Contract
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
WARRANT
TO PURCHASE STOCK
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Corporation:
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Number
of Shares:
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68,027
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Class
of Stock:
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Common
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Initial
Exercise Price:
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$0.588
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Issue
Date:
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September
2, 2009
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Expiration
Date:
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September
2, 2016
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This
Warrant Certifies That, for good and valuable consideration, the receipt
of which is hereby acknowledged, Bridge Bank
N.A. or its assignee (“Holder”)
is entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the “Shares”)
of the corporation (the “Company”)
at the initial exercise price per Share (the “Warrant
Price”) all as set forth above and as adjusted pursuant to Article 2 of
this warrant, subject to the provisions and upon the terms and conditions set
forth in this warrant.
ARTICLE
1
EXERCISE
1.1 Method of
Exercise. Holder may exercise this warrant by delivering this
warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the Company. Unless
Holder is exercising the conversion right set forth in Section 1.2, Holder shall
also deliver to the Company a check for the aggregate Warrant Price for the
Shares being purchased.
1.2 Conversion
Right. In lieu of exercising this warrant as specified in
Section 1.1, provided there is not an effective registration statement covering
the resale of the Shares, Holder may from time to time convert this warrant, in
whole or in part, into a number of Shares determined by dividing (a) the
aggregate fair market value of the Shares or other securities otherwise issuable
upon exercise of this warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of
the Shares shall be determined pursuant to Section 1.3.
1.
1.3 Fair Market
Value. If the Shares are traded regularly in a public market,
the fair market value of the Shares shall be the closing price of the Shares (or
the closing price of the Company’s stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not regularly traded in a
public market, the Board of Directors of the Company shall determine fair market
value in its reasonable good faith judgment. The foregoing
notwithstanding, if Xxxxxx advises the Board of Directors in writing that Xxxxxx
disagrees with such determination, then the Company and Holder shall promptly
agree upon a reputable investment banking firm to undertake such
valuation. If the valuation of such investment banking firm is
greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the
Company. In all other circumstances, such fees and expenses shall be
paid by Xxxxxx.
1.4 Delivery of Certificate and New
Warrant. Promptly after Holder exercises or converts this
Warrant, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised or converted and has
not expired, a new warrant representing the Shares not so acquired.
1.5 Replacement of
Warrants. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
ARTICLE
2
ADJUSTMENTS
TO THE SHARES
2.1 Stock Dividends, Splits,
Etc. If the Company declares or pays a dividend on its common
stock payable in common stock, or other securities, or subdivides the
outstanding common stock into a greater amount of common stock, then upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend or subdivision occurred.
2.2 Reclassification, Exchange or
Substitution. Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or class
of the securities issuable upon exercise or conversion of this Warrant, Holder
shall be entitled to receive, upon exercise or conversion of this Warrant, the
number and kind of securities and property that Holder would have received for
the Shares if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. Such an
event shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company’s Certificate of Incorporation upon
the closing of a registered public offering of the Company’s common
stock. The Company or its successor shall promptly issue to Holder a
new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 2 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new warrant. The
provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.
2.3 Adjustments for Mergers,
Combinations, Etc. If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Price shall be proportionately increased. If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a greater number of shares, the Warrant Price shall be
proportionately decreased. Upon the closing of any acquisition of all or
substantially all of Holder’s assets or capital stock, the successor entity
shall assume the obligations of this Warrant, and this Warrant shall be
exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as
if such Shares were outstanding on the record date for the acquisition and
subsequent closing. The Warrant Price shall be adjusted
accordingly.
2.4 Adjustments for Diluting
Issuances. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant or, if Shares are Preferred Stock, the
number of shares of common stock issuable upon conversion of Shares, shall be
subject to adjustment, from time to time in the manner set forth on
Exhibit A in the event of Diluting Issuances (as defined on
Exhibit A).
2.5 No Impairment. The
Company shall not, by amendment of its Certificate of Incorporation or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out all the provisions of this Article 2 and in taking all such action
as may be necessary or appropriate to protect Holder’s rights under this Article
against impairment.
