriate exchange, (iv) all expenses relating to the preparation, printing,
distribution and reproduction of each registration statement required to be
filed hereunder, each prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement to the foregoing, the certificates
representing the Registrable Securities and all other documents relating hereto,
(v) internal expenses (including, without limitation, all salaries and expenses
of the Company's officers and employees performing legal or accounting duties),
and (vi) fees, disbursements and expenses of counsel and independent certified
public accountants of the Company (including the expenses of any opinions or
"cold comfort" letters required by or incident to such performance and
compliance) (collectively, the "Registration Expenses"). Notwithstanding the
foregoing, Investor shall pay all underwriting discounts and commissions
attributable to the sale of the Registrable Securities and the fees and
disbursements of any counsel or other advisors or experts retained by Investor.
Section 5: Representations and Warranties. The Company represents and warrants
to, and agrees with, Investor that:
5.1 Each registration statement covering Registrable Securities and each
prospectus (including any summary prospectus) contained therein and any further
amendments or supplements to any such registration statement or prospectus, when
it becomes effective or is filed with the Commission, as the case may be, and,
in the case of an underwritten offering of Registrable Securities, at the time
of the closing under the underwriting agreement relating thereto will conform in
all material respects to the requirements of the Securities Act, and will not
contain an untrue statement statement of a material fact or omit to state a
material fact required to be stated therein; and at all times subsequent to the
effective time when a prospectus would be required to be delivered under the
Securities Act, will conform in all material respects to the requirements of the
Securities Act, and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by Investor expressly for use therein, and further
provided that for any statements or omissions made by the Company prior to
October 1, 2001, this representation and warranty shall be limited to the
knowledge of the Company, including its officers and directors, which knowledge
shall include matters which should have been known by reasonable investigation.
5.2 Any documents incorporated by reference in any prospectus prepared
pursuant to this Agreement, when they become or became effective or are or were
filed with the Commission, or if amended, when amended, as the case may be, will
conform or conformed in all material respects to the requirements of the
Exchange Act, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a
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material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made;
provided, however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by Investor expressly for use therein; and
further provided that for any statements or omissions made by the Company prior
to October 1, 2001, this representation and warranty shall be limited to the
knowledge of the Company, including its officers and directors, which knowledge
shall include matters which should have been known by reasonable investigation.
Section 6: Indemnification.
6.1 Indemnification by the Company. Upon the registration of Registrable
Securities pursuant to this Agreement, and in consideration of the agreements of
Investor contained herein, and as an inducement to Investor to purchase the
Convertible Note and the Series C Preferred, the Company shall, and it hereby
agrees to, indemnify and hold harmless Investor and its officers, directors,
partners, employees, representatives, underwriters and agents and each control
person (as defined in Section 15 of the Exchange Act) against any losses,
claims, damages or liabilities, joint or several, to which Investor or any of
its officers, directors, partners, employees, representatives, underwriters and
agents and each control person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this Agreement, or any final or summary prospectus contained therein
or furnished by the Company to Investor, any officer, director, partner,
employee, representative, underwriter or agent or control person, or any
amendment or supplement thereto, or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein, and the Company shall, and it hereby agrees to, reimburse Investor, any
officer, director, partner, employee, representative, underwriter or agent or
control person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
to any such person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission made in such registration statement, final
or summary prospectus, or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by the Investor
expressly for use therein or is caused by Investor's failure to deliver a copy
of the registration statement or prospectus, or any supplement or amendment
thereto or any other information of which it is aware. Notwithstanding the
foregoing, in no event shall the total indemnity under this Section 6.1, except
for the cost of investigation and defense, exceeds the total gross cash proceeds
received by the Company from Investor pursuant to the Bridge Loan Agreement and
Series C Agreement. The indemnity provided herein shall be in lieu of and not in
addition to any right to receive any indemnity pursuant to the Series C
Agreement.
6.2 Indemnification by the Investor. In connection with any registration
statement pursuant to which Investor sold or offered for sale Registrable
Securities, Investor agrees to indemnify and hold harmless the Company and its
officers, directors, employees, representatives, underwriter and agents and each
control person against any losses, claims, damages or liabilities
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to which the Company may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in such registration statement, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to Investor, any officer, director, partner, employee, representative,
underwriter or agent or control person, or any amendment or supplement thereto,
or arise out of or are based upon 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 in light of the circumstances in which they
were made, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by the Investor; provided that in no event shall any indemnity under
this subsection exceed the gross proceeds from such offering received by the
Investor.
