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07/08/2005 LocatePlus Registration Rights Agreement_#1739308.DOC
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (the "Agreement") is made and entered
into as of this 8th day of July, 2005 by and among LocatePlus Holdings
Corporation, a Delaware corporation (the "Company"), and the "Investors" named
in that certain Purchase Agreement by and among the Company and the Investors
(the "Purchase Agreement").
The parties hereby agree as follows:
1. Certain Definitions.
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As used in this Agreement, the following terms shall have the following
meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
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regulations promulgated thereunder.
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"1934 Act" means the Securities Exchange Act of 1934, as amended, and the rules
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and regulations promulgated thereunder.
"Affiliate" means, with respect to any person, any other person which directly
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or indirectly controls, is controlled by, or is under common control with, such
person.
"Business Day" means a day, other than a Saturday or Sunday, on which banks in
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New York City are open for the general transaction of business.
"Common Stock" shall mean (i) prior to the consummation of the
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Recapitalization, the Class A Voting Common Stock, par value $0.01 per share, of
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the Company; provided, however, that if, upon conversion of the Notes or the
exercise of the Warrants, as the case may be, the authorized but unissued shares
of Class A Voting Common Stock are not sufficient to permit the full conversion
of the Notes and the full exercise of the Warrants, then the term "Common Stock"
shall mean such shares of Class A Voting Common Stock as are then available for
issuance plus such number of shares of Class B Nonvoting Common Stock as shall
permit the full conversion of the Notes and the full exercise of the Warrants
and (ii) from and after the effective time of the Recapitalization, the
Recapitalization Stock.
"Conversion Shares" means the shares of Common Stock issuable upon
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conversion of the Notes.
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"Investors" shall mean the Investors identified in the Purchase Agreement and
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any Affiliate or permitted transferee of any Investor who is a subsequent holder
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of any Warrants or Registrable Securities.
"Notes" means, the Company's 3% Senior Convertible Notes issued to the Investors
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pursuant to the Purchase Agreement, the form of which is attached to the
Purchase Agreement as Exhibit A.
"Prospectus" shall mean the prospectus included in any Registration Statement,
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as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Recapitalization" shall mean (i) the recapitalization of each outstanding share
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of the Company's Class A Voting Common Stock, par value $0.01 per share, and the
Company's Class B Nonvoting Common Stock, par value $0.01 per share, into one
share of a single class of voting common stock and (ii) a one-for-fifty reverse
split of the Common Stock.
"Recapitalization Stock" shall mean the common stock, par value $0.01 per share,
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of the Company after giving effect to the Recapitalization.
"Register,""registered" and "registration" refer to a registration made by
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preparing and filing a Registration Statement or similar document in compliance
with the 1933 Act (as defined below), and the declaration or ordering of
effectiveness of such Registration Statement or document.
"Registrable Securities" shall mean (i) the Conversion Shares, (ii) the Warrant
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Shares and (iii) any other securities issued or issuable with respect to or in
exchange for Registrable Securities; provided, that, a security shall cease to
be a Registrable Security upon (A) sale pursuant to a Registration Statement or
Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale by
the Investors pursuant to Rule 144(k).
"Registration Statement" shall mean any registration statement of the Company
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filed under the 1933 Act that covers the resale of any of the Registrable
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Securities pursuant to the provisions of this Agreement, amendments and
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supplements to such Registration Statement, including post-effective amendments,
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all exhibits and all material incorporated by reference in such Registration
Statement.
"Required Investors" means the Investors holding a majority of the Registrable
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Securities.
"Rule 144(k)" means Rule 144(k) promulgated under the 1933 Act or any successor
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provision thereto.
"SEC" means the U.S. Securities and Exchange Commission or any successor agency
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thereto.
"Warrants" means, the warrants to purchase shares of Common Stock issued to the
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Investors pursuant to the Purchase Agreement, the form of which is attached to
the Purchase Agreement as Exhibit B.
"Warrant Shares" means the shares of Common Stock issuable upon the exercise of
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the Warrants.
2. Registration.
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(a) Registration Statements.
