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EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of October 22, 1998, by and
between SCM Microsystems, Inc., a Delaware corporation ("SCM"), and the
undersigned shareholders (the "EXCHANGING SHAREHOLDERS") of Shuttle Technology
Group Limited, a limited company incorporated and registered under the laws of
England and Wales with registered number 2764412 ("SHUTTLE").
RECITALS
WHEREAS, concurrent with delivery of this Agreement, SCM and the Exchanging
Shareholders are entering into a Share Exchange Agreement on the date hereof
(the "SHARE EXCHANGE AGREEMENT") which provides for the exchange (the
"EXCHANGE") of the entire issued share capital of Shuttle by the Exchanging
Shareholders in exchange for shares of SCM Common Stock;
WHEREAS, as an inducement to the Exchanging Shareholders to enter into the
Share Exchange Agreement, as of the Closing Date, the shares of SCM Common Stock
that are issued to the Exchanging Shareholders pursuant to the Share Exchange
Agreement shall be granted registration rights as set forth herein; and
WHEREAS, all terms not otherwise defined herein shall have the same
meanings ascribed to them in the Share Exchange Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. SCM covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "1934 Act" shall mean the Securities Exchange Act
of 1934, as amended.
(c) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(d) The term "Registrable Securities" means the SCM Common Stock
("Common Stock") issued to the Exchanging Shareholders in accordance with the
terms and conditions of the Share Exchange Agreement and any securities of SCM
issued as a dividend on or other distribution with respect to, or in exchange
for or replacement of, such common stock.
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(e) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Obligations of SCM. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, SCM shall, as soon as
reasonably possible:
(a) Prepare and file with the SEC as soon as reasonably
practicable, but in no event later than 30 days after the availability of
restated pooled SCM financials, a registration statement on Form S-3, or other
available form of registration statement with respect to such Registrable
Securities (hereinafter referred to as the "Registration Statement") and use its
reasonable best efforts to cause such registration statement to become effective
as soon as reasonably possible thereafter, and, subject to the provisions below,
use its reasonable best efforts to, keep such Registration Statement
continuously effective for a period of 180 days or, if earlier, until the
Exchanging Shareholders have sold all of the Registrable Securities. If at any
time after a Registration Statement becomes effective, SCM advises the
Exchanging Shareholders in writing that due to the existence of material
information that has not been disclosed to the public and included in the
Registration Statement it is necessary to amend the Registration Statement, the
Exchanging Shareholders shall suspend any further sale of Registrable Securities
pursuant to the Registration Statement until SCM advises the Exchanging
Shareholders that the Registration Statement has been amended. In such event,
SCM shall cause the Registration Statement to be supplemented or amended as soon
as reasonably practicable, and use its best efforts to cause such amendment to
be declared effective as soon as reasonably practicable, provided that SCM shall
not be required to amend the Registration Statement during any time when SCM's
officers and director are prohibited from buying or selling SCM's Common Stock
pursuant to SCM's xxxxxxx xxxxxxx policy. Notwithstanding the foregoing
sentence, SCM shall file any amendment necessary for the Exchanging Shareholders
to recommence sales under the Registration Statement concurrently with the
commencement of any period in which directors and officers of SCM are allowed to
buy or sell SCM Common Stock pursuant to SCM's xxxxxxx xxxxxxx policy. In
addition, SCM may suspend use of the Registration Statement to the extent SCM is
advised by its legal counsel, such action is reasonably necessary to comply with
federal securities law. In such event the Company shall use its best efforts to
end such suspension as soon as reasonably practicable. In the event the sales of
Registrable Securities of the Exchanging Shareholders are suspended as provided
above, the 180-day period during which a Registration Statement must be kept
effective shall be extended for the total number of days during which sales are
suspended.
(b) Subject to subsection 1.2(a), promptly prepare and file with
the SEC such amendments and supplements to such Registration Statement and the
prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement and use its
reasonable best efforts to have such supplements and amendments declared
effective as soon as reasonably practicable.
(c) Furnish to the Exchanging Shareholders such numbers of
copies of the latest version of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as the Exchanging Shareholders may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
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(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other (U.S.) securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Exchanging Shareholders, provided that SCM shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless SCM is already subject to service in such jurisdiction and except as may
be required by the Act.
(e) SCM may include securities issued in connection with any
acquisition not otherwise registered on an S-3 Registration Statement in the
registration pursuant to this Agreement.
1.3 Information from Exchanging Shareholders. It shall be a condition
precedent to the obligations of SCM to take any action pursuant to this Section
1 with respect to the Registrable Securities of the Exchanging Shareholders that
the Exchanging Shareholders shall furnish to SCM such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities, as shall be required to effect the registration
of the Registrable Securities.
