Exhibit 10.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into as of
the 24th day of January, 2000, by and between Aden Enterprises, Inc., a
California corporation, with its principal place of business at 00000 X Xxxxxx,
Xxxxx, XX 00000 ("Aden"), and MercExchange, LLC, a Virginia limited liability
company, with its principal place of business at 000 X. Xxxxxx Xxxxxx,
Xxxxxxxxxx, XX 00000 ("MercExchange").
WHEREAS, MercTravel, Incorporated, a Delaware corporation ("MercTravel"),
is a wholly owned subsidiary of MercExchange; and
WHEREAS, Aden desires to acquire all of the issued and outstanding shares
of common stock of MercTravel on the terms and conditions hereinafter set forth;
and
WHEREAS, the parties desire that the transactions contemplated by this
Agreement constitute an exchange of property as provided in Section 351 of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants set forth herein, the parties agree as follows:
1. Representations of MercExchange.
a. To the knowledge of MercExchange, the authorized capital stock of
MercTravel consists of 1,000 shares of common stock, par value $.01 per
share, of which 1,000 shares are issued and outstanding. MercExchange is
the sole shareholder. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require such
corporation to issue, sell or otherwise cause to become outstanding any of
its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to such corporation. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital
stock of such corporation.
b. To the knowledge of MercExchange, MercTravel is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, and is duly qualified to do business as
a foreign corporation, if required, and is in good standing in each
jurisdiction in which the ownership or leasing of its properties or the
conduct of its business require such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
assets, business, results of operations or conditions (financial or
otherwise) of each of such corporation. MercTravel has previously delivered
to Aden true, complete and correct copies of its charter and by-laws, as
currently in effect.
c. To the knowledge of MercExchange, MercTravel has no subsidiaries, or any
direct or indirect interest, whether by way of stock ownership or
otherwise, in any corporation, firm, association or business enterprise.
d. To the knowledge of MercExchange, MercTravel owns and possesses, or is duly
licensed in respect of, all licenses, trademarks, trademark rights,
applications for trademarks, trade names, trade name rights, processes, and
formulas, necessary for the operation of its business, with no known
material conflict with the rights of others, and the same are subject to no
liens, encumbrances, claims, or charges.
e. As of the date of this Agreement, to the knowledge of MercExchange, there
are no actions, suits, or proceedings pending or, to the knowledge of
MercExchange, threatened, against MercTravel, at law or in equity, or
before or by any federal, state, municipal, or other governmental agency or
instrumentality, domestic or foreign, except for those actions, suits, or
proceedings which would not have a material and adverse effect on the
financial condition of MercTravel. MercTravel is not in default with
respect of any order or decree of any court or of any such governmental
agency or instrumentality.
f. Neither the execution and delivery of this Agreement nor the consummation
of the transactions herein contemplated, will conflict with or result in
the breach of, or accelerate the performance required by, any terms of any
agreement to which either of MercTravel or MercExchange are now a party, or
constitute a default thereunder, or result in the creation of any lien,
charge, or encumbrance upon any of the properties or assets of MercTravel.
g. To the knowledge of MercExchange, MercTravel is not a party to any
agreement or instrument subject to any charter or other corporate
restriction materially and adversely effecting the business, property, or
assets, operations or condition (financial or otherwise) of such
corporation.
h. To the knowledge of MercExchange, MercTravel and MercExchange have timely
filed all tax returns and reports required to be filed by each, including
without limitation all federal, state, local and foreign tax returns, and
all such tax returns and reports are true, complete and correct in all
material respects. MercTravel has paid in full or made adequate provision
by the establishment of reserves for all such taxes and other charges which
have become due or have been asserted in writing by any taxing authority to
be due, relating to each such corporation, including, if such corporation
was an S Corporation prior to the consummation of the transactions
contemplated by this Agreement, taxes and other charges attributable to the
S Corporation election by each such corporation, and has withheld with
respect to their employees all federal and state income taxes, FICA, FUTA
and any other taxes or charges required to be withheld except for those
taxes or other charges the failure of which to pay or withhold would not
have a material and adverse effect on the financial condition of
MercTravel. To the knowledge of MercExchange, there is no tax deficiency
proposed or threatened against MercTravel. To the knowledge of
MercExchange, MercTravel has made all payments of estimated taxes, if any,
when due in amounts sufficient to avoid the imposition of any penalty
except where such penalty would not have a material and adverse effect on
the financial condition of MercTravel. There are no outstanding agreements,
waivers, or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or assessment
of, taxes due from or with respect to MercTravel for any taxable period,
and no power of attorney granted by or with respect to MercTravel relating
to taxes is currently in force. No closing agreement pursuant to Section
7121 of the Internal Revenue Code of 1986, as amended, (or any predecessor
provision) or any similar provision of any state, local, or foreign law has
been entered into by or with respect to MercTravel that could materially
and negatively effect the future liability for taxes of MercTravel. No
audit or other proceeding by any governmental authority has formally
commenced and no written notification has been given that such an audit or
other proceeding is pending or threatened with respect to any taxes due
from or with respect to MercTravel that could materially and negatively
affect the future liability for taxes of MercTravel. No unpaid assessment
of tax has been proposed in writing against MercTravel other than
assessment of a type that arise on a recurring basis in the ordinary course
of business.
