EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
October 1, 2004, is made by and among Remote Dynamics, Inc., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), and the
undersigned (together with their affiliates, the "INITIAL INVESTORS").
BACKGROUND
A. In connection with that certain Securities Purchase Agreement
of even date herewith by and among the Company and the Initial Investors (the
"SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors (i) shares of the Company's Series A Convertible Preferred Stock, with
a face amount of $1,000 per share (the "PREFERRED STOCK"), that are convertible
into shares of the Company's common stock, par value $0.01 per share (the
"COMMON STOCK"), upon the terms and subject to the limitations and conditions
set forth in the Certificate of Designation, Rights and Preferences with respect
to such Preferred Stock (the "CERTIFICATE OF DESIGNATION"), (ii) structured
warrants (the "STRUCTURED WARRANTS") to acquire shares of Common Stock, and
(iii) incentive warrants (the "INCENTIVE WARRANTS") to acquire shares of Common
Stock. The Structured Warrants and the Incentive Warrants are together referred
to herein as the "WARRANTS"). The shares of Common Stock issuable upon
conversion of or otherwise pursuant to the Preferred Stock are referred to
herein as the "CONVERSION SHARES" and the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the
"WARRANT SHARES."
B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, and to consummate the transactions contemplated
thereby, 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
Initial Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law, regulation or executive order to close.
(ii) "INVESTOR" means the Initial Investors and any
permitted transferees or assignees who agree to become bound by the provisions
of this Agreement in accordance with Section 9 hereof.
(iii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iv) "REGISTRABLE SECURITIES" means (a) the Conversion
Shares, (b) the Warrant Shares, (c) additional shares of Common Stock issuable
upon a Change of Control (as defined in that certain Certificate of Designation,
Preferences and Rights of Series A Preferred Stock of the Company), and (d) any
shares of capital stock issued or issuable, from time to time, as a distribution
on or in exchange for or otherwise with respect to any of the foregoing
(including the Preferred Stock and the Warrants), whether as default payments,
on account of anti-dilution or other adjustments or otherwise.
(v) "REGISTRATION STATEMENT" means a registration
statement of the Company under the Securities Act.
(vi) "TRADING DAY" means any day on which the SmallCap
Market or, if the Common Stock is not then traded on the SmallCap Market, the
principal national securities exchange, automated quotation system or other
trading market where the Common Stock is then listed, quoted or traded, is open
for trading.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. REGISTRATION.
(a) Mandatory Registration. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the date hereof (the "FILING DATE"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors) covering the resale of at least 5,000,000 Registrable
Securities. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Stock and exercise of the Warrants to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The Registrable Securities included on the Registration Statement shall be
allocated among the Investors as set forth in Section 11(k) hereof. The
Registration Statement shall contain the "Plan of Distribution" in the form
attached hereto as Exhibit A (the "PLAN OF DISTRIBUTION"), unless otherwise
directed by a majority of the Investors who provide a new legal Plan of
Distribution. The Registration Statement (and each amendment
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or supplement thereto, and each request for acceleration of effectiveness
thereof) shall be provided to (and subject to the reasonable review and, in the
case of the "Selling Security Holders" and "Plan of Distribution" sections of
the Registration Statement, the approval of) the Initial Investors and their
counsel prior to its filing or other submission.
