Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement") made as of October 21, 2003
between AdStar, Inc., a Delaware corporation (the "Company"), on the one hand,
and Edward P. Hopey ("Hopey") and Gil Wolsky ("Wolsky") on the other hand.
WITNESSETH
WHEREAS, the Company, Hopey, Wolsky and certain other entities have,
simultaneously herewith, entered into an Agreement and Plan of Merger dated and
even date (the "Merger Agreement"); and
WHEREAS, in connection with the Merger Agreement, the Company has agreed
to enter into this Agreement with Hopey and Wolsky.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Allowed Delay" is defined in Section 3(e).
"Closing Date" shall have the same meaning as in the Merger Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
"Securities Act" (as defined herein).
"Common Stock" shall mean the Common Stock, $.0001 par value per share, of
the Company, as constituted as of the date of this Agreement.
"Consideration Shares" shall have the same meaning as in the Merger
Agreement.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.
"Filing Date" is defined in Section 2.
"Registration Expenses" shall mean the expenses described in Section 5.
"Registration Period" is defined in Section 3(a).
"Securities Act" shall mean the United States Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses described in Section 5.
"Selling Holders" shall mean Hopey and Wolsky collectively.
2. Registration.
(a) Subject to the provisions of paragraph (b) and Section 3 below,
on or prior to the 60th day (the "Filing Date") following the Closing Date, the
Company shall file a Registration Statement on Form S-3 (or any successor form
relating to secondary offerings) (the "Resale Registration Statement")
registering the sale by the Selling Holders of the Consideration Shares under
the Securities Act.
(b) Anything contained herein to the contrary notwithstanding, with
respect to the registration required pursuant to this Section 2, the Company may
include in such registration any issued and outstanding shares of Common Stock
held by others.
3. Obligations Of The Company.
In connection with the registration of sale of the Consideration
Shares, the Company shall have the following obligations:
(a) The Company shall prepare promptly, and file with the Commission
not later than the Filing Date, the Resale Registration Statement with respect
to the Consideration Shares and thereafter use its reasonable best efforts to
cause such Resale Registration Statement to become effective as soon as possible
after such filing with the Commission, and keep the Resale Registration
Statement effective until the earlier of the second anniversary of the Closing
Date or the sale of all of the Consideration Shares (the "Registration Period"),
which Resale Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading.
(b) The Company shall prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to the Resale
Registration Statement and the prospectus used in connection with the Resale
Registration Statement as may be necessary to keep the Resale Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Consideration Shares covered by the Resale Registration
Statement until such time as all of such Consideration Shares have been disposed
of in
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accordance with the intended methods of disposition by the Selling Holders as
set forth in the Resale Registration Statement. The Company shall use its
reasonable best efforts to cause any amendment to the Resale Registration
Statement to become effective as soon as practicable following the filing
thereof.
(c) The Company shall furnish to the Selling Holders (i) promptly
(but in no event more than two (2) business days) after the same is prepared and
filed with the Commission, one copy of the Resale Registration Statement and any
amendment thereto, and (ii) such number of copies of a prospectus and all
amendments and supplements thereto as such Selling Holders may reasonably
request in order to facilitate the disposition of the Consideration Shares owned
by such Selling Holders. The Company will immediately notify each Selling Holder
by facsimile of the effectiveness of Resale Registration Statement or any
post-effective amendment. The Company will promptly respond (but in no event
more than twenty (20) business days) to any and all comments received from the
Commission, with a view towards causing Resale Registration Statement or any
amendment thereto to be declared effective by the Commission as soon as
practicable.
(d) The Company shall use reasonable efforts to (i) register and
qualify the Consideration Shares covered by the Resale Registration Statement
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the Selling Holders reasonably request, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Consideration Shares for sale in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (a) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (b) subject itself to general
taxation in any such jurisdiction, (c) file a general consent to service of
process in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its stockholders.
(e) As promptly as practicable after becoming aware of such event,
the Company shall notify each Selling Holder of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
the Resale Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
use its reasonable best efforts promptly to prepare a supplement or amendment to
the Resale Registration Statement to correct such untrue statement or omission,
and deliver such number of copies of such supplement or amendment to each
Selling Holder as such Selling Holder may reasonably request; provided that, the
Company may delay the disclosure of material non-public information concerning
the Company (as well as prospectus or Resale Registration Statement updating)
the disclosure of which at the time is not, in the good faith opinion of the
Company, in
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the best interests of the Company (an "Allowed Delay"); provided, further, that
the Company shall promptly (i) notify the Selling Holders in writing of the
existence of (but in no event, without the prior written consent of the Selling
Holders, shall the Company disclose to such Selling Holders any of the facts or
circumstances regarding) material non-public information giving rise to an
Allowed Delay and (ii) advise the Selling Holders in writing to cease all sales
under such Resale Registration Statement until the end of the Allowed Delay.
Upon expiration of the Allowed Delay, the Company shall again be bound by the
first sentence of this Section 3(e) with respect to the information giving rise
thereto.
(f) The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of the Resale
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest moment and to notify each Selling
Holder of the issuance of such order and the resolution thereof.
(g) The Company shall permit a single firm or counsel designated by
the Selling Holders, at the expense of the Selling Holders, to review such
Resale Registration Statement and all amendments and supplements thereto a
reasonable period of time prior to their filing with the SEC, and not file any
document in a form to which such counsel reasonably objects. The sections of
such Resale Registration Statement covering information with respect to the
Selling Holders, the Selling Holder's beneficial ownership of securities of the
Company or the Selling Holders intended method of disposition of Consideration
Shares shall conform to the information provided to the Company by each of the
Selling Holders.
