REGISTRATION RIGHTS AGREEMENT
Exhibit 2.4
THIS REGISTRATION RIGHTS AGREEMENT
(this “Agreement”) is made by and among
Inuvo, Inc., a Nevada corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, a
“Purchaser,” and
collectively, the “Purchasers”) effective as of the
date this Agreement is executed by the Company.
RECITALS
A. In
connection with the Securities Purchase Agreement by and among the
parties hereto (or as applicable, their affiliates), (the
“Securities Purchase
Agreement”), the Company has agreed, upon the terms
and subject to the conditions of the Securities Purchase Agreement,
to issue and sell to each Purchaser 10% senior unsecured
subordinated convertible promissory notes of the Company (the
“Notes”).
B. The
Notes are convertible into shares of the Company’s common
stock, $0.001 par value per share (the “Common Stock”).
C. To
induce the Purchasers to consummate the transactions contemplated
by the Securities Purchase Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “Securities Act”), and applicable
state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration of the
premises and the mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each of the
Purchasers hereby agree as follows:
1.
Definitions
Capitalized terms
used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the
following meanings:
(a) “Business
Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in Newport Beach, California
are authorized or required by law to remain closed.
(b) “Conversion
Shares” means the shares of Common Stock issuable upon
conversion of the Notes.
(c) “Cut
Back Shares” has the meaning set forth in Section 2(d).
(d) “Effective
Date” means the date that the applicable Registration
Statement has been declared effective by the SEC.
(e) “Filing
Deadline” means (i) with respect to the initial
Registration Statement required to be filed pursuant to
Section 2(a), the
15th
calendar day after the termination of the Merger Agreement (and the
30th
calendar day after the termination of the Merger Agreement in the
event the Registration Statement is filed on Form S-1) and (ii)
with respect to any additional Registration Statements that may be
required to be filed by the Company pursuant to this Agreement, the
date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this
Agreement.
(f) “Merger
Agreement” means that certain Agreement and Plan of
Merger of even date herewith by and among the Company,
ConversionPoint Technologies, Inc. and other parties
thereto.
(g) “Prospectus
Supplement” has the meaning set forth in Section 2(h).
(h) “Purchaser”
means a Purchaser or any transferee or assignee of any Registrable
Securities or Notes, as applicable, to whom a Purchaser assigns its
rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any transferee or
assignee thereof to whom a transferee or assignee of any
Registrable Securities or Notes, as applicable, assigns its rights
under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9.
(i) “Person”
means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization or a government or any department or agency
thereof.
(j) “register,”
“registered,”
and “registration” refer to a
registration effected by preparing and filing one or more
Registration Statements in compliance with the Securities Act and
pursuant to Rule 415 and the declaration of effectiveness of such
Registration Statement(s) by the SEC.
(k) “Registrable
Securities” means (i) any Conversion Shares issued or
issuable pursuant to the terms of the Notes, and (ii) any capital
stock of the Company issued or issuable with respect to the
Conversion Shares or the Notes, including, without limitation, (1)
as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise and (2) shares of capital
stock of the Company into which the shares of Common Stock are
converted or exchanged and Alternate Consideration (as defined in
the Notes) into which the shares of Common Stock are converted or
exchanged, in each case, without regard to any limitations on
issuance of Common Stock pursuant to the terms of the
Notes.
(l) “Registration
Statement” means a registration statement or
registration statements of the Company filed under the Securities
Act covering Registrable Securities.
(m) “Required
Holders” means the holders of at least a majority of
the Registrable Securities (excluding any Registrable Securities
held by the Company or any of its Subsidiaries).
(n) “Required
Registration Amount” means that number of Conversion
Shares issued and issuable pursuant to the terms of the Notes,
subject to adjustment as provided in Section 2(c).
(o) “Rule
144” means Rule 144 promulgated by the SEC under the
Securities Act, as such rule may be amended from time to time, or
any other similar or successor rule or regulation of the SEC that
may at any time permit the Purchasers to sell securities of the
Company to the public without registration.
(p) “Rule
415” means Rule 415 promulgated by the SEC under the
Securities Act, as such rule may be amended from time to time, or
any other similar or successor rule or regulation of the SEC
providing for offering securities on a continuous or delayed
basis.
(q) “SEC”
means the United States Securities and Exchange Commission or any
successor thereto.
(r) “Shelf
Registration Statement” has the meaning set forth in
Section
2(h).
(s) “Staff”
has the meaning set forth in Section 2(d).
(t) “Transaction
Agreements” means this Agreement, the Securities
Purchase Agreement and the Notes.
2.
Registration.
(a) Mandatory
Registration. The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file
with the SEC an initial Registration Statement on Form S-3 covering
the resale of all of the Registrable Securities, provided that such
initial Registration Statement shall register for resale at least
the number of shares of Common Stock equal to the Required
Registration Amount as of the date such Registration Statement is
initially filed with the SEC, provided further that if Form S-3 is
unavailable for such a registration, the Company shall use such
other form as is required by Section 2(b). Such initial
Registration Statement, and each other Registration Statement
required to filed pursuant to the terms of this Agreement, shall
contain (except if otherwise directed by the Required Holders) the
“Selling Security
Holders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit B. The Company shall
use its commercially reasonable best efforts to have such initial
Registration Statement, and each other Registration Statement
required to filed pursuant to the terms of this Agreement, declared
effective by the SEC as soon as practicable and, with respect to
the initial Registration Statement, within ninety (90) days after
filing.
(b) Ineligibility
to Use Form S-3. In the event that Form S-3 is not available
for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the
Registrable Securities on another appropriate form, including Form
S-1, reasonably acceptable to the Required Holders and (ii)
undertake to register the resale of the Registrable Securities on
Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of all Registration
Statements then in effect until such time as a Registration
Statement on Form S-3 covering the resale of all the Registrable
Securities has been declared effective by the SEC.
(c) Sufficient
Number of Shares Registered. In the event the number of
shares available under any Registration Statement is insufficient
to cover all of the Registrable Securities required to be covered
by such Registration Statement or a Purchaser’s allocated
portion of the Registrable Securities pursuant to Section 2(f), the Company shall
amend such Registration Statement (if permissible), or file with
the SEC a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover at least the
Required Registration Amount as of the Trading Day immediately
preceding the date of the filing of such amendment or new
Registration Statement, in each case, as soon as practicable, but
in any event not later than fifteen (15) days after the necessity
therefor arises (but taking account of any Staff position with
respect to the date on which the Staff will permit such amendment
to the Registration Statement and/or such new Registration
Statement (as the case may be) to be filed with the SEC). The
Company shall use its commercially reasonable best efforts to cause
such amendment to such Registration Statement and/or such new
Registration Statement (as the case may be) to become effective as
soon as practicable following the filing thereof with the
SEC.
(d) Offering.
Notwithstanding anything to the contrary contained in this
Agreement, in the event the staff of the SEC (the
“Staff”) or the
SEC seeks to characterize any offering pursuant to a
Registration Statement filed pursuant to this Agreement as
constituting an offering of securities by, or on behalf of,
the Company, or in any other manner, such that the Staff
or the SEC do not permit such Registration Statement to
become effective and used for resales in a manner that does not
constitute such an offering and that permits the continuous resale
at the market by the Purchasers participating therein (or
as otherwise may be acceptable to each Purchaser) without being
named therein as an “underwriter,” then the Company
shall remove from the Registration Statement such portion of the
Registrable Securities (the “Cut Back Shares”) to be included
in such Registration Statement by all Purchasers until such time as
the Staff and the SEC shall so permit such Registration
Statement to become effective as aforesaid. In making such
reduction, the Company shall remove from the Registration Statement
the number of Registrable Securities to be included by all
Purchasers on a pro rata basis (based upon the number of
Registrable Securities otherwise required to be included for each
Purchaser) unless the inclusion of the Registrable Securities by a
particular Purchaser or a particular set of Purchasers are
resulting in the Staff or the SEC’s “by or on
behalf of the Company” offering position, in which event the
Registrable Securities held by such Purchaser or set of Purchasers
shall be the only Registrable Securities subject to reduction (and
if by a set of Purchasers on a pro rata basis by such Purchasers or
on such other basis as would result in the exclusion of the least
number of Registrable Securities by all such Purchasers). In
addition, in the event that the Staff or the SEC requires any
Purchaser seeking to sell securities under a Registration
Statement filed pursuant to this Agreement to be specifically
identified as an “underwriter” in order to
permit such Registration Statement to become effective, and such
Purchaser does not consent to being so named as an underwriter in
such Registration Statement, then, in each such case, the
Company shall reduce the total number of Registrable
Securities to be registered on behalf
of such Purchaser, until such time as the Staff or
the SEC does not require such identification or until such
Purchaser accepts such identification and the manner
thereof. Any reduction pursuant to this paragraph
will first reduce all Registrable Securities other than those
issued pursuant to the Securities Purchase Agreement. In the
event of any reduction in Registrable Securities pursuant to
this paragraph, an affected Purchaser shall have the right to
require, upon delivery of a written request to the Company signed
by such Purchaser, the Company to file a registration statement
within thirty (30) days of such request (subject to any
restrictions imposed by Rule 415 or required by the Staff
or the SEC) for resale by such Purchaser in a manner acceptable to
such Purchaser, and the Company shall following such
request cause to be and keep effective such registration
statement in the same manner as otherwise contemplated in this
Agreement for registration statements hereunder, in each case
until such time as: (i) all Registrable Securities held by such
Purchaser have been registered and sold pursuant to an
effective Registration Statement in a manner acceptable to such
Purchaser or (ii) all Registrable Securities may be resold by
such Purchaser without restriction (including, without
limitation, volume limitations) pursuant to Rule 144 (taking
account of any Staff position with respect to
“affiliate” status) and without the need for current
public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) or (iii) such Purchaser agrees to be named as an
underwriter in any such Registration Statement in a manner
acceptable to such Purchaser as to all Registrable Securities held
by such Purchaser and that have not theretofore been included in a
Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised
by a Purchaser multiple times and with respect to limited amounts
of Registrable Securities in order to permit the resale thereof by
such Purchaser as contemplated above).
