EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (the "Agreement") made and entered into as
of May ____, 2004, between Secured Services, Inc., a Delaware corporation (the
"Company"), and the Subscribers named in the Subscription Agreement dated as of
the date hereof (collectively, the "Purchasers").
The Company and each Purchaser hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Subscription Agreement shall have the meanings given
such terms in the Subscription 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
$0.0001 per share.
"Effectiveness Date" means the 110th day following the closing under
the Subscription Agreement.
"Effectiveness Period" shall have 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 the Registration Statement
required to be filed hereunder, a date no later than thirty five (35) days
following the closing under the Subscription Agreement, with respect to shares
of Common Stock issuable to the Purchaser pursuant to the Subscription Agreement
and issuable on the exercise of the Warrants to be issued to the Purchaser
thereunder.
"Holder" or "Holders" means the Purchaser or any of its affiliates
or transferees to the extent any of them hold Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
5(c).
"Indemnifying Party" shall have 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 threatened.
"Prospectus" means the prospectus included in the 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 the 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.
"Registrable Securities" means the shares of Common Stock issuable
under the Subscription Agreement and issuable upon exercise of the Warrants.
"Registration Statement" means each registration statement required
to be filed hereunder, including the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"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.
"Rule 424" means Rule 424 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.
"Subscription Agreement" means the agreement between the parties
hereto calling for the issuance by the Company of 5,384,616 shares of Common
Stock and Warrants to purchase 1,346,154 shares of common stock.
"Trading Market" means any of the NASD OTC Bulletin Board, NASDAQ
SmallCap Market, the Nasdaq National Market, the American Stock Exchange or the
New York Stock Exchange.
"Warrants" means the Common Stock purchase warrants issued pursuant
to the Subscription Agreement.
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2. Registration.
(a) On or prior to the Filing Date the Company shall prepare and
file with the Commission a Registration Statement covering the Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be initially on Form SB-2, and
as soon as reasonably practicable after the Company becomes eligible to
use Form S-3 (or any successor form) to register the Registrable
Securities, the Company shall prepare and file a Registration Statement
covering the Registrable Securities on Form S-3 and, upon effectiveness of
such Form S-3, such Registration Statement on Form S-3 shall thereafter be
the "Registration Statement" required hereunder. The Registration
Statement required hereunder shall contain (except if otherwise directed
by the Holders) the "Plan of Distribution" attached hereto as Annex A. The
Company shall cause the Registration Statement to become effective and
remain effective as provided herein. The Company shall use its best
efforts to cause the Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof, but
in any event no later than the Effectiveness Date. The Company shall use
its best efforts to keep the Registration Statement continuously effective
under the Securities Act until the date which is the earlier date of when
(i) all Registrable Securities have been sold or (ii) all Registrable
Securities 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 (the "Effectiveness Period").
(b) If: (i) the Registration Statement is not filed on or prior to
the Filing Date (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a), the Company shall not be deemed to have
satisfied clause (i)); (ii) the Company fails to file with the Commission
a request for acceleration in accordance with Rule 461 promulgated under
the Securities Act, within five Trading Days of the date that the Company
is notified (orally or in writing, whichever is earlier) by the Commission
that a Registration Statement will not be "reviewed," or not subject to
further review; (iii) prior to its Effectiveness Date, the Company fails
to file a pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration Statement
within 10 Trading Days after the receipt of comments by or notice from the
Commission that such amendment is required in order for a Registration
Statement to be declared effective; (iv) the Registration Statement is not
declared effective by the Commission by the Effectiveness Date; or (v)
after the Registration Statement is filed with and declared effective by
the Commission, the Registration Statement ceases to be effective (by
suspension or otherwise) as to all Registrable Securities to which it is
required to relate at any time prior to the expiration of the
Effectiveness Period (without being succeeded immediately by an additional
registration statement filed and declared effective) for a period of
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time which shall exceed 20 days in the aggregate per year or more than 10
consecutive calendar days, (any such failure or breach being referred to
as an "Event," and for purposes of clause (i) or (iv) the date on which
such Event occurs, or for purposes of clause (ii) the date on which such
five Trading Day period is exceeded, or for purposes of clause (iii) the
date which such 10 Trading Day period is exceeded, or for purposes of
clause (v) the date which such 30 day or 20 consecutive day period (as the
case may be) is exceeded, then until the applicable Event is cured, the
Company shall pay to each Holder an amount in cash, as liquidated damages
and not as a penalty, equal to 2.0% for each thirty (30) day period
(prorated for partial periods) on a daily basis of the original amount
invested by the Purchaser in the Registrable Securities. While such Event
continues, such liquidated damages shall be paid not less often than each
thirty (30) days. Any unpaid liquidated damages as of the date when an
Event has been cured by the Company shall be paid within three (3) days
following the date on which such Event has been cured by the Company. If
the Company fails to pay any liquidated damages pursuant to this Section
in full within seven days after the date payable, the Company will pay
interest thereon at a rate of 18% per annum (or such lesser maximum amount
that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full.
