Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement is made and entered into as of June
28, 2002 (this "Agreement"), by and between SAFLINK Corporation, a Delaware
corporation (the "Company"), and the entities listed on Exhibit A hereto (each,
a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), the
Company has agreed to issue and sell shares of its Common Stock and Warrants (as
defined in the Purchase Agreement) to purchase shares of its Common Stock to the
Purchaser; and
WHEREAS, to induce the Purchaser to execute and deliver the Purchase
Agreement and to purchase the Shares (as defined in the Purchase Agreement) and
the Warrants, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Shares and the Warrant Shares (as defined in the Purchase
Agreement).
NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which is hereby acknowledged by the parties, the
Company and the Purchasers hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section 3(l).
"Board" shall have the meaning set forth in Section 3(l).
"Business Day" means any day except Saturday, Sunday and any day which
is a legal holiday or a day on which banking institutions in the state of New
York generally are authorized or required by law or other government actions to
close.
"Commission" means the Securities and Exchange Commission.
"Common Shares" shall have the meaning set forth in the definition of
"Registrable Securities."
"Common Stock" means the Company's Common Stock, $.01 par value.
"Effectiveness Date" means with respect to the Registration Statement
the earlier of (x) the 90th day following the Closing Date, before which the
Company will use its best efforts to cause the registration statement to become
effective and (y) the date which is within five (5) Business Days of the date on
which the Commission informs the Company that it may request the acceleration of
the effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in Section 2.
"Event" shall have the meaning set forth in Section 8(d).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Filing Date" means the date that the Registration Statement is
required to be filed which date shall be as soon as reasonably practicable after
the Closing Date, but in any event, within thirty (30) days thereafter.
"Holder" means collectively, each holder from time to time of
Registrable Securities including, without limitation, each Purchaser and its
assignees.
"Indemnified Party" shall have the meaning set forth in Section 6(c).
"Indemnifying Party" shall have the meaning set forth in Section 6(c).
"Liquidated Damages" shall have the meaning set forth in Section 8(d).
"Losses" shall have the meaning set forth in Section 6(a).
"OTC" shall mean the over-the-counter electronic bulletin board.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock issued and
issuable pursuant to the Purchase Agreement and the Warrants, as the case may
be, and upon any stock split, stock dividend, recapitalization or similar event
with respect to such shares of Common Stock and any other securities issued in
exchange of or replacement of such shares of Common Stock (collectively, the
"Common Shares"); until in the case of any of the Common Shares (i) a
Registration Statement covering such Common Share has been declared effective by
the SEC and continues to be effective during the Effectiveness Period; or (ii)
such Common Share is sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k) after which time such Common Share shall not be a Registrable
Security.
"Registration Statement" means the registration statement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
2. Registration. On or prior to the Filing Date the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of the Registrable Securities as would permit or facilitate the sale and
distribution of all the Registrable Securities in the manner reasonably
requested by the Holders. The Registration Statement shall be on Form S-2
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-2, in which case such registration shall be on
another appropriate form in accordance with the Securities Act and the rules
promulgated thereunder) and shall contain (except if otherwise directed by the
Purchaser) the "Plan of Distribution" attached hereto as Exhibit B. The Company
shall (i) not permit any securities other than the Registrable Securities to be
included in the Registration Statement, other than the securities described in
Schedule 1 hereto, (ii) use commercially reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange Act
within
five (5) Business Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that a Registration Statement
will not be "reviewed," or not be subject to further review) as soon as
practicable after the filing thereof, but in any event prior to the
Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until the earlier of (x) the date when all
Registrable Securities covered by such Registration Statement have been sold,
(y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written letter, addressed to the Company's transfer agent to such
effect or (z) the fifth (5th) anniversary of the Closing Date (the
"Effectiveness Period").
