UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 5,
2017
AutoWeb, Inc.
(Exact name of registrant as specified in its charter)
Delaware
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1-34761
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33-0711569
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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18872 MacArthur Boulevard, Suite 200,
Irvine, California
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92612-1400
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(Address of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number, including area code (949)
225-4500
Not Applicable
(Former name or former address, if changed since last
report.)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
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Item 1.01
Entry
into a Material Definitive Agreement
.
Master
License and Services Agreement
On
October 5, 2017, AutoWeb, Inc., a Delaware corporation
(“
AutoWeb
” or
“
Company
”), and
DealerX Partners, LLC, a Florida limited liability company
(“
DealerX
”),
entered into a Master License and Services Agreement
(“
License
Agreement
”). Pursuant to the terms of the License
Agreement, AutoWeb will receive a perpetual license to access and
use DealerX’s proprietary platform and technology for
targeted, online marketing (“
Platform License
”). DealerX will
operate the platform for AutoWeb and provide enhancements to and
support for the DealerX platform (these operation, enhancement, and
support obligations are collectively referred to herein as the
“
Platform Support
Obligations
”) for an initial five year period
(“
Initial Platform Support
Period
”), which may be extended in perpetuity as
described below.
The
transaction consideration consists of: (i) $8.0 million in cash
paid to DealerX upon the execution of the License Agreement and
(ii) the right to have issued to DealerX 710,856 shares of
AutoWeb
’
s
common stock, par value $0.001 per share (
“
Common
Stock
”
) (subject to proportional
adjustment for subdivision or combination of the Common Stock as
set forth in the License Agreement), representing approximately
five percent of the Company’s outstanding Common Stock as of
the date the parties entered into the License Agreement
(“
Market Capitalization
Shares
”) if on or before October 5, 2022: (i)
AutoWeb’s market capitalization averages at least $225
million over a consecutive 90 day period or (ii) there is a change
in control of AutoWeb that reflects a market capitalization of at
least $225 million. In the event that the Market Capitalization
Shares are issued to DealerX, DealerX’s Platform Support
Obligations will continue in perpetuity. Alternatively, upon the
occurrence of certain events prior to the issuance of the Market
Capitalization Shares, AutoWeb may elect to make an additional
lump-sum payment of $12.5 million (“
Alternative Cash Payment
”) in
order to extend DealerX’s Platform Support Obligations in
perpetuity. If the Alternative Cash Payment is made,
DealerX’s contingent right to receive the Market
Capitalization Shares will be terminated. The events that give rise
to AutoWeb’s election to pay the Alternative Cash Payment
are: (i) a change in control of AutoWeb that reflects a market
capitalization of less than $225 million; (ii) the expiration of
the Initial Platform Support Period; (iii) a change in control of
DealerX; (iv) an AutoWeb bankruptcy or other insolvency event; and
(v)
any transfer or
assignment of the License Agreement by AutoWeb where the Platform
Support Obligations have not previously become
perpetual.
In the
event that the Platform Support Obligations expire at the end of
the Initial Platform Support Period without becoming perpetual or
the Platform Support Obligations are otherwise terminated in
accordance with the License Agreement, the Platform License will
continue in effect and the Company will continue to be able to use
and operate the Platform as it exists at the time the Platform
Support Obligations expire or terminate, without further benefit of
the Platform Support Obligations.
The
License Agreement contains representations, warranties, and
covenants that AutoWeb believes are customary for a licensing
transaction of this size and nature.
The
foregoing description of the License Agreement is not complete and
is qualified in its entirety by reference to the Master License and
Services Agreement, a copy of which is filed herewith as Exhibit
10.1 to this Current Report on Form 8-K.
Stockholder
Agreement
Concurrently with
the execution and delivery of the License Agreement, AutoWeb,
DealerX, and Jeffrey Tognetti (DealerX’s Manager and
President), a Designated Restricted Stockholder Affiliate, entered
into a Stockholder Agreement (“
Stockholder
Agreement
”).
In the
event that the Market Capitalization Shares are issued, the
Stockholder Agreement contains various restrictions and limitations
on transfers of the Market Capitalization Shares. AutoWeb is
granted a right of first refusal on any shares proposed to be
transferred by DealerX and a right to repurchase the Market
Capitalization Shares from DealerX in the event of a change in
control of DealerX. Upon issuance of the Market Capitalization
Shares, DealerX will grant AutoWeb an irrevocable proxy to vote the
Market Capitalization Shares. DealerX also agreed to certain
standstill provisions restricting the acquisition of additional
shares of Common Stock and prohibiting DealerX from engaging in
other actions relating to control of the Company. Certain
restrictions and other provisions of the Stockholder Agreement
terminate after five years. However, the proxy and standstill
provisions will only terminate at such time as DealerX and its
affiliates own less than 4.9% of the outstanding shares of the
Common Stock. The Stockholder Agreement also grants DealerX certain
demand and “piggy back” registration rights with
respect to the Market Capitalization Shares.
The
foregoing description of the Stockholder Agreement does not purport
to be complete and is qualified in its entirety by reference to the
Stockholder Agreement which is filed herewith as Exhibit 10.2 to
this Current Report on Form 8-K and which is incorporated herein by
reference.
The
assertions embodied in the representations, warranties and
covenants included in the License Agreement and Stockholder
Agreement were made solely for purposes of the licensing
transaction and may be subject to important qualifications and
limitations. Moreover, some of those representations, warranties
and covenants may not be accurate or complete as of any specified
date, may be subject to contractual materiality standards or may
have been included for the purposes of allocating risk between the
parties rather than establishing matters as facts. In addition,
certain of the representations and warranties are subject to
knowledge qualifications, which means that they would not be deemed
untrue, inaccurate or incorrect as a result of matters of which the
party making the representation did not have knowledge. For these
reasons, investors should not rely on these representations,
warranties and covenants as statements of factual
information.
Exemption
Under NOL Plan
In
connection with the possible issuance of the Market Capitalization
Shares pursuant to the License Agreement, the Board of Directors of
AutoWeb (“
Board
”) considered exercising its
discretionary authority under the Company’s Tax Benefit
Preservation Plan (“
NOL
Plan
”) to deem DealerX not to be an
“
Acquiring
Person
” (as defined in the NOL Plan) and to grant an
exemption under the NOL Plan to allow DealerX with respect to
DealerX’s beneficial ownership of the Market Capitalization
Shares.
The NOL Plan was
adopted to protect stockholder value by preserving the
Company’s substantial net operating loss carry-forwards and
other tax attributes for United States federal income tax purposes
(“
Tax
Benefits
”) that can
generally be used to offset future taxable income and therefore
reduce federal income tax obligations. However, the Company’s
ability to use the Tax Benefits will be adversely affected if there
is an “ownership change” of the Company as defined
under Section 382 of the Internal Revenue Code
(“
Section
382
”). In
general, an ownership change will occur if the Company’s
“
5%
shareholders
” (as defined
under Section 382) collectively increase their ownership in
the Company by more than 50% over a rolling three-year
period.
The NOL Plan was adopted to reduce the likelihood
that the Company’s use of its Tax Benefits could be
substantially limited under Section 382. The NOL Plan is
intended to deter any “
Person
” (as defined in the NOL
Plan) from becoming an Acquiring Person and thereby jeopardizing
the Company’s Tax Benefits. In general, an Acquiring Person
is any Person, itself or together with all “
Affiliates
” (as defined in the NOL
Plan) of such Person, that becomes the “
Beneficial Owner
” (as defined in
the NOL Plan) of 4.90% (“
Plan
Limit
”) or more of the Company’s outstanding
“
Common Stock
”
(as defined in the NOL Plan). Under the NOL Plan, the Board may, in
its sole discretion, exempt any person from being deemed an
Acquiring Person for purposes of the NOL Plan if the Board
determines that such person’s ownership of Common Stock will
not be likely to directly or indirectly limit the availability of
the Company’s Tax Benefits or is otherwise in the best
interests of the Company (“
Plan Exemption
”).
The
Board considered and granted DealerX and its Affiliates a Plan
Exemption with respect to the Market Capitalization Shares, subject
to and in reliance upon DealerX entering into and remaining in
compliance with the terms and conditions set forth in the
Stockholder Agreement.
The
foregoing description of the NOL Plan does not purport to be
complete and is qualified in its entirety by reference to the Tax
Benefit Preservation Plan
dated as of
May 26, 2010 between the Company and Computershare Trust Company,
N.A., as rights agent, together with the following exhibits
thereto: Exhibit A – Form of Right Certificate; and Exhibit B
– Summary of Rights to Purchase Shares of Preferred Stock of
the Company, which is incorporated herein by reference to Exhibit
4.1 to the Current Report on Form 8-K filed with the SEC on June 2,
2010 (SEC File No. 000-22239), as amended by Amendment No. 1 to Tax
Benefit Preservation Plan dated as of April 14, 2014, between the
Company and Computershare Trust Company, N.A., as rights agent,
which is incorporated herein by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed with the SEC on April 16, 2014
(SEC File No. 001-34761), and as amended by Amendment No. 2 to Tax
Benefit Preservation Plan dated as of April 13, 2017 between the
Company and Computershare Trust Company, N.A., as rights agent,
which is incorporated herein by reference to Exhibit 4.1 to the
Current Report on Form 8-K filed with the SEC on April 14, 2017
(SEC File No. 001-34761), together with the Certificate of
Adjustment Under Section 11(m) of the Tax Benefit Preservation
Plan, which is incorporated herein by reference to Exhibit 4.3 to
the Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2012 filed with the SEC on November 8, 2012 (SEC File
No. 001-34761).
Item 3.02
Unregistered
Sales of Equity Securities.
The
information set forth in Item 1.01 above is hereby incorporated by
reference into this Item 3.02 insofar as such information relates
to the right to receive the Market Capitalization Shares. The right
to receive the Market Capitalization Shares is issued in reliance
on Section 4(a)(2) of the Securities Act of 1933, as amended, which
exempts from registration transactions by an issuer not involving
any public offering. The right to receive the Market Capitalization
Shares is nontransferable or assignable except to an acquirer of
DealerX in connection with a change in control of DealerX (as set
forth in the License Agreement); provided that the License
Agreement is also concurrently transferred to and fully assumed by
the acquirer. In addition, the Market Capitalization Shares, if
issued, will be subject to the Stockholder Agreement providing for,
among other things, restrictions on transfer.
Item 9.01
Financial Statements and Exhibits.
Master License and
Services Agreement dated as of October 5, 2017 by and between
AutoWeb, Inc. (formerly Autobytel Inc.) and DealerX Partners,
LLC.
Stockholder
Agreement dated as of October 5, 2017 by and between AutoWeb, Inc.
(formerly Autobytel Inc.), DealerX Partners, LLC, and Jeffrey
Tognetti.
‡
Certain
schedules in these Exhibits have been omitted in accordance with
Item 601(b)(2) of Regulation S-K. AutoWeb will furnish
supplementally a copy of any omitted schedule or exhibit to the
Securities and Exchange Commission upon request; provided, however,
that AutoWeb may request confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended, for any
schedule or exhibit so furnished.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date:
October 11, 2017
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AUTOWEB, INC.
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By:
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/s/ Glenn E.
Fuller
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Glenn
E. Fuller, Executive Vice
President,
Chief Legal and
Administrative
Officer and Secretary
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Exhibits A and B in this Exhibit 10.1 have been omitted in
accordance with Item 601(b)(2) of Regulation S-K. AutoWeb,
Inc. will furnish supplementally a copy of any omitted exhibit to
the Securities and Exchange Commission upon request; provided,
however, that AutoWeb, Inc. may request confidential treatment
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended, for the exhibits so furnished.
Exhibit 10.1
MASTER LICENSE AND SERVICES AGREEMENT
This Master License
and Services Agreement (“
Agreement
”) is made and entered into as of
October
5, 2017
(“
Effective
Date
”), by and between
Autobytel Inc., a Delaware corporation (“
Company
”), and DealerX Partners, LLC, a Florida
limited liability company (“
Vendor
”) (Company and Vendor individually a
“
Party
” and collectively the
“
Parties
”).
Background
Company
is an automotive media and marketing services company engaged in
the business of providing (i) automotive consumers with the best
available tools and information they need to make smart,
well-informed vehicle purchasing and ownership decisions through
the Autobytel Sites; and (ii) automotive dealers and manufacturers
with innovative products and services to help the dealers and
manufacturers sell more new and used cars. Vendor has developed
proprietary technology and systems for targeted, online marketing
through the creation of consumer information databases and
“audiences” and is engaged in the business of providing
targeted, online marketing services using such databases and
audiences to the automotive industry.
Company
desires to obtain a perpetual license to access and use
Vendor’s proprietary technology and systems, to engage Vendor
to provide development, maintenance, and operational support
services for the technology and systems, and to obtain the right to
acquire a perpetual, irrevocable license to Vendor’s
proprietary technology and systems, and Vendor desires to provide
the foregoing to Company on the terms and conditions set forth in
this Agreement.
In
consideration of the mutual promises and covenants contained herein
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be
legally bound, the parties agree as follows:
ARTICLE I
DEFINITIONS
For
purposes of this Agreement, the following terms shall have the
meanings set forth below:
“
Action
” means any complaint, claim, demand,
prosecution, indictment, action, litigation, lawsuit, arbitration,
proceeding, hearing, inquiry, audit, or investigation (whether
civil, criminal, judicial, or administrative, and whether formal or
informal, and whether public or private) made or brought by any
Person or brought or heard by or before any Governmental
Authority.
“
Affiliate(s)
” of a Party shall mean any and all entities
(whether incorporated or not, and whether existing as of the
Effective Date or that exist in the future), that are owned or
controlled by the Party, that own or control the Party, or that are
under common control with a Party. For purposes of the preceding
sentence, “own or control” shall mean (i) the record or
beneficial ownership or control (directly or indirectly) of more
than fifty percent (50%) of the outstanding shares or securities
representing the right to vote for the election of directors or
other managing authority of a Party or (ii) the ability, whether
directly or indirectly, to direct the affairs of another by means
of ownership, agreement, contract, or
otherwise.
“
Automotive
Field
” means sale of
automobiles and parts or accessories therefore; providing
information about automobiles and parts and accessories therefore;
connecting consumers to sellers of automobiles and parts and
accessories therefore; or providing web-based advertising and
marketing programs to sellers of automobiles and parts and
accessories therefore.
“
Business Day
” means any day other than a Saturday,
Sunday, or a day on which banks located in the State of Florida,
USA are authorized or required by Law to close.
“
Change in
Control
” means the (i)
consummation of a reorganization, merger, or consolidation of an
entity (“
Acquired
Entity
”) with or into
another entity as a result of which transaction the stockholders,
members, partners, or other equity owners of the Acquired Entity
immediately prior to such transaction own, immediately after such
transaction, a number of shares of voting stock, membership
interests, partnership interests, or other voting securities of the
Acquired Entity that represent less than fifty percent (50%) of
either (1) the then outstanding shares of voting stock, membership
interests, partnership interests, or other voting securities of the
Acquired Entity; or (2) the combined voting power of all of the
then outstanding shares of stock, membership interests, partnership
interests, or other securities of the Acquired Entity entitled to
vote generally in the election of directors, managing members, or
managing partners, as applicable; (ii) sale or other disposition of
all or substantially all of the assets of the Acquired Entity; or
(iii) the acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under such
act) of more than 50% of either (1) the then outstanding shares of
voting stock, membership interests, partnership interests, or other
voting securities of the Acquired Entity; or (2) the combined
voting power of all of the then outstanding shares of stock,
membership interests, partnership interests, or other securities
entitled to vote generally in the election of directors, managing
members, or managing partners, as applicable.
“
Company Change in Control
Event
” means a Change in
Control of Company where the Company or its acquirer or successor
elects to pay Vendor the Perpetual Platform Support Cash
Consideration.
“
Company Common
Stock
” means the
Company’s Common Stock, $0.001 par value per
share.
“
Company Platform
Audience
” means the
Platform Audience derived from the use and operation of the
Platform for Company’s benefit and marketing
purposes.
“
Company Insolvency
Event
” means the
occurrence of an event set forth in Section 4.3(b) that results in
a termination of Vendor’s right to receive the Market
Capitalization Event Shares prior to the Market Capitalization
Event Shares being earned and the Company elects to acquire
Perpetual Platform Support by payment of the Perpetual Platform
Support Cash Consideration.
“
Confidential
Information
” means (i)
the terms and conditions of this Agreement; (ii) a Party's trade
secrets, business plans, strategies, methods, and/or practices;
(iii) software, technology, computer systems architecture, and
network configurations; (iv) any other information relating to
either Party that is not generally known to the public, including
information about either Party's personnel, products, customers,
marketing and pricing strategies, services, or future business
plans, know-how, formulas, processes, ideas, and inventions
(whether or not patentable) or which should be reasonably
understood by the receiving party as the confidential or
proprietary information of the disclosing party; and
(
v
) any and all analyses, compilations, studies,
notes, or other materials prepared with or which contain or are
based on Confidential Information received from the disclosing
party. Confidential Information does not include information that:
(i) is known to the receiving party prior to the time of
receipt by the receiving party as evidenced by written records of
the receiving party; (ii) is or becomes publicly known and
made generally available through no improper action or inaction by
the receiving party or any agent or Affiliate of the receiving
party; (iii) is independently developed by the receiving party
without use of or reference to the Confidential Information of the
disclosing party; or (iv) has been rightfully received by the
receiving party from a third party who is not known by the
receiving party at the time of receipt of the Confidential
Information to be under an obligation of confidentiality to the
disclosing party restricting the disclosure of the Confidential
Information to the receiving party.
“
Consent
” means any approval, consent, permission,
ratification, waiver, or other authorization of any Person
(including any Governmental Authority).
“
Contract
” means any agreement, contract, obligation,
promise, note, bond, mortgage, undertaking, indenture, purchase
order, sales order, instrument, lease, franchise, license, permit,
understanding, arrangement, commitment, or undertaking, whether
written or oral, or express or implied, and in each case, including
all amendments thereto.
“
Critical Platform
Support
” means the
Platform Support listed in Section I.A of the Platform Support and
Service Level Schedule.
“
Deliverables
” means tangible material, or its intangible
equivalent in unwritten or oral form, provided by Vendor in
performance of its obligations under this Agreement; Deliverables
shall include all Software, scripts, configuration files, database
schemas, and all design documentation.
“
Dispute Resolution
Venue
” means (i) Miami,
Florida in the case of any action or proceeding initiated or filed
by Company; and (ii) Tampa, Florida in the case of any action or
proceeding initiated or filed by Vendor.
“Electronic
Transmission
” means a
communication (i) delivered by facsimile, telecommunication, or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other party for sending notices
pursuant to the Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
“
Existing Vendor
Members
” means all of the
holders of equity interests in Vendor as of the Effective
Date.
“
Existing Vendor Member
Designee
” means the
designee, as of the Effective Date, of the Existing Vendor Member
that has certain rights to use the Platform.
“
Frozen
Platform
” means the
Platform and Platform Documentation as they exist as of the end of
the Platform Support Period.
“
Frozen Platform Triggering
Event
” means the
occurrence of any of the following:
(i)
A termination
or expiration of all Platform Support for any
reason.
(ii
)
A Vendor Default Event.
“
Governing
Documents
” means (i) with
respect to a corporate Person, such Person’s (1) certificate
or articles of incorporation or other formation document, as
amended to date, (2) bylaws, and (3) any resolution adopted by the
board of directors or shareholders of such Person; and (ii) with
respect to a limited liability company Person, such Person’s
(1) certificate of formation or organization or other formation
document, (2) operating or similar agreement or document, and (3)
any resolution adopted by the board of directors, manager, managing
member, or members of such Person.
“
Governmental Authority
” means any:
(i) nation, state, county, city, town, or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign, or other
government; (iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (iv)
multi-national organization or body; (v) stock exchange or
quotation service; (vi) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature; (vii)
arbitrator or mediator; or (viii) any official or authorized
representative of any of the foregoing.
“
Governmental
Authorization
” means any
Consent, permit, license, Order, or other authorization issued,
granted, given, or otherwise made available by or under the
authority, or any requirement, of any Governmental Authority or
pursuant to any Laws.
“
Initial Platform Support
Period
” means the
five-year period commencing on the Effective Date and ending at
12:00 midnight (Eastern Time) on the day before the fifth
anniversary of the Effective Date.
“
Intellectual Property
Rights
” means (i) all
inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof; (ii) all copyrights and
works of authorship (whether copyrightable or not), and all
applications, registrations, and renewals, and moral rights in
connection therewith in any jurisdiction; (iii) all know-how, trade
secrets, and Confidential Information; (iv) all Software; (v) all
websites, website content, and domain names (including
registrations thereof); (vi) all other intellectual property and/or
proprietary rights; and (vii) all tangible embodiments of any of
the foregoing (in whatever form or medium), including all copies
thereof.
“
Laws
” means any federal, state, local,
municipal, foreign, international, multinational, or other order,
constitution, law, ordinance, principle of common law, regulation,
statute, rule, treaty, permit, license, certificate, judgment,
Order, decree, award, or other decision or requirement of any
arbitrator or Governmental Authority.
“
Licensed Technology,
Documentation and Access, Use and Development
Rights
” means the
Platform, Platform Technology, Platform Functionality, Platform
Documentation, and Platform Documentation Access, Use and
Development Rights, including without
limitation:
(i
)
Vendor’s network of data
collection placements exclusive of Vendor’s current and
future clients.
(ii
)
Use of Vendor Platform
Audiences.
(iii
)
The Digital Marketing Platform for
retargeting.
(iv
)
Twilio-based phone call
platform.
(v
)
Wordpress Powered CMS Web Platform
for the Automotive Field.
(vi
)
Email, video, and direct mail
capabilities.
“
Lien
” means any lien, security interest, pledge,
charge, claim, condition, equitable interest, option, right of
first refusal, preemptive right, conditional or installment sale
agreement, or other adverse interest.
