REGISTRATION RIGHTS AGREEMENT
Exhibit
10.6
This
Registration Rights Agreement (this “Agreement”) is made and entered into as of
August 24, 2006, by and between APPLIED DIGITAL SOLUTIONS, INC., a Missouri
corporation (the “Company”), and LAURUS MASTER FUND, LTD., a Cayman Islands
company (the “Purchaser”).
This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the
date hereof, by and among the Purchaser and the Company (as amended, modified
or
supplemented from time to time, the “Purchase Agreement”), and pursuant to the
Warrants referred to therein.
The
Company and the Purchaser hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement shall have the meanings given such terms in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
shares of the Company’s common stock, par value $0.01 per share.
“Effectiveness
Date”
means,
(i) with respect to the Registration Statement required to be filed in
connection with the Warrants issued on the date hereof, a date no later than
one
hundred eighty days (180) days following such date, (ii) with respect to each
additional Registration Statement required to be filed hereunder (if any),
a
date no later than forty five (45) days following the applicable Filing Date,
and (iii) with respect to a Registration Statement that is subject to a full
review by the Commission, a date no later than one hundred twenty (120) days
following the applicable Filing Date.
“Effectiveness
Period”
has the
meaning set forth in Section 2(a).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and any successor
statute.
“Filing
Date”
means,
with respect to (1) the Registration Statement required to be filed in
connection with the shares of Common Stock issuable to the Holder upon exercise
of a Warrant, the date which is sixty (60) days after the issuance of such
Warrant, and (2) the Registration Statement required to be filed in connection
with the shares of Common Stock issuable to the Holder as a result of
adjustments to the Exercise Price and the number of shares of Common Stock
issuable to the Holder upon exercise made pursuant to Section 4 of the Warrant
or otherwise, thirty (30) days after the occurrence of such event or the date
of
such adjustments.
“Holder”
or
“Holders”
means
the Purchaser or any of its affiliates or transferees to the extent any of
them
hold Registrable Securities, other then those purchasing Registrable Securities
in a market transaction.
“Indemnified
Party”
has the
meaning set forth in Section 5(c).
“Indemnifying
Party”
has the
meaning set forth in Section 5(c).
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or to the Company's Knowledge, threatened.
“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 such 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.
“Purchase
Agreement”
has the
meaning given to such term in the Preamble hereto.
“Registrable
Securities”
means
the shares of Common Stock issuable upon exercise of the Warrants; provided,
however, that "Registrable Securities" shall not include any such shares that
have been sold to the public pursuant to the Registration Statement or Rule
144.
“Registration
Statement”
means
each registration statement required to be filed hereunder, including the
Prospectus therein, 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.
“Rule
144”
means
Rule 144 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
“Rule
415”
means
Rule 415 promulgated by the Commission 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 Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended, and any successor statute.
“Trading
Market”
means
any of the NASD Over The Counter Bulletin Board, NASDAQ Capital Market, the
NASDAQ National Markets System, the American Stock Exchange or the New York
Stock Exchange.
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“Warrants”
means
the Common Stock purchase warrants issued in connection with the Purchase
Agreement, whether on the date thereof or thereafter.
2. Registration.
(a) On
or
prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the Registrable Securities for
a
selling stockholder resale offering to be made on a continuous basis pursuant
to
Rule 415. Each Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith). The Company shall cause each Registration
Statement to become effective and remain effective as provided herein. The
Company shall use commercially reasonable efforts to cause each Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof. The Company shall use commercially reasonable
efforts to keep each Registration Statement continuously effective under the
Securities Act until the date which is the earlier date of when (i) all
Registrable Securities covered by such Registration Statement have been sold
or
(ii) all Registrable Securities covered by such Registration Statement may
be
sold immediately without registration under the Securities Act and 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 (each, an
“Effectiveness Period”). In no event will the Company be required (i) to pay a
penalty for failure to cause each Registration Statement to be declared
effective or for failure to cause each Registration Statement to remain
effective; (ii) to pay liquidating damages in connection with the Warrants;
and
(iii) to make a cash payment in connection with the settlement of the
Warrants.