3. Registration Procedures; Company's Obligations. In connection with
the registration of the Registrable Securities, the Company shall:
(a) Prepare and file with the Commission on or prior to the
Filing Date, a Registration Statement on Form S-2 (or if the Company is
not then eligible to register for resale the Registrable Securities on
Form S-2 such registration shall be on another appropriate form in
accordance with the Securities Act and the Rules promulgated
thereunder) in accordance with the method or methods of distribution
thereof as specified by the Holder (except if otherwise directed by the
Holder), and use commercially reasonable efforts to cause the
Registration Statement to become effective and remain effective as
provided herein.
(b) (i) Use its best efforts to prepare and file with the
Commission such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period in order to register for resale
under the Securities Act all of the Registrable Securities; (ii) use
its best efforts to cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act;
(iii) respond promptly to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto;
and (iv) use its best efforts to comply in all material respects with
the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with
the intended methods of disposition by the Holders thereof set forth in
the Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holder of Registrable Securities to be sold
promptly (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to
be filed; (B) when the Commission notifies the Company whether there
will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement; and (C)
with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by
the Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus
or for additional information; (iii) of the issuance by the Commission
of any stop order
suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for
sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (v) of the occurrence of any event
that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires
any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any 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.
The Company shall promptly furnish to special counsel to the
Holder, without charge, (i) any correspondence from the Commission or
the Commission's staff to the Company or its representatives relating
to any Registration Statement and (ii) promptly after the same is
prepared and filed with the Commission, a copy of any written response
to the correspondence received from the Commission.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of
the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any U.S. jurisdiction, at the
earliest practicable moment.
(e) If requested by the Holder, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.
(f) Furnish to the Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.
(g) Promptly deliver to the Holder, without charge, as many
copies of the Registration Statement, Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement
thereto as such Persons may reasonably request; and the Company hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by the selling Holder in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as the
Holder reasonably requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions
of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject.
(i) Cooperate with the Holder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to a Registration Statement and to
enable such Registrable Securities to be in such denominations and
registered in such names as the Holder may request at least two (2)
Business Days prior to any sale of Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), promptly prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement
to the related Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and file any other required document
so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the OTC and any
other securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which the same securities issued by the
Company are then listed as and when required pursuant to the Purchase
Agreement.
(l) If (i) there is material non-public information regarding
the Company which the Company's Board of Directors (the "Board")
reasonably determines not to be in the Company's best interest to
disclose and which the Company is not otherwise required to disclose,
or (ii) there is a significant business opportunity (including, but not
limited to, the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer
or other similar transaction) available to the Company which the Board
reasonably determines not to be in the Company's best interest to
disclose and which the Company would be required to disclose under the
Registration Statement, then the Company may suspend effectiveness of a
registration statement and suspend the sale of Registrable Securities
under a Registration Statement one (1) time every three (3) months or
three (3) times in any twelve month period, provided that the Company
may not suspend its obligation for more than sixty (60) days in the
aggregate in any twelve month period (each, a "Blackout Period");
provided, however, that no such
suspension shall be permitted for more than twenty (20) consecutive
days, arising out of the same set of facts, circumstances or
transactions.
(m) Within five (5) Business Days after the Registration
Statement which includes the Registrable Securities is ordered
effective by the Commission, deliver, and cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holder whose Registrable Securities are
included in such Registration Statement) confirmation that the
Registration Statement has been declared effective by the Commission in
the form attached hereto as Exhibit C.
4. Registration Procedures; Holder's Obligations
In connection with the registration of the Registrable Securities, the
Holder shall:
(a) Cooperate with the Company in all respects, including
supplying, in a timely manner, all information reasonably requested by
the Company (which shall include all information regarding the Holder
and the proposed manner of sale of the Registrable Securities required
to be disclosed in the Registration Statement) and executing and
delivering all documents reasonably requested in connection with the
registration and sale of the Registrable Securities in usual and
customary form.