“
Market Capitalization
Event
” means the earliest
to occur of the following prior to the Market Capitalization Event
Expiration Date:
(i
)
The Market Capitalization of Company averaging at
least $225.0 Million over a consecutive ninety (90) day period
(“
Market Capitalization
Measurement Period
”);
and
(ii
)
A Change in Control of Company resulting in a
Market Capitalization of Company of at least $225.0
Million.
The
Market Capitalization of Company shall be determined by multiplying
(i) the weighted average number of shares of Company Common Stock
issued and outstanding during the Market Capitalization Measurement
Period or the number of shares of Company Common Stock outstanding
immediately prior to the closing of the Change in Control of
Company, as applicable, by (ii) the weighted average closing price
of the Company Common Stock on The Nasdaq Capital Market over the
Market Capitalization Measurement Period or the per share price
received by stockholders of Company in the Change in Control
transaction, as applicable.
“
Market Capitalization Event
Expiration Date
” means
12:00 midnight (Eastern Time) on the day before the fifth
anniversary of the Effective Date.
“
Market Capitalization Event
Expiration Event
” means
the expiration of Vendor’s right to receive the Market
Capitalization Event Shares prior to the Market Capitalization
Event Shares Issuance and Company elects to pay Vendor or its
successor or assigns the Perpetual Platform Support Cash
Consideration.
“
Market Capitalization Event
Shares
” means 710,856
shares of Company Common Stock provided that if at any time prior
to the issuance of such shares Company shall subdivide or combine
the Company Common Stock, the number of Market Capitalization Event
Shares shall be proportionately adjusted to reflect such
subdivision or combination.
“
Market Capitalization Event
Shares Deemed Initial Issuance Price
” means the weighted average closing price
of the Company Common Stock on The Nasdaq Capital Market during the
consecutive ninety (90) day period preceding the date of the Market
Capitalization Event Shares Issuance.
“
Market Capitalization Event
Shares Issuance
” means
the issuance of Market Capitalization Event Shares upon the
occurrence of a Market Capitalization Event.
“
Off-the-Shelf
Software
” means
commercially available desktop computer Software licensed
non-exclusively under “shrink wrap” or other comparable
standard form licenses.
“
Open Source Software
” means each
of: (a) any Software that contains, or is derived in any
manner (in whole or in part) from, any Software that is distributed
as free Software, open source Software (
e.g.,
GNU General Public License,
Apache Software License, or MIT License), or pursuant to similar
licensing and distribution models, and (b) any Software that
requires as a condition of use, modification, hosting, and/or
distribution of such Software, or of other Software used or
developed with, incorporated into, derived from, or distributed
with such Software, that such Software or other Software: (i) be
disclosed or distributed in source code form, (ii) be licensed for
the purpose of making derivative works, (iii) be redistributed,
hosted, or otherwise made available at no or minimal charge, or
(iv) be licensed, sold, or otherwise made available on terms that:
(x)
limit in any manner
the ability to charge license fees or otherwise seek compensation
in connection with marketing, licensing, or distribution of such
Software or other Software, (y) grant the right to decompile,
disassemble, reverse engineer, or otherwise derive the source code
or underlying structure of such Software or other Software, or (z)
limit in any manner the ability to enforce Intellectual Property
Rights in such Software.
“
Order
” means any judgment, decision, order,
injunction, decree, award, or writ of any Governmental
Authority.
“
Perpetual Platform
Support
” means Platform
Support provided by Vendor in perpetuity.
“
Perpetual Platform Support
Acquisition Event
” means
the earliest occurrence of the following
events:
(i
)
A Company Change in Control
Event.
(ii
)
The Market Capitalization Event Shares
Issuance.
(iii
)
A Market Capitalization Event Expiration
Event.
(iv
)
A Vendor Change in Control
Event.
(v
)
A Company Insolvency Event.
(vi
)
A Perpetual Platform Support Assignment
Event.
“
Perpetual Platform Support Cash
Consideration
” means the
amount equal to Twelve Million Five Hundred Thousand Dollars
($12,500,000.00).
“
Perpetual Platform Support
Assignment Event
” means
any transfer or assignment of this Agreement by Company where (i)
the Company has not previously obtained Perpetual Platform Support;
and (ii) the Company elects to acquire Perpetual Platform Support
by payment of the Perpetual Platform Support Cash Consideration in
connection with such transfer or assignment.
“
Perpetual Platform Support
Consideration
” means the
consideration paid to Vendor by Company to obtain Perpetual
Platform Support that consists of either (i) the Perpetual Platform
Support Cash Consideration; or (ii) the Market Capitalization
Shares Event Shares Issuance.
“
Person
” means any natural person, corporation
(including any non-profit corporation), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union, or other entity, or
a Governmental Authority.
“
Personal
Information
” means any
financial or other nonpublic personal information about or relating
to any individual that is received, generated, collected, or
processed by Vendor, regardless of the medium involved (e.g.,
paper, electronic, video, audio).
“
Platform
” means Vendor’s ROIQ Stack platform
software stack which includes the components listed below; all
current and future enhancements, modifications, development, and
capabilities of the ROIQ Stack, and any other software required to
generate or enhance Platform Functionality, even if not included in
the ROIQ Stack, that are developed or that come into effect during
the Platform Support Period; and all Intellectual Property Rights
included in or comprising all of the foregoing or that are needed
for the operation and use of the Platform. The Platform components
are:
(i
)
Wordpress Web platform
(ii
)
RoiQ, which is comprised of the
below-listed components:
a.
Data
& Analytics Stack
“
Platform
Audience
” means a group
of consumers or consumer events, which are divided into groups or
subgroups based on internet usage, digital native application
usage, or any other digital marker or signal upon which criterion
such as site usage, product usage, media usage, communication
preferences and usage, demographics, etc. may be used to segment
consumers or consumer events for the purpose of directing marketing
actions.
“
Platform
Documentation
” means
source code, written or stored otherwise, application program
interfaces, databases (except for Platform Audiences and Third
Party Script Captured Audiences), technical documentation,
operational manuals, and data generated and stored related to the
operation of the Platform for Company.
“
Platform Documentation Access,
Use and Development Rights
” means the rights granted to Company under
Section 2.1 to use, have access to, to have provided to Company the
Platform Documentation, Company Platform Audience, and Vendor
Platform Audience, including, without limitation license and rights
to use, add to, build upon, modify, improve, enhance, and create
derivative works from the Platform
Documentation.
“
Platform
Functionality
” means the
functionality and Platform Results and Output from operation of the
Platform as set forth in Section 2.3.
“
Platform
License
” means the
license and rights granted to Company pursuant to Section
2.1.
“
Platform Results and
Output
” means the results
and output from the operation of the Platform, including online
traffic, clicks, and leads.
“
Platform Source
Code
” means the source
code for the Platform as in existence as of the Effective Date and
as modified, upgraded, or enhanced after the Effective
Date.
“
Platform
Support
” means the
support for the Platform provided by Vendor in accordance with
Section 2.2, including the Critical Platform Support and the Vendor
Development and Operations Team Platform
Support.
“
Platform Support Default
Event
” means any uncured
default by Vendor or any successor or assignee of Vendor in
providing the Platform Support during the Platform Support Period
(for purposes of this definition, an uncured default in providing
Platform Support becomes effective upon Vendor’s failure to
cure such default within thirty (30) days following Company’s
written notice detailing such default).
“
Platform Support and Service
Level Schedule
” means
Exhibit A attached hereto and incorporated herein by
reference.
“
Platform Support
Period
” means, as
applicable, (i) the Initial Platform Support Period, unless Company
has acquired Perpetual Platform Support prior to such date and
time; (ii) the period commencing on the Effective Date and
continuing in perpetuity if Company has acquired Perpetual Platform
Support prior to expiration of the Initial Platform Support Period;
(iii) the period commencing with the Effective Date and ending upon
the occurrence of a Change in Control of Company, unless the
Company has previously acquired Perpetual Platform Support or a
Company Change in Control Event occurs in connection with such
Change in Control of the Company, in either case, the Platform
Support Period is perpetual; and (iv) the period commencing on the
Effective Date and ending at any time Company elects to terminate
all Platform Support.
“
Platform
Technology
” means all
Platform technology used to generate Platform Results and Output
available to or used by Vendor or any of its customers, any holder
of member or other equity interests in Vendor or to the Existing
Vendor Member Designee.
“
Reimbursable Platform Operating
Expenses
” means those
expenses for the operation of the Platform on behalf of Company as
set forth on the Reimbursable Platform Operating Expenses
Schedule.
“
Reimbursable Platform Operating
Expenses Schedule
” means
Exhibit B attached hereto and incorporated herein by
reference.
“
Restricted
Companies
” means the
following and their Affiliates: Edmunds, Reply.com (including
BuyerLink.com and One Planet), Detroit Trading, TrueCar, Cox
Automotive, Cars.com, Cargurus, and T
he Enthusiast Network.
“
Software
” means all computer software and subsequent
versions thereof, including source, object, executable, or binary
codes, objects, comments, screens, user interfaces, report formats,
templates, menus, buttons and icons, and all files, data,
materials, manuals, design notes, and other items and documentation
related thereto or associated therewith.
“
Stockholder
Agreement
” means the
Stockholder Agreement relating to the Market Capitalization Event
Shares entered into between Company and Vendor concurrently with
the execution and delivery of this Agreement by the
Parties.
“
Tognetti
” means Jeffrey Tognetti, the Managing
Member of Vendor.
“
Vendor Change in Control
Event
” means a Change in
Control of Vendor where Company is not the acquirer and Company
elects to pay Vendor or its acquirer or successor the Perpetual
Platform Support Cash Consideration.
“
Vendor Default
Event
” means the
occurrence of any uncured, material default by Vendor under this
Agreement, which includes, without limitation, any Platform Support
Default Event.
“
Vendor Development and
Operations Team
” means
Tognetti and the other members of the Vendor development and
operations team who are critical to the continued development,
enhancement, and operation of the Platform as anticipated by this
Agreement.
“
Vendor Development and
Operations Team Platform Support
” means the Platform Support listed in
Section I.B of the Platform Support and Service Level
Schedule
“
Vendor Platform
Audience
” means the
Platform Audience, Bid Logs, and Third Party Script Captured
Audiences derived from the use and operation of the Platform for
the benefit and marketing purposes of Vendor’s customers
(excluding current and future Vendor clients and the Existing
Vendor Member Designee or any audiences derived or captured outside
of the Automotive Field). Vendor shall make available to Company
any additional audience-related products, services, or features
Vendor obtains from any new or existing third-party vendor, unless
Vendor is contractually prohibited from doing so, subject to
Company’s payment of its proportional share of the cost of
any such product, service, or feature.
ARTICLE II
PLATFORM LICENSE AND SERVICES
2.1
Platform
License
.
(a
)
Vendor hereby grants to
Company an exclusive, perpetual, world-wide, irrevocable,
non-terminable, fully paid up, royalty free license to and full
right to use, have access to, and to have provided to Company the
Platform, Platform Technology, Platform Functionality, Platform
Documentation, and Vendor Platform Audience to generate Platform
Results and Output solely for use for and within the Automotive
Field.
(b
)
Without limiting the
generality of the foregoing, the license and rights granted in
Section 2.1(a) include, without limitation, the license and right
to use, add to, build upon, modify, improve, enhance, and create
derivative works from Platform Documentation; provided that unless
and until Platform Support ceases and Company acquires the right to
receive the Frozen Platform, Company may not change or modify the
underlying base source code for the Platform in Vendor’s
GitHub account or other source code repository. However, during the
Platform Support Period, Vendor shall provide Company with a
development or “sandbox” staging area and access to the
source code for Company to gain knowledge about the source code and
its use and operation.
(c
)
Company shall solely own
all right, title, and interest in and to all additions, builds,
modifications, improvements, enhancements, and derivative works
made by Company to the Platform and Platform Documentation in
perpetuity.
(d
)
Company shall solely own
and have sole right to access and use the Company Platform Audience
in perpetuity.
(e
)
The Platform License excludes custom development
work to the Platform commissioned and paid for by Vendor’s
clients or the Existing Vendor Member Designee.
(f
)
The Platform License is transferable and
assignable by Company in connection with any assignment of this
Agreement by Company in accordance with Section 8.3. The Platform
License does not include the right to sell or sub-license rights to
individual components of the Platform or sell or sub-license rights
to the Platform in its entirety or in its substantial entirety
except (i) in connection with an assignment or transfer of this
Agreement in accordance with Section 8.3; or (ii) after Company
obtains the Frozen Platform. For the avoidance of doubt, the
Platform License does not include the right to use, sell, or
sub-license any Intellectual Property Rights comprising the
Platform other than as needed to operate and use the
Platform.
2.2
Platform
Support
.
(a)
During the Platform Support Period,
Vendor and its successors and assigns shall (i) operate, maintain,
support, and enhance the Platform in accordance with the technical
performance and availability requirements set forth in the Platform
Support and Service Level Schedule; and (ii) maintain current,
true, complete, correct, and accurate sets and copies of all
Platform Documentation that are fully accessible, viewable, and
usable by Company by means of providing a designated group of
Company technology personnel with read access to Vendor’s
GitHub account, or other such source code repository should Vendor
choose to change the repository type or
service.
(b)
Company at all times is solely
responsible for its own creative content, including display ads,
messaging, user interfaces, and Company-specific webpages displayed
on any Vendor website.
(c)
Upon the earliest to occur of any
Perpetual Platform Support Acquisition Event, the Platform Support
Period shall be perpetual and shall not terminate at the end of the
Initial Platform Support Period.
(d)
At any time, Company may elect to
terminate all or any portion of the Platform Support upon thirty
(30) days’ notice to Vendor. Upon termination of any Platform
Support, both the Reimbursable Platform Operating Expenses
associated with such terminated Platform Support and the services,
access, and Platform Results and Output associated with such
terminated Platform Support shall terminate.
(e)
Upon the occurrence of any Frozen
Platform Triggering Event:
(i)
Company
shall receive the Frozen Platform to use for and within the
Automotive Field in perpetuity to generate Platform Results and
Output, and Vendor shall promptly (but in no event later than
thirty (30) days after the occurrence of the Frozen Platform
Triggering Event) (i) deliver or make available to Company full,
complete, and accurate copies of all Platform Documentation and
Company Platform Audience in existence at that time.
(ii)
Company’s access right to further updates to
the Platform shall terminate.
(iii)
Company shall not have access to Third Party
Script Captured Audiences, and expenses associated with such access
in any Statement of Work shall be omitted at that
time.
(iv)
Company shall have continued access to Bid Logs in
perpetuity.
(v)
Company shall not have access to updated ANON
eMail or Direct Mail databases and expenses associated with such
access in any Statement of Work shall be omitted at that time, and
the scope of Company access will be limited to email and direct
mail sent by Company during the Term.
(vi)
Vendor shall have no obligation to support the
Frozen Platform.
(vii)
Company shall be responsible for establishing
accounts and services intended to replace those services previously
supplied by Vendor as described in Exhibit A under the Critical
Platform Support. Vendor will assist Company in establishing these
accounts and services and starting the operation of the Platform.
Company and Vendor may mutually agree to share some accounts and
services. These accounts and services will be determined and agreed
to mutually by Vendor and Company at the time of the Frozen
Platform Triggering Event.
(viii)
In the event the Frozen Platform Triggering Event
constitutes a Vendor Default Event, in addition to the foregoing
under this Section 2.2(e):
(1)
Company retains
and reserves any other rights or remedies it may
have by reason of such Vendor Default Event;
and
(2)
If such
Vendor
Default Event occurs after a Change in Control of Vendor, Tognetti
and the other members of the Vendor Development and Operations Team
shall be personally obligated to provide, and Vendor or its
successor or assigns shall be obligated to take all necessary
actions and enter into all necessary agreements and other documents
to ensure that Tognetti and the other members of the Vendor
Development and Operations Team shall each be personally available
and obligated to provide, Vendor Development and Operations Team
Platform Support for a period of not less than six (6) months
following the effective date of the uncured default in providing
Platform Support.
(f)
The Platform Support is not
transferable or assignable by Company in connection with any
assignment of this Agreement by Company unless Company has acquired
Perpetual Platform Support prior to or in connection with such
transfer or assignment. Perpetual Platform Support and the Frozen
Platform and the Company’s rights therein are transferable
and assignable by Company in connection with any transfer or
assignment of this Agreement by Company.
2.3
Platform
Functionality
. During the
Platform Support Period, Vendor shall provide Company with Platform
Functionality, which includes, without limitation, the
following:
(i)
ANON
Email Retargeting with unique custom messages based on audience
behavior during website visits and usage in mobile
apps.
(iii)
Programmatic Video
Targeted to Competitors In-Market Shoppers.
(iv)
Anonymous, Variably
Printed Direct Mail Retargeting.
(v)
Paid
Search, Search Marketing, Transactional Focused PPC.
(vi)
Conversionary®
- SEO ready, fully responsive WordPress powered website
platform.
(vii)
RoiQ® -
Analytics & Attribution with dashboards reporting real actions
in real time with source tracking and custom reports for website
and mobile app activities, impressions/bids-cast, conversations,
trending, and history.
2.4
Company-Requested
Development Work
.
(a
)
Vendor will perform the
development services (“
Development Services
”) described
in one or more statements of work referencing this Agreement and
executed by the Parties (each, a “
Statement of Work
”). The
Development Services provided for in a Statement of Work are
referred to as a “
Project
.” Among other things,
Statements of Work may identify: (i) the tasks to be performed
under such Statement of Work; (ii) the Deliverables to be delivered
to Company by Vendor under the Statement of Work; (iii) the
schedule for the Project (“
Project Schedule
”); (iv) the
operational elements, features, and functional design
specifications of the Deliverables (“
Specifications
”); (v) delivery of
and access to source and other codes for the Deliverables; (vi) any
third party deliverables and the party responsible for providing
such third party deliverables; (vii) the schedule of estimated fees
and expenses for the applicable Project (the fees and expenses will
together be referred to as the “
Project Fees
”) and the payment
terms; (viii) cancellation fees (if any); and (ix) ongoing
recurring work and emergency work communicated through authorized
channels included in the scope of a Project. Upon execution of a
Statement of Work by both Parties, the Statement of Work will be
subject to and deemed part of this Agreement and incorporated
herein by reference. In the event of any apparent conflict,
ambiguity, or inconsistency between or among the terms of this
Agreement and a Statement of Work, the conflicting, ambiguous, or
inconsistent terms shall be construed in a reasonable manner that
gives effect to all such terms. If such construction is not
possible, the terms of this Agreement shall prevail except to the
extent the Statement of Work expressly references the provisions of
this Agreement being modified, and with respect to that particular
Statement of Work only. Development Services will be performed in a
good and workmanlike manner and the Deliverables shall materially
conform to their relevant specifications.
(b)
Within thirty (30) days of
Company’s request, Vendor shall convey and deliver to Company
current, complete, correct, and accurate sets of all Platform
Documentation that is developed by Vendor at the request of
Company, the development of which was funded by
Company.
(c
)
The Parties may agree in
writing to any changes to a Statement of Work, including changes,
additions, or deletions to the Development Services or Deliverables
to be performed under the Statement of Work (each, a
“
Change Order
”).
Either Party may from time to time during the performance under a
particular Statement of Work provide the other Party with a
proposed Change Order for such Statement of Work. Each Party may
accept or reject in its sole discretion any proposed Change Order
submitted by the other Party. No Change Order will have any
contractually binding effect until such Change Order has been
executed by an authorized representative of each
Party.
(d
)
Unless a Statement of
Work contains specific acceptance provisions to the contrary, all
Development Services and Deliverables submitted to Company for
approval shall be deemed accepted when Company provides Vendor
written notice stating that the Development Services and
Deliverables are accepted by the Company; provided, however, if the
Company does not notify Vendor of any issues in the applicable
services/deliverables within sixty (60) days after delivery by
Vendor or uses the applicable services/deliverables commercially
for sixty (60) days, the delivery will be deemed accepted. Unless
otherwise agreed in a Statement of Work, Vendor agrees to promptly
re-perform any Development Services or replace any Deliverables
that are reasonably rejected and not accepted by Company. In the
event Vendor has not been able to remedy any rejected services or
deliverables prior to the invoicing by Vendor immediately
subsequent to the rejection of the services or deliverables,
payments due to Vendor or that have been made to Vendor with
respect to such rejected services or deliverables will be credited
back to Company on such subsequent invoice. With respect to any
credited amount, Vendor may re-invoice such credited amount once
the rejected Development Services or Deliverables have been
remedied.
(e
)
Deliverables
shall be considered “works made for hire” under
applicable law and in which from the time of creation of such
Deliverables, all right, title, and interest thereto, including
copyright and patent rights, shall be owned exclusively by Company.
To the extent any Deliverables are not deemed a “work made
for hire” under applicable law, Vendor hereby assigns and
transfers to Company all right, title, and interest, including
copyright and patent rights, in Deliverables. In the event that
Company elects to file an application for a patent in any
jurisdiction respecting any Deliverables, Vendor shall reasonably
cooperate with Company in preparing and submitting the patent
application
(f)
Except as set forth in a Statement of
Work and except for modifications to the source code for the
Platform requested by Company prior to Company’s acquisition
of Platform Co-Ownership, Company is not obligated to use Vendor
for any development or other Development
Services
.
(g
)
The Parties acknowledge and agree that any
modifications or enhancements to or derivative works made from
Platform Documentation developed by Company, and all Intellectual
Property Rights therein, shall be solely owned and usable by
Company, and Company may further modify, enhance, or make such work
the subject of additional derivative works, and all of the
foregoing shall be solely owned and usable by
Company.
2.5
Subcontractors
and Independent Contractors
.
Vendor will be solely responsible for the
selection and management of its personnel in performance of its
obligations under this Agreement. In addition, Vendor reserves the
right, upon notice to Company, to subcontract Vendor’s
development, support, and operating obligations under this
Agreement to third party subcontractors or independent contractors.
