EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of September 30,
2005, by and among InkSure Technologies Inc., a Delaware corporation, with
headquarters located at 0000 X.X. 00xx Xxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000
(the "COMPANY"), and the undersigned buyers (each, a "BUYER", and collectively,
the "BUYERS").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "SECURITIES PURCHASE AGREEMENT"), the
Company has agreed, upon the terms and subject to the conditions set forth in
the Securities Purchase Agreement, to issue and sell to each Buyer convertible
notes of the Company (the "INITIAL NOTES") which will, among other things, be
convertible into shares of the Company's common stock, par value $0.01 per share
(the "COMMON STOCK") (as converted, the "INITIAL CONVERSION SHARES") in
accordance with the terms of the Notes.
B. In connection with the Securities Purchase Agreement, the Company has
agreed, upon the terms and subject to the conditions set forth in the Securities
Purchase Agreement, to issue and sell to each Buyer at the Additional Closings
additional convertible notes of the Company (the "ADDITIONAL NOTES", and
collectively with the Initial Notes, the "NOTES"), which will be convertible
into shares of Common Stock (as converted, the "ADDITIONAL CONVERSION SHARES",
and collectively with the Initial Conversion Shares, the "CONVERSION SHARES") in
accordance with the terms of the Additional Notes.
B. To induce the Buyers to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 ACT"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the Buyers
hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:
a. "ADDITIONAL EFFECTIVENESS DEADLINE" means the date which is 90 days
after the applicable Additional Closing Date that triggers the obligation
to file an Additional Registration Statement hereunder, or if there is a
full review of the Registration Statement by the SEC, 120 days after such
Additional Closing Date.
b. "ADDITIONAL FILING DEADLINE" means 45 days after the earlier of (x)
each Additional Closing Date at which an aggregate of at least $500,000 in
principal amount of Additional Notes are purchased by one or more Buyers or
their successors or assigns or after which there is an aggregate of at
least $500,000 in principal amount of Additional Notes that have been
purchased by one or more Buyers or their successors or assigns that have
not had their related Additional Registrable Securities previously
registered hereunder or (y) such time after any Additional Notes are
purchased that no additional Additional Notes are available or are
permitted to be purchased pursuant to the Securities Purchase Agreement.
c. "ADDITIONAL REGISTRABLE SECURITIES" means the Additional Conversion
Shares issued or issuable upon conversion or redemption of all of the
Additional Notes actually purchased and any share capital of the Company
issued or issuable with respect to the Additional Notes or the Additional
Conversion Shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to
any limitations on conversions of Additional Notes.
d. "ADDITIONAL REGISTRATION STATEMENT" means a registration statement
or registration statements of the Company filed under the 1933 Act covering
any Additional Registrable Securities.
e. "ADDITIONAL REQUIRED REGISTRATION AMOUNT" means 130% of the number
of Additional Conversion Shares issued and issuable pursuant to the
Additional Notes as of the trading day immediately preceding the applicable
date of determination, subject to adjustment as provided in Section 2(e),
without regard to any limitations on conversions of the Additional Notes.
f. "BUSINESS DAY" means any day other than Saturday, Sunday or any
other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.
g. "CLOSING DATE" shall have the meaning set forth in the Securities
Purchase Agreement.
h. "EFFECTIVE DATE" means, with respect to the Initial Registration
Statement or the Additional Registration Statement, the date such
Registration Statement has been declared effective by the SEC.
i. "EFFECTIVENESS DEADLINE" means the Initial Effectiveness Deadline
(as defined below) and the Additional Effectiveness Deadline (as defined
below), as applicable.
j. "FILING DEADLINE" means the Initial Filing Deadline (as defined
below) and the Additional Filing Deadline (as defined below), as
applicable.
k. "INITIAL EFFECTIVENESS DEADLINE" means the date which is 90 days
after the Initial Closing Date, or if there is a full review of the
Registration Statement by the SEC, 120 days after the Initial Closing Date.
l. "INITIAL FILING DEADLINE" means 45 days after the Initial Closing
Date.