2.6 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the
Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based. The
Company shall, upon written request, furnish Holder a certificate setting forth
the Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
2.7 Fractional
Shares. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and the Number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder amount computed
by multiplying the fractional interest by the fair market value of a full
Share.
3.
ARTICLE
3
REPRESENTATIONS
AND COVENANTS OF THE COMPANY
3.1 Representations and
Warranties. The Company hereby represents and warrants to the
Holder as follows:
(a) The
initial Warrant Price referenced on the first page of this Warrant is not
greater than the fair market value of the Shares as of the date of this
Warrant.
(b) All
Shares which may be issued upon the exercise of the purchase right represented
by this Warrant, and all securities, if any, issuable upon conversion of the
Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state securities
laws.
(c) The
Company’s capitalization table attached to this Warrant is true and complete as
of the Issue Date.
3.2 Notice of Certain
Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon its common stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to
offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; (c)
to effect any reclassification or recapitalization of common stock; or (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up, then, in connection with each such event, the Company shall
give Holder (1) at least 20 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (a) and (b) above; and (2) in the case of the matters referred to
in (c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event).
3.3 Information
Rights. So long as the Holder holds this Warrant and/or any of
the Shares, the Company shall deliver to the Holder (a) promptly after mailing,
copies of all communiques to the shareholders of the Company, (b) within ninety
(90) days after the end of each fiscal year of the Company, the annual audited
financial statements of the Company certified by independent public accountants
of recognized standing and (c) within forty-five (45) days after the end of each
of the first three quarters of each fiscal year, the Company’s quarterly,
unaudited financial statements.
3.4 Registration
Rights. Company agrees that Shares or, if Shares are
convertible into common stock of Company, such common stock, shall have the
registration rights set forth on Exhibit B.
4.
ARTICLE
4
MISCELLANEOUS
4.1 Term: Exercise Upon
Expiration. This Warrant is exercisable in whole or in part,
at any time and from time to time on or before the Expiration Date set forth
above. If this Warrant has not been exercised prior to the Expiration
Date, provided there is not an effective registration statement covering the
resale of the Shares, this Warrant shall be deemed to have been automatically
exercised on the Expiration Date by “cashless” conversion pursuant to Section
1.2.
4.2 Legends. This
Warrant and the Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.”
4.3 Compliance with Securities Laws on
Transfer. This Warrant and the Shares issuable upon exercise
of this Warrant (and the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) may not be transferred or assigned in whole or
in part without compliance with applicable federal and state securities laws by
the transferor and the transferee.
4.4 Transfer
Procedure. Subject to the provisions of Section 4.3, Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company notice of the portion of
the warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder, if
applicable).
4.5 Notices. All
notices and other communications from the Company to the Holder, or vice versa,
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company or the Holder, as the case may be, in
writing by the Company or such Holder from time to
time. All notices to the Holder shall be addressed as
follows:
5.
Bridge
Bank N.A.
00 Xxxxxxx Xxxx.
San Jose, CA 95113
Attn: Xxxxx Xxxxxxxxx
4.6 Amendments. This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.
4.7 Attorneys’ Fees. In
the event of any dispute between the parties concerning the terms and provisions
of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs incurred in such dispute, including
reasonable attorneys’ fees.
4.8 Governing Law. This
Warrant shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its principles regarding conflicts
of law.
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By:
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Name:
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Title:
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6.
Appendix
1
NOTICE
OF EXERCISE
1. The
undersigned hereby elects to purchase ______________ shares of the
______________ stock of DOCUMENT CAPTURE TECHNOLOGIES,
INC. pursuant to the terms of the attached warrant, and tenders herewith
payment of the purchase price of such shares in full.
2. The
undersigned hereby elects to convert the attached warrant into shares in the
manner specified in the warrant. This conversion is exercised with
respect to ______________ of the shares covered by the warrant.
[Strike
paragraph that does not apply.]
3. Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name as is specified below:
Bridge
Bank N.A.
4. The
undersigned represents it is acquiring the shares solely for its own account and
not as a nominee for any other party and not with a view toward the resale or
distribution thereof except in compliance with applicable securities
laws.
