REGISTRATION RIGHTS AGREEMENT
Exhibit 10.4
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
October [___], 2010, is by and among Socket Mobile, Inc., a Delaware corporation
with offices located at 00000 Xxxxxx Xxxxx, Xxxxxx, XX 00000 (the "Company"),
and the undersigned buyers (each, a "Buyer," and collectively, the
"Buyers").
RECITALS
A. In connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of October 27, 2010 (the "Securities Purchase Agreement"),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to each Buyer (i) the Notes
(as defined in the Securities Purchase Agreement) which will be convertible
into Conversion Shares (as defined in the Securities Purchase Agreement) in
accordance with the terms of the Notes and (ii) the Warrants (as defined in
the Securities Purchase Agreement) which will be exercisable to purchase Warrant
Shares (as defined in the Securities Purchase Agreement) in accordance with
the terms of the Warrants.
B. To induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "1933 Act"), and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and each of the
Buyers hereby agree as follows:
1. Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:
(a) "Business Day" means any day other than Saturday, Sunday
or any other day on which commercial banks in New York, New York are authorized
or required by law to remain closed.
(b) "Closing Date" shall have the meaning set forth in the
Securities Purchase Agreement.
(c) "Effective Date" means the date that the applicable Registration Statement has been declared effective by the SEC.
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(d) "Effectiveness Deadline" means (i) with respect to the
initial Registration Statement required to be filed pursuant to Section 2(a),
the earlier of the (A) 60th calendar day after the Closing Date (or the 90th
calendar day after the Closing Date in the event that such Registration Statement
is subject to review by the SEC) and (B) 3rd Business Day after the date the
Company is notified (orally or in writing, whichever is earlier) by the SEC
that such Registration Statement will not be reviewed or will not be subject
to further review and (ii) with respect to any additional Registration Statements
that may be required to be filed by the Company pursuant to this Agreement,
the earlier of the (A) 60th calendar day following the date on which the Company
was required to file such additional Registration Statement (or the 90th calendar
day after such date in the event that such Registration Statement is subject
to review by the SEC) and (B) 3rd Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the SEC that such Registration
Statement will not be reviewed or will not be subject to further review.
(e) "Filing Deadline" means (i) with respect to the initial
Registration Statement required to be filed pursuant to Section 2(a), the 30th
calendar day after the Closing Date and (ii) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.
(f) "Investor" means a Buyer or any transferee or assignee
of any Registrable Securities, Notes or Warrants, as applicable, to whom a Buyer
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any transferee
or assignee thereof to whom a transferee or assignee of any Registrable Securities,
Notes or Warrants, as applicable, assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.
(g) "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.
(h) "register," "registered," and "registration"
refer to a registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the SEC.
(i) "Registrable Securities" means (i) the Conversion Shares,
(ii) the Warrant Shares and (iii) any capital stock of the Company issued or
issuable with respect to the Conversion Shares, the Warrant Shares, the Notes
or the Warrants, including, without limitation, (1) as a result of any stock
split, stock dividend, recapitalization, exchange or similar event or otherwise
and (2) shares of capital stock of the Company into which the shares of Common
Stock (as defined in the Notes) are converted or exchanged and shares of capital
stock of a Successor Entity (as defined in the Warrants) into which the shares
of Common Stock are converted or exchanged, in each case, without regard to
any limitations on conversion of the Notes or exercise of the Warrants.
(j) "Registration Statement" means a registration statement or registration statements of the Company filed under the 1933 Act covering Registrable Securities.
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(k) "Required Holders" means the holders of at least a majority
of the Registrable Securities (excluding any Registrable Securities held by
the Company or any of its Subsidiaries).
(l) "Required Registration Amount" means the sum of (i) 152.0796%
of the maximum number of Conversion Shares issued and issuable pursuant to the
Notes and (ii) 100% of the maximum number of Warrant Shares issued and issuable
pursuant to the Warrants, in each case, as of the Trading Day (as defined in
the Warrants) immediately preceding the applicable date of determination (without
taking into account any limitations on the conversion of the Notes or the exercise
of the Warrants set forth therein), all subject to adjustment as provided in
Section 2(d).
(m) "Rule 144" means Rule 144 promulgated by the SEC under
the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC that may at any time permit the Investors
to sell securities of the Company to the public without registration.
(n) "Rule 415" means Rule 415 promulgated by the SEC under
the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC providing for offering securities
on a continuous or delayed basis.
(o) "SEC" means the United States Securities and Exchange
Commission or any successor thereto.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
an initial Registration Statement on Form S-3 covering the resale of all of
the Registrable Securities, provided that such initial Registration Statement
shall register for resale at least the number of shares of Common Stock equal
to the Required Registration Amount as of the date such Registration Statement
is initially filed with the SEC, provided further that if Form S-3 is unavailable
for such a registration, the Company shall use such other form as is required
by Section 2(c). Such initial Registration Statement, and each other Registration
Statement required to be filed pursuant to the terms of this Agreement, shall
contain (except if otherwise directed by the Required Holders) the "Selling
Stockholders" and "Plan of Distribution" sections
in substantially the form attached hereto as Exhibit B. The Company
shall use its reasonable best efforts to have such initial Registration Statement,
and each other Registration Statement required to be filed pursuant to the terms
of this Agreement, declared effective by the SEC as soon as practicable, but
in no event later than the applicable Effectiveness Deadline for such Registration
Statement.
(b) Legal Counsel. Subject to Section 5 hereof, Xxxxxxxxx Xxxxxxx, LLP,
counsel solely to the lead investor ("Legal Counsel") shall
review and oversee any registration pursuant to this Section 2.
(c) Ineligibility to Use Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities hereunder,
the Company shall (i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to the Required Holders and (ii) undertake
to register the resale of the Registrable Securities on Form S-3 as soon as
such form is available, provided that the Company shall maintain the effectiveness
of all Registration Statements then in effect until such time as a Registration
Statement on Form S-3 covering the resale of all the Registrable Securities
has been declared effective by the SEC and the prospectus contained therein
is available for use.
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(d) Sufficient Number of Shares Registered. In the event the number
of shares available under any Registration Statement is insufficient to cover
all of the Registrable Securities required to be covered by such Registration
Statement or an Investor's allocated portion of the Registrable Securities pursuant
to Section 2(h), the Company shall amend such Registration Statement (if permissible),
or file with the SEC a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover at least the Required Registration
Amount as of the Trading Day immediately preceding the date of the filing of
such amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor
arises (but taking account of any Staff position with respect to the date on
which the Staff will permit such amendment to the Registration Statement and/or
such new Registration Statement (as the case may be) to be filed with the SEC).
