Exhibit 10.4
EXHIBIT C TO THE
SECURITIES PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
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October 21, 2004, by and between APPLIED DIGITAL SOLUTIONS, INC., a Missouri
corporation (the "Company"), and SATELLITE STRATEGIC FINANCE ASSOCIATES,
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LLC, a Delaware limited liability company (the "Investor").
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The Company has agreed, on the terms and subject to the conditions
set forth in the Securities Purchase Agreement, dated as of October 21, 2004
(the "Securities Purchase Agreement"), to issue and sell to the Investor (i)
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shares (the "Shares") of the Company's common stock, par value $0.01 per
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share (the "Common Stock"), (ii) a Series C Warrant in the form attached to
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the Securities Purchase Agreement as Exhibit A (the "Series C Warrant") and
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(iii) a Series D Warrant in the form attached to the Securities Purchase
Agreement as Exhibit B (the "Series D Warrant"). The Series C Warrant and
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the Series D Warrant are collectively referred to herein as the "Warrants".
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The shares of Common Stock into which the Warrants are exercisable
are referred to herein as the "Warrant Shares".
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In order to induce the Investor to enter into the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended (the "Securities Act"),
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and under applicable state securities laws. Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in
the Securities Purchase Agreement.
In consideration of the Investor entering into the Securities
Purchase Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. DEFINITIONS.
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For purposes of this Agreement, the following terms shall have the
meanings specified:
(a) "Effective Date" means the date on which the
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Registration Statement is declared effective by the Securities and
Exchange Commission (the "Commission");
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(b) "Filing Deadline" means the thirtieth (30th) calendar
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day following the Closing Date;
(c) "Holder" means any person owning or having the right
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to acquire, including without limitation through exercise of the
Warrants, Registrable Securities, including initially the Investor
and thereafter any assignee permitted hereunder;
(d) "Outstanding Registrable Securities" means, at any
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time, all Registrable Securities that at such time are either
issued and outstanding or issuable upon exercise of the Warrants
(without regard to any limitation on such exercise);
(e) "Registrable Securities" means the Shares and the
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Warrant Shares and any other shares of Common Stock issuable
pursuant to the exercise of the Warrants (without regard to any
limitation on such exercise), and any shares of capital stock
issued or issuable from time to time (with any adjustments) in
replacement of, in exchange for or otherwise in respect of the
Shares or the Warrant Shares; provided, however, that "Registrable
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Securities" shall not include any such shares that have been sold
pursuant to the Registration Statement or Rule 144;
(f) "Registration Deadline" means the one hundred and
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twentieth (120th) calendar day following the Closing Date, subject
to reasonable extensions for any delays caused by comments to the
Registration Statement made by the Commission pertaining solely to
the transactions contemplated hereby and/or to the Investor;
(g) "Registration Period" means the period beginning on
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the Registration Deadline (or such earlier date on which the
Registration Statement may have been declared effective by the
Commission) and ending on the earlier to occur of (A) the date on
which all Registrable Securities have been sold under the
Registration Statement or Rule 144 and (B) the date on which any
Registrable Securities (in the reasonable opinion of counsel to the
Company or any Holder) may be sold to the public under Rule 144(k)
or any successor provision by a Person that is not an Affiliate of
the Company at the time of such sale or during the period of ninety
(90) days prior thereto; and
(h) "Registration Statement" means the Registration
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Statement to be filed hereunder relating to resales of the
Registrable Securities.
2. REGISTRATION.
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(a) Registration Statement. On or before the Filing
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Deadline, the Company shall use reasonable best efforts to prepare and file
with the Commission a Registration Statement on Form S-3 as a "shelf"
registration statement under Rule 415 under the Securities Act ("Rule 415")
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covering the resale of a number of shares of common stock equal to the
number of shares required to be reserved pursuant to the Securities Purchase
Agreement as of the Closing Date. The Registration Statement shall state, to
the extent permitted by Rule 416 under the Securities Act, that it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon the exercise of the Warrants in order to prevent
dilution resulting from stock splits, stock dividends or similar events. In
the event that the Company is at any time not eligible to use Form S-3 to
register the resale of Registrable Securities by the Holders, the Company
shall file the Registration Statement on such form as may then be available
to the Company, and thereafter shall use its reasonable best efforts, as
soon as reasonably practicable following the date on which it becomes
eligible to use Form S-3 (but in no event later than the thirtieth (30th)
day after such date),
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to convert the Registration Statement to a Form S-3, or file a new
registration statement on such form, covering the greater of (i) the number
of shares of Common Stock covered by the Registration Statement and
remaining unsold thereunder and (ii) the number of Outstanding Registrable
Securities. The Company shall not permit any securities other than
Registrable Securities to be included in any registration statement or
amendment to any registration statement required to be filed hereunder.