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m. "INITIAL REGISTRABLE SECURITIES" means the Initial Conversion
Shares issued or issuable upon conversion or redemption of the Initial
Notes, and any share capital of the Company issued or issuable with respect
to the Initial Conversion Shares or the Initial Notes as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise, without regard to any limitations on conversions of the Initial
Notes.
n. "INITIAL REQUIRED REGISTRATION AMOUNT" means 130% of the number of
Initial Conversion Shares issued and issuable pursuant to the Initial Notes
as of the trading day immediately preceding the applicable date of
determination, subject to adjustment as provided in Section 2(e), without
regard to any limitations on conversions of the Initial Notes.
o. "INITIAL REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
the Initial Registrable Securities.
p. "INVESTOR" means a Buyer or any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section
9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by
the provisions of this Agreement in accordance with Section 9.
q. "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
r. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant
to Rule 415 and the declaration or ordering of effectiveness of such
Registration Statement(s) by the SEC.
s. "REGISTRABLE SECURITIES" means the Initial Registrable Securities
and the Additional Registrable Securities.
t. "REGISTRATION STATEMENT" means a registration statement or
registration statements of the Company filed under the 1933 Act covering
the Registrable Securities.
u. "REQUIRED HOLDERS" means the holders of at least a majority of the
Registrable Securities.
v. "RULE 415" means Rule 415 under the 1933 Act or any successor rule
providing for offering securities on a continuous or delayed basis.
w. "SEC" means the United States Securities and Exchange Commission.
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2. REGISTRATION.
a. INITIAL MANDATORY REGISTRATION. The Company shall prepare, and, as
soon as practicable, but in no event later than the Initial Filing
Deadline, file with the SEC the Initial Registration Statement on Form SB-2
or Form S-3 covering the resale of all of the Initial Registrable
Securities. In the event that Form SB-2 or Form S-3 is unavailable for such
a registration, the Company shall use such other form as is available for
such a registration on another appropriate form reasonably acceptable to
the Required Holders, subject to the provisions of Section 2(e). The
Initial Registration Statement prepared pursuant hereto shall register for
resale at least the number of shares of Common Stock equal to the Initial
Required Registration Amount as of the date the Registration Statement is
initially filed with the SEC. The Initial Registration Statement shall
contain (except if otherwise directed by the Required Holders) the "SELLING
SHAREHOLDERS" and "PLAN OF DISTRIBUTION" sections in substantially the form
attached hereto as EXHIBIT B. The Company shall use its best efforts to
have the Initial Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the Initial Effectiveness
Deadline.
b. ADDITIONAL MANDATORY REGISTRATIONS. The Company shall prepare, and,
as soon as practicable but in no event later than the applicable Additional
Filing Deadline, file with the SEC an Additional Registration Statement on
Form SB-2 or Form S-3 covering the resale of all of the Additional
Registrable Securities not previously registered on an Additional
Registration Statement hereunder. In the event that Form SB-2 or Form S-3
is unavailable for such a registration, the Company shall use such other
form as is available for such a registration on another appropriate form
reasonably acceptable to the Required Holders, subject to the provisions of
Section 2(e). Each Additional Registration Statement prepared pursuant
hereto shall register for resale at least that number of shares of Common
Stock equal to the Additional Required Registration Amount as to the
Additional Registrable Securities not previously registered hereunder as of
the date such Registration Statement is initially filed with the SEC. Each
Additional Registration Statement shall contain (except if otherwise
directed by the Required Holders) the "SELLING SHAREHOLDERS" and "PLAN OF
DISTRIBUTION" sections in substantially the form attached hereto as EXHIBIT
B. The Company shall use its best efforts to have each Additional
Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than the applicable Additional
Effectiveness Deadline.
c. ALLOCATION OF REGISTRABLE SECURITIES. The initial number of
Registrable Securities included in any Registration Statement and any
increase in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement
covering such initial number of Registrable Securities or increase thereof
is declared effective by the SEC. In the event that an Investor sells or
otherwise transfers any of such Investor's Registrable Securities, each
transferee shall be allocated a pro rata portion of the then remaining
number of Registrable Securities included in such Registration Statement
for such transferor. Any Shares of Common Stock included in a Registration
Statement and which remain allocated to any Person which ceases to hold any
Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by
such Registration Statement. Other than as set forth on Schedule 2(c), the
Company shall not include any securities other than Registrable Securities
on any Registration Statement without the prior written consent of the
Required Holders.