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Bridge
Bank N.A. or Registered Assignee
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(Signature)
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(Date)
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EXHIBIT
A
Anti-Dilution
Provisions
In the
event of the issuance (a "Diluting Issuance") by Company, at any time during the
twelve month period following the Issue Date of the Warrant, of Common Stock (or
options or other rights to subscribe thereto or securities convertible into or
exchangeable for Common Stock) at a price per share less than the Exercise Price
at the date of such issuance, then the number of Shares issuable upon exercise
of the Warrant and the Exercise Price, shall be adjusted as a result of Diluting
Issuances in accordance with the following (provided that under
no circumstances shall the aggregate Exercise Price payable by Holder upon
exercise of the Warrant increase as a result of any adjustment arising from a
Diluting Issuance):
1. Definitions. As
used in these Antidilution Provisions, the following terms have the following
respective meanings:
(a) "Option"
means any right, option, or warrant to subscribe for, purchase, or otherwise
acquire common stock or Convertible Securities.
(b) "Convertible
Securities" means any evidences of indebtedness, shares of stock, or other
securities directly or indirectly convertible into or exchangeable for common
stock.
(c) "Issue",
means to grant, issue, sell, assume, or fix a record date for determining
persons entitled to receive, any security (including Options), whichever of the
foregoing is the first to occur. Any variation of the term "Issue"
including, without limitation, "Issuable", "Issuance" or "Issued" shall have the
same meaning as set forth in this section 1(c).
(d) "Additional
Common Shares" means all common stock (including reissued shares) issued (or
deemed to be issued pursuant to Section 2) after the date of the
Warrant. Additional Common Shares does not include, however, any
common stock issued in a transaction described in Sections 2.1 and 2.2 of
the Warrant; any common stock Issued upon conversion of preferred stock
outstanding on the date of the Warrant; any common stock issued upon conversion
or exercise of any warrants, options or other securities convertible into common
stock which are outstanding on the date of the Warrant; the Shares; or any
Option or common stock Issued as incentive or in a nonfinancing transaction to
employees, officers, directors, or consultants to Company.
(e) The
shares of common stock ultimately Issuable upon exercise of an Option (including
the shares of common stock ultimately Issuable upon conversion or exercise of a
Convertible Security Issuable pursuant to an Option) are deemed to be Issued
when the Option is Issued. The shares of common stock ultimately
Issuable upon conversion or exercise of a Convertible Security (other than a
Convertible Security Issued pursuant to an Option) shall be deemed Issued upon
Issuance of the Convertible Security.
1.
2. Deemed Issuance of
Additional Common Shares. The shares of common stock
ultimately Issuable upon exercise of an Option (including the shares of common
stock ultimately Issuable upon conversion or exercise of a Convertible Security
Issuable pursuant to an Option) are deemed to be Issued when the Option is
Issued. The shares of common stock ultimately Issuable upon
conversion or exercise of a Convertible Security (other than a Convertible
Security Issued pursuant to an Option) shall be deemed Issued upon Issuance of
the Convertible Security. The maximum amount of common stock Issuable
is determined without regard to any future adjustments permitted under the
instrument creating the Options or Convertible Securities.
3. Adjustment of Exercise Price
for Diluting Issuances
3.1 Weighted Average
Adjustment. If Company issues Additional Common Shares during
the period that is twelve months after the date of the Warrant and the
consideration per Additional Common Share (determined pursuant to
Section 9) is less than the Exercise Price in effect immediately before
such Issue, the Exercise Price shall be reduced, concurrently with such Issue,
to a price (calculated to the nearest hundredth of a cent) determined by
multiplying the Exercise Price by a fraction:
(a) the
numerator of which is the amount of such common stock outstanding immediately
before such Issue plus the amount of common stock that the aggregate
consideration received by Company for the Additional Common Shares would
purchase at the Exercise Price in effect immediately before such Issue,
and
(b) the
denominator of which is the amount of common stock outstanding immediately
before such Issue plus the number of such Additional Common Shares.
3.2 Adjustment of Number of
Shares. Upon each adjustment of the Exercise Price, the number
of Shares issuable upon exercise of the Warrant shall be increased to equal the
quotient obtained by dividing (a) the product resulting from multiplying (i) the
number of Shares issuable upon exercise of the Warrant and (ii) the Exercise
Price, in each case as in effect immediately before such adjustment, by (b) the
adjusted Exercise Price.