(b)
Within
three business days of the Effectiveness Date, the Company shall cause its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
to
the transfer agent stating that the shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by the Purchaser and confirmation by the Purchaser that it
has
complied with the prospectus delivery requirements, provided that the Company
has not advised the transfer agent orally or in writing that the opinion has
been withdrawn. Copies of the blanket opinion required by this Section 2(b)
shall be delivered to the Purchaser within the time frame set forth above.
3. Registration
Procedures.
If and
whenever the Company is required by the provisions hereof to effect the
registration of any Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare
and file with the Commission a Registration Statement with respect to such
Registrable Securities, respond as promptly as possible to any comments received
from the Commission, and use commercially reasonable efforts to cause such
Registration Statement to become and remain effective for the Effectiveness
Period with respect thereto, and promptly provide to the Purchaser copies of
all
filings and Commission letters of comment relating thereto;
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(b) prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may
be
necessary to comply with the provisions of the Securities Act with respect
to
the disposition of all Registrable Securities covered by such Registration
Statement and to keep such Registration Statement effective until the expiration
of the Effectiveness Period applicable to such Registration
Statement;
(c) furnish
to the Purchaser such number of copies of the Registration Statement and the
Prospectus included therein (including each preliminary Prospectus) as the
Purchaser reasonably may request to facilitate the public sale or disposition
of
the Registrable Securities covered by such Registration Statement;
(d) use
commercially reasonable efforts to register or qualify the Purchaser’s
Registrable Securities covered by such Registration Statement under the
securities or “blue sky” laws of such jurisdictions within the United States as
the Purchaser may reasonably request, provided, however, that the Company shall
not for any such purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not so qualified or
to
consent to general service of process in any such jurisdiction;
(e) list
the
Registrable Securities covered by such Registration Statement with any
securities exchange on which the Common Stock of the Company is then listed;
(f) promptly
notify the Purchaser at any time when a Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event of
which
the Company has Knowledge as a result of which the Prospectus contained in
such
Registration Statement, 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 in light of the
circumstances then existing; and
(g) make
available for inspection by the Purchaser and any attorney, accountant or other
agent retained by the Purchaser during normal business hours, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the attorney, accountant or agent of the
Purchaser.
4. Registration
Expenses.
All
expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the NASD, transfer taxes, and fees of transfer agents and registrars are called
“Registration Expenses.” All selling commissions applicable to the sale of
Registrable Securities, including any fees and disbursements of any counsel
to
the Holders, are called “Selling Expenses.” The Company shall only be
responsible for Registration Expenses not any Selling Expenses.
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5. Indemnification.
(a) In
the
event of a registration of any Registrable Securities under the Securities
Act
pursuant to this Agreement, the Company will indemnify and hold harmless each
Holder, and its officers, directors and each other person, if any, who controls
such Holder within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such Holder, or
such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Securities were registered under the Securities Act pursuant to
this
Agreement, any preliminary Prospectus or final Prospectus contained therein,
or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and
will reimburse such Holder, and each such person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however,
that
the Company will not be liable in any such case if and to the extent that any
such loss, claim, damage or liability arises out of or is (i) based upon an
untrue statement or alleged untrue statement or omission or alleged omission
so
made in conformity with information furnished by or on behalf of the Purchaser
or any such person specifically for use in any such document, or (ii) based
on a
failure of such person to deliver or cause to be delivered the final Prospectus
contained in the Registration Statement and made available by the
Company.