(e) Piggyback
Registrations. Without limiting any obligation of the
Company hereunder or under the Securities Purchase Agreement, if
there is not an effective Registration Statement covering all of
the Registrable Securities or the prospectus contained therein is
not available for use and the Company shall determine to prepare
and file with the SEC a registration statement relating to an
offering for its own account or the account of others under the
Securities Act of any of its equity securities (other than on Form
S-4 or Form S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with the
Company’s stock option or other employee benefit plans), then
the Company shall deliver to each Purchaser a written notice of
such determination and, if within fifteen (15) days after the date
of the delivery of such notice, any such Purchaser shall so request
in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such
Purchaser requests to be registered; provided, however, that the Company shall
not be required to register any Registrable Securities pursuant to
this Section 2(e)
that are eligible for resale pursuant to Rule 144 without
restriction (including, without limitation, volume restrictions)
and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the
subject of a then-effective Registration Statement.
(f) Allocation
of Registrable Securities. The initial number of Registrable
Securities included in any Registration Statement and any increase
in the number of Registrable Securities included therein shall be
allocated pro rata among the Purchasers based on the number of
Registrable Securities held by each Purchaser at the time such
Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In
the event that a Purchaser sells or otherwise transfers any of such
Purchaser’s Registrable Securities, each transferee or
assignee (as the case may be) that becomes a Purchaser shall be
allocated a pro rata portion of the then-remaining number of
Registrable Securities included in such Registration Statement for
such transferor or assignee (as the case may be). Any shares of
Common Stock included in a Registration Statement and which remain
allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be
allocated to the remaining Purchasers, pro rata based on the number
of Registrable Securities then held by such Purchasers which are
covered by such Registration Statement.
(g) No
Inclusion of Other Securities. In no event shall the Company
include any securities other than Registrable Securities on any
Registration Statement without the prior written consent of the
Required Holders.
(h) Shelf
Registration Statement. Notwithstanding the registration
obligations set forth above in this Section 2, in the event it is
determined that the Company may effect registration of the
Registrable Securities by filing a prospectus supplement (the
“Prospectus
Supplement”) to the Company’s shelf registration
statement (Registration No. 333-220317) (the “Shelf Registration Statement”),
the Company shall, in lieu of filing a Registration Statement
pursuant to Section 2(a) or Section 2(b), file by no later than the
Filing Deadline, a Prospectus Supplement to the Shelf Registration
Statement covering the Registrable Securities.
The
Company shall use its commercially reasonable best efforts to
effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof, and, pursuant
thereto, the Company shall have the following
obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration
Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use its
commercially reasonable best efforts to cause such Registration
Statement to become effective as soon as practicable after such
filing. The Company shall use its commercially reasonable best
efforts keep each Registration Statement effective (and the
prospectus contained therein available for use) pursuant to Rule
415 for resales by the Purchasers on a delayed or continuous basis
at then-prevailing market prices (and not fixed prices) at all
times until the earlier of (i) the date as of which all of the
Purchasers may sell all of the Registrable Securities required to
be covered by such Registration Statement (disregarding any
reduction pursuant to Section 2(e)) without
restriction pursuant to Rule 144 (including, without limitation,
volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if
applicable), or (ii) the date on which the Purchasers shall have
sold all of the Registrable Securities covered by such Registration
Statement (the “Registration
Period”). Notwithstanding anything to the contrary
contained in this Agreement, the Company shall ensure that, when
filed and at all times while effective, each Registration Statement
(including, without limitation, all amendments and supplements
thereto) and the prospectus (including, without limitation, all
amendments and supplements thereto) used in connection with such
Registration Statement (1) shall not contain 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 therein (in the
case of prospectuses, in the light of the circumstances in which
they were made) not misleading and (2) will disclose (whether
directly or through incorporation by reference to other SEC filings
to the extent permitted) all material information regarding the
Company and its securities required to be disclosed under the
Securities Act or the Exchange Act (as defined below). The Company
shall use its best efforts to submit to the SEC, within one (1)
Business Day (but in any event no later than the second
(2nd)
Business Day), after the date that the Company learns that no
review of a particular Registration Statement will be made by the
Staff or that the Staff has no further comments on a particular
Registration Statement (as the case may be), a request for
acceleration of effectiveness of such Registration Statement to a
time and date not later than twenty-four (24) hours after the
submission of such request .
(b) The
Company shall prepare and file with the SEC such amendments
(including, without limitation,
post-effective amendments) and supplements to each Registration
Statement and the prospectus used in connection with each such
Registration Statement, which prospectus is to be filed pursuant to
Rule 424 promulgated under the Securities Act, as may be necessary
to keep each such Registration Statement effective at all times
during the Registration Period for such Registration Statement,
and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities of the Company required to be covered by such
Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as
set forth in such Registration Statement; provided, however, that by 8:30 a.m. (New
York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule
424(b) under the Securities Act the final prospectus to be used in
connection with sales pursuant to the applicable Registration
Statement (whether or not such a prospectus is technically required
by such rule). In the case of amendments and supplements to any
Registration Statement which are required to be filed pursuant to
this Agreement (including, without limitation, pursuant to this
Section 3(b)) by
reason of the Company filing a report on Form 10-Q or Form 10-K or
any analogous report under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), the Company shall have incorporated such report
by reference into such Registration Statement, if applicable, or
shall file such amendments or supplements with the SEC on the same
day on which the Exchange Act report is filed which
created
the
requirement for the Company to amend or supplement such
Registration Statement.
(c) The
Company shall (A) permit legal counsel for each Purchaser to review
and comment upon (i) each Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to each Registration Statement
(including, without limitation, the prospectus contained therein)
(except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any similar or successor
reports) within a reasonable number of days prior to their filing
with the SEC, and (B) not file any Registration Statement or
amendment or supplement thereto in a form to which any legal
counsel for any Purchaser reasonably objects. The Company shall
promptly furnish to legal counsel for each Purchaser, without
charge, (i) copies of any correspondence from the SEC or the Staff
to the Company or its representatives relating to each Registration
Statement, provided that such correspondence shall not contain any
material, non-public information regarding the Company or any of
its Subsidiaries (as defined in the Securities Purchase Agreement),
(ii) after the same is prepared and filed with the SEC, one
(1) copy of each Registration Statement and any amendment(s) and
supplement(s) thereto, including, without limitation, financial
statements and schedules, all documents incorporated therein by
reference, if requested by a Purchaser, and all exhibits and
(iii) upon the effectiveness of each Registration Statement,
one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with legal counsel for each Purchaser in
performing the Company’s obligations pursuant to this
Section
3.
(d) The
Company shall promptly furnish to each Purchaser whose Registrable
Securities are included in any Registration Statement, without
charge, (i) after the same is prepared and filed with the SEC, at
least one (1) copy of each Registration Statement and any
amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents
incorporated therein by reference, if requested by a Purchaser, all
exhibits and each preliminary prospectus, (ii) upon the
effectiveness of each Registration Statement, ten (10) copies of
the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies
as such Purchaser may reasonably request from time to time) and
(iii) such other documents, including, without limitation, copies
of any preliminary or final prospectus, as such Purchaser may
reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such
Purchaser.
(e) The
Company shall use its commercially reasonable best efforts to (i)
register and qualify, unless an exemption from registration and
qualification applies, the resale by Purchasers of the Registrable
Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in those
jurisdictions, such amendments (including, without limitation,
post-effective amendments) and supplements to such registrations
and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto
to (x) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(e), (y) subject itself to
general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction. The Company
shall promptly notify legal counsel for each Purchaser and each
Purchaser who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities
for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice
of the initiation or threatening of any proceeding for such
purpose.