(b) If the Registration Statement refers to the Holder by name
or otherwise as the holder of any securities of the Company, have the
right to require (if such reference to the Holder by name or otherwise
is not required by the Securities Act or any similar federal statute
then in force) the deletion of the reference to the Holder in any
amendment or supplement to the Registration Statement filed or prepared
subsequent to the time that such reference ceases to be required.
(c) (i) not sell any Registrable Securities under the
Registration Statement until it has received copies of the Prospectus
as then amended or supplemented as contemplated in Section 3(g) and
confirmation that such Registration Statement and any post-effective
amendments thereto have become effective as contemplated by Section
3(c), (ii) comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement and (iii)
furnish to the Company information regarding such Holder and the
distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude
from such registration the Registrable Securities of the Holder if it
fails to furnish such information within a reasonable time prior to the
filing of each Registration Statement, supplemented Prospectus and/or
amended Registration Statement.
(d) upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(iv), 3(c)(v) or 3(l), forthwith discontinue disposition
of such Registrable Securities under the Registration Statement until
the Holder's receipt of the copies of the supplemented Prospectus
and/or amended Registration Statement contemplated by Section 3(j), or
until it is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.
5. Registration Expenses
All reasonable fees and expenses incident to the performance of or
compliance with this Agreement (excluding underwriting, brokerage and other
selling commissions and discounts) shall be borne by the Company whether or not
the Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the OTC and each other securities exchange or market on which
Registrable Securities are required hereunder to be listed, (B) with respect to
filings required to be made with the Commission, and (C) in compliance with
state securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and (v) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.
6. Indemnification
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless the Purchaser,
its permitted assignees, officers, directors, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result of a pledge
or any failure to perform under a margin call of Common Stock), investment
advisors and employees, each Person who controls any such Purchaser or permitted
assignee (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against any and all claims, losses,
damages, liabilities, penalties, judgments, costs (including, without
limitation, costs of investigation) and expenses (including, without limitation,
reasonable attorneys' fees and expenses) (collectively, "Losses"), arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under which
they were made) not misleading, except (i) to the extent, but only to the
extent, that such untrue statements or omissions are based solely upon
information regarding the Holder furnished in writing to the Company by the
Holder expressly for use in the Registration Statement, such Prospectus or such
form of Prospectus or in any amendment or supplement thereto or (ii) as a result
of the failure of the Holder to deliver a Prospectus, as amended or
supplemented, to a purchaser in connection with an offer or sale. The Company
shall notify the Holder promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of an Indemnified
Party (as defined in Section 6(c) hereof) and shall survive the transfer of the
Registrable Securities by the Holder.
(b) Indemnification by Purchaser. The Purchaser and its permitted
assignees shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in or omitted from any information so
furnished in writing by the Holder to the Company specifically for inclusion in
the Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to the Holder or the Holder's proposed method of
distribution of Registrable Securities and was furnished in writing by the
Holder expressly for use in the Registration Statement, such Prospectus or such
form of Prospectus Supplement. In no event shall the Purchaser's liability for
indemnification under this Section 6(b) exceed the aggregate amount invested by
such Purchaser under the Purchase Agreement.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity pursuant to Section
6(a) or 6(b) hereunder (an "Indemnified Party"), such Indemnified Party promptly
shall notify the Person from whom indemnity is sought (the "Indemnifying Party)
in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally
determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel reasonably acceptable to the Indemnifying
Party that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, 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). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, which consent shall not unreasonably be withheld, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within twenty (20) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder or pursuant to applicable law).
7. Rule 144.
As long as the Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as the Holder owns Registrable Securities, if the Company
is not required to file reports pursuant to Section 13(a) or 15(d) of the
Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in
form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants that it will take such further
action as the Holder may reasonably request, all to the extent required from
time to time to enable the Holder to sell Common Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act, including providing any legal
opinions of counsel to the Company referred to in the Purchase Agreement. Upon
the request of any Holder, the Company shall deliver to such Holder a written
certification of a duly authorized officer as to whether it has complied with
such requirements.