(b) In
the
event of a registration of the Registrable Securities under the Securities
Act
pursuant to this Agreement, the Purchaser will indemnify and hold harmless
the
Company, and its officers, directors and each other person, if any, who controls
the Company within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact which was furnished by the Purchaser to the Company
expressly for use in (and such information is contained in) the Registration
Statement under which such Registrable Securities were registered under the
Securities Act pursuant to this Agreement, any preliminary Prospectus or final
Prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such person
for
any reasonable legal or other expenses incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action
provided,
however,
that
the Purchaser will be liable in any such case if and only to the extent that
any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in
conformity with information furnished to the Company by or on behalf of the
Purchaser specifically for use in any such document. Notwithstanding the
provisions of this paragraph, the Purchaser shall not be required to indemnify
any person or entity in excess of the amount of the aggregate net proceeds
received by the Purchaser in respect of Registrable Securities in connection
with any such registration under the Securities Act.
(c) Promptly
after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action,
such
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Indemnified
Party shall, if a claim for indemnification in respect thereof is to be made
against a party hereto obligated to indemnify such Indemnified Party (an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
omission so to notify the Indemnifying Party shall not relieve it from any
liability which it may have to such Indemnified Party other than under this
Section 5(c) and shall only relieve it from any liability which it may have
to
such Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such action
shall
be brought against any Indemnified Party and it shall notify the Indemnifying
Party of the commencement thereof, the Indemnifying Party shall be entitled
to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such Indemnified Party, and, after
notice from the Indemnifying Party to such Indemnified Party of its election
so
to assume and undertake the defense thereof, the Indemnifying Party shall not
be
liable to such Indemnified Party under this Section 5(c) for any legal expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof; if the Indemnified Party retains its own counsel, then the Indemnified
Party shall pay all fees, costs and expenses of such counsel, provided,
however,
that,
if the defendants in any such action include both the Indemnified Party and
the
Indemnifying Party and the Indemnified Party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests
of the Indemnifying Party, the Indemnified Party shall have the right to select
one separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and
fees
of such separate counsel and other expenses related to such participation to
be
reimbursed by the Indemnifying Party as incurred.
(d) In
order
to provide for just and equitable contribution in the event of joint liability
under the Securities Act in any case in which either (i) the Purchaser, or
any
officer, director or controlling person of the Purchaser, makes a claim for
indemnification pursuant to this Section 5 but it is judicially determined
(by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of the
Purchaser or such officer, director or controlling person of the Purchaser
in
circumstances for which indemnification is provided under this Section 5; then,
and in each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Purchaser is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the Registration Statement bears
to
the public offering price of all securities offered by such Registration
Statement, provided,
however,
that,
in any such case, (A) the Purchaser will not be required to contribute any
amount in excess of the public offering price of all such securities offered
by
it pursuant to such Registration Statement; and (B) no person or entity guilty
of fraudulent misrepresentation (within the meaning of Section 10(f) of the
Act)
will be entitled to contribution from any person or entity who was not guilty
of
such fraudulent misrepresentation.
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6. Representations
and Warranties.
(a) The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has timely filed all proxy statements, reports, schedules,
forms, statements and other documents required to be filed by it under the
Exchange Act. The Company has filed (i) its Annual Report on Form 10-K for
its
fiscal year ended December 31, 2005 and (ii) its Quarterly Report on Form 10-Q
for the fiscal quarters ended March 31, 2006, and June 30, 2006 (collectively,
the “SEC Reports”). Each SEC Report was, at the time of its filing, in
substantial compliance with the requirements of its respective form and none
of
the SEC Reports, nor the financial statements (and the notes thereto) included
in the SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted 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. The financial
statements of the Company included in the SEC Reports comply as to form in
all
material respects with applicable accounting requirements and the published
rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles (“GAAP”) applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the
case
of unaudited interim statements, to the extent they may not include footnotes
or
may be condensed) and fairly present in all material respects the financial
condition, the results of operations and the cash flows of the Company and
its
subsidiaries, on a consolidated basis, as of, and for, the periods presented
in
each such SEC Report.
(b) The
Common Stock is listed or quoted, as applicable, for trading on the NASDAQ
Capital Market and satisfies all requirements for the continuation of such
listing or quotation, as applicable, and the Company shall do all things
necessary for the continuation of such listing or quotation, as applicable.
