Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of February 6,
2017 (the “Effective Date”), by and between Inuvo, Inc., a Nevada corporation
(the “Company”), and NetSeer, Inc., a Delaware corporation (the “Seller”).
Capitalized terms used by not defined herein have the meaning set forth in the
Purchase Agreement (defined below).
RECITALS
WHEREAS, the Company, the Seller and NetSeer Acquisition, Inc., a Nevada
corporation and wholly-owned subsidiary of the Company (the “Buyer”), are
parties to the Asset Purchase Agreement, of even date herewith (the “Purchase
Agreement”), pursuant to which, the Seller sold to the Buyer substantially all
the assets, and certain specified liabilities, of the Business (as defined in
the Purchase Agreement); and
WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, the Seller and the Company desire to enter into this Agreement, which
shall, among other things, govern the rights of the Seller to cause the Company
to register shares of Common Stock issued or issuable to the Seller under the
terms of the Purchase Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1.Definitions. For purposes of this Agreement:
1.1    “Affiliate” means, with respect to any specified Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with such Person, including without limitation any general partner,
managing member, officer or director of such Person or any venture capital fund
now or hereafter existing that is controlled by one or more general partners or
managing members of, or shares the same management company with, such Person.
1.2    "Business Day" means any day except Saturday, Sunday or any other day on
which commercial banks located in New York, New York are authorized or required
by Law to be closed for business.
1.3    “Common Stock” means shares of the Company’s common stock, $0.001 par
value.
1.4    “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
1.5    "Filing Deadline" means March 22, 2017.
1.6    “Form S‑3” means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the SEC that permits incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
1.7    “Person” means any individual, corporation, partnership, trust, limited
liability company, association or other entity.
1.8    “Registrable Securities” means the Consideration Shares.
1.9    “SEC” means the Securities and Exchange Commission.
1.10    “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.11    “Selling Expenses” means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of Registrable
Securities, and fees and disbursements of counsel for the Seller.
2.Registration Rights. The Company covenants and agrees as follows:
2.1    On or before the Filing Deadline, the Company will file a Form S-3
registration statement under the Securities Act covering all Registrable
Securities (the "Resale Registration Statement"). Notwithstanding the foregoing
obligations, if the Company furnishes to the Seller a certificate signed by the
Company’s chief executive officer stating that in the good faith judgment of the
Company’s Board of Directors there exists material nonpublic information
relating to the Company that is not otherwise required to be disclosed and that
such disclosure would be materially detrimental to the Company and its
stockholders, then the Company shall have the right to defer taking action with
respect to such filing, for a period of not more than sixty (60) days after the
Filing Deadline; provided, however, that the Company may not invoke this right
more than once in any twelve (12) month period; and provided further that the
Company shall not register any securities for its own account or that of any
other stockholder during such sixty (60) day period. The Company shall not be
obligated to effect, or to take any action to effect, any registration pursuant
to Section 2 after the Company has effected one (1) Resale Registration
Statement. A Resale Registration Statement shall not be counted as “effected”
for purposes of Section 2 until such time as the Resale Registration Statement
has been declared effective by the SEC.
2.2    Whenever required under this Section 2 to effect the registration of any
Registrable Securities, the Company shall:
(a)    use its best efforts to cause such registration statement to become
effective;
(b)    prepare and file with the SEC such amendments and supplements to such
registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the Securities Act;
(c)    provide to the Seller and the Seller’s counsel for review each
registration statement and all amendments and supplements thereto no fewer than
five (5) Business Days prior to their filing with the SEC;
(d)    promptly request acceleration of the Resale Registration Statement at
such time as the staff of the SEC advises the Company it may do so;
(e)    furnish to the Seller such numbers of copies of a prospectus, including a
preliminary prospectus, as required by the Securities Act, and such other
documents as the Seller may reasonably request, which such requirement may be
satisfied through a link to the prospectus, including the preliminary
prospectus, to the SEC's website at www.sec.gov;
(f)    use its best efforts to register and qualify the Registrable Securities
covered by such Resale Registration Statement under such other securities or
blue-sky laws of such jurisdictions as shall be reasonably requested by the
Seller; provided that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(g)    notify the Seller, promptly after the Company receives notice thereof, of
the time when such registration statement has been declared effective or a
supplement to any prospectus forming a part of such registration statement has
been filed; and
(h)    after such Resale Registration Statement becomes effective, provide
written notice to the Seller (a “Suspension Notice”) of the occurrence of any of
the following events, as promptly as practicable after becoming aware of such
event: (i) any request by the SEC or any other federal or state governmental
authority, during the period of effectiveness of the Resale Registration
Statement, for amendments or supplements to such registration statement or
related prospectus or for additional information; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Resale Registration Statement or the
initiation of any proceedings for that purpose; (iii) the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction from a state governmental authority or the initiation of any
proceeding for such purpose by a state governmental authority; or (iv) any event