(b) Payments by the Company. The Company shall use its best
efforts to cause the Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but in no event
later than the ninetieth (90th) day following the date hereof. At the time of
effectiveness, the Company shall ensure that such Registration Statement covers
all of the Registrable Securities issuable upon full conversion of the Preferred
Stock (without giving effect to any limitations on conversion contained in the
Certificate of Designation and exercise of the Warrants (without giving effect
to any limitations on exercise contained in the Warrants), including, if
necessary, by filing an amendment prior to the effective date of the
Registration Statement to increase the number of Registrable Securities covered
thereby. If (i) (A) the Registration Statement required to be filed pursuant to
Section 2(a) hereof is not filed with the SEC prior to the Filing Date or
declared effective by the SEC on or before the one hundred twentieth (120th) day
following the date hereof (the "REGISTRATION DEADLINE") or (B) any Registration
Statement required to be filed pursuant to Section 3(b) hereof is not declared
effective by the SEC on or before the sixtieth (60th) day following the
applicable Registration Trigger Date (as defined in Section 3(b) below), or (ii)
if, after any such Registration Statement has been declared effective by the
SEC, sales of any of the Registrable Securities required to be covered by such
Registration Statement (including any Registrable Securities required to be
registered pursuant to Section 3(b) hereof) cannot be made pursuant to such
Registration Statement (by reason of a stop order or the Company's failure to
update the Registration Statement or for any other reason outside the control of
the Investors) or (iii) the Common Stock is not listed or included for quotation
on the Nasdaq SmallCap Market (the "SMALLCAP Market"), the Nasdaq National
Market (the "NATIONAL MARKET"), the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX") at any time after the Registration Deadline
hereunder, then the Company will make payments to each Investor in such amounts
and at such times as shall be determined pursuant to this Section 2(b) as relief
for the damages to the Investors by reason of any such delay in or reduction of
their ability to sell the Registrable Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity). The Company
shall pay to each Investor an amount equal to the product of (i) the number of
shares of Preferred Stock then outstanding (including, for this purpose, any
shares of Preferred Stock that have been converted into Conversion Shares then
held by such Investor as if such shares of Preferred Stock had not been so
converted) multiplied by the per share purchase price, multiplied by (ii) three
hundredths (.03) for the 30 day period beginning the 90th day after the date
hereof and ending the 120th day after the date hereof, and fifteen thousandths
(.015) for each subsequent 30 day period (or portion thereof) (A) after the
Filing Date and prior to the date the Registration Statement is filed with the
SEC pursuant to Section 2(a), (B) after the Registration Deadline and prior to
the date the Registration Statement filed pursuant to Section 2(a) is declared
effective by the SEC, (C) after the sixtieth (60th) day following a Registration
Trigger Date and prior to the date the Registration Statement filed pursuant to
Section 3(b) hereof is declared effective by the SEC, and (D) during which sales
of any Registrable Securities cannot be made pursuant to any such Registration
Statement after the Registration Statement has been declared effective or the
Common Stock is not listed or included for quotation on the SmallCap Market, the
National Market, NYSE or AMEX; provided, however, that, for purpose
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of calculating the payment amount owed to any given Investor, there shall be
excluded from each such period any delays which are solely attributable to
changes required by such Investor in the Registration Statement with respect to
information relating to such Investor, including, without limitation, changes to
the Plan of Distribution (other than any corrections of Company mistakes with
respect to information previously provided by such Investor). All such amounts
required to be paid hereunder shall be paid in cash within five days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments shall be
made for each such 30 day period.
(c) Piggy-Back Registrations. If, at any time prior to the
expiration of the Registration Period (as defined in Section 3(a) below) the
Company shall 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 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 stock option or other employee benefit plans), the Company shall
send to each Investor written notice of such filing, and if, within 15 days
after the date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered. Notwithstanding
the foregoing, in the event that, in connection with any underwritten public
offering, the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit;
provided, however, that (i) the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders of which are not contractually entitled to inclusion of such securities
in such Registration Statement or are not contractually entitled to pro rata
inclusion with the holders of the Registrable Securities, (ii) after giving
effect to the immediately preceding proviso, any such exclusion of Registrable
Securities shall be made pro rata among the Investors seeking to include
Registrable Securities and the holders of other securities having the
contractual right to inclusion of their securities in such Registration
Statement by reason of demand registration rights, in proportion to the number
of Registrable Securities or other securities, as applicable, sought to be
included by each such Investor or other holder, and (iii) no such reduction
shall reduce the amount of Registrable Securities included in the registration
below twenty-five (25%) of the total amount of securities included in such
registration. No right to registration of Registrable Securities under this
Section 2(c) shall be construed to limit any registration required under Section
2(a) hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(c) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.