3.3 Securities Deemed
Outstanding. For the purpose of this Section 3, all
securities issuable upon exercise of any outstanding Convertible Securities or
Options, warrants, or other rights to acquire securities of Company shall be
deemed to be outstanding.
4. No Adjustment for Issuances
Following Deemed Issuances. No adjustment to the Exercise
Price shall be made upon the exercise of Options or conversion of Convertible
Securities.
5. Adjustment Following Changes
in Terms of Options or Convertible Securities. If during the
twelve month period following the date of the Warrant the consideration payable
to, or the amount of common stock Issuable by, Company increases or decreases,
respectively, pursuant to the terms of any outstanding Options or Convertible
Securities, the Exercise Price shall be recomputed to reflect such increase or
decrease. The recomputation shall be made as of the time of the
Issuance of the Options or Convertible Securities. Any changes in the
Exercise Price that occurred after such Issuance because other Additional Common
Shares were Issued or deemed Issued shall also be recomputed.
2.
6. Recomputation Upon
Expiration of Options or Convertible Securities. The Exercise
Price computed upon the original Issue of any Options or Convertible Securities,
and any subsequent adjustments based thereon, shall be recomputed when any
Options or rights of conversion under Convertible Securities expire without
having been exercised. In the case of Convertible Securities or
Options for common stock, the Exercise Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities. In
the case of Options for Convertible Securities, the Exercise Price shall be
recomputed as if the only Convertible Securities Issued were the Convertible
Securities actually Issued upon the exercise thereof, if any, and as if the only
consideration received therefor was the consideration actually received by
Company (determined pursuant to Section 9), if any, upon the Issue of the
Options for the Convertible Securities.
7. Limit on
Readjustments. No readjustment of the Exercise Price pursuant
to Sections 5 or 6 shall increase the Exercise Price more than the amount
of any decrease made in respect of the Issue of any corresponding Options or
Convertible Securities.
8. 30 Day
Options. In the case of any Options that expire by their terms
not more than 30 days after the date of Issue thereof, no adjustment of the
Exercise Price shall be made until the expiration or exercise of all such
Options, except as otherwise set forth herein.
9. Computation of
Consideration. The consideration received by Company for the
Issue of any Additional Common Shares shall be computed as follows:
(a) Cash shall
be valued at the amount of cash received by Company, excluding amounts paid or
payable for accrued interest or accrued dividends.
(b) Property. Property
other than cash shall be computed at the fair market value thereof at the time
of the Issue as determined in good faith by the Board of Directors of
Company.
(c) Mixed
Consideration. The consideration for Additional Common Shares
Issued together with other property of Company for consideration that covers
both shall be determined in good faith by the Board of Directors of
Company.
(d) Options and Convertible
Securities. The consideration per Additional Common Share for
Options and Convertible Securities shall be determined by dividing:
(i) the
total amount, if any, received or receivable by Company for the Issue of the
Options or Convertible Securities, plus the minimum amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to Company upon exercise of the Options or conversion of
the Convertible Securities, by
(ii) the
maximum amount of common stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number) ultimately Issuable upon the exercise of such Options
or the conversion of such Convertible Securities.
3.
EXHIBIT
B
REGISTRATION
RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT, dated as of September 2, 2009, is between Bridge
Bank, National Association ("Lender") and the Company whose name appears on the
last page of this Agreement.
RECITALS
A. Concurrently
with the execution of this Agreement, Lender is purchasing from Company a
Warrant to Purchase Stock (the "Warrant") pursuant to which Xxxxxx has the right
to acquire from Company the Shares (as defined in the Warrant).
B. By
this Agreement, Lender and Company desire to set forth the registration rights
of the Shares all as provided herein.
NOW,
THEREFORE, in consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto agree as follows:
1. Registration
Rights.
1.1
Definitions. For
purposes of this Section 1:
(a) The
term "register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of effectiveness of such registration statement
or document;
(b) The
term "Registrable Securities" means (i) the Shares (if Common Stock) or all
shares of Common Stock of Company issuable or issued upon conversion of the
Shares and (ii) any Common Stock of Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in exchange for or in
replacement of, any stock referred to in (i).