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d. LEGAL COUNSEL. Subject to Section 5 hereof, the Required Holders
shall have the right to select one legal counsel to review and oversee any
registration pursuant to this Section 2 ("LEGAL COUNSEL"), which shall be
Xxxxxxx Xxxx & Xxxxx LLP or such other counsel as thereafter designated by
the Required Holders. The Company and Legal Counsel shall reasonably
cooperate with each other in performing the Company's obligations under
this Agreement.
e. INELIGIBILITY FOR FORM SB-2 OR FORM S-3. In the event that Form
SB-2 or Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale
of the Registrable Securities on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the
Registrable Securities on Form SB-2 or Form S-3 as soon as either such form
is available, provided that the Company shall maintain the effectiveness of
the Registration Statement then in effect until such time as a Registration
Statement on Form SB-2 or Form S-3 covering the Registrable Securities has
been declared effective by the SEC or the Company is no longer obligated to
maintain a registration statement for the Registrable Securities pursuant
to the terms hereof.
f. SUFFICIENT NUMBER OF SHARES REGISTERED. In the event the number of
shares available under a Registration Statement filed pursuant to Section
2(a) is insufficient to cover all of the Registrable Securities required to
be covered by such Registration Statement or an Investor's allocated
portion of the Registrable Securities pursuant to Section 2(b), the Company
shall amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least the Required Registration
Amount as of the trading day immediately preceding the date of the filing
of such amendment or new Registration Statement, in each case, as soon as
practicable, but in any event not later than thirty (30) days after the
necessity therefor arises. The Company shall use its best efforts to cause
such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a Registration
Statement shall be deemed "insufficient to cover all of the Registrable
Securities" if at any time the number of shares of Common Stock available
for resale under the Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such
time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion of the
Notes and such calculation shall assume that the Notes are then convertible
into Shares of Common Stock at the then prevailing Conversion Rate (as
defined in the Notes).
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g. EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF
REGISTRATION STATEMENT. If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be
filed by the Company pursuant to this Agreement is (A) not filed with the
SEC on or before the respective Filing Deadline (a "FILING FAILURE") or (B)
not declared effective by the SEC on or before the respective Effectiveness
Deadline (an "EFFECTIVENESS FAILURE") or (ii) on any day after the
Effective Date sales of all of the Registrable Securities required to be
included on such Registration Statement cannot be made (other than during
an Allowable Grace Period (as defined in Section 3(r)) pursuant to such
Registration Statement (including, without limitation, because of a failure
to keep such Registration Statement effective, to disclose such information
as is necessary for sales to be made pursuant to such Registration
Statement or to register a sufficient number of Shares of Common Stock) (a
"MAINTENANCE FAILURE") then, as partial relief for the damages to any
holder by reason of any such delay in or reduction of its ability to sell
the underlying Shares of Common Stock (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay
to each holder of Registrable Securities relating to such Registration
Statement an amount in cash equal to one percent (1.0%) of the aggregate
Purchase Price (as such term is defined in the Securities Purchase
Agreement) of such Investor's Registrable Securities included in such
Registration Statement on each of the following dates: (i) the day of a
Filing Failure and on every thirtieth day (pro rated for periods totaling
less than thirty days) after a Filing Failure until such Filing Failure is
cured; (ii) the day of an Effectiveness Failure and on every thirtieth day
(pro rated for periods totaling less than thirty days) after an
Effectiveness Failure until such Effectiveness Failure is cured; and (iii)
the initial day of a Maintenance Failure and on every thirtieth day (pro
rated for periods totaling less than thirty days) after a Maintenance
Failure until such Maintenance Failure is cured. The payments to which a
holder shall be entitled pursuant to this Section 2(g) are referred to
herein as "REGISTRATION DELAY PAYMENTS." Notwithstanding the foregoing, to
the extent that there simultaneously exists more than one of the following:
(i) a Filing Failure, (ii) an Effectiveness Failure or (iii) a Maintenance
Failure, no more than one Registration Delay Payment shall accrue
simultaneously. Registration Delay Payments shall be paid on the day of the
Filing Failure, Effectiveness Failure and the initial day of a Maintenance
Failure, as applicable, and thereafter on the earlier of (I) the thirtieth
day after the event or failure giving rise to the Registration Delay
Payments has occurred and (II) the third Business Day after the event or
failure giving rise to the Registration Delay Payments is cured. In the
event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of
one percent (1.0%) per month (prorated for partial months) until paid in
full.