Vendor shall be solely responsible for the performance of the
subcontractors and independent contractors that Vendor uses to
perform development, support, and operating obligations under this
Agreement. Vendor shall ensure that any Deliverables created by
such subcontractors shall be assigned or licensed to Vendor with
full rights to license or assign such Deliverables and all rights,
title, and interests therein, as applicable, to Company in
accordance with this Agreement.
2.6
Certain
Restrictions
.
(a)
Vendor shall not sell, license, assign, or otherwise transfer the
Platform, Platform Technology or Platform Documentation to any
third party (including the Restricted Companies) during the
Platform Support Period, provided that:
(i
)
The Existing
Vendor Members or the Existing Vendor Member Designee shall be
entitled to continue to use the Platform, Platform Technology and
Platform Documentation.
(ii
)
Vendor may
sell or otherwise transfer the Platform, Platform Technology, and
Platform Documentation in their entirety to an acquirer of Vendor
in a transaction constituting a Change in Control of
Vendor.
(iii
)
Vendor may
license or grant reseller or “white-label” rights to
individual components of the Platform to third parties (excluding
Restricted Companies) as long as no third party is licensed or
granted reseller or “white label” rights with respect
to the Platform in its entirety or in its substantial
entirety.
(b
)
In addition to the restrictions set forth under Section 2.6(a) with
respect to the Platform, Platform Technology, and Platform
Documentation, during the Platform Support Period, Vendor shall not
sell, license, transfer, or otherwise provide any products,
services, Platform results/output, Platform Functionality, or
Platform Results or Output to the Restricted Companies with respect
to the Automotive Field.
(c
)
T
he Parties acknowledge that Company
and Vendor will be engaged in the business of licensing or selling
of Platform Results and Output to their respective customer bases
and customer prospects and that their customers and prospects may
overlap. Nothing in this Agreement shall preclude either Party from
competing with the other Party with respect to the sale or license
of Platform Results and Output.
(d
)
During the Platform Support Period,
Company will not develop an integrated, whole platform that
competes with the Platform. The parties acknowledge that Company
may already have individual components or functionality that are
the same or similar to the Platform that Company will continue to
use, and that Company may develop these or other individual
components or functionality in the future; provided, however, that
during the Platform Support Period, Company will not independently
develop the following Platform components or functionality:
(i) Data Management Platform (“
DMP
”) or demand side platform
(
DSP
”) based on
Vendor’s framework, source code or architecture; or (ii) a
call stack on Twilio. Company is not restricted in using third
party DMP’s or DSP’s and building upon
them.
(e
)
Vendor will not enter into any
contract, take an action, omit to take any actions, nor make any
commitments that will or may impair Company’s rights under
this Agreement or that would result in any Lien on the
Company’s license and other rights under this
Agreement.
(f
)
Vendor shall not use or provide the
benefits of the Company Platform Audience to any third parties
exclusive of overlapping Platform Audiences derived independently
by Vendor.
(g
)
Company shall not have any right to
access or use any Platform Audience derived by Vendor for any
customer, Existing Vendor Member or Existing Vendor Member
Designee.
(h
)
Without the prior written consent of
the other Party, during the Platform Support Period neither Company
nor Vendor will, and each will use commercially reasonable efforts
to cause each of their respective Affiliates to not, directly or
indirectly,
cause, induce,
influence, encourage, or solicit any material business relationship
or any other customer, vendor, or supplier of the other Party to
terminate or modify in any respect any such relationship with the
other Party, subject to the rights of the Parties under Section
2.6(c) above.
(i
)
Without the prior written consent of
the other Party, during the Platform Support Period and for a
period of one (1) year thereafter, neither Company nor Vendor will,
and each will use commercially reasonable efforts to cause each of
their respective Affiliates to not, directly or indirectly, solicit
for employment or hire or engage any employee or independent
contractor of the other Party while such employee or independent
contractor is employed or engaged by the other Party or any of its
Affiliates or any employee or independent contractor who was
employed or engaged by the other Party or any of its Affiliates
within six (6) months prior to such time, or cause, induce,
influence, or encourage to terminate, reduce or modify any
employee’s or independent contractor’s relationship
with the other Party or any of its Affiliates while so employed or
engaged. Notwithstanding the foregoing, neither Company nor Vendor
nor any of their respective Affiliates shall be deemed to have
violated the covenants in this Section 2.6(i) by (i) publishing or
running advertisements and general solicitations in or through any
print, broadcast, internet, direct mail, or other medium to
generally solicit qualified job applicants to apply for employment
opportunities within the soliciting Party or any of its Affiliates
and not specifically directed to any employee or independent
contractor of the other Party or any of its Affiliates, or (ii)
hiring or engaging any employee or independent contractor of the
other Party or any of its Affiliates who is terminated by the other
Party or its Affiliates, provided that no breach of the foregoing
provisions of this Section 2.6(i) has occurred with respect to such
employee or independent contractor.
(j
)
The Parties acknowledge that the
restrictions contained in this Section 2.6 are reasonable and
necessary to protect the legitimate interests of the respective
Parties and constitute a material inducement to each Party entering
into this Agreement and consummate the transactions contemplated by
this Agreement. In the event that any covenant contained in this
Section 2.6 should ever be adjudicated to exceed the time,
geographic, product or service, or other limitations permitted by
applicable Law in any jurisdiction, then any court is expressly
empowered to reform such covenant, and such covenant shall be
deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by
applicable Laws. The covenants contained in this Section 2.6 and
each provision hereof are severable and distinct covenants and
provisions. The invalidity or unenforceability of any such covenant
or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such covenant or provision in
any other jurisdiction.
ARTICLE
III
PLATFORM LICENSE ACQUISITION CONSIDERATION, REIMBURSABLE PLATFORM
OPERATING EXPENSES AND DEVELOPMENT SERVICES FEES AND PAYMENT
TERMS
3.1
Platform
License Acquisition Consideration
.
(a
)
In full payment for the Platform
License, Platform Support, Platform Functionality, Platform
Documentation Access, Use and Development Rights, right to acquire
Platform Co-Ownership, and Company’s other rights under this
Agreement, concurrently with the execution and delivery of this
Agreement by the Parties:
(i
)
Company
has delivered to Vendor the sum of Eight Million Dollars
($8,000,000.00); and
(ii
)
Company
hereby grants to Vendor the right to earn and to be issued the
Market Capitalization Event Shares upon the occurrence of a Market
Capitalization Event.
(b
)
The right to receive the Market
Capitalization Event Shares shall be non-transferable or assignable
except to an acquirer of Vendor in connection with a Change in
Control of Vendor and provided that this Agreement is also
concurrently transferred to and fully assumed by the
acquirer.
(c
)
Concurrently with the execution and
delivery of this Agreement, the Parties have entered into the
Stockholder Agreement governing the Market Capitalization Event
Shares upon their issuance.
(d
)
Vendor’s right to earn and have
issued to Vendor the Market Capitalization Event Shares shall
terminate upon the occurrence of any of the
following:
(i
)
Upon
the occurrence of any Vendor Default Event.
(ii)
Upon
the occurrence of any Perpetual Platform Support Acquisition Event
(other than by reason of the Market Capitalization Event Shares
Issuance).
(iii)
In
the event Company receives the Frozen Platform.
(e
)
In the event Company acquires control
of Vendor within five years of the Effective Date, the sum of the
following shall be credited to the acquisition price/consideration:
(i) the cash payment set forth in Section 3.1(a); and (ii) either
(1) Perpetual Platform Support Cash Consideration, if it has been
paid prior to such acquisition; or (2) the aggregate deemed market
value of the Market Capitalization Event Shares as of the date of
the Market Capitalization Event Shares Issuance (calculated using
the Market Capitalization Event Shares Deemed Initial Issuance
Price) if the Market Capitalization Event Shares have been issued
prior to such acquisition.
3.2
Reimbursable
Platform Operating Expenses and Development Services Fees and
Expenses
.
(a
)
Company shall pay or reimburse to
Vendor (i) the fixed out-of-pocket expenses unique to the operation
of the Platform for the benefit of Company and related solely to
the generation or origination of Platform Results and Output for
the benefit of Company as set forth on the Reimbursable Platform
Operating Expenses Schedule; (ii) such variable expenses and costs
for third party media approved by Company in advance and incurred
in the operation of the Platform for the benefit of Company and
related solely to the generation or origination of Platform Results
and Output for the benefit of Company; and (iii)such fees, costs,
and expenses agreed upon by the Parties in any Statement of Work
for Development Services. Company acknowledges that the vendors,
fees, and expenses set forth on the Reimbursable Platform Operating
Expenses Schedule reflect the vendors utilized and the fees and
expenses in effect as of the Effective Date. Company acknowledges
and agrees that such vendors, fees, and expenses are subject to
change upon written notice; provided, however, that Company must
acknowledge in writing any change in any fees or expenses prior to
them becoming effective. Vendor shall make available to Company,
provided Vendor is not contractually prohibited from doing so,
additional products and services Vendor may obtain from vendors in
the future, conditioned on Company’s payment of the
corresponding pass-through costs.
(b
)
Except as may otherwise be agreed upon
by Company in writing in advance, (i) the fees payable to Vendor
under applicable Statements of Work include any and all costs and
expenses which may be incurred by Vendor in Vendor’s
performance of the Development Services; and (ii) Vendor shall not
be reimbursed for any costs or expenses unless authorized by
Company in writing in advance of Vendor incurring the costs or
expenses.
(c
)
As to expenses for which Company has
agreed to reimburse Vendor, Company shall pay or reimburse Vendor
for all reasonable and authorized business expenses incurred by
Vendor while engaged under this Agreement so long as said expenses
have been incurred for and promote the business of Company and are
normally and customarily incurred by persons performing similar
services in the same or similar market.
(d
)
As a condition to reimbursement for
approved expenses, Vendor shall furnish to Company sufficient
records and other documentary evidence required by federal and
state statutes and regulations for the substantiation of each
expenditure. Vendor must submit proper documentation for each such
expense within thirty (30) days after the date that Vendor incurs
such expense, and Company will reimburse Vendor for all eligible
expenses within thirty (30) days thereafter. Vendor acknowledges
and agrees that failure to furnish the required documentation may
result in Company denying all or part of the expense for which
reimbursement is sought.
3.3
Invoicing
and Payment
. Unless otherwise
set forth in a Statement of Work and excepting costs for third
party media in excess of $50,000 per month, within fifteen (15)
days after the completion of each month, Vendor will provide
Company with an invoice detailing the actual time charges and
approved costs and expenses incurred by Vendor on behalf of Company
during the previous month, together with sufficient backup and
support (including third party invoices) documenting the invoiced
amounts.
With respect to costs
for third party media in excess of $50,000 per month, Company will
advance the costs for such third party media to Vendor and such
advances will be reconciled within the above-described time period.
If Company has any dispute regarding any invoice
, Company will contact Vendor
to discuss Company’s
concerns.
Unless
Company
has notified Vendor of Company’s disapproval
of an invoice within thirty (30) days
after Company receives such invoice, such invoice shall be deemed
to be approved by Company and all amounts set forth on such invoice
shall be due and payable
.
Company agrees to pay all
invoices
that are not subject to a dispute
on a monthly basis in accordance with
Company’s customary accounts payable practice. All payments
under this Agreement shall be made in U.S.
Dollars.
3.4
Taxes
.
All amounts payable to Vendor are exclusive of national, federal,
state, local, and other excise, sales, use, value-added, goods and
services, consumption, and other taxes, levies, or duties now or
hereafter levied or imposed.
Except for taxes on Company’s net income,
Vendor shall be liable for and pay all other taxes and levies,
regardless of whether included on any statement or report. Company
assumes no responsibility for paying any of the foregoing on behalf
of Vendor. Vendor assumes complete and sole responsibility for
payment of any of the foregoing owed by Vendor. Vendor shall
provide such information and certifications, including a Form W-9
certifying Vendor’s tax identification number, to Company for
tax reporting purposes. Notwithstanding the foregoing, Company
shall reimburse Vendor for sales tax due on pass-through costs
payable by Company, including taxes on direct
mail.
3.5
Audit
Rights
. During the Term and for a period of one year
thereafter, Vendor will maintain true and correct records of all
fees, expenses, and costs incurred and all transactions reasonably
necessary to calculate all amounts paid or payable to Vendor under
this Agreement. Upon no less than 20 days prior written notice and
not more than once in any six-month period, Company may audit the
books and records of Vendor for the purpose of verifying fees,
costs, and expenses paid or payable to Vendor under this Agreement.
At the election of Company, any such audit will be conducted by a
reputable, independent certified public accounting firm at
Company’s expense. Each audit will be conducted during
regular business hours at Vendor’s offices. Vendor will
promptly pay to Company the amount of any overpayments revealed by
an audit. In the event an audit reveals an overpayment of greater
than 10% of the amounts paid to Vendor for the audited period,
Vendor will, in addition to paying the amount of any such
overpayment, reimburse or pay Company the reasonable expenses
incurred by Company in connection with such audit.
ARTICLE
IV
TERM AND TERMINATION
4.1
Term
.
The term of this Agreement shall commence as of the Effective Date
and shall continue until terminated in accordance with this
Agreement (“
Term
”).
4.2
Early
Termination for Cause
. Either
Party may terminate this Agreement (subject to the provisions that
are to survive any such termination) upon written notice in the
event that the other Party: (i) makes an assignment for the benefit
of creditors; (ii) commences or has commenced against it any action
appointing a receiver over its assets; (iii) commences or has
commenced against it any proceeding in bankruptcy, insolvency, or
reorganization pursuant to bankruptcy laws or any debtor’s
moratorium which, in the case of an involuntary proceeding, is not
dismissed within ninety (90) days of its filing; (iv) breaches any
material term or provision hereof, and such Party fails to cure
such breach within thirty (30) days following written notice
detailing such breach from the non-breaching Party. For the
avoidance of doubt, Company’s breach of and failure to cure
any payment obligations under Section 3.1(a) constitute terminable
events under clause (iv) of this Section 4.2.
4.3
Effect
on Rights
.
(a
)
Termination of this Agreement by
either Party shall not act as a waiver of any breaches of this
Agreement and shall not act as a release of either Party from any
liability for breaches of this Agreement. Any payments due one
Party to the other that have accrued before termination of this
Agreement for any reason, including outstanding credits, shall be
due and payable within thirty (30) days after the date of
termination.
(b
)
If bankruptcy, insolvency,
liquidation, assignment for the benefit of creditors, appointment
of a receiver, cessation of business, or similar or related event
or action by Company results in a termination of Vendor’s
right to receive the Market Capitalization Event Shares prior to
the Market Capitalization Event Shares being earned, then, at the
election of Vendor, Vendor’s obligations to provide the
Platform Support shall terminate, and all of Company’s
payment obligations for continuing Platform Support shall
terminate; provided, however, that in any such event, Company may
elect to acquire Perpetual Platform Support by payment of the
Perpetual Platform Support Cash Consideration, in which case
Vendor’s obligation to provide the Perpetual Platform Support
shall continue in perpetuity as provided in this
Agreement.
(c
)
Notwithstanding anything to the
contrary in this Agreement, (i) the Platform License and all rights
granted to Company thereunder; (ii) Company’s right to
receive the Frozen Platform and all rights granted to Company with
respect to the Frozen Platform; (iii) Company’s ownership and
rights in the Company Platform Audience; and (iv) all of
Company’s licenses and ownership rights in Deliverables that,
in each case, have come into effect prior to the termination date
shall not be terminated or cease by reason of any termination of
this Agreement by either Party for any reason, and the provision of
Section 2.1, Section 2.2, and 2.4 relating to the foregoing shall
survive any termination of this Agreement.
4.4
Survival
.
Termination of this Agreement for any reason shall not release any
party from any liabilities or obligations set forth in this
Agreement which (i) the parties have expressly agreed shall survive
any such termination or expiration, or (ii) by their nature would
be intended to be applicable following any such termination or
expiration including, but not limited to, Section 4.3, this Section
4.4, Article V, Article VI, Article VII and Article
VIII.
ARTICLE
V
REPRESENTATIONS AND WARRANTIES
5.1
Representations and
Warranties of Company
. Company represents and warrants to
Vendor as follows:
(a
)
Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to enter into this
Agreement.
(b
)
This Agreement constitutes a valid and legally binding obligation
of Company, enforceable against Company in accordance with its
terms.
(c
)
The execution, delivery, and performance of this Agreement by
Company will not result in any violation or be in conflict with or
constitute, with or without the passage of time or giving of notice
(or both), a default under any instrument, judgment, order, writ,
decree, license, contract, or agreement to which Company is a party
or bound.
5.2
Representations and
Warranties of Vendor
. Vendor represents and warrants to
Company as follows:
(a
)
Vendor is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of
Florida and has all requisite power and authority to enter into
this Agreement.
(b
)
This Agreement constitutes a valid and legally binding obligation
of Vendor, enforceable against Vendor in accordance with its
terms.
(c
)
The execution, delivery, and performance of this Agreement by
Vendor will not, with or without the passage of time or giving of
notice (or both):
(i
)
violate or
conflict with any provision of Vendor’s Governing Documents
or any Laws to which Vendor or Vendor assets or properties
(including the Platform) is subject or by which any of them is
bound;
(ii
)
violate or
conflict with any Laws to which Vendor or Vendor assets or
properties (including the Platform) is subject or by which any of
them is bound;
(iii
)
violate or
conflict with, result in a breach of any provision of, or
constitute a default, or otherwise cause any loss of any benefit
under any Contract or other obligation to which Vendor or
Vendor’s business is a party or by which any of
Vendor’s assets or properties (including the Platform) are
bound, or result in the termination or cancellation of any Contract
to which Vendor is a party or by which any of Vendor’s assets
or properties (including the Platform) are bound, or give rise to
any rights of others (including rights of termination, foreclosure,
cancellation, or acceleration), in or with respect to the Platform
or Vendor’s business;
(iv
)
give any
Governmental Authority or other Person the right to challenge this
Agreement or any aspect of the transactions contemplated hereby to
exercise any remedy or obtain any relief under any Law to which
Vendor or Vendor’s business or any of Vendor’s assets
or properties (including the Platform) may be subject;
or
(v
)
result in,
require, or permit the creation or imposition of any Lien upon or
with respect to any of the assets or properties owned, leased, or
used by Vendor in the operation of its business, including the
Platform.
(d
)
All Governmental Authorizations and other Consents required to be
obtained, given, or made by Vendor in connection with the
execution, delivery, and performance of this Agreement by Vendor or
the consummation of the transactions contemplated hereby have been
obtained, given, or made.
(e
)
Vendor is operating and has always operated the Platform and
Vendor’s business in compliance in all material respects with
all applicable Laws, including Laws with respect to (1) the
collection, use, sharing, licensing, transfer, and safeguarding of
Personally Identifiable Information; (2) email, facsimile,
telephone (land, wireless, or cellular) or text messaging,
advertising or solicitations; and (3) fair and accurate
advertising, and Vendor has not received any notice, Order, or
other communication from any Governmental Authority of any alleged,
actual, or potential violation of or failure to comply with any
Law.
(f
)
There are no Actions presently pending, threatened, or contemplated
against Vendor or any predecessor thereto and there are no facts
that could reasonably serve as a basis for any such Action. There
are no, and during the past five (5) years have not been any,
unsatisfied or outstanding Orders against, binding upon, or
adversely affecting Vendor or any predecessor thereto, the
Platform, or Vendor’s business. Vendor has not received any
claims, threats, or notices claiming any violation of any third
party Intellectual Property Rights related to the Platform or in
the conduct of Vendor’s business. No Actions are currently
pending or have been filed against or by Vendor or any predecessor
thereto or any of Vendor’s Affiliates for any violation of
any Intellectual Property Rights of any third party, and there is
no basis for a third party to assert any claim or bring any Action
for any violation, infringement, or misappropriation of any
Intellectual Property Right of any third party.
(g
)
Vendor owns or possesses all legal and ownership rights to the
Platform, Platform Technology, and Platform Documentation free and
clear of all Liens and has all legal rights necessary for the
provision of any services or support and grant of any licenses or
ownership rights to Company in accordance with this
Agreement.
(h
)
The Frozen Platform, when delivered to Company, will include all
components of the Platform, Platform Technology, and Platform
Documentation that are necessary for Company to continue to use,
access, operate and maintain the Platform as set forth in this
Agreement.
(i
)
Vendor has not entered into any contract nor made any commitments
that will or may impair Company’s rights under this
Agreement.
(j
)
All Persons who have contributed to the creation, invention, or
development of the Platform, Platform Documentation, or any
Intellectual Property Rights related to any of the foregoing have
assigned to Vendor all of their rights therein that do not vest
initially in Vendor by operation of Law. Vendor takes reasonable
actions to protect and maintain (1) any trade secrets and
Confidential Information that constitute Intellectual Property
Rights related to the Platform, including executing confidentiality
and non-disclosure agreements with employees and contractors, and
(2) the confidentiality, integrity, and security of its Software,
databases, systems, networks, and Internet websites, and
information stored or contained therein or transmitted thereby, and
all transactions consummated in connection therewith, from any
unauthorized use, access, interruption, or modification by third
parties, including the use of reliable encryption protection (or an
equivalent).
(k
)
All Software related to the Platform or that is included in the
Platform Documentation substantially conforms to all existing
documentation for its use in the operation of the Platform and the
conduct of Vendor’s business as currently conducted, and is
functioning in all material respects in accordance with applicable
specifications.
Vendor has not
incorporated into the Platform or otherwise accessed, used, or
distributed any Open Source Software, in whole or in part, in
connection with the Platform.
(l
)
Concurrently with the execution and
delivery of this Agreement by the Parties, Vendor has delivered to
Company a disclosure letter that contains the names of all Existing
Vendor Members and the Existing Vendor Member
Designee
.
ARTICLE
VI
CONFIDENTIALITY
6.1
Confidential
Information
.
