NOVUME SOLUTIONS, INC. REGISTRATION RIGHTS AGREEMENT
Exhibit 4.1
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of
[●], 2017 (the “Agreement Date”), by and among
Novume Solutions, Inc., a company organized and existing under the
General Corporation Law of the State of Delaware (the
“Company”), and
the individuals identified as “Holders” in Schedule 1 attached hereto
(collectively, the “Stockholders”).
WHEREAS, the Company entered into that
certain Agreement and Plan of Merger as of the [●], 2017 (the
“Merger
Agreement”) by and among the Company, NeoSystems
Holding, LLC, a Delaware limited liability company and wholly owned
subsidiary of the Company, NeoSystems HoldCo, Inc., a Delaware
corporation (“NeoSystems
HoldCo”), NeoSystems LLC, a Virginia limited liability
company and a wholly owned subsidiary of NeoSystems Holdco, Xxxxxx
X. Xxxxxx, Xx., in his personal capacity, and Xxxxxxx Xxxxxxx, in
his personal capacity and in his capacity as the representative of
each former shareholder of NeoSystems Holdco, pursuant to which
such former shareholders received their shares of common stock, par
value $0.0001 per share, of the Company (the “Common Stock”); and
WHEREAS, the Stockholders and the
Company desire to set forth certain matters regarding the ownership
of the Registrable Securities (as defined below) by the Holders (as
defined below).
NOW, THEREFORE, in consideration of the
mutual promises and covenants set forth herein, the parties hereby
agree as follows:
1.1 Definitions.
As used herein, the following terms have the following
meanings:
1.1.1. “Holder”
means any holder of outstanding Registrable Securities, who
acquired such Registrable Securities pursuant to the Merger
Agreement and any holder of Registrable Securities to whom a
Holder’s rights hereunder are assigned pursuant to Section
1.6 hereof.
1.1.2. “Public
Offering” means the closing of a firmly underwritten
public offering of the Company’s Common Stock after the
Closing of the Merger Agreement pursuant to an effective
registration statement under the Securities Act, or equivalent law
of another jurisdiction. For the avoidance of doubt, a Public
Offering shall not include the Qualifying Offering (as defined in
the Merger Agreement).
1.1.3. “Register”,
“registered” and
“registration” refer to a
registration effected by filing a registration statement in
compliance with the Securities Act and the declaration or ordering
by the SEC of effectiveness of such registration statement, or the
equivalent actions under the laws of another
jurisdiction.
1.1.4. “Registrable
Securities” means shares of Common Stock of any
Holder.
1.1.5. “SEC”
means the Securities and Exchange Commission.
1.1.6. “Securities
Act” means the Securities Act of 1933, as
amended.
1.2 Incidental
Registration. If at any time after the Company’s
Public Offering the Company proposes to register any of its
securities for its own account or on behalf of any of its other
stockholders (other than in connection with a registration relating
solely to the sale of shares to employees), it shall give notice to
the Holders of such intention at least 30 days before the
announcement of such offering. Upon the written request of any
Holder given within 20 days after receipt of any such notice, the
Company shall use its commercially reasonable efforts, subject to
the provisions of this
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Section 1.2, to include in such
registration all of the Registrable Securities indicated in such
request, so as to permit the disposition of the shares so
registered, and to cause any Registrable Securities so included in
such registration to be listed or included on the same securities
exchange as any similar securities registered for the account of
the Company or on behalf of any other stockholder in such offering.
If the managing underwriter advises the Company in writing that
marketing factors require a limitation of the number of shares to
be underwritten, then the number of shares of Common Stock that are
entitled to be included in the registration shall be allocated in
the following order of priority: first, the Company shall be entitled to
register all of the shares of Common Stock the Company wishes to
register for its own account, subject to the provisions of this
Section 1.2 and
Section 1.3 below;
and second, if remaining,
the Holders shall be entitled to register such number of
Registrable Securities requested to be registered by them (pro rata
to the respective number of Registrable Securities requested by
each Holder to be included in the registration).
For the
avoidance of doubt, to the extent that the managing underwriter
advises the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the
number of shares of Common Stock that each Holder may include in a
registration may be reduced on a pro rata basis in accordance with
the total amount of Common Stock requested to be included in such
registration (including, without limitation, Common Stock requested
to be included in such registration by other persons pursuant to
any other agreement or arrangement between such person and the
Company). Notwithstanding anything herein to the contrary, the
Company may enter into any such agreement or arrangement with any
person that provides such person with the right to include in any
registration such person’s registrable securities in
accordance with the terms set forth therein; provided, however, that to the extent
that the number of shares of securities in such registration that
are available for such registration is below the aggregate number
of securities required to be included in such registration pursuant
to all arrangements binding upon the Company, then the number of
shares of securities that each person (including the Holders) may
include in such registration may be reduced on a pro rata basis in
accordance with the total amount of securities requested to be
included in such registration.