(d) Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors of the
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Registrable Securities and the Company shall file all reports and statements
required to be filed by the Company with the SEC in a timely manner so as to
thereafter maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) The Company shall respond as soon as reasonably practicable to
any and all comments made by the staff of the SEC to any Registration Statement
required to be filed hereunder, and shall submit to the SEC, before the close of
business on the business day immediately following the business day on which the
Company learns (either by telephone or in writing) that no review of such
Registration Statement will be made by the SEC or that the staff of the SEC has
no further comments on such Registration Statement, as the case may be, a
request for acceleration of the effectiveness of such Registration Statement to
a time and date as soon as practicable. The Company shall keep such Registration
Statement effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have been
sold and (ii) the date on which all of the Registrable Securities may be
immediately sold to the public without registration or restriction pursuant to
Rule 144(k) under the Securities Act or any successor provision (the
"REGISTRATION PERIOD"), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein and all documents
incorporated by reference therein) (A) shall comply in all material respects
with the requirements of the Securities Act and the rules and regulations of the
SEC promulgated thereunder and (B) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading. The financial
statements of the Company included in any such Registration Statement or
incorporated by reference therein (x) shall comply as to form in all material
respects with the applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto, (y) shall be prepared in
accordance with U.S. generally accepted accounting principles, consistently
applied during the periods involved (except as may be otherwise indicated in
such financial statements or the notes thereto or, in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed on summary statements) and (z) fairly present in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to immaterial year-end adjustments).
(b) The Company shall (i) prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
Registration Statement required to be filed hereunder and the prospectus used in
connection with any such Registration Statement as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and (ii) during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by any such Registration Statement until such time as all of
such Registrable Securities 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 event the number of shares available under a
Registration
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Statement filed pursuant to this Agreement is, for any three (3) consecutive
trading days (the last of such three (3) trading days being the "REGISTRATION
TRIGGER DATE"), insufficient to cover all of the Registrable Securities then
issued or issuable upon conversion of the Preferred Stock (without giving effect
to any limitations on conversion contained in the Certificate of Designation)
and exercise of the Warrants (without giving effect to any limitations on
exercise contained in the Warrants), the Company shall provide each Investor
written notice of such Registration Trigger Date within three business days
thereafter and shall amend the Registration Statement, or file a new
Registration Statement (on the short form available therefor, if applicable), or
both, so as to cover all of the Registrable Securities issued or issuable upon
conversion of the Preferred Stock (without giving effect to any limitations on
conversion contained in the Certificate of Designation or exercise of the
Warrants (without giving effect to any limitations on exercise contained in the
Warrants) as of the Registration Trigger Date, in each case, as soon as
practicable, but in any event within 15 days after the Registration Trigger
Date. The Company shall cause such amendment(s) and/or new Registration
Statement(s) to become effective as soon as practicable following the filing
thereof. In the event the Company fails to obtain the effectiveness of any such
Registration Statement within 60 days after a Registration Trigger Date, each
Investor shall thereafter have the option, exercisable in whole or in part at
any time and from time to time by delivery of a written notice to the Company (a
"MANDATORY REDEMPTION NOTICE"), to require the Company to redeem for cash such
number of the Investor's shares of the Preferred Stock at a price per share of
Preferred Stock equal to $1,150, the total number of Registrable Securities
included on the Registration Statement for resale by such Investor is at least
equal to all of the Registrable Securities issued or issuable upon conversion of
such Investor's Preferred (without giving effect to any limitations on
conversion contained in the Certificate of Designation) and exercise of such
Investor's Warrants (without giving effect to any limitation on exercise
contained in the Warrants). If the Company fails to redeem any of such Preferred
Stock within five business days after its receipt of a Mandatory Redemption
Notice, then such Investor shall be entitled to the remedies provided in Article
VII.C of the Certificate of Designation.