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(i) Promptly following the closing of the purchase and sale of the
securities contemplated by the Purchase Agreement (the "Closing Date") but no
later than thirty (30) days after the Closing Date (the "Filing Deadline"), the
Company shall prepare and file with the SEC one Registration Statement on Form
SB-2 (or, if Form SB-2 is not then available to the Company, on such form of
registration statement as is then available to effect a registration for resale
of the Registrable Securities), covering the resale of the Registrable
Securities in an
amount at least equal to the Conversion Shares and the Warrant Shares. Such
Registration Statement shall include the plan of distribution attached hereto as
Exhibit A, subject to any SEC comments. Such Registration Statement also shall
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cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416 under the 1933 Act), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities, if any. The
Company shall use its reasonable best efforts to obtain from each person who now
has piggyback registration rights a waiver of those rights with respect to the
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a Registration Statement
covering the Registrable Securities is not filed with the SEC on or prior to the
Filing Deadline, the Company will make pro rata payments to each Investor, as
liquidated damages and not as a penalty, in an amount equal to 1.5% of the
aggregate purchase price paid by such Investor pursuant to the Purchase
Agreement for each 30-day period or pro rata for any portion thereof following
the Filing Deadline for which no Registration Statement is filed with respect to
the Registrable Securities. Such payments shall constitute the Investors'
exclusive monetary remedy for such events, but shall not affect the right of the
Investors to seek injunctive relief. Such payments shall be made to each
Investor in cash.
(ii) Additional Registrable Securities. Upon any change in the Conversion
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Price (as defined in the Notes) or the Warrant Price (as defined in the Warrant)
such that additional shares of Common Stock become issuable upon the conversion
of the Notes or the exercise of the Warrants (the "Additional Shares"), the
Company shall prepare and file with the SEC one or more Registration Statements
on Form SB-2 or amend the Registration Statement filed pursuant to clause (i)
above, if such Registration Statement has not previously been declared effective
covering the resale of the Additional Shares (or, if Form SB-2 is not then
available to the Company, on such form of registration statement as is then
available to effect a registration for resale of the Additional Shares), subject
to the Required Investors' consent) covering the resale of the Additional
Shares, but only to the extent the Additional Shares are not at the time covered
by an effective Registration Statement. Such Registration Statement also shall
cover, to the extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416 under the 1933 Act), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Additional Shares, if any. The
Company shall use its reasonable best efforts to obtain from each person who now
has piggyback registration rights a waiver of those rights with respect to such
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission. If a Registration Statement
covering the Additional Shares is required to be filed under this Section
2(a)(ii) and is not filed with the SEC within five Business Days of the
occurrence of any of the events specified in this Section 2(a)(ii), the Company
will make pro rata payments to each Investor, as liquidated damages and not as a
penalty, in an amount equal to 1.5% of the aggregate purchase price paid by such
Investor pursuant to the Purchase Agreement for each 30-day period or pro rata
for any portion thereof following the date by which such Registration Statement
should have been filed for which no Registration Statement is filed with respect
to the Additional Shares. Such payments shall constitute the Investors'
exclusive
monetary remedy for such events, but shall not affect the right of the Investors
to seek injunctive relief. Such payments shall be made to each Investor in
cash.
(iii) S-3 Qualification. Promptly following the date (the
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"Qualification Date") upon which the Company becomes eligible to use a
registration statement on Form S-3 to register the Registrable Securities or
Additional Shares, as applicable, for resale, but in no event more than thirty
(30) days after the Qualification Date (the "Qualification Deadline"), the
Company shall file a registration statement on Form S-3 covering the Registrable
Securities or Additional Shares, as applicable (or a post-effective amendment on
Form S-3 to the registration statement on Form S-1) (a "Shelf Registration
Statement") and shall use commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective as promptly as practicable
thereafter. If a Shelf Registration Statement covering the Registrable
Securities is not filed with the SEC on or prior to the Qualification Deadline,
the Company will make pro rata payments to each Investor, as liquidated damages
and not as a penalty, in an amount equal to 1.5% of the aggregate purchase price
paid by such Investor pursuant to the Purchase Agreement for each 30-day period
or pro rata for any portion thereof following the date by which such Shelf
Registration Statement should have been filed for which no such Shelf
Registration Statement is filed with respect to the Registrable Securities or
Additional Shares, as applicable. Such payments shall constitute the Investors'
exclusive monetary remedy for such events, but shall not affect the right of the
Investors to seek injunctive relief. Such payments shall be made to each
Investor in cash.