The
Company has not received any notice that its Common Stock will be delisted
from
or no longer be quoted on, as applicable, the NASDAQ Capital Market (except
for
prior notices which have been fully remedied) or that the Common Stock does
not
meet all requirements for the continuation of such listing or quotation, as
applicable.
(c) To
the
Company's Knowledge, neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security under
circumstances that would cause the offering of the Securities pursuant to the
Purchase Agreement to be integrated with prior offerings by the Company for
purposes of the Securities Act which would prevent the Company from selling
the
Common Stock pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of
its affiliates or subsidiaries take any action or steps that would cause the
offering of the Common Stock to be integrated with other offerings (other than
such concurrent offering to the Purchaser).
(d) The
Warrants and the shares of Common Stock that the Purchaser may acquire pursuant
to the Warrants are all restricted securities under the Securities Act as of
the
date of this Agreement. The Company will not issue any stop transfer order
or
other order impeding the sale and delivery of any of the Registrable Securities
at such time as such Registrable Securities are registered for public sale
or an
exemption from registration is available, except as required by federal or
state
securities laws.
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(e) The
Company understands the nature of the Registrable Securities issuable upon
the
exercise of each Warrant and recognizes that the issuance of such Registrable
Securities may have a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the Registrable Securities is binding
upon the Company and enforceable regardless of the dilution such issuance may
have on the ownership interests of other shareholders of the
Company.
(f) Except
for agreements made in the ordinary course of business, there is no agreement
that has not been filed with the Commission as an exhibit to a registration
statement or to a form required to be filed by the Company under the Exchange
Act, the breach of which could reasonably be expected to have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material
respect.
(g) The
Company will at all times have authorized and reserved a sufficient number
of
shares of Common Stock for the full exercise of the Warrants.
(h) The
Company shall provide written notice to each Holder of (i) the occurrence of
each Discontinuation Event (as defined below) and (ii) the declaration of
effectiveness by the SEC of each Registration Statement required to be filed
hereunder, in each case within three (3) business days of the date of each
such
occurrence and/or declaration.
7. Obligations
of Each Holder.
In
connection with the registration of Registrable Securities pursuant to a
Registration Statement, each Holder shall:
(a)
timely furnish to the Company in writing such information regarding itself
and
the intended method of disposition of such Registrable Securities as the Company
shall reasonably request in order to effect the registration thereof;
(b)
upon
receipt of any notice from the Company of the happening of any Discontinuation
Event of the kind described in Section 8(d), immediately discontinue any sale
or
other disposition of such Registrable Securities pursuant to such Registration
Statement until the filing of an amendment or supplement;
(c)
to
the extent required by applicable law, deliver a preliminary and definitive
prospectus to the purchaser of Registrable Securities sold under the
Registration Statement;
(d)
notify the Company when it has sold all of the Registrable Securities held
by
it; and
(e)
notify the Company promptly in the event that any information supplied by such
Holder in writing for inclusion in such Registration Statement or related
prospectus is untrue or omits to state a material fact required to be stated
therein or necessary to make such information not misleading in light of the
circumstances then existing; immediately discontinue any sale or other
disposition of such Registrable Securities pursuant to such
Registration
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Statement
until the filing of an amendment or supplement to such prospectus as may be
necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and provide the Company with updates on such
information as may be appropriate to make such amendment or supplement effective
for such purpose.
8. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by a Holder, of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The failure of the
Company to cause each Registration Statement to become effective and to remain
effective as provided herein shall not convey to the Holder(s) any rights to
the
recovery of monetary and or liquidated damages. In the event of a breach by
the
Company of any of their obligations under this Agreement, the Holder(s) damages
thereof shall not exceed the delivery of shares of the Company’s common stock
equal to 10% of the number of shares of the Company’s common stock affected by
the breach.
(b)
No Piggyback on Registrations.