i. To the knowledge of MercExchange, MercTravel has no direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, accrued, absolute, contingent or otherwise
("Liabilities"), which would be required by generally accepted accounting
principles to be disclosed in their respective financial statements
(including, without limitation, in the notes thereto), other than
liabilities fully and adequately reflected or reserved against their
respective balance sheet, prepared in accordance with generally accepted
accounting principles. To the knowledge of MercExchange, since December 13,
1999, MercTravel has incurred no liabilities which would be required by
generally accepted accounting principles to be disclosed in its financial
statements (including, without limitation, in the notes thereto), other
than Liabilities incurred since December 13, 1999 in the ordinary course of
business.
j. To the knowledge of MercExchange, MercTravel is in compliance in all
material respects with all applicable laws (including, but not limited to,
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of all federal, state or local
governments, or any agency or instrumentality of the foregoing, domestic or
foreign, in respect of the conduct of its business and ownership or leasing
of its properties, except where the failure to so comply would not have a
material adverse effect on the assets, business, results of operations or
condition (financial or otherwise) of such corporation. To the knowledge of
MercExchange, MercTravel has all licenses, permits, orders or approvals of
all federal, state or local governmental bodies, quasi-governmental bodies
or authorities, domestic or foreign, which are material to, or necessary
for, the conduct of the operations of such corporation. To the knowledge of
MercExchange, no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against
MercTravel alleging any failure so to comply, except where the failure to
so comply would not have a material and adverse effect on the assets,
business, results of operations or condition (financial or otherwise) of
such corporation.
k. Since December 13, 1999, there has not been any material adverse change in
the business, financial condition, operations, results of operations, or
future prospects of MercTravel.
l. MercTravel has good and marketable title to, or a valid leasehold interest
in, the properties and assets used by it, located on its premises, or shown
in its balance sheet, or acquired after the date thereof, free and clear of
all liens, claims, encumbrances, charges, and assessments, except for
properties and assets disposed of in the ordinary course of business since
December 13, 1999.
m. MercExchange further represents and warrants that:
i. The Aden Shares (as defined below) are being acquired for investment
for MercExchange's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and
MercExchange has no present intention of selling, granting any
participation in, or otherwise distributing the same. MercExchange
does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or
to any third person, with respect to any of the Aden Shares.
ii. MercExchange believes it has received all information it considers
necessary or appropriate for deciding whether to purchase the Aden
Shares. MercExchange has had an opportunity to ask questions and
receive answers from Aden regarding the terms and conditions of the
offering of the Aden Shares.
iii.MercExchange has previously invested in companies in the development
stage, can bear the economic risks of the investment and has such
knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of its investment in the
Aden Shares.
iv. MercExchange is an accredited investor as defined in Rule 501(a) of
Regulation D, as amended, of the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended.
v. MercExchange understands that the Aden Shares it is purchasing
pursuant to this Agreement are characterized as "restricted
securities" under the federal securities laws inasmuch as they are
being acquired from Aden in a transaction not involving a public
offering and that under such laws and applicable regulations the Aden
Shares may be resold without registration under the Securities Act
only in certain limited circumstances. In this connection,
MercExchange is familiar with SEC Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act.
vi. MercExchange will not dispose of any of the Aden Shares (other than
pursuant to SEC Rules 144 or 144A or any similar or analogous rule or
rules) unless and until (A) MercExchange shall have notified Aden of
the proposed disposition and the circumstances surrounding the
proposed disposition and, if reasonably requested by Aden,
MercExchange shall have furnished Aden with an opinion of counsel
reasonably satisfactory in form and substance to Aden to the effect
that such disposition will not require registration under the
Securities Act; or (B) there is in effect a registration statement
under the Securities Act covering the proposed disposition and the
proposed disposition is made in accordance with such registration
statement.