8. Miscellaneous.
(a) Remedies. The remedies provided in this Agreement are cumulative
and not exclusive of any remedies provided by law. In the event of a breach by
the Company or by the Holder, of any of their obligations under this Agreement,
the Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement. The Company and the Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has, as of the date hereof entered into, nor shall the Company or
any of its Affiliates, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Without limiting the generality of the foregoing, without the
written consent of the Holder, the Company shall not grant to any Person the
right to request the Company to register any securities of the Company under the
Securities Act if the rights so granted are inconsistent with the rights granted
to Holders set forth herein, or otherwise prevent the Company with complying
with all of its obligations hereunder.
(c) No Piggyback on Registrations. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto and
those security holders listed on Schedule 1 hereto) may include securities of
the Company in the Registration Statement.
(d) Failure to File Registration Statement and Other Events. The
Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent
of such damages with precision. Accordingly, if (i) the Registration Statement
is not filed on or prior to the Filing Date, or is not declared effective by the
Commission on or prior to the Effectiveness Date, (ii) the Registration
Statement is filed with and declared effective by the Commission but thereafter
ceases to be effective as to any Registrable Securities at any time during the
Effectiveness Period, without being succeeded within twenty (20) business days
by a subsequent Registration Statement filed with and declared effective by the
Commission, or (iii) during the Effectiveness Period, trading in the Common
Stock shall be suspended for any reason, for more than five (5) consecutive
Business Days, (any such failure or breach being referred to as an "Event"), the
Company shall pay as liquidated damages for such failure and not as a penalty
(the "Liquidated Damages") to the Holder an amount equal to two percent (2%) of
such Holder's pro rata Purchase Price for the first thirty (30) day period and
one percent (1%) of such Holder's pro rata Purchase Price for each subsequent
thirty (30) day period, pro rated for any period less than thirty (30) days,
following the Event until the applicable Event has been cured. Payments to be
made pursuant to this Section 8(d) shall be due and payable immediately upon
demand at the option of the Holders in cash. The parties agree that the
Liquidated Damages represent a reasonable estimate on the part of the parties,
as of the date of this Agreement, of the amount of damages that may be incurred
by the Holders if the Registration Statement is not filed on or prior to the
Filing Date or has not been declared effective by the Commission on or prior to
the Effectiveness Date and maintained in the manner contemplated herein during
the Effectiveness Period or if any other Event as described herein has occurred.
Notwithstanding the foregoing, the Company shall not be obligated to pay
Liquidated Damages for a delay or suspension of effectiveness as a result of the
Blackout Period.
(e) Governing Law; Consent to Jurisdiction. The parties agree that this
Agreement, and any disputes arising under this Agreement, will be governed by
and construed in accordance with the laws of the state of New York, without
giving effect to any conflict of laws principle to the contrary. The parties
agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue. The parties irrevocably
consent to personal jurisdiction in the state and federal courts of the state of
New York. The Company and each Purchaser consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 8(e) shall affect or limit any right to serve
process in any other manner permitted by law.
(f) Amendments and Waivers. No provision of this Agreement may be
waived or amended other than by a written instrument signed by the Company and
the holders of at least a majority in interest of the then-outstanding
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 8(f) shall be binding upon each Holder (and their permitted assigns) and
the Company.
(g) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile, (ii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iii) actual receipt by the party to whom such notice is
required to be given.
(x) if to the Company:
SAFLINK Corporation
00000 XX 0xx Xxxxxx, Xxxxx X-000
Xxxxxxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxx Xxxxxxxxx
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxx Xxx., Xxx. 0000
Xxxxxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: W. Xxxxxxx Xxxxxxxxx
(y) if to any Purchaser:
At the address of such Purchaser set forth on Exhibit
A to this Agreement.
with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxxxxxxx X. Xxxxxxx
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.
(h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns
and shall inure to the benefit of the Holder and its successors and assigns.