Neither
the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in any
Registration Statement other than the Registrable Securities, and the Company
shall not after the date hereof enter into any agreement providing any such
right for inclusion of shares in the Registration Statement to any of its
security holders, in each case, without the prior written consent of Laurus,
which consent shall not be unreasonably withheld. The Company has not previously
entered into any agreement granting any registration rights with respect to
any
of its securities to any person or entity that have not been fully satisfied
except as disclosed on Schedule 4.15 to the Securities Purchase
Agreement.
(c) Compliance.
Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to any Registration Statement.
(d) Discontinued
Disposition.
Each
Holder agrees by its acquisition of such Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of a Discontinuation
Event (as defined below), such Holder will forthwith discontinue disposition
of
such Registrable Securities under the applicable Registration Statement until
such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. For purposes of this Agreement, a
“Discontinuation Event” shall mean (i) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement (the Company
shall
provide true and complete copies thereof and all written responses thereto
to
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each
of
the Holders); (ii) any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information; (iii) the issuance by
the
Commission of any stop order suspending the effectiveness of such Registration
Statement covering any or all of the Registrable Securities or the initiation
of
any Proceedings for that purpose; (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and/or (v) the occurrence of any event or passage of time that makes
the financial statements included in such Registration Statement ineligible
for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by
reference untrue in any material respect or that requires any revisions to
such
Registration Statement, Prospectus or other documents so that, in the case
of
such Registration Statement or Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(e) Piggy-Back
Registrations.
If at
any time after the date hereof there is not an effective Registration Statement
covering all of the Registrable Securities required to be covered hereunder
and
the Company shall determine to prepare and file with the Commission 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 stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of
such
determination and, if within fifteen (15) days after receipt of such notice,
any
such Holder shall so request in writing, the Company shall use commercially
reasonable efforts to include in such registration statement all or any part
of
such Registrable Securities such Holder requests to be registered, to the extent
the Company may do so without violating registration rights of others which
exist as of the date of this Agreement, subject to customary underwriter
cutbacks applicable to all holders of registration rights and subject to
obtaining any required consent of any selling stockholder(s) to such inclusion
under such registration statement.
(f) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and the Holders of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to
the
rights of certain Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority of the
Registrable Securities to which such waiver or consent relates; provided,
however,
that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding
sentence.
(g) Notices.
Any
notice or request hereunder may be given to the Company or the Purchaser at
the
respective addresses set forth below or as may hereafter be specified in
a
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10
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notice
designated as a change of address under this Section 8(g). Any notice or request
hereunder shall be given by registered or certified mail, return receipt
requested, hand delivery, overnight mail, Federal Express or other national
overnight next day carrier (collectively, “Courier”) or telecopy (confirmed by
mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any party to whom it is addressed,
in the case of those by mail or overnight mail, deemed to have been given three
(3) business days after the date when deposited in the mail or with the
overnight mail carrier, in the case of a Courier, the next business day
following timely delivery of the package with the Courier, and, in the case
of a
telecopy, when confirmed. The address for such notices and communications shall
be as follows:
| If to the Company: | Applied Digital Solutions, Inc. | ||
| 0000 Xxxxxxxx Xxxxxx, Xxxxx 000 | |||
| Xxxxxx Xxxxx, XX 00000 | |||
| Attention: Xxxxxxx Xxxxxxx | |||
|
Facsimile:
000-000-0000
|
|||
| With a copy to: | Xxxxxx Xxxxxxx, Esq. | ||
| Holland & Knight LLP | |||
| 000 Xxxxxxxx Xxxxxx, Xxxxx 0000 | |||
| Xxxxx, XX 00000 | |||
| Facsimile: 000-000-0000 | |||
| If to a Purchaser: | To the address set forth under such Purchaser name on the signature pages hereto. | ||
|
If
to any other Person who is
then
the registered Holder:
|
To
the address of such Holder as it
appears
in the stock transfer books of
the
Company
|
||
or
such
other address as may be designated in writing hereafter in accordance with
this
Section 8(g) by such Person.
(h) Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the persons and entities as
permitted under the Purchase Agreement.