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2(a), 2(b) or 2(e), the Company will use its
best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:
a. The Company shall submit to the SEC, within two (2) Business Days
after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff has no
further comments on a particular Registration Statement, as the case may
be, a request for acceleration of effectiveness of such Registration
Statement to a time and date not later than 48 hours after the submission
of such request. The Company shall use its best efforts to keep each
Registration Statement effective pursuant to Rule 415 at all times until
the earlier of (i) the date as of which the Investors may sell all of the
Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under the 1933 Act or (ii) the date on which the Investors shall have sold
all of the Registrable Securities covered by such Registration Statement
(the "REGISTRATION PERIOD"). The Company shall ensure that each
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made)
not misleading.
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b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such
period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-QSB, Form 10-KSB or any analogous report
under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), the
Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is
filed which created the requirement for the Company to amend or supplement
such Registration Statement.
c. The Company shall (A) permit Legal Counsel to review and comment
upon (i) a Registration Statement at least five (5) Business Days prior to
its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-KSB, and
Reports on Form 10-QSB and any similar or successor reports) within a
reasonable number of days prior to their filing with the SEC, and (B) not
file any Registration Statement or amendment or supplement thereto in a
form to which Legal Counsel reasonably objects. The Company shall not
submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval
of Legal Counsel, which consent shall not be unreasonably withheld. The
Company shall furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) promptly after
the same is prepared and filed with the SEC, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and
schedules, all documents incorporated therein by reference, if requested by
an Investor, and all exhibits and (iii) upon the effectiveness of any
Registration Statement, one copy of the prospectus included in such
Registration Statement and all amendments and supplements thereto. The
Company shall reasonably cooperate with Legal Counsel in performing the
Company's obligations pursuant to this Section 3.
d. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one
copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, if requested by an Investor, all exhibits and each preliminary
prospectus, (ii) upon the effectiveness of any Registration Statement, ten
(10) copies of the prospectus included in such Registration Statement and
all amendments and supplements thereto (or such other number of copies as
such Investor may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as such Investor
may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
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e. The Company shall use its best efforts to (i) register and qualify,
unless an exemption from registration and qualification applies, the resale
by Investors of the Registrable Securities covered by a Registration
Statement under the securities or "blue sky" laws of the jurisdictions in
the United States in which the Company's Common Stock is currently trading
and in such other jurisdictions in the United States reasonably requested
by an Investor, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(e), (y) subject itself to general taxation in any such jurisdiction, or
(z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification
with respect to the suspension of the registration or qualification of any
of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual
notice of the initiation or threatening of any proceeding for such purpose.
f. The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming
aware of such event, as a result of which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided that in
no event shall such notice contain any material, nonpublic information),
and, subject to Section 3(r), promptly prepare a supplement or amendment to
such Registration Statement to correct such untrue statement or omission,
and deliver ten (10) copies of such supplement or amendment to Legal
Counsel and each Investor (or such other number of copies as Legal Counsel
or such Investor may reasonably request). The Company shall also promptly
notify Legal Counsel and each Investor in writing (i) when a prospectus or
any prospectus supplement or post-effective amendment has been filed, and
when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus
or related information, and (iii) of the Company's reasonable determination
that a post-effective amendment to a Registration Statement would be
appropriate.