Notwithstanding anything in this Agreement to the contrary, the Company
shall be permitted to register with the Commission the Excluded Securities
(as defined in the Series D Warrant) on or prior to the effectiveness of the
Registration Statement.
(b) Effectiveness. The Company shall use its reasonable
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best efforts to cause the Registration Statement to become effective as soon
as practicable following the filing thereof, but in no event later than the
Registration Deadline. The Company shall respond promptly to any and all
comments made by the staff of the Commission on the Registration Statement,
and shall promptly submit to the Commission, within two (2) Business Days
after the Company learns that no review of the Registration Statement will
be made by the staff of the Commission or that the staff of the Commission
has no further comments on the Registration Statement, as the case may be, a
request for acceleration of the effectiveness of the Registration Statement
to a time and date not later than two (2) Business Days following the
submission of such request. The Company shall use its reasonable best
efforts to maintain the effectiveness of the Registration Statement during
the Registration Period.
(c) Registration Default. If (A) the Registration
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Statement is not filed on or before the Filing Deadline or declared
effective by the Commission on or before the Registration Deadline, (B)
after the Registration Statement has been declared effective by the
Commission and other than during a period in which an Allowed Delay (as
hereinafter defined) is in effect, sales of Registrable Securities cannot be
made by a Holder under the Registration Statement for any reason not within
the exclusive control of such Holder, (C) trading in the Common Stock on the
Principal Exchange is suspended or restricted, or (D) an amendment to the
Registration Statement, or a new registration statement, required to be
filed pursuant to the terms of paragraph 4(k) below is not filed on or
before the date required by such paragraph, (each of (A), (B), (C) and (D)
being referred to herein as a "Registration Default"), the Company shall
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make cash payments to each Holder equal to one percent (1.0%) of the
Purchase Price for the Securities then held by such Holder for each thirty
(30) day period until such Registration Default is cured (such payment to be
prorated for any period in which a Registration Default continues for less
than thirty days). Each such payment shall be made in immediately available
funds within five (5) Business Days following the last day of the calendar
month in which a Registration Default occurs or is continuing. Any such
payment shall be in addition to any other remedies available to each Holder
at law or in equity, whether pursuant to the terms hereof, the Securities
Purchase Agreement, or otherwise.
(d) Allowed Delay. The Company may delay the disclosure of
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material non-public information, and suspend the availability of the
Registration Statement, for a period not to exceed (i) five (5) consecutive
Business Days at any one time (each such five Business Day period to be
separated by at least ten (10) Business Days from the next such period) or
(ii) twenty (20) calendar days in any twelve (12) month period; provided,
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however, that the Company may delay such disclosure only in the event of a
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proposed merger, reorganization or similar transaction
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involving the Company where its board of directors (A) has determined, upon
the advice of counsel, that such information would be required to be
disclosed in an offering registered under the Securities Act and (B)
reasonably deems it in the best interests of the Company and its
shareholders not to disclose such information publicly (an "Allowed Delay").
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The Company shall promptly (i) notify each Holder in writing of the
existence of information giving rise to an Allowed Delay (but in no event,
without the prior written consent of such Holder, shall the Company disclose
to such Holder any material non-public information), (ii) advise each Holder
in writing to cease all sales under the Registration Statement until the
termination of the Allowed Delay and (iii) notify each Holder in writing
immediately upon the termination or expiration of an Allowed Delay.
(e) Allocation of Warrant Shares. The initial number of
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Warrant Shares included in any Registration Statement and each increase in
the number thereof included therein shall be allocated pro rata among the
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Holders based on the aggregate number of Outstanding Registrable Securities
held by each Holder at the time the Registration Statement covering such
initial number of Registrable Securities or increase thereof is declared
effective by the Commission (without regard to any restriction on the
ability of a Holder to exercise such Holder's Warrants as of such date). In
the event that a Holder sells or otherwise transfers any of such Holder's
Registrable Securities, each transferee shall be allocated the portion of
the then remaining number of Registrable Securities included in such
Registration Statement allocable to the transferor. Any portion of the
Registrable Securities included in such Registration Statement and allocated
to a Holder or other Person which no longer holds any Registrable Securities
shall be reallocated to the remaining Holders pro rata based on the number
of Outstanding Registrable Securities.