(a
)
A Party
receiving Confidential Information from the other Party will not,
during or subsequent to the term of this Agreement, use the
disclosing Party’s Confidential Information for any purpose
whatsoever other than the performance of its obligations or
exercise of its rights under this Agreement, or disclose the
disclosing Party’s Confidential Information to any third
party. The receiving Party further agrees to take all reasonable
precautions to prevent any unauthorized disclosure of the
disclosing Party’s Confidential Information including, but
not limited to, limiting access to the disclosing Party’s
Confidential Information to employees, subcontractors, or
independent contractors who require access for the performance of
obligations or exercise of rights under this Agreement, limiting
the scope of access afforded such persons to the narrowest scope of
access required for the performance of obligations or exercise of
rights under this Agreement, and having each employee,
subcontractor, or independent contractor of the receiving Party, if
any, with access to any of disclosing Party’s Confidential
Information be bound by nondisclosure and confidentiality
obligations (by contract, duties, or otherwise) applicable to
Confidential Information that are no less stringent than the
confidentiality provisions of this Agreement.
(b
)
Nothing
in this Agreement will prevent the receiving Party from disclosing
Confidential Information of the disclosing Party to the extent the
receiving Party is legally compelled to do so by any governmental
or judicial agency or body pursuant to proceedings over which such
agency or body has jurisdiction; provided, however, that prior to
any such disclosure, the receiving Party shall: (i) assert the
confidential nature of the Confidential Information to the agency
or body; (ii) where permitted, immediately notify the disclosing
Party in writing of the agency’s or body’s request to
disclose Confidential Information; (iii) cooperate fully with the
disclosing Party in protecting against any such disclosure and/or
obtaining a protective order narrowing the scope of the compelled
disclosure and protecting its confidentiality; and (iv) in any
event only disclose such Confidential Information, or portion
thereof, specifically requested by the agency or body.
(c
)
Upon
the termination of this Agreement, or upon the disclosing
Party’s earlier request, the receiving Party will deliver to
the disclosing Party (and will not recreate or deliver to anyone
else) all of the disclosing Party’s Confidential Information
that the receiving Party may have in its possession or control; or
upon the disclosing Party’s request, the receiving Party will
destroy all Confidential Information of the disclosing Party in its
possession, including all copies, and confirm in writing that it
has complied with the obligations set forth in this Section 6.1(c).
However, this Section 6.1(c) will not apply to any Confidential
Information of Vendor that is embedded in or a part of any of the
Development Services or Deliverables licensed to or owned by
Company under this Agreement.
ARTICLE
VII
INDEMNIFICATIO
N
7.1
Indemnification
.
(a
)
Company will defend, indemnify, and hold harmless Vendor and each
of Vendor’s Affiliates, officers, directors, employees, and
agents against and in respect of any loss, debt, liability, damage,
obligation, claim, demand, fines, penalties, forfeitures, judgment,
or settlement of any nature or kind, known or unknown, liquidated
or unliquidated, including without limitation all reasonable costs
and expenses incurred (legal, accounting, or otherwise)
(collectively, “
Damages
”) arising out of,
resulting from, or based upon any claim, action, or proceeding by
any third party, including any governmental or regulatory body,
alleging facts or circumstances constituting or giving rise to (i)
a breach of the obligations, representations, or warranties of
Company set forth in this Agreement; (ii) violation of applicable
Law or Order by Company; or (iii) infringement or misappropriation
of any Intellectual Property Rights of any third party stemming
from use of Company’s Intellectual Property Rights in
connection with this Agreement.
(b
)
Vendor will defend, indemnify, and hold harmless Company and each
of Company’s Affiliates, officers, directors, employees, and
agents against and in respect of any Damages arising out of,
resulting from, or based upon any claim, action, or proceeding by
any third party, including any governmental or regulatory body,
alleging facts or circumstances constituting or giving rise to (i)
a breach of the obligations, representations, or warranties of
Vendor set forth in this Agreement; (ii) violation of applicable
Law or Order by Vendor; or (iii) infringement or misappropriation
of any Intellectual Property Rights of any third party stemming
from the licensing, use, operation or support of the Platform,
Platform Documentation, Platform Technology, Platform
Functionality, Platform Audiences, and Vendor’s Intellectual
Property Rights as contemplated by this Agreement.
7.2
Indemnification
Process
.
(a
)
Promptly after receipt by an indemnified Party of notice of a claim
from a third party (a “
Third
Party Claim
”) which may give rise to a claim for
indemnification hereunder, such indemnified Party shall, if a claim
is to be made against an indemnifying Party, give notice to the
indemnifying Party of such Third Party Claim. Notwithstanding the
foregoing, the failure to notify or any delay in notifying the
indemnifying Party will not relieve the indemnifying Party of any
liability that it may have to any indemnified party, except to the
extent that the indemnifying Party demonstrates that the defense of
such action is materially prejudiced by the indemnified
Party’s failure to give or delay in giving such notice, and
then only to the extent of such prejudice.
(b
)
Any indemnifying Party will have the right to defend the
indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the indemnified Party so long as
(i) the indemnifying Party notifies the indemnified Party in
writing within ten (10) business days after the indemnified Party
has given notice of the Third Party Claim that the indemnifying
Party will indemnify the indemnified Party from and against such
Third Party Claim as required under this Agreement; (ii) the
indemnifying Party has (and, if the indemnified Party so requests,
provides the indemnified Party with reasonable evidence that the
indemnifying Party has) the financial resources (which could
include insurance coverage) to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder; and (iii)
the indemnifying party conducts the defense of the Third Party
Claim in a commercially reasonable manner.
(c
)
So long as the indemnifying Party is conducting the defense of the
Third Party Claim in accordance with the foregoing provisions of
this Section 7.2, and provided there is no conflict in the interest
of the indemnified Party and the indemnifying Party, (i) the
indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party
Claim; (ii) the indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the indemnifying
Party; and (iii) the indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of the
indemnified Party (not to be withheld, conditioned, or delayed
unreasonably), provided, however, that no consent of the
indemnified Party shall be required if the settlement contains an
unconditional release of the indemnified Party from all liability
and adverse actions with respect to such Third Party Claim and does
not subject the indemnifying Party to any injunction or other
equitable relief.
(d
)
In the event any of the foregoing conditions in this Section 7.2 is
or becomes unsatisfied in any material respect, however, (i) the
indemnified Party may defend against, and consent to the entry of
any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem appropriate,
provided, before effecting any compromise or settlement, the
indemnified Party shall solicit and obtain the consent of the
indemnifying Party, such consent not to be unreasonably withheld,
conditioned, or delayed; (ii) the indemnifying Party will reimburse
the indemnified party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys’ fees and expenses) to the extent the indemnifying
Party is obligated to provide indemnity hereunder; and (iii) the
indemnifying Party will remain responsible for any Damages the
indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent that the indemnifying Party is obligated to
provide indemnity under this Article VII.
ARTICLE VIII
GENERAL PROVISIONS
8.1
Entire
Agreement
.
This Agreement, including the Exhibits
attached hereto, all of which are hereby incorporated by reference,
constitutes the complete and exclusive statement of agreement
between the parties and supersedes all prior agreements,
understandings, and communication of any kind by and between the
Parties, whether written or oral, with respect to the subject
matter hereof. Upon the execution and delivery of this Agreement by
the Parties, the Parties agree that the Master Services Agreement
effective as of August 1, 2017 between the Parties is hereby
terminated.
8.2
Amendments and Waivers
.
This Agreement may be amended, modified, superseded, or cancelled,
and the terms and conditions hereof may be waived, only by a
written instrument signed by the Parties hereto or, in the case of
a waiver, by the Party waiving compliance, in a document that
refers to this Agreement. No delay on the part of any Party in
exercising any right, power, or privilege hereunder will operate as
a waiver thereof, nor will any waiver on the part of any Party of
any right hereunder, nor any single or partial exercise of any
rights hereunder, preclude any other or further exercise thereof or
the exercise of any other right hereunder.
8.3
Assignment
.
Neither Party may assign or otherwise transfer or delegate this
Agreement or any of a Party’s rights, duties, or obligations
under this Agreement to another person or entity without the prior
written consent of the other Party. Notwithstanding the foregoing,
this Agreement may be assigned or transferred by a Party without
the consent of the other Party to any Affiliate of the assigning
Party or any person or entity that acquires all or substantially
all of the assets of the assigning Party or that succeeds the
assigning Party by operation of law. Nothing herein will prohibit
or restrict a change of control of either Party or any Affiliate of
that Party or require the consent of the other Party to any
assignment or transfer of this Agreement in connection with any
change of control of the assigning Party. This Agreement will be
binding on and inure to the benefit of each Party hereto and to
each Party's respective permitted successors and
assigns.
8.4
Notices
.
Any notice required or permitted under this Agreement will be
considered to be effective (i) upon receipt by recipient as
indicated on the courier’s receipt in the case of delivery by
courier or messenger service; or (ii) upon receipt of an Electronic
Transmission by the Party that is the intended recipient of the
Electronic Transmission. The record addresses, facsimile numbers of
record, and electronic mail addresses of record for the Parties are
set forth on the signature page to this Agreement and may be
changed from time to time by notice from the changing Party to the
other Party pursuant to the provisions of this Section
8.4.
8.5
Marketing and
Communications
.
(a
)
Except as may be required, as determined in good faith by the
disclosing party, by applicable law, rules, or regulations or the
rules of any securities exchange or market, neither Party will make
any public statement or release concerning this Agreement or any of
the transactions contemplated by this Agreement, except for such
written information as has been approved in advance in writing as
to form and content by the other Party, which approval will not be
unreasonably withheld. Notwithstanding the foregoing, neither Party
shall have the right to review or approve any filings or other
disclosures that the other Party determines in good faith are
reasonably required to be made in any filings with the Securities
and Exchange Commission, with any other governmental agency, or any
securities exchange or market. The Parties acknowledge that Company
will be required to disclose this Agreement in Company’s
filings with the Securities and Exchange Commission.
(b
)
During the Term of this Agreement, each Party may refer to the
existence of this Agreement and to the name of the other Party in
marketing communications to customers and partners using
mutually-approved language describing the relationship, such
approval not to be unreasonably withheld.
8.6
Independent Parties
.
The
relationship of the Parties is that of independent contractors.
Nothing contained in this Agreement will be construed as creating a
joint venture, agency, employment, or partnership relationship
among the Parties hereto nor will any Party have the right, power,
or authority to create any obligation or duty, express or implied,
on behalf of any other Party.
8.7
Force
Majeure
. Neither Party will be
liable hereunder by reason of any failure or delay in the
performance of its obligations on account of strikes, shortages,
riots, insurrection, terrorism, fires, flood, storm, explosions,
earthquakes, Internet or telecommunication failures or outages,
acts of God, war, governmental action, or any other similar cause
that is beyond the reasonable control of such Party. A Party
experiencing a delaying event shall work diligently and promptly to
mitigate the impact and length of the delay. If, in the reasonable
judgment of the party not experiencing a delaying event, a delaying
event applicable to the other party materially and adversely
impacts or is reasonably likely to materially and adversely impact,
either by reason of the length of the delay or the nature of the
delaying event, the ability of the party experiencing the delaying
event to perform its obligations under this Agreement in a timely
manner, the party not experiencing the delaying event may elect to
perform itself or have third parties perform the obligations of the
party experiencing the delaying event without liability to the
party experiencing the delaying event.
8.8
Further Assurances
. Each
Party agrees to execute and deliver any and all further documents,
and to perform such other acts, as may be reasonably necessary or
expedient to carry out and make effective this
Agreement.
8.9
Choice of Law
. This
Agreement, its construction and the determination of any rights,
duties, or remedies of the parties arising out of or relating to
this Agreement will be governed by, enforced under, and construed
in accordance with the laws of the State of Florida, USA,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws of such state. The parties exclude
the application of the 1980 United Nations Convention on Contracts
for the International Sale of Goods if otherwise applicable to this
Agreement.
8.10
Severability
.
Each term, covenant, condition, or provision of this Agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition, or provision will be deemed to be
invalid or unenforceable, the court finding such invalidity or
unenforceability will modify or reform this Agreement to give as
much effect as possible to the terms and provisions of this
Agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
8.11
Interpretation
.
Every provision of this Agreement is the result of full
negotiations between the Parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each Party hereto further
agrees and acknowledges that it is sophisticated in legal affairs
and has reviewed this Agreement in detail. Accordingly, no
provision of this Agreement shall be construed in favor of or
against any Party hereto by reason of the extent to which any such
Party or its counsel participated in the drafting thereof. Captions
and headings of sections contained in this Agreement are for
convenience only and shall not control the meaning, effect, or
construction of this Agreement. Time periods used in this Agreement
shall mean calendar periods (i.e., days, months, and years) in the
State of Florida, USA, unless otherwise expressly indicated. All
references to fees, expenses, costs, and payments thereof are in
U.S. Dollars. The English language shall apply to any
interpretation of this Agreement. Except as otherwise provided or
if the context otherwise requires, whenever used in this Agreement,
(i) any noun or pronoun shall be deemed to include the plural and
the singular as well as the masculine, feminine, and neuter
genders, (ii) the terms “include,”
“includes,” and “including” shall be deemed
to be followed by the phrase “without limitation,”
(iii) the word “or” shall be inclusive and not
exclusive, (iv) all references to Articles, Sections, subsections,
preambles, or recitals, refer to the Articles, Sections,
subsections, preamble, and recitals of this Agreement, and all
references to Schedules refer to the Schedules attached to this
Agreement or delivered with this Agreement, as appropriate, and all
references to Exhibits refer to the Exhibits attached to this
Agreement, each of which is made a part of this Agreement for all
purposes, (v) the terms “hereunder,”
“hereof,” “hereto,” and words of similar
import shall unless otherwise stated be deemed references to this
Agreement as a whole and not to any particular Article, Section, or
other provision hereof, (vi) the terms “dollars” or
“$” means United States dollars, (vii) reference to any
agreement, document, or instrument means such agreement, document,
or instrument as amended or modified through the date hereof in
accordance with the terms thereof and includes all addenda,
exhibits, and disclosure schedules thereto, (viii) any reference to
any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are permitted by
this Agreement, and (ix) any reference to any governmental
authority includes any designee thereof or successor thereto. In
the event of any inconsistency between the statements made in the
body of this Agreement and those contained in the Schedules (other
than an express exception to a specifically identified statement),
those in this Agreement shall control. Any disclosures in any
Schedule or in any other transaction document of any information
that is not required under the terms hereof or thereof to be
disclosed herein or therein shall not change or diminish the
disclosure requirements herein or therein.
8.12
Dispute
Resolution, Forum
.
(a
)
If a dispute or claim arises between the Parties relating to this
Agreement, before either Company or Vendor pursues other available
remedies, the Party asserting the dispute or claim shall notify the
other Party of the nature of the dispute or claim and request that
persons with decision making authority regarding the dispute or
claim from each Party (together with their respective counsel)
confer, at a mutually convenient date and time, by a mutually
convenient means (e.g., in person or by telephone, video
conferencing, or other electronic means), and at a mutually
convenient place (in the event an in person meeting is agreed upon
by the Parties), to attempt to a resolve the dispute or claim. No
such attempt to resolve the dispute or claim shall be deemed to
vitiate or reduce the obligations and liabilities of Company or
Vendor hereunder or be deemed a waiver by Company or Vendor of any
remedies to which Company or Vendor would otherwise be entitled
hereunder. Any offers of settlement or compromise made during such
attempt to resolve the dispute or claim shall be inadmissible in
any court or arbitration proceeding to prove a Party’s
liability with respect to the dispute or claim, nor shall any offer
of settlement or compromise constitute or be construed as an
admission of any liability with respect to the dispute or claim.
Notwithstanding the foregoing, either Party may seek specific
performance and injunctive relief from a court of competent
jurisdiction in the Dispute Resolution Venue in order to maintain
the status quo while the procedure set forth in this Section
8.12(a) is being followed. If the Parties are unable to agree upon
a mutually convenient date and time, means, or place to confer
within three (3) days after the asserting Party’s notice of
dispute or claim is effective in accordance with Section 8.4, or if
the Parties confer and do not reach a resolution of the dispute or
claim, each of the Parties shall be entitled to purse arbitration
under Section 8.12(b).
(b
)
In the event a dispute or claim is not resolved under the procedure
set forth in Section 8.12(a), the Parties consent to and agree that
any dispute or claim arising out of, or in any way related to, this
Agreement shall be submitted to binding arbitration in the Dispute
Resolution Venue, and conducted in accordance with the Judicial
Arbitration and Mediation Service (“
JAMS
”) rules of practice then in
effect or such other procedures as the Parties may agree in
writing, and the Parties expressly waive any right they may
otherwise have to cause any such action or proceeding to be brought
or tried elsewhere. The Parties further agree that (i) any request
for arbitration shall be made in writing and must be made within a
reasonable time after the claim, dispute, or other matter in
question has arisen; provided however, that in no event shall the
demand for arbitration be made after the date that institution of
legal or equitable proceedings based on such claim, dispute, or
other matter would be barred by the applicable statue(s) of
limitations; (ii) the appointed arbitrator must be a former or
retired judge or attorney at law with at least ten (10)
years’ experience in commercial matters; (iii) costs and fees
of the arbitrator shall be borne by the Parties equally, unless the
arbitrator or arbitrators determine otherwise; (iv) depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized in civil
judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final, and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter. The
arbitrator shall be required to follow applicable law in rendering
the arbitrator’s decision.
(c
)
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(d
)
The Parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of this
Agreement, including but not limited to Article VI, and
accordingly, a non-breaching Party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, the Parties agree that a non-breaching party may seek
relief in a court of competent jurisdiction in the Dispute
Resolution Venue for the purposes of seeking equitable relief
hereunder, and that such remedies shall not be deemed to be
exclusive remedies for a violation of the terms of this Agreement
but shall be in addition to all other remedies available to the
non-breaching party at law or in equity.
(e
)
In any action or other proceeding by which a Party either seeks to
enforce its rights under this Agreement, or seeks a declaration of
any rights or obligations under this Agreement, the prevailing
party will be entitled to reasonable attorneys’ fees, and
subject to Section 8.12(b) above, reasonable costs and expenses
incurred to resolve such dispute and to enforce any final
judgment.
(f
)
No remedy conferred on a Party by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and
each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of one or
more remedies by a Party will not constitute a waiver of the right
to pursue other available remedies.
8.13
Counterparts;
Facsimile or PDF Signature
.
This Agreement may be executed in counterparts, each of which will
be deemed an original hereof and all of which together will
constitute one and the same instrument. This Agreement may be
executed by facsimile, PDF signature, or other electronic means by
either Party, and any such signature shall be deemed binding for
all purposes hereof, without delivery of an original signature
being thereafter required.
[
Remainder
of Page Intentionally Left Blank; Signature Page and Exhibits
Follow]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
Vendor
DealerX Partners, LLC
By:
/s/ Jeffrey
Tognetti
Jeffrey Tognetti
Manager and President
Contact
Name:
Jeffrey Tognetti
Contact
Address:
DealerX Partners, LLC
360
Ocean Drive, Suite 1001S
Key
Biscayne, Florida 33149
Contact Telephone
Number:
212.794.3333
Contact Facsimile
Number:
Contact Email
Address:
jeff@dealerx.com
With copy
to:
Cody Winchester
Phillips
Ryther & Winchester
124
South 600 East
Salt
Lake City, Utah 84103
Facsimile
No.: 801.935.4936
Email
Address: czw@prwlawfirm.com
And a copy to:
Rodney
A. Fields
Lewis
Thomason
One
Centre Square, Fifth Floor
620
Market Street
Knoxville,
Tennessee 37092
Facsimile
No.: 865.523.6529
Email
Address: rfields@lewisthomason.com
|
Company
Autobytel Inc.
By:
/s/ Jeffrey
H. Coats
Jeffrey H.
Coats
President and
Chief
Executive Officer
Contact
Name:
Jeffrey H. Coats
Contact
Address:
Autobytel Inc.
18872 MacArthur Blvd., Suite
200
Irvine, California 92612-1400
Contact Telephone
Number:
949.862.4543
Contact Facsimile
Number:
949. 797.0404
Contact Email
Address:
jeffc@autobytel.com
With copy
to:
Autobytel Inc.
Legal Department
18872 MacArthur Blvd. Suite
200
Irvine, California 92612-1400
Facsimile No.: 949.862.1323
Email
Address:ABTLLegal@autobytel.com
|
This Exhibit has been omitted in accordance with Item 601(b)(2) of
Regulation S-K. AutoWeb, Inc. will furnish supplementally a
copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request; provided, however, that AutoWeb,
Inc. may request confidential treatment pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended, for the exhibit so
furnished.
Exhibit A
Platform Support and Service Level Schedule
This Exhibit has been omitted in accordance with Item 601(b)(2) of
Regulation S-K. AutoWeb, Inc. will furnish supplementally a
copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request; provided, however, that AutoWeb,
Inc. may request confidential treatment pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended, for the exhibit so
furnished.
Exhibit B
Reimbursable Platform Operating Expenses Schedule
Certain
portions of Exhibit B in this
Exhibit 10.2 have been
omitted in accordance with Item 601(b)(2) of Regulation S-K.
AutoWeb, Inc. will furnish supplementally a copy of any
omitted portions of the exhibit to the Securities and Exchange
Commission upon request; provided, however, that AutoWeb, Inc. may
request confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended, for any the portions
of the exhibit so furnished.
Exhibit
10.2
This
Stockholder Agreement (“
Agreement
”) is made as of October
5, 2017 (“
Effective
Date
”) by and among Autobytel Inc., a Delaware
corporation (“
Company
”), DealerX Partners, LLC,
a Florida limited liability company (“
Restricted Stockholder
”) and
Jeffrey Tognetti (“
Designated
Restricted Stockholder Affiliate
”). The Company,
Restricted Stockholder and Designated Restricted Stockholder
Affiliate are referred to herein collectively as the
“
Parties
” and
sometimes each individually as a “
Party
.”
Background
Designated
Restricted Stockholder Affiliate is the Manager and President of
Restricted Stockholder.