The Company shall use its reasonable best efforts to cause such amendment to
such Registration Statement and/or such new Registration Statement (as the case
may be) to become effective as soon as practicable following the filing thereof
with the SEC, but in no event later than the applicable Effectiveness Deadline
for such Registration Statement. For purposes of the foregoing provision, the
number of shares available under a Registration Statement shall be deemed "insufficient
to cover all of the Registrable Securities" if at any time the number of
shares of Common Stock available for resale under the applicable Registration
Statement is less than the product determined by multiplying (i) the Required
Registration Amount as of such time by (ii) 0.90. The calculation set forth
in the foregoing sentence shall be made without regard to any limitations on
(i) conversion of the Notes (and such calculation shall assume that the Notes
are then fully convertible into shares of Common Stock at the then-prevailing
applicable Conversion Price) and (ii) exercise of the Warrants (and such calculation
shall assume that the Warrants are then fully exercisable for shares of Common
Stock at the then-prevailing applicable Exercise Price).
(e) Effect of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering the resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section 2(f)) and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for such Registration Statement (a "Filing Failure") (it being understood that if the Company files a Registration Statement without affording each Investor the opportunity to review and comment on the same as required by Section 3(c) hereof, the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B) not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (an "Effectiveness Failure") (it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement the Company shall not have filed a "final" prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance with Section 3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace Period (as defined below), on any day after the Effective Date of a Registration Statement sales of all of the Registrable Securities required to be included on such Registration Statement (disregarding
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any reduction pursuant to Section 2(f)) cannot be made pursuant to such Registration
Statement (including, without limitation, because of a failure to keep such
Registration Statement effective, a failure to disclose such information as
is necessary for sales to be made pursuant to such Registration Statement, a
suspension or delisting of (or a failure to timely list) the shares of Common
Stock on the Principal Market (as defined in the Securities Purchase Agreement),
or a failure to register a sufficient number of shares of Common Stock or by
reason of a stop order) or the prospectus contained therein is not available
for use for any reason (a "Maintenance Failure"), or (iii)
if a Registration Statement is not effective for any reason or the prospectus
contained therein is not available for use for any reason, the Company fails
to file with the SEC any required reports under Section 13 or 15(d) of the 1934
Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) (a "Current Public Information Failure") as
a result of which any of the Investors are unable to sell Registrable Securities
without restriction under Rule 144 (including, without limitation, volume restrictions),
then, as partial relief for the damages to any holder by reason of any such
delay in, or reduction of, its ability to sell the underlying shares of Common
Stock (which remedy shall not be exclusive of any other remedies available at
law or in equity), the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to two percent
(2%) of such Investor's original principal amount stated in such Investor's
Note on the Closing Date (1) on the date of such Filing Failure, Effectiveness
Failure, Maintenance Failure or Current Public Information Failure, as applicable
(provided, however, there shall be only one payment of any such amount if there
exist multiple failures at the same time), and (2) on every thirty (30) day
anniversary of (I) a Filing Failure until such Filing Failure is cured; (II)
an Effectiveness Failure until such Effectiveness Failure is cured; (III) a
Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current
Public Information Failure until the earlier of (i) the date such Current Public
Information Failure is cured and (ii) such time that such public information
is no longer required pursuant to Rule 144 (in each case, pro rated for periods
totaling less than thirty (30) days) (provided, however, there shall be only
one payment of any such amount per each thirty (30) day period if there exist
multiple failures at the same time). The payments to which a holder of Registrable
Securities shall be entitled pursuant to this Section 2(e) are referred to herein
as "Registration Delay Payments." Following the initial Registration
Delay Payment for any particular event or failure (which shall be paid on the
date of such event or failure, as set forth above), without limiting the foregoing,
if an event or failure giving rise to the Registration Delay Payments is cured
prior to any thirty (30) day anniversary of such event or failure, then such
Registration Delay Payment shall be made on the third (3rd) Business Day after
such cure. In the event the Company fails to make Registration Delay Payments
in a timely manner in accordance with the foregoing, such Registration Delay
Payments shall bear interest at the rate of two percent (2%) per month (prorated
for partial months) until paid in full. Notwithstanding the foregoing, no Registration
Delay Payments shall be owed to an Investor (other than with respect to a Maintenance
Failure resulting from a suspension or delisting of (or a failure to timely
list) the shares of Common Stock on the Principal Market) with respect to any
period during which all of such Investor's Registrable Securities may be sold
by such Investor without restriction under Rule 144 (including, without limitation,
volume restrictions) and without the need for current public information required
by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
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(f) Offering. Notwithstanding anything to the contrary contained in
this Agreement, but subject to the payment of the Registration Delay Payments
pursuant to Section 2(e), in the event the staff of the SEC (the "Staff")
or the SEC seeks to characterize any offering pursuant to a Registration Statement
filed pursuant to this Agreement as constituting an offering of securities by,
or on behalf of, the Company, or in any other manner, such that the Staff or
the SEC do not permit such Registration Statement to become effective and used
for resales in a manner that does not constitute such an offering and that permits
the continuous resale at the market by the Investors participating therein (or
as otherwise may be acceptable to each Investor) without being named therein
as an "underwriter," then the Company shall reduce the number of shares
to be included in such Registration Statement by all Investors until such time
as the Staff and the SEC shall so permit such Registration Statement to become
effective as aforesaid. In making such reduction, the Company shall reduce the
number of shares to be included by all Investors on a pro rata basis (based
upon the number of Registrable Securities otherwise required to be included
for each Investor) unless the inclusion of shares by a particular Investor or
a particular set of Investors are resulting in the Staff or the SEC's "by
or on behalf of the Company" offering position, in which event the shares
held by such Investor or set of Investors shall be the only shares subject to
reduction (and if by a set of Investors on a pro rata basis by such Investors
or on such other basis as would result in the exclusion of the least number
of shares by all such Investors). In addition, in the event that the Staff or
the SEC requires any Investor seeking to sell securities under a Registration
Statement filed pursuant to this Agreement to be specifically identified as
an "underwriter" in order to permit such Registration Statement to
become effective, and such Investor does not consent to being so named as an
underwriter in such Registration Statement, then, in each such case, the Company
shall reduce the total number of Registrable Securities to be registered on
behalf of such Investor, until such time as the Staff or the SEC does not require
such identification or until such Investor accepts such identification and the
manner thereof. Any reduction pursuant to this paragraph will first reduce all
Registrable Securities other than those issued pursuant to the Securities Purchase
Agreement. In the event of any reduction in Registrable Securities pursuant
to this paragraph, an affected Investor shall have the right to require, upon
delivery of a written request to the Company signed by such Investor, the Company
to file a registration statement within thirty (30) days of such request (subject
to any restrictions imposed by Rule 415 or required by the Staff or the SEC)
for resale by such Investor in a manner acceptable to such Investor, and the
Company shall following such request cause to be and keep effective such registration
statement in the same manner as otherwise contemplated in this Agreement for
registration statements hereunder, in each case until such time as: (i) all
Registrable Securities held by such Investor have been registered and sold pursuant
to an effective Registration Statement in a manner acceptable to such Investor
or (ii) all Registrable Securities may be resold by such Investor without restriction
(including, without limitation, volume limitations) pursuant to Rule 144 (taking
account of any Staff position with respect to "affiliate" status)
and without the need for current public information required by Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named
as an underwriter in any such Registration Statement in a manner acceptable
to such Investor as to all Registrable Securities held by such Investor and
that have not theretofore been included in a Registration Statement under this
Agreement (it being understood that the special demand right under this sentence
may be exercised by an Investor multiple times and with respect to limited amounts
of Registrable Securities in order to permit the resale thereof by such Investor
as contemplated above).
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(g) Piggyback Registrations. Without limiting any obligation of the
Company hereunder or under the Securities Purchase Agreement, if there is not
an effective Registration Statement covering all of the Registrable Securities
or the prospectus contained therein is not available for use and the Company
shall determine to prepare and file with the SEC a registration statement relating
to an offering for its own account or the account of others under the 1933 Act
of any of its equity securities (other than on Form S-4 or Form S-8 (each as
promulgated under the 0000 Xxx) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the Company's stock
option or other employee benefit plans), then the Company shall deliver to each
Investor a written notice of such determination and, if within fifteen (15)
days after the date of the delivery of such notice, any such Investor shall
so request in writing, the Company shall include in such registration statement
all or any part of such Registrable Securities such Investor requests to be
registered; provided, however, the Company shall not be required to register
any Registrable Securities pursuant to this Section 2(g) that are eligible for
resale pursuant to Rule 144 without restriction (including, without limitation,
volume restrictions) and without the need for current public information required
by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject
of a then-effective Registration Statement.
(h) Allocation of Registrable Securities. The initial number of Registrable
Securities included in any Registration Statement and any increase in the number
of Registrable Securities included therein shall be allocated pro rata among
the Investors based on the number of Registrable Securities held by each Investor
at the time such Registration Statement covering such initial number of Registrable
Securities or increase thereof is declared effective by the SEC. In the event
that an Investor sells or otherwise transfers any of such Investor's Registrable
Securities, each transferee or assignee (as the case may be) that becomes an
Investor shall be allocated a pro rata portion of the then-remaining number
of Registrable Securities included in such Registration Statement for such transferor
or assignee (as the case may be). Any shares of Common Stock included in a Registration
Statement and which remain allocated to any Person which ceases to hold any
Registrable Securities covered by such Registration Statement shall be allocated
to the remaining Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration Statement.
(i) No Inclusion of Other Securities. In no event shall the Company
include any securities other than Registrable Securities on any Registration
Statement without the prior written consent of the Required Holders. Until the
Applicable Date (as defined in the Securities Purchase Agreement), the Company
shall not enter into any agreement providing any registration rights to any
of its security holders.
3. Related Obligations.
The Company shall use its reasonable best efforts to effect the registration
of the Registrable Securities in accordance with the intended method of disposition
thereof, and, pursuant thereto, the Company shall have the following obligations:
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(a) The Company shall promptly prepare and file with the SEC a Registration
Statement with respect to all the Registrable Securities (but in no event later
than the applicable Filing Deadline) and use its reasonable best efforts to
cause such Registration Statement to become effective as soon as practicable
after such filing (but in no event later than the Effectiveness Deadline). Subject
to Allowable Grace Periods, the Company shall keep each Registration Statement
effective (and the prospectus contained therein available for use) pursuant
to Rule 415 for resales by the Investors on a delayed or continuous basis at
then-prevailing market prices (and not fixed prices) at all times until the
earlier of (i) the date as of which all of the Investors may sell all of the
Registrable Securities required to be covered by such Registration Statement
(disregarding any reduction pursuant to Section 2(f)) without restriction pursuant
to Rule 144 (including, without limitation, volume restrictions) and without
the need for current public information required by Rule 144(c)(1) (or Rule
144(i)(2), if applicable) or (ii) the date on which the Investors shall have
sold all of the Registrable Securities covered by such Registration Statement
(the "Registration Period"). Notwithstanding anything to the
contrary contained in this Agreement, the Company shall ensure that, when filed
and at all times while effective, each Registration Statement (including, without
limitation, all amendments and supplements thereto) and the prospectus (including,
without limitation, all amendments and supplements thereto) used in connection
with such Registration Statement (1) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein (in the case of prospectuses, in
the light of the circumstances in which they were made) not misleading and (2)
will disclose (whether directly or through incorporation by reference to other
SEC filings to the extent permitted) all material information regarding the
Company and its securities. The Company shall submit to the SEC, within two
(2) Business Days after the later of the date that (i) the Company learns that
no review of a particular Registration Statement will be made by the Staff or
that the Staff has no further comments on a particular Registration Statement
(as the case may be) and (ii) the consent of Legal Counsel is obtained pursuant
to Section 3(c) (which consent shall be immediately sought), a request for acceleration
of effectiveness of such Registration Statement to a time and date not later
than forty-eight (48) hours after the submission of such request.
(b) Subject to Section 3(r) of this Agreement, the Company shall prepare and
file with the SEC such amendments (including, without limitation, post-effective
amendments) and supplements to each Registration Statement and the prospectus
used in connection with each such Registration Statement, which prospectus is
to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep each such Registration Statement effective at all times during the Registration
Period for such Registration Statement, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all Registrable
Securities of the Company required to be covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement; provided, however, by 8:30
a.m. (New York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule 424(b) under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to the applicable Registration Statement (whether or not such a prospectus is
technically required by such rule). In the case of amendments and supplements
to any Registration Statement which are required to be filed pursuant to this
Agreement (including, without limitation, pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-Q or Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Company shall have incorporated such report by reference into
such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such Registration
Statement.
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(c) The Company shall (A) permit Legal Counsel and legal counsel for each other
Investor to review and comment upon (i) each Registration Statement at least
five (5) Business Days prior to its filing with the SEC and (ii) all amendments
and supplements to each Registration Statement (including, without limitation,
the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor
reports) within a reasonable number of days prior to their filing with the SEC,
and (B) not file any Registration Statement or amendment or supplement thereto
in a form to which Legal Counsel or any legal counsel for any other Investor
reasonably objects. The Company shall not submit a request for acceleration
of the effectiveness of a Registration Statement or any amendment or supplement
thereto or to any prospectus contained therein without the prior consent of
Legal Counsel, which consent shall not be unreasonably withheld. The Company
shall promptly furnish to Legal Counsel and legal counsel for each other Investor,
without charge, (i) copies of any correspondence from the SEC or the Staff to
the Company or its representatives relating to each Registration Statement,
provided that such correspondence shall not contain any material, non-public
information regarding the Company or any of its Subsidiaries (as defined in
the Securities Purchase Agreement), (ii) after the same is prepared and filed
with the SEC, one (1) copy of each Registration Statement and any amendment(s)
and supplement(s) thereto, including, without limitation, financial statements
and schedules, all documents incorporated therein by reference, if requested
by an Investor, and all exhibits and (iii) upon the effectiveness of each Registration
Statement, one (1) copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto. The Company shall reasonably cooperate
with Legal Counsel and legal counsel for each other Investor in performing the
Company's obligations pursuant to this Section 3.
(d) The Company shall promptly furnish to each Investor whose Registrable Securities
are included in any Registration Statement, without charge, (i) after the same
is prepared and filed with the SEC, at least one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents incorporated therein
by reference, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of each Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and all
amendments and supplements thereto (or such other number of copies as such Investor
may reasonably request from time to time) and (iii) such other documents, including,
without limitation, copies of any preliminary or final prospectus, as such Investor
may reasonably request from time to time in order to facilitate the disposition
of the Registrable Securities owned by such Investor.
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(e) The Company shall use its reasonable best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale
by Investors of the Registrable Securities covered by a Registration Statement
under such other securities or "blue sky" laws of all applicable jurisdictions
in the United States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(e),
(y) subject itself to general taxation in any such jurisdiction, or (z) file
a general consent to service of process in any such jurisdiction. The Company
shall promptly notify Legal Counsel, legal counsel for each other Investor and
each Investor who holds Registrable Securities of the receipt by the Company
of any notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue
sky" laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel, legal counsel for each other Investor
and each Investor in writing of the happening of any event, as promptly as practicable
after becoming aware of such event, as a result of which the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (provided that in no event shall
such notice contain any material, non-public information regarding the Company
or any of its Subsidiaries), and, subject to Section 3(r), promptly prepare
a supplement or amendment to such Registration Statement and such prospectus
contained therein to correct such untrue statement or omission and deliver ten
(10) copies of such supplement or amendment to Legal Counsel, legal counsel
for each other Investor and each Investor (or such other number of copies as
Legal Counsel, legal counsel for each other Investor or such Investor may reasonably
request). The Company shall also promptly notify Legal Counsel, legal counsel
for each other Investor and each Investor in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed, when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel, legal
counsel for each other Investor and each Investor by facsimile or e-mail on
the same day of such effectiveness and by overnight mail), and when the Company
receives written notice from the SEC that a Registration Statement or any post-effective
amendment will be reviewed by the SEC, (ii) of any request by the SEC for amendments
or supplements to a Registration Statement or related prospectus or related
information, (iii) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate; and (iv) of the
receipt of any request by the SEC or any other federal or state governmental
authority for any additional information relating to the Registration Statement
or any amendment or supplement thereto or any related prospectus. The Company
shall respond as promptly as practicable to any comments received from the SEC
with respect to each Registration Statement or any amendment thereto (it being
understood and agreed that the Company's response to any such comments shall
be delivered to the SEC no later than fifteen (15) Business Days after the receipt
thereof).
(g) The Company shall (i) use its reasonable best efforts to prevent the issuance
of any stop order or other suspension of effectiveness of each Registration
Statement or the use of any prospectus contained therein, or the suspension
of the qualification, or the loss of an exemption from qualification, of any
of the Registrable Securities for sale in any jurisdiction and, if such an order
or suspension is issued, to obtain the withdrawal of such order or suspension
at the earliest possible moment and (ii) notify Legal Counsel, legal counsel
for each other Investor and each Investor who holds Registrable Securities of
the issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.
10
(h) If any Investor may be required under applicable securities law to be described
in any Registration Statement as an underwriter and such Investor consents to
so being named an underwriter, at the request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of such Registration
Statement and thereafter from time to time on such dates as an Investor may
reasonably request (i) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as of
such date, of counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an underwritten
public offering, addressed to the Investors.
(i) If any Investor may be required under applicable securities law to be described
in any Registration Statement as an underwriter and such Investor consents to
so being named an underwriter, upon the written request of such Investor, the
Company shall make available for inspection by (i) such Investor, (ii) legal
counsel for such Investor and (iii) one (1) firm of accountants or other agents
retained by such Investor (collectively, the "Inspectors"),
all pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"),
as shall be reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, each Inspector shall agree in writing
to hold in strict confidence and not to make any disclosure (except to such
Investor) or use of any Record or other information which the Company's board
of directors determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (1) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (2) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from
a court or government body of competent jurisdiction, or (3) the information
in such Records has been made generally available to the public other than by
disclosure in violation of this Agreement or any other Transaction Document
(as defined in the Securities Purchase Agreement). Such Investor agrees that
it shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor's ability to sell Registrable Securities in
a manner which is otherwise consistent with applicable laws and regulations.
(j) The Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement or is otherwise required to be disclosed
in such Registration Statement pursuant to the 1933 Act, (iii) the release of
such information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by disclosure
in violation of this Agreement or any other Transaction Document. The Company
agrees that it shall, upon learning that disclosure of such information concerning
an Investor is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to such Investor and allow
such Investor, at such Investor's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information.
11
(k) Without limiting any obligation of the Company under the Securities Purchase
Agreement, the Company shall use its reasonable best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to
be listed on each securities exchange on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, (ii)
secure designation and quotation of all of the Registrable Securities covered
by each Registration Statement on an Eligible Market (as defined in the Securities
Purchase Agreement), or (iii) if, despite the Company's reasonable best efforts
to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in
satisfying the preceding clauses (i) or (ii), without limiting the generality
of the foregoing, to use its reasonable best efforts to arrange for at least
two market makers to register with the Financial Industry Regulatory Authority
("FINRA") as such with respect to such Registrable Securities.
In addition, the Company shall cooperate with each Investor and any broker or
dealer through which any such Investor proposes to sell its Registrable Securities
in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by
such Investor. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 3(k).
(l) The Company shall cooperate with the Investors who hold Registrable Securities
being offered and, to the extent applicable, facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to a Registration Statement
and enable such certificates to be in such denominations or amounts (as the
case may be) as the Investors may reasonably request from time to time and registered
in such names as the Investors may request.
(m) If requested by an Investor, the Company shall as soon as practicable after
receipt of notice from such Investor and subject to Section 3(r) hereof, (i)
incorporate in a prospectus supplement or post-effective amendment such information
as an Investor reasonably requests to be included therein relating to the sale
and distribution of Registrable Securities, including, without limitation, information
with respect to the number of Registrable Securities being offered or sold,
the purchase price being paid therefor and any other terms of the offering of
the Registrable Securities to be sold in such offering; (ii) make all required
filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any Registration
Statement or prospectus contained therein if reasonably requested by an Investor
holding any Registrable Securities.
(n) The Company shall use its reasonable best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to consummate
the disposition of such Registrable Securities.
12
(o) The Company shall make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the manner
provided by, the provisions of Rule 158 under the 0000 Xxx) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the applicable Effective Date of each Registration Statement.
(p) The Company shall otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the SEC in connection with any registration
hereunder.
(q) Within one (1) Business Day after a Registration Statement which covers
Registrable Securities is declared effective by the SEC, the Company shall deliver,
and shall cause legal counsel for the Company to deliver, to the transfer agent
for such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form attached
hereto as Exhibit A.
(r) Notwithstanding anything to the contrary herein (but subject to the last
sentence of this Section 3(r)), at any time after the Effective Date of a particular
Registration Statement, the Company may delay the disclosure of material, non-public
information concerning the Company or any of its Subsidiaries the disclosure
of which at the time is not, in the good faith opinion of the board of directors
of the Company, in the best interest of the Company and, in the opinion of counsel
to the Company, otherwise required (a "Grace Period"), provided
that the Company shall promptly notify the Investors in writing of the (i) existence
of material, non-public information giving rise to a Grace Period (provided
that in each such notice the Company shall not disclose the content of such
material, non-public information to any of the Investors) and the date on which
such Grace Period will begin and (ii) date on which such Grace Period ends,
provided further that (I) no Grace Period shall exceed ten (10) consecutive
days and during any three hundred sixty five (365) day period all such Grace
Periods shall not exceed an aggregate of thirty (30) days, (II) the first day
of any Grace Period must be at least five (5) Trading Days after the last day
of any prior Grace Period and (III) no Grace Period may exist during the thirty
(30) Trading Day period immediately following the Effective Date of such Registration
Statement (provided that such thirty (30) Trading Day period shall be extended
by the number of Trading Days during such period and any extension thereof contemplated
by this proviso during which such Registration Statement is not effective or
the prospectus contained therein is not available for use) (each, an "Allowable
Grace Period"). For purposes of determining the length of a Grace Period
above, such Grace Period shall begin on and include the date the Investors receive
the notice referred to in clause (i) above and shall end on and include the
later of the date the Investors receive the notice referred to in clause (ii)
above and the date referred to in such notice. The provisions of Section 3(g)
hereof shall not be applicable during the period of any Allowable Grace Period.
Upon expiration of each Grace Period, the Company shall again be bound by the
first sentence of Section 3(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable. Notwithstanding
anything to the contrary contained in this Section 3(r), the Company shall cause
its transfer agent to deliver unlegended shares of Common Stock to a transferee
of an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which
such Investor has entered into a contract for sale, and delivered a copy of
the prospectus included as part of the particular Registration Statement to
the extent applicable, prior to such Investor's receipt of the notice of a Grace
Period and for which the Investor has not yet settled.
13
(s) The Company shall use its reasonable best efforts to maintain eligibility
for use of Form S-3 (or any successor form thereto) for the registration of
the resale of all the Registrable Securities.
(t) The Company shall take all other reasonable actions necessary to expedite
and facilitate disposition by each Investors of its Registrable Securities pursuant
to each Registration Statement.
4. Obligations of the Investors.
(a) At least five (5) Business Days prior to the first anticipated filing date
of each Registration Statement, the Company shall notify each Investor in writing
of the information the Company requires from each such Investor with respect
to such Registration Statement. It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
(b) Each Investor, by such Investor's acceptance of the Registrable Securities,
agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of each Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g) or the first
sentence of 3(f), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(g) or the first sentence of
Section 3(f) or receipt of notice that no supplement or amendment is required.
Notwithstanding anything to the contrary in this Section 4(c), the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a transferee
of an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which
such Investor has entered into a contract for sale prior to the Investor's receipt
of a notice from the Company of the happening of any event of the kind described
in Section 3(g) or the first sentence of Section 3(f) and for which such Investor
has not yet settled.
14
(d) Each Investor covenants and agrees that it will comply with the prospectus
delivery requirements of the 1933 Act as applicable to it in connection with
sales of Registrable Securities pursuant to a Registration Statement.
5. Expenses of Registration.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing
and qualifications fees, printers and accounting fees, FINRA filing fees (if
any) and fees and disbursements of counsel for the Company shall be paid by
the Company. The Company shall also reimburse Legal Counsel for its fees and
disbursements in connection with registration, filing or qualification pursuant
to Sections 2 and 3 of this Agreement which amount shall be limited to $15,000.
6. Indemnification.
(a) To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of its directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, shareholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an "Indemnified Person"), against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including, without limitation, court costs, reasonable attorneys' fees and costs of defense and investigation), amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein
15
were made, not misleading or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without limitation,
any state securities law, or any rule or regulation thereunder relating to the
offer or sale of the Registrable Securities pursuant to a Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to Section 6(c), the Company shall reimburse
the Indemnified Persons, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred by them
in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained
in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such Indemnified
Person for such Indemnified Person expressly for use in connection with the
preparation of such Registration Statement or any such amendment thereof or
supplement thereto and (ii) shall not be available to a particular Investor
to the extent such Claim is based on a failure of such Investor to deliver or
to cause to be delivered the prospectus made available by the Company (to the
extent applicable), including, without limitation, a corrected prospectus, if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d) and then only if, and to the extent that, following
the receipt of the corrected prospectus no grounds for such Claim would have
existed; and (iii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Indemnified Person and shall survive the transfer of any
of the Registrable Securities by any of the Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an Investor is participating,
such Investor agrees to severally and not jointly indemnify, hold harmless and
defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an "Indemnified Party"),
against any Claim or Indemnified Damages to which any of them may become subject,
under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the extent,
and only to the extent, that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Investor expressly
for use in connection with such Registration Statement; and, subject to Section
6(c) and the below provisos in this Section 6(b), such Investor will reimburse
an Indemnified Party any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not
be unreasonably withheld or delayed, provided further that such Investor shall
be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of
the applicable sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of any of the Registrable Securities by any of the Investors pursuant
to Section 9.
16
(c) Promptly after receipt by an Indemnified Person or Indemnified Party (as
the case may be) under this Section 6 of notice of the commencement of any action
or proceeding (including, without limitation, any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party (as the case
may be) shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party (as the case may be); provided,
however, an Indemnified Person or Indemnified Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the indemnifying party
has agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Indemnified Person or Indemnified Party
(as the case may be) in any such Claim; or (iii) the named parties to any such
Claim (including, without limitation, any impleaded parties) include both such
Indemnified Person or Indemnified Party (as the case may be) and the indemnifying
party, and such Indemnified Person or such Indemnified Party (as the case may
be) shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Person or such
Indemnified Party and the indemnifying party (in which case, if such Indemnified
Person or such Indemnified Party (as the case may be) notifies the indemnifying
party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, then the indemnifying party shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the
indemnifying party, provided further that in the case of clause (iii) above
the indemnifying party shall not be responsible for the reasonable fees and
expenses of more than one (1) separate legal counsel for such Indemnified Person
or Indemnified Party (as the case may be). The Indemnified Party or Indemnified
Person (as the case may be) shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person (as the
case may be) which relates to such action or Claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person (as the case may be) reasonably
apprised at all times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent;
provided, however, the indemnifying party shall not unreasonably withhold, delay
or condition its consent. No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person (as the case may be),
consent to entry of any judgment or enter into any settlement or other compromise
which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party or Indemnified Person (as the case may
be) of a release from all liability in respect to such Claim or litigation,
and such settlement shall not include any admission as to fault on the part
of the Indemnified Party or Indemnified Person (as the case may be). Following
indemnification as provided for hereunder, the indemnifying party shall be subrogated
to all rights of the Indemnified Party or Indemnified Person (as the case may
be) with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party (as the case may be) under this
Section 6, except to the extent that the indemnifying party is materially and
adversely prejudiced in its ability to defend such action.
17
(d) No Person involved in the sale of Registrable Securities who is guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) in connection with such sale shall be entitled to indemnification
from any Person involved in such sale of Registrable Securities who is not guilty
of fraudulent misrepresentation.
(e) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or defense,
as and when bills are received or Indemnified Damages are incurred.
(f) The indemnity and contribution agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party
or Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
7. Contribution.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however: (i) no contribution
shall be made under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in Section 6 of this
Agreement, (ii) no Person involved in the sale of Registrable Securities which
Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller
of Registrable Securities shall be limited in amount to the amount of net proceeds
received by such seller from the applicable sale of such Registrable Securities
pursuant to such Registration Statement. Notwithstanding the provisions of this
Section 7, no Investor shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the net proceeds actually received by
such Investor from the applicable sale of the Registrable Securities subject
to the Claim exceeds the amount of any damages that such Investor has otherwise
been required to pay, or would otherwise be required to pay under Section 6(b),
by reason of such untrue or alleged untrue statement or omission or alleged
omission.
8. Reports Under the 1934 Act.
With a view to making available to the Investors the benefits of Rule 144,
the Company agrees to:
(a) make and keep public information available, as those terms are understood
and defined in Rule 144;
18
(b) file with the SEC in a timely manner all reports and other documents required
of the Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood and agreed that nothing herein
shall limit any obligations of the Company under the Securities Purchase Agreement)
and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and
(c) furnish to each Investor so long as such Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company, if true, that
it has complied with the reporting, submission and posting requirements of Rule
144 and the 1934 Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company
with the SEC if such reports are not publicly available via XXXXX, and (iii)
such other information as may be reasonably requested to permit the Investors
to sell such securities pursuant to Rule 144 without registration.
9. Assignment of Registration Rights.
All or any portion of the rights under this Agreement shall be automatically
assignable by each Investor to any transferee or assignee (as the case may be)
of all or any portion of such Investor's Registrable Securities, Notes or Warrants
if: (i) such Investor agrees in writing with such transferee or assignee (as
the case may be) to assign all or any portion of such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
transfer or assignment (as the case may be); (ii) the Company is, within a reasonable
time after such transfer or assignment (as the case may be), furnished with
written notice of (a) the name and address of such transferee or assignee (as
the case may be), and (b) the securities with respect to which such registration
rights are being transferred or assigned (as the case may be); (iii) immediately
following such transfer or assignment (as the case may be) the further disposition
of such securities by such transferee or assignee (as the case may be) is restricted
under the 1933 Act or applicable state securities laws if so required; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this sentence such transferee or assignee (as the case may be)
agrees in writing with the Company to be bound by all of the provisions contained
herein; (v) such transfer or assignment (as the case may be) shall have been
made in accordance with the applicable requirements of the Securities Purchase
Agreement, the Notes and the Warrants (as the case may be); and (vi) such transfer
or assignment (as the case may be) shall have been conducted in accordance with
all applicable federal and state securities laws.
10. Amendment of Registration Rights.
Provisions of this Agreement may be amended only with the written consent of
the Company and the Required Holders. Any amendment effected in accordance with
this Section 10 shall be binding upon each Investor and the Company, provided
that no such amendment shall be effective to the extent that it (1) applies
to less than all of the holders of the holders of Registrable Securities or
(2) imposes any obligation or liability on any Investor without such Investor's
prior written consent (which may be granted or withheld in such Investor's sole
discretion). No waiver shall be effective unless it is in writing and signed
by an authorized representative of the waiving party. No consideration shall
be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement.
19
11. Miscellaneous.
(a) Solely for purposes of this Agreement, a Person is deemed to be a holder
of Registrable Securities whenever such Person owns, or is deemed to own, of
record such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from such record owner of such Registrable Securities.
(b) Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) with respect to Section 3(c), by electronic mail (provided confirmation of transmission is electronically generated and kept on file by the sending party); or (iv) one (1) Business Day after deposit with a nationally recognized overnight delivery service with next day delivery specified, in each case, properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to the Company:
|
||
Socket Mobile, Inc. 00000 Xxxxxx Xxxxx Xxxxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Chief Executive Officer |
||
With a copy (for informational purposes only) to: | ||
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. 000 Xxxx Xxxx Xxxx Xxxx Xxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxxxx X. Xxxxxxx, Esq. |
||
If to the Transfer Agent: | ||
American Stock Transfer & Trust Company 00 Xxxxxx Xxxx, Xxxxx Xxxxx Xxx Xxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxx Xxxxx |
||
If to Legal Counsel: | ||
Xxxxxxxxx Traurig, LLP MetLife Building 000 Xxxx Xxxxxx Xxx Xxxx, XX 00000 Telephone: (000) 000-0000 Facsimile: (000) 000-0000 Attention: Xxxxxxx X. Xxxxxxxxx, Esq. |
20
If to a Buyer, to its address and facsimile number set forth on the Schedule
of Buyers attached to the Securities Purchase Agreement, with copies to such
Buyer's representatives as set forth on the Schedule of Buyers, or to such other
address and/or facsimile number and/or to the attention of such other Person
as the recipient party has specified by written notice given to each other party
five (5) days prior to the effectiveness of such change, provided that Xxxxxxxxx
Traurig, LLP shall only be provided notices sent to the lead investor. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated
by the sender's facsimile machine or electronic mail transmission containing
the time, date, recipient facsimile number or electronic mail address and an
image of the first page of such transmission or (C) provided by a courier or
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall
not operate as a waiver thereof. The Company and each Investor acknowledge and
agree that irreparable damage would occur in the event that any of the provisions
of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that each party hereto
shall be entitled to an injunction or injunctions to prevent or cure breaches
of the provisions of this Agreement by any other party hereto and to enforce
specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being
in addition to any other remedy to which any party may be entitled by law or
equity.
(d) All questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper. Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If any provision
of this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or enforceability
of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
21
(e) This Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto and thereto solely
with respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement, the other Transaction Documents, the
schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein supersede all prior agreements and understandings among the
parties hereto solely with respect to the subject matter hereof and thereof;
provided, however, nothing contained in this Agreement or any other Transaction
Document shall (or shall be deemed to) (i) have any effect on any agreements
any Investor has entered into with the Company or any of its Subsidiaries prior
to the date hereof with respect to any prior investment made by such Investor
in the Company, (ii) waive, alter, modify or amend in any respect any obligations
of the Company or any of its Subsidiaries or any rights of or benefits to any
Investor or any other Person in any agreement entered into prior to the date
hereof between or among the Company and/or any of its Subsidiaries and any Investor
and all such agreements shall continue in full force and effect or (iii) limit
any obligations of the Company under any of the other Transaction Documents.
(f) Subject to compliance with Section 9 (if applicable), this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto. This Agreement is not for the benefit of, nor
may any provision hereof be enforced by, any Person, other than the parties
hereto, their respective permitted successors and assigns and the Persons referred
to in Sections 6 and 7 hereof.
(g) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms "including,"
"includes," "include" and words of like import shall be
construed broadly as if followed by the words "without limitation."
The terms "herein," "hereunder," "hereof" and
words of like import refer to this entire Agreement instead of just the provision
in which they are found.
(h) This Agreement may be executed in two or more identical counterparts, all
of which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party. In the event that any signature is delivered by facsimile transmission
or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such signature page were an original thereof.
22
(i) Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
(j) The language used in this Agreement will be deemed to be the language chosen
by the parties to express their mutual intent and no rules of strict construction
will be applied against any party. Notwithstanding anything to the contrary
set forth in Section 10, terms used in this Agreement but defined in the other
Transaction Documents shall have the meanings ascribed to such terms on the
Closing Date in such other Transaction Documents unless otherwise consented
to in writing by each Investor.
(k) All consents and other determinations required to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Holders.
(l) The obligations of each Investor under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the obligations
of any other Investor under this Agreement or any other Transaction Document.
Nothing contained herein or in any other Transaction Document, and no action
taken by any Investor pursuant hereto or thereto, shall be deemed to constitute
the Investors as, and the Company acknowledges that the Investors do not so
constitute, a partnership, an association, a joint venture or any other kind
of group or entity, or create a presumption that the Investors are in any way
acting in concert or as a group or entity with respect to such obligations or
the transactions contemplated by the Transaction Documents or any matters, and
the Company acknowledges that the Investors are not acting in concert or as
a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Investor shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights arising
out of this Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Investor to be joined as an additional party
in any proceeding for such purpose. The use of a single agreement with respect
to the obligations of the Company contained herein was solely in the control
of the Company, not the action or decision of any Investor, and was done solely
for the convenience of the Company and not because it was required or requested
to do so by any Investor. It is expressly understood and agreed that each provision
contained in this Agreement and in each other Transaction Document is between
the Company and an Investor, solely, and not between the Company and the Investors
collectively and not between and among Investors.
[signature pages follow]
23
IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
COMPANY:
By:_________________________
Name:
Title:
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as
of the date first written above.
BUYERS:
XXXXXX BAY MASTER FUND LTD.
By:_________________________
Name:
Title:
1
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______________________
______________________
______________________
Attention: _____________
Ladies and Gentlemen:
[We are][I am] counsel to Socket Mobile, Inc., a Delaware corporation (the
"Company"), and have represented the Company in connection
with that certain Securities Purchase Agreement (the "Securities Purchase
Agreement") entered into by and among the Company and the buyers named
therein (collectively, the "Holders") pursuant to which the
Company issued to the Holders secured convertible notes (the "Notes")
convertible into the Company's shares of common stock, $0.001 par value per
share (the "Common Stock"), and warrants exercisable for shares
of Common Stock (the "Warrants"). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement with the Holders (the "Registration Rights Agreement")
pursuant to which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon conversion of the Notes and exercise of
the Warrants, under the Securities Act of 1933, as amended (the "1933
Act"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 20__, the Company filed a Registration
Statement on Form [S-1][S-3] (File No. 333-_____________) (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC")
relating to the Registrable Securities which names each of the Holders as a
selling stockholder thereunder.
In connection with the foregoing, [we][I] advise you that a member of the SEC's
staff has advised [us][me] 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][I] 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 the Registrable Securities are available for resale
under the 1933 Act pursuant to the Registration Statement.
This letter shall serve as our standing opinion to you that the shares of Common
Stock underlying the Notes and Warrants are freely transferable by the Holders
pursuant to the Registration Statement. You need not require further letters
from us to effect any future legend-free issuance or reissuance of such shares
of Common Stock to the Holders as contemplated by the Company's Irrevocable
Transfer Agent Instructions dated _________ __, 20__.
Very
truly yours,
[ISSUER'S
COUNSEL]
By:_____________________
CC: [LIST NAMES OF HOLDERS]
EXHIBIT B
SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders are those
issuable to the selling stockholders upon conversion of the notes and exercise
of the warrants. For additional information regarding the issuance of the notes
and the warrants, see "Private Placement of Notes and Warrants" above.
We are registering the shares of common stock in order to permit the selling
stockholders to offer the shares for resale from time to time. Except for the
ownership of the notes and the warrants issued pursuant to the Securities Purchase
Agreement, the selling stockholders have not had any material relationship with
us within the past three years.
The table below lists the selling stockholders and other information regarding
the beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder)
of the shares of common stock held by each of the selling stockholders. The
second column lists the number of shares of common stock beneficially owned
by the selling stockholders, based on their respective ownership of shares of
common stock, notes and warrants, as of ________, 2010, assuming conversion
of the notes and exercise of the warrants held by each such selling stockholder
on that date but taking account of any limitations on conversion and exercise
set forth therein.
The third column lists the shares of common stock being offered by this prospectus
by the selling stockholders and does not take in account any limitations on
(i) conversion of the notes set forth therein or (ii) exercise of the warrants
set forth therein.
In accordance with the terms of a registration rights agreement with the holders
of the notes and the warrants, this prospectus generally covers the resale of
the sum of (i) 152.0796% of the maximum number of shares of common stock issuable
upon conversion of the notes and (ii) 100% of the maximum number of shares of
common stock issuable upon exercise of the warrants, in each case, determined
as if the outstanding notes and warrants were converted or exercised (as the
case may be) in full (without regard to any limitations on conversion or exercise
contained therein) as of the trading day immediately preceding the date this
registration statement was initially filed with the SEC. Because the conversion
price of the notes and the exercise price of the warrants may be adjusted, the
number of shares that will actually be issued may be more or less than the number
of shares being offered by this prospectus. The fourth column assumes the sale
of all of the shares offered by the selling stockholders pursuant to this prospectus.
Under the terms of the notes and the warrants, a selling stockholder may not convert the notes or exercise the warrants to the extent (but only to the extent) such selling stockholder or any of its affiliates would beneficially own a number of shares of our common stock which would exceed 4.99%. The number of shares in the second column reflects these limitations. The selling stockholders may sell all, some or none of their shares in this offering. See "Plan of Distribution."
Name of Selling Stockholder | Number of Shares of Common Stock Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | Number of Shares of Common Stock of Owned After Offering | ||||
Xxxxxx Bay Master Fund Ltd.(1) | |||||||
(1) Xxxxxx Bay Capital Management LP, the investment manager of Xxxxxx Bay Master Fund Ltd., has voting and investment power over these securities. Xxxxxx Xxxxxx is the managing member of Xxxxxx Bay Capital GP LLC, which is the general partner of Xxxxxx Bay Capital Management LP. Xxxxxx Xxxxxx disclaims beneficial ownership over these securities. | |||||||
PLAN OF DISTRIBUTION
We are registering the shares of common stock issuable upon conversion of the
notes and exercise of the warrants to permit the resale of these shares of common
stock by the holders of the notes and warrants from time to time after the date
of this prospectus. We will not receive any of the proceeds from the sale by
the selling stockholders of the shares of common stock. We will bear all fees
and expenses incident to our obligation to register the shares of common stock.
The selling stockholders may sell all or a portion of the shares of common
stock held by them and offered hereby from time to time directly or through
one or more underwriters, broker-dealers or agents. If the shares of common
stock are sold through underwriters or broker-dealers, the selling stockholders
will be responsible for underwriting discounts or commissions or agent's commissions.
The shares of common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale or at negotiated prices. These sales may be effected
in transactions, which may involve crosses or block transactions, pursuant to
one or more of the following methods:
- on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;
- in the over-the-counter market;
- in transactions otherwise than on these exchanges or systems or in the over-the-counter
market;
- through the writing or settlement of options, whether such options are listed
on an options exchange or otherwise;
- ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales made after the date the Registration Statement is declared effective
by the SEC;
- broker-dealers may agree with a selling securityholder to sell a specified
number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholders may transfer
the shares of common stock by other means not described in this prospectus.
If the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts, concessions
or commissions from the selling stockholders or commissions from purchasers
of the shares of common stock for whom they may act as agent or to whom they
may sell as principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary in
the types of transactions involved). In connection with sales of the shares
of common stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of
the shares of common stock in the course of hedging in positions they assume.
The selling stockholders may also sell shares of common stock short and deliver
shares of common stock covered by this prospectus to close out short positions
and to return borrowed shares in connection with such short sales. The selling
stockholders may also loan or pledge shares of common stock to broker-dealers
that in turn may sell such shares.
The selling stockholders may pledge or grant a security interest in some or
all of the notes, warrants or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time pursuant
to this prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if necessary,
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the shares of common stock in other
circumstances in which case the transferees, donees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities Act and the rules and regulations
thereunder, the selling stockholders and any broker-dealer participating in
the distribution of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commission paid, or any discounts
or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed, which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholders and
any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any selling stockholder will sell any or all
of the shares of common stock registered pursuant to the registration statement,
of which this prospectus forms a part.
The selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without limitation,
to the extent applicable, Regulation M of the Exchange Act, which may limit
the timing of purchases and sales of any of the shares of common stock by the
selling stockholders and any other participating person. To the extent applicable,
Regulation M may also restrict the ability of any person engaged in the distribution
of the shares of common stock to engage in market-making activities with respect
to the shares of common stock. All of the foregoing may affect the marketability
of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.
We will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or "blue sky" laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled to contribution.
Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable in the hands of persons other than our affiliates.