or circumstance which necessitates the making of any changes to the Resale
Registration Statement or related prospectus, or any document incorporated or
deemed to be incorporated therein by reference, so that, in the case of the
Resale Registration Statement, it will not include 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 made therein not misleading and, in the case of
the prospectus, it will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. The
Company shall promptly prepare a supplement or amendment to the Resale
Registration Statement to correct such untrue statement or omission, and deliver
a copy of such supplement or amendment to the Seller. The Company shall also
promptly notify the Seller in writing (x) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a registration
statement or any post-effective amendment has become effective and (y) of the
Company’s reasonable determination that a post-effective amendment to a
registration statement would be appropriate.
2.3    The Seller agrees that upon its receipt of any Suspension Notice from the
Company, the Seller will discontinue the disposition of Registrable Securities
pursuant to any registration statement covering such securities to the extent
required by the SEC or such other federal or state governmental authority until
the earlier of the Seller’s receipt of (i) copies of the supplemented or amended
prospectus contemplated by Section 2, (ii) written notice from the Company that
no supplement or amendment is required, (iii) written notice from the Company
that the any suspension of the effectiveness such registration statement or
initiation of any related proceeding has ceased or (iv) written notice from the
Company that any suspension of the qualification or exemption from qualification
or initiation of any proceeding related thereto has ceased; in each case, which
shall be promptly and within five (5) Business Days delivered by the Company to
the Seller.
2.4    It shall be a condition precedent to the obligations of the Company to
take any action pursuant to Section 2 with respect to the Registrable Securities
that the Seller shall promptly furnish to the Company such information regarding
itself, the Company's securities held by it, and the intended method of
disposition of such securities as is reasonably required to effect the
registration of the Registrable Securities. If the Seller shall fail to so
promptly furnish any such information as may be reasonably requested by the
Company, the Company's obligation to proceeds with the provisions of Section 2
hereof shall automatically be suspended until such time as the Seller has
provided such requested information to the Company.
3.    Expenses of Registration. All expenses (excluding Selling Expenses)
incurred in connection with registrations, filings, or qualifications pursuant
to Section 2, including all registration, filing, and qualification fees;
printers’ and accounting fees; fees and disbursements of counsel for the
Company, shall be borne by the Company. The Seller shall be responsible for any
Selling Fees, fees and disbursements of its counsel and any additional ancillary
costs it may incur.
4.    Indemnification.
(a)    To the extent permitted by law, the Company will indemnify and hold
harmless the Seller, and the partners, members, officers, directors and
stockholders of the Seller; legal counsel and accountants; any underwriter (as
defined in the Securities Act) for the Seller; and each Person, if any, who
controls the Seller or underwriter within the meaning of the Securities Act or
the Exchange Act, against any loss, damage, claim or liability (joint or
several) to which such aforementioned Person may become subject under the
Securities Act, the Exchange Act, or other federal or state law, insofar as such
loss, damage, claim or liability (or any action in respect thereof) arises out
of or is based upon: (i) any untrue statement or alleged untrue statement of a
material fact contained in the Resale Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto; (ii) an omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by the
Company or its officers, directors, employees, agents or Affiliates of the
Securities Act, the Exchange Act, any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state
securities law, and the Company will pay to the Seller, underwriter, controlling
Person, or other aforementioned Person any legal or other expenses reasonably
incurred thereby in connection with investigating or defending any such loss,
claim, liability or action, as such expenses are incurred; provided, however,
that the indemnity agreement contained in this Section 4(a) shall not apply if
and to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or omission made in conformity with written
information furnished by or on behalf of the Seller, underwriter, controlling
Person, or other aforementioned Person specifically for use in connection with
Resale Registration Statement.
(b)    To the extent permitted by law, the Seller, will indemnify and hold
harmless the Company, and each of its directors, each of its officers who has
signed the Resale Registration Statement, each Person (if any), who controls the
Company within the meaning of the Securities Act, legal counsel and accountants
for the Company, any underwriter (as defined in the Securities Act), any other
stockholder selling securities in such registration statement, and any
controlling Person of any such underwriter or other stockholder, against any
loss, damage, claim or liability, in each case only to the extent that such
loss, claim, damage or liability arises out of or are based upon (i) any untrue
statement or omission made in conformity with written information furnished by
or on behalf of the Seller specifically for use in connection with such
registration; or (ii) the use by the Seller of an outdated or defective
prospectus after the Company has notified the Seller, through the Company’s
delivery of a Suspension Notice, that the prospectus is outdated or defective;
and the Seller will pay to the Company and each other aforementioned Person any
legal or other expenses reasonably incurred thereby in connection with
investigating or defending any claim or proceeding from which any loss, claim,
damage or liability may result, as such expenses are incurred; provided,
however, that the indemnity agreement contained in this Section 4(b) shall not
apply to amounts paid in settlement of any such claim or proceeding if such
settlement is effected without the consent of the Seller, which consent shall
not be unreasonably withheld; and provided further that in no event shall the