(c) The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and such Investor's legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC or received by the Company, as applicable, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and, in the case of the
Registration Statement required to be filed pursuant to Section 2(a), each
letter written by or on behalf of the Company to the SEC or the staff of the SEC
(including, without limitation, any request to accelerate the effectiveness of
the Registration Statement or amendment thereto), and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
the Registration Statement (other than any portion thereof that contains
information for which the Company has sought confidential treatment), (ii) on
the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Company has been orally advised by the SEC
that the Registration Statement or amendment has been declared effective, and
(iii) such number of copies of a prospectus, including a preliminary prospectus,
all amendments and supplements thereto and all such other documents as such
Investor may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
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(d) The Company shall use commercially reasonable efforts to (i)
register and qualify the Registrable Securities covered by any Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as each Investor who holds Registrable Securities being
offered 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 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 (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause the Company undue expense
or burden, or (E) make any change in its Certificate of Incorporation or Bylaws,
which in each case the Board of Directors of the Company determines to be
contrary to the best interests of the Company and its stockholders.
(e) As promptly as practicable after becoming aware of such event,
the Company shall (i) notify each Investor by telephone and facsimile of the
happening of any event, as a result of which the prospectus included in any
Registration Statement that includes Registrable Securities, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
(f) The Company shall use its best efforts (i) to prevent the
issuance of any stop order or other suspension of effectiveness of any
Registration Statement that includes Registrable Securities, and, if such an
order is issued, to obtain the withdrawal of such order at the earliest
practicable moment (including in each case by amending or supplementing such
Registration Statement), and (ii) to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).
(g) The Company shall permit a single firm of counsel designated
by the Initial Investors to review any Registration Statement required to be
filed hereunder and all amendments and supplements thereto a reasonable period
of time prior to its filing with the SEC, and not file any document in a form to
which such counsel reasonably objects.
(h) The Company shall make generally available to its security
holders as soon as practicable, but in no event later than 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-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.
The Company will be deemed to have complied with its obligations under this
Section 3(h) upon the Company's filing,
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on an appropriate form, the appropriate report of the Company as required by the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "EXCHANGE ACT").
(i) The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement that
includes such Investor's Registrable Securities, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement, or (v) such Investor consents to the form and content of
any such disclosure; provided, however, that the Initial Investors expressly
agree and consent to the filing of this Agreement and related transaction
documents as exhibits to the Company's Exchange Act reports. The Company shall,
upon learning that disclosure of any information concerning an Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor prior to making such
disclosure, and cooperate with the Investor, at the Investor's expense, in
taking appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
(j) The Company shall use commercially reasonable efforts to
promptly cause all of the Registrable Securities covered by any Registration
Statement to be listed or designated for quotation on the SmallCap Market, the
National Market, the NYSE, the AMEX or any other national securities exchange or
automated quotation system and on each additional national securities exchange
or automated quotation system on which securities of the same class or series
issued by the Company are then listed or quoted, if any, if the listing or
quotation of such Registrable Securities is then permitted under the rules of
such exchange or automated quotation system, and in any event, without limiting
the generality of the foregoing, to arrange for or maintain at least two market
makers to register with the National Association of Securities Dealers, Inc.
(the "NASD") as such with respect to the Registrable Securities.
(k) To the extent not already provided, the Company shall provide
a transfer agent and registrar, which may be a single entity, for the
Registrable Securities not later than the effective date of the Registration
Statement required to be filed pursuant to Section 2(a) hereof.
(l) The Company shall cooperate with any Investor who holds
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to any Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, and
registered in such names, as such Investor or the managing underwriter or
underwriters, if any, may reasonably request. Without limiting the generality of
the foregoing, within three business days after any Registration Statement that
includes Registrable Securities is declared effective by the SEC, the Company
shall cause legal counsel selected by the Company to deliver to the transfer
agent for the Registrable Securities (with copies to any Investor whose
Registrable Securities are included in such Registration Statement), an opinion
of such counsel substantially in the form attached hereto as Exhibit B.
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(m) At the reasonable request of any Investor, the Company shall
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to any Registration Statement required to be filed
hereunder and the prospectus used in connection with such Registration Statement
as may be necessary in order to change the plan of distribution set forth in
such Registration Statement; provided that such plan of distribution comports
with applicable SEC and NASD rules and requirements.
(n) Notwithstanding anything to the contrary herein, the Company
shall comply with all applicable laws related to a Registration Statement and
offering and sale of securities and all applicable rules and regulations of
governmental authorities in connection therewith (including, without limitation,
the Securities Act and the Exchange Act and the rules and regulations thereunder
promulgated by the SEC.)
