Exhibit 10.4
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this
“Agreement” ) is made as of
April , 2004 by and among
AXS-One Inc., a Delaware corporation (the
“Company” ) and the investors listed on
Exhibit A hereto (each an “Investor” and
collectively the “Investors” )
WHEREAS, the Company desires to sell
to the Investors, and the Investors desire to purchase from the
Company, (i) an aggregate of 2,580,645 shares of Common Stock of
the Company (the “ Shares ”), and (ii)
three-year warrants, exercisable to purchase an aggregate of (A)
258,065 shares of Common Stock, with pricing set at $3.98 per share
(the “ Class A Warrants ”), and (B) 258,064
shares of Common Stock at $4.50 per share (the “ Class B
Warrants” , and together with the Class A Warrants, the
“ Purchased Warrants ”), upon the terms and
conditions set forth in that certain Unit Subscription Agreement of
even date herewith, among the Company and the Investors (the
“Unit Subscription Agreement” ); and
WHEREAS, the terms of the Unit
Subscription Agreement provide that it shall be a condition
precedent to the closing of the transactions thereunder for the
Company and the Investors to execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of
the premises and mutual covenants contained herein, the parties
hereto hereby agree as follows:
1 .
Definitions
. Defined terms used herein
but not defined herein shall have the respective meanings ascribed
to them in the Unit Subscription Agreement. The following
terms shall have the meanings provided below:
“Board of
Directors” shall
mean the board of directors of the Company.
“Gross
Proceeds” has the
meaning set forth in Section 7(b).
“Holder”
shall mean any of the Investors or
any transferee of the Purchased Warrants or Registrable
Shares.
“Mandatory Registration
Termination Date” has the meaning set forth in
Section 3(c).
“Notice”
has the meaning set forth in
Section 11(d).
“Other
Securities” refers
to any stock (other than Common Stock) and other securities of the
Company or any other Person (corporate or otherwise) which the
Holders of the Purchased Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Purchased
Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange
for or in replacement of Common Stock or Other Securities pursuant
to the terms of the Purchased Warrants.
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“register”,
“registered” and “registration” refer to a
registration of Common Stock or other securities of the Company
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.
“Registrable
Shares” shall mean
any Shares or any shares of Common Stock or Other Securities issued
or issuable from time to time upon the exercise of a Purchased
Warrant; provided , however , that as to any such
securities so issued or issuable, such securities will cease to be
Registrable Shares when such securities have been sold to the
public pursuant to a registration or pursuant to Rule 144 or are
eligible to be sold pursuant to Rule 144(k).
“Registration
Statement” has the
meaning set forth in Section 3(a).
“Rule 144”
shall mean Rule 144 promulgated
under the Securities Act and any successor or substitute rule, law
or provision.
“SEC”
shall mean the Securities and
Exchange Commission.
“Securities
Act” shall mean the
Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.
“Suspension” has the meaning set forth in
Section 9(b).
2.
Effectiveness
. This Agreement shall become
effective upon the Closing.
3.
Mandatory
Registration .
(a)
No later than thirty (30) days after
the Closing, the Company will prepare and file with the SEC a
registration statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement
that is then available to effect a registration of all Registrable
Shares) for the purpose of registering under the Securities Act all
of the Registrable Shares for resale by, and for the account of,
the Investors as selling stockholders thereunder (the
“Registration Statement” ). The
Registration Statement shall permit the Investors to offer and
sell, on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act, any or all of the Registrable Shares.
The Registration Statement also shall cover, to
the extent allowable under the Securities
Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of
additional shares of Common Stock resulting
from stock splits, stock dividends or
similar transactions with respect to the Registrable Shares.
The offer and sale of the Registrable Shares pursuant to the
Registration Statement shall not be underwritten.
(b)
The Company agrees to use
commercially reasonable efforts to cause the Registration Statement
to become effective within ninety (90) days after
filing.
(c)
The Company shall be required to
keep the Registration Statement, as amended, effective until such
date that is the earliest to occur of (i) the second anniversary of
the Closing, (ii) the date when all of the Registrable Shares
registered thereunder shall have been sold, and (iii) such time as
all the Registrable Shares held by the Investors can be sold
pursuant
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to Rule 144(k) under the Securities
Act and without compliance with the registration requirements of
the Securities Act (such date is referred to herein as the
“Mandatory Registration Termination Date”
). Thereafter, the Company shall be entitled to withdraw the
Registration Statement and the Investors shall have no further
right to offer or sell any of the Registrable Shares pursuant to
the Registration Statement (or any prospectus relating
thereto).
(d)
During the period beginning on the
Closing Date and ending on the date of the effectiveness of the
Registration Statement, the Company shall not grant any
registration rights that are pari passu with or senior to the
registration rights of the Investors under this Agreement if such
registration rights would adversely affect the Investors’
ability to sell Registrable Shares pursuant to the Registration
Statement. Except as set forth in the SEC Documents or in the
Company Disclosure Letter, the Company represents and warrants to
the Investors that no stockholders other than the Investors have
the right to sell any Common Stock or other securities of the
Company pursuant to the Registration Statement.
4.