vii.The certificates evidencing the Aden Shares may bear the restrictive
legends set forth below, except that such certificates shall not bear
the legends set forth below if: (x) the transfer was made in
compliance with Rule 144; (y) there is in effect a registration
statement under the Securities Act covering the proposed disposition
and the proposed disposition is made in accordance with such
registration statement; or (z) if the opinion of counsel, if any,
delivered pursuant to this Section is to the effect that such legend
is not required in order to establish compliance with any provisions
of the Securities Act:
(A) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT").
THE SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR SUCH
TRANSFER IS MADE PURSUANT TO RULES 144 OR 144A OF THE ACT OR AN
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THE ACT."
(B) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE CORPORATION RECEIVES
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SAID ACT."
(C) Any legend required by the laws of any applicable state or other
jurisdiction governing the Aden Shares.
2. Exchange of Stock.
a. On the Closing Date, as hereinafter fixed, MercExchange shall deliver to
Aden certificates representing all of the issued and outstanding shares of
common stock of MercTravel, as the same shall be constituted on the Closing
Date, duly endorsed in blank by the owner of record, or accompanied by duly
executed stock powers in blank, and accompanied by
requisite revenue stamps evidencing the payment of the transfer tax, if
any.
b. On the Closing Date, as hereinafter fixed, Aden shall deliver to
MercExchange fifty-eight million (58,000,000) shares of restricted common
stock in Aden Enterprises, Inc. (the "Aden Shares").
3. Closing. The consummation of the transactions contemplated herein (the
"Closing") shall take place at the offices of Xxxxxxxx & Xxxxxxxxxx, P.C. at
00000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000, at 10:00 a.m. (local time)
on February 25, 2000 (the "Closing Date"), or at such other time and place as
the parties may agree.
4. Indemnity for Damages. MercExchange shall indemnify, fully defend and save
and hold harmless Aden at all times from and against all demands, claims,
actions, causes of action, assessments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and expenses, but net of any tax savings and insurance proceeds
actually received by the indemnitee as a result of the matter giving rise to the
indemnification, asserted against, resulting to, imposed upon or incurred by
Aden, by reason of or resulting from any inaccurate representation made by
MercExchange in this Agreement, breach of any of the warranties made by
MercExchange in this Agreement and breach or default in performance by
MercExchange of any of the covenants which it is to perform hereunder.
5. Conditions to Obligations of Aden. The obligations of Aden hereunder are,
except as may be waived in writing by Aden, subject to the conditions that:
a. Certificates representing 100% of the issued and outstanding shares of
common stock of MercTravel, as such stock shall then be constituted, shall
be tendered for exchange at the Closing by MercExchange.
b. The representations contained in Sections 1 and 7 hereof shall be true on
and as of the Closing Date with the same effect as though such
representations had been made on and as of the Closing Date, and there
shall be delivered to Aden at the Closing, if requested, a certificate, in
form and substance satisfactory to Aden and its counsel, duly signed by
MercExchange to that effect.
6. Conditions to Obligations of MercExchange. The obligation of MercExchange
hereunder to deliver to Aden shares of common stock of MercTravel is, except as
may be waived in writing by MercExchange, subject to the conditions that:
x. Xxxx is a duly organized and existing corporation in good standing under
the laws of the State of California;
b. A certificate or certificates representing the Aden Shares are delivered to
MercExchange according to the provisions of Section 2;
c. A duly executed Registration Rights Agreement in substantially the form of
Exhibit "A" hereto is delivered at the Closing; and
d. This Agreement has been duly executed and delivered by Aden, and
constitutes the legal, valid, and binding obligation of Aden, enforceable
in accordance with its terms.
7. Survival of Representations. The representations and warranties of the
parties hereto shall survive the making of this agreement, any examination on
behalf of such parties, and the Closing hereunder. Any waiver of any term or
condition of this agreement shall not operate as a waiver of any other breach of
such term or condition, or of any other term or condition, nor shall any failure
to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
8. Notices. All communications hereunder shall be in writing and delivered or
mailed to Xxxx, Xxxx Enterprises, Inc., Attn: Xxxxxxx Xxxxxx, and to
MercExchange, MercExchange, LLC, Attn: Xxxxxx Xxxxxxxx, or at such other address
as each party may specify in writing.
