Exhibit 10.3
RIGHT OF FIRST OFFER, RIGHT OF NEGOTIATION AND BOARD ATTENDANCE RIGHT
This Right of First Offer, Right of Negotiation and Board Attendance
Right Agreement (this "Agreement") is made and entered into effective as of
August 5, 2005 by and between Park City Group, Inc., ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ("PCG") and ▇▇▇▇▇▇ Equipment Company, a Minnesota corporation
("▇▇▇▇▇▇"), with a place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
RECITALS
WHEREAS, concurrently with the execution of this Agreement, ▇▇▇▇▇▇ and
PCG are entering into a variety of agreements as to the licensing of software,
the provision of services and other matters.
WHEREAS, in connection therewith and in consideration of the execution
of these other agreements with PCG, ▇▇▇▇▇▇ desires that PCG grant to it certain
rights.
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions and the
mutual agreements contained in this Agreement and the entry by ▇▇▇▇▇▇ into the
transactions contemplated by the first Whereas Clause in the Recitals, and
intending to be legally bound hereby, ▇▇▇▇▇▇ and PCG agree as follows:
ARTICLE 1.
RIGHT OF FIRST OFFER AND RIGHT OF NEGOTIATION
1.1. Issuance of Company Equity. Except as otherwise provided in this
Article 1, until December 31, 2005 or if later the end of any Offer Period which
occurs after such date, no Issuance of any Company Equity (as defined below) by
the Company may occur without the prior written consent of ▇▇▇▇▇▇, which consent
may be withheld at ▇▇▇▇▇▇'▇ sole and absolute discretion; provided that the
foregoing shall not be deemed to prohibit Issuance to its employees or outside
business consultants of shares of or options for common stock of the Company in
the ordinary course of business under compensation arrangements or stock option
plans.
1.2. Transfers in Violation of Section 1.1. No purported Issuance of
Company Equity by the Company in violation of Section 1.1 will be valid or
effective. In the case of an Issuance or attempted Issuance of any Company
Equity that is not a permitted Issuance under Section 1.1, the Company will be
liable to indemnify and hold harmless ▇▇▇▇▇▇ from all costs, liabilities, and
damages that it or its affiliate may incur (including incremental tax liability
and attorneys' fees and expenses) as a result of such Issuance or attempted
Issuance and efforts to enforce the indemnity granted hereby.
1.3. Notice of Desire to Issue.
(a) In the event that the Company desires to Issue any time
prior to December 31, 2005 any Company Equity in a transaction which
requires the prior written consent of ▇▇▇▇▇▇ pursuant to Section 1.1
hereof, the Company will give to ▇▇▇▇▇▇ a written notice (the "Offer
Notice") setting forth the terms upon which it proposes to Issue such
Company Equity, the price (which may be denominated solely in U.S.
dollars) and the nature and amount of the Company Equity it desires to
Issue (the "Offered Interest") and a written offer consistent with the
terms hereof (the "Firm Offer") to sell the Offered Interest to ▇▇▇▇▇▇
at the price (the "Offer Price") and on terms set forth in the Offer
Notice and closing of the transaction contemplated by the Firm Offer,
if accepted in accordance herewith, shall occur as described in Section
1.4(c).
1.4. Right of First Refusal.
(a) Offer Period. The Firm Offer will be irrevocable for a
period (the "Offer Period") ending at 11:59 p.m., local time at the
Company's principal place of business or residence, as applicable, on
the day which is thirty (30) days after delivery of the Offer Notice.
(b) Acceptance of Firm Offer. At any time during the Offer
Period, ▇▇▇▇▇▇ may accept the Firm Offer by giving written notice of
such acceptance to the Company. If ▇▇▇▇▇▇ does not accept the Firm
Offer as to all of the Offered Interest during the Offer Period, the
Firm Offer will be deemed to be rejected in its entirety.
(c) Closing of Purchase Pursuant to Firm Offer. In the event
that the Firm Offer is accepted, the closing of the sale of the Offered
Interest will take place within sixty (60) days after the Firm Offer is
accepted or, if later, the date of closing set forth in the Purchase
Offer. The Company and ▇▇▇▇▇▇ will execute such documents and
instruments as may be necessary or appropriate to affect the sale of
the Offered Interest pursuant to the terms of the Firm Offer and this
Section 1.4.
(d) Sale Pursuant to Purchase Offer if Firm Offer Rejected. If
the Firm Offer is not accepted in the manner set forth above, ▇▇▇▇▇▇
shall be deemed to have consented to the Issuance contemplated by the
Offer Notice and the Company may at a single closing sell all but not
less than all Offered Interest to one or more purchasers at any time
within sixty (60) days after the last day of the Offer Period, provided
that such sale will be made on terms and at a price no more favorable
than the terms contained in the Firm Offer. In the event that the
Offered Interest is not sold in accordance with the terms of the
preceding sentence, the Offered Interest will again become subject to
all of the conditions and restrictions of this Agreement, including
this Section 1.4.