(b) Expenses. The Company will pay all expenses associated with
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each registration, including filing and printing fees, the Company's counsel and
accounting fees and expenses, costs associated with clearing the Registrable
Securities for sale under applicable state securities laws, listing fees, fees
and expenses of one counsel to the Investors and the Investors' reasonable
expenses in connection with the registration, but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable Securities
being sold.
(c) Effectiveness.
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(i) The Company shall use commercially reasonable efforts to have the
Registration Statement declared effective as soon as practicable. The Company
shall notify the Investors by facsimile or e-mail as promptly as practicable,
and in any event, within twenty-four (24) hours, after any Registration
Statement is declared effective and shall simultaneously provide the Investors
with copies of any related Prospectus to be used in connection with the sale or
other disposition of the securities covered thereby. If (A)(x) a Registration
Statement covering the Registrable Securities is not declared effective by the
SEC prior to the earlier of (i) five (5) Business Days after the SEC shall have
informed the Company that no review of the Registration Statement will be made
or (ii) the 120th day after the Closing Date, (y) a Registration Statement
covering Additional Shares is not declared effective by the SEC within ninety
(90) days following the time such Registration Statement was required to be
filed pursuant to Section 2(a)(ii) or (z) a Shelf Registration Statement is not
declared effective by the SEC within ninety (90) days after the Qualification
Deadline, or (B) after a Registration Statement has been declared effective by
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the SEC, sales cannot be made pursuant to such Registration Statement for any
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reason (including without limitation by reason of a stop order, or the
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Company's failure to update the Registration Statement), but excluding the
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inability of any Investor to sell the Registrable Securities covered thereby due
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to market conditions and except as excused pursuant to subparagraph (ii)
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below,then the Company will make pro rata payments to each Investor, as
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liquidated damages and not as a penalty, in an amount equal to 1.5% of the
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aggregate purchase price paid by such Investor pursuant to the Purchase
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Agreement for each 30-day period or pro rata for any portion thereof following
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the date by which such Registration Statement should have been effective (the
"Blackout Period"). Such payments shall constitute the Investors' exclusive
monetary remedy for such events, but shall not affect the right of the Investors
to seek injunctive relief. The amounts payable as liquidated damages pursuant
to this paragraph shall be paid monthly within three (3) Business Days of the
last day of each month following the commencement of the Blackout Period until
the termination of the Blackout Period. Such payments shall be made to each
Investor in cash.
(ii) For not more than twenty (20) consecutive days or for a total of not
more than forty-five (45) days in any twelve (12) month period, the Company may
delay the disclosure of material non-public information concerning the Company,
by suspending the use of any Prospectus included in any registration
contemplated by this Section containing such information, the disclosure of
which at the time is not, in the good faith opinion of the Company, in the best
interests of the Company (an "Allowed Delay"); provided, that the Company shall
promptly (a) notify the Investors in writing of the existence of (but in no
event, without the prior written consent of an Investor, shall the Company
disclose to such Investor any of the facts or circumstances regarding) material
non-public information giving rise to an Allowed Delay, (b) advise the Investors
in writing to cease all sales under the Registration Statement until the end of
the Allowed Delay and (c) use commercially reasonable efforts to terminate an
Allowed Delay as promptly as practicable.