9. Broker. Aden and MercExchange represent to each other that no broker has been
employed in connection with any transaction or transactions involved in this
Agreement.
10. Entire Agreement. This Agreement constitutes the entire contract between the
parties hereto and no party shall be liable or bound to another in any manner by
any warranties, representations or guarantees except as specifically set forth
herein.
11. Modification. This Agreement may not be changed or modified except by an
agreement in writing by Aden and by MercExchange or by any person authorized to
act on their behalf.
12. Benefit. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective legal representatives, successors,
and assigns of the parties hereto.
13. Governing Law. This Agreement is made pursuant to and shall be construed
under the laws of the State of Nebraska, without regard to any applicable
conflicts of law provisions.
14. Counterparts. This Agreement may be executed and endorsed in one or more
counterparts, and each of such counter parts shall, for all purposes, be deemed
to be an original, but all such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF the parties hereto have duly caused this Agreement to be
executed as of the day and year first above written.
Aden: MercExchange:
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxxxx
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of ___, 2000, by and between
Aden Enterprises, Inc., a California corporation (the "Company") and
MercExchange, LLC, a Virginia limited liability company (the "Shareholder").
WHEREAS, the Company and the Shareholder are parties to that certain
Exchange Agreement, dated January 24, 2000 (the "Exchange Agreement"); and
WHEREAS, the issuance of Company's Common Stock to the Shareholder in the
Exchange Agreement is conditioned upon the registration rights being extended to
the Shareholder,
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing Date" shall mean the date of execution of this Agreement and
the Exchange Agreement by the Company and the Shareholder.
"Commission" shall mean the Securities and Exchange Commission of the
United States or any other U.S. federal agency at the time administering the
Securities Act.
"Common Stock" shall mean shares of the Company's Common Stock.
"Holder" shall mean any person holding Registrable Securities.
"Other Holders" shall mean persons other than Holders who, by virtue of
agreements with the Company, are entitled to include their securities in certain
registrations hereunder.
"Registrable Securities" means (i) the Common Stock issued pursuant to
the Exchange Agreement and (ii) any shares of Common Stock issued or issuable in
respect of such Common Stock upon any stock split, stock dividend,
recapitalization, or similar event; provided that none of such shares of Common
Stock are, at the time of Holders' exercise of any rights hereunder, subject to
a repurchase option in favor of Company. Shares of Common Stock shall only be
treated as Registrable Securities if they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public securities
transaction or (B) sold or, in the opinion of counsel to the Company, are
available for sale in a single transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
The terms "register, "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 2 and 3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company (but not fees and disbursements of special counsel for Holders, if any,
that is not also counsel for the Company), Blue Sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, or any similar United
States federal statute.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
Holders.
2. COMPANY REGISTRATION.
(a) Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Commission Rule 145 transaction, or (iii) a registration on
any registration form that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice thereof, and
(ii) include in such registration (and any related qualification under
Blue Sky laws or other compliance), and in any underwriting-involved therein,
all the Registrable Securities specified in a written request or requests, made
within twenty (20) days after receipt of such written notice from the Company,
by any Holder,
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
2(a)(i). In such event the right of any Holder to registration pursuant to this
Section 2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall, together with the Company and Other Holders, if
any, enter into an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 2, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities and
other securities to be included in such registration. The Company shall so
advise all Holders and Other Holders and the number of shares that may be
included in the registration and underwriting by all Holders and Other Holders
shall be allocated among them, as nearly as practicable, first, to the Company
(or, if applicable, to the holders for whose account the Company is registering
the securities), second, among the Other Holders of securities in proportion to
the respective amounts of securities proposed to be included in the registration
by such Other Holders, and, third, among the Holders in proportion to the number
of Registrable Securities proposed to be included in such registration by such
Holders. If any Holder or Other Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2
prior to the effectiveness of such registration whether or not any Holder or has
elected to include Registrable Securities in such registration.
3. REGISTRATION ON FORM S-3.
(a) Request for Registration. If any Holder or Holders request that the
Company file a registration statement on Form S-3 (or any successor form to Form
S-3) for a public offering of shares of the Registrable Securities the
reasonably anticipated aggregate price to the public of which would exceed
$500,000, and the Company is a registrant entitled to use Form S-3 to register
the Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the offering
on such form and to cause such Registrable Securities to be qualified in such
jurisdictions as the
Holder or Holders may reasonably request. The substantive provisions of Section
2(b) shall be applicable to each registration initiated under this Section 3.
