EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
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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
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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,
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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
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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
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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.
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(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, L.L.C.
By: /S/ By: /S/
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