(c) Within three business days of the date on which the Registration
Statement becomes effective, the Company shall cause its counsel to issue
a blanket opinion 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.
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) in any event not less than five Trading Days prior to the filing
of each Registration Statement or any related Prospectus or any amendment
or supplement thereto (excluding any document that would be incorporated
or deemed incorporated therein by reference), (i) furnish to each Holder
copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to conduct a reasonable investigation within the
meaning of the Securities Act; the Company shall not file the Registration
Statement or any such Prospectus or any amendments or
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supplements thereto to which the Holders of a majority of the Registrable
Securities shall reasonably and in good faith object;
(b) prepare and file with the Commission the Registration Statement
with respect to such Registrable Securities, respond as promptly as
possible to any comments received from the Commission, and use its best
efforts to cause the Registration Statement to become and remain effective
for the Effectiveness Period with respect thereto as soon as reasonably
practicable, and promptly provide to the Purchaser copies of all filings
and Commission letters of comment relating thereto;
(c) prepare and file with the Commission such amendments, including
post-effective amendments and supplements to the 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 the Registration
Statement and to keep such Registration Statement effective until the
expiration of the Effectiveness Period; respond as promptly as reasonably
possible, and in any event within 15 Trading Days to any comments received
from the Commission with respect to a Registration Statement or any
amendment thereto and as promptly as reasonably possible provide the
Holders true and complete copies of all correspondence from and to the
Commission relating to any amendment; and comply in all material respects
with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by the
Registration Statement during the applicable period in accordance with the
intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented;
(d) promptly furnish to the Purchaser such number of copies of the
Registration Statement and the Prospectus included therein (including each
preliminary Prospectus) and each amendment or supplement thereto as the
Purchaser reasonably may request to facilitate the public sale or
disposition of the Registrable Securities covered by the Registration
Statement; and the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except
after the giving of any notice pursuant to Section 3(g);
(e) use its best efforts to register or qualify the Purchaser's
Registrable Securities covered by the Registration Statement under the
securities or "blue sky" laws of such jurisdictions within the United
States as the Purchaser may reasonably request among those jurisdictions
in which registration or qualification is necessary to permit resale of
the Registrable Securities by Purchaser, including without limitation
Massachusetts, New York and California, provided, however, that the
Company shall not for any such purpose be required to qualify generally
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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;
(f) list the Registrable Securities covered by the Registration
Statement with any securities exchange on which the Common Stock of the
Company is then listed;
(g) immediately notify the Purchaser (and, in the case of (i)(A)
below, not less than two Trading Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing promptly
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be
filed; (B) when the Commission notifies the Company whether there will be
a "review" of the Registration Statement and whenever the Commission
comments in writing on the Registration Statement (the Company shall upon
request provide true and complete copies thereof and all written responses
thereto to each of the Holders); and (C) with respect to the Registration
Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose; (iv) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening
of any Proceeding for such purpose; and (v) of the occurrence of any event
or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement
made in the 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 the Registration
Statement, Prospectus or other documents so that, in the case of the
Registration Statement or the Prospectus, as the case may be, it will 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 in light of the circumstances then
existing;
(h) use its commercially reasonable efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment;
(i) if requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates
representing Registrable
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Securities to be delivered to a transferee pursuant to the Registration
Statement, which certificates shall be free of all restrictive legends,
and to enable such Registrable Securities to be in such denominations and
registered in such names as any such Holders may request;
(j) upon the occurrence of any event contemplated by Section
3(g)(v), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an 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, in light of
the circumstances under which they were made, not misleading;
(k) comply with all applicable rules and regulations of the
Commission; and
(l) make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, 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, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders (to the extent such counsel is required due to Company's
failure to meet any of its obligations hereunder), fees and expenses of any
special experts retained by the Company in connection with such registration and
fees and expenses incurred in connection with the listing or quotation, as
appropriate of the Registrable Securities are called "Registration Expenses".
All selling commissions applicable to the sale of Registrable Securities,
including any fees and disbursements of any special counsel to the Holders
beyond those included in Registration Expenses, are called "Selling Expenses."
The Company shall only be responsible for all Registration Expenses.
5. Indemnification.
(a) In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Company will,
notwithstanding the termination of this Agreement indemnify and hold
harmless each Purchaser,
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and its officers, directors, agents employees and each other person, if
any, who controls each Purchaser within the meaning of the Securities Act,
and the officers, directors, agents and employees of each such controlling
person, against any losses, claims, damages or liabilities, joint or
several, to which the Purchaser, 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 the Purchaser, and each such
person for any reasonable legal or other expenses (including without
limitation reasonable attorneys' fees) 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 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
in writing specifically for use in any such document.