3. Company Obligations. The Company will use commercially reasonable
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efforts to effect the registration of the Registrable Securities in accordance
with the terms hereof, and pursuant thereto the Company will, as expeditiously
as possible:
(a) use commercially reasonable efforts to cause such Registration
Statement to become effective and to remain continuously effective for a period
that will terminate upon the earlier of (i) the date on which all Registrable
Securities covered by such Registration Statement as amended from time to time,
have been sold, and (ii) the date on which all Registrable Securities covered by
such Registration Statement may be sold pursuant to Rule 144(k) (the
"Effectiveness Period") and advise the Investors in writing when the
Effectiveness Period has expired;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the Effectiveness Period and to
comply with the provisions of the 1933 Act and the 1934 Act with respect to the
distribution of all of the Registrable Securities covered thereby;
(c) provide copies to and permit a single counsel designated by the
Investors to review each Registration Statement and all amendments and
supplements thereto no
fewer than seven (7) days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(d) furnish to the Investors and their legal counsel (i) promptly after
the same is prepared and publicly distributed, filed with the SEC, or received
by the Company (but not later than two (2) Business Days after the filing date,
receipt date or sending date, as the case may be) one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto, and each letter written
by or on behalf of the Company to the SEC or the staff of the SEC, and each item
of correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Investor may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by such Investor that are covered by the
related Registration Statement;
(e) use commercially reasonable efforts to (i) prevent the issuance of
any stop order or other suspension of effectiveness and, (ii) if such order is
issued, obtain the withdrawal of any such order at the earliest possible moment;
(f) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with the
Investors and their counsel in connection with the registration or qualification
of such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions requested by the Investors and do any and all
other commercially reasonable acts or things necessary or advisable to enable
the distribution in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, however, that the Company shall not be
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required in connection therewith or as a condition thereto to (i) qualify to do
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business in any jurisdiction where it would not otherwise be required to qualify
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but for this Section 3(f), (ii) subject itself to general taxation in any
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jurisdiction where it would not otherwise be so subject but for this Section
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3(f), or (iii) file a general consent to service of process in any such
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jurisdiction;
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(g) use commercially reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(h) immediately notify the Investors, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the 1933
Act, upon discovery that, or upon the happening of any event (an "Amendment
Event") as a result of which, the Prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and at the request of any such holder, promptly prepare and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not
include an 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 in light of the circumstances then existing; and
(i) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act,
take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities hereunder; and make available to its
security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period of
at least twelve (12) months, beginning after the effective date of each
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for
the purpose of this subsection 3(i), "Availability Date" means the 45th day
following the end of the fourth fiscal quarter that includes the effective date
of such Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter).
(j) With a view to making available to the Investors the benefits
of Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell shares of Common Stock to the
public without registration, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be resold pursuant to Rule 144(k) or any other rule
of similar effect or (B) such date as all of the Registrable Securities shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act; and (iii) furnish to
each Investor upon request, as long as such Investor owns any Registrable
Securities, (A) a written statement by the Company that it has complied with the
reporting requirements of the 1934 Act, (B) a copy of the Company's most recent
Annual Report on Form 10-KSB or Quarterly Report on Form 10-QSB, and (C) such
other information as may be reasonably requested in order to avail such Investor
of any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due Diligence Review; Information. The Company shall make
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available, during normal business hours, for inspection and review by the
Investors, advisors to and representatives of the Investors (who may or may not
be affiliated with the Investors and who are reasonably acceptable to the
Company), all financial and other records, all SEC Filings (as defined in the
Purchase Agreement) and other filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.
The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review and any Investor wishing to obtain
such information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
5. Obligations of the Investors.
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(a) Each Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such
Investor if such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement.
(b) Each Investor, by its acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.
(c) Each Investor agrees that, upon receipt of any notice from the
Company of either (i) the commencement of an Allowed Delay pursuant to Section
2(c)(ii) or (ii) the happening of an Amendment Event, such Investor will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the
Investor's receipt of the copies of the supplemented or amended prospectus filed
with the SEC and until any related post-effective amendment is declared
effective and, if so directed by the Company, the Investor 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 the Investor's possession of the
Prospectus covering the Registrable Securities current at the time of receipt of
such notice.