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g. The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension
is issued, to obtain the withdrawal of such order or suspension at the
earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and
the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.
h. If any Investor is required under applicable securities law to be
described in the Registration Statement as an underwriter, at the
reasonable request and expenses of such Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as such Investor
may reasonably request (i) a letter, dated such date, from the Company's
independent certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to such
Investor, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to such Investor.
i. The Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the "INSPECTORS"), all
pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "RECORDS"), as shall be
reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector
shall agree to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the 1933 Act, (b)
the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this or any other agreement of which the Inspector has knowledge. Each
Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit
the Investors' ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
j. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws or applicable rules and regulations of Nasdaq or any other
relevant market or exchange, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or
governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this Agreement or any other agreement to which the Company is
a party or of which the Company has knowledge. The Company agrees that it
shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such
Investor and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
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k. The Company shall use its best efforts either to (i) cause all of
the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation and quotation of all of the Registrable
Securities covered by a Registration Statement on the American Stock
Exchange or (iii) if, despite the Company's best efforts to satisfy, the
preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the
preceding clauses (i) or (ii), to secure the inclusion for quotation on The
Nasdaq SmallCap Market for such Registrable Securities and, without
limiting the generality of the foregoing, to use its best efforts to
arrange for at least two market makers to register with the National
Association of Securities Dealers, Inc. ("NASD") as such with respect to
such Registrable Securities. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).
l. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the Investors may
reasonably request and registered in such names as the Investors may
request.
m. If requested by an Investor, the Company shall (i) as soon as
practicable incorporate in a prospectus supplement or post-effective
amendment such information as an Investor reasonably requests to be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make
all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by an Investor holding any Registrable Securities.
n. The Company shall use its best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.
10
o. The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying
with, and in the manner provided by, the provisions of Rule 158 under the
0000 Xxx) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the effective date of a
Registration Statement.
p. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
q. Within two (2) Business Days after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to
the transfer agent for such Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as EXHIBIT A.
r. Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the SEC, the
Company may delay the disclosure of material, non-public information
concerning the Company the disclosure of which at the time is not, in the
good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel
to the Company, otherwise required (a "GRACE PERIOD"); provided, that the
Company shall promptly (i) notify the Investors in writing of the existence
of material, non-public information giving rise to a Grace Period (provided
that in each notice the Company will not disclose the content of such
material, non-public information to the Investors) and the date on which
the Grace Period will begin, and (ii) notify the Investors in writing of
the date on which the Grace Period ends; and, provided further, that no
Grace Period shall exceed thirty (30) consecutive days and during any three
hundred sixty five (365) day period such Grace Periods shall not exceed an
aggregate of sixty (60) days (or in the case such material, non-public
information relates to an acquisition or business combination and the
Company is advised by counsel that the use of the Registration Statement is
required by law to be suspended, no Grace Period shall exceed forty-five
(45) consecutive days and, during any three hundred sixty five day (365)
period, such Grace Periods shall not exceed an aggregate of ninety (90)
days) the first day of any Grace Period must be at least two (2) trading
days after the last day of any prior Grace Period (each, an "ALLOWABLE
GRACE PERIOD"). For purposes of determining the length of a Grace Period
above, the Grace Period shall begin on and include the date the Investors
receive the notice referred to in clause (i) and shall end on and include
the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of
Section 3(g) hereof shall not be applicable during the period of any
Allowable Grace Period. Upon expiration of the Grace Period, the Company
shall again be bound by the first sentence of Section 3(f) with respect to
the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the
contrary, the Company shall cause its transfer agent to deliver unlegended
Shares of Common Stock to a transferee of an Investor in accordance with
the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered
into a contract for sale, and delivered a copy of the prospectus included
as part of the applicable Registration Statement, prior to the Investor's
receipt of the notice of a Grace Period and for which the Investor has not
yet settled.
11
4. OBLIGATIONS OF THE INVESTORS.
a. At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in such Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish, in a manner
consistent with the last sentence of this Section 4(a), to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the effectiveness of the
registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may
reasonably request. All such information provided to the Company by an
Investor pursuant to the prior sentence shall be in writing, and such
writing shall expressly acknowledge that the information is being provided
for use in connection with the preparation of the Registration Statement or
any such amendment thereof or supplement thereto.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from such Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration
Statement(s) covering such Registrable Securities until such Investor's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of 3(f) or receipt of
notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to
deliver unlegended Shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor's
receipt of a notice from the Company of the happening of any event of the
kind described in Section 3(g) or the first sentence of 3(f) and for which
the Investor has not yet settled.
d. Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it in
connection with sales of Registrable Securities pursuant to the
Registration Statement.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions
(which shall be borne by the Investors), incurred in connection with the
performance of the Company's obligations hereunder and under the transactions
contemplated hereby, including, without limitation, registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company shall be paid by the Company.