aggregate amounts payable by the Seller by way of indemnity or contribution
hereunder exceed the Purchase Price (as that term is defined in the Purchase
Agreement), except in the case of fraud by the Seller.
(c)    Promptly after receipt by an indemnified party under this Section 4 of
notice of the commencement of any action (including any governmental action) for
which a party may be entitled to indemnification hereunder, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 4, give the indemnifying party notice of the
commencement thereof. The indemnifying party shall have the right to participate
in such action and, to the extent the indemnifying party so desires, participate
jointly with any other indemnifying party to which notice has been given, and to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party (together with all other
indemnified parties that may be represented without conflict by one counsel)
shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such action. The failure to
give notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 4, to the extent that such
failure materially prejudices the indemnifying party’s ability to defend such
action. The failure to give notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party otherwise than under
this Section 4.
(d)    To provide for just and equitable contribution to joint liability under
the Securities Act in any case in which either: (i) any party otherwise entitled
to indemnification hereunder makes a claim for indemnification pursuant to this
Section 4 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case, notwithstanding the fact that this Section 4 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any party hereto for which indemnification is
provided under this Section 4, then, and in each such case, such parties will
contribute to the aggregate losses, claims, damages, liabilities, or expenses to
which they may be subject (after contribution from others) in such proportion as
is appropriate to reflect the relative fault of each of the indemnifying party
and the indemnified party in connection with the statements, omissions, or other
actions that resulted in such loss, claim, damage, liability, or expense, as
well as to reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or allegedly untrue
statement of a material fact, or the omission or alleged omission of a material
fact, relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission;
provided, however, that, in any such case (x) the Seller will not be required to
contribute any amount in excess of the Registrable Securities offered and sold
by the Seller pursuant to such registration statement, and (y) no Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation; and provided further that in no
event shall the Seller’s liability pursuant to this Section 4, when combined
with the amounts paid or payable by the Seller pursuant to Section 4, exceed the
Purchase Price, except in the case of fraud by the Seller.
(e)    The obligations of the Company and the Seller under this Section 4 shall
survive the completion of any offering of Registrable Securities in a
registration under Section 2, and otherwise shall survive the termination of
this Agreement.
5.    Miscellaneous.
(a)    Successors and Assigns. Subject to the terms of the Purchase Agreement,
the rights under this Agreement may be assigned (but only with all related
obligations) by the Seller to a transferee of Registrable Securities that (i) is
at the time of transfer or was as of the Effective Date hereof an Affiliate of
the Seller or is a Person named on Exhibit A hereto or an Affiliate of such
Person; provided, however, in each case that (x) the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee and the Registrable Securities with respect to
which such rights are being transferred; and (y) such transferee agrees in a
written instrument delivered to the Company to be bound by and subject to the
terms and conditions of this Agreement. The terms and conditions of this
Agreement inure to the benefit of and are binding upon the respective successors
and permitted assignees of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
(b)    Governing Law. This Agreement shall for all purposes be deemed to be made
under and shall be construed in accordance with the laws of the State of Nevada,
without regard to the conflicts of laws principles thereof.
(c)     Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and, except as
expressly provided herein, may not be changed or modified except by an
instrument in writing signed by the Seller and the Company.
(d)    Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
thereof.
(e)     Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties hereto and their legal representatives,
successors and assigns.
(f)    Notices. Any notice or other communication required or which may be given
hereunder shall be sufficiently given when so delivered if by hand or overnight
delivery or if sent by certified mail or private courier service within five
days after deposit of such notice, postage prepaid, or sent by facsimile or
other electronic transmission (with confirmation of receipt), addressed as
follows:
If to the Seller:
c/o ONSET Ventures
2400 Sand Hill Road, Suite 150
Menlo Park, VA 94025
Facsimile: (650) 529-0777
E-mail: bea@onset.com
Attention: Vice President of Finance
 
 
with a copy to:
Pillsbury Winthrop Shaw Pitman LLP
2550 Hanover Street
Palo Alta, CA 94304
Facsimile: (650) 223-4545
E-mail: spierson@pillsburylaw.com
Attention: Stanley F. Pierson, Esq.
 
 
If to Company:
500 President Clinton Avenue
Suite 300
Little Rock, AR 72201
Facsimile: (877) 311-3050
E-mail: John.Pisaris@Inuvo.com
Attention: John B. Pisaris, Esq. Secretary and General Counsel
 
 
with a copy to:
Pearlman Law Group LLP
2200 Corporate Boulevard NW
Suite 210
Boca Raton, FL 33431
Facsimile: (561) 362-9612
E-mail: brian@pslawgroup.net
Attention: Brian A. Pearlman, Esq.

The parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in the
manner provided herein for giving notice.
(g)    Counterparts. This Agreement may be executed in several counterparts,
each one of which shall constitute an original and may be delivered by facsimile
transmission, and together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

COMPANY:

INUVO, INC.

By:/s/ Wallace D. Ruiz
Wallace D. Ruiz
Chief Financial Officer

SELLER:

NETSEER, INC.

By: /s/ John Mracek
John Mracek
Chief Executive Officer

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Registration Rights Agreement