1.3 Expenses.
All customary expenses incident to the Company’s and the
Holders’ performance of or compliance with this Agreement or
of completing any offering, including the reasonable fees and
expenses of one counsel for the Holders incurred in connection with
any registration under Section 1.2, shall be borne by
the Company; provided, however, that each of the
Holders participating in such registration shall pay its pro rata
portion of discounts or commissions payable to any
underwriter.
1.4 Indemnities.
In the event of any registered offering of Registrable Securities
pursuant to this Section 1:
1.4.1. The
Company will indemnify and hold harmless, to the fullest extent
permitted by law, any Holder whose Registrable Securities are
included in the registration and each person, if any, who controls
the Holder, from and against any and all losses, damages, claims,
liabilities, joint or several, and reasonable and documented costs
and expenses (including any amounts paid in any settlement effected
with the Company’s consent) to which the Holder or
controlling person may become subject under applicable law or
otherwise, insofar as such losses, damages, claims, liabilities (or
actions or proceedings in respect thereof), costs or expenses arise
out of or are based upon any of the following
statements, omissions or violations by the Company: (i) any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or included in the
prospectus, as amended or supplemented, or (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading,
and the Company will reimburse the Holder and each such controlling
person of the Holder, promptly upon written demand, for any
reasonable and documented legal or any other expenses incurred by
them in connection with investigating, preparing to defend or
defending against or appearing as a
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third-party witness
in connection with such loss, claim, damage, liability, action or
proceeding; provided, however, that the Company will
not be liable to any Holder or controlling person in any such case
to the extent that any such loss, damage, liability, cost or
expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by any Holder or such
controlling persons claiming for indemnification in writing
specifically for inclusion therein; provided, further, that the indemnity
agreement contained in this Section 1.4.1 shall not
apply to amounts paid in settlement of any such claim, loss,
damage, liability or action if such settlement is effected without
the written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
the selling Holder or any controlling person of the selling Holder,
and regardless of any sale in connection with such offering by the
selling Holder. Such indemnity shall survive the transfer of
securities by a selling Holder.
1.4.2. As
a condition precedent to the Company’s obligations under this
Section 1, each Holder
participating in a registration hereunder will furnish to the
Company in writing any information regarding such Holder, the
Registrable Securities held by it, and his or her intended method
of distribution of Registrable Securities as the Company may
reasonably request and will indemnify and hold harmless the Company
(and each of its directors and officers), any underwriter for the
Company, any other person participating in the distribution and
each person, if any, who controls the Company, such underwriter, or
such other person from and against any and all losses, damages,
claims, liabilities, costs or expenses (including any amounts paid
in any settlement effected with the selling Holder's consent) to
which the Company (and each of its directors and officers) or any
such controlling person and/or any such underwriter may become
subject under applicable law or otherwise, insofar as such losses,
damages, claims, liabilities (or actions or proceedings in respect
thereof), costs or expenses arise out of or are based on
(i) any untrue or alleged untrue statement of any material
fact contained in the registration statement or included in the
prospectus, as amended or supplemented, or (ii) the omission
or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading, and each such Holder will reimburse the Company (and
each of its directors and officers), any underwriter, any other
person participating in the distribution and each such controlling
person of the Company, any underwriter or other person, promptly
upon demand, for any reasonable legal or other expenses incurred by
them in connection with investigating, preparing to defend or
defending against or appearing as a third-party witness in
connection with such loss, claim, damage, liability, action or
proceeding; in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission
or alleged omission was so made in conformity with written
information furnished by such Holder specifically for inclusion
therein. The foregoing indemnity shall be individual and several
(and not joint or joint and several) by each Holder. The foregoing
indemnity is also subject to the condition that, insofar as it
relates to any such untrue statement (or alleged untrue statement)
or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus at
the time the registration statement becomes effective or in the
final prospectus, such indemnity agreement shall not inure to the
benefit of (i) the Company, (ii) any underwriter and any
person, if any, controlling the Company or the underwriter, if a
copy of the final prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act;
provided,
further, that this
indemnity shall not be deemed to relieve any underwriter of any of
its due diligence obligations; provided, further, that the indemnity
agreement contained in this Section 1.4.2 shall not
apply to amounts paid in settlement of any such claim, loss,
damage, liability or action if such settlement is effected without
the consent of the Holders, as the case may be, which consent shall
not be unreasonably
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withheld. In no
event shall the liability of a Holder exceed the net proceeds from
the offering received by such Holder.