The fees and disbursements for Legal Counsel shall be borne by the Investors.
12
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the
directors, officers, members, partners, employees, agents, representatives
of, and each Person, if any, who controls any Investor within the meaning
of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED PERSON"), against
any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "CLAIMS") incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before
any court or governmental, administrative or other regulatory agency, body
or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of
them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction
in which Registrable Securities are offered ("BLUE SKY FILING"), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made
therein, in the light of the circumstances under which the statements
therein were made, not misleading, (iii) any violation or alleged violation
by the Company of the 1933 Act, the 1934 Act, any other law, including,
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS"). Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not
apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(d); (ii) with respect to any preliminary prospectus,
shall not inure to the benefit of any such Person from whom the Person
asserting any such Claim purchased the Registrable Securities that are the
subject thereof (or to the benefit of any Person controlling such Person)
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(d), and the Indemnified Person was promptly advised
in writing not to use the incorrect prospectus prior to the use giving rise
to a violation and such Indemnified Person, notwithstanding such advice,
used it or failed to deliver the correct prospectus as required by the 1933
Act and such correct prospectus was timely made available pursuant to
Section 3(d); (iii) shall not be available to the extent such Claim is
based on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, including a corrected
prospectus, if such prospectus or corrected prospectus was timely made
available by the Company pursuant to Section 3(d); and (iv) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
13
b. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person,
if any, who controls the Company within the meaning of the 1933 Act or the
1934 Act (each, an "INDEMNIFIED PARTY"), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the
1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement
or any post-effective amendment thereof or any prospectus contained
therein; and, subject to Section 6(c), such Investor will reimburse any
legal or other expenses reasonably incurred by an Indemnified Party in
connection with investigating or defending any such Claim as promptly as
such expenses are incurred and are due and payable; provided, however, that
the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not
be unreasonably withheld or delayed; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9. Notwithstanding anything
to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented.
14
c. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a
Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the
fees and expenses of not more than one counsel for such Indemnified Person
or Indemnified Party to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. In the case of an Indemnified Person, legal counsel referred to
in the immediately preceding sentence shall be selected by the Investors
holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any
such action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or Claim. The
indemnifying party shall keep the Indemnified Party or Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall
be liable for any settlement of any action, claim or proceeding effected
without its prior written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment
or enter into any settlement or other compromise which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation. Following indemnification
as provided for hereunder, the indemnifying party shall be subrogated to
all rights of the Indemnified Party or Indemnified Person with respect to
all third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend
such action.
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified
Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
15
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions
of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144,
the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual report
of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of such Investor's Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.
16
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
11. MISCELLANEOUS.
a. A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the such record owner of such Registrable
Securities.
b. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
InkSure Technologies Inc.
0000 X.X. 00xx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx
17
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
e-mail: xxxxx@xxxxx.xxx
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
If to Legal Counsel:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or to such other address and/or facsimile number
and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party 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 suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
18
e. This Agreement, the other Transaction Documents (as defined in the
Securities Purchase Agreement) and the instruments referenced herein and
therein constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement, the other
Transaction Documents and the instruments referenced herein and therein
supersede all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
j. All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by the Required Holders.
k. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules
of strict construction will be applied against any party.
19
l. This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
m. The obligations of each Buyer hereunder are several and not joint
with the obligations of any other Buyer, and no provision of this Agreement
is intended to confer any obligations on any Buyer vis-a-vis any other
Buyer. Nothing contained herein, and no action taken by any Buyer pursuant
hereto, shall be deemed to constitute the Buyers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Buyers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.
20
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
COMPANY:
INKSURE TECHNOLOGIES INC.
By: _____________________
Name:
Title:
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
BUYERS:
SMITHFIELD FIDUCIARY LLC
By: ____________________
Name: Xxxx X. Chill
Title: Authorized Signatory
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
THE IRREVOCABLE TRUST OF XXXXX
X. XXXXXXXXXX U/A 12/17/98
By: ____________________________
Name:
Title:
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
IROQUOIS MASTER FUND LTD.