6.3 Notices of Claims, Etc. Promptly after receipt by an indemnified party
under Section 6.1 or Section 6.2 above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the failure so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 6.1 or Section 6.2 hereof and only to the extent of
prejudice caused by such failure. In case any such action shall be brought
against any indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense and costs of investigation thereof, such indemnifying party shall not be
liable to such indemnified party for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof.
6.4 Contribution. If the indemnification provided for in this Section 6 is
held by a court of competent jurisdiction to be unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 6.4 were determined by
pro rata allocation (even if the Investor or any agents or underwriters or all
of them were treated as one entity for
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such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 6.4. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
or liabilities (or actions in respect thereof) referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6.4, neither Investor
nor the Company shall be required to contribute any amount in excess of the
amount required pursuant to Section 6.2 and Section 6.1, respectively. 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.
6.5 The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have; and the
obligations of Investor contemplated by this Section 6 shall be in addition to
any liability which Investor may otherwise have.
6.6 Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in an underwriting agreement entered
into by Investor are in conflict with the foregoing provisions, the provisions
of such underwriting agreement shall control.
Section 7: Miscellaneous.
7.1 Entire Agreement. This Agreement and the other writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to its subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter.
7.2 No Inconsistent Agreements. The Company represents, warrants, covenants
and agrees that it has not granted, and shall not grant, registration rights
with respect to shares of Common Stock or any other securities which would be
inconsistent with the terms contained in this Agreement.
7.3 Specific Performance. The parties hereto acknowledge that there may be
no adequate remedy at law if any party fails to perform any of its obligations
hereunder and that each party may be irreparably harmed by any such failure, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement, in any court of the
United States or any State thereof having jurisdiction.
7.4 Amendments and Waivers. This Agreement may not be amended or
terminated, or any right or obligation hereunder waived, other than by a written
instrument signed by the party against whom enforcement of such amendment,
termination or waiver is sought.
7.5 Governing Law. Except for applicable federal securities laws this
Agreement shall be governed in all respects by the laws of the State of
California.
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7.6 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument and is intended to be binding when all parties have
delivered their signatures to the other parties. Signatures may be delivered by
facsimile transmission. All counterparts shall be deemed an original of this
Agreement.
7.7 Headings. The table of contents and headings used herein are used for
convenience only, are not part of this Agreement and shall not be considered in
construing or interpreting this Agreement.
7.8 Notice. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and will be effective (a)
immediately upon delivery in person or by messenger, (b) two (2) business days
after deposit with a commercial courier or delivery service for next day
delivery, (c) upon receipt by facsimile as established by evidence of successful
transmission or (d) five (5) business days after deposit with the United States
Postal Service, certified mail, return receipt requested, postage prepaid. All
notices must be properly addressed as follows (or to such other address as a
party may specify by notice in pursuant to this Section 7.8.
(a) If to the Company:
The Bluebook International Holding Company
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxx, Xxxxxxx & Xxxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxx, Esq.
Fax: (000) 000-0000
(b) If to Cotelligent:
Cotelligent, Inc.
000 Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxx + Xxxxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
7.9 Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of the Investor or any
of its officers, directors, partners, employees, representatives, or agents, or
any controlling person of any of the foregoing.
7.10 Assignment. Investor may not assign its rights hereunder, except to a
successor-in-interest by merger or sale of substantially all the assets or stock
of Investor. Upon such assignment the transferee shall, insofar as the
transferred Shares are concerned, be entitled to all of the rights, and be
subject to all of the obligations, of Investor under this Agreement, and all
references to the "Investor" herein shall thereafter be deemed to include the
transferring Investor, or such transferee, or both, as the circumstances
warrant.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date referred to above.
COMPANY: THE BLUEBOOK INTERNATIONAL HOLDING COMPANY,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President
INVESTOR: COTELLIGENT, INC., a Delaware corporation
By: /s/ Xxxxxx X. Machiorlette
---------------------------------------
Name: Xxxxxx X. Machiorlette
Title: Senior Vice President
[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
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