(c) The
terms "Holder" or "Holders" means Lender or qualifying transferees under
subsection 1.8 hereof who hold Registrable Securities.
(d) The
term "SEC" means the Securities and Exchange Commission.
1.2 Company
Registration.
(a) Registration. If
at any time or from time to time, Company shall determine to register any of its
securities, for its own account or the account of any of its shareholders, other
than a registration on Form S-1 or S-8 relating solely to employee
stock option or purchase plans, or a registration on Form S-4 relating
solely to an SEC Rule 145 transaction, or a registration on any other form
(other than Form S-1, S-2, S-3 or S-18, or their successor forms) or any
successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, Company
will:
1.
(i) promptly
give to each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under the applicable blue sky or other state securities laws); and
(ii) include
in such registration (and compliance), and in any underwriting involved therein,
all Registrable Securities specified in a written request or requests, made
within 30 days after receipt of such written notice from Company, by any Holder
or Holders, except as set forth in subsection 1.2(b) below.
(b) Underwriting. If
the registration of which Company gives notice is for a registered public
offering involving an underwriting, Company shall so advise Holders as a part of
the written notice given pursuant to subsection 1.2(a)(i). In such
event the right of any Holder to registration pursuant to this
subsection 1.2 shall be conditioned upon such Xxxxxx's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall (together with
Company and the other shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by
Company.
1.3 Expenses of
Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section 1
including without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for Company and expenses of
any special audits incidental to or required by such registration, shall be
borne by Company except Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities. All
expenses of any registered offering not otherwise borne by Company shall be
borne pro rata among Holders participating in the offering and
Company.
1.4 Registration
Procedures. In the case of each registration, qualification or
compliance effected by Company pursuant to this Registration Rights Agreement,
Company will keep each Holder participating therein advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. Except as otherwise provided in
subsection 1.3, at its expense Company will:
(a) Prepare
and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of Holders of a majority of Registrable
Securities registered thereunder, keep such registration statement effective for
up to 120 days.
(b) Prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement.
2.
(c) Furnish
to Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
d) Use
its best efforts to register and qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by Holders, provided that Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.
(e) In
the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act or the happening of any event as a result of which the
prospectus included 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 the light of the circumstances then existing.
1.5 Indemnification.
(a) Company
will indemnify each Holder of Registrable Securities and each of its officers,
directors and partners, and each person controlling such Holder, with respect to
which such registration, qualification or compliance has been effected pursuant
to this Registration Rights Agreement, and each underwriter, if any, and each
person who controls any underwriter of Registrable Securities held by or
issuable to such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, or any violation or
alleged violation by Company of the Securities Act, the Securities Exchange Act
of 1934, as amended, ("Exchange Act") or any state securities law applicable to
Company or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any such state law and relating to action or inaction required
of Company in connection with any such registration, qualification of
compliance, and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, within a reasonable amount of
time after incurred for any reasonable legal and any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.5(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of Company (which consent shall not
be unreasonably withheld); and provided further, that Company will not be liable
in any such case to the extent that any such claim, loss, damage or liability
arises out of or is based on any untrue statement or omission based upon written
information furnished to Company by an instrument duly executed by such Holder
or underwriter specifically for use therein.
3.
(b) Each
Holder will, if Registrable Securities held by or issuable to such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify Company, each of its directors and
officers, each underwriter, if any, of Company's securities covered by such a
registration statement, each person who controls Company within the meaning of
the Securities Act, and each other such Holder, each of its officers, directors
and partners and each person controlling such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any 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 Company, such Holders,
such directors, officers, partners, persons or underwriters for any reasonable
legal or any other expenses incurred in connection with investigating, defending
or settling any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to Company by an instrument
duly executed by such Holder specifically for use therein; provided, however,
that the indemnity agreement contained in this subsection 1.5(b) shall not apply
to amounts paid in settlement of any such claim, loss, damage, liability or
action if such settlement is effected without the consent of Holder, (which
consent shall not be unreasonably withheld); and provided further, that the
total amount for which any Holder shall be liable under this subsection 1.5(b)
shall not in any event exceed the aggregate proceeds received by such Holder
from the sale of Registrable Securities held by such Holder in such
registration.