(f) The
Company shall notify legal counsel for each Purchaser and each
Purchaser in writing of the happening of any event, as promptly as
practicable after becoming aware of such 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
omission to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided
that in no event shall such notice contain any material, non-public
information regarding the Company or any of its Subsidiaries), and
promptly prepare a supplement or amendment to such Registration
Statement and such prospectus contained therein to correct such
untrue statement or omission and deliver ten (10) copies of such
supplement or amendment to legal counsel for each Purchaser and
each Purchaser (or such other number of copies as legal counsel for
each Purchaser or such Purchaser may reasonably request). The
Company shall also promptly notify legal counsel for each Purchaser
and each Purchaser in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed,
when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be
delivered to legal counsel for each Purchaser and each Purchaser by
facsimile or e-mail on the same day of such effectiveness and by
overnight mail), and when the Company receives written notice from
the SEC that a Registration Statement or any post-effective
amendment will be reviewed by the SEC, (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, (iii) of the
Company’s reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate; and
(iv) of the receipt of any request by the SEC or any other federal
or state governmental authority for any additional information
relating to the Registration Statement or any amendment or
supplement thereto or any related prospectus. The Company shall
respond as promptly as practicable to any comments received from
the SEC with respect to each Registration Statement or any
amendment thereto.
(g) The
Company shall (i) use its commercially reasonable best efforts to
prevent the issuance of any stop order or other suspension of
effectiveness of each Registration Statement or the use of any
prospectus contained therein, or the suspension of the
qualification, or the loss of an exemption from qualification, of
any of the Registrable Securities for sale in any jurisdiction and,
if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and
(ii) notify legal counsel for each Purchaser and each Purchaser who
holds Registrable Securities of the issuance of such order and the
resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such
purpose.
(h) If
any Purchaser may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such
Purchaser consents to so being named an underwriter, at the request
of any Purchaser, the Company shall furnish to such Purchaser, on
the date of the effectiveness of such Registration Statement and
thereafter from time to time on such dates as a Purchaser may
reasonably request (i) a letter, dated such date, from the
Company’s independent certified public accountants in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering, addressed to the Purchasers, and (ii) an opinion, dated
as of such date, of counsel representing the Company for purposes
of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to
the Purchasers.
(i) If
any Purchaser may be required under applicable securities law to be
described in any Registration Statement as an underwriter and such
Purchaser consents to so being named an underwriter, upon the
written request of such Purchaser, the Company shall make available
for inspection by (i) such Purchaser, (ii) legal counsel for such
Purchaser and (iii) one (1) firm of accountants or other agents
retained by such Purchaser (collectively, the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall agree in writing to hold in strict confidence and not to make
any disclosure (except to such Purchaser) or use of any Record or
other information which the Company’s board of directors
determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (1) the
disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is
otherwise required under the Securities Act, (2) the release of
such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent
jurisdiction, or (3) the information in such Records has been made
generally available to the public other than by disclosure in
violation of this Agreement or any other Transaction Agreement (as
defined in the Securities Purchase Agreement). Such Purchaser
agrees that it shall, upon learning that disclosure of such Records
is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing
herein (or in any other confidentiality agreement between the
Company and such Purchaser, if any) shall be deemed to limit any
Purchaser’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.
(j) The
Company shall hold in confidence and not make any disclosure of
information concerning a Purchaser provided to the Company unless
(i) disclosure of such information is necessary to comply with
federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or
omission in any Registration Statement or is otherwise required to
be disclosed in such Registration Statement pursuant to the
Securities Act, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a
court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other
than by disclosure in violation of this Agreement or any other
Transaction Agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Purchaser
is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to
such Purchaser and allow such Purchaser, at such Purchaser’s
expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities
Purchase Agreement, the Company shall use its commercially
reasonable best efforts either to (i) cause all of the Registrable
Securities covered by each Registration Statement to be listed on
each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the
rules of such exchange, (ii) secure designation and quotation of
all of the Registrable Securities covered by each Registration
Statement on an Eligible Market (as defined in the Securities
Purchase Agreement), or (iii) if, despite the Company’s best
efforts to satisfy the preceding clauses (i) or (ii) the Company is
unsuccessful in satisfying the preceding clauses (i) or (ii),
without limiting the generality of the foregoing, to use its
commercially reasonable best efforts to arrange for at least two
market makers to register with the Financial Industry Regulatory
Authority (“FINRA”) as such with respect to
such Registrable Securities. In addition, the Company shall
cooperate with each Purchaser and any broker or dealer through
which any such Purchaser proposes to sell its Registrable
Securities in effecting a filing with FINRA pursuant to FINRA Rule
5110 as requested by such Purchaser. The Company shall pay all fees
and expenses in connection with satisfying its obligations under
this Section
3(k).
(l) The
Company shall cooperate with the Purchasers who hold Registrable
Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts (as the case
may be) as the Purchasers may reasonably request from time to time
and registered in such names as the Purchasers may
request.
(m) If
requested by a Purchaser, the Company shall as soon as practicable
after receipt of notice from such Purchaser and (i) incorporate in
a prospectus supplement or post-effective amendment such
information as a Purchaser reasonably requests to be included
therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the
purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any
Registration Statement or prospectus contained therein if
reasonably requested by a Purchaser holding any Registrable
Securities.
(n) The
Company shall use its commercially reasonable best efforts to cause
the Registrable Securities covered by a Registration Statement to
be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of
such Registrable Securities.
(o) The
Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form
complying with, and in the manner provided by, the provisions of
Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company’s
fiscal quarter next following the applicable Effective Date of each
Registration Statement. For the avoidance of doubt, filing of
documents required by this Section 3(o) via the SEC’s
Electronic Data Gathering, Analysis and Retrieval system (XXXXX)
shall satisfy all delivery requirements of this Section
3(o).
(p) The
Company shall otherwise use its commercially reasonable best
efforts to comply with all applicable rules and regulations of the
SEC in connection with any registration hereunder.
(q) Within
one (1) Business Day after a Registration Statement, which covers
Registrable Securities, is declared effective by the SEC, and in
the event the Registrable Shares are not covered by a prospectus
supplement to the Company’s Shelf Registration Statement, the
Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared
effective by the SEC substantially in the form attached hereto as
Exhibit
A.
(r) The
Company shall use its commercially reasonable best efforts to
maintain eligibility for use of Form S-3 (or any successor form
thereto) for the registration of the resale of all the Registrable
Securities (provided that Form S-3 may be used for any such
resales).
(s) The
Company shall take all other commercially reasonable actions
necessary to expedite and facilitate disposition by each Purchaser
of its Registrable Securities pursuant to each Registration
Statement.
4.
Obligations of the
Purchasers.
(a) At
least five (5) Business Days prior to the first anticipated filing
date of each Registration Statement, the Company shall notify each
Purchaser in writing of the information the Company requires from
each such Purchaser with respect to such Registration Statement. It
shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Purchaser that such
Purchaser shall furnish 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 and maintain the
effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such
registration as the Company may reasonably request.
(b) Each
Purchaser, by such Purchaser’s 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 each Registration Statement hereunder, unless such
Purchaser has notified the Company in writing of such
Purchaser’s election to exclude all of such Purchaser’s
Registrable Securities from such Registration Statement. Each
Holder agrees to furnish to the Company a completed questionnaire
in the form attached to this Agreement as Exhibit D (a
“Selling Stockholder Questionnaire”) on a date that is
the later of (i) not less than two (2) Business Days prior to the
Filing Date or (ii) by the end of the fourth (4th) Business Day
following the date on which such Holder receives draft materials in
accordance with this Section.
(c) Each
Purchaser agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or the first
sentence of Section
3(f), such Purchaser will immediately discontinue
disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such
Purchaser’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first
sentence of Section
3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary in this
Section 4(c), the
Company shall cause its transfer agent to deliver unlegended shares
of Common Stock to a transferee of a Purchaser in accordance with
the terms of the Securities Purchase Agreement in connection with
any sale of Registrable Securities with respect to which such
Purchaser has entered into a contract for sale prior to the
Purchaser’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first
sentence of Section
3(f) and for which such Purchaser has not yet
settled.
(d) Each
Purchaser covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable
Securities pursuant to a Registration
Statement.
5.
Expenses of
Registration.
All
reasonable expenses, other than underwriting discounts and
commissions and Purchaser legal fees, incurred in connection with
registrations, filings or qualifications pursuant to Section 2 and Section 3, including, without
limitation, all registration, listing and qualifications fees,
printers and accounting fees, FINRA filing fees (if any) and fees
and disbursements of counsel for the Company shall be paid by the
Company. Notwithstanding the foregoing, the Company shall pay the
reasonable fees and expenses of one legal counsel to the Purchasers
in connection with the transactions contemplated by this Agreement
in an amount not to exceed $25,000 in the aggregate.
(a) In
the event any Registrable Securities are included in any
Registration Statement under this Agreement, to the fullest extent
permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend each Purchaser and each of its directors,
officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) and each
Person, if any, who controls such Purchaser within the meaning of
the Securities Act or the Exchange Act and each of the directors,
officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a
functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against any
losses, obligations, claims, damages, liabilities, contingencies,
judgments, fines, penalties, charges, costs (including, without
limitation, court costs, reasonable attorneys’ fees and costs
of defense and investigation), amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto (“Indemnified
Damages”), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of
a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which
Registrable Securities are offered (“Blue Sky Filing”), or the omission
or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files
any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not
misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the
Registrable Securities pursuant to a Registration Statement (the
matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). Subject to
Section 6(c), the
Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement
contained in this Section
6(a): (x) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in
writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the
preparation of such Registration Statement or any such amendment
thereof or supplement thereto, (y) shall not be available to a
particular Purchaser to the extent such Claim is based on a failure
of such Purchaser to deliver or to cause to be delivered the
prospectus made available by the Company (to the extent
applicable), including, without limitation, a corrected prospectus,
if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d) and then only if,
and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed, and (z)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld or
delayed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of any of the
Registrable Securities by any of the Purchasers pursuant to
Section
9.
