REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March 20,
2007, by and among LOCATEPLUS HOLDINGS CORPORATION, a Delaware corporation (the
"Company"), and the undersigned Buyers listed on Schedule I attached hereto
(each, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"), the
Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Buyers (i) secured
convertible debentures (the "Convertible Debentures") which shall be convertible
into shares of the Company's common stock, par value $0.01 per share (the
"Common Stock," as converted, the "Conversion Shares") in accordance with the
terms of the Convertible Debentures, and (ii) warrants (the "Warrants"), which
will be exercisable to purchase shares of Common Stock (as exercised,
collectively, the "Warrant Shares"). Capitalized terms not defined herein shall
have the meaning ascribed to them in the Securities Purchase Agreement.
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "Securities
Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyers hereby
agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
(a) "Effectiveness Deadline" means, with respect to the initial Registration
Statement required to be filed hereunder, the 145th calendar day following the
date hereof and, with respect to any Subsequent Registration Statements which
may be required pursuant to Section 3(c), the 60th calendar day following the
date on which the Company first knows, or reasonably should have known, that it
is obligated to file such Subsequent Registration Statement; provided, however,
in the event the Company is notified by the U.S. Securities and Exchange
Commission ("SEC") that one of the above Registration Statements will not be
reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date precedes
the dates required above.
(b) "Filing Deadline" means, with respect to the initial Registration
Statement required hereunder, the 30th calendar day following the date hereof
and, with respect to any Subsequent Registration Statement which may be required
pursuant to Section 3(c), the 15th day following the date on which the Company
first knows, or reasonably should have known that it is obligated to file such
Subsequent Registration Statement.
(c) "Initial Required Registration Amount" means Two Million One Hundred
Thousand shares of Common Stock issued or to be issued upon conversion of the
Convertible Debentures or exercise of the series F Warrant.
(d) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
(e) "Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
(f) "Registrable Securities" means all of (i) the Conversion Shares issuable
upon conversion of the Convertible Debentures, (ii) the Warrant Shares issued or
issuable upon exercise of the Warrants, (iii) any additional shares issuable in
connection with any anti-dilution provisions in the Warrants or the Convertible
Debentures (without giving effect to any limitations on exercise set forth in
the Warrants or Convertible Debentures) and (iv) any shares of Common Stock
issued or issuable with respect to the Conversion Shares, the Convertible
Debentures, the Warrant Shares, or the Warrants as a result of any stock split,
dividend or other distribution, recapitalization or similar event or otherwise,
without regard to any limitations on the conversion of the Convertible
Debentures or exercise of the Warrants.
(g) "Registration Statement" means the registration statements required to
be filed hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
(h) "Rule 415" means Rule 415 promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC having substantially the same
purpose and effect as such Rule.
2. REGISTRATION.
(a) On or prior to each Filing Deadline, the Company shall prepare and file
with the SEC a Registration Statement on Form S-1 or SB-2 (or, if the Company is
then eligible, on Form S-3) covering the resale of all of the Registrable
Securities. The initial Registration Statement prepared pursuant hereto shall
register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount. Each Registration Statement shall contain the
"Selling Stockholders" and "Plan of Distribution" sections in substantially the
form attached hereto as Exhibit A and contain all the required disclosures set
forth on Exhibit B. The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC as soon as practicable, but
in no event later than the Effectiveness Deadline. By 9:30 am on the date
following the date of effectiveness, the Company shall file with the SEC in
accordance with Rule 424 under the 1933 Act the final Prospectus to be used in
connection with sales pursuant to such Registration Statement. The Company
shall cause the Registration Statement to remain effective until all of the
Registrable Securities have been sold or may be sold without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders ("Registration Period").
Prior to the filing of the Registration Statement with the SEC, the Company
shall furnish a draft of the Registration Statement to the Buyers for their
review and comment. The Buyers shall furnish comments on the Registration
Statement to the Company within twenty-four (24) hours of the receipt thereof
from the Company.
(b) Failure to File or Obtain Effectiveness of the Registration Statement.