6. Indemnification.
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(a) Indemnification by the Company. The Company will indemnify
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and hold harmless each Investor and its officers, directors, members, employees
and agents, successors and assigns, and each other person, if any, who controls
such Investor within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Registration
Statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof; (ii) any blue sky application or other
document executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a "Blue Sky Application"); (iii) 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; (iv) any violation by the Company or
its agents of any rule or regulation promulgated under the 1933 Act applicable
to the Company or its agents and relating to action or inaction required of the
Company in connection with such registration; or (v) any failure to register or
qualify the Registrable Securities included in any such Registration in any
state where the Company or its agents has affirmatively undertaken or agreed in
writing that the Company will undertake such registration or qualification on an
Investor's behalf and will reimburse such Investor, and each such officer,
director or member and each such 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,
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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 (x) an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such Investor or any such
controlling person in writing specifically for use in such Registration
Statement or Prospectus or (y) the use by such Investor of an outdated or
defective Prospectus after the Company has notified such Investor of an
Amendment Event.
(b) Indemnification by the Investors. Each Investor agrees, severally
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but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the 0000 Xxx) against any
losses, claims, damages, liabilities and expense (including reasonable attorney
fees) resulting from (i) such Investor's failure to comply with the prospectus
delivery requirements of the 1933 Act or (ii) any untrue statement of a material
fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or amendment or
supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto. In no event shall the liability of an
Investor be greater in amount than the dollar amount of the proceeds (net of all
expense paid by such Investor in connection with any claim relating to this
Section 6 and the amount of any damages such Investor has otherwise been
required to pay by reason of such untrue statement or omission) received by such
Investor upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
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indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
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indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such person unless (a) the indemnifying
party has agreed to pay such fees or expenses, or (b) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (c) in the reasonable judgment of any
such person, based upon written advice of its counsel, a conflict of interest
exists between such person and the indemnifying party with respect to such
claims (in which case, if the person notifies the indemnifying party in writing
that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such person); and provided, further, that
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the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all such indemnified parties. No
indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that 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 of such
claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
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in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation.
In no event shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder in connection with any claim relating to this
Section 6 and the amount of any damages such holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission) received by it upon the sale of the Registrable Securities
giving rise to such contribution obligation.
7. Miscellaneous.
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(a) Amendments and Waivers. This Agreement may be amended only by
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a writing signed by the Company and the Required Investors. The Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company shall have obtained the written consent
to such amendment, action or omission to act, of the Required Investors.
(b) Notices. All notices and other communications provided for or
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permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(c) Assignments and Transfers by Investors. The provisions of this
------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Investors and
their respective
successors and assigns. An Investor may transfer or assign, in whole or from
time to time in part, to one or more persons its rights hereunder in connection
with the transfer of Registrable Securities by such Investor to such person,
provided that such Investor complies with all laws applicable thereto and
provides written notice of assignment to the Company promptly after such
assignment is effected.
(d) Assignments and Transfers by the Company. This Agreement may not
------------------------------------------
be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors, provided, however, that the
Company may assign its rights and delegate its duties hereunder to any surviving
or successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company's assets to another corporation, without
the prior written consent of the Required Investors, after notice duly given by
the Company to each Investor.
(e) Benefits of the Agreement. The terms and conditions of this
----------------------------
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns 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 assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts; Faxes. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(g) Titles and Subtitles. The titles and subtitles used in this
----------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Severability. Any provision of this Agreement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(i) Further Assurances. The parties shall execute and deliver all such
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further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties as a
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final expression of their agreement and intended to be a complete and exclusive
statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
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Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served on
each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT
TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
The Company: LOCATEPLUS HOLDINGS CORPORATION
By:_________________________
Name:
Title:
The Investors:
Exhibit A
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PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any one or more of the following methods
when disposing of shares or interests therein:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales effected after the date the registration statement of which
this Prospectus is a part is declared effective by the SEC;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share; and
- a combination of any such methods of sale.
The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock, from time to time, under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as
selling stockholders under this prospectus. The selling stockholders also may
transfer the shares of common stock in other circumstances, in which case the
transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the
selling stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering.
Upon any exercise of the warrants by payment of cash, however, we will receive
the exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus (as it may be supplemented
or amended from time to time) available to the selling stockholders for the
purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