(b) In
connection with any Registration Statement in which a Purchaser is
participating, such Purchaser agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the
same manner as is set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified
Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case,
to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information
furnished to the Company by such Purchaser expressly for use in
connection with such Registration Statement; and, subject to
Section
6(c) and the below provisos in
this Section
6(b), such Purchaser will
reimburse an Indemnified Party any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Purchaser, which consent
shall not be unreasonably withheld or delayed, provided further
that such Purchaser shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to
such Purchaser as a result of the applicable sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and
shall survive the transfer of any of the Registrable Securities by
any of the Purchasers pursuant to Section 9.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the
case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any
governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party (as the case may be) shall,
if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of
the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party (as the case may be); provided, however, that an Indemnified
Person or Indemnified Party (as the case may be) shall have the
right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the
indemnifying party has agreed in writing to pay such fees and
expenses; (ii) the indemnifying party shall have failed promptly to
assume the defense of such Claim and to employ counsel reasonably
satisfactory to such Indemnified Person or Indemnified Party (as
the case may be) in any such Claim; or (iii) the named parties to
any such Claim (including, without limitation, any impleaded
parties) include both such Indemnified Person or Indemnified Party
(as the case may be) and the indemnifying party, and such
Indemnified Person or such Indemnified Party (as the case may be)
shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such
Indemnified Person or such Indemnified Party and the indemnifying
party (in which case, if such Indemnified Person or such
Indemnified Party (as the case may be) notifies the indemnifying
party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, then the indemnifying party
shall not have the right to assume the defense thereof and such
counsel shall be at the expense of the Indemnifying Party,
provided
further, that in
the case of clause (iii) above the indemnifying party shall not be
responsible for the reasonable fees and expenses of more than one
(1) separate legal counsel for such Indemnified Person or
Indemnified Party (as the case may be). The Indemnified Party or
Indemnified Person (as the case may be) shall reasonably cooperate
with the indemnifying party in connection with any negotiation or
defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably
available to the Indemnified Party or Indemnified Person (as the
case may be) which relates to such action or Claim. The
indemnifying party shall keep the Indemnified Party or Indemnified
Person (as the case may be) reasonably apprised at all times as to
the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its
prior written consent; provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person (as the case
may be), consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified Person (as the case may
be) of a release from all liability in respect to such Claim or
litigation, and such settlement shall not include any admission as
to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or
Indemnified Person (as the case may be) with respect to all third
parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified
Party (as the case may be) under this Section 6, except to the extent that
the indemnifying party is materially and adversely prejudiced in
its ability to defend such action.
(d) No
Person involved in the sale of Registrable Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) in connection with such sale shall be
entitled to indemnification from any Person involved in such sale
of Registrable Securities who is not guilty of fraudulent
misrepresentation.
(e) The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
(f) The
indemnity and contribution agreements contained herein shall be in
addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying
party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.
To the
extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted
by law; provided,
however, that: (i)
no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault
standards set forth in Section 6, (ii) no Person involved in
the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) in connection with such sale shall be
entitled to contribution from any Person involved in such sale of
Registrable Securities who was not guilty of fraudulent
misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the amount of
net proceeds received by such seller from the applicable sale of
such Registrable Securities pursuant to such Registration
Statement. Notwithstanding the provisions of this Section 7, no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of
the amount by which the net proceeds actually received by such
Purchaser from the applicable sale of the Registrable Securities
subject to the Claim exceeds the amount of any damages that such
Purchaser has otherwise been required to pay, or would otherwise be
required to pay under Section 6(b), by reason of such untrue
or alleged untrue statement or omission or alleged
omission.
8.
Reports Under the Exchange Act
With a
view to making available to the Purchasers the benefits of Rule
144, the Company agrees to use its best efforts to:
(a) make
and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act so long as the Company remains subject to such requirements (it
being understood and agreed that nothing herein shall limit any
obligations of the Company under the Securities Purchase Agreement)
and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and
(c) furnish
to each Purchaser so long as such Purchaser owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company, if true, that it has complied with the reporting,
submission and posting requirements of Rule 144 and the Exchange
Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the
Company with the SEC if such reports are not publicly available via
XXXXX, and (iii) such other information as may be reasonably
requested to permit the Purchasers to sell such securities pursuant
to Rule 144 without registration.
All or
any portion of the rights under this Agreement shall be
automatically assignable by each Purchaser to any transferee or
assignee (as the case may be) of all or any portion of such
Purchaser’s Registrable Securities, Notes or Warrants if: (i)
such Purchaser agrees in writing with such transferee or assignee
(as the case may be) to assign all or any portion of such rights,
and a copy of such agreement is furnished to the Company within a
reasonable time after such transfer or assignment (as the case may
be); (ii) the Company is, within a reasonable time after such
transfer or assignment (as the case may be), furnished with written
notice of (a) the name and address of such transferee or assignee
(as the case may be), and (b) the securities with respect to which
such registration rights are being transferred or assigned (as the
case may be); (iii) immediately following such transfer or
assignment (as the case may be) the further disposition of such
securities by such transferee or assignee (as the case may be) is
restricted under the Securities Act or applicable state securities
laws if so required; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this
sentence such transferee or assignee (as the case may be) agrees in
writing with the Company to be bound by all of the provisions
contained herein; (v) such transfer or assignment (as the case may
be) shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement, the Notes and
the Warrants (as the case may be); and (vi) such transfer or
assignment (as the case may be) shall have been conducted in
accordance with all applicable federal and state securities
laws.
Provisions of this
Agreement may be amended only with the written consent of the
Company and the Required Holders. Any amendment effected in
accordance with this Section 10 shall be binding upon each
Purchaser and the Company, provided that no such amendment shall be
effective to the extent that it (1) applies to less than all of the
holders of the holders of Registrable Securities, (2) imposes any
obligation or liability on any Purchaser without such
Purchaser’s prior written consent (which may be granted or
withheld in such Purchaser’s sole discretion) or (3) applies
retroactively. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party. No
consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of
the parties to this Agreement.
11.
Miscellaneous.
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder
of Registrable Securities whenever such Person owns, or is deemed
to own, of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or
election received from such record owner of such Registrable
Securities.
(b) Any
notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party);
(iii) with respect to Section 3(c), by electronic mail
(provided confirmation of transmission is electronically generated
and kept on file by the sending party); or (iv) one (1) Business
Day after deposit with a nationally recognized overnight delivery
service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to
the Company:
000
Xxxxxxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx
Xxxx, XX 00000
Attention: Xxxx
Xxxxxxx, General Counsel
Email:
xxxx.xxxxxxx@xxxxx.xxx
Facsimile No.:
000-000-0000
With a
copy (for informational purposes only) to:
Xxxxxxxx Law Group
LLP
000
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx
Xxxxxxxx, Esq.
Email:
xxxxx@xxxxxxxxxx.xxx
If to
the Transfer Agent:
Colonial Stock
Transfer Company, Inc.
00
Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxx
Xxxx Xxxx, XX 00000
Telephone: (000)
000-0000
Email:
xxxxx@xxxxxxxxxxxxx.xxx
Attention: Xxxxx
Xxxxx
If to a
Purchaser, to its address and facsimile number set forth on the
signature page to the Securities Purchase Agreement, or to such
other address and/or facsimile number and/or to the attention of
such other Person as the recipient party has specified by written
notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the
sender’s facsimile machine or electronic mail transmission
containing the time, date, recipient facsimile number or electronic
mail address and an image of the first page of such transmission or
(C) provided by a courier or overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above,
respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof. The Company and each
Purchaser acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that each party hereto shall be
entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement by any other party
hereto and to enforce specifically the terms and provisions hereof
(without the necessity of showing economic loss and without any
bond or other security being required), this being in addition to
any other remedy to which any party may be entitled by law or
equity.
(d) All
questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal
laws of the State of Nevada, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Nevada.
Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in Orange County,
California, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address
for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by
law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in
any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO
THE EXTENT POSSIBLE, ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
(e) This
Agreement, the other Transaction Agreements, the schedules and
exhibits attached hereto and thereto and the instruments referenced
herein and therein constitute the entire agreement among the
parties hereto and thereto solely with respect to the subject
matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement, the other Transaction
Agreements, the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all
prior agreements and understandings among the parties hereto solely
with respect to the subject matter hereof and thereof; provided, however, that nothing contained
in this Agreement or any other Transaction Agreement shall (or
shall be deemed to) (i) have any effect on any agreements any
Purchaser has entered into with the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior
investment made by such Purchaser in the Company, (ii) waive,
alter, modify or amend in any respect any obligations of the
Company or any of its Subsidiaries or any rights of or benefits to
any Purchaser or any other Person in any agreement entered into
prior to the date hereof between or among the Company and/or any of
its Subsidiaries and any Purchaser and all such agreements shall
continue in full force and effect or (iii) limit any obligations of
the Company under any of the other Transaction
Agreements.