3. PIGGYBACK REGISTRATION.
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If at any time prior to the expiration of the Registration Period,
(i) the Company proposes to register shares of Common Stock under the
Securities Act in connection with the public offering of such shares for
cash (a "Proposed Registration") other than a registration statement on Form
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S-8 or Form S-4 or any successor or other forms promulgated for similar
purposes and (ii) a Registration Statement covering the sale of all of the
Registrable Securities is not then effective and available for sales thereof
by the Holders, the Company shall, at such time, promptly give each Holder
written notice of such Proposed Registration. Each Holder shall have ten
(10) Business Days from its receipt of such notice to deliver to the Company
a written request specifying the amount of Registrable Securities that such
Holder intends to sell and such Holder's intended method of distribution.
Upon receipt of such request, the Company shall use its commercially
reasonable efforts to cause all Registrable Securities which the Company has
been requested to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of such
Holder; provided, however, that the Company shall have the right to postpone
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or withdraw any registration effected pursuant to this Section 3 without
obligation to the Holder. If, in connection with any underwritten public
offering for the account of the Company or for stockholders of the Company
that have contractual rights to require the Company to register shares of
Common Stock, the managing underwriter(s) thereof shall impose a limitation
on the number of shares of Common Stock which may be included in a
registration statement because, in the judgment of such underwriter(s),
marketing or other factors dictate such limitation is necessary to
facilitate such
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offering, then the Company shall be obligated to include in the registration
statement only such limited portion of the Registrable Securities with
respect to which each Holder has requested inclusion hereunder as such
underwriter(s) shall permit. Any exclusion of Registrable Securities shall
be made pro rata among the Holders seeking to include Registrable Securities
in a registration statement, in proportion to the number of Registrable
Securities sought to be included by such Holders; provided, however, that
the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not
entitled to inclusion of such securities in the registration statement or
are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in
the registration statement.
4. OBLIGATIONS OF THE COMPANY.
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In addition to performing its obligations hereunder, including
without limitation those pursuant to paragraphs 2(a), (b) and (c) above, the
Company shall:
(a) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus used in
connection with the Registration Statement as may be necessary to comply
with the provisions of the Securities Act or to maintain the effectiveness
of the Registration Statement during the Registration Period (subject to any
Allowed Delays), or as may be reasonably requested by a Holder in order to
incorporate information concerning such Holder or such Holder's intended
method of distribution;
(b) use commercially reasonable efforts to secure the
listing of all Registrable Securities on the Principal Market, and provide
each Holder with reasonable evidence thereof;
(c) upon the effectiveness of the Registration Statement,
furnish to each Holder such number of copies of the prospectus included in
the Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as such Holder may reasonably request in order to facilitate the
disposition of such Holder's Registrable Securities;
(d) use all commercially reasonable efforts to register or
qualify the Registrable Securities under the securities or "blue sky" laws
of such jurisdictions within the United States as shall be reasonably
requested in writing from time to time by a Holder, and do any and all other
acts or things which may be necessary or advisable to enable such Holder to
consummate the public sale or other disposition of the Registrable
Securities in such jurisdictions; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
jurisdiction;
(e) in the event of an underwritten public offering of the
Registrable Securities, enter into (together with all Holders proposing to
distribute Registrable Securities through such underwriting) and perform its
obligations under an underwriting agreement, in usual and customary form
reasonably acceptable to the Company, with the managing underwriter of such
offering;
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(f) notify each Holder immediately after becoming aware of
the occurrence of any event (but shall not, without the prior written
consent of such Holder, disclose to such Holder any facts or circumstances
constituting material non-public information) as a result of which the
prospectus included in the Registration Statement, as then in effect,
contains an untrue statement of material fact or omits to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
(except during an Allowed Delay) as promptly as practicable prepare, and
file with the Commission and furnish to each Holder a reasonable number of
copies of a supplement or an amendment to such prospectus as may be
necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) use all commercially reasonable efforts to prevent the
issuance of any stop order or other order suspending the effectiveness of
the Registration Statement and, if such an order is issued, to obtain the
withdrawal thereof at the earliest possible time and to notify each Holder
of the issuance of such order and the resolution thereof;
(h) furnish to each Holder, within two (2) Business Days
following the date on which the Registration Statement, or any successor
registration statement, becomes effective, (x) a letter, dated such date,