By: ____________________
Name:
Title:
IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.
OMICRON MASTER TRUST
By: ________________
Name:
Title:
SCHEDULE OF BUYERS
BUYER'S ADDRESS BUYER'S REPRESENTATIVE'S ADDRESS
AND FACSIMILE NUMBER AND FACSIMILE NUMBER
-------------------- --------------------
Smithfield Fiduciary LLC c/o Highbridge Capital Management, LLC Xxxxxxx Xxxx & Xxxxx LLP
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx Attn: Xxxxxxx Xxxxx, Esq.
Xxxx X. Chill Facsimile: (000) 000-0000
Facsimile: (000) 000-0000 Telephone: (000) 000-0000
Telephone: (000) 000-0000
The Irrevocable Trust of Xxxxx X. c/x Xxxxxxxxxx & Co., LLC Xxxxxxxx Xxxxxxx LLP
Xxxxxxxxxx u/a 12/17/98 0000 Xxxxxx Xxxx Xx. Xxx Xxxxxxxx Xxxxxxxx
Xxxxxx, XX 00000 000 Xxxxxxxxx Xxxxxx
Attention: Xxxxx Xxxxxxxxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000 Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Iroquois Master Fund Ltd. Iroquois Master Fund Ltd.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Omicron Master Trust c/o Omicron Capital
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Pacific Stock Transfer Company
000 X. Xxxx Xxxxxxx Xxxx, Xxx. 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Re: InkSure Technologies Inc.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT") by and among InkSure Technologies Inc., a
Delaware corporation, (the "Company") and the buyers named therein
(collectively, the "HOLDERS"), pursuant to which the Company issued to the
Holders senior secured convertible notes (the "NOTES") convertible into the
Company's common stock, $0.01 par value per share (the "COMMON STOCK"), and that
certain Registration Rights Agreement by and among the Company and the Holders
(the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Notes and the shares of Common Stock, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 200_, the Company filed a Registration Statement on Form SB-2 (File No.
333-_____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling shareholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised our counsel by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
This letter shall serve as our notice to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
___________ _, 2005.
1
This letter shall serve as our standing notice with regard to this matter.
Very truly yours,
INKSURE TECHNOLOGIES INC.
By:______________________
Name:
Title:
CC: [LIST NAMES OF HOLDERS]
1
The following is Schedule 2(c) (the "Schedule") to that certain Registration
Rights Agreement (the "Agreement"), dated as of September 30, 2005, by and among
InkSure Technologies Inc., a Delaware corporation (the "Company"), and the
investors listed on the Schedule of Buyers attached thereto. Capitalized terms
used but not defined in the Schedule shall have the meaning given to such terms
in the Agreement.
SCHEDULE 2(C) - ALLOCATION OF REGISTRABLE SECURITIES
The following table sets forth the securities (including shares of Common Stock
that are issued and outstanding and shares of Common Stock issuable upon the
exercise of outstanding warrants), other than the Registrable Securities, that
may be included by the Company on any Registration Statement, without the prior
written consent of the Required Holders:
SELLING STOCKHOLDER COMMON STOCK
------------------- ------------
1 Xxxxxx X. Xxxxxx Venture Capital LLC 294,118
2 Xxxxxxx X. Xxxxxx 58,824
3 Xxxxxx X. Xxxxxxx 147,059
4 Xxxxxx Xxxxx 73,529
5 Xxxxx Xxx-Zion 147,059
6 Xxxxxxx Corporation 294,118
7 Xxxx Reinich 147,059
8 Xxxxx Xxxx 100,000
9 Hebrides Offshore Fund Ltd. 200,000
10 Hebrides LP 550,000
11 Xxxxx X. XxXxxxxx 100,000
12 Xxxx X. Xxxx 25,000
13 M.T. Xxxxxx Family Trust 50,000
14 Xxxx and Xxxxxxx Xxxxx 75,000
15 RGA Irrevocable Trust 205,882
16 Xxxxxx Xxxxx 205,882
17 Xxxx Xxxxxxxxx 176,471
---------
TOTAL: 2,850,001
2