(f) Subject
to compliance with Section 9 (if applicable), this
Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
This Agreement is not for the benefit of, nor may any provision
hereof be enforced by, any Person, other than the parties hereto,
their respective permitted successors and assigns and the Persons
referred to in Sections 6 and 7 hereof.
(g) The
headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. Unless
the context clearly indicates otherwise, each pronoun herein shall
be deemed to include the masculine, feminine, neuter, singular and
plural forms thereof. The terms “including,”
“includes,” “include” and words of like
import shall be construed broadly as if followed by the words
“without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like
import refer to this entire Agreement instead of just the provision
in which they are found.
(h) This
Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any
signature is delivered by facsimile transmission or by an e-mail
which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid
and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if
such signature page were an original thereof.
(i) Each
party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents as
any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
(j) The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any
party.
(k) All
consents and other determinations required to be made by the
Purchasers pursuant to this Agreement shall be made, unless
otherwise specified in this Agreement, by the Required
Holders.
(l) The
obligations of each Purchaser under this Agreement and the other
Transaction Agreements are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of
any other Purchaser under this Agreement or any other Transaction
Agreement. Nothing contained herein or in any other Transaction
Agreement, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as, and the
Company acknowledges that the Purchasers do not so constitute, a
partnership, an association, a joint venture or any other kind of
group or entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group or entity with respect to
such obligations or the transactions contemplated by the
Transaction Agreements or any matters, and the Company acknowledges
that the Purchasers are not acting in concert or as a group, and
the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or
any of the other the Transaction Agreements. Each Purchaser shall
be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this
Agreement or out of any other Transaction Agreements, and it shall
not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The use of a
single agreement with respect to the obligations of the Company
contained herein was solely in the control of the Company, not the
action or decision of any Purchaser, and was done solely for the
convenience of the Company and not because it was required or
requested to do so by any Purchaser. It is expressly understood and
agreed that each provision contained in this Agreement and in each
other Transaction Agreement is between the Company and a Purchaser,
solely, and not between the Company and the Purchasers collectively
and not between and among Purchasers.
[signature pages follow]
IN WITNESS WHEREOF, the parties have
executed this Registration Rights Agreement as of the dates set
forth below.
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COMPANY:
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By: /s/
Xxxxxxx X.
Xxxx
Xxxxxxx X. Xxxx, President and CEO
Dated:
November 1, 2018
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[SIGNATURE
PAGE OF PURCHASER(S) FOLLOWS]
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[SIGNATURE PAGE OF
PURCHASER – REGISTRATION RIGHTS AGREEMENT]
CPT
INVESTMENTS, LLC,
a
California limited liability company
By:
/s/ Xxxxx
Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Managing Member
Name: Xxxxx Xxxxxxx
Title: Managing Member
Dated:
November 1, 2018
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EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Attention:
_____________
Re:
Ladies
and Gentlemen:
[We
are][I am] counsel to Inuvo, Inc., a Nevada corporation (the
“Company”), and
have represented the Company in connection with that certain
Securities Purchase Agreement (the “Securities Purchase Agreement”)
entered into by and among the Company and the Purchasers named
therein (collectively, the “Holders” or the
“Selling
Shareholders”) pursuant to which the Company issued to
the Holders certain 10% senior unsecured subordinated convertible
promissory notes (the “Notes”) convertible into shares of
the Company’s common stock, $0.001 par value per share
(the “Common
Stock”). Pursuant to the Securities Purchase
Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the “Registration Rights Agreement”)
pursuant to which the Company agreed, among other things, to
register the shares of Common Stock issuable pursuant to the terms
of the Notes, which are defined as the Registrable Securities (as
defined in the Registration Rights Agreement), under the Securities
Act of 1933, as amended (the “Securities Act”). In connection
with the Company’s obligations under the Registration Rights
Agreement, on ____________ ___, 20__, the Company filed a
Registration Statement on Form [S-3] (File No. 333-_____________)
(the “Registration
Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable
Securities which names each of the Holders as a selling security
holder thereunder.
The
names of the Selling Stockholders to whom this opinion relates and
the numbers of Shares that each Selling Stockholder may resell
under the Registration Statement are set forth under the column
“Shares to be Offered” in the section of the
Registration Statement and Prospectus entitled “Selling
Stockholders” in the column “Shares to be Offered
Pursuant to the Registration Statement.” For purposes of this
opinion, we have reviewed a copy of the Registration Statement and
Prospectus, and such other and further information and documents as
we have deemed advisable.
In
connection with the foregoing, we have examined copies of
resolutions of the Board of Directors of the Company, the
securities described in the Registration Statement and such other
agreements, instruments and documents as we have deemed relevant or
necessary as a basis for the opinions hereinafter set forth. In
making such examination, we have assumed the genuineness of all
signatures on all original documents and the conformity to original
documents of all copies submitted to us as conformed, photostat or
other copies. As to matters of fact material to such opinions, we
have, when relevant facts were not independently established,
relied upon statements and certificates furnished to
us.
Based
upon and subject to the foregoing, we render the following
opinion:
1. The
Registration Statement has become effective under the Act, and to
the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or
threatened.
2. Upon
conversion of the Notes, the Shares are duly and validly issued,
fully paid and non-assessable, and not subject to the preemptive
rights of any stockholder of the Company.
As
with any selling stockholders’ registration statement, the
Shares are restricted securities, but may be sold pursuant to the
Registration Statement. The normal restrictive legend appearing
thereto may be removed following the sale of such securities or the
placement in street name of the selling broker in contemplation of
imminent sale with the understanding that, if the sale is not
consummated, the certificates will be returned to you for
relegending.
Notwithstanding
the foregoing, we may in the future advise you as to certain
institutional type investors or foreign investors from whose shares
the restrictive legend may be removed prior to placement into
street name based on their status.
Our
opinion shall not apply to resales occurring during any period that
we or the Company may advise you in writing that the Registration
Statement is not current. In such event, no resales of Shares by
Selling Stockholders shall be effected pursuant to our opinion
until we confirm that our opinion may again be relied upon to
effect resales by Selling Stockholders.
This
opinion is rendered to Colonial Stock Transfer Co., Inc. and is not
to be relied upon by any other person. We undertake no
responsibility to update this information to reflect facts
occurring after the date hereof.
Very
truly yours,
[ISSUER’S
COUNSEL]
By:_____________________
EXHIBIT B
SELLING SECURITY HOLDERS
This
prospectus covers the sale by the selling security holders of up to
an aggregate of [________] shares of common stock, including an
aggregate of [________] shares of our common stock issuable upon
conversion of the Notes. We are registering the shares of common
stock in order to permit the selling security holders to offer the
shares for resale from time to time. Except for the ownership of
the Notes described below, the selling security holders have not
had any material relationship with us within the past three years
except as disclosed under the heading “Our Relationships with
the Selling Security Holders” below.
The
table below lists the selling security holders and other
information regarding the beneficial ownership of the shares of
common stock held by each of the selling security holders. The
second column lists the number of shares of common stock
beneficially owned by the selling security holders, based on their
respective ownership of shares of common stock, as of ________ __,
20__, assuming conversion of the Notes held by each selling
security holder on that date and does not take into account of any
limitations on conversion contained in the Notes. The number of
shares of common stock issuable upon conversion of the Notes held
by each selling security holder on _________ __, 20__ is the
maximum number of shares of common stock issuable upon conversion
of the Notes on _______ __, 20__.
The
third column lists the shares of common stock being offered by this
prospectus by the selling security holders and does not take in
account any limitations on issuance of common stock upon conversion
of the Notes.
The
fourth column assumes the sale of all of the shares offered by the
selling security holders under this prospectus and does not take
into account any limitations on issuance of common stock pursuant
to the terms of the notes contained in the notes or the limitations
on issuance of common stock upon exercise of the Warrants contained
in the Warrants.
Under
the terms of the Notes, a selling security holder may not convert
the Notes to the extent (but only to the extent) the aggregate
number of shares of common stock issuable upon conversion of all
Notes issued by us would exceed 19.99% of our outstanding shares of
common stock on November 1, 2018 without first obtaining
shareholder approval. The number of shares in the second column and
the fourth column does not reflect these limitations. The number of
shares beneficially owned by each selling security holder taking
into account these limitations, if such number is less than the
number of shares set forth in the table, is set forth in the
footnotes to the table below. The selling security holders may sell
all, some or none of their shares in this offering. See “Plan
of Distribution.”
EXHIBIT
C
PLAN OF DISTRIBUTION
We are
registering the shares of common stock issuable pursuant to the
conversion of the Notes to permit the resale of these shares of
common stock by the holders of the Notes from time to time after
the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling security holders of the
shares of common stock. We will bear all fees and expenses incident
to our obligation to register the shares of common
stock.