(h) The Company shall cause all the Consideration Shares covered by
the Resale Registration Statement to be listed on each national securities
exchange on which securities of the same class or series issued by the Company
are then listed, if any, if the listing of such Consideration Shares is then
permitted under the rules of such exchange.
(i) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Selling Holders of Consideration
Shares pursuant to the Resale Registration Statement.
4. Obligations Of The Selling Holders.
In connection with the registration of sale of the Consideration
Shares, the Selling Holders shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Consideration Shares of a particular Selling Holder that such Selling Holder
shall furnish to the Company, in writing, such information regarding itself, the
securities of the Company held by him and the intended method of disposition of
the Consideration Shares held by him as shall be reasonably required to effect
the registration of such Consideration Shares and shall execute such documents
in connection with such registration as the Company may reasonably request. At
least fifteen (15)
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business days prior to the Filing Date, the Company shall notify each Selling
Holder of the information the Company requires from each such Selling Holder.
(b) Each Selling Holder, by such Selling Holder's acceptance of the
Consideration Shares, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Resale Registration Statement hereunder, unless such Selling Holder has notified
the Company in writing of such Selling Holder's election to exclude all of such
Selling Holder's Consideration Shares from the Resale Registration Statement.
(c) Each Selling Holder agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(e)
or 3(f), such Selling Holders will immediately discontinue disposition of
Consideration Shares pursuant to the Resale Registration Statement covering such
Consideration Shares until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f) and, if
so directed by the Company, such Selling Holder shall deliver to the Company (at
the expense of the Company) or destroy (and deliver to the Company a certificate
of destruction) all copies in such Selling Holder's possession, of the
prospectus covering such Consideration Shares current at the time of receipt of
such notice.
5. Expenses. All expenses incurred by the Company in complying with
Sections 2 and 3 hereof, including without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company and independent public accountants for the Company, fees and expenses,
including counsel fees, incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, and costs
of insurance are called "Registration Expenses." All selling commissions
applicable to Consideration Shares, including any fees and disbursements of any
special counsel retained by the Selling Holders, are called "Selling Expenses."
The Company will pay all Registration Expenses. All Selling Expenses shall
be borne by the Selling Holders.
6. Rule 144 Reporting. With a view to making available to the Selling
Holders the benefits of certain rules and regulations of the Commission which
may permit the sale of the Consideration Shares without registration, the
Company agrees to:
(a) make and keep public information available, as those terms are used
and defined in Commission Rule 144; and
(b) use its reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required by the Company under the
Exchange Act.
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7. Indemnification and Contribution.
(a) In the event of a registration of the sale by the Selling Holders of
any Consideration Shares under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless Hopey and Wolsky, as the case may
be, against any losses, claims, damages or liabilities, joint or several, to
which Hopey and Wolsky, as the case may be, may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon any
untrue statement or alleged untrue statement of any fact contained in the Resale
Registration Statement under which such Consideration Shares was registered
under the Securities Act pursuant to this Agreement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Hopey and Wolsky, as the case may be,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by Hopey and
Wolsky, as the case may be, in writing specifically for use in the Resale
Registration Statement.
(b) In the event of a registration of the sale by the Selling Holders of
any of the Consideration Shares under the Securities Act pursuant to this
Agreement, Hopey and Wolsky, as the case may be, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the Resale
Registration Statement and each director of the Company, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities, or
actions in respect thereof, arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Resale
Registration Statement under which such Consideration Shares were registered
under the Securities Act pursuant to this Agreement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that Hopey and
Wolsky, as the case may be, will be liable hereunder in any such case if and
only to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
pertaining to Hopey and Wolsky, as the case may be, furnished in writing to the
Company by Hopey and Wolsky, as the case may be, specifically for use in the
Resale Registration Statement.
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(c) Promptly after receipt by a party indemnified hereunder of notice of
the commencement of any action or the receipt of any claim, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 7 and shall only relieve it from any liability which it may have to such
indemnified party under this Section 7 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal expense subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified parties
shall have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 7 to the fullest extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the indemnifying
party would not have been liable for indemnification under the fault standards
set forth in Section 7, (ii) no Selling Holder guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Selling Holder who was not guilty of such
fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any Selling Holder
shall be limited in amount to the net amount of proceeds received by such
Selling Holder from the sale of Consideration Shares.
8. Miscellaneous.
(a) The rights granted to Hopey and Wolsky hereunder may not be assigned
to any other person.
(b) All notices, requests, demands and other communications which are
required to be or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when (a) delivered in person, (b) the
day following dispatch by an overnight courier service
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(such as Federal Express or UPS, etc.) or (c) five (5) days after dispatch by
certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
if to the Company, Hopey and Wolsky, at the address of such party
set forth in the Merger Agreement.
(c) All questions concerning the construction, validity and interpretation
of this Agreement shall be governed by the internal law, and not the law of
conflicts, of the State of California.
(d) This Agreement may not be amended or modified or otherwise altered
except pursuant to an instrument, in writing, signed by each of the parties.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer, and Hopey and Wolsky have duly executed
this Agreement, as of the date first written above.
AdStar, Inc.
By: /s/ Leslie Bernhard
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Leslie Bernhard, President and CEO
/s/ Edward P. Hopey
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Edward P. Hopey
/s/ Gil Wolsky
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Gil Wolsky
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