from the Company addressed to such Holder, confirming such effectiveness
and, to the knowledge of the Company, the absence of any stop order, and (y)
in the case of an underwriting, (A) a copy of an opinion, dated such date,
of such outside counsel, in such form and substance as is required to be
given to the underwriters, and (B) a copy of a letter, dated such date, from
the Company's independent certified public accountants, in such form and
substance as is required to be given by the Company's independent certified
public accountants to such underwriters;
(i) during the Registration Period or at any other time
when a Registration Statement is effective and available to the Holders for
the resale of Registrable Securities, provide to each Holder and its
representatives, upon reasonable prior notice and execution of a reasonable
non-disclosure agreement by such Holder, the opportunity to conduct a
reasonable inquiry of the Company's financial and other records during
normal business hours and make available its officers for questions
regarding information which such Holder may reasonably request in order to
fulfill any due diligence obligation on its part;
(j) permit counsel for each Holder to review the
Registration Statement and all amendments and supplements thereto, and any
comments made by the staff of the Commission concerning such Holder and/or
the transactions contemplated by the Transaction Documents and the Company's
responses thereto, within a reasonable period of time (but in no event less
than three (3) Business Days after such Holder has received such documents)
prior to the filing thereof with the Commission (or, in the case of comments
made by the staff of the Commission, within a reasonable period of time
following the receipt thereof by the Company); and
(k) in the event that, at any time, the number of shares
available under the
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Registration Statement is insufficient to cover one hundred percent (100%)
of the number of Outstanding Registrable Securities, the Company shall
promptly amend the Registration Statement or file a new registration
statement, in any event as soon as practicable, but not later than the
thirtieth (30th) day following notice from a Holder of the occurrence of
such event, so that the Registration Statement or such new registration
statement, or both, covers no less than (i) one hundred percent (100%) of
the outstanding Shares and issued Warrant Shares that constitute Registrable
Securities, plus (ii) one hundred percent (100%) of the Warrant Shares
issuable upon exercise of the Series C Warrant that constitute Registrable
Securities, plus (iii) one hundred twenty five percent (125%) of the Warrant
Shares issuable upon exercise of the Series D Warrant (without giving effect
to any limitation on such exercise that may be set forth in the Series D
Warrant) that constitute Registrable Securities. The Company shall use its
best efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. Any
Registration Statement filed pursuant to this paragraph 4(k) shall state
that, to the extent permitted by Rule 416 under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon exercise of the Warrants
in order to prevent dilution resulting from stock splits, stock dividends or
similar events. Unless and until such amendment or new Registration
Statement becomes effective, each Holder shall have the rights described in
Section 2(c) above.
5. OBLIGATIONS OF EACH HOLDER.
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In connection with the registration of Registrable Securities
pursuant to a Registration Statement, each Holder shall:
(a) timely furnish to the Company in writing such
information regarding itself and the intended method of disposition of such
Registrable Securities as the Company shall reasonably request in order to
effect the registration thereof;
(b) upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraphs 4(f) or 4(g),
immediately discontinue any sale or other disposition of such Registrable
Securities pursuant to such Registration Statement until the filing of an
amendment or supplement as described in paragraph 4(f) or withdrawal of the
stop order referred to in paragraph 4(g), and, if such Holder has agreed in
writing to receive material, non-public information, to use commercially
reasonable efforts to maintain the confidentiality of such notice and its
contents;
(c) in the event of an underwritten offering of such
Registrable Securities in which such Holder participates pursuant to Section
3 hereof, enter into a customary and reasonable underwriting agreement and
execute such other documents (including without limitation "lock-up" and
indemnity agreements) as the Company and the managing underwriter for such
offering may reasonably request;
(d) to the extent required by applicable law, deliver a
preliminary and definitive prospectus to the purchaser of Registrable
Securities sold under the Registration Statement;
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(e) notify the Company when it has sold all of the
Registrable Securities held by it;
(f) notify the Company promptly in the event that any
information supplied by such Holder in writing for inclusion in such
Registration Statement or related prospectus is untrue or omits to state a
material fact required to be stated therein or necessary to make such
information not misleading in light of the circumstances then existing;
immediately discontinue any sale or other disposition of such Registrable
Securities pursuant to such Registration Statement until the filing of an
amendment or supplement to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing; and provide the Company with updates on such information as may be
appropriate to make such amendment or supplement effective for such purpose;
and
(g) otherwise use commercially reasonable efforts to
assist the Company and the underwriters, if any, in the preparation of
documentation reasonably necessary or desirable to effectuate the resale of
Registrable Securities pursuant to any Registration Statement filed in
accordance herewith.