The
selling security holders may sell all or a portion of the shares of
common stock held by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or
agents. If the shares of common stock are sold through underwriters
or broker-dealers, the selling security holders will be responsible
for underwriting discounts or commissions or agent’s
commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale
or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:
●
on any national
securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;
●
in the
over-the-counter market;
●
in transactions
otherwise than on these exchanges or systems or in the
over-the-counter market;
●
through the writing
or settlement of options, whether such options are listed on an
options exchange or otherwise;
●
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 made after the date the Registration Statement is declared
effective by the SEC;
●
broker-dealers
may agree with the selling securityholders to sell a specified
number of such shares at a stipulated price per share;
●
a
combination of any such methods of sale; and
●
any
other method permitted pursuant to applicable law.
The
selling security holders may also sell shares of common stock under
Rule 144 promulgated under the Securities Act of 1933, as amended,
if available, rather than under this prospectus. In addition, the
selling security holders may transfer the shares of common stock by
other means not described in this prospectus. If the selling
security holders effect such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents,
such underwriters, broker-dealers or agents may receive commissions
in the form of discounts, concessions or commissions from the
selling security holders or commissions from purchasers of the
shares of common stock for whom they may act as agent or to whom
they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents
may be in excess of those customary in the types of transactions
involved). In connection with sales of the shares of common stock
or otherwise, the selling security holders may enter into hedging
transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in
positions they assume. The selling security holders may also sell
shares of common stock short and deliver shares of common stock
covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The
selling security holders may also loan or pledge shares of common
stock to broker-dealers that in turn may sell such
shares.
The
selling security holders may pledge or grant a security interest in
some or all of the notes, warrants or 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 pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if
necessary, the list of selling security holders to include the
pledgee, transferee or other successors in interest as selling
security holders under this prospectus. The selling security
holders also may transfer and donate the shares of common stock in
other circumstances in which case the transferees, donees, pledgees
or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.
To the
extent required by the Securities Act and the rules and regulations
thereunder, the selling security holders and any broker-dealer
participating in the distribution of the shares of common stock may
be deemed to be “underwriters” within the meaning of
the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. At
the time a particular offering of the shares of common stock is
made, a prospectus supplement, if required, will be distributed,
which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or
names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling security
holders and any discounts, commissions or concessions allowed or
re-allowed or paid to broker-dealers.
Under
the securities laws of some states, the shares of common stock may
be sold in such states only through registered or licensed brokers
or dealers. In addition, in some states the shares of common stock
may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.
There
can be no assurance that any selling security holder will sell any
or all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a
part.
The
selling security holders and any other person participating in such
distribution will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including, without limitation, to the
extent applicable, Regulation M of the Exchange Act, which may
limit the timing of purchases and sales of any of the shares of
common stock by the selling security holders and any other
participating person. To the extent applicable, Regulation M may
also restrict the ability of any person engaged in the distribution
of the shares of common stock to engage in market-making activities
with respect to the shares of common stock. All of the foregoing
may affect the marketability of the shares of common stock and the
ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We will
pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be
$[ ] in total, including, without
limitation, Securities and Exchange Commission filing fees and
expenses of compliance with state securities or “blue
sky” laws; provided, however, that a selling
security holder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling security holders
against liabilities, including some liabilities under the
Securities Act in accordance with the registration rights
agreements or the selling security holders will be entitled to
contribution. We may be indemnified by the selling security holders
against civil liabilities, including liabilities under the
Securities Act that may arise from any written information
furnished to us by the selling security holder specifically for use
in this prospectus, in accordance with the related registration
rights agreements or we may be entitled to
contribution.
Once
sold under the registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in
the hands of persons other than our affiliates.
EXHIBIT
D
INUVO, INC.
SELLING STOCKHOLDER QUESTIONNAIRE
In
connection with the Registration Rights Agreement dated _________,
2018 (the “Registration Rights Agreement”) by and
between Inuvo, Inc., a Nevada corporation (the “Company”)
and the undersigned selling stockholder (the “Selling
Stockholder”), the Company agreed to file with the
U.S. Securities and Exchange Commission (the “Commission”)
a registration statement (the “Resale Registration
Statement”) pursuant to which the Company will
register the resale of certain shares of its common stock (the
“Restricted
Securities”) held of record by the Selling Stockholder
for resale under Rule 415 under the Securities Act of 1933, as
amended (the “Securities
Act”).
This
Selling Stockholder Questionnaire (the “Questionnaire”)
requests certain information regarding you as a Selling Stockholder
which is necessary to complete the preparation of the Resale
Registration Statement. Exhibit
A to this questionnaire defines certain terms which are used
herein.
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1.
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Please
provide the full legal name of the Selling
Stockholder(s):
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_____________________________________________________________________________________
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_____________________________________________________________________________________
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If the
Selling Stockholder is a corporation, partnership, limited
liability company or other entity, please provide the jurisdiction
under which such entity is organized:
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_____________________________________________________________________________________
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2.
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Please
indicate below the total number of shares of the Company's common
stock held by the Selling Stockholder as of the date
hereof:
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______________________________________________________________________________________
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3.
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Please
indicate below the nature of any position, office or other material
relationship which the Selling Stockholder has had within the past
three years with the Company or any of the Company’s
affiliates:
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______________________________________________________________________________________
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4.
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Is the
Selling Stockholder a registered “broker-dealer” under
Section 15 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)?
“Broker” and
“dealer” are
defined on Exhibit A
attached hereto.
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Yes
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☐
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No
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☐
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If
“Yes”, did the
Selling Stockholder receive the Restricted Securities as
compensation for services provided to the Company?
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Yes
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☐
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No
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☐
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If the Selling Stockholder is a Broker or Dealer and has checked
the “No” box directly above, the Company may identify
the Selling Stockholder as an underwriter in the Resale
Registration Statement and related prospectus in accordance with
the Commission’s rules and interpretations.
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5.
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Is the
Selling Stockholder an “affiliate” of a registered
broker-dealer as defined above? An “affiliate” is a person that
directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
person specified. Securities Act,
Rule 405, Rule 501(b), Rule 3b-18.
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Yes
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☐
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No
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☐
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If
“Yes”, did the
Selling Stockholder both: (i) purchase the Restricted Securities in
the ordinary course of business; and (ii) has no agreement or understanding,
directly or indirectly, with any party to distribute the Restricted
Securities, at the time of purchase of the Restricted
Securities?
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Yes
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☐
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No
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☐
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If the Selling Stockholder is an
affiliate of a Broker or Dealer and has checked the
“No” box directly above, the Company may identify such
Selling Stockholder as an underwriter in the Resale Registration
Statement and related prospectus in accordance with the
Commission’s rules and interpretations.
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6.
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Please
list in the space provided below the names of all natural persons
(i.e., individuals), if
any, who have beneficial ownership of the Restricted Securities.
“Beneficial
ownership” is defined on Exhibit A attached hereto.
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______________________________________________________________________________________
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7.
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Are
there any agreement or understanding to transfer the Restricted
Securities to a third party or any existing warrants, options,
stock purchase agreements, redemption agreements, restrictions of
any nature, calls or rights to subscribe of any character relating
to the Restricted Securities?
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Yes
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☐
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No
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☐
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If
“Yes”, please
describe below:
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______________________________________________________________________________________
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8.
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Is the
Selling Stockholder subject to any lock-up or leak-out agreements
with respect to the Restricted Securities?
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Yes
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☐
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No
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☐
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If
“Yes”, please
describe below:
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______________________________________________________________________________________
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9.
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At the
time the Selling Stockholder acquired the Restricted Securities was
the Selling Stockholder a U.S. person? “U.S. person” is defined on
Exhibit A attached
hereto.
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Yes
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☐
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No
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☐
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Once
you have completed the Questionnaire, please sign it to
indicate:
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●
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your
acknowledgment that the Company will rely on the information
provided by you in this Questionnaire in the preparation and filing
of the Resale Registration Statement, and your consent for the
Company to use the information provided therein;
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●
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your
acknowledgement that material misstatements or omissions in your
responses to the questions contained in this Questionnaire may give
rise to civil and criminal liabilities against you;
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●
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your
agreement to promptly notify the Company of any changes in
information provided in the Questionnaire occurring after the date
you sign the Questionnaire; and
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●
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your
confirmation that the information contained in the Questionnaire is
true and correct, to the best of your knowledge and belief after a
reasonable investigation, as of the date you sign the
Questionnaire.
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If
the Restricted Securities are held of record by more than one
person, both persons must complete and sign this
Questionnaire.
Please
return this completed executed Questionnaire as soon as possible,
but not later than ___________________ to: Xxxx X. Xxxxxxx, Esq.,
General Counsel of the Company. THE
EXISTENCE AND CONTENTS OF THE QUESTIONNAIRE, AS WELL AS YOUR
ANSWERS AND ALL NOTES AND DRAFTS PREPARED BY YOU, ARE CONSIDERED
EXTREMELY CONFIDENTIAL AND PROPRIETY BY THE COMPANY AND SHOULD BE
TREATED ACCORDINGLY.