1.5. Negotiation Right. In the event that the Company desires to Issue
any time after December 31, 2005 but during the term hereof any Company Equity,
the Company will give to ▇▇▇▇▇▇ a written notice (the "Proposed Issuance
Notice") setting forth the terms upon which it proposes to Issue such Company
Equity, the price (which may be denominated solely in U.S. dollars) and the
nature and amount of the Company Equity it desires to Issue. Unless ▇▇▇▇▇▇
consents to the contrary in writing, the Company shall upon ▇▇▇▇▇▇'▇ request
negotiate exclusively with ▇▇▇▇▇▇ as to the terms the purchase of such Company
Equity by ▇▇▇▇▇▇ or its affiliates for a period of thirty (30) days following
delivery of the Proposed Issuance Notice. The foregoing shall not be deemed to
apply to a proposed Issuance to employees or outside business consultants of the
Company of shares of or options for common stock of the Company in the ordinary
course of business under compensation arrangements or stock option plans.
1.6. Definitions. For purposes of the foregoing:
(a) "Issuance" means any issuance, sale, transfer, pledge,
encumbrance, gift or other disposition, whether voluntary, involuntary,
by operation of law, or otherwise, and the term "Issue" shall be given
a corresponding meaning.
(b) "Company Equity" means any shares or other equity
interests in the Company of whatever class, series or designation,
including warrants, options, subscriptions, convertible or exchangeable
securities or other agreements pursuant to which the Company is
obligated to issue, sell, purchase, retire or redeem any shares or
other equity interests of the Company.
ARTICLE 2.
BOARD ATTENDANCE RIGHTS
The Company grants to ▇▇▇▇▇▇ the right, during the term of this Agreement, to
designate one person to attend in a nonvoting observer capacity all meetings of
the Board of Directors of the Company. The Company agrees to provide the
designee of ▇▇▇▇▇▇ copies of notices, minutes, consents, and other materials
that the Company provides to its directors at the same time such materials are
provided to the directors.
ARTICLE 3.
TERM
This Agreement shall commence on the date hereof and continue for one (1) year
from the date hereof.
ARTICLE 4.
MISCELLANEOUS
4.1. Assignment. This Agreement may not be assigned by the Company
without the prior written consent of ▇▇▇▇▇▇, which may be withheld at its sole
and absolute discretion. ▇▇▇▇▇▇ may assign this Agreement to any person or
entity acquiring the entirety of its Company Equity.
4.2. Entire Agreement; Severability. This Agreement contains the entire
agreement between the parties relating to the matters addressed herein and
supersede all prior contracts or agreements, whether oral or written, relating
to such subject matter. If one or more of the provisions of this Agreement or
any application thereof are invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions and any
other application thereof will in no way be affected or impaired and any such
provision will be enforced to the maximum extent possible by law.
4.3. Counterparts. This Agreement may be executed in counterparts, all
of which taken together will constitute a single agreement.
4.4. Applicable Law. This Agreement and the legal relations created by
it will in all respects, including with respect to construction, interpretation,
performance, effect and remedies, be governed by and construed in accordance
with the internal laws of the State of Minnesota (without regard to the laws of
conflict of any jurisdiction).
4.5. Notices. Any notice to be given or to be served upon any party in
connection with this Agreement must be in writing and will be deemed to have
been given and received upon the earlier of (i) when personally delivered, (ii)
when delivered by facsimile, if the delivering party has written, mechanical
proof of such facsimile delivery, (iii) one day after having been sent by
recognized overnight delivery, and (iv) on the date of receipt indicated on the
return receipt if mailed registered or certified mail, all addressed to the
parties at the addresses set forth in this document for such parties, or to such
other address as a party to whom notice is to be given may have previously
furnished to the other parties in writing.
4.6. Waivers. Neither the waiver by a party of a breach of or a default
under any of the provisions of this Agreement, nor the failure of a party, on
one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy or privilege hereunder will thereafter be construed
as a waiver of any such provisions, rights, remedies or privileges hereunder.
4.7. Exercise of Rights. No failure or delay on the part of a party in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any other rights or
remedies which a party would otherwise have at law in equity or otherwise.
4.8. Expenses. Each party will be responsible and bear all of their own
costs and expenses incurred in connection with this Agreement.
4.9. Amendment. Neither this Agreement nor any of the terms hereof may
be terminated, amended, supplemented or modified, except by an instrument in
writing signed by all of the parties.
The undersigned have duly executed this Agreement effective on the date
set forth on the first page of this Agreement.
▇▇▇▇▇▇ Equipment Company, Park City Group, Inc.,
a Minnesota corporation a Nevada corporation
By:_____________________________________ By:______________________________
Its:____________________________________ Its:_____________________________