(o) From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
to include any of their securities which are not Registrable Securities in the
Registration Statement required to be filed pursuant to Section 2(a) or 3(b)
hereof without the consent of the holders of a majority in interest of the
Registrable Securities.
(p) The Company shall make available for inspection by (i) each
Investor, (ii) any underwriter participating in any disposition pursuant to any
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (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 to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) of
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, (B) the release of such
Records is ordered pursuant to a subpoena or other 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. Nothing herein shall be deemed to
limit any Investor's ability to sell Registrable Securities in a manner that is
otherwise consistent with applicable laws and regulations.
(q) In the case of an underwritten public offering, at the request
of any Investor, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) a copy of each opinion from counsel representing the
Company given to any underwriter in such underwritten public offering and (ii) a
copy of each letter from the Company's independent certified public accountants
given to any underwriter in such underwritten public offering.
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4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, each
Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to effect the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five
trading days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.
(b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement required to be filed hereunder, unless such Investor has
notified the Company in writing of such Investor's election to exclude all of
such Investor's Registrable Securities from such Registration Statement.
(c) Upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(e) or 3(f) with respect to any
Registration Statement including Registrable Securities, each Investor shall
immediately discontinue disposition of Registrable Securities pursuant to such
Registration Statement until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) and 3(f), as
applicable, and, if so directed by the Company, such Investor shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's possession
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Notwithstanding the foregoing or anything to the
contrary in this Agreement, but subject to compliance with applicable laws, the
Company shall cause the transfer agent for the Registrable Securities to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Preferred Stock and Warrants in connection with any sale
of Registrable Securities with respect to which any such Investor has entered
into a contract for sale prior to receipt of such notice and for which any such
Investor has not yet settled.
(d) No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below, and (iv) complies with all applicable laws
in connection therewith. Notwithstanding anything in this Section 4(d) to the
contrary, this Section 4(d) is not intended to limit any Investor's rights under
Sections 2(a) or 3(b) hereof.
10
5. EXPENSES OF REGISTRATION.
All expenses incurred by the Company or the Investors in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3 above
(including, without limitation, all registration, listing and qualification
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company and the fees and disbursements of one counsel selected by the
Investors holding a majority of the Registrable Securities (with a maximum
reimbursable fee of $7,500 unless otherwise approved by the Company, which
approval shall not be withheld unreasonably), and any underwriting discounts and
commissions other than those relating to shares of the Registrable Securities
sold on behalf of the Investors in such offering, which shall be borne solely by
the Investors) shall be borne by the Company. In addition, the Company shall pay
each Investor's costs and expenses (including legal fees) incurred in connection
with the enforcement of the rights of such Investor hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees and
agents of each such Investor and each person, if any, who controls each such
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (each, an "INVESTOR INDEMNIFIED PERSON"), against any joint or
several losses, claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "CLAIMS") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (A) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (B) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (C) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any other law (including, without
limitation, any state securities law), rule or regulation relating to the offer
or sale of the Registrable Securities (the matters in the foregoing clauses (A)
through (C), collectively, "VIOLATIONS"). Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim 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 Investor Indemnified Person (or
their counsel on behalf of such Investor Indemnified Person) expressly for use
in the Registration Statement or any such amendment thereof or supplement
thereto; (y) 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; and (z) with respect to any
prospectus, shall not
11
inure to the benefit of any Investor Indemnified Person if the untrue statement
or omission of material fact contained in the prospectus was corrected on a
timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3(c) hereof, and the Investor Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Investor Indemnified Person, notwithstanding such advice,
used it. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investor Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9 hereof.