IN WITNESS WHEREOF, the undersigned, by
authority duly given, has caused this Questionnaire to be executed
and delivered either in person or by its authorized
agent.
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Dated: _______________________________________________
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Printed
Name of Selling Stockholder(s)
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Signature
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____________________________________________________
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Signature
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Printed
name(s) of Signatory
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Title
of Signatory, if applicable
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EXHIBIT A
Exchange Act, Section 3(a)(4).
A.
“Broker”
means generally, any person engaged in the business of effecting
transactions in securities for the account of others.
B.
A bank shall not be
considered to be a broker because the bank engages in any one or
more of the following activities under the conditions
described:
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i.
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Third party brokerage arrangements: The bank enters into a
contractual or other written arrangement with a broker or dealer
registered under this title under which the broker or dealer offers
brokerage services on or off the premises of the bank if
—
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I.
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such
broker or dealer is clearly identified as the person performing the
brokerage services;
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II.
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the
broker or dealer performs brokerage services in an area that is
clearly marked and, to the extent practicable, physically separate
from the routine deposit-taking activities of the
bank;
|
|
|
III.
|
any
materials used by the bank to advertise or promote generally the
availability of brokerage services under the arrangement clearly
indicate that the brokerage services are being provided by the
broker or dealer and not by the bank;
|
|
|
IV.
|
any
materials used by the bank to advertise or promote generally the
availability of brokerage services under the arrangement are in
compliance with the Federal securities laws before
distribution;
|
|
|
V.
|
bank
employees (other than associated persons of a broker or dealer who
are qualified pursuant to the rules of a self-regulatory
organization) perform only clerical or ministerial functions in
connection with brokerage transactions including scheduling
appointments with the associated persons of a broker or dealer,
except that bank employees may forward customer funds or securities
and may describe in general terms the types of investment vehicles
available from the bank and the broker or dealer under the
arrangement;
|
|
|
VI.
|
bank
employees do not receive incentive compensation for any brokerage
transaction unless such employees are associated persons of a
broker or dealer and are qualified pursuant to the rules of a self-
regulatory organization, except that the bank employees may receive
compensation for the referral of any customer if the compensation
is a nominal one-time cash fee of a fixed dollar amount and the
payment of the fee is not contingent on whether the referral
results in a transaction;
|
|
|
VII.
|
such
services are provided by the broker or dealer on a basis in which
all customers that receive any services are fully disclosed to the
broker or dealer;
|
|
|
VIII.
|
the
bank does not carry a securities account of the customer except as
permitted under clause (ii) or (viii) of this
subparagraph; and
|
A-7
|
|
IX.
|
the
bank, broker, or dealer informs each customer that the brokerage
services are provided by the broker or dealer and not by the bank
and that the securities are not deposits or other obligations of
the bank, are not guaranteed by the bank, and are not insured by
the Federal Deposit Insurance Corporation.
|
|
|
|
|
|
ii.
|
Trust activities: The bank effects transactions in a trustee
capacity, or effects transactions in a fiduciary capacity in its
trust department or other department that is regularly examined by
bank examiners for compliance with fiduciary principles and
standards, and—
|
|
|
|
I.
|
is
chiefly compensated for such transactions, consistent with
fiduciary principles and standards, on the basis of an
administration or annual fee (payable on a monthly, quarterly, or
other basis), a percentage of assets under management, or a flat or
capped per order processing fee equal to not more than the cost
incurred by the bank in connection with executing securities
transactions for trustee and fiduciary customers, or any
combination of such fees; and
|
|
|
II.
|
does
not publicly solicit brokerage business, other than by advertising
that it effects transactions in securities in conjunction with
advertising its other trust activities.
|
|
iii.
|
Permissible securities transactions: The bank effects
transactions in—
|
|
|
I.
|
commercial
paper, bankers acceptances, or commercial bills;
|
|
|
II.
|
exempted
securities;
|
|
|
III.
|
qualified
Canadian government obligations as defined in section 24 of Title
12, in conformity with section 15C and the rules and regulations
thereunder, or obligations of the North American Development Bank;
or
|
|
|
IV.
|
any
standardized, credit enhanced debt security issued by a foreign
government pursuant to the March 1989 plan of then Secretary of the
Treasury Xxxxx, used by such foreign government to retire
outstanding commercial bank loans.
|
|
iv.
|
Certain stock purchase plans
|
|
|
I.
|
Employee benefit plans: The bank effects transactions, as
part of its transfer agency activities, in the securities of an
issuer as part of any pension, retirement, profit- sharing, bonus,
thrift, savings, incentive, or other similar benefit plan for the
employees of that issuer or its affiliates (as defined in section
1841 of Title 12), if the bank does not solicit transactions or
provide investment advice with respect to the purchase or sale of
securities in connection with the plan.
|
|
|
II.
|
Dividend reinvestment plans: The bank effects transactions,
as part of its transfer agency activities, in the securities of an
issuer as part of that issuer’s dividend reinvestment plan,
if—
|
|
|
|
|
|
|
|
|
|
(aa)
|
the
bank does not solicit transactions or provide investment advice
with respect to the purchase or sale of securities in connection
with the plan; and
|
|
|
|
|
|
|
|
|
(bb)
|
the
bank does not net shareholders’ buy and sell orders, other
than for programs for odd-lot holders or plans registered with the
Commission.
|
A-7
|
|
III.
|
Issuer plans: The bank effects transactions, as part of its
transfer agency activities, in the securities of an issuer as part
of a plan or program for the purchase or sale of that
issuer’s shares, if—
|
|
|
|
|
|
|
|
|
|
(aa)
|
the
bank does not solicit transactions or provide investment advice
with respect to the purchase or sale of securities in connection
with the plan or program; and
|
|
|
|
|
|
|
|
|
(bb)
|
the
bank does not net shareholders’ buy and sell orders, other
than for programs for odd-lot holders or plans registered with the
Commission.
|
|
|
IV.
|
Permissible delivery of materials: The exception to being
considered a broker for a bank engaged in activities described in
subclauses (I), (II), and (III) will not be affected by delivery of
written or electronic plan materials by a bank to employees of the
issuer, shareholders of the issuer, or members of affinity groups
of the issuer, so long as such materials are—
|
|
|
|
|
|
|
|
|
|
(aa)
|
comparable
in scope or nature to that permitted by the Commission as of
November 12, 1999; or
|
|
|
|
|
|
|
|
|
(bb)
|
otherwise
permitted by the Commission.
|
|
v.
|
Sweep accounts: The bank effects transactions as part of a
program for the investment or reinvestment of deposit funds into
any no-load, open-end management investment company registered
under the Investment Company Act of 1940 that holds itself out as a
money market fund.
|
|
vi.
|
Affiliate transactions: The bank effects transactions for
the account of any affiliate of the bank (as defined in section
1841 of Title 12) other than—
|
|
|
I.
|
a
registered broker or dealer; or
|
|
|
II.
|
an
affiliate that is engaged in merchant banking, as described in
section 1843(k)(4)(H) of Title 12.
|
|
vii.
|
Private securities offerings: The bank—
|
|
|
I.
|
effects
sales as part of a primary offering of securities not involving a
public offering, pursuant to section 3(b), 4(2), or 4(6) of the
Securities Act of 1933 or the rules and regulations issued
thereunder;
|
|
|
II.
|
at any
time after the date that is 1 year after November 12, 1999, is
not affiliated with a broker or dealer that has been registered for
more than 1 year in accordance with this title, and engages in
dealing, market making, or underwriting activities, other than with
respect to exempted securities; and
|
|
|
III.
|
if the
bank is not affiliated with a broker or dealer, does not effect any
primary offering described in subclause (I) the aggregate
amount of which exceeds 25 percent of the capital of the bank,
except that the limitation of this subclause shall not apply with
respect to any sale of government securities or municipal
securities.
|
A-7
|
viii.
|
Safekeeping and custody activities
|
|
|
I.
|
In general: The bank, as part of customary banking
activities—
|
|
|
|
|
|
|
|
|
|
(aa)
|
provides
safekeeping or custody services with respect to securities,
including the exercise of warrants and other rights on behalf of
customers;
|
|
|
|
|
|
|
|
|
(bb)
|
facilitates
the transfer of funds or securities, as a custodian or a clearing
agency, in connection with the clearance and settlement of its
customers’ transactions in securities;
|
|
|
|
|
|
|
|
|
(cc)
|
effects
securities lending or borrowing transactions with or on behalf of
customers as part of services provided to customers pursuant to
division (aa) or (bb) or invests cash collateral pledged in
connection with such transactions
|
|
|
|
|
|
|
|
|
(dd)
|
holds
securities pledged by a customer to another person or securities
subject to purchase or resale agreements involving a customer, or
facilitates the pledging or transfer of such securities by book
entry or as otherwise provided under applicable law, if the bank
maintains records separately identifying the securities and the
customer; or
|
|
|
|
|
|
|
|
|
(ee)
|
serves
as a custodian or provider of other related administrative services
to any individual retirement account, pension, retirement, profit
sharing, bonus, thrift savings, incentive, or other similar benefit
plan.