1.4.3. Promptly
after receipt by an indemnified party pursuant to the provisions of
Sections 1.4.1 or
1.4.2 of notice of
the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a
claim thereof is to be made against the indemnifying party pursuant
to the provisions of Sections 1.4.1 or 1.4.2, promptly notify the
indemnifying party of the commencement thereof; however, the
omission to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party hereunder,
unless such omission is materially prejudicial to the indemnifying
party’s ability to defend such action. In case such action is
brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, that if the defendants
in any action include both the indemnified party and the
indemnifying party and the indemnified party reasonably believes
that there is a conflict of interests which would prevent counsel
for the indemnifying party from also representing the indemnified
party, the indemnified party or parties shall have the right to
select one separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party pursuant to the
provisions of said Sections 1.4.1 or 1.4.2 for any legal or other
expense subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified
party shall have employed counsel in accordance with the provision
of the preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action and within 15
days after written notice of the indemnified party’s
intention to employ separate counsel pursuant to the previous
sentence, or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party. No indemnifying party will consent to entry
of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
1.4.4. If
recovery is not available under the foregoing indemnification
provisions, for any reason other than as specified therein, the
parties entitled to indemnification by the terms thereof shall be
entitled to contribution to liabilities and expenses as more fully
set forth in an underwriting agreement to be executed in connection
with such registration. In determining the amount of contribution
to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to
information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement
or omission, and any other equitable considerations appropriate
under the circumstances. In no event shall the liability of a
Holder exceed the net proceeds from the offering received by such
Holder.
1.4.5. Notwithstanding
the foregoing, to the extent that the provisions on indemnification
and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the
underwriting agreement shall prevail.
1.5 Delay of
Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying the Qualifying
Offering or any registration pursuant to this Agreement as the
result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
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1.6 Assignment
of Registration Rights. Any of the Holders may assign its
rights to cause the Company to register Registrable Securities
pursuant to this Section 1 to (i) any partner or
retired partner of any Holder which is a partnership or (ii) any
family member or trust for the benefit of any individual Holder,
The transferor shall, within 20 days after such transfer, furnish
the Company with written notice of the name and address of such
transferee and the securities with respect to which such
registration rights are being assigned, and the transferee's
written consent to be bound by this Agreement. No other assignment
of registration rights shall be permitted herein.
1.7 Lock-Up. In
any registration of the Company’s shares (including the
Qualifying Offering) all Holders agree that any sales of
Registrable Securities may be subject to a “lock-up”
period restricting such sales for up to 180 days, and all Holders
will agree to abide by such customary “lock-up” period
of up to 180 days as is required by the underwriter in such
registration, provided that such obligation shall only apply where
the officers, directors of the Company and other stockholders who
hold at least one 1% of the issued and outstanding capital are
similarly bound. In order to enforce the foregoing covenants, the
Company may impose stop-transfer instructions with respect to the
securities of each Holder. Each Holder agrees that prior to a
Public Offering it will not transfer securities of the Company
unless each transferee agrees in writing to be bound by all of the
provisions of this Section
1.7, provided that this Section 1.7 shall not apply to
transfers pursuant to a registration statement.
1.8 Public
Information. For as long as the Company is obligated to file
periodic reports with the SEC under the Securities Exchange Act of
1934, as amended, the Company shall (i) undertake to make publicly
available and available to the Stockholders pursuant to Rule 144,
such information as is reasonably necessary to enable the
Stockholders to make sales of Registrable Securities pursuant to
that Rule and (ii) comply with the current public information
requirements of Rule 144 and shall furnish thereafter to any
Stockholder, upon request, a written statement executed by the
Company as to the steps it has taken to so comply.
1.9 Termination of
Registration Rights. The registration rights contained in
this Agreement will terminate with respect to securities held by
the holders of Registrable Securities, upon the third anniversary
of the Agreement Date.
2. Miscellaneous.
2.1 Further
Assurances. Each of the parties hereto shall perform such
further acts and execute such further documents as may reasonably
be necessary to carry out and give full effect to the provisions of
this Agreement and the intentions of the parties as reflected
thereby.
2.2 Governing
Law. The internal laws of the State of Delaware,
irrespective of its conflicts of law principles, shall govern the
validity of this Agreement, the construction of its terms, the
interpretation and enforcement of the rights and duties of the
parties hereto.