(b) In connection with any Registration Statement in which an
Investor is participating, (i) each such Investor shall, severally and not
jointly, indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (each, a "COMPANY INDEMNIFIED
PERSON"), against any Claims to which any of them may become subject insofar as
such Claims arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
(or their counsel on their behalf) expressly for use in connection with such
Registration Statement; and (ii) subject to the restrictions set forth in
Section 6(c), such Investor shall reimburse the Company Indemnified Persons,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim; provided, however, that the
indemnification obligations contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; and provided, further, that the Investor shall be liable
under this Agreement (including this Section 6(b) and Section 7) for only that
amount as does not exceed the net proceeds actually received by such Investor 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 Company Indemnified Person and
shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9 hereof. Notwithstanding anything to the contrary contained
herein, the indemnification obligations contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Company Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
(c) Promptly after receipt by any party entitled to
indemnification under this Section 6 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a Claim in
respect thereof is to 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
12
assume control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the indemnified party; provided, however, that such
indemnifying party shall not be entitled to assume such defense and an
indemnified party shall have the right to retain its own counsel with the fees
and expenses 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 party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
indemnified party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and any
such indemnified party reasonably determines that there may be legal defenses
available to such indemnified party that are in conflict with those available to
such indemnifying party. The indemnifying party shall pay for only one separate
legal counsel for the indemnified parties, and such legal counsel shall be
selected by Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates (if
the parties entitled to indemnification hereunder are Investor Indemnified
Persons) or by the Company (if the parties entitled to indemnification hereunder
are Company Indemnified Persons). 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 party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
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 such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party shall 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 as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, with respect to the Violation giving rise
to the applicable Claim; provided, however, that (a) no contribution shall be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (b) no person
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 such fraudulent misrepresentation,
and (c) contribution (together with any indemnification or other obligations
under this Agreement) 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 Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
13
(a) file with the SEC in a timely manner and make and keep
available 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 and the filing and availability of such reports and other
documents is required for the applicable provisions of Rule 144; and
(b) furnish to each Investor so long as such Investor holds
Preferred Stock, Warrants or 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 such Investor to sell such securities
under Rule 144 without registration (to the extent such Rule is available to the
Investors).
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Preferred Stock, the Warrants or the Registrable Securities if:
(a) the Investor agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company after such
assignment, (b) the Company is furnished with written notice of (i) the name and
address of such transferee or assignee, and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (c) following
such transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) the transferee or assignee agrees in writing for the
benefit of the Company to be bound by all of the provisions contained herein,
and (e) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement, the Certificate of
Designation and the Warrants, as applicable. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Securities Purchase
Agreement, the Certificate of Designation or the Warrants, the Securities (as
defined in the Securities Purchase Agreement) may be pledged, and all rights of
the Investor under this Agreement or any other agreement or document related to
the transactions contemplated hereby may be assigned, without further consent of
the Company, to a bona fide pledgee in connection with an Investor's margin or
brokerage account.
10. 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 written consent of the Company and
the Investor(s) who hold a majority in interest of the Registrable Securities
or, in the case of a waiver, with the written consent of the party charged with
the enforcement of any such provision; provided, however, that (a) no amendment
hereto which restricts the ability of an Investor to elect not to participate in
an underwritten offering shall be effective against any Investor which does not
consent in writing to such amendment; (b) no consideration shall be paid to an
Investor by the Company in connection with an amendment hereto unless each
Investor similarly affected by such amendment receives a pro rata amount of
consideration from the Company; and (c) unless an Investor otherwise agrees,
each amendment
14
hereto must similarly affect each Investor. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company and their respective permitted successors and assigns.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities 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) Any notices required or permitted to be given under the terms
of this Agreement shall be in writing and sent by certified or registered mail
(return receipt requested) or delivered personally, by nationally recognized
overnight carrier or by confirmed facsimile transmission, and shall be effective
five days after being placed in the mail, if mailed, or upon receipt or refusal
of receipt, if delivered personally or by nationally recognized overnight
carrier or confirmed facsimile transmission, in each case addressed to a party
as provided herein. The initial addresses for such communications shall be as
follows, and each party shall provide notice to the other parties of any change
in such party's address:
(i) If to the Company:
Remote Dynamics, Inc.
0000 Xxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx, Esquire
with a copy simultaneously transmitted by like means
(which transmittal shall not constitute notice
hereunder) to:
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esquire
(ii) If to any Investor, to such address as such Investor
shall have provided in writing to the Company.