|
|
|
II.
|
Exception for carrying broker activities: The exception to
being considered a broker for a bank engaged in activities
described in subclause (I) shall not apply if the bank, in
connection with such activities, acts in the United States as a
carrying broker (as such term, and different formulations thereof,
are used in section 15(c)(3) and the rules and regulations
thereunder) for any broker or dealer, unless such carrying broker
activities are engaged in with respect to government securities (as
defined in paragraph (42)).
|
|
|
|
|
|
ix.
|
Identified banking products: The bank effects transactions
in identified banking products as defined in section 206 of the
Xxxxx-Xxxxx-Xxxxxx Act [15 U.S.C.A. § 78c note].
|
|
|
x.
|
Municipal securities: The bank effects transactions in
municipal securities.
|
|
xi.
|
De minimis exception: The bank effects, other than in
transactions referred to in clauses (i) through (x), not more
than 500 transactions in securities in any calendar year, and such
transactions are not effected by an employee of the bank who is
also an employee of a broker or dealer.
|
|
|
|
C. Execution by broker or dealer: The exception to being
considered a broker for a bank engaged in activities described in
clauses (ii), (iv), and (viii) of subparagraph (B) shall
not apply if the activities described in such provisions result in
the trade in the United States of any security that is a publicly
traded security in the United States, unless—
|
i.
|
the
bank directs such trade to a registered broker or dealer for
execution;
|
|
ii.
|
the
trade is a cross trade or other substantially similar trade of a
security that—
|
|
|
I.
|
is made
by the bank or between the bank and an affiliated fiduciary;
and
|
|
|
II.
|
is not
in contravention of fiduciary principles established under
applicable Federal or State law; or
|
|
iii.
|
the
trade is conducted in some other manner permitted under rules,
regulations, or orders as the Commission may prescribe or
issue.
|
|
|
|
D. Fiduciary capacity: For purposes of subparagraph (B)(ii),
the term “fiduciary capacity” means
—
|
i.
|
in the
capacity as trustee, executor, administrator, registrar of stocks
and bonds, transfer agent, guardian, assignee, receiver, or
custodian under a uniform gift to minor act, or as an investment
adviser if the bank receives a fee for its investment
advice;
|
A-7
|
ii.
|
in any
capacity in which the bank possesses investment discretion on
behalf of another; or
|
|
iii.
|
in any
other similar capacity.
|
|
|
|
E. Exception for entities subject to section 15(e): The term
“broker” does not include a bank
that—
|
i.
|
was, on
the day before November 12, 1999, subject to section 15(e);
and
|
|
ii.
|
is
subject to such restrictions and requirements as the Commission
considers appropriate.
|
Exchange Act, Section 3(a)(5).
A.
“Dealer”
means generally, any person engaged in the business of buying and
selling securities for such person’s own account through a
broker or otherwise.
B.
Exception for person not engaged in the
business of dealing: The term “dealer” does not
include a person that buys or sells securities for such
person’s own account, either individually or in a fiduciary
capacity, but not as a part of a regular business.
C.
Exception for certain bank activities: A
bank shall not be considered to be a dealer because the bank
engages in any of the following activities under the conditions
described:
|
i.
|
Permissible securities transactions: The bank buys or
sells—
|
|
|
I.
|
commercial
paper, bankers acceptances, or commercial bills;
|
|
|
II.
|
exempted
securities;
|
|
|
III.
|
qualified
Canadian government obligations as defined in section 24 of Title
12, in conformity with section 15C and the rules and regulations
thereunder, or obligations of the North American Development Bank;
or
|
|
|
IV.
|
any
standardized, credit enhanced debt security issued by a foreign
government pursuant to the March 1989 plan of then Secretary of the
Treasury Xxxxx, used by such foreign government to retire
outstanding commercial bank loans.
|
|
ii.
|
Investment, trustee, and fiduciary transactions: The bank
buys or sells securities for investment
purposes—
|
|
|
I.
|
for the
bank; or
|
|
|
II.
|
for
accounts for which the bank acts as a trustee or
fiduciary.
|
|
iii.
|
Asset-backed transactions: The bank engages in the issuance
or sale to qualified investors, through a grantor trust or other
separate entity, of securities backed by or representing an
interest in notes, drafts, acceptances, loans, leases, receivables,
other obligations (other than securities of which the bank is not
the issuer), or pools of any such obligations predominantly
originated by—
|
A-7
|
|
I.
|
the
bank;
|
|
|
II.
|
an
affiliate of any such bank other than a broker or dealer;
or
|
|
|
III.
|
a
syndicate of banks of which the bank is a member, if the
obligations or pool of obligations consists of mortgage obligations
or consumer related receivables.
|
|
iv.
|
Identified banking products: The bank buys or sells
identified banking products, as defined in section 206 of the
Xxxxx-Xxxxx-Xxxxxx Act [15 U.S.C.A. § 78c note].
|
“Beneficial
Ownership” Securities are “beneficially
owned” by an individual if such individual, directly or
indirectly, through any contract, arrangement, understanding,
relationship or other means, has or shares with others either (or
both):
|
|
●
|
|
Voting
power, that is, the power to vote, or to direct the vote, of the
securities; and/or
|
|
|
●
|
|
Investment
power, that is, the power to dispose, or to direct the disposition,
of the securities.
|
Securities
beneficially owned need not be registered in an individual’s
name. For example, an individual would ordinarily be considered the
beneficial owner of securities:
|
|
●
|
|
held in
the name of family members, if such individual has the power to
re-vest title in himself or herself or to dispose or direct the
voting of the securities;
|
|
|
●
|
|
held
for such individual in the names of nominees, such as brokers, or
in “street name”;
|
|
|
●
|
|
held by
a partnership of which such individual is a partner;
|
|
|
●
|
|
held by
a corporation controlled by such individual; or
|
|
|
●
|
|
held by
a trust of which such individual is a trustee.
|
|
|
|
|
|
On the
other hand, securities would not be beneficially owned by an
individual if such individual only has the right to receive
dividends on, or the sale proceeds of, such securities, and does
not have or share the power to vote or divest them. For example, a
beneficiary of the income from securities held in a trust managed
by independent trustees would not ordinarily be the beneficial
owner of such securities.
An
individual would also be considered the beneficial owner of
securities on any date if he or she has the right to acquire
beneficial ownership, as defined above, within 60 days of that
date, including pursuant to the exercise of an option, warrant, or
other right, through conversion of a security, or pursuant to the
power to revoke a trust, discretionary account, or similar
arrangement.
U.S. person. A “U.S.
person” means:
|
(i)
|
any natural person resident in the United States;
|
|
|
|
|
(ii)
|
any partnership or corporation organized or incorporated under the
laws of the United States;
|
|
|
|
|
(iii)
|
any estate of which any executor or administrator is a U.S.
person;
|
|
|
|
|
(iv)
|
any trust of which any trustee is a U.S. person;
|
|
|
|
|
(v)
|
any agency or branch of a foreign entity located in the United
States;
|
|
|
|
A-7
|
(vi)
|
any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
|
|
|
|
|
|
|
(vii)
|
any discretionary account or similar account (other than an estate
or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States;
and
|
|
|
|
|
|
|
(viii)
|
any partnership or corporation if:
|
|
|
|
|
|
|
|
(A)
|
organized or incorporated under the laws of any foreign
jurisdiction; and
|
|
|
|
|
|
|
(B)
|
formed by a U.S. person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or
incorporated, and owned, by accredited investors who are not
natural persons, estates or trusts.
|
|
|
|
|
|
The following are not “U.S. persons”:
|
||
|
|
|
|
|
(i)
|
any discretionary account or similar account (other than an estate
or trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or
(if an individual) resident in the United States;
|
|
|
|
|
|
|
(ii)
|
any estate of which any professional fiduciary acting as executor
or administrator is a U.S. person if:
|
|
|
|
|
|
|
|
(A)
|
an executor or administrator of the estate who is not a U.S. person
has sole or shared investment discretion with respect to the assets
of the estate; and
|
|
|
|
|
|
|
(B)
|
the estate is governed by foreign law;
|
|
|
|
|
|
(iii)
|
any trust of which any professional fiduciary acting as trustee is
a U.S. person, if a trustee who is not a U.S. person has sole or
shared investment discretion with respect to the trust assets, and
no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person;
|
|
|
|
|
|
|
(iv)
|
an employee benefit plan established and administered in accordance
with the law of a country other than the United States and
customary practices and documentation of such country;
|
|
|
|
|
|
|
(v)
|
any agency or branch of a U.S. person located outside the United
States if:
|
|
|
|
|
|
|
|
(A)
|
the agency or branch operates for valid business reasons;
and
|
|
|
|
|
|
|
(B)
|
the agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located;
and
|
|
|
|
|
|
(vi)
|
the International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank, the
United Nations, and their agencies, affiliates and pension plans,
and any other similar international organizations, their agencies,
affiliates and pension plans.
|
|
“United States” means the United States of America, its
territories and possessions, any State of the United States, and
the District of Columbia.
A-7