(i) Execution
and Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid
binding
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11
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obligation
of the party executing (or on whose behalf such signature is executed) the
same
with the same force and effect as if such facsimile signature were the original
thereof.
(j) Governing
Law, Jurisdiction and Waiver of Jury Trial.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH
STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company hereby
consents and agrees that the state or federal courts located in the County
of
New York, State of New York shall have exclusive jurisdiction to hear and
determine any Proceeding between the Company, on the one hand, and the
Purchaser, on the other hand, pertaining to this Agreement or to any matter
arising out of or related to this Agreement; provided,
that
the Purchaser and the Company acknowledge that any appeals from those courts
may
have to be heard by a court located outside of the County of New York, State
of
New York, and further provided,
that
nothing in this Agreement shall be deemed or operate to preclude the Purchaser
from bringing a Proceeding in any other jurisdiction to enforce a judgment
or
other court order in favor of the Purchaser. The Company expressly submits
and
consents in advance to such jurisdiction in any Proceeding commenced in any
such
court, and the Company hereby waives any objection which it may have based
upon
lack of personal jurisdiction, improper venue or forum
non conveniens.
The
Company hereby waives personal service of the summons, complaint and other
process issued in any such Proceeding and agrees that service of such summons,
complaint and other process may be made by registered or certified mail
addressed to the Company at the address set forth in Section 8(g) and that
service so made shall be deemed completed upon the Company’s actual receipt
thereof. The parties hereto desire that their disputes be resolved by a judge
applying such applicable laws. Therefore, to achieve the best combination of
the
benefits of the judicial system and of arbitration, the parties hereto waive
all
rights to trial by jury in any Proceeding brought to resolve any dispute,
whether arising in contract, tort, or otherwise between the Purchaser and/or
the
Company arising out of, connected with, related or incidental to the
relationship established between then in connection with this Agreement. If
either party hereto shall commence a Proceeding to enforce any provisions of
this Agreement, the Purchase Agreement or any other Related Agreement, then
the
prevailing party in such Proceeding shall be reimbursed by the other party
for
its reasonable attorneys’ fees and other costs and expenses incurred in
connection with the investigation, preparation and prosecution of such
Proceeding.
(k) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(l) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
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12
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(m) Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
[Balance
of page intentionally left blank; signature page follows]
|
13
|
IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as
of the date first written above.
APPLIED
DIGITAL SOLUTIONS, INC.
By:
/s/ Xxxx X.
XxXxxxx
Name:
Xxxx X.
XxXxxxx
Title:
SVP &
CFO
LAURUS
MASTER FUND, LTD.
By:
/s/ Xxxxx
Grin
Name:
Xxxxx
Grin
Title:
Director
Address
for Notices:
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx Grin
Facsimile:
000-000-0000
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14
|
EXHIBIT
A
________,
200__
[Continental
Stock Transfer
&
Trust Company
Two
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx Xxxxxxxxx]
Re:
Applied
Digital Solutions, Inc. Registration Statement on Form [S-3]
Ladies
and Gentlemen:
I
am
General Counsel of Applied Digital Solutions, Inc., a Missouri corporation
(“ADSX”). In that capacity, I have been asked to deliver to you the opinion set
forth below relating to _______ shares of common stock of ADSX (the “Shares”)
that were registered with the Securities and Exchange Commission pursuant to
the
Securities Act of 1933, as amended (Registration Statement No. ______, declared
effective on ______ ___, 200___). A copy of the prospectus is attached for
your
records.
Based
on
my review of this transaction and of the documents and records as I have
considered appropriate, I am of the opinion that the Shares of common stock
will
not require a restrictive legend stating that such shares may be transferred
only pursuant to a registration statement or an applicable exemption to
registration under the Securities Act of 1933. Any shares resulting from the
transfer of the Shares need not bear any restrictive legend.
Very
truly yours,
[Company
counsel]
|
|
Schedule
A to Exhibit A
|
Selling
Stockholder
|
R/N/O
|
Shares
Being
Offered
|