(c) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
15
(d) 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 in the State of Delaware. Each party irrevocably consents to
the jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, State of Delaware in any suit or proceeding
based on or arising under this Agreement and irrevocably agrees that all claims
in respect of such suit or proceeding may be determined in such courts. Each
party irrevocably waives the defense of an inconvenient forum to the maintenance
of such suit or proceeding. Each party further agrees that service of process
upon such party, mailed by first class mail shall be deemed in every respect
effective service of process upon such party in any such suit or proceeding in
such forum. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. Each party agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(e) This Agreement and the other Transaction Documents (including
any schedules and exhibits hereto and thereto) 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 and the other
Transaction Documents supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(g) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more 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.
(i) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as 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.
(j) Unless other expressly provided herein, all consents,
approvals and other determinations to be made by the Investors pursuant to this
Agreement shall be made by the Investors holding a majority in interest of the
Registrable Securities (determined as if all Preferred Stock and Warrants then
outstanding had been converted into or exercised for Registrable Securities)
held by all Investors.
(k) The initial number of Registrable Securities included on any
Registration Statement filed pursuant to Section 2(a) or 3(b), and each increase
to the number of Registrable
16
Securities included thereon, shall be allocated pro rata among the Investors
based on the number of Registrable Securities held by each Investor at the time
of such establishment or increase, as the case may be. In the event an Investor
shall sell or otherwise transfer any of such holder's Registrable Securities,
each transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such transferor.
Any shares of Common Stock included on a Registration Statement and which remain
allocated to any person or entity which does not hold any Registrable Securities
shall be allocated to the remaining Investors, pro rata based on the number of
shares of Registrable Securities then held by such Investors. For the avoidance
of doubt, the number of Registrable Securities held by any Investor shall be
determined as if all Preferred Stock and Warrants then outstanding were
converted into or exercised for Registrable Securities.
(l) Each party to this Agreement has participated in the
negotiation and drafting of this Agreement. As such, the language used herein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
17
IN WITNESS WHEREOF, the undersigned Initial Investor and the Company
have caused this Agreement to be duly executed as of the date first above
written.
REMOTE DYNAMICS, INC.
By: /s/ W. Xxxxxxx Xxxxx
---------------------------
Name: W. Xxxxxxx Xxxxx
Title: Chief Operating Officer
INITIAL INVESTOR:
SDS CAPITAL GROUP SPC, LTD. for itself and on behalf of its Class A Segregated
portfolio, Class B Segregated portfolio, Class C Segregated portfolio and all
future Segregated portfolios created by it from time to time
------------------------------------------------------------
(Print or Type Name of Purchaser)
By: /s/ Xxxxx Xxxxx
--------------------
Name: Xxxxx Xxxxx
Title: Managing Member
EXHIBIT B
[Date]
[Transfer Agent]
RE: REMOTE DYNAMICS, INC.
Ladies and Gentlemen:
We are counsel to Remote Dynamics, Inc., a corporation organized under the laws
of the State of Delaware (the "COMPANY"), and we understand that [Name of
Investor] (the "HOLDER") has purchased from the Company (i) shares of Series A
Convertible Preferred Stock that are convertible into shares of the Company's
common stock, par value [$___] per share (the "COMMON STOCK"), and (ii) warrants
to acquire shares of Common Stock. Pursuant to a Registration Rights Agreement,
dated as of October 1, 2004, by and among the Company and the signatories
thereto (the "REGISTRATION RIGHTS AGREEMENT"), the Company agreed with the
Holder, among other things, to register the Registrable Securities (as that term
is defined in the Registration Rights Agreement) under the Securities Act of
1933, as amended (the "SECURITIES ACT"), upon the terms provided in the
Registration Rights Agreement. In connection with the Company's obligations
under the Registration Rights Agreement, on _____________ ___, ____, the Company
filed a Registration Statement on Form S-3 (File No. 333- _____________) (the
"REGISTRATION STATEMENT") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder. The Registration Statement was declared
effective by the SEC on _____________, ____.
In connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered into an order declaring the
Registration Statement effective under the Securities Act at [time of
effectiveness] on [date of effectiveness], and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC.
Based on the foregoing, we are of the opinion that the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
Very truly yours,
[NAME OF COUNSEL]
cc: [Name of Investor]