Concurrently with
and subject to the execution and delivery of this Agreement by the
Parties, pursuant to the terms of that certain Master License and
Services Agreement, dated as of October 5, 2017
(“
License
Agreement
”), by and among the Company and Restricted
Stockholder, Restricted Stockholder is acquiring a right to receive
the Initial Restricted Securities (as defined below) upon the
occurrence of the Market Capitalization Event. Upon the occurrence
of the Market Capitalization Event, the Initial Restricted
Securities will be issued, subject to the terms and conditions set
forth in the License Agreement and this Agreement, without
registration or qualification under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder
(“
Securities
Act
”), or applicable state securities laws, in
accordance with applicable exemptions from such registration or
qualification requirements.
Effective as of May
26, 2010, the Company adopted a Tax Benefit Preservation Plan,
which plan was amended by Amendment No. 1 to Tax Benefit
Preservation Plan dated as of April 14, 2014 and by Amendment No. 2
to Tax Benefit Preservation Plan dated as of April 13, 2017
(collectively the “
NOL
Plan
”). The Board of Directors of the Company
(“
Board
”)
adopted the NOL Plan to protect stockholder value by preserving
important tax assets. The Company has generated substantial net
operating loss carryovers and other tax attributes for United
States federal income tax purposes (“
Tax Benefits
”) that can generally
be used to offset future taxable income and therefore reduce
federal income tax obligations. However, the Company’s
ability to use the Tax Benefits will be adversely affected if there
is an “ownership change” of the Company as defined
under Section 382 (“
Section
382
”) of the Internal Revenue Code (as defined below).
In general, an ownership change will occur if the Company’s
“5% shareholders” (as defined under Section 382)
collectively increase their ownership in the Company by more than
50% over a rolling three-year period. The NOL Plan was adopted to
reduce the likelihood that the Company’s use of its Tax
Benefits could be substantially limited under Section 382. The NOL
Plan is intended to deter any “
Person
” (as defined in the NOL
Plan) from becoming an “
Acquiring Person
” (as defined in
the NOL Plan) and thereby jeopardizing the Company’s Tax
Benefits. In general, an Acquiring Person is any Person, itself or
together with all Affiliates (as defined below) of such Person,
that becomes the “
Beneficial
Owner
” (as defined in the NOL Plan) of 4.9% or more of
the Company’s outstanding Common Stock. Under the NOL Plan,
the Board may, in its sole discretion, exempt any person from being
deemed an Acquiring Person for purposes of the NOL Plan
(“
NOL Plan
Exemption
”) if the Board determines that such
person’s ownership of Common Stock will not be likely to
directly or indirectly limit the availability of the
Company’s Tax Benefits or is otherwise in the best interests
of the Company. The Board does not have any obligation, implied or
otherwise, to grant such an exemption.
Either
upon entering into the License Agreement and obtaining the right to
receive the Market Capitalization Event Shares (as defined in the
License Agreement) or upon acquisition of the Initial Restricted
Securities, Restricted Stockholder would be deemed to be an
Acquiring Person under the NOL Plan. Restricted Stockholder has
requested that the Board consider whether the Board would exercise
its discretionary authority under the NOL Plan to deem Restricted
Stockholder and its Affiliates not to be an Acquiring Person by
reason of the acquisition of Beneficial Ownership of the Initial
Restricted Securities because the acquisition of Beneficial
Ownership of the Initial Restricted Securities by Restricted
Stockholder and its Affiliates will not be likely to directly or
indirectly limit the availability to the Company of the Tax
Benefits or otherwise is in the best interests of the Company
(“
NOL Plan
Exemption
”). The Board has considered Restricted
Stockholder’s request and is prepared to grant Restricted
Stockholder and its Affiliates a NOL Plan Exemption, subject to and
in reliance upon Restricted Stockholder and the Designated
Restricted Stockholder Affiliate entering into and remaining in
compliance with the terms and conditions of this
Agreement.
In
consideration of the mutual promises and covenants set forth
herein, the Parties hereto further agree as follows:
Article
I
Definitions
As used
in this Agreement, the following defined terms shall have the
meanings ascribed below:
“
Action or Proceeding
” means any
complaint, claim, demand, prosecution, indictment, action,
litigation, lawsuit, arbitration, proceeding, hearing, inquiry,
audit, or investigation (whether civil, criminal, judicial or
administrative, and whether formal or informal, and whether public
or private) made or brought by any Person or brought or heard by or
before any Governmental Authority.
“
Affiliate
” means (i) an Affiliate
as defined in the NOL Plan; and (ii) with respect to any specified
Person, any other Person who or which, directly or indirectly,
controls, is controlled by, or is under common control with such
specified Person.
“
Associate
” shall be as defined in
the NOL Plan.
“
Beneficial Ownership
” shall be as
defined in the NOL Plan.
“
Business Day
” means any day other
than a Saturday, Sunday or any other day on which commercial banks
in Delaware are authorized or required by law to
close.
“
Change in Control
” means with
respect to any Person the first to occur of any of the following
(in one transaction or a series of related transactions): (i)
consummation of a sale of, directly or indirectly, all or
substantially all of the Person’s assets, (ii) any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities of the Person under an employee benefit plan of
the Person, becomes the “beneficial owner” (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Person representing 50% or more of
(A) the outstanding equity securities of the Person or (B) the
combined voting power of the Person’s then outstanding
securities, or (iii) the Person is party to a consummated merger or
consolidation which results in the voting securities of the Person
outstanding immediately prior thereto failing to continue to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving or another entity) at least
fifty (50%) percent of the combined voting power of the voting
securities of the Person or such surviving or other entity
outstanding immediately after such merger or
consolidation.
“
Code
” means the U.S. Internal
Revenue Code of 1986, as amended, and the Treasury regulations
promulgated thereunder.
“
Common Stock
” means the
Company’s common stock, $0.001 par value per
share.
“
Confidential Information
” means
(i) Company’s trade secrets, business plans, strategies,
methods and/or practices; (ii) Company’s software,
technology, computer systems architecture and network
configurations; (iii) any other information relating to Company
that is not generally known to the public, including information
about Company’s personnel, products, customers, suppliers,
financial information, marketing and pricing strategies, services
or future business plans; (iv) material, non-public information
related to Company; and (v) any and all analyses, compilations,
studies, notes or other materials prepared which contain or are
based on other Confidential Information of Company.
“
Consent
” means any approval,
consent, permission, ratification, waiver, or other authorization
of any Person (including any Governmental Authority).
“
Contract
” means any agreement,
contract, obligation, promise, note, bond, mortgage, undertaking,
indenture, purchase order, sales order, instrument, lease,
franchise, license, permit, understanding, arrangement, commitment
or undertaking, whether written or oral, or express or implied, and
in each case, including all amendments thereto.
“
Control
” means the possession,
directly or indirectly, of the power to direct or cause the
direction of management policies of a Person, whether through
ownership of voting securities, by contract, or
otherwise.
“
Damages
” means any loss, damage,
or liability (joint or several) to which a Party hereto may become
subject under the Securities Act, the Exchange Act, or other
foreign, federal, state or local law, insofar as such loss, damage,
or liability (or any action in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement of Company,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) an 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 (iii) any violation or alleged violation by the
indemnifying Party (or any of its agents or Affiliates) of the
Securities Act, the Exchange Act, any state or foreign securities
law, or any rule or regulation promulgated under the Securities
Act, the Exchange Act, or any state or foreign securities law;
provided, however, that Damages shall not include any loss, damage,
or liability resulting from use of a preliminary prospectus if the
loss, damage, or liability arises after the Company makes a
correcting preliminary or final prospectus available, and any such
loss, damage, or liability would have been avoided by delivery of
such correcting preliminary or final prospectus.
“
Dispute Resolution Venue
” means
(i) Miami, Florida in the case of any action or proceeding
initiated or filed by Company; and (ii) Tampa, Florida in the case
of any action or proceeding initiated or filed by Restricted
Stockholder or Designated Restricted Stockholder
Affiliate.
“
Electronic Transmission
” means a
communication (i) delivered by facsimile, telecommunication or
electronic mail when directed to the facsimile number of record or
electronic mail address of record, respectively, which the intended
recipient has provided to the other Party for sending notices
pursuant to the Agreement and (ii) that creates a record of
delivery and receipt that is capable of retention, retrieval, and
review, and that may thereafter be rendered into clearly legible
tangible form.
“
Encumbrance
” means any mortgage,
charge, claim, condition, equitable interest, community or other
marital property interest, lien, option, pledge, security interest,
right of first refusal, right of first option, easement,
right-of-way, encroachment, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership and including any
conditional sale or other title retention agreement, any lease in
the nature thereof and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction, and including any lien or charge arising by statute
or other Laws or which secures the payment of a debt (including any
Taxes due and payable) or the performance of an
obligation.
“
Exchange Act
” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“
Excluded Registration
” means (i) a
registration relating to the sale of securities to employees of the
Company or a subsidiary pursuant to a stock option, stock purchase,
or similar plan; (ii) a registration relating to an SEC Rule 145
transaction; (iii) a registration on any form that does not include
substantially the same information as would be required to be
included in a registration statement covering the sale of the
Restricted Securities; (iv) a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of
debt securities that are also being registered; or (v) a
registration in which the only Company securities being registered
are debt securities.
“
Fair Market Value
” means the
weighted average of the Market Values of the Common Stock for the
thirty consecutive trading day period preceding the applicable date
for the determination of the Fair Market Value, except in the case
of subsection (iii) of the definition of Market Value, in which
case Fair Market Value shall be Market Value determined as of the
applicable date for determination of Fair Market
Value.
“
Form S-3
” means such form under
the Securities Act as in effect on the date hereof or any
registration form under the Securities Act subsequently adopted by
the SEC that permits incorporation of substantial information by
reference to other documents filed by the Company with the
SEC.
“
Governing Documents
” means
(i) with respect to a corporate Person, such Person’s
(1) certificate or articles of incorporation or other
formation document, as amended to date, and (2) bylaws or
similar document; (ii) with respect to a limited liability
company Person, such Person’s (1) certificate of
formation or organization or other formation document, and
(2) operating or similar agreement or document;
(iii) with respect to a business company Person, such
Person’s memorandum and articles of association or other
formation documents; or (iv) with respect to any other Person
(other than a natural person), such Person’s (1) certificate
of formation or organization or other formation document, and (2)
operating or similar agreement or document.
“
Governmental Authority
” means any:
(i) nation, state, county, city, town, or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign, or other
government; (iii) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal); (iv)
multi-national organization or body; (v) stock exchange or
quotation service; (vi) body exercising, or entitled to exercise,
any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature; (vii)
arbitrator or mediator; or (viii) any official or authorized
representative of any of the foregoing.
“
Governmental Authorization
” means
any Consent, permit, license, Order or other authorization issued,
granted, given, or otherwise made available by or under the
authority, or any requirement, of any Governmental Authority or
pursuant to any Laws, including Environmental Permits.
“
Group
” shall have the meaning set
forth in Section 13(d)(3) of the Exchange Act and Rule 13d-5 of the
General Rules and Regulations under the Exchange Act.
“
Immediate Family Member
” means a
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of a natural person referred to
herein.
“
Initial Restricted Securities
”
means the Market Capitalization Event Shares (as defined in the
License Agreement) acquired by Restricted Stockholder in connection
with the transactions contemplated by the License
Agreement.
“
Initial Restricted Securities Issuance
Date
” means the date the Initial Restricted Securities
are issued to Restricted Stockholder.
“
Irrevocable Proxy
” means an
Irrevocable Proxy in the form of
Exhibit A
attached
hereto.
“
Law
” means any federal, state,
local, municipal, foreign, international, multinational, or other
order, constitution, law, ordinance, principle of common law,
regulation, statute, rule, treaty, permit, license, certificate,
judgment, Order, decree, award or other decision or requirement of
any arbitrator or Governmental Authority.
“
Market Capitalization Event
” means
the Market Capitalization Event as defined in the License
Agreement.
“
Market Value
” means, with respect
to the Common Stock as of any date, (i) the closing price of the
Common Stock as reported on the principal U.S. national securities
exchange on which the Common Stock is listed and traded on that
date, or, if there is no closing price on that date, then on the
last preceding date on which a closing price was reported; (ii) if
the Common Stock is not listed on any U.S. national securities
exchange but are quoted in an inter-dealer quotation system on a
last sale basis, the final ask price of the Common Stock reported
on the inter-dealer quotation system for such date, or, if there is
no sale on that date, then on the last preceding date on which a
sale was reported; or (iii) if the Common Stock is neither listed
on a U.S. national securities exchange nor quoted on an
inter-dealer quotation system on a last sale basis, the amount
reasonably determined by the Company to be the fair market value of
the Common Stock as determined by the Company in good faith and in
light of all available information.
“
Member of the Restricted Stockholder
Group
” means each of Restricted Stockholder and
Designated Restricted Stockholder Affiliate.
“
Non-Restricted
Securities
”
for the purposes of this
Agreement, Non-Restricted Securities are Restricted Securities for
which all of the Securities Restrictions have expired or
terminated.
“
No Transfer Period
” means the
six-month period commencing on the Initial Restricted Securities
Issuance Date and ending on the six-month anniversary of the
Initial Restricted Securities Issuance Date.
“
Order
” means any judgment,
decision, order, injunction, decree, award, or writ of any
Governmental Authority.
“
Person
” means any natural person,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other
entity, or a Governmental Authority.
“
Proposed Public Transfer
” means a
proposed Transfer to be implemented pursuant to (i) Restricted
Stockholder’s exercise of the registration rights as
described in Article IV; or (ii) Rule 144; provided, however,
that no proposed Transfer under clauses (i) or (ii) of this
definition shall constitute a Proposed Public Transfer if the
transaction constitutes a directed sale or a block sale to known or
designated buyers or any known or designated group of
buyers.
“
Reply Period
” means sixty (60)
days.
“
Representative
” means, as to any
Person, such Person’s Affiliates and its and their directors,
officers, employees, agents, representatives, debt and equity
financing sources, and advisors (including, without limitation,
financial and investment banking advisors, attorneys, consultants,
counsel and accountants and any representatives of such
advisors).
“
Repurchase Option Event
” means any
Change in Control of Restricted Stockholder.
“
Restricted Securities
” means (i)
the Initial Restricted Securities;
and
(ii) any other Shares that may be
issued with respect to the Initial Restricted Securities by reason
of any stock split, reverse split, stock dividend (including any
dividend or distribution of securities convertible into Shares),
combination, reorganization, recapitalization or other like change,
conversion or exchange of shares, or any other change in the
corporate or capital structure of the Company, in each case under
clause (i) or (ii
), until such
time as all of the Securities Restrictions expire or terminate with
respect to such Shares.
“
Restricted Securities Transfer
Proceeds
” means all cash, securities, property (real
or personal) or other proceeds from any Transfer of the Restricted
Securities.
“
Restricted Stockholder Disclosure
Schedule
” means Exhibit B attached
hereto.
“
SEC
” means the Securities and
Exchange Commission.
“
SEC Rule 144
” means Rule 144
promulgated by the SEC under the Securities Act.
“
Section 382 5% Shareholder
” means
a “5-percent shareholder” as defined under Section 382
and the rules and regulations thereunder.
“
Securities Restrictions
” means the
securities Laws restrictions, and the transfer restrictions and
obligations, voting proxy, right of first refusal and repurchase
option under Articles V, VI and VII.
“
Securities Restrictions Period
”
means the period commencing on the Effective Date and ending on the
fifth anniversary of the Effective Date.
“
Securities Trading Policy
” means
the Company’s then-current Securities Trading Policy as it
may be amended from time to time and furnished or made available to
Restricted Stockholder and Designated Restricted Stockholder
Affiliate, including via the Company’s website and/or
intranet.
“
Selling Expenses
” means all
underwriting discounts, selling commissions, and stock transfer
taxes applicable to the sale of Restricted Securities in a
transaction described in Article IV, and fees and disbursements of
counsel for Restricted Stockholder.
“
Shares
” means all issued and
outstanding shares of Common Stock that Restricted Stockholder or
any of its Affiliates or Associates are collectively deemed to
Beneficially Own (as defined in the NOL Plan). In the event of any
change in the number of issued and outstanding shares of Common
Stock by reason of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible
into Shares), combination, reorganization, recapitalization or
other like change, conversion or exchange of shares, or any other
change in the corporate or capital structure of the Company, the
term “
Shares
”
shall be deemed to refer to and include the Shares as well as all
such stock dividends and distributions and any shares of capital
stock into which or for which any or all of the Shares may be
changed or exchanged.
“
Subsidiary
”
of any Person shall mean any
corporation or other entity of which a majority of the voting power
of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
“
Tax
” or “
Taxes
” means any federal, state,
local, or foreign income, gross receipts, license, payroll,
employment, occupation, sales, use, excise, severance, stamp,
occupancy, premium, windfall profits, environmental (including
Taxes under Section 59A of the Code), customs duties, capital
stock, franchise, profits, net proceeds, transfer, withholding,
social security or similar, unemployment, disability, greenmail,
real and personal property (tangible and intangible), production,
escheat, registration, value added, alternative or add-on minimum,
estimated or other similar taxes, or other tax, charge, fee, levy,
deficiency or other assessment of whatever kind or nature, imposed
by any Tax Authority, together with any interest, penalties or
additions to tax relating thereto, and including an obligation to
indemnify or assume or otherwise succeed to or otherwise be liable
for the tax liability of any other Person (including any
predecessor) as a transferee or successor or
otherwise.
“
Tax Authority
” means any branch,
office, department, agency, instrumentality, court, tribunal,
officer, employee, designee, representative, or other Person that
is acting for, on behalf or as a part of any Governmental Authority
that is engaged in or has any power, duty, responsibility or
obligation relating to the legislation, promulgation,
interpretation, enforcement, regulation, monitoring, supervision or
collection of or any other activity relating to any Tax or Tax
Return.
“
Tax Return
” means any return,
election, declaration, report, schedule, information return,
document, information, opinion, statement, or any attachment or
amendment to any of the foregoing (including any consolidated,
combined or unitary return) submitted or required to be submitted
to any Tax Authority and any claims for refund of Taxes
paid.
“
Transfer
” means (i) to sell,
assign, lend; offer; pledge; contract to sell; sell any option or
contract to purchase; purchase any option or contract to sell;
grant any option, right, or warrant to purchase; or otherwise
transfer or dispose of, directly or indirectly, any Shares or any
securities convertible into or exercisable or exchangeable
(directly or indirectly) for Shares or (ii) to enter into any swap
or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of such
securities, whether any such transaction described in clause (i) or
this clause (ii) is to be settled by delivery of Shares or other
securities, in cash, or otherwise; or (iii) any Change in Control
of Restricted Stockholder.
Article
II
NOL Plan
Exemption
2.1
Grant
of NOL Plan Exemption
. Subject
to and in reliance upon the representations, warranties and
obligations of Restricted Stockholder under this Agreement, the
Board granted Restricted Stockholder a NOL Plan Exemption solely
with respect to Restricted Stockholder’s acquisition of the
Initial Restricted Securities. As long as Restricted Stockholder
and Designated Restricted Stockholder Affiliate remains in full
compliance with this Agreement, Company shall maintain the NOL Plan
Exemption in effect with respect to the Initial Restricted
Securities. This NOL Plan Exemption is not applicable to the
acquisition of Beneficial Ownership of any other or additional
Shares by Restricted Stockholder or any of its Affiliates or
Associates.
2.2
Governmental
Filings
. Upon request by
Company, Restricted Stockholder and its Affiliates and Associates
shall cooperate with Company and furnish to Company such
information regarding Restricted Stockholder and its Affiliates and
Associates, including information regarding the beneficial
ownership of Restricted Stockholder and its Affiliates and
Associates, as Company requires to comply with the filing
requirements of any applicable Law.
2.3
Legends
.
(a)
The
Initial Restricted Securities shall be subject to and bear the
legends set forth below together with (i) any other legends
required by the securities laws of any state or other jurisdiction
to the extent such laws are applicable to the Restricted
Securities; and (ii) such other legends and restrictions as are
applicable to the Common Stock generally.
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (“SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER
APPLICABLE STATE SECURITIES LAWS WITH RESPECT TO SUCH SECURITY IS
THEN IN EFFECT, OR SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED DUE TO AVAILABLE
EXEMPTIONS FROM SUCH REGISTRATION. SHOULD THERE BE ANY UNCERTAINTY
OR DISAGREEMENT BETWEEN THE COMPANY AND THE HOLDER AS TO THE
AVAILABILITY OF SUCH EXEMPTIONS, THEN THE HOLDER SHALL BE REQUIRED
TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL (SKILLED IN
SECURITIES MATTERS, SELECTED BY THE HOLDER AND REASONABLY
SATISFACTORY TO THE COMPANY) IN FORM AND SUBSTANCE SATISFACTORY TO
COMPANY TO THE EFFECT THAT SUCH OFFER, SALE, TRANSFER, ASSIGNMENT,
PLEDGE, OR HYPOTHECATION IS IN COMPLIANCE WITH AN AVAILABLE
EXEMPTION UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS.”
“THE
SECURITIES EVIDENCED HEREBY ARE SUBJECT TO A STOCKHOLDER AGREEMENT
DATED AS OF OCTOBER 5, 2017, AS MAY BE AMENDED FROM TIME TO TIME,
(A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST FROM THE
COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SECURITIES THE
PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND
SHALL BECOME BOUND BY ALL THE PROVISIONS OF THAT STOCKHOLDER
AGREEMENT, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER, REPURCHASE
RIGHTS, STANDSTILL PROVISIONS AND VOTING ARRANGEMENTS, INCLUDING AN
IRREVOCABLE PROXY, SET FORTH THEREIN.”
2.4
Stop
Transfer Instructions
. So long
as Restricted Securities remain subject to the Securities
Restrictions and other provisions of this Agreement, the Restricted
Securities shall be held in a restricted account at Company’s
transfer agent, and Company may maintain appropriate “stop
transfer” orders with respect to such securities represented
thereby on its books and records and with its transfer
agent.