If: (i) a Registration Statement is not filed on or prior to its Filing Date (if
the Company files a Registration Statement without affording the Holders the
opportunity to review and comment on the same as required by Section 3(a), the
Company shall not be deemed to have satisfied this clause (i)), or (ii) the
Company fails to file with the SEC a request for acceleration in accordance with
Rule 461 promulgated under the Securities Act, within five Trading Days of the
date that the Company is notified (orally or in writing, whichever is earlier)
by the SEC that a Registration Statement will not be "reviewed," or not subject
to further review, or (iii) a Registration Statement filed or required to be
filed hereunder is not declared effective by the SEC by its Effectiveness
Deadline, or (iv) after the effectiveness, a Registration Statement ceases for
any reason to remain continuously effective as to all Registrable Securities for
which it is required to be effective, or the Holders are otherwise not permitted
to utilize the Prospectus therein to resell such Registrable Securities for more
than 30 consecutive calendar days or more than an aggregate of 40 calendar days
during any 12-month period (which need not be consecutive calendar days) (any
such failure or breach being referred to as an "Event"), then in addition to any
other rights the holders of the Convertible Debentures may have hereunder or
under applicable law, on each such Event date and on each monthly anniversary of
each such Event date (if the applicable Event shall not have been cured by such
date) until the applicable Event is cured, the Company shall pay to each holder
of Convertible Debentures an amount in cash, as partial liquidated damages
("Liquidated Damages") and not as a penalty, equal to 1.0% of the aggregate
purchase price paid by such holder pursuant to the Securities Purchase Agreement
for any Convertible Debentures then held by such holder. The parties agree that
(1) the Company shall not be liable for Liquidated Damages under this Agreement
with respect to any Warrants or Warrant Shares and (2) the maximum aggregate
Liquidated Damages payable to a holder of Convertible Debentures under this
Agreement shall be twenty-four percent (24%) of the
aggregate Purchase Price paid by such holder pursuant to the Securities Purchase
Agreement. The partial Liquidated Damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to the cure of
an Event. Notwithstanding anything herein to the contrary, the liquidated
damages described in this Section 2(b) shall not be applicable to Non-Registered
Shares. The Company's failure to meet the Filing Date and Effective Date as
they relate to any Subsequent Registration Statements shall subject it to all
liquidated damage provisions set forth in this Section 2(b).
(c) Liquidated Damages. The Company and the Buyer hereto acknowledge and
agree that the sums payable under subsection 2(b) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
the Buyer, including the right to call a default. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable relationship to, and are not plainly or
grossly disproportionate to, the probable loss likely to be incurred in
connection with any failure by the Company to obtain or maintain the
effectiveness of a Registration Statement, (iii) one of the reasons for the
Company and the Buyer reaching an agreement as to such amounts was the
uncertainty and cost of litigation regarding the question of actual damages, and
(iv) the Company and the Buyer are sophisticated business parties and have been
represented by sophisticated and able legal counsel and negotiated this
Agreement at arm's length.
3. RELATED OBLIGATIONS.
(a) The Company shall, not less than three (3) Trading Days prior to the
filing of each Registration Statement and not less than one (1) Trading Day
prior to the filing of any related amendments and supplements to all
Registration Statements (except for annual reports on Form 10-K or Form 10-KSB),
furnish to each Buyer copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the reasonable and prompt review of such Buyers,
The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Buyers shall reasonably
object in good faith; provided that, the Company is notified of such objection
in writing no later than two (2) Trading Days after the Buyers have been so
furnished copies of a Registration Statement.
(b) The Company shall (i) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the Prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the Securities Act, as may be necessary to keep such Registration
Statement effective at all times during the Registration Period, and prepare and
file with the SEC such additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities; (ii)
cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement (subject to the terms of this Agreement), and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as reasonably possible to any comments received from the SEC with
respect to a Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Buyers true and complete copies of all
correspondence from and to the SEC relating to a Registration
Statement (provided that the Company may excise any information contained
therein which would constitute material non-public information as to any Buyer
which has not executed a confidentiality agreement with the Company); and (iv)
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company's filing a report on Form 10-KSB, Form 10-QSB or Form 8-K
or any analogous report under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company shall incorporate such report by reference
into the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act report is
filed which created the requirement for the Company to amend or supplement the
Registration Statement.