(b) In the event of a registration of the Registrable Securities
under the Securities Act pursuant to this Agreement, the Purchasers,
severally and not jointly, will indemnify and hold harmless the Company,
and its officers, directors, agents, employees and each other person, if
any, who controls the Company within the meaning of the Securities Act,
against all losses, claims, damages or liabilities 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 in
writing 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 (including without
limitation reasonable attorneys' fees) 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 in writing to the
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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 actually 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 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 reasonably
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 parties in any such
action (including any impleaded parties) 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. The Indemnifying Party
shall not be liable for any settlement of any such action effected without
its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending action in respect
of which any Indemnified Party is a party, unless such settlement includes
an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such action.
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(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 as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such liability. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined
by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or made
by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement
or omission. Notwithstanding the provisions of this Section 5(d), (A) the
Purchaser will not be required to contribute any amount in excess of the
amount of the proceeds actually received by such Purchaser from the sale
of the Registrable Securities; 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.
6. Representations and Warranties.
(a) The Common Stock of the Company 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 or will file (i) its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2003 and (ii) its Quarterly Report on
Form 10-QSB for the fiscal quarter ended March 31, 2004 (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
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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 for trading on the Nasdaq OTC
Bulletin Board Market and satisfies all requirements for the continuation
of such listing. The Company has not received any notice that its Common
Stock will be delisted or that the Common Stock does not meet all
requirements for the continuation of such listing.
(c) 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 Subscription 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 Securities to be
integrated with other offerings.
(d) The Registrable Securities 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.
(e) The Company understands the nature of the Registrable Securities
issuable upon the exercise of the 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
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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.
7. 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 Company and each Holder agree that
monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense
that a remedy at law would be adequate.
(b) No Piggyback on Registrations. Neither the Company nor any of
its security holders may include securities of the Company in a
Registration Statement except for (i) the Registrable Securities and (ii)
as set forth on Schedule 4(ae) to the Subscription Agreement, and the
Company shall not after the date hereof enter into any agreement providing
any such right to any of its security holders. The Company shall not file
any other registration statement until after the effective date of the
Registration Statement.
(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 the 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 (the "Advice") 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 will use its best
efforts to ensure that the use of the Prospectus may be
12
resumed as promptly as is practicable. For purposes of this paragraph, 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 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 during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine
to prepare and file with the 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 days after receipt of such
notice, any such Holder shall so request in writing, the Company shall
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 the 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
13
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 a majority 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 notice designated as a change of address
under this Section 7(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: Secured Services, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention:
Facsimile:
with a copy to:
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: 000-000-0000
If to a Purchaser: To the address set forth under such
Purchaser name on the signature pages
hereto.
14
If to any other Person who To the address of such Holder as it
is then the registered appears in the stock transfer books of
Holder: the Company
or such other address as may be designated in writing hereafter in
accordance with this Section 7(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 as permitted
under the Subscription 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
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. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement shall be commenced exclusively
in the state and federal courts sitting in the City of New York, Borough
of Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any Proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such Proceeding is improper.
Each party hereto hereby irrevocably waives personal service of process
and consents to process being served in any such Proceeding by mailing a
copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions
15
contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of the Securities Purchase Agreement, this
Agreement or any 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 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.
(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]
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SECURED SERVICES, INC. 033 GROWTH PARTNERS I, L.P.
By: 033 Asset Management, LLC,
its Investment Manager
By: _________________________ By: ___________________________
Name: King Xxxxx Name: Xxxxxxxx X. Xxxxx
Title: President and Chief Title: Chief Operating Officer
Executive Officer
Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx,
Chief Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
033 GROWTH PARTNERS II, L.P.
By: 033 Asset Management, LLC,
its Investment Manager
By: _____________________________
Xxxxxxxx X. Xxxxx
Chief Operating Officer
Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx,
Chief Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
00
XXXXXX XXXX PARTNERS, L.P.
By: 033 Asset Management, LLC,
its Investment Manager
By: _____________________________
Xxxxxxxx X. Xxxxx
Chief Operating Officer
Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx,
Chief Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
033 GROWTH INTERNATIONAL FUND, LTD.
By: 033 Asset Management, LLC,
its Investment Manager
By: _____________________________
Xxxxxxxx X. Xxxxx
Chief Operating Officer
Address for Notice:
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx,
Chief Operating Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
18
Annex A
Plan of Distribution
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The selling stockholder may from time to time pledge or grant a security
interest in some or all of the Shares or common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling stockholders have
informed the Company that none of them have any agreement or understanding,
directly or indirectly, with any person to distribute the common stock.
The Company is required to pay all fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