(i) Assignment of Registration Rights. The rights of the Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
assignable by each Holder to any transferee of the Holder of all or a portion of
the shares of Registrable Securities if: (i) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement and shall be for no less than 50% of the Registrable
Securities. In addition, the Holder shall have the right to assign its rights
hereunder to any other Person with the prior written consent of the Company,
which consent shall not be unreasonably withheld. The rights to assignment shall
apply to the Holder (and to subsequent) successors and assigns. In the event of
an assignment pursuant to this Section 8(i), the Purchaser shall pay all
incremental costs and expenses incurred by the Company in connection with filing
a Registration Statement (or an amendment to the Registration Statement) to
register the shares of Registrable Securities assigned to any assignee or
transferee of the Purchaser.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Termination. This Agreement shall terminate on the earlier of (i)
the date on which all remaining Registrable Securities may be sold without
restriction pursuant to Rule 144(k) of the Securities Act or (ii) the date when
all Registrable Securities have been sold.
(l) Severability. If any term, provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
SAFLINK CORPORATION
By:
-------------------------------------
Name:
Title:
PURCHASER
By:
-------------------------------------
Name:
Title:
EXHIBIT A
PURCHASERS
EXHIBIT B
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholder. The shares of common stock may be sold in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market prices, at varying prices determined at the
time of sale, or at negotiated prices. These sales may be effected at various
times in one or more of the following transactions, or in other kinds of
transactions:
o transactions on the New York Stock Exchange or on any national
securities exchange or U.S. inter-dealer system of a registered
national securities association on which our common stock may be listed
or quoted at the time of sale;
o in the over-the-counter market;
o in private transactions and transactions otherwise than on these
exchanges or systems or in the over-the-counter market;
o in connection with short sales of the shares;
o by pledge to secure or in payment of debt and other obligations;
o through the writing of options, whether the options are listed on an
options exchange or otherwise;
o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options; or
o through a combination of any of the above transactions.
The selling stockholder and its successors, including its transferees,
pledgees or donees or their successors, may sell the common stock directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
We entered into a registration rights agreement for the benefit of the
selling stockholder to register our common stock under applicable federal and
state securities laws. The registration rights agreement provides for cross-
indemnification of the selling
stockholder and us and our respective directors, officers and controlling
persons against specific liabilities in connection with the offer and sale of
the common stock, including liabilities under the Securities Act. We will pay
substantially all of the expenses incurred by the selling stockholder incident
to the offering and sale of the common stock.
EXHIBIT C
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and address of Transfer Agent]
-----------------------------
-----------------------------
-----------------------------
Attn:
-----------------------
Re: SAFLINK Corporation
-------------------
Ladies and Gentlemen:
We are counsel to SAFLINK Corporation, a Delaware corporation (the
"Company"), and have represented the Company in connection with that certain
Purchase Agreement (the "Purchase Agreement"), dated as of June 28, 2002 by and
between the Company and the purchaser (the "Purchaser" and the "Holder") named
therein pursuant to which the Company issued to the Purchaser shares (the
"Common Shares") of its Common Stock, $.01 par value per share (the "Common
Stock"). Pursuant to the Purchase Agreement, the Company has also entered into a
Registration Rights Agreement with the Purchaser (the "Registration Rights
Agreement"), dated as of June 28, 2002, pursuant to which the Company agreed,
among other things, to file a registration statement covering the Registrable
Securities (as defined in the Registration Rights Agreement), including the
Common Shares, under the Securities Act of 1933, as amended (the "1933 Act"). In
connection with the Company's obligations under the Registration Rights
Agreement, on _________ __, 2002, the Company filed a Registration Statement on
Form S-2 (File No. 333-________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the resale of the
Registrable Securities which names the Holder as a selling stockholder
thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of the Registration Statement.
Very truly yours,
By:
------------------------------------
cc: [PURCHASER]