(c) Each
party entitled to indemnification under this subsection 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be approved by
Indemnified Party (whose approval shall not be unreasonably withheld), and
Indemnified Party may participate in such defense at such party's expense; and
provided further, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
hereunder, unless such failure resulted in prejudice to Indemnifying Party; and
provided further, that an Indemnified Party (together with all other Indemnified
Parties which may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to be paid by
Indemnifying Party, if representation of such Indemnified Party by the counsel
retained by Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
4.
1.6 Information by
Holder. Any Holder or Holders of Registrable Securities
included in any registration shall promptly furnish to Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to
herein.
1.7 Rule 144
Reporting. With a view to making available to Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of Registrable Securities to the public without registration, Company shall at
all times:
(a) make
and keep public information available, as those terms are understood and defined
in SEC Rule 144, after 90 days after the effective date of the first
registration filed by Company for an offering of its securities to the general
public;
(b) file
with the SEC in a timely manner all reports and other documents required
of Company under the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements); and
(c) so
long as a Holder owns any Registrable Securities, to furnish to such Holder
forthwith upon request a written statement by Company as to its compliance with
the reporting requirements of said Rule 144 (at any time after 90 days
after the effective date of the first registration statement filed by Company
for an offering of its securities to the general public), and of the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly report of
Company, and such other reports and documents so filed by Company as Holder may
reasonably request in complying with any rule or regulation of the SEC allowing
Holder to sell any such securities without registration.
1.8 Transfer of Registration
Rights. Holders' rights to cause Company to register their
securities and keep information available, granted to them by Company under
subsections 1.2 and 1.7 may be assigned to a transferee or assignee of
a Holder's Registrable Securities not sold to the public, provided, that Company
is given written notice by such Holder at the time of or within a reasonable
time after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned. Company may prohibit the transfer of any
Holders' rights under this subsection 1.8 to any proposed transferee or assignee
who Company reasonably believes is a competitor of Company.
5.
2. General.
2.1
Waivers and
Amendments. With the written consent of the record or
beneficial holders of at least a majority of the Registrable Securities, the
obligations of Company and the rights of Holders of Registrable Securities under
this agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), and with the same consent Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of all of the Holders
of Registrable Securities. Upon the effectuation of each
such waiver, consent, agreement of amendment or modification, Company shall
promptly give written notice thereof to the record holders of Registrable
Securities who have not previously consented thereto in writing. This
Agreement or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, except to
the extent provided in this subsection 2.1.
2.2
Governing
Law. This Agreement shall be governed in all respects by the
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
2.3
Successors and
Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
2.4
Entire
Agreement. Except as set forth below, this Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
2.5
Notices,
etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Holder, at such Xxxxxx's address as set forth below, or
at such other address as such Holder shall have furnished to the Company in
writing, or (b) if to the Company, at Company's address set forth below, or
at such other address as Company shall have furnished to Holder in
writing.
2.6 Severability. In
case any provision of this Agreement shall be invalid, illegal, or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement or any provision of the other Agreement s shall not
in any way be affected or impaired thereby.
2.7 Titles and
Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
2.8 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.
6.
IN WITNESS WHEREOF, the parties have
caused this Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
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COMPANY:
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LENDER:
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DOCUMENT
CAPTURE TECHNOLOGIES,
INC.
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BRIDGE
BANK, NATIONAL
ASSOCIATION
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By:
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By:
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Name:
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Name:
|
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Title:
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Title:
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Address for Notices:
|
Address for Notices:
|
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Attn: Xxxxxxx
Xxxxx, CFO
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Attn: Xxxx
Xxxxx
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0000
Xxxxxxxxxx Xxxxx, Suite 000
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00
Xxxxxxx Xxxxxxxxx
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San
Jose, CA 95110
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Suite
100
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Email: xxxxxx@xxxxxxx.xxx
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San
Jose, California 95113
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Tel: (000)
000-0000
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Fax: (000)
000-0000
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7.