(c) To the extent that the Buyer holds any Registrable Securities that are
prohibited from being included on a the initial Registration Statement or any
other Registration Statement (the "Non-Registered Shares") under Rule 415, as
interpreted by the SEC, then the Company shall become obligated to file, and
obtain the effectiveness of, (in accordance with the Filing Deadline and
Effectiveness Deadline set forth above) an additional Registration Statement
(each, a "Subsequent Registration Statement") on the first day after such
Subsequent Registration Statement may be filed without objection by the SEC
under Rule 415 covering the resale by the Buyers of the maximum number of such
Non-Registered Shares allowed under Rule 415 as interpreted by the SEC.
(d) The Company shall furnish to each Buyer whose Registrable Securities are
included in any Registration Statement, without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Buyer may reasonably request) and (iii) such other
documents as such Buyer may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such Buyer.
(e) The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as any
Buyer reasonably requests, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its articles of incorporation or by-laws, (x) qualify to do business
in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify each Buyer who holds Registrable Securities of the receipt
by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(f) As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Buyer in writing of the happening of
any event as a result of which the Prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Buyer. The
Company shall also promptly notify each Buyer in writing (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to each Buyer
by facsimile on the same day of such effectiveness), (ii) of any request by the
SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(g) The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Buyer who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.
(h) If, after the execution of this Agreement, a Buyer believes, after
consultation with its legal counsel, that it could reasonably be deemed to be an
underwriter of Registrable Securities, at the request of any Buyer, the Company
shall furnish to such Buyer, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as a Buyer
may reasonably request (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Buyers.
(i) If, after the execution of this Agreement, a Buyer believes, after
consultation with its legal counsel, that it could reasonably be deemed to be an
underwriter of
Registrable Securities, at the request of any Buyer, the Company shall make
available for inspection by (i) any Buyer and (ii) one (1) firm of accountants
or other agents retained by the Buyers (collectively, the "Inspectors") all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall be reasonably
deemed necessary by each Inspector, and cause the Company's officers, directors
and employees to supply all information which any Inspector may reasonably
request; provided, however, that each Inspector shall agree, and each Buyer
hereby agrees, to hold in strict confidence and shall not make any disclosure
(except to a Buyer) or use any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the Securities Act, (b) the release of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Buyer has knowledge. Each Buyer agrees that it shall,
upon learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
(j) The Company shall hold in confidence and not make any disclosure of
information concerning a Buyer provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Buyer is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to such Buyer and allow such Buyer, at the Buyer's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
(k) The Company shall use its best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).
(l) The Company shall cooperate with each Buyer who holds Registrable
Securities being offered and, to the extent applicable, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Buyers may reasonably
request and registered in such names as the Buyers may request.
(m) The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
(n) The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve (12) month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.
(o) The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.
(p) Within two (2) business days after a Registration Statement which covers
Registrable Securities is declared effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Buyer whose
Registrable Securities are included in such Registration Statement) confirmation
that such Registration Statement has been declared effective by the SEC in the
form attached hereto as Exhibit C.
(q) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by each Buyer of Registrable Securities
pursuant to a Registration Statement.
4. OBLIGATIONS OF THE BUYERS.
(a) Each Buyer agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(f) or the first
sentence of Section 3(e), such Buyer will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement covering such
Registrable Securities until such Buyer's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of Section 3(e) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended certificates for shares of Common Stock to
a transferee of a Buyer in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which a Buyer has entered into a contract for sale prior to the Buyer's receipt
of a notice from the Company of the happening of any event of the kind described
in Section 3(f) or the first sentence of 3(e) and for which the Buyer has not
yet settled.
(b) Each Buyer covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sales of Registrable Securities pursuant to the
Registration Statement.
5. EXPENSES OF REGISTRATION.
All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.
6. INDEMNIFICATION.
With respect to Registrable Securities which are included in a Registration
Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Buyer, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls any Buyer within the meaning of the Securities Act or the Exchange Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys'
fees, amounts paid in settlement or expenses, joint or several (collectively,
"Claims") incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the foregoing by
or before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("Indemnified Damages"), to which any of them
may become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or any post-effective amendment thereto or in any filing
made in connection with the qualification of the offering under the securities
or other "blue sky" laws of any jurisdiction in which Registrable Securities are
offered ("Blue Sky Filing"), or the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any final prospectus (as amended or supplemented,
if the Company files any amendment thereof or supplement thereto with the SEC)
or the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under which
the statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any rule
or regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). The Company shall
reimburse the Buyers and each such controlling person promptly as such expenses
are incurred and are due and payable, for any legal fees or disbursements or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (x) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (y) shall not be available to the
extent such Claim is based on a failure of the Buyer to deliver or to cause to
be delivered the prospectus made available by the Company, if such prospectus
was timely made available by the Company pursuant to Section 3(c); and (z) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Buyers pursuant to Section 9 hereof.