6. INDEMNIFICATION.
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In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the officers, directors, employees,
agents and representatives of such Holder, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
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any losses, claims, damages, liabilities or reasonable out-of-pocket
expenses (whether joint or several) (collectively, including legal or other
expenses reasonably incurred in connection with investigating or defending
same, "Losses"), insofar as any such Losses arise out of or are based upon
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(i) any untrue statement or alleged untrue statement of a material fact
contained in such Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Subject to the provisions of paragraph 6(c) below, the
Company will reimburse such Holder, and each such officer, director,
employee, agent, representative or controlling person, for any legal or
other out-of-pocket expenses as reasonably incurred by any such entity or
person in connection with investigating or defending any Loss; provided,
however, that the foregoing indemnity shall not apply to amounts paid in
settlement of any Loss if such settlement is effected without the consent of
the Company (which consent shall not be unreasonably withheld), nor shall
the Company be obligated to indemnify any person for any Loss to the extent
that such Loss is (i) based upon and is in conformity with written
information furnished by such person expressly for use in such Registration
Statement or (ii) based on a failure of such person to deliver or cause to
be delivered the final prospectus contained in the Registration Statement
and made available by the Company, if such delivery is required by
applicable law.
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(b) To the extent permitted by law, each Holder who is
named in such Registration Statement as a selling stockholder, acting
severally and not jointly, shall indemnify and hold harmless the Company,
the officers, directors, employees, agents and representatives of the
Company, and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act, against any Losses
arising out of (i) any untrue statement or alleged untrue statement of a
material fact contained in such Registration Statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, to the extent (and only to the extent) that
any such statement or omission is based upon and in conformity with written
information furnished by such Holder expressly for use in such Registration
Statement. Subject to the provisions of paragraph 6(c) below, such Holder
will reimburse any legal or other expenses as reasonably incurred by the
Company and any such officer, director, employee, agent, representative, or
controlling person, in connection with investigating or defending any such
Loss; provided, however, that the foregoing indemnity shall not apply to
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amounts paid in settlement of any such Loss if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld); and provided, further, that, in no event shall any indemnity
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under this subsection 6(b) exceed the net proceeds resulting from the sale
of the Registrable Securities sold by such Holder under such Registration
Statement.
(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 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 assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right
to retain its own counsel, with the reasonably incurred fees and expenses of
one such counsel for all indemnified parties to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate under applicable standards
of professional conduct due to actual or potential conflicting interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified
party under this Section 6 with respect to such action, but the omission so
to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 6 or with respect to any other action unless the indemnifying
party is materially prejudiced as a result of not receiving such notice.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 6 is unavailable or insufficient to hold harmless
an indemnified party for any reason, the Company and each Holder agree,
severally and not jointly, to contribute to the aggregate Losses to which
the Company or such Holder may be subject in such proportion as is
appropriate to reflect the relative fault of the Company and such Holder in
connection with the statements or omissions which
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resulted in such Losses; provided, however, that in no case shall such
Holder be responsible for any amount in excess of the net proceeds resulting
from the sale of the Registrable Securities sold by it under the
Registration Statement. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information
provided by the Company or by such Holder. The Company and each Holder agree
that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. For purposes of this Section 6, each
person who controls a Holder within the meaning of either the Securities Act
or the Exchange Act and each officer, director, employee, agent or
representative of such Holder shall have the same rights to contribution as
such Holder, and each person who controls the Company within the meaning of
either the Securities Act or the Exchange Act and each officer, director,
employee, agent or representative of the Company shall have the same rights
to contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with an underwritten public offering
are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) Unless otherwise superceded by an underwriting
agreement entered into in connection with an underwritten public offering,
the obligations of the Company and each Holder under this Section 6 shall
survive the exercise of the Warrants in full, the completion of any offering
or sale of Registrable Securities pursuant to a Registration Statement under
this Agreement, or otherwise.