1.4 Indemnification. In the event any Registrable Securities are
included in the Registration Statement under this Section 1:
(a) SCM will indemnify and hold harmless the Exchanging
Shareholders, each of their directors, officers, trustees or beneficiaries, if
applicable and each person, if any, who controls a non-individual shareholder
within the meaning of the Act against any losses, claims, damages, or
liabilities (joint or several) to which the Exchanging Shareholders may become
subject under the Act, or the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements' therein not misleading, or (iii) any violation or alleged
violation by SCM of the Act, the 1934 Act, or any rule or regulation promulgated
under the Act, or the 1934 Act; and SCM will pay to the Exchanging Shareholders
as incurred any legal or other expenses reasonably incurred by the Exchanging
Shareholders in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.4(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of SCM, which consent shall not be
unreasonably withheld, nor shall SCM be liable in any such case for any such
loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing expressly for use in connection with such
registration by the Exchanging Shareholders seeking indemnification hereunder.
In addition, SCM shall not be liable for any untrue statement or omission in any
prospectus if a supplement or amendment thereto correcting such untrue statement
or omission was delivered to the Exchanging Shareholders prior to the pertinent
sale or sales by the Exchanging Shareholders.
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(b) Each Exchanging Shareholder will indemnify and hold harmless
SCM, each of its directors, each of its officers who has signed the Registration
Statement, each person, if any, who controls SCM within the meaning of the Act,
any other shareholder selling securities in such Registration Statement and any
controlling person of any such shareholder, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Act, or the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) 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 by such Exchanging Shareholder
expressly for use in connection with such registration; and such Exchanging
Shareholder will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this subsection
1.4(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.4(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Exchanging Shareholder, which
consent shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection 1.4(b) by such Exchanging Shareholder exceed
the gross proceeds from the offering received by such Exchanging Shareholder.
(c) Promptly after receipt by an indemnified party under this
Section 1.4 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.4, 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 the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.4, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.4.
(d) If the indemnification provided for in this Section 1.4 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the
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untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
(e) The obligations of SCM, and the Exchanging Shareholders
under this Section 1.4 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.5 Reports Under the Securities Exchange Act of 1934. SCM agrees to
file with the SEC in a timely manner all reports and other documents and
information required of SCM under the 1934 Act, and take such other actions as
may be necessary to assure the availability of Form S-3 for use in connection
with the registration rights provided in this Agreement.
1.7 Rules 144 and 144A. SCM shall use commercially reasonable efforts
to file the reports required to be filed by it under the 1934 Act in a timely
manner and, if at any time SCM is not required to file such reports, it will,
upon the written request of both Exchanging Shareholders, make publicly
available other information so long as necessary to permit sales of the
Exchanging Shareholders' securities pursuant to Rule 144 and 144A. SCM covenants
that it will take such further action as the Exchanging Shareholders may
reasonably request, all to the extent required from time to time to enable the
Exchanging Shareholders to sell securities without registration under the Act
within the limitation of the exemptions provided by Rules 144 and 144A
(including the requirements of Rule 144A(d)(4)).
2. Miscellaneous.
2.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(1) if to SCM:
SCM Microsystems, Inc.
000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx, Chief Executive Officer
Facsimile No.: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(2) if to the Exchanging Shareholders, to:
X. X. Xxxxx
Xxxx Xxxxx, Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx XX00 0XX
England
with a copy to:
Norose Notices Limited
Xxxxxxx Xxxxx
00-00 Xxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Attention: The Administrative Controller
Facsimile No.: 011 44 171 283 6500
2.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
2.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
2.4 Entire Agreement; Assignment. This Agreement and the documents
and instruments and other agreements among the parties hereto referenced herein:
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; (b) are not intended to confer upon any other person (including, without
limitation, those persons listed on any exhibits hereto) any rights or remedies
hereunder; and (c) without the prior written consent of each party shall not be
assigned by operation of law or otherwise, except that SCM may assign its rights
and obligations hereunder to an affiliate of SCM provided that SCM shall remain
liable for all its obligations hereunder notwithstanding such assignment. Any
assignment of rights or delegation of
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duties under this Agreement by a party without the prior written consent of the
other parties, if such consent is required hereby, shall be void.
2.5 Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
2.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
2.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
SCM MICROSYSTEMS, INC.
By:
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Xxxxx Xxxxxxxxx, Chief Executive Officer
Address: 000 Xxxxxxxx Xxx
Xxx Xxxxx, XX 00000
EXCHANGING SHAREHOLDERS
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P.K. VENKATESWAREN
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BALAJI BAKHTA
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