Article
III
Representations and
Warranties of Parties
3.1
Representations
and Warranties of Restricted Stockholder
. Restricted Stockholder hereby represents and
warrants to Company as follows:
(a)
Organization
and Good Standing
. Restricted
Stockholder is a limited liability company, duly formed and
organized, validly existing, and in good standing under the Laws of
the State of Florida.
(b)
Power
and Authorization
. Restricted
Stockholder has the requisite power and lawful authority to enter
into and to perform its obligations under this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution, delivery, and performance by Restricted Stockholder of
this Agreement and the consummation by Restricted Stockholder of
the transactions contemplated by this Agreement have been duly and
properly authorized in accordance with applicable Laws, and no
other action, entity or otherwise, on the part of Restricted
Stockholder or any other Person, is necessary to authorize the
execution, delivery, and performance by Restricted Stockholder of
this Agreement.
(c)
Execution
and Performance of Agreement; Validity and Binding
Nature
. This Agreement has been
duly executed and delivered by Restricted Stockholder and
constitutes the legal, valid, and binding obligations of Restricted
Stockholder, enforceable against Restricted Stockholder in
accordance with its terms, except (i) to the extent that such
enforceability is limited by (1) bankruptcy, receivership,
moratorium, conservatorship, insolvency, fraudulent conveyance,
reorganization Laws or other Laws of general application affecting
the rights of creditors generally, or (2)
Laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies; and
(ii) that the indemnification provisions contained in this
Agreement may be limited by applicable federal or state securities
laws.
(d)
No
Conflicts/Consents
. The
execution, delivery and performance of this Agreement by Restricted
Stockholder does not and will not (with or without the passage of
time or the giving of notice): (i) violate or conflict with any
provision of Restricted Stockholder’s Governing Documents or
any Laws to which Restricted Stockholder or its business, assets or
properties are subject or bound; (ii) violate or conflict with,
result in a breach of any provision of, or constitute a default, or
otherwise cause any loss of any benefit under any material Contract
or other material obligation to which Restricted Stockholder is a
party or by which any of its business, assets or properties are
subject or bound; (iii) result in the termination or cancellation
of any material Contract to which Restricted Stockholder is a party
or by which any of its assets or properties are subject or bound;
(iv) give any Governmental Authority or other Person the right to
challenge this Agreement or any aspect of the transactions
contemplated hereby or to exercise any remedy or obtain any relief
under any Law to which Restricted Stockholder, or any of its
business, assets or properties may be subject or bound; (v) require
any Governmental Authorization, Consent or registration,
notification, filing and/or declaration with, or requirement of,
any Governmental Authority or other Person; (vi) result in,
require, or permit the creation or imposition of any Encumbrance
upon or with respect to any of the Restricted Securities; or (vii)
cause Company or any of its Affiliates to become subject to, or to
become liable for the payment of, any Tax
.
(e)
Governing
Documents; Directors and Officers; Equity
Ownership
. True and complete
copies of the Governing Documents of Restricted Stockholder in
effect as of the Effective Date will be delivered to Company if
required by applicable Law. Restricted Stockholder Disclosure
Schedule contains an accurate and complete list of all directors,
officers, and managers of Restricted Stockholder. The beneficial
and record owners of all of the issued and outstanding capital
stock, membership interests, ownership interests and other
securities of Restricted Stockholder (including all options,
warrants, convertible securities and rights to acquire any
securities of Restricted Stockholder) are set forth on the
Restricted Stockholder Disclosure Schedule, and no other Person
holds or has any rights to acquire any securities of Restricted
Stockholder.
(f)
Actions
or Proceedings
.
There is no Action or Proceeding pending or, to
the knowledge of Restricted Stockholder, threatened with respect to
Restricted Stockholder’s ownership of the Initial Restricted
Securities, nor is there any judgment, decree, injunction or order
of any applicable Governmental Entity or arbitrator outstanding
which would prevent the carrying out by Restricted Stockholder of
its obligations under this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated
hereby or cause such transactions to be
rescinded.
(g)
Beneficial
Ownership
.
Prior to the execution of the License Agreement,
neither Restricted Stockholder nor any Affiliate or Associate of
Restricted Stockholder Beneficially Owned any shares of Common
Stock. Following the execution of the License Agreement and upon
the Market Capitalization Event as set forth therein, the Initial
Restricted Securities will be the only Shares Beneficially Owned by
Restricted Stockholder (together with its Affiliates and
Associates
).
(h)
Purchase
Entirely for Own Account
. The
Initial Restricted Securities are being acquired by Restricted
Stockholder for investment for Restricted Stockholder’s own
account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. Restricted Stockholder
has no present intention of selling, granting any participation in,
or otherwise distributing the Initial Restricted Securities.
Restricted Stockholder does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third
Person, with respect to any of the Initial Restricted
Securities.
(i)
Disclosure
of Information and Due Diligence
. In addition to reviewing Company’s public
filings under the Exchange Act and Securities Act, Restricted
Stockholder and each Affiliate or Associate thereof has had full
opportunity to discuss the Company’s business, management,
financial condition and results of operation, and affairs with
Company’s management, review such Contracts and other
documents as deemed warranted by Restricted Stockholder or any
Affiliate or Associate thereof and to conduct such other due
diligence as Restricted Stockholder or any Affiliate or Associate
thereof has deemed warranted and has acquired sufficient
information about Company to reach an informed and knowledgeable
decision to acquire the Initial Restricted
Securities.
(j)
Accredited
Investors
. Each owner of any
equity in Restricted Stockholder is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
3.2
Representations
and Warranties of Company
.
Company hereby represents and warrants to Restricted Stockholder as
follows:
(a)
Organization
and Good Standing
. Company is a
corporation duly formed and organized, validly existing, and in
good standing under the Laws of the State of
Delaware.
(b)
Power
and Authorization
. Company has
the requisite power and lawful authority to enter into and to
perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement. The execution,
delivery, and performance by Company of this Agreement and the
consummation by Company of the transactions contemplated by this
Agreement have been duly and properly authorized in accordance with
applicable Laws, and no other action, entity or otherwise, on the
part of Company or any other Person, is necessary to authorize the
execution, delivery, and performance by Company of this
Agreement.
(c)
Execution
and Performance of Agreement; Validity and Binding
Nature
. This Agreement has been
duly executed and delivered by Company and constitutes the legal,
valid, and binding obligations of Company, enforceable against
Company in accordance with its terms, except (i) to the extent that
such enforceability is limited by (1) bankruptcy, receivership,
moratorium, conservatorship, insolvency, fraudulent conveyance,
reorganization Laws or other Laws of general application affecting
the rights of creditors generally, or (2) Laws relating to the
availability of specific performance, injunctive relief, or other
equitable remedies; and (ii) that the indemnification provisions
contained in this Agreement may be limited by applicable federal or
state securities laws.
(d)
No
Conflicts/Consents
. The
execution, delivery and performance of this Agreement by Company
will not (with or without the passage of time or the giving of
notice): (i) violate or conflict with any provision of
Company’s Governing Documents or any Laws to which Company or
its business, assets or properties are subject or bound; (ii)
violate or conflict with, result in a breach of any provision of,
or constitute a default, or otherwise cause any loss of any benefit
under any material Contract or other obligation to which Company is
a party or by which any of its business, assets or properties are
subject or bound; (iii) result in the termination or cancellation
of any material Contract to which Company is a party or by which
any of its assets or properties are subject or bound; (iv) give any
Governmental Authority or other Person the right to challenge this
Agreement or any aspect of the transactions contemplated hereby or
to exercise any remedy or obtain any relief under any Law to which
Company, or any of its business, assets or properties may be
subject or bound; (v) require any Governmental Authorization,
Consent or registration, notification, filing and/or declaration
with, or requirement of, any Governmental Authority or other
Person; (vi) result in, require, or permit the creation or
imposition of any Encumbrance upon or with respect to any of the
Restricted Securities; or (vii) cause Company or any of its
Affiliates to become subject to, or to become liable for the
payment of, any Tax.
(e)
Actions
or Proceedings
.
There is no Action or Proceeding pending or, to
the knowledge of Company, threatened with respect to Restricted
Stockholder’s ownership of the Initial Restricted Securities,
nor is there any judgment, decree, injunction or order of any
applicable Governmental Entity or arbitrator outstanding which
would prevent the carrying out by Company of its obligations under
this Agreement or any of the transactions contemplated hereby,
declare unlawful the transactions contemplated hereby or cause such
transactions to be rescinded.
Article
IV
Registration
Rights
Restricted
Stockholder is granted the following registration rights after the
Initial Restricted Securities Issuance Date with regard to
Restricted Securities held by Restricted Stockholder.
4.1
Demand
Registration
.
(a)
If
at any time the Company is eligible to use a Form S-3 registration
statement, the Company receives a request in writing from
Restricted Stockholder that the Company file a Form S-3
registration statement with respect to outstanding Restricted
Securities held by Restricted Stockholder having an anticipated
aggregate offering price, net of Selling Expenses, of at least five
million dollars ($5,000,000.00), then the Company shall as soon as
practicable, and in any event within ninety (90) days after the
date such request is received by the Company, file a Form S-3
registration statement under the Securities Act covering all
Restricted Securities requested to be included in such registration
by Restricted Stockholder, subject to the limitations of Section
4.1(b), 4.1(c), and Section 4.3.
The Company shall use its commercially reasonable
efforts to cause such Form S-3 registration statement to be
declared effective by the SEC as soon as practicable after filing.
Any registration requested by Restricted Stockholder pursuant to
this Section 4.1 is referred to in this Agreement as a
“
Demand
Registration
.”
(b)
Notwithstanding
the foregoing obligations, if the Company furnishes to Restricted
Stockholder a certificate signed by the Company’s chief
executive officer stating that in the good faith judgment of the
Board it would be materially detrimental to the Company and its
stockholders for such registration statement to either become
effective or remain effective for as long as such registration
statement otherwise would be required to remain effective, because
such action would: (i) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction
involving the Company; (ii) require premature disclosure of
material information that the Company has a bona fide business
purpose for preserving as confidential; or (iii) render the Company
unable to comply with requirements under the Securities Act or
Exchange Act,
then the Company
shall have the right to defer taking action with respect to such
filing, and any time periods with respect to filing or
effectiveness thereof shall be tolled correspondingly, for a period
of not more than ninety (90)
days after the request of Restricted Stockholder
is given;
provided
,
however, that the Company may not invoke this right more than once
in any twelve (12) month period
; and
provided
further
that the Company shall not register
any securities for its own account or that of any other stockholder
during such ninety (90) day period other than
an Excluded Registration
.
(c)
The
Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to Section 4.1(a) (i) during the
period that is ninety (90) days before the Company’s good
faith estimate of the date of filing of, and ending on a date that
is ninety (90) days after the effective date of, a
Company-initiated registration, provided that the Company is
actively employing in good faith commercially reasonable efforts to
cause such registration statement to become effective; or (ii) if
the Company has effected a registration pursuant to Section 4.1(a)
within the twelve (12) month period immediately preceding the date
of such request.
A registration
shall not be counted as “effected” for purposes of
this
Section
4.1
(c)
until such time as the applicable registration
statement has been declared effective by the SEC, unless Restricted
Stockholder withdraws its request for such registration, elects not
to pay the registration expenses therefor,
and forfeits its right to one demand registration
statement
pursuant to this
Section
4.1 as provided in
Section 4.6,
in which case such
withdrawn registration statement shall be counted as
“effected” for purposes of this Section
4.1(c).
(d)
Restricted
Stockholder shall only be entitled to two (2) Demand Registrations
under this Section 4.1.
4.2
Company
Registration
. If the Company
proposes to register (including, for this purpose, a registration
effected by the Company for stockholders other than Restricted
Stockholder) any of its
capital
stock or other securities
under
the Securities Act in connection with the public offering of such
securities solely for cash (other than
in
an Excluded
Registration), the Company shall, at such time, promptly give
Restricted Stockholder notice of such registration. Upon the
request in writing of Restricted Stockholder given within twenty
(20) days after such notice is given by the Company, the Company
shall, subject to the provisions of Section
4.3,
cause to
be registered all of the Restricted Securities that Restricted
Stockholder has properly requested to be included in such
registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 4.2
before the effective date of such registration, whether or not
Restricted Stockholder has elected to include Restricted Securities
in such registration. The expenses
(other than Selling Expenses)
of such withdrawn registration shall be borne by
the Company in accordance with Section
4.6.
4.3
Underwriting
Requirements
.
(a)
If,
pursuant to Section
4.1,
Restricted Stockholder intends to
distribute Restricted Securities covered by its request by means of
an underwriting, Restricted Stockholder shall so advise the Company
as a part of its request made pursuant to Section
4.1
. The
underwriter
(s)
will be selected by Restricted
Stockholder subject to the reasonable approval of Company. In such
event, the right of Restricted Stockholder to include Restricted
Stockholder’s Restricted Securities in such registration
shall be conditioned upon Restricted Stockholder’s
participation in such underwriting and the inclusion of Restricted
Stockholder’s Restricted Securities in the underwriting to
the extent provided herein. Restricted Stockholder shall (together
with the Company as provided in
Section
4.4
(e)) enter
into an underwriting agreement in customary form with the
underwriter(s) selected for such
underwriting. Notwithstanding any other provision of this
Section
4.3,
if the managing underwriter(s)
advise(s) Restricted Stockholder in writing that marketing factors
require a limitation on the number of shares to be underwritten,
then the number of Restricted Securities that may be included in
the underwriting shall be reduced to the number of Restricted
Securities determined by the managing
underwriter(s).
(b)
In
connection with any offering involving an underwriting of shares of
the Company’s capital stock pursuant to Section 4.2, the
Company shall not be required to include any of Restricted
Stockholder’s Restricted Securities in such underwriting
unless Restricted Stockholder accepts the terms of the underwriting
as agreed upon between the Company and the underwriters, and then
only in such quantity as the underwriters in their sole discretion
determine will not jeopardize the success of the offering by the
Company. If the total number of securities, including Restricted
Securities, requested by stockholders to be included in such
offering exceeds the number of securities to be sold (other than by
the Company) that the underwriters in their reasonable discretion
determine is compatible with the success of the offering, then the
Company shall be required to include in the offering only that
number of such securities, including Restricted Securities, which
the underwriters and the Company in their sole discretion determine
will not jeopardize the success of the offering.
If the managing underwriter(s)
determine that less than all of the Restricted Securities requested
to be registered can be included in such offering, then the
Restricted Securities that are included in such offering shall
be
reduced to the number
determined by the managing underwriter(s).
Notwithstanding the foregoing, in no event
shall
the number of Restricted
Securities included in the offering be reduced unless all other
securities (other than securities to be sold by the Company) are
first entirely excluded from the offering or, subject to Section
4.11, cutback proportionately with Other Registrable Securities (as
defined in Section 4.11) requested to be registered. For purposes
of the provision in this Section
4.3
(b)
concerning apportionment, for any selling Restricted
Stockholder
that is
a partnership, limited liability
company, or corporation, the partners, members, retired partners,
retired members, stockholders, and Affiliates of Restricted
Stockholder, or the estates and Immediate Family Members of any
such partners, retired partners, members, and retired members and
any trusts for the benefit of any of the foregoing Persons, shall
be deemed to be a single “selling Restricted
Stockholder,” and any pro rata reduction with respect to such
“selling Restricted Stockholder” shall be based upon
the aggregate number of Restricted Securities owned by all Persons
included in such “selling Restricted Stockholder,” as
defined in this sentence.
(c)
For
purposes of Section
4.1,
a registration shall not be counted as
“effected” if, as a result of an exercise of the
underwriter’s cutback provisions in Section
4.3
(b), fewer than fifty percent (50%) of the total
number of Restricted Securities that Restricted Stockholder has
requested to be included in such registration statement are
actually included.
4.4
Obligations
of the Company
.
Whenever required under this
Article IV to effect the registration of any
Restricted Securities, the Company shall, as expeditiously as
reasonably possible:
(a)
prepare
and file with the SEC a registration statement with respect to such
Restricted Securities and use its commercially reasonable
efforts
to cause such
registration statement to become effective and, upon the request of
Restricted Stockholder, keep such registration statement effective
for a period of at least one hundred eighty (180) days or, if
earlier, until the distribution contemplated in the registration
statement has been completed;
provided,
however
, that (i) such one
hundred eighty (180) day period shall be extended for a period of
time equal to the period Restricted Stockholder refrains, at the
request of an underwriter of securities of the Company, from
selling any securities included in such registration, and (ii) in
the case of any registration of Restricted Securities on Form S-3
that are intended to be offered on a continuous or delayed basis,
subject to compliance with applicable SEC rules, such one hundred
eighty (180) day period shall be extended, if necessary, to keep
the registration statement effective until all such Restricted
Securities are sold;
(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
Securities Act in order to enable the disposition of all securities
covered by such registration statement;
(c)
furnish
to Restricted Stockholder such numbers of copies of a prospectus,
including a preliminary prospectus, as required by the Securities
Act, and such other documents as Restricted Stockholder may
reasonably request in order to facilitate the disposition of the
Restricted Securities;
(d)
use
its commercially reasonable efforts to 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 Restricted Stockholder;
provided that
the Company shall not be required to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions,
unless the Company is already subject to service
in such jurisdiction and except as may be required by the
Securities Act;
(e)
in
the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the
underwriter
(s)
of such
offering;
(f)
use
its commercially reasonable efforts to cause all such Restricted
Securities covered by such registration statement to be listed on a
national securities exchange or trading system and each securities
exchange and trading system (if any) on which similar securities
issued by the Company are then listed;
(g)
provide
a transfer agent and registrar for all Restricted Securities
registered pursuant to this Agreement and provide a CUSIP number
for all such Restricted Securities, in each case not later than the
effective date of such registration;
(h)
promptly
make available for inspection by Restricted Stockholder, any
managing underwriter
(s)
participating in any disposition
pursuant to such registration statement, and any attorney or
accountant or other agent retained by any such underwriter or
selected by Restricted Stockholder, all financial and other
records, pertinent corporate documents, and properties of the
Company, and cause the Company’s officers, directors,
employees, and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant, or agent
, in each
case, as necessary or advisable to verify the accuracy of the
information in such registration statement and to conduct
appropriate due diligence
in
connection
therewith
;
(i)
notify
Restricted Stockholder, promptly after the Company receives notice
thereof, of the time when such registration statement has been
declared effective or a supplement to any prospectus forming a part
of such registration statement has been filed; and
(j)
after
such registration statement becomes effective, notify Restricted
Stockholder of any request by the SEC that the Company amend or
supplement such registration statement or prospectus.
4.5
Furnish
Information
. It shall be a
condition precedent to the obligations of Company to take any
action pursuant to this
Article
IV with respect to the Restricted Securities of Restricted
Stockholder that Restricted Stockholder shall furnish to the
Company such information regarding itself and its Affiliates and
Associates, the Restricted Securities held by it, and the intended
method of disposition of such securities as is reasonably required
to effect the registration of Restricted Stockholder’s
Restricted Securities.
4.6
Expenses
of Registration
.
All expenses (other than Selling
Expenses) incurred in connection with registrations, including
without limitation, those expenses for filings, or qualifications
pursuant to Article IV
,
including all registration, filing, and qualification fees;
printers’ and accounting fees; fees and expenses of
compliance with securities laws or blue sky laws; and fees and
disbursements of counsel for Company
shall be borne and paid by Company; provided,
however, that Company shall not be required to pay for any expenses
of any registration proceeding begun pursuant to Section 4.1
if the registration request is
subsequently withdrawn at the request of Restricted Stockholder (in
which case Restricted Stockholder shall bear such expenses), unless
Restricted Stockholder agrees to forfeit the right to one (1)
registration pursuant to Section
4.1,
as the
case may be;
provided
further
that if, at the time of
such withdrawal, Restricted Stockholder has learned of a material
adverse change in the condition, business, or prospects of Company
from that known to Restricted Stockholder at the time of its
request and has withdrawn the request with reasonable promptness
after learning of such information, then Restricted Stockholder
shall not be required to pay any of such expenses and shall not
forfeit its right to one (1) registration pursuant to Section
4.1
. All Selling Expenses
relating to Restricted Securities registered pursuant to this
Article IV shall be borne and paid by Restricted
Stockholder.
4.7
Delay
of Registration
. Restricted
Stockholder shall not have any right to obtain or seek an
injunction restraining or otherwise delaying any registration
pursuant to this Agreement as the result of any controversy that
might arise with respect to the interpretation or implementation of
this
Article
IV.
4.8
Indemnification
.
If any Restricted Securities are
included in a registration statement under this Article
IV:
(a)
To
the maximum extent permitted by applicable Law, Company will
indemnify and hold harmless Restricted Stockholder, and the
Affiliates, Associates, partners, members, officers, directors, and
stockholders of Restricted Stockholder; legal counsel and
accountants for Restricted Stockholder; any underwriter (as defined
in the Securities Act) for Restricted Stockholder; and each Person,
if any, who controls Restricted Stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any
Damages, and Company will pay to Restricted Stockholder,
underwriter, controlling Person, or other aforementioned Person any
legal or other expenses reasonably incurred thereby in connection
with investigating
or defending
any
Action or
P
roceeding from which Damages
may result, as such expenses are incurred;
provided
,
however
,
that the indemnity agreement contained in this Section
4.8
(a) shall not apply to amounts paid in settlement
of any such
Action or
P
roceeding if such settlement
is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable for
any Damages to the extent that they arise out of or are based upon
actions or omissions made in reliance upon and in conformity with
written information furnished by or on behalf of Restricted
Stockholder, underwriter, controlling Person, or other
aforementioned Person expressly for use in connection with such
registration.