(b) In connection with a Registration Statement, each Buyer agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers, employees, representatives, or agents
and each Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (each an "Indemnified Party"), against any
Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or is based upon any Violation, in each case to
the extent, and only to the extent, that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by such
Buyer expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), such Buyer will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution contained in Section
7 shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of such Buyer, which consent shall
not be unreasonably withheld; provided, further, however, that the Buyer shall
be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Buyer as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Buyers pursuant to Section 9. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any prospectus shall not inure to
the benefit of any Indemnified Party if the untrue statement or omission of
material fact contained in the prospectus was corrected and such new prospectus
was delivered to each Buyer prior to such Buyer's use of the prospectus to which
the Claim relates.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the
fees and expenses of not more than one (1) counsel for such Indemnified Person
or Indemnified Party to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(d) The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.
(e) The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Buyers the benefits of Rule 144
promulgated under the Securities Act or any similar rule or regulation of the
SEC that may at any time permit the Buyers to sell securities of the Company to
the public without registration ("Rule 144") 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 SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents as are required by the applicable provisions of Rule 144; and
(c) furnish to each Buyer so long as such Buyer owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Buyers to
sell such securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Buyers who then
hold at least two-thirds (2/3) of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 9 shall be binding upon each
Buyer and the Company. No such amendment shall be effective to the extent that
it applies to fewer than all of the holders of the Registrable Securities. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this Agreement.
10. MISCELLANEOUS.
(a) A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable Securities or
owns the right to receive the Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two (2) or more Persons with
respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) No Piggyback on Registrations. Except as set forth on Schedule 10(b)
attached hereto, neither the Company nor any of its security holders (other than
the Buyers in such capacity pursuant hereto) may include securities of the
Company in the initial Registration Statement other than the Registrable
Securities. The Company shall not file any other registration statements until
the initial Registration Statement required hereunder is declared effective by
the SEC, provided that this Section 10(b) shall not prohibit the Company from
filing amendments to registration statements already filed.
(c) Piggy-Back Registrations. If at any time during the Registration Period
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with the stock option or other employee
benefit plans, then the Company shall send to each Buyer a written notice of
such determination and, if within fifteen (15) days after the date of such
notice, any such Buyer shall so request in writing, the Company shall include in
such registration statement all or any part of such Registrable Securities such
Buyer requests to be registered; provided, however, that, the Company shall not
be required to register any Registrable Securities pursuant to this Section
10(c) that are eligible for resale pursuant to Rule 144(k) promulgated under the
Securities Act or that are the subject of a then effective Registration
Statement.
(d) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company, to: LocatePLUS Holdings Corporation
000 Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Telephone:
Facsimile:
With Copy to: Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to an Buyer, to its address and facsimile number on the Schedule of Buyers
attached hereto, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers or to such other address and/or facsimile number and/or to
the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
(e) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(f) The laws of the State of New Jersey shall govern all issues concerning
the relative rights of the Company and the Buyers as its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New Jersey, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New Jersey or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New Jersey. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the Superior Courts of the State of New
Jersey, sitting in Xxxxxx County, New Jersey and federal courts for the District
of New Jersey sitting Newark, New Jersey, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(g) This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
(h) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
(j) Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(k) The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.
(l) 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each Buyer and the Company have caused their signature
page to this Registration Rights Agreement to be duly executed as of the date
first above written.
COMPANY:
LOCATEPLUS HOLDINGS CORPORATION
By: /s/ Xxx X. Xxxxxxxxx
Name: Xxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
IN WITNESS WHEREOF, each Buyer and the Company have caused their signature page
to this Registration Rights Agreement to be duly executed as of the date first
above written.
BUYER:
CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Portfolio Manager