(b) Limitations. Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 3:(i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) if the Company, within
ten (10) days of the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a registration
statement with the Commission within thirty (30) days of receipt of such request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which is
not appropriate for the registration of Registrable Securities); (iii) during
the period starting with the date thirty (30) days prior to the Company's
estimated date of filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement pertaining to
securities of the Company (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; (iv) if the Company shall furnish to
such Holder a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for registration statements to be
filed in the near future, then the Company's obligation to use its best efforts
to file a registration statement shall be deferred for a period not to exceed
sixty (60) days from the receipt the request to file such registration by such
Holder, provided, however, that the Company shall not utilize this right more
than once in any twelve (12) month period; (v) if in a given twelve-month
period, the Company has effected one (1) such registration in such period; or
(vi) after the Company has effected two (2) registration statements pursuant to
this Section 3.
4. EXPENSES OF REGISTRATION.
(a) Registration Expenses. The Company shall bear all Registration
Expenses incurred in connection with all registrations pursuant to Section 2 and
Section 3.
(b) Selling Expenses. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders and Other Holders
shall be borne by the Holders and Other Holders pro rata on the basis of the
number of shares so registered.
5. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(a) keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof,
(b) prepare and file with the Commission a registration statement and
any amendments thereto with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for at least
one hundred twenty (120) days or until the distribution described in the
Registration Statement has been completed; and
(c) furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
6. INDEMNIFICATION.
(a) By Company. The Company will indemnify each Holder with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation or alleged violation by the Company of the
Securities Act, or the Securities Exchange Act of 1934, as amended (the "1934
Act"), or any rule or regulation promulgated under the Securities Act or the
1934 Act applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.
If the Holders are represented by counsel other than counsel for the Company,
the Company will not be obligated under this Section 6(a) to reimburse legal
fees and expenses of more than one separate counsel for Holders.
(b) By Holders. Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, against all claims, losses, damages
and liabilities (or actions in respect thereof arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the public offering price
of the shares sold by such Holder, unless such registration liability arises out
of or is based on willful conduct by such Holder.
(c) Procedures. Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
7. INFORMATION BY HOLDER. Holders including any Registrable Securities
in any registration shall furnish to the Company such information regarding such
Holders as shall be necessary to enable the Company to comply with the
provisions hereof in connection with any registration, qualification or
compliance referred to in this Agreement.
8. RESTRICTIONS ON TRANSFERABILITY; RESTRICTIVE LEGEND.
(a) Each Holder agrees not make any disposition of all or any portion
of the Registrable Securities unless and until the transferee has agreed in
writing for the benefit of the Company to be by bound by this Section 8.
(b) Each certificate representing Registrable Securities shall be
stamped or otherwise imprinted with a legend substantially in the following
form, in addition to any legend that may now or hereafter be required by the
California Department of Corporations or any other state securities law or
regulation:
"THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS ON SALE, TRANSFER, AND HYPOTHECATION AS SET FORTH IN
A REGISTRATION RIGHTS AGREEMENT BETWEEN THE ISSUER CORPORATION AND
THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST.
COPIES OF SUCH AGREEMENT ARE ON FILE AT THE PRINCIPAL OFFICE OF
THE ISSUER CORPORATION AND WILL BE FURNISHED UPON REQUEST TO SUCH
REGISTERED HOLDER."
9. MISCELLANEOUS.
(a) Governing Law. This Agreement will be governed by and construed under
the laws of Nebraska as applied to agreements among Nebraska residents entered
into and to be performed entirely within Nebraska.
(b) Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Holders of a majority of the
Registrable Securities, voting as a class. Any amendment or waiver effected in
accordance with this paragraph will be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and the Company.
(c) Severability. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegally invalid,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision. In such event, the parties shall negotiate, in good
faith, a legal, valid and binding substitute provision which most nearly effects
the intent of the parties in entering into this Agreement.
(d) Notices. All notices to Holders will be mailed by registered or
certified mail to the addresses maintained in the Company's records for such
Holders. Notices will be effective three (3) days after deposit in the U.S.
Mail.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(f) Titles, Subtitles and Table of Contents. The titles, subtitles and
table of contents used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
ADEN ENTERPRISES, INC. MERCEXCHANGE, LLC
By: By:
