REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
This
Registration Rights Agreement (this “Agreement”)
is made and entered into effective as of October __, 2018, among
Wrap Technologies, Inc. a Delaware corporation (the
“Company”),
and the persons who have purchased the Offering Shares and have
executed omnibus or counterpart signature page(s) hereto (each, a
“Purchaser”
and collectively, the “Purchasers”).
Capitalized terms used herein shall have the meanings ascribed to
them in Section 1 below or in
the Subscription Agreement.
RECITALS:
WHEREAS, the Company has offered and
sold in compliance with Rule 506 of Regulation D promulgated under
the Securities Act to accredited investors in a private placement
offering the closing of which occurred on or about the date hereof
(together with any subsequent closing of such private placement,
the “Offering”)
Units to purchase shares of the Common Stock and Warrants to
purchase shares of Common Stock pursuant to Subscription Agreements
entered into by and between the Company and each of the subscribers
for the Offering Shares set forth on the signature pages affixed
thereto (each a “Subscription
Agreement” and collectively the “Subscription
Agreements”); and
WHEREAS, the Company has agreed to enter
into a registration rights agreement with each of the Purchasers in the Offering who purchased the
Offering Shares; and
NOW, THEREFORE, in consideration of the
mutual promises, representations, warranties, covenants, and
conditions set forth herein, the parties mutually agree as
follows:
1. Certain Definitions. As used in
this Agreement, the following terms shall have the following
respective meanings:
“Approved
Market” means the OTC Markets Group, the Nasdaq Stock
Market, the New York Stock Exchange or the NYSE MKT.
“Blackout
Period” means, with respect to a registration, a
period during which the Company, in the good faith judgment of its
board of directors, determines (because of the existence of, or in
anticipation of, any acquisition, financing activity, or other
transaction involving the Company, or the unavailability for
reasons beyond the Company’s control of any required
financial statements, disclosure of information which is in its
best interest not to publicly disclose, or any other event or
condition of similar significance to the Company) that the
registration and distribution of the Registrable Securities to be
covered by such registration statement, if any, or the filing of an
amendment to such registration statement in the circumstances
described in Section 4(g),
would be seriously detrimental to the Company and its stockholders,
in each case commencing on the day the Company notifies the Holders
that they are required, because of the determination described
above, to suspend offers and sales of Registrable Securities and
ending on the earlier of (1) the date upon which the material
non-public information resulting in the Blackout Period is
disclosed to the public or, in the sole discretion of the Company,
ceases to be material and (2) such time as the Company notifies the
selling Holders that sales pursuant to such Registration Statement
or a new or amended Registration Statement may resume; provided, however, that no Blackout
Period shall extend for a period of more than thirty (30)
consecutive Trading Days and aggregate Blackout Periods shall not
exceed sixty (60) Trading Days in any twelve (12) month
period.
“Business
Day” means any day of the year, other than a Saturday,
Sunday, or other day on which banks in the State of New York are
required or authorized to close.
“Commission”
means the U.S. Securities and Exchange Commission or any other
federal agency at the time administering the Securities
Act.
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“Common
Stock” means the common stock, par value $0.0001 per
share, of the Company and any and all shares of capital stock or
other equity securities of: (i) the Company which are added to or
exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of
any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital
structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which
results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of
the shares or assets of the Company, if immediately after such
merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.
“Effective
Date” means the date of the final closing of the
Offering.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder.
“Family
Member” means (a) with respect to any individual, such
individual’s spouse, any descendants (whether natural or
adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals
together with any organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or
limited liability company all of the equity interests of which are
owned by those above described individuals, trusts or organizations
and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
“Holder”
means each Purchaser or any of such Purchaser’s respective
successors and Permitted Assignees who acquire rights in accordance
with this Agreement with respect to any Registrable Securities
directly or indirectly from a Purchaser or from any Permitted
Assignee.
“Majority
Holders” means, at any time, Holders of a majority of
the Registrable Securities then outstanding.
“Permitted
Assignee” means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership
interests, (b) with respect to a corporation, its stockholders in
accordance with their interest in the corporation, (c) with respect
to a limited liability company, its members or former members in
accordance with their interest in the limited liability company,
(d) with respect to an individual party, any Family Member of such
party, (e) an entity or trust that is controlled by, controls, or
is under common control with a transferor, or (f) a party to this
Agreement.
“Offering
Shares” means the shares of Common Stock issued to the
Purchasers pursuant to the Subscription Agreements, including the
Warrant Shares and any shares of Common Stock issued or issuable
with respect to such shares upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.
The
terms “register,”
“registered,”
and “registration”
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such
registration statement.
“Registrable
Securities” means the Offering Shares, but excluding
any otherwise Registrable Securities that (i) have been sold or
otherwise transferred other than to a Permitted Assignee, or (ii)
may be sold at the time under the Securities Act without
restriction, including manner of sale, current information
requirements or volume limitations either pursuant to Rule 144 of
the Securities Act or otherwise during any ninety (90) day
period.
“Registration
Default Period” means the period during which any
Registration Event occurs and is continuing.
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“Registration
Effectiveness Date” means the date that is five (5)
calendar days after the date the Commission (i) notifies the
Company there will no review of the Registration Statement or (ii)
confirms that its review of the Registration Statement is
complete.
“Registration
Event” means the occurrence of any of the following
events:
(a) the Company fails
to file with the Commission the Registration Statement on or before
the Registration Filing Date;
(b) the Registration
Statement is not declared effective by the Commission on or before
the Registration Effectiveness Date;
(c) after the SEC
Effective Date, the Registration Statement ceases for any reason to
remain continuously effective or the Holders are otherwise not
permitted to utilize the prospectus therein to resell the
Registrable Securities for a period of more than fifteen (15)
consecutive Trading Days, except for Blackout Periods permitted
herein and except for suspension of the use of the Registration
Statement in connection with its post-effective amendment in
connection with the filing of the Company’s Annual Report on
Form 10-K for the time reasonably required to respond to any
comments from the staff of the Commission (the “Staff”)
on the Form 10-K, and as excused pursuant to Section 3(a); or
(d) following the
listing or inclusion for quotation on an Approved Market, the
Registrable Securities, if issued and outstanding, are not listed
or included for quotation on an Approved Market, or trading of the
Common Stock is suspended or halted on the Approved Market, which
at the time constitutes the principal markets for the Common Stock,
for more than three (3) full, consecutive Trading Days; provided,
however, a Registration Event shall not be deemed to occur if all
or substantially all trading in equity securities (including the
Common Stock) is suspended or halted on the Approved Market for any
length of time.
“Registration Filing
Date” means the date that is thirty (30) calendar days
after the Effective Date.
“Registration
Statement” means the registration statement that the
Company is required to file pursuant to Section 3(a) of this Agreement to register the
Registrable Securities.
“Rule
144” means Rule 144 promulgated by the Commission
under the Securities Act, as such rule may be amended or
supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.
“Rule
145” means Rule 145 promulgated by the Commission
under the Securities Act, as such rule may be amended or
supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.
“Rule
415” means Rule 415 promulgated by the Commission
under the Securities Act, as such rule may be amended or
supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.
“Securities
Act” means the Securities Act of 1933, as amended, or
any similar federal statute promulgated in replacement thereof, and
the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
“SEC Effective
Date” means the date the Registration Statement is
declared effective by the Commission.
“Trading
Day” means any day on which such national securities
exchange, the OTC Markets Group or such other securities market or
quotation system, which at the time constitutes the principal
securities market for the Common Stock, is open for general trading
of securities.
“Warrant
Shares” means the shares of shares of Common Stock
issued upon exercise of the Warrants.
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2. Term. This Agreement shall
terminate with respect to each Holder on the earlier of: (i) the
date that is three (3) years from the SEC Effective Date and (ii)
the date on which all Registrable Securities held by such Holder
have been transferred other than to a Permitted Assignee.
Notwithstanding the foregoing, Section 3(b), Section 7, Section 8 and Section 10
shall survive the termination of this Agreement.
3. Registration.
(a) Registration on Form S-1. The
Company shall file with the Commission a Registration Statement on
Form S-1, or any other form for which the Company then qualifies or
which counsel for the Company shall deem appropriate and which form
shall be available for the resale by the Holders of all of the
Registrable Securities, and the Company shall (i) use its
commercially reasonable efforts to make the initial filing of the
Registration Statement with the Commission no later than the
Registration Filing Date, (ii) use its commercially reasonable
efforts to cause such Registration Statement to be declared
effective no later than the Registration Effectiveness Date and
(iii) use its commercially reasonable efforts to keep such
Registration Statement effective for a period of three (3) years
after the SEC Effective Date or for such shorter period ending on
the date on which all Registrable Securities have been transferred
other than to a Permitted Assignee (the “Effectiveness
Period”); provided, however, that the Company shall
not be obligated to effect any such registration, qualification or
compliance pursuant to this Section, or keep such registration
effective pursuant to the terms hereunder, in any particular
jurisdiction in which the Company would be required to qualify to
do business as a foreign corporation or as a dealer in securities
under the securities laws of such jurisdiction or to execute a
general consent to service of process in effecting such
registration, qualification or compliance, in each case where it
has not already done so; and provided further, the Company shall be
entitled to suspend the effectiveness of the Registration Statement
at any time prior to the expiration of the Effectiveness Period
during a Blackout Period. Notwithstanding the foregoing, in the
event that the Staff should limit the number of Registrable
Securities that may be sold pursuant to the Registration Statement,
the Company may remove from the Registration Statement such number
of Registrable Securities as specified by the Commission on behalf
of all of the holders of Registrable Securities on a pro rata basis
among the holders thereof (such Registrable Securities, the
“Reduction
Securities”). In such event, the Company shall give
the Purchasers prompt notice of the number of Registrable
Securities excluded therefrom. The Company shall use its
commercially reasonable efforts at the first opportunity that is
permitted by the Commission to register for resale the Reduction
Securities (pro rata among the Holders of such Reduction
Securities) using one or more registration statements that it is
then entitled to use. The Company shall use its commercially
reasonable efforts to cause each such registration statement to be
declared effective under the Securities Act as soon as possible,
and shall use its commercially reasonable efforts to keep such
registration statement continuously effective under the Securities
Act during the entire Effectiveness Period. Notwithstanding the
foregoing, the Company shall be entitled to suspend the
effectiveness of such Registration Statement at any time prior to
the expiration of the Effectiveness Period for the reasons and time
periods during a Blackout Period. No liquidated damages shall
accrue or be payable to any Holder with respect to any Registrable
Securities that are excluded by reason of the Staff limiting the
number of Registrable Securities that may be sold pursuant to a
registration statement; provided that the Company continues to use
commercially reasonable efforts to register such Registrable
Securities for resale by other available means. Notwithstanding
anything herein to the contrary, if the Commission limits the
Company’s ability to file, or prohibits or delays the filing
of a new registration statement, the Company’s compliance
with such limitation, prohibition or delay solely to the extent of
such limitation, prohibition or delay shall not be deemed a failure
by the Company to use commercially reasonable efforts as set forth
above or elsewhere in this Agreement and shall not require the
payment of any liquidated damages by the Company under this
Agreement.
(b) Liquidated Damages. If a
Registration Event occurs, then the Company will make payments to
each Holder of Registrable Securities, as liquidated damages to
such Holder by reason of the Registration Event, a cash sum of 1%
of the aggregate purchase price paid by such Purchaser pursuant to
this Agreement on the date of such Registration Event and on each
monthly anniversary of each such Registration Event thereof (if the
applicable Registration Event shall not have been cured by such
date) until the applicable Registration Event is cured or the
Registrable Securities can be sold under Rule 144, but in each
case, only with respect to such Holder’s Registrable
Securities that are affected by such Registration Event and only
for the period during which such Registration Event continues to
affect such Registrable Securities. Notwithstanding the foregoing,
the maximum amount of liquidated damages that may be paid by the
Company pursuant to this Section 3(b)
shall be an amount equal to five percent (5%) of the applicable
foregoing amounts described in the preceding sentence with respect
to such Holder’s Registrable Securities that are affected by
all Registration Events in the aggregate. Each
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payment
of liquidated damages pursuant to this Section 3(b) shall be due and payable in arrears
within five (5) days after the end of each full 30-day period of
the Registration Default Period until the termination of the
Registration Default Period and within five (5) days after such
termination. The Registration Default Period shall terminate upon
the earlier of such time as the Registrable Securities that are
affected by the Registration Event cease to be Registrable
Securities or (i) the filing of the Registration Statement in the
case of clause (a) of the definition of Registration Event, (ii)
the SEC Effective Date in the case of clause (b) of the definition
of Registration Event, (iii) the ability of the Holders to effect
sales pursuant to the Registration Statement in the case of clause
(c) of the definition of Registration Event, (iv) the Registrable
Securities can be sold under Rule 144 and (v) the listing or
inclusion and/or trading of the Common Stock on an Approved Market,
as the case may be, in the case of clause (d) of the definition of
Registration Event. The amounts payable as liquidated damages
pursuant to this Section 3(b) shall be
payable in lawful money of the United States. Notwithstanding the
foregoing, the Company will not be liable for the payment of
liquidated damages described in this Section 3(b) for any delay in registration of
Registrable Securities that would otherwise be includable in the
Registration Statement pursuant to Rule 415 solely as a result of a
comment received from the Staff requiring a limit on the number of
Registrable Securities included in such Registration Statement in
order for such Registration Statement to be able to avail itself of
Rule 415, or, with respect to a Holder, if such Holder fails to
provide to the Company information concerning the Holder and manner
of distribution of the Holder’s Registrable Securities that
is required by SEC Rules to be disclosed in a registration
statement utilized in connection with the registration of the
Registrable Securities. In the event of any such circumstance, the
Company will use its commercially reasonable efforts at the first
opportunity that is permitted by the Commission to register for
resale the Registrable Securities that have been cut back from
being registered pursuant to Rule 415 only with respect to that
portion of the Holders’ Registrable Securities that are then
Registrable Securities.
(c) Other Limitations. If (i) the
Commission does not declare the Registration Statement effective on
or before the Registration Effectiveness Date, or (ii) the
Commission allows the Registration Statement to be declared
effective at any time before or after the Registration
Effectiveness Date, subject to the withdrawal of certain
Registrable Securities from the Registration Statement, and the
reason for (i) or (ii) is the Commission’s determination that
(x) the offering of any of the Registrable Securities constitutes a
primary offering of securities by the Company, (y) Rule 415 may not
be relied upon for the registration of the resale of any or all of
the Registrable Securities, and/or (z) a Holder of any Registrable
Securities must be named as an underwriter, the Holders understand
and agree that in the case of (ii) the Company may (notwithstanding
anything to the contrary contained herein) reduce, on a pro rata
basis, in the manner provided above, the total number of
Registrable Securities to be registered on behalf of each such
Holder, and in the case of (i) or (ii) the Holder shall not be
entitled to liquidated damages with respect to the Registrable
Securities not registered for the reason set forth in (i) or so
reduced on a pro rata basis as set forth in (ii) above. The Company
shall use its commercially reasonable efforts at the first
opportunity that is permitted by the Commission to register for
resale the Reduction Securities (pro rata among the Holders of such
Reduction Securities) using one or more registration statements
that it is then entitled to use. The Company shall use its
commercially reasonable efforts to cause each such registration
statement to be declared effective under the Securities Act as soon
as possible, and shall use its commercially reasonable efforts to
keep such registration statement continuously effective under the
Securities Act during the entire Effectiveness Period. No
liquidated damages shall accrue or be payable to any Holder with
respect to any Registrable Securities that are excluded by reason
of the Staff limiting the number of Registrable Securities that may
be sold pursuant to a registration statement; provided that the
Company continues to use commercially reasonable efforts to
register such Registrable Securities for resale by other available
means. Notwithstanding anything herein to the contrary, if the
Commission limits the Company’s ability to file, or prohibits
or delays the filing of a new registration statement, the
Company’s compliance with such limitation, prohibition or
delay solely to the extent of such limitation, prohibition or delay
shall not be deemed a failure by the Company to use commercially
reasonable efforts as set forth above or elsewhere in this
Agreement and shall not require the payment of any liquidated
damages by the Company under this Agreement.
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4. Registration Procedures. The
Company will keep each Holder reasonably advised as to the filing
and effectiveness of the Registration Statement. At its expense
with respect to the Registration Statement, the Company
will:
(a) prepare and file
with the Commission with respect to the Registrable Securities, a
Registration Statement in accordance with Section 3(a) hereof, and use its commercially
reasonable efforts to cause such Registration Statement to become
effective and to remain effective for the Effectiveness
Period;
(b) not name any Holder
in the Registration Statement as an underwriter without that
Holder’s prior written consent;
(c) if the Registration
Statement is subject to review by the Commission, promptly respond
to all comments and diligently pursue resolution of any comments to
the satisfaction of the Commission;
(d) prepare and file
with the Commission such amendments and supplements to such
Registration Statement as may be necessary to keep such
Registration Statement effective during the Effectiveness
Period;
(e) furnish, without
charge, to each Holder of Registrable Securities covered by such
Registration Statement (i) a reasonable number of copies of such
Registration Statement (including any exhibits thereto other than
exhibits incorporated by reference), each amendment and supplement
thereto as such Holder may reasonably request, (ii) such number of
copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any other prospectus
filed under Rule 424 of the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the
Securities Act, and (iii) such other documents as such Holder may
reasonably require to consummate the disposition of the Registrable
Securities owned by such Holder, but only during the Effectiveness
Period; provided that the Company shall have no obligation to
furnish any document pursuant to this clause that is available on
the XXXXX system;
(f) use its
commercially reasonable efforts to register or qualify such
registration under such other applicable securities laws of such
jurisdictions within the United States as any Holder of Registrable
Securities covered by such Registration Statement reasonably
requests and as may be necessary for the marketability of the
Registrable Securities (such request to be made by the time the
applicable Registration Statement is deemed effective by the
Commission) and do any and all other acts and things necessary to
enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder;
provided, that the
Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph, (ii) subject itself to
taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction where it has not
already done so;
(g) as promptly as
practicable after becoming aware of such event, notify each Holder
of Registrable Securities, the disposition of which requires
delivery of a prospectus relating thereto under the Securities Act,
of the happening of any event, which comes to the Company’s
attention, that will after the occurrence of such event cause the
prospectus included in such Registration Statement, if not amended
or supplemented, to contain an untrue statement of a material fact
or an 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 and
the Company shall promptly thereafter prepare and furnish to such
Holder a supplement or amendment to such prospectus (or prepare and
file appropriate reports under the Exchange Act) so that, as
thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, unless suspension of the use of such prospectus
otherwise is authorized herein or in the event of a Blackout
Period, in which case no supplement or amendment need be furnished
(or Exchange Act filing made) until the termination of such
suspension or Blackout Period; provided that any and all
information provided to the Holder pursuant to such notification
shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required
by law;
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(h) comply, and
continue to comply during the Effectiveness Period, in all material
respects with the Securities Act and the Exchange Act and with all
applicable rules and regulations of the Commission with respect to
the disposition of all securities covered by such Registration
Statement;
(i) as promptly as
practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the
Registration Statement of the issuance by the Commission of any
stop order or other suspension of effectiveness of the Registration
Statement;
(j) use its
commercially reasonable efforts to cause the shares of Common Stock
to be quoted or listed on an Approved Market;
(k) provide a transfer
agent and registrar, which may be a single entity, for the shares
of Common Stock at all times and cooperate with the Holders to
facilitate the timely preparation and delivery of the Registrable
Securities to be delivered to a transferee pursuant to the
Registration Statement (whether electronically or in certificated
form) which Registrable Securities shall be free, to the extent
permitted by the Subscription Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may
request;
(l) cooperate with the
Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver, or cause its transfer
agent to issue and deliver, certificates representing Registrable
Securities to be offered pursuant to the Registration Statement
within a reasonable time after the delivery of certificates
representing the Registrable Securities to the transfer agent or
the Company, as applicable, and enable such certificates to be in
such denominations or amounts as the Holders may reasonably request
and registered in such names as the Holders may
request;
(m) notify the Holders,
the Placement Agent and their counsel as promptly as reasonably
possible and (if requested by any such Person) confirm such notice
in writing no later than one (1) Trading Day following the day:
(i)(A) when a prospectus or any prospectus supplement or
post-effective amendment to a Registration Statement is proposed to
be filed; (B) when the Commission notifies the Company whether
there will be a “no review,” “review” or a
“completion of a review” of such Registration Statement
and whenever the Commission comments in writing on such
Registration Statement (in which case the Company shall provide
true and complete copies thereof and all written responses thereto
to each of the Holders that pertain to the Holders as a selling
stockholder, but not information which the Company believes would
constitute material and non-public information); and (C) with
respect to each Registration Statement or any post-effective
amendment, when the same has been declared effective, provided,
however, that such notice under this clause (C) shall be delivered
to each Holder; (ii) of any request by the Commission or any other
federal or state governmental authority for amendments or
supplements to a Registration Statement or prospectus or for
additional information that pertains to the Holders as selling
stockholders; or (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities
for sale in any jurisdiction, or the initiation or threatening of
any proceeding for such purpose;
(n) during the
Effectiveness Period, refrain from bidding for or purchasing any
Common Stock or any right to purchase Common Stock or attempting to
induce any person to purchase any such security or right if such
bid, purchase or attempt would in any way limit the right of the
Holders to sell Registrable Securities by reason of the limitations
set forth in Regulation M of the Exchange Act; and
(o) take all other
commercially reasonable actions necessary to enable, expedite, or
facilitate the Holders to dispose of the Registrable Securities by
means of the Registration Statement during the term of this
Agreement.
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(a) Each Holder agrees
that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(h) hereof or of the commencement of a
Blackout Period, such Holder shall discontinue the disposition of
Registrable Securities included in the Registration Statement until
such Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(h) hereof or notice of the end of the
Blackout Period.
(b) The Holders of the
Registrable Securities shall provide such information as may
reasonably be requested by the Company in connection with the
preparation of any registration statement, including amendments and
supplements thereto, in order to effect the registration of any
Registrable Securities under the Securities Act pursuant to Section
3(a) of this Agreement and in
connection with the Company’s obligation to comply with
federal and applicable state securities laws, including a completed
questionnaire in the form attached to this Agreement as Annex A (a
“Selling
Securityholder Questionnaire”) or any update thereto
not later than three (3) Business Days following a request
therefore from the Company.
(c) Each Holder, by its
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 any Registration Statement
hereunder, unless such Holder has notified the Company in writing
of its election to exclude all of its Registrable Securities from
such Registration Statement.
6. Assignment of Rights. No Holder
may assign its rights under this Agreement to any party without the
prior written consent of the Company; provided, however, that any Holder may
assign its rights under this Agreement without such consent (a) to
a Permitted Assignee as long as (i) such transfer or assignment is
effected in accordance with applicable securities laws; (ii) such
transferee or assignee agrees in writing to become bound by and
subject to the terms of this Agreement; and (iii) such Holder
notifies the Company in writing of such transfer or assignment,
stating the name and address of the transferee or assignee and
identifying the Registrable Securities with respect to which such
rights are being transferred or assigned; or (b) as otherwise
permitted under the Subscription Agreement. The Company may not
assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other parties hereto
(other than by merger or consolidation or to an entity which
acquires the Company including by way of acquiring all or
substantially all of the Company’s assets).
7. Indemnification.
(a) In the event of
the offer and sale of Registrable Securities under the Securities
Act, the Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each Holder, its
directors, officers, partners, employees and agents and each other
person, if any, who controls or is under common control with such
Holder within the meaning of Section 15 of the Securities Act
(collectively, the “Holder Indemnified
Parties”), against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder
Indemnified Parties may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement prepared and filed by the
Company under which Registrable Securities were registered under
the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated or necessary to make
the statements therein in light of the circumstances in which they
were made not misleading, and the Company shall reimburse the
Holder Indemnified Parties for any legal or any other expenses
reasonably incurred by them in connection with investigating,
defending or settling any such loss, claim, damage, liability,
action or proceeding; provided, however, that the Company shall
not be liable in any such case (i) to the extent, but only to the
extent, that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises solely out of or
is solely based upon (x) an untrue statement in or omission from
such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance
upon and in conformity with written information included in the
Selling Securityholder Questionnaire, attached hereto as Annex A,
furnished by a Holder or its representative (acting on such
Holder’s behalf) to the Company expressly for use in the
preparation thereof or (y) the failure of a Holder to comply with
the covenants and agreements contained in Section 5 hereof respecting the sale of Registrable
Securities; or (ii) if the
-8-
person
asserting any such loss, claim, damage, liability (or action or
proceeding in respect thereof) who purchased the Registrable
Securities that are the subject thereof did not receive a copy of
an amended preliminary prospectus or the final prospectus (or the
final prospectus as amended or supplemented) at or prior to the
written confirmation of the sale of such Registrable Securities to
such person because of the failure of such Holder to so provide
such amended preliminary or final prospectus and the untrue
statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented).
Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Holder Indemnified
Parties and shall survive the transfer of such shares by the
Holder.
(b) As a condition
to including Registrable Securities in any registration statement
filed pursuant to this Agreement, each Holder agrees, severally and
not jointly, to be bound by the terms of this Section 7 and to
indemnify and hold harmless, to the fullest extent permitted by
law, the Company, each of its directors, officers, partners, and
each underwriter, if any, and each other person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director or
officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise solely out of or
are solely based upon any untrue statement of a material fact or
any omission of a material fact required to be stated in any
registration statement, any preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement thereto or
necessary to make the statements therein not misleading, to the
extent, but only to the extent, that such untrue statement or
omission is included or omitted in reliance upon and in conformity
with written information included in the Selling Securityholder
Questionnaire, attached hereto as Annex A, furnished by the Holder
or its representative (acting on such Holder’s behalf) to the
Company expressly for use in the preparation thereof, and such
Holder shall reimburse the Company, and its directors, officers,
partners, and any such controlling persons for any legal or other
expenses reasonably incurred by them in connection with
investigating, defending, or settling any such loss, claim, damage,
liability, action, or proceeding; provided, however, that the indemnity
obligation contained in this Section 7(b) shall in no event exceed the amount of
the net proceeds received by such Holder as a result of the sale of
such Holder’s 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
the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such
shares.
(c) Promptly after
receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in this
Section 7 (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the indemnifying party
of the commencement of such action; provided, that the failure of
any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this
Section, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice in any material
respect. In case any such action is brought against an indemnified
party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified
party and indemnifying parties may exist or the indemnified party
may have defenses not available to the indemnifying party in
respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection
with the defense thereof, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified
and indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party fails
to defend such claim in a diligent manner, other than reasonable
costs of investigation. Neither an indemnified party nor an
indemnifying party shall be liable for any settlement of any action
or proceeding effected without its consent. No indemnifying party
shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement, which does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. Notwithstanding
anything to the contrary set forth herein, and without limiting any
of the rights set forth above, in any event any party shall have
the right to retain, at its own expense, counsel with respect to
the defense of a claim. Each indemnified party shall furnish such
information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
-9-
(d) If an indemnifying
party does not or is not permitted to assume the defense of an
action pursuant to Section 7(c) or in
the case of the expense reimbursement obligation set forth in
Sections 7(a) and 7(b), the indemnification required by Sections
7(a) and 7(b) 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 expenses, losses, damages, or
liabilities are incurred.
(e) If the
indemnification provided for in Section 7(a) or 7(b) is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party
as a result of such loss, liability, claim, damage or expense (i)
in such proportion as is appropriate to reflect the proportionate
relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or omission relates to information supplied by the
indemnifying party or the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission), or (ii)
if the allocation provided by clause (i) above is not permitted by
applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, then in such proportion as
is appropriate to reflect not only the proportionate relative fault
of the indemnifying party and the indemnified party, but also the
relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other, as well as any other
relevant equitable considerations. Notwithstanding any other
provision of this Section 7(e), no
Holder shall be required to contribute any amount in excess of the
amount by which the net proceeds received by such Holder from the
sale of the Registrable Securities pursuant to the Registration
Statement exceeds the amount of damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged
untrue statement of a material fact or omission, except in the case
of fraud or willful misconduct. No indemnified party guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent
misrepresentation.
(f) The indemnity and
contribution agreements contained in this Section 7 are in addition
to any liability that the indemnifying parties may have to the
indemnified parties and are not in diminution or limitation of the
indemnification provisions under the Subscription
Agreements.
8. Rule 144. The Company will use
its commercially reasonable efforts to timely file all reports
required to be filed by the Company after the date hereof under the
Exchange Act and the rules and regulations adopted by the
Commission thereunder, and if the Company is not required to file
reports pursuant to such sections, it will prepare and furnish to
the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell
shares of Common Stock under Rule 144.
9. Independent Nature of Each
Purchaser’s Obligations and Rights. The obligations of
each Purchaser under this Agreement are several and not joint with
the obligations of any other Purchaser, and each Purchaser shall
not be responsible in any way for the performance of the
obligations of any other Purchaser under this Agreement. Nothing
contained herein and no action taken by any Purchaser pursuant
hereto, shall be deemed to constitute such Purchasers as a
partnership, an association, a joint venture, or any other kind of
entity, or create a presumption that the Purchasers are in any way
acting in concert or as a group with respect to such obligations or
the transactions contemplated by this Agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.
10. Miscellaneous.
(a) Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America and the
State of Delaware, both substantive and remedial, without regard to
Delaware conflicts of law principles. Any judicial proceeding brought against either of
the parties to this Agreement or any dispute arising out of this
Agreement or any matter related hereto shall be brought in the
state or federal courts located in the State of Delaware
and, by its execution and delivery of
this Agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to jurisdiction
shall not be deemed to confer rights on any person other than the
parties to this Agreement.
-10-
(b) Remedies. Except as otherwise
specifically set forth herein with respect to a Registration Event,
in the event of a breach by the Company or by a Holder of any of
their respective obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific
performance of its rights under this Agreement. Except as otherwise
specifically set forth herein with respect to a Registration Event,
the Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of
a breach by it of any of the provisions of this Agreement and
hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall not assert or shall
waive the defense that a remedy at law would be
adequate.
(c) Subsequent Registration Rights.
Until the Registration Statement required hereunder is declared
effective by the Commission, the Company shall not enter into any
agreement granting any registration rights with respect to any of
its securities to any person without the written consent of Holders
representing no less than a majority of the outstanding Registrable
Securities.
(d) Successors and Assigns. Except
as otherwise provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, Permitted
Assignees, executors and administrators of the parties
hereto.
(e) No Inconsistent Agreements. The
Company has not entered, as of the date hereof, and shall not
enter, on or after the date of this Agreement, into any agreement
with respect to its securities that would have the effect of
impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.
(f) Entire Agreement. This
Agreement and the documents, instruments and other agreements
specifically referred to herein or delivered pursuant hereto
constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof.
(g) Notices, etc. All
notices, consents,
waivers, and other communications which are required or permitted
under this Agreement shall be in writing will be deemed given to a
party (i) upon receipt, when personally delivered; (ii) one (1)
Business Day after deposit with an nationally recognized overnight
courier service with next day delivery specified, costs prepaid) on
the date of delivery, if delivered to the appropriate address by
hand or by nationally recognized overnight courier service (costs
prepaid); (iii) the date of transmission if sent by facsimile or
e-mail with confirmation of transmission by the transmitting
equipment if such notice or communication is delivered prior to
5:00 P.M., New York City time, on a Trading Day, or the next
Trading Day after the date of transmission, if such notice or
communication is delivered on a day that is not a Trading Day or
later than 5:00 P.M., New York City time, on any Trading Day,
provided confirmation of facsimile is mechanically or
electronically generated and kept on file by the sending party and
confirmation of email is kept on file, whether electronically or
otherwise, by the sending party and the sending party does not
receive an automatically generated message from the recipients
email server that such e-mail could not be delivered to such
recipient; (iv) the date received or rejected by the addressee, if
sent by certified mail, return receipt requested, postage prepaid;
or (v) seven days after the placement of the notice into the mails
(first class postage prepaid), to the party at the address,
facsimile number, or e-mail address furnished by the such
party,
-11-
If to
the Company, to:
0000
Xxxxxxx Xxxxxx, Xxx X
Xxx
Xxxxx, XX 00000
Attention: Xxxxx
Xxxxxx, President
Email:
xxxxx@xxxxxxxxxxxxxxxx.xxx
with
copies (which shall not constitute notice) to:
Disclosure Law
Group
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Attention: Xxxxxx
X. Xxxxxx
Facsimile:
000-000-0000
Email:
xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
if to a
Holder, to:
such
Holder at the address set forth on the signature page hereto or the
Company’s records;
or at
such other address as any party shall have furnished to the other
parties in writing in accordance with this Section
10(g).
(h) Delays or Omissions. No delay
or omission to exercise any right, power or remedy accruing to any
Holder, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such
Holder nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of any similar breach or
default thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Holder of any
breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement,
must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder,
shall be cumulative and not alternative.
(i) Counterparts. This Agreement
may be executed in any number of counterparts, and with respect to
any Purchaser, by execution of an Omnibus Signature Page to this
Agreement and the Subscription Agreement, each of which shall be
enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument. 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 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 facsimile or e-mail of a .pdf
signature page were an original thereof.
(j) Severability. In the case any
provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
(k) Amendments. Except as otherwise
provided herein, the provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this
Agreement may be waived, with and only with an agreement or consent
in writing signed by the Company and the Majority Holders; provided
that this Agreement may not be amended and the observance of any
term hereof may not be waived with respect to any Holder without
the written consent of such Holder unless such amendment or waiver
applies to all Holders in the same fashion. The Purchasers
acknowledge that by the operation of this Section, the Majority
Holders may have the right and power to diminish or eliminate all
rights of the Purchasers under this Agreement.