(b)
To
the maximum extent permitted by applicable Law, Restricted
Stockholder will indemnify and hold harmless Company, and each of
its directors, each of its officers who has signed the registration
statement, each Person (if any), who controls Company within the
meaning of the Securities Act, legal counsel and accountants for
Company, any underwriter (as defined in the Securities Act), any
other Person selling securities in such registration statement, and
any controlling Person of any such underwriter or other selling
Person, against any Damages, in each case only to the extent that
such Damages arise out of or are based upon actions or omissions
made in reliance upon and in conformity with written information
furnished by or on behalf of Restricted Stockholder expressly for
use in connection with such registration; and Restricted
Stockholder will pay to Company and each other aforementioned
Person any legal or other expenses reasonably incurred thereby in
connection with investigating
or defending any
claim or
proceeding from which Damages may result, as such
expenses are incurred; provided, however, that the indemnity
agreement contained in this Section
4.8
(b) shall
not apply to amounts paid in settlement of any such
claim
or proceeding if such settlement is effected
without the consent of Restricted Stockholder, which consent shall
not be unreasonably withheld; and provided further that in no event
shall any indemnity under this Section
4.8
(b) exceed
the proceeds from the offering
received by Restricted Stockholder
(net of any Selling Expenses
paid by Restricted
Stockholder
)
, except in the case of fraud or willful
misconduct by Restricted Stockholder.
(c)
Promptly
after receipt by an indemnified party under this Section
4.8
of notice of the commencement of any Action or
Proceeding (including any governmental Action or Proceeding) for
which a party may be entitled to indemnification hereunder, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section
4.8
, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right
to participate in such Action or Proceeding and, to the extent the
indemnifying party so desires, participate jointly with any other
indemnifying party to which notice has been given, and to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together
with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one (1)
separate 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 differing interests
between such indemnified party and any other party represented by
such counsel in such action. Failure to give notice to the
indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section
4.8,
to the extent that such failure does not
materially prejudice the indemnifying party’s ability to
defend such action.
(d)
Notwithstanding
anything else herein to the contrary, the
foregoing indemnity agreements of Company and
Restricted Stockholder are subject to the condition that, insofar
as they relate to any Damages arising from any untrue statement or
alleged untrue statement of a material fact contained in, or
omission or alleged omission of a material fact from, a preliminary
prospectus (or necessary to make the statements therein not
misleading) that has been corrected in the form of prospectus
included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the
SEC pursuant to Rule 424(b) under the Securities Act
(“
Final
Prospectus
”), such
indemnity agreement shall not inure to the benefit of any Person if
a copy of the Final Prospectus was furnished to the indemnified
party and such indemnified party failed to deliver, at or before
the confirmation of the sale of the shares registered in such
offering, a copy of the Final Prospectus to the Person asserting
the loss, liability, claim, or damage in any case in which such
delivery was required by the Securities Act.
(e)
To
provide for just and equitable contribution to joint liability
under the Securities Act in any case in which either (i) any party
otherwise entitled to indemnification hereunder makes a claim for
indemnification pursuant to this
Section 4.8 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
4.8
provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part
of any party hereto for which indemnification is provided under
this Section
4.8,
then, and in each such case, such
parties will contribute to the aggregate losses, claims, damages,
liabilities, or expenses to which they may be subject (after
contribution from others) in such proportion as is appropriate to
reflect the relative fault of
each of
the
indemnifying party and the indemnified party in
connection with the statements, omissions, or other actions that
resulted in such loss, claim, damage, liability, or expense, as
well as to reflect any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things,
whether the untrue or allegedly untrue statement of a material
fact, or the omission or alleged omission of a material fact,
relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or
prevent such statement or omission;
provided
,
however
,
that, in any such case, (x) Restricted Stockholder will not be
required to contribute any amount in excess of the public offering
price of all Restricted Securities offered and sold by Restricted
Stockholder pursuant to such registration statement except in the
case of willful misconduct or fraud, and (y) no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation;
and
provided
,
further,
that in no event shall Restricted
Stockholder’s liability pursuant to this Section
4.8
(e), when combined with the amounts paid or
payable by Restricted Stockholder pursuant to Section
4.8
(b), exceed the proceeds from the offering
received by Restricted
Stockholder
(net of any Selling
Expenses
paid
by Restricted
Stockholder
)
, except in the case of willful misconduct or
fraud by Restricted Stockholder.
(f)
Notwithstanding
the foregoing, to the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(g)
Unless
otherwise superseded by an underwriting agreement entered into in
connection with the underwritten public offering, the obligations
of Company and Restricted Stockholder under this Section
4.8
shall survive the completion of any offering of
Restricted Securities in a registration under this Article IV, and
otherwise shall survive the termination of this
Agreement.
4.9
Reports
Under Exchange Act
. With a view
to making available to Restricted Stockholder the benefits of SEC
Rule 144 and any other rule or regulation of the SEC that may at
any time permit Restricted Stockholder to sell securities of the
Company to the public without registration or pursuant to a
registration on Form S-3, the Company shall:
(a)
make
and keep
available adequate
current
public
information
, as those terms are
understood and defined in SEC Rule 144;
(b)
use
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 and the Exchange Act (at any time after
the Company has become subject to such reporting requirements);
and
(c)
furnish
to Restricted Stockholder, so long as Restricted Stockholder owns
any Restricted Securities, forthwith upon request (i)
to the extent accurate,
a written statement by the Company
that it has complied with the reporting requirements of SEC Rule
144, the Securities Act, and the Exchange Act, or that it qualifies
as a registrant whose securities may be resold pursuant to Form S-3
(at any time after Company so qualifies); (ii) a copy of the most
recent annual or quarterly report of Company and such other reports
and documents so filed by Company; and (iii) such other information
as may be reasonably requested in availing Restricted Stockholder
of any rule or regulation of the SEC that permits the selling of
any such securities without registration (at any time after the
Company has become subject to the reporting requirements under the
Exchange Act) or pursuant to
Form S-3 (at any time after Company so qualifies
to use such form).
4.10
“Market
Stand-off” Agreement
.
Restricted
Stockholder hereby agrees that it will not, without the prior
written consent of the managing underwriter(s), during the period
commencing on the date of the final prospectus relating to a
registration of
equity
securities of Company under the
Securities Act
and
ending on the date specified by Company and the managing
underwriter(s) (such period not to exceed (x) one hundred eighty
(180) days, which period may be extended upon the request of the
managing underwriter(s) for an additional period of up to fifteen
(15) days if Company issues or proposes to issue an earnings or
other public release within fifteen (15) days of the expiration of
the 180-day lockup period),
Transfer
any Shares held immediately before the effective date of the
registration statement for such offering
. The foregoing provisions of this Section
4.
10
shall not apply to the sale of any securities to
an underwriter pursuant to an underwriting agreement. The
underwriters in connection with
such
registration
are intended third-party beneficiaries of this
Section
4.1
0 and shall have the right, power, and authority
to enforce the provisions hereof as though they were a party
hereto. Restricted Stockholder further agrees to execute such
agreements as may be reasonably requested by the underwriters
in
connection with such
registration
that are
consistent with this Section
4.1
0 or that
are necessary to give further effect thereto.
4.11
Addition
of Other Registrable Securities
. Notwithstanding any other provision of this
Article IV, in the event Company grants to any third parties any
rights to register their securities under the Securities Act
(“
Other Registrable
Securities
”), such rights
may be granted by Company on a pari passu basis with the rights
granted to Restricted Stockholder under this Agreement. Any such
Other Registrable Securities may be included in any registration
statement in which Restricted Securities are included on the same
terms and conditions as set forth in this Article IV as if the
Other Registrable Securities were Restricted Securities and the
holders of the Restricted Securities were Restricted Stockholders,
subject to customary provisions for pro rata participation,
allocations and cutbacks of securities included in any such
registrations. Upon request by Company, the Parties shall amend
this Article IV to provide for such combined participation by
holders of Other Registrable Securities or terminate the provisions
of this Article IV and enter into a separate agreement providing
for such combined participation.
4.12
Termination
of Registration Rights
.
Restricted Stockholder shall not be entitled to exercise any right
provided for in this Article IV after the earlier of (i) the
expiration of the Securities Restrictions Period; (ii) such time as
all Restricted Securities held by Restricted Stockholder, together
with its Affiliates, may be sold in a three (3)-month period
without registration pursuant to SEC Rule 144, subject to the
volume limitations contained in such rule; and (iii) the date
Company ceases to have a security registered (1) on a national
securities exchange under Section 12(b) of the Exchange Act, or (2)
with the SEC under Section 12(g) of the Exchange Act.
The registration rights granted to
Restricted Stockholder under this Article IV are personal to
Restricted Stockholder and may not be transferred or assigned to
any subsequent holder of Restricted Securities, except that a
permitted transferee of Restricted Securities that becomes a party
to this Agreement as an additional Restricted Stockholder in
accordance with Section 5.6 will be entitled to the registration
rights under this Article IV with all other Restricted Stockholders
(and other third parties holding registration rights as provided in
Section 4.11), subject to customary provisions for pro rata
participation, allocations and cutbacks of securities included in
any such registrations. Restricted Stockholder acknowledges that
any request for registration under the Securities Act pursuant to
this Agreement shall give rise to the right of first refusal set
forth in Section 5.3, to the extent such right has not been
previously terminated.
Article
V
Transfer
Restrictions
5.1
Restrictions
Under Securities Laws
.
(a)
Restricted
Stockholder understands that Restricted Securities have not been,
and will not be, registered under the Securities Act, by reason of
a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona
fide nature of the investment intent and the accuracy of Restricted
Stockholder’s representations and warranties made to Company.
Restricted Stockholder understands that the Restricted Securities
are “
restricted
securities
” under
applicable U.S. federal and state securities Laws and that,
pursuant to these Laws, Restricted Stockholder must hold the
Restricted Securities indefinitely unless they are registered with
the SEC and qualified by state authorities or an exemption from
such registration and qualification requirements is available.
Restricted Stockholder acknowledges that Company has no obligation
to register or qualify the Restricted Securities for resale except
as set forth in this Agreement. Restricted Stockholder further
acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various
requirements including, but not limited to, the time and manner of
sale, the holding period for the Restricted Securities, and on
requirements relating to Company which are outside of Restricted
Stockholder’s or Company’s control, and which Company
is under no obligation and may not be able to
satisfy.
(b)
Unless
there is in effect a registration statement under the Securities
Act covering the proposed transaction, before any proposed Transfer
of any Restricted Securities to a permitted purchaser, pledgee,
assignee or transferee, Restricted Stockholder shall give notice to
Company of Restricted Stockholder’s intention to effect such
Transfer. Each such notice shall describe the manner and
circumstances of the proposed sale, pledge, or transfer in
sufficient detail. If at the time of the proposed Transfer of
Restricted Securities no registration statement is in effect with
respect to such shares under applicable provisions of the
Securities Act and other applicable securities laws, Restricted
Stockholder hereby agrees that it will not Transfer all or any part
of the Restricted Securities unless there shall be available
exemptions from such registration requirements. Should there be any
uncertainty or disagreement between Company and Restricted
Stockholder as to the availability of such exemptions, then
Restricted Stockholder shall be required to deliver to Company an
opinion of counsel (skilled in securities matters, selected by
Restricted Stockholder and reasonably satisfactory to Company) in
form and substance satisfactory to Company to the effect that such
Transfer is in compliance with an available exemption under the
Securities Act and other applicable securities
laws
.
(c)
In
addition to the other restrictions set forth in this Article V,
Restricted Securities may only be acquired or Transferred by
Restricted Stockholder in compliance with the Securities Trading
Policy generally applicable to officers and directors of the
Company.
(d)
Restricted
Stockholder acknowledges that the United States securities Laws
prohibit any person or entity from: (i) purchasing or selling a
security, in breach of a fiduciary duty or other relationship of
trust and confidence, while in possession of material, nonpublic
information about the security, or (ii) tipping material nonpublic
information in breach of such a fiduciary duty or other
relationship. In addition, Restricted Stockholder acknowledges that
Restricted Stockholder and any Affiliates of Restricted Stockholder
will be deemed “affiliates” of Company under applicable
securities Laws, and as such, Restricted Stockholder will be
subject to additional restrictions on Transfers under applicable
securities Laws by reason of Restricted Stockholder’s status
as an “affiliate” of the Company, which, among other
things, may result in Restricted Stockholder being deemed to be an
underwriter or in possession of material, non-public information of
Company. Restricted Stockholder agrees that it will not: (i)
purchase or sell any security of Company while in possession of, or
on the basis of, material, nonpublic information about those
securities or Company (other than in connection with any purchase
of Company securities direct from the Company with the consent of
the Company), or (ii) tip material nonpublic information about the
Company’s securities or Company in violation of the United
States securities Laws. Restricted Stockholder further agrees to
comply with all applicable securities Laws in connection with any
Transfers of Restricted Securities that are otherwise permitted
under this Article V.
5.2
No
Transfers During Securities Restrictions Period
. Restricted Stockholders shall not Transfer any
Restricted Securities to any Person during the No Transfers
Period.
5.3
Right
of First Refusal
.
(a)
Prior
to any intended Transfer of any Restricted Securities that is
otherwise permitted by the provisions of this Article V, Restricted
Stockholder shall first give written notice
(“
Offer Notice
”) to Company specifying (i) Restricted
Stockholder’s bona fide intention to sell or otherwise
transfer such Restricted Securities, (ii) the name and address of
the proposed purchaser(s) or transferee(s) and their beneficial
owners (if different from the proposed purchaser(s) or
transferee(s), (iii) the number of Restricted Securities Restricted
Stockholder proposes to sell (“
Offered
Securities
”), (iv) the
price for which Restricted Stockholder proposes to sell the Offered
Securities, and (v) all other material terms and conditions of the
proposed sale or other transfer. Notwithstanding the foregoing, if
Restricted Stockholder proposes to Transfer Restricted Securities
pursuant to a Proposed Public Transfer, the name, address and price
of the Offered Securities may not be applicable or available. In
case of a Proposed Public Transfer under Rule 144, the Offer Notice
shall include only the information specified in items (i), (iii)
and (v) above, and, in the case of a demand pursuant to Section 4.1
or request for registration pursuant to Section 4.2, Restricted
Stockholder’s demand or request will constitute its Offer
Notice. In the case of any Proposed Public Transfer, the purchase
price for purposes of this Section 5.3 will be the volume-weighted
average closing price of the Common Stock over the thirty 30 days
preceding Restricted Stockholder’s delivery of the Offer
Notice.
(b)
Within
the applicable Reply Period after receipt of the Offer Notice,
Company or its nominee(s) may elect to purchase all (but not less
than all) of the Offered Securities at the price and on the terms
and conditions set forth in the Offer Notice by delivery of written
notice (“
Acceptance
Notice
”) to Restricted
Stockholder. Within fifteen (15) days after delivery of the
Acceptance Notice to Restricted Stockholder, Company and/or its
nominee(s) shall deliver a check or wire transfer (or, at the
discretion of Company, such other form of consideration set forth
in the Offer Notice) in the amount of the purchase price of the
Offered Securities to be purchased pursuant to this Section 5.3,
against delivery by Restricted Stockholder of book-entry account
transfer instructions representing the Offered Securities to be
purchased, duly endorsed for transfer to Company or such
nominee(s), as the case may be. If Company and/or its nominee(s) do
not elect to purchase the Offered Securities, Restricted
Stockholder shall be entitled to sell the Offered Securities to the
purchaser(s) named in the Offer Notice or in accordance with the
Proposed Public Transfer at the price specified in the Offer Notice
or at a higher price and substantially on the same terms and
conditions set forth in the Offer Notice,
provided,
however
, that a private sale or
a Proposed Public Transfer under Rule 144 must be consummated
within sixty (60) days from the date of the earlier of (i)
expiration of the applicable Reply Period for the Offer Notice and
(ii) if applicable, the Company’s election not to exercise
its right of first refusal, and any proposed sale after such sixty
(60) day period may be made only by again complying with the
procedures set forth in this Section 5.3; and
provided,
further
, that a Proposed Public
Transfer under Section 4.1 or 4.2 herein shall be conducted in
accordance with the terms described in Article IV, and shall not be
subject to the above sixty-day limitation.
(c)
The
right of first refusal set forth in this Section 5.3 shall
terminate upon the later of (i) the expiration of the Securities
Restrictions Period; and (ii) such time as Restricted Stockholder
and all of its Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock. In addition, provided that the Company
has not elected to exercise its right of first refusal under this
Section 5.3, the right of first refusal granted under this Section
5.3 shall terminate as to Restricted Securities proposed to be
Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
5.4
Limitation
on Number of Transfers of Restricted Securities
. Notwithstanding any other provision of this
Agreement, the number of Restricted Securities that may be resold
or otherwise Transferred to the public or through any public
securities trading market at any time may not exceed the volume
limitations contained in SEC Rule 144; provided, that the number of
Restricted Securities that may be sold pursuant to a registered
offering under Article IV of this Agreement shall be determined
among the Company, Restricted Stockholder and the applicable
underwriters in accordance with Article IV. The Transfer volume
limitations set forth in this Section 5.4 shall terminate upon the
later of (i) the expiration of the Securities Restrictions Period;
(ii) such time as Restricted Stockholder and all of its Affiliates
and Associates, individually and as a group, Beneficially Own less
than 4.9% of the Company’s outstanding Common Stock; and
(iii) such time as Restricted Stockholder is no longer subject to
the volume limitations for Transfers under SEC Rule
144.
5.5
Restrictions
Related to NOL Plan and Section 382 Compliance
. Restricted Stockholder will not Transfer any
Beneficial Ownership in any Shares to any Person who Restricted
Stockholder reasonably believes after due inquiry Beneficially Owns
or as a result of such transaction would Beneficially Own 4.9% or
more of the Company’s then outstanding Common Stock;
provided
,
that the obligation of due inquiry set forth in this Section 5.5
shall not apply to any Proposed Public
Transfer.
5.6
Permitted
Transferees Subject to Restrictions
. Any permitted successor of Restricted
Stockholder, and any other permitted transferee of Restricted
Securities pursuant to this Article V (other than transferees in
Proposed Public Transfers), as a condition to such Transfer shall
execute and become a party to this Agreement as an additional
Restricted Stockholder, execute and deliver an Irrevocable Proxy
with respect to the Restricted Securities Transferred to such
permitted transferee or successor and hold the Restricted
Securities subject to the terms and conditions of this Agreement as
if the permitted successor or other transferee were Restricted
Stockholder. Upon request by Company, the parties to this Agreement
shall enter into such amendment or modifications to this Agreement
as the Company may deem necessary to facilitate the inclusion of
additional Restricted Stockholders as parties to this Agreement. No
further Transfer of Restricted Securities may be made without
complying with the provisions of this
Agreement.
5.7
Escrow
and Pro-Rata Release of Proceeds From Transfers of Restricted
Securities
. In the event of any
Transfer of the Restricted Securities, including a Transfer to the
Company as a result of the Company’s exercise of its right of
first refusal under Section 5.3, all Restricted Securities Transfer
Proceeds from the Transfer shall be deposited directly into an
escrow established prior to the consummation of the Transfer with a
financial institution reasonably acceptable to the Company and the
Restricted Stockholder; provided that in the event a Transfer
occurs following the first anniversary of the Effective Date,
subject to any unresolved claims made by the Company against the
Restricted Securities or the escrowed Restricted Securities
Transfer Proceeds, Restricted Stockholder shall receive a pro rata
portion of the Restricted Securities Transfer Proceeds in an amount
equal to the product of: (i) the aggregate amount of the Restricted
Securities Transfer Proceeds multiplied by (ii) the number of
anniversaries of the Effective Date that have occurred since the
Effective Date multiplied by (iii) twenty percent (20%). The escrow
instructions shall provide that, subject to any unresolved claims
made by Company against the Restricted Securities or the escrowed
Restricted Securities Transfer Proceeds, an amount equal to twenty
percent (20%) of the aggregate amount of Restricted Securities
Transfer Proceeds initially escrowed shall be released to
Restricted Stockholder upon each anniversary of the Effective
Date.
Article
VI
Voting
Proxy
6.1
Irrevocable
Proxy
. Concurrently with, and
as a condition to, the issuance of the Initial Restricted
Securities, Restricted Stockholder will execute and deliver an
Irrevocable Proxy with respect to the Restricted
Securities.
6.2
Termination
of Irrevocable Proxy
. The
Irrevocable Proxy granted in Section 6.1 shall terminate upon the
later of (i) the expiration of the Securities Restrictions Period;
and (ii) such time as Restricted Stockholder and all of its
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock. In addition, the Irrevocable Proxy granted under this
Article VI shall terminate as to Restricted Securities proposed to
be Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
Article
VII
Repurchase
Option
7.1
Right
to Repurchase
. Effective
immediately upon the occurrence of a Repurchase Option Event,
Company shall have the right and option (but not the obligation) to
purchase, all or part, of the Restricted Securities from Restricted
Stockholder that is the subject of the Repurchase Option Event
(“
Repurchase
Option
”). The purchase
price for the Restricted Securities to be purchased under the
Repurchase Option shall be the Fair Market Value determined as of
the date of the occurrence of the applicable Repurchase Option
Event.
7.2
Exercise
of Repurchase Option
. For
ninety (90) days after the occurrence of a Repurchase Option Event
(“
Repurchase Option Exercise
Period
”), the Company
shall have the right to exercise the Repurchase Option by giving to
Restricted Stockholder written notice of such exercise, specifying
the number of Restricted Securities to be repurchased by the
Company and the aggregate purchase price thereof. Such notice shall
be accompanied by the Company’s payment in immediately
available funds. Notwithstanding the foregoing, the Repurchase
Option Exercise Period shall be tolled until such time as
Restricted Stockholder that is the subject of the Repurchase Option
Event provides notice of the occurrence of the Repurchase Option
Event to the Company.
7.3
Termination
of Repurchase Option
. The
Repurchase Option granted in this Article VII shall terminate upon
the later of (i) the expiration of the Securities Restrictions
Period; and (ii) such time as Restricted Stockholder and all of its
Affiliates and Associates, individually and as a group,
Beneficially Own less than 4.9% of the Company’s outstanding
Common Stock. In addition, the Repurchase Option granted under this
Article VII shall terminate as to Restricted Securities proposed to
be Transferred in a Proposed Public Transfer on the date such
Restricted Securities are sold pursuant to such Proposed Public
Transfer.