2.3 Successors and
Assigns; Assignment. Except as otherwise expressly limited
herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto. Subject to Section 1.7, none of the
rights, privileges, or obligations set forth in, arising under, or
created by this Agreement may be assigned or transferred without
the prior consent in writing of each party to this
Agreement.
2.4 Entire Agreement;
Amendment and Waiver. This Agreement and the Schedule hereto
constitute the full and entire understanding and agreement between
the parties with regard to the subject matters hereof and thereof.
Any term of this Agreement may be amended and the observance of any
term hereof may be waived (either prospectively or retroactively
and either generally or in a particular instance) (collectively, a
“Change”) with
the written consent of the Company and Holders holding at least a
majority of the Registrable Securities. Any Change effected in
accordance with this paragraph shall be binding upon all the
parties hereto, including without limitation, each Holder, each
future Holder of Registrable Securities, and the
Company.
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2.5 Notices,
etc. All
notices and other communications required or permitted hereunder to
be given to a party to this Agreement shall be in writing and shall
be telecopied or mailed by registered, electronic or certified
mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed to such party's address as set forth below or
at such other address as the party shall have furnished to each
other party in writing in accordance with this
provision:
if to the Stockholders:
to the
Stockholders’ Agent
[
]
if to the Company:
00000
Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX
00000
Attention: Xxxxxx
Xxxxxx
with a copy, not constituting formal notice,
to:
Xxxxxxx
& Xxxxxx LLP
0000
Xxxxxxxxxxxx Xxxxxx, XX,
Xxxxxxxxxx, XX
00000
Attention: Xxxxxx
X. XxXxx Xx., Esq.
Fax
No.: (000) 000-0000
or such
other address with respect to a party as such party shall notify
each other party in writing as above provided. Any notice sent in
accordance with this Section 2.5 shall be effective
(i) if mailed, 7 business days after mailing, (ii) if sent by
messenger, upon delivery, and (iii) if sent via email or facsimile,
upon transmission and electronic confirmation of receipt or, if
transmitted and received on a non-business day, on the first
business day following transmission and electronic confirmation of
receipt (provided,
however, that any
notice of change of address shall only be valid upon
receipt).
2.6 Delays or
Omissions. No delay or omission to exercise any right,
power, or remedy accruing to any party upon any breach or default
under this Agreement, shall be deemed a waiver of any other breach
or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver
on the part of any party of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any of the
parties, shall be cumulative and not alternative.
2.7 Severability.
If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable under applicable law, then such
provision shall be excluded from this Agreement and the remainder
of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms;
provided,
however, that in
such event this Agreement shall be interpreted so as to give
effect, to the greatest extent consistent with and permitted by
applicable law, to the meaning and intention of the excluded
provision as determined by such court of competent
jurisdiction.
2.8 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original and enforceable against the
parties actually executing such counterpart, and all of which
together shall constitute one and the same instrument. Signatures
by facsimile or signatures which have been scanned and transmitted
by electronic mail shall be deemed valid and binding for all
purposes.
2.9 Titles and
Subtitles. The titles and subtitles used in this Agreement
are used for
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convenience
only and are not to be considered in construing or interpreting
this Agreement.
2.10 Confidentiality.
Neither Company nor any Holder shall make any public announcement
of any kind regarding the terms of this Agreement and the
transactions contemplated hereby. Following the date hereof,
Company may issue such press releases, and make such other public
disclosures, as it determines are required or deems
appropriate.
2.11 Waiver
of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
HEREOF.
2.12 The
Stockholders’ Agent. The Stockholders, by virtue of
their approval of this Agreement, shall be deemed to have
irrevocably constituted and appointed Xxxxxxx Xxxxxxx as their
agent (together with his or her or its permitted successors) as
their true and lawful agent and attorney-in-fact to give (as
explicitly directed by each of the other Stockholders) and receive
notices on their behalf, and the Stockholders’ Agent agrees
to act as, and to undertake the duties and responsibilities of,
such agent and attorney-in-fact. This power of attorney and the
powers, immunities and rights to indemnification granted to the
Stockholders’ Agent hereunder: (i) are coupled with an
interest and shall be irrevocable and survive the death,
incompetence, bankruptcy or liquidation of any Stockholder and
shall be binding on any successor thereto, and (ii) shall survive
the delivery of an assignment by any Stockholder of the whole or
any fraction of his, her or its interest in the
Agreement.
[Remainder of page intentionally left
blank.]
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IN WITNESS WHEREOF the parties have
signed this Registration Rights Agreement as of the date first
hereinabove set forth.
Company:
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By:
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/s/ Xxxxxx X.
Xxxxxx
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Xxxxxx X.
Xxxxxx
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Chief
Executive Officer
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