7. REPORTS.
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For such time as any Registrable Securities are
outstanding, with a view to making available to each Holder the benefits of
Rule 144 under the Securities Act ("Rule 144") and any other similar rule or
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regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act;
(c) furnish to such Holder, so long as such Holder owns
any Registrable Securities, promptly upon written request (i) a written
statement by the Company, if true, that it has complied with the reporting
requirements to enable such Holder to rely on Rule 144(c), and that it has
also complied with the reporting requirements of the Securities Act and the
Exchange Act, (ii)
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to the extent not publicly available through the Commission's XXXXX
database, a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested by such Holder
in connection with such Holder's compliance with any rule or regulation of
the Commission which permits the selling of any such securities without
registration; and
(d) not at any time disclose material non-public
information to such Holder without first receiving such Holder's written
consent to such disclosure.
8. MISCELLANEOUS.
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(a) Expenses of Registration. Except as otherwise provided
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in the Securities Purchase Agreement, all reasonable expenses, other than
underwriting discounts and commissions and fees and expenses of counsel and
other advisors to each Holder, incurred in connection with the
registrations, filings or qualifications described herein, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, the fees and disbursements of counsel for the
Company, and the fees and disbursements incurred in connection with the
opinion and letter described in paragraph 4(h) hereof, shall be borne by the
Company.
(b) Amendment; Waiver. Except as expressly provided
-----------------
herein, neither this Agreement nor any term hereof may be amended or waived
except pursuant to a written instrument executed by the Company and the
Holders of at least two-thirds (2/3) of the number of Outstanding
Registrable Securities. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each Holder, each future Holder and the
Company, provided, however, that any such waver or consent shall be
-------- -------
effective only in the specific instance and for the specific purpose for
which given.
(c) Notices. Any notice, demand or request required or
-------
permitted to be given by the Company or an Investor pursuant to the terms of
this Agreement shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless such
delivery is made on a day that is not a Business Day, in which case such
delivery will be deemed to be made on the next succeeding Business Day, (ii)
on the next Business Day after timely delivery to an overnight courier and
(iii) on the Business Day actually received if deposited in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:
If to the Company:
Applied Digital Solutions, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
-11-
with a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Mailing Address: X.X. Xxx 000000, Xxxxxxx, 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
and if to a Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Assignment. Upon the transfer of any Warrant or
----------
Registrable Securities by a Holder, the rights and obligations of such
Holder hereunder with respect to such securities so transferred shall be
assigned and delegated automatically to the transferee thereof, and such
transferee shall thereupon be deemed to be a "Holder" for purposes of this
Agreement, as long as: (i) the Company is, within a reasonable period of
time following such transfer, furnished with written notice of the name and
address of such transferee, (ii) the transferee agrees in writing with the
Company to be bound by all of the provisions hereof, and (iii) such transfer
is made in accordance with the applicable requirements of the Securities
Purchase Agreement; provided, however, that the registration rights granted
-------- -------
in this Agreement shall not be transferred to any person or entity that
receives any Warrant or Registrable Securities in a public transaction
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144.
(e) Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument. This Agreement, once
executed by a party, may be delivered to any other party hereto by facsimile
transmission.
(f) Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within the State of Delaware.
(g) Holder of Record. A person is deemed to be a Holder
----------------
whenever such person owns or is deemed to own of record any Warrant or
Registrable Securities.
(h) Entire Agreement. This Agreement, the Securities
----------------
Purchase Agreement, the Warrants, and the other Transaction Documents
constitute the entire agreement among the parties hereto 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 Securities Purchase Agreement, the
Warrants, and the other Transaction Documents supersede all prior agreements
and understandings among the parties hereto with respect to the subject
matter hereof and thereof.
-12-
(i) Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Third Party Beneficiaries. This Agreement is intended
-------------------------
for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
[Signature Pages to Follow]
-13-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first-above written.
APPLIED DIGITAL SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxx
Title: CEO
SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC
By: Satellite Asset Management, L.P., its Manager
By: /s/ Xxxxx Xxxxxxx
---------------------------
Xxxxx Xxxxxxx
General Counsel