Obligations of the
Company . In
connection with the Company’s obligation under Section 3
hereof to file the Registration Statement with the SEC and to use
its reasonable efforts to cause the Registration Statement to
become effective as soon as practicable after filing, the Company
shall, as expeditiously and as reasonably as possible, subject to
Section 9 hereof:
(a)
Prepare and file with the SEC such
amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
the Registration Statement effective until the Mandatory
Registration Termination Date;
(b)
Furnish to the selling Investors
such reasonable number of copies of the Registration Statement,
prospectus and preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents
(including, without limitation, prospectus amendments and
supplements as are prepared by the Company in accordance with
Section 4(a) above) as the selling Investors may reasonably
request, in order to facilitate the disposition of such selling
Investors’ Registrable Shares pursuant to the Registration
Statement;
(c)
Use reasonable efforts to register
and qualify the Registrable Shares covered by the Registration
Statement under all applicable Blue Sky Laws of all states
requiring such registration or qualification, provided ,
however , that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any
such states or jurisdictions; and
(d)
Use reasonable efforts to cause all
such Registrable Shares registered hereunder to be listed on each
national securities exchange on which securities of the same class
issued by the Company are then listed.
5.
Furnish
Information .
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Agreement that the
selling Investors shall furnish to the Company such information
regarding them and the securities held by them as the Company shall
reasonably request and as shall be required in order to effect any
registration by
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the Company pursuant to this
Agreement.
(b)
The Registration Statement will
provide, at the request of the Investors, for a plan of
distribution with respect to the Registrable Shares substantially
as follows: The Registrable Shares may be sold from time to
time by the selling Investors. Such sales may be made on one
or more exchanges or in the over-the-counter market, or otherwise
at prices and at terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. The
Registrable Shares may be sold by selling Investors in one or more
of the following types of transactions: (i) a block trade in which
the broker or dealer so engaged will attempt to sell the shares as
agent but may position and resell a portion of the block as
principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its
account pursuant to the resale registration statement; (iii) an
exchange distribution in accordance with the rules of such
exchange; (iv) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (v) transactions between
sellers and purchasers without a broker/dealer. In addition,
any securities covered by the Registration Statement which qualify
for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to the Registration Statement. From time to
time the selling Investors may engage in short sales, short sales
versus the box, puts and calls and other transactions in securities
of the issuer or derivatives thereof, and may sell and deliver the
shares in connection therewith. In effecting sales, brokers
or dealers engaged by the selling Investors may arrange for other
brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from selling Investors in amounts
to be negotiated immediately prior to the sale.
6.
Expenses of
Registration .
All expenses incurred by the Company in connection with the
registration of the Registrable Shares pursuant to this Agreement
(excluding underwriting, brokerage and other selling commissions
and discounts), including without limitation all registration and
qualification and filing fees, printing expenses, fees and
disbursements of counsel for the Company, and the reasonable fees
and disbursements of one counsel for the selling Investors selected
by the selling Investors, shall be borne by the Company; provided,
however, that the Company shall not be required to pay any fees and
expenses of such counsel for the selling Investors, which, together
with the Legal Fee exceed $30,000.
7.
Indemnification
.
(a)
To the extent permitted by law, the
Company will indemnify and hold harmless each selling Investor
(including the partners or officers, directors and stockholders of
such Investor), and each Person, if any, who controls such selling
Investor within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which
they may become subject under the Securities Act, the Exchange Act,
and other federal or state securities laws, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in the
Registration Statement, in any preliminary prospectus or final
prospectus relating thereto or in any amendments or supplements to
the Registration Statement or any such preliminary prospectus or
final prospectus, (ii) arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
stated therein, or
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necessary to make the statements therein not
misleading or (iii) arise out of any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any other
federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any other
federal or state securities law; and the Company will reimburse
such selling Investor (including the partners, officers, directors
and stockholders of such Investor) or such controlling Person for
any legal or other expenses (but in no event for more than one law
firm) reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided , however , that the indemnity agreement
contained in this Section 7(a) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company,
nor shall the Company be liable in any such case for any such loss,
damage, liability or action to the extent that it arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with the
Registration Statement, any preliminary prospectus or final
prospectus relating thereto or any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final
prospectus, (i) in reliance upon and in conformity with written
information furnished expressly for use in connection with the
Registration Statement or any such preliminary prospectus or final
prospectus or any amendments or supplements to the Registration
Statement, preliminary prospectus or final prospectus by the
selling Investors, any broker/dealer acting on their behalf or
controlling person with respect to them or (ii) the plan of
distribution described in Section 5(b).
(b)
To the extent permitted by law, each
selling Investor will severally and not jointly indemnify and hold
harmless the Company, its Affiliates, each of their respective
directors, officers, partners, members and stockholders, each
Person, if any, who controls the Company within the meaning of the
Securities Act, any broker/dealer, any underwriter and all other
selling Investors, against any losses, claims, damages or
liabilities to which the Company or any such Affiliate, director,
officer, partner, member, stockholder, controlling Person,
broker/dealer, underwriter or such other selling Investor may
become subject to, under the Se