Article
VIII
Standstill
8.1
Agreement
to Standstill
. Neither
Restricted Stockholder, Designated Restricted Stockholder Affiliate
nor any Affiliate or Associate of Restricted Stockholder will,
without the prior written consent of the Company (i) acquire, offer
to acquire, propose (whether publicly or otherwise) to acquire,
announce any intention to effect or cause or participate in or in
any way assist or encourage any other person to effect or seek,
offer or propose (whether publicly or otherwise) to acquire or
agree to acquire, directly or indirectly, by purchase or otherwise,
any securities (or beneficial ownership thereof) or direct or
indirect rights to acquire any securities of the Company or any
subsidiary thereof, or of any successor to or person in control of
the Company, or any assets of the Company or any subsidiary or
division thereof or of any such successor or controlling person;
(ii) participate in (1) any tender or exchange offer, merger or
other business combination involving the Company or any of its
affiliates; (2) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the
Company or any of its affiliates; or (3) any
“solicitation” of “proxies” (as such terms
are used in the proxy rules of the SEC) or consents to vote any
voting securities of the Company or any of its affiliates; (iii)
form, join or in any way participate in a “group” as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, in connection with any of the foregoing; (iv) otherwise
act, alone or in concert with others, to seek to control or
influence the management, Board or policies of the Company or any
of its affiliates; (v) nominate or seek to nominate any person to
the Board or otherwise act, alone or in concert with others, to
seek to control or influence the management, the Board or policies
of the Company; (vi) request that any part of this Section 8.1 be
waived; (vii) participate in any special meeting or written consent
of stockholders of the Company; (vii) request any list of
stockholders of the Company; (viii) enter into any voting agreement
with respect to the Company’s Common Stock or any other
voting securities; (ix) initiate any stockholder proposals; (x)
participate in any financing for the acquisition by any Person of
securities or assets of the Company; (xi) seek to influence any
person with respect to voting of any Company securities; (xii) seek
any changes in composition of the Board or management; (xiii) take
any actions that may impede the acquisition of control of the
Company or any other Person; (xiv) cause the Common Stock to be
eligible for termination of registration under Section 12 of the
Exchange Act; (xv) take any action which might force the Company to
make a public announcement regarding any of the types of matters
set forth in clauses (i)-(xiv) above; or (xvi) enter into any
discussions or arrangements with any third party with respect to
any of the foregoing.
8.2
Expiration
of Standstill
. The standstill
provisions of Section 8.1 shall terminate at such time as
Restricted Stockholder and all of its Affiliates and Associates,
individually and as a group, Beneficially Own less than 4.9% of the
Company’s outstanding Common Stock.
Article
IX
Operational and
Other Restrictions
9.1
License
Agreement Restrictions
. Each of
Restricted Stockholder and Designated Restricted Stockholder
Affiliate covenants and agrees that, without the express written
consent of the Company, it will not, nor will it cause or knowingly
permit any of its Affiliates or Associates to, directly or
indirectly violate any of the provisions of Section 2.6 of the
License Agreement.
9.2
Termination
of Restrictions
. The
restrictions set forth in this Article IX shall terminate if and
when the restrictions in the License Agreement
terminate.
Article
X
Confidentiality
10.1
Confidentiality
Obligations
. Unless otherwise
agreed to in writing by Company, Restricted Stockholder and
Designated Restricted Stockholder Affiliate agree (i) to keep all
Confidential Information confidential and not to disclose or reveal
any Confidential Information (or the fact that Confidential
Information has been made available to Restricted Stockholder or
Designated Restricted Stockholder Affiliate) to any Person; and
(ii) not to use Confidential Information for any purpose other than
in connection with the management of Restricted Stockholder’s
investment in Company and more specifically not to use Confidential
Information to compete with Company. Restricted Stockholder and
Designated Restricted Stockholder Affiliate each acknowledge that
they are aware that, in general, the United States securities laws
prohibit any person or entity who or which possesses material,
non-public information regarding a publicly-held company such as
Company from purchasing or selling securities of such company or
from communicating the information to any person or
entity.
10.2
Limitation
on Confidentiality Obligations
.
The confidentiality obligations set forth in Section 10.1 shall not
apply to any Confidential Information that (i) is or becomes
generally available to the public other than as a result of a
disclosure by Restricted Stockholder or Designated Restricted
Stockholder Affiliate; (ii) was available to Restricted Stockholder
or Designated Restricted Stockholder Affiliate on a nonconfidential
basis prior to its disclosure to Restricted Stockholder or
Designated Restricted Stockholder Affiliate by Company; (iii)
becomes available to Restricted Stockholder or Designated
Restricted Stockholder Affiliate on a nonconfidential basis from a
Person other than Company or its Representatives who is not known
by Restricted Stockholder to be otherwise bound by a
confidentiality agreement with, or other obligation of
confidentiality or duty to, Company or any of its Representatives;
or (iv) is independently developed by Restricted Stockholder or
Designated Restricted Stockholder Affiliate without use of the
Confidential Information.
10.3
Disclosure
Required by Law
. In the event
Restricted Stockholder or Designated Restricted Stockholder
Affiliate is required by applicable Law or legal process (other
than as a result of an affirmative action taken by Restricted
Stockholder, Designated Restricted Stockholder Affiliate or any of
their respective Affiliates, Associates or Representatives that
triggers the disclosure obligation) to disclose any Confidential
Information, Restricted Stockholder and Designated Restricted
Stockholder Affiliate will provide Company with prompt notice of
such requirement (to the extent permitted by such applicable Law or
legal process) in order to enable Company to seek an appropriate
protective order or other remedy, to consult with Restricted
Stockholder and Designated Restricted Stockholder Affiliate with
respect to Company taking steps to resist or narrow the scope of
such required disclosure, or to waive compliance, in whole or in
part, with the terms of this Article X. In any event, Restricted
Stockholder and Designated Restricted Stockholder Affiliate will
use their respective best efforts to ensure that all Confidential
Information that is so disclosed will be accorded confidential
treatment.
10.4
Termination
of Restrictions
. The
restrictions set forth in this Article X shall terminate three (3)
years after the later of (i) the expiration of the Securities
Restrictions Period; and (ii) such time as Restricted Stockholder
and all of its Affiliates and Associates, individually and as a
group, Beneficially Own less than 4.9% of the Company’s
outstanding Common Stock.
Article
XI
General
Provisions
11.1
Entire
Agreement
. This Agreement
(including any Exhibits attached hereto, each of which is
incorporated herein by reference) 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.
11.2
Amendments
and Waivers
. This Agreement may
be amended, modified, superseded, or cancelled, and the terms and
conditions hereof may be waived, only by a written instrument
signed by the Parties hereto or, in the case of a waiver, by the
Party waiving compliance. No delay on the part of any Party in
exercising any right, power, or privilege hereunder will operate as
a waiver thereof, nor will any waiver on the part of any Party of
any right hereunder, nor any single or partial exercise of any
rights hereunder, preclude any other or further exercise thereof or
the exercise of any other right hereunder.
11.3
Assignment
.
Neither Party may assign or otherwise transfer or delegate this
Agreement or any of a Party’s rights, duties or obligations
under this Agreement to another person or entity without the prior
written consent of the other Party. Notwithstanding the foregoing,
this Agreement may be assigned or transferred by a Party to any
person or entity that succeeds the Party by operation of law or
that controls, is controlled by or is under common control of the
Party without the consent of the other Party;
provided
,
that in the case of Restricted Stockholder, Restricted Stockholder
has complied with the restrictions on Transfer set forth in this
Agreement that are applicable to any such Transfer. Nothing herein
will prohibit or restrict a Change in Control of either Party or
any party controlling, controlled by or under common control with
such Party or require the consent of the other Party to any
assignment or transfer of this Agreement in connection with any
Change in Control; provided, that in the case of Restricted
Stockholder, Restricted Stockholder has complied with the
restrictions on Transfer set forth in this Agreement that are
applicable to any such Transfer. This Agreement will be binding on
and inure to the benefit of each Party hereto and to each
Party’s respective permitted successors and
assigns.
11.4
Notices
.
Any notice required or permitted under this Agreement will be
considered to be effective in the case of (i) certified U.S. mail,
when sent postage prepaid and addressed to the Party for whom it is
intended at its address of record, three (3) days after deposit in
the U.S. mail; (ii) by courier or messenger service, upon receipt
by recipient as indicated on the courier’s receipt; or (iii)
upon receipt of an Electronic Transmission by the Party that is the
intended recipient of the Electronic Transmission. All notices
hereunder shall be delivered to the addresses set forth below, or
pursuant to such other instructions as may be designated in writing
by the Party to receive such notice:
(a)
if
to the Company, to:
Autobytel
Inc.
18872
MacArthur Blvd., Suite 200
Irvine,
California 92612-1400
Attention:
Glenn E. Fuller
Executive
Vice President, Chief Legal and
Administrative
Officer and Secretary
Facsimile:
949.862.323
Email:
glennf@autobytel.com
(b
)
if
to Restricted Stockholder or Designated Restricted Stockholder
Affiliate, to:
DealerX
Partners, LLC
360
Ocean Drive, Suite 1001S
Key
Biscayne, Florida 33149
Attention: Jeffrey
Tognetti
Manager
and President
Facsimile
:
Email:
jeff@dealerx.com
With
copy to:
Cody
Winchester
Phillips Ryther
& Winchester
124
South 600 East
Salt
Lake City, Utah 84103
Facsimile:
801.935.4936
Email:
czw@prwlawfirm.com
And
a copy to:
Rodney
A. Fields
Lewis
Thomason
One
Centre Square, Fifth Floor
620
Market Street
Knoxville,
Tennessee 37092
Facsimile:
865.523.6529
Email:
rfields@lewisthomason.com
11.5
Choice
of Law
. This Agreement, its
construction and the determination of any rights, duties or
remedies of the Parties arising out of or relating to this
Agreement will be governed by, enforced under and construed in
accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws of such state.
11.6
Dispute
Resolution
,Forum
.
(a) If
a dispute or claim arises between the Parties relating to this
Agreement, before either Company or a Member of the Restricted
Stockholder Group pursues other available remedies, the Party
asserting the dispute or claim shall notify the other Party of the
nature of the dispute or claim and request that persons with
decision making authority regarding the dispute or claim from each
Party (together with their respective counsel) confer, at a
mutually convenient date and time, by a mutually convenient means
(e.g., in person or by telephone, video conferencing, or other
electronic means), and at a mutually convenient place (in the event
an in person meeting is agreed upon by the Parties), to attempt to
a resolve the dispute or claim. No such attempt to resolve the
dispute or claim shall be deemed to vitiate or reduce the
obligations and liabilities of Company or a Member of the
Restricted Stockholder Group hereunder or be deemed a waiver by
Company or a Member of the Restricted Stockholder Group of any
remedies to which Company or a Member of the Restricted Stockholder
Group would otherwise be entitled hereunder. Any offers of
settlement or compromise made during such attempt to resolve the
dispute or claim shall be inadmissible in any court or arbitration
proceeding to prove a Party’s liability with respect to the
dispute or claim, nor shall any offer of settlement or compromise
constitute or be construed as an admission of any liability with
respect to the dispute or claim. Notwithstanding the foregoing,
either Party may seek specific performance and injunctive relief
from a court of competent jurisdiction in the Dispute Resolution
Venue in order to maintain the status quo while the procedure set
forth in this Section 11.6(a) is being followed. If the Parties are
unable to agree upon a mutually convenient date and time, means, or
place to confer within three (3) days after the asserting
Party’s notice of dispute or claim is effective in accordance
with Section 11.4, or if the Parties confer and do not reach a
resolution of the dispute or claim, each of the Parties shall be
entitled to purse arbitration under Section 11.6(b).
(b) In
the event a dispute or claim is not resolved under the procedure
set forth in Section 11.6(a), the Parties consent to and agree that
any dispute or claim arising out of, or in any way related to, this
Agreement shall be submitted to binding arbitration in the Dispute
Resolution Venue, and conducted in accordance with the Judicial
Arbitration and Mediation Service (“
JAMS
”) rules of practice then in
effect or such other procedures as the Parties may agree in
writing, and the Parties expressly waive any right they may
otherwise have to cause any such action or proceeding to be brought
or tried elsewhere. The Parties further agree that (i) any request
for arbitration shall be made in writing and must be made within a
reasonable time after the claim, dispute, or other matter in
question has arisen; provided however, that in no event shall the
demand for arbitration be made after the date that institution of
legal or equitable proceedings based on such claim, dispute, or
other matter would be barred by the applicable statue(s) of
limitations; (ii) the appointed arbitrator must be a former or
retired judge or attorney at law with at least ten (10)
years’ experience in commercial matters; (iii) costs and fees
of the arbitrator shall be borne by the Parties equally, unless the
arbitrator or arbitrators determine otherwise; (iv) depositions may
be taken and other discovery may be obtained during such
arbitration proceedings to the same extent as authorized in civil
judicial proceedings; and (v) the award or decision of the
arbitrator, which may include equitable relief, shall be final, and
judgment may be entered on such award in accordance with applicable
law in any court having jurisdiction over the matter. The
arbitrator shall be required to follow applicable law in rendering
the arbitrator’s decision.
(c)
TO
THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(d) The
Parties acknowledge and agree that money damages may not be a
sufficient remedy for a breach of certain provisions of this
Agreement, including but not limited to Articles X, and
accordingly, a non-breaching Party may be entitled to specific
performance and injunctive relief as remedies for such violation.
Accordingly, the Parties agree that a non-breaching party may seek
relief in a court of competent jurisdiction in the Dispute
Resolution Venue for the purposes of seeking equitable relief
hereunder, and that such remedies shall not be deemed to be
exclusive remedies for a violation of the terms of this Agreement
but shall be in addition to all other remedies available to the
non-breaching party at law or in equity.
(e) In
any action or other proceeding by which a Party either seeks to
enforce its rights under this Agreement, or seeks a declaration of
any rights or obligations under this Agreement, the prevailing
party will be entitled to reasonable attorneys’ fees, and
subject to Section 11.6(b) above, reasonable costs and expenses
incurred to resolve such dispute and to enforce any final
judgment.
(f) No
remedy conferred on a Party by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy, and
each and every remedy will be cumulative and will be in addition to
every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of one or
more remedies by a Party will not constitute a waiver of the right
to pursue other available remedies.
11.7
Severability
.
Each term, covenant, condition or provision of this Agreement will
be viewed as separate and distinct, and in the event that any such
term, covenant, condition or provision will be deemed to be invalid
or unenforceable, the arbitrator or court finding such invalidity
or unenforceability will modify or reform this Agreement to give as
much effect as possible to the terms and provisions of this
Agreement. Any term or provision which cannot be so modified or
reformed will be deleted and the remaining terms and provisions
will continue in full force and effect.
11.8
Delays
or Omissions
. No delay or
omission to exercise any right, power, or remedy accruing to any
Party under this Agreement, upon any breach or default of any other
Party under this Agreement, shall impair any such right, power or
remedy of such nonbreaching or nondefaulting Party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or
default, or to any similar breach or default thereafter occurring,
nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter
occurring. All remedies, whether under this Agreement or by law or
otherwise afforded to any Party, shall be cumulative and not
alternative.
11.9
Further
Assurances
. Each Party agrees
to execute and deliver any and all further documents, and to
perform such other acts, as may be reasonably necessary or
expedient to carry out and make effective this
Agreement.
11.10
Interpretation
.
Every provision of this Agreement is the result of full
negotiations between the Parties, both of whom have either been
represented by counsel throughout or otherwise been given an
opportunity to seek the aid of counsel. Each Party hereto further
agrees and acknowledges that it is sophisticated in legal affairs
and has reviewed this Agreement in detail. Accordingly, no
provision of this Agreement shall be construed in favor of or
against any Party hereto by reason of the extent to which any such
Party or its counsel participated in the drafting thereof. Captions
and headings of sections contained in this Agreement are for
convenience only and shall not control the meaning, effect or
construction of this Agreement. Time periods used in this Agreement
shall mean calendar periods (i.e., days, months, and years) in the
State of California, USA unless otherwise expressly indicated. All
references to fees, expenses, costs and payments thereof are U.S.
Dollars. The English language shall apply to any interpretation of
this Agreement.
11.11
Counterparts;
Facsimile or PDF Signature
.
This Agreement may be executed in counterparts, each of which will
be deemed an original hereof and all of which together will
constitute one and the same instrument. This Agreement may be
executed by facsimile or PDF signature by either Party and such
signature shall be deemed binding for all purposes hereof, without
delivery of an original signature being thereafter
required.
[
Remainder of Page Intentionally Left Blank;
Signature Page and Exhibits Follow
]
IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
|
Company
Autobytel
Inc.
|
|
By:
|
/s/ Glenn E.
Fuller
|
|
|
Name:
Glenn E. Fuller
|
|
|
Title:
Executive Vice President, Chief Legal and Administrative Officer
and Secretary
|
|
Restricted Stockholder
DealerX Partners,
LLC, a Florida limited liability company
|
|
By:
|
/s/ Jeffrey
Tognetti
|
|
|
Name:
Jeffrey Tognetti
|
|
|
Title:
Manager and President
|
|
|
|
|
|
|
|
|
Designated Restricted Stockholder Affiliate
|
|
Jeffrey
Tognetti
/s/ Jeffrey
Tognetti
|
|
Jeffrey
Tognetti
|
|
|
Exhibit A
Irrevocable Proxy
The
undersigned stockholder (“
Restricted Stockholder
”) of
Autobytel Inc., a Delaware corporation (“
Company
”), hereby irrevocably
appoints and constitutes the Company’s Chief Executive
Officer, Chief Financial Officer and Chief Legal Officer
(collectively, the “
Proxyholders
”), and each of them
individually, the agents, attorneys-in-fact and proxies of the
undersigned, with full power of substitution and resubstitution, to
the full extent of the undersigned’s rights with respect to
all Shares (as defined in that certain Stockholder Agreement dated
as of October 5, 2017, by and between Company and Restricted
Stockholder (“
Stockholder
Agreement
”)) beneficially owned by Restricted
Stockholder (including any Shares acquired by Restricted
Stockholder on or after the date hereof and before the date this
proxy terminates) to vote the Shares as follows:
The
Proxyholders named above, or each of them individually, are
empowered at any time before termination of this proxy to exercise
all voting rights of the undersigned at any meeting (whether annual
or special and whether or not an adjourned or postponed meeting) of
stockholders of the Company, and in any action by written consent
of the stockholders of the Company, in accordance with the
recommendations of or instructions provided by the Company’s
Board of Directors.
The
proxy granted by Restricted Stockholder to the Proxyholders hereby
is granted as of the date of this Irrevocable Proxy in order to
secure the obligations of Restricted Stockholder set forth in
Section 6.1 of the Stockholder Agreement and, as such, is coupled
with an interest and is irrevocable in accordance with subdivision
(e) of Section 212 of the Delaware General Corporation
Law.
This
proxy shall survive the insolvency, incapacity, death, liquidation
or dissolution of the undersigned and shall terminate as provided
in Section 6.2 of the Stockholder Agreement in accordance with its
terms.
Upon
the execution and delivery hereof, all prior proxies given by the
undersigned with respect to the Shares are hereby revoked, and
until such time as this proxy shall be terminated in accordance
with its terms, Restricted Stockholder shall not purport to grant
any other proxy or power of attorney with respect to any Shares,
deposit any of Shares into a voting trust or enter into any
agreement, arrangement or understanding with any person, directly
or indirectly, to vote, grant any proxy or give instructions with
respect to the voting of any Shares.
Any
obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
Dated:
_________________
Restricted
Stockholder
DealerX
Partners, LLC, a Florida limited liability company
B
y:
|
___________________
Name: Jeffrey
Tognetti
T
itle: Manager and
President
|
Portions of this Exhibit have been omitted in accordance with Item
601(b)(2) of Regulation S-K. AutoWeb, Inc. will furnish
supplementally a copy of any omitted portions of the exhibit to the
Securities and Exchange Commission upon request; provided, however,
that AutoWeb, Inc. may request confidential treatment pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for
the portions of the exhibit so furnished.
Exhibit B
Restricted Stockholder Disclosure Schedule
This Restricted Stockholder Disclosure Schedule is
made and delivered pursuant to
Section
3.1(e)
of that certain
Stockholder Agreement, dated as of October 5, 2017
(“
Agreement
”), by and between Autobytel Inc., a
Delaware corporation (“
Company
”), DealerX Partners, LLC, a Florida limited
liability company (“
Restricted
Stockholder
”), and
Jeffrey Tognetti (“
Designated Restricted
Stockholder Affiliate
”). All capitalized terms used
but not defined herein shall have the meanings given to such terms
in the Agreement, unless otherwise provided herein. The
section numbers below correspond to the section numbers of the
representations and warranties in the
Agreement;
provided
,
however
,
that any information disclosed in this Restricted Stockholder
Disclosure Schedule under any section number shall be deemed to be
disclosed and incorporated into any other section number under the
Agreement where such disclosure would be reasonably appropriate on
the face of the disclosure.
Nothing
in this Restricted Stockholder Disclosure Schedule is intended to
broaden the scope of any representation or warranty contained in
the Agreement or to create any covenant. Inclusion of
any item in this Restricted Stockholder Disclosure Schedule shall
not constitute, or be deemed to be, an admission to any third party
concerning such item and does not represent a determination that
(i) such item is material or establish a standard of materiality,
(ii) such item did not arise in the ordinary course of business or
(iii) the transactions contemplated by the Agreement require the
consent of third parties. This Restricted Stockholder
Disclosure Schedule includes brief descriptions or summaries of
certain agreements and instruments, copies of which are available
upon reasonable request. Such descriptions do not
purport to be comprehensive, and are qualified in their entirety by
reference to the text of the documents described.
Section 3.1(e)
Directors, Officers
and Managing Members of Restricted Stockholder:
Manager and President
: Jeffrey
Tognetti
Beneficial and
record owners of all of the issued and outstanding capital stock or
membership interests of Restricted Stockholder:
[This information has been omitted in accordance with Item
601(b)(2) of Regulation S-K.]