[company signature
page follows]
-12-
This
Registration Rights Agreement is hereby executed as of the date
first above written.
The Company:
By:
Name:
Title:
|
Purchasers
See Omnibus Signature Pages to Subscription Agreement
|
|
-13-
Annex A
Selling Securityholder Notice and Questionnaire
The
undersigned beneficial owner of Registrable Securities of Wrap
Technologies, Inc., a Delaware corporation (the “Company”), understands
that the Company has filed or intends to file with the U.S.
Securities and Exchange Commission a registration statement (the
“Registration
Statement”) for the registration and resale under Rule
415 of the Securities Act of 1933, as amended, of the Registrable
Securities, in accordance with the terms of the Registration Rights
Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy
of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms
not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.
Certain
legal consequences arise from being named as a selling security
holder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable
Securities are advised to consult their own securities law counsel
regarding the consequences of being named or not being named as a
selling security holder in the Registration Statement and the
related prospectus.
NOTICE
The
undersigned beneficial owner (the “Selling Securityholder”)
of Registrable Securities hereby elects to include the Registrable
Securities owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the
Company and represents and warrants that such information is
accurate:
QUESTIONNAIRE
1. Name:
(a)
Full Legal Name of
Selling Securityholder
|
|
|
|
(b)
Full Legal Name of
Registered Holder (holder of record) (if not the same as (a) above)
through which Registrable Securities are held:
|
|
|
|
-14-
(c)
If you are not a
natural person, full Legal Name of Natural Control Person (which
means a natural person who directly or indirectly alone or with
others has power to vote or dispose of the securities covered by
this Questionnaire):
|
|
|
|
2. Address
for Notices to Selling Securityholder:
|
|
|
|
|
|
|
Telephone:
Fax:
|
|
Email:
|
|
Contact
Person:
|
-15-
3. Broker-Dealer
Status:
(a)
Are you a
broker-dealer?
Yes
☐
No
☐
(b)
If
“yes” to Section 3(a), did you receive your Registrable
Securities as compensation for investment banking services to the
Company?
Yes
☐
No
☐
Note:
If “no”
to Section 3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
(c)
Are you an
affiliate of a broker-dealer?
Yes
☐
No
☐
(d)
If you are an
affiliate of a broker-dealer, do you certify that you purchased the
Registrable Securities in the ordinary course of business, and at
the time of the purchase of the Registrable Securities to be
resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable
Securities?
Yes
☐
No
☐
Note:
If “no”
to Section 3(d), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.
4.
Beneficial
Ownership of Securities of the Company Owned by the Selling
Securityholder:
Except as set forth below in this Item 4, the undersigned is not
the beneficial or registered owner of any securities of the
Company.
(a)
Please list the
type (common stock, warrants, etc.) and amount of all securities of
the Company (including any Registrable Securities) beneficially
owned1 by the Selling
Securityholder:
5.
Relationships
with the Company:
Except as set forth below, neither you nor (if you are a natural
person) any member of your immediate family, nor (if you are not a
natural person) any of your affiliates2, officers, directors
or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or
has had any other material relationship with the Company (or its
predecessors or affiliates) during the past three
years.
State any
exceptions here:
It is
possible that a security may have more than one “beneficial
owner,” such as a trust, with two co-trustees sharing voting
power, and the settlor or another third party having investment
power, in which case each of the three would be the
“beneficial owner” of the securities in the
trust. The power to vote or direct the voting, or to invest
or dispose of, or direct the investment or disposition of, a
security may be indirect and arise from legal, economic,
contractual or other rights, and the determination of beneficial
ownership depends upon who ultimately possesses or shares the power
to direct the voting or the disposition of the
security.
The
final determination of the existence of beneficial ownership
depends upon the facts of each case. You may, if you believe
the facts warrant it, disclaim beneficial ownership of securities
that might otherwise be considered “beneficially owned”
by you.
2
Affiliate:
An “affiliate” is a company or person that directly, or
indirectly through one or more intermediaries, controls you, or is
controlled by you, or is under common control with
you.
-16-
The
undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may
occur subsequent to the date hereof at any time while the
Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5
and the inclusion of such information in the Registration Statement
and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related prospectus
and any amendments or supplements thereto.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has
caused this Selling Securityholder Notice and Questionnaire to be
executed and delivered either in person or by its duly authorized
agent.
BENEFICIAL OWNER (individual) BENEFICIAL OWNER (entity)
Signature
Name of
Entity
Print
Name
Signature
Print
Name:
Signature
(if Joint Tenants or Tenants in Common)
Title:
PLEASE E-MAIL OR FAX A COPY OF THE COMPLETED AND EXECUTED SELLING
SECURITYHOLDER NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY
OVERNIGHT MAIL, TO:
Disclosure Law
Group
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
Attention: Xxxxxx
X. Xxxxxx
Facsimile:
000-000-0000
Email:
xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
-17-
