Tribeworks, Inc. SUBSCRIPTION AGREEMENT
Exhibit 4.1
Tribeworks, Inc.
1. Subscription. Subject to the terms and conditions hereof, the Subscriber hereby
irrevocably subscribes for and agrees to purchase ( ) post
consolidation shares of Common Stock, $0.0004 par value per share (the “Shares”) of
Tribeworks, Inc., a Delaware corporation (the “Company”), at a price of US$0.01 per Share,
and agrees to become a shareholder of the Company and to be bound by the terms of this Subscription
Agreement. As consideration for the Shares, the Subscriber hereby irrevocably tenders to the
Company a cashier’s check (or personal check if so authorized by the Company) or wire transfer in
the amount of $ (the “Purchase Price”).
This Subscription Agreement shall not become binding unless (i) this subscription is accepted
by the Company, (ii) the Purchase Price has been received and accepted by the Company, and (iii)
such additional closing conditions as the Company, in its sole discretion, shall require are
satisfied. This subscription shall not be deemed accepted by the Company until this Subscription
Agreement is signed by a duly authorized officer of the Company. If this subscription is accepted,
this Agreement shall become effective as between the Company and the Subscriber. If this
subscription is rejected, this Subscription Agreement and the Purchase Price will be returned to
the Subscriber as soon as reasonably practicable, and this subscription shall be rendered void and
of no further force or effect.
2. Acceptance of Subscription. The Subscriber acknowledges and agrees that this
subscription is made subject to the following terms and conditions:
(a) the Subscriber is committing to purchase the Shares for which he has subscribed upon
executing this Subscription Agreement; and
(b) the Company shall have the right to reject this subscription, in whole or in part, for any
reason whatsoever.
3. Acknowledgments, Representations and Covenants of the Subscriber. The Subscriber
acknowledges that he is purchasing the Shares without being furnished any offering literature or
prospectus. The Subscriber acknowledges that he has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the Shares and to obtain any
additional information that the Company possesses, or could acquire without unreasonable effort or
expense, necessary to verify the accuracy of such information. The Subscriber represents and
warrants that:
(a) (1) if the Subscriber is a natural person, the Subscriber (i) has a personal net worth or
joint net worth with his spouse in excess of $1,000,000, or (ii) has individual income (not joint
income with his spouse) in excess of $200,000 in each of the two most recent years or joint income
with his spouse in excess of $300,000 in each of those years and (in either case) has a reasonable
expectation of reaching the same income level in the current year, and he has no reason to
anticipate any change in personal circumstances, financial or otherwise, that may cause or require
any resale of his Shares; or (2) if the Subscriber is not a natural person, the Subscriber and the
person signing on its behalf represent and warrant that either (i) all owners of equity interests
in the Subscriber meet the qualifications stated in the preceding sentence, or (ii) the Subscriber
otherwise qualifies as an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities
Act”);
OR
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(b) The Subscriber acknowledges and confirms that (1) he understands the speculative nature
of, and the risks involved in, an investment in the Company and is able to bear the economic risks
of an investment in the Company; (2) he is fully informed as to the business conducted by the
Company; (3) he has adequate means of providing for his current needs and possible contingencies
and has no need now, and anticipates no need in the foreseeable future, to sell the Shares for
which the Subscriber hereby subscribes; (4) he understands that sale of the Shares have not been
registered under the Securities Act or the securities laws of any state and are being offered under
an exemption from registration thereunder; (5) the Shares are being acquired by the Subscriber
solely for his own account (unless otherwise disclosed in writing to the Company), for investment
purposes only, and not with a view to, or in connection with, any resale, distribution,
subdivision, fractionalization or other distribution thereof; (6) the Subscriber has no agreement
or other arrangement, formal or informal, with any person to sell, transfer or pledge any part of
the Shares subscribed for hereby or which would guarantee to the Subscriber any profit or against
any loss with respect to such Shares, and he has no plans to enter into any such agreement or
arrangement; and (7) he understands that he must bear the economic risk of his investment for an
indefinite period of time because the Shares or any part thereof cannot be sold or otherwise
transferred unless they are subsequently registered under the Act or an exemption from such
registration is available.
The Subscriber further acknowledges, represents, warrants and covenants as follows:
(a) The Subscriber, either individually or together with his purchaser representative, has
such knowledge and experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Shares and of making an informed investment decision.
(b) If the Subscriber is a natural person, he is at least 21 years of age and a bona fide
resident and domiciliary (not a temporary or transient resident) of the state or country set forth
on the signature page hereof, and has no current intention of becoming a resident of any other
state or jurisdiction.
(c) Before executing this Agreement, the Subscriber has had access to all information
regarding the financial condition and business of the Company that he has requested, and he has had
sufficient opportunity to ask questions of, and has received answers (to the extent available
without unreasonable effort) from, the Company’s management.
(d) There have been no representations, guaranties, or warranties made to the Subscriber by
the Company, or its agents or employees, or by any other person, expressly or by implication, with
respect to (i) the approximate length of time that the Subscriber will be required to remain an
owner of the Shares; (ii) the percentage of profit and/or amount of or type of consideration,
profit, or loss (including, without limitation, tax benefits) to be realized, if any, as a result
of investment in the Shares; and (iii) the possibility that the past performance or experience on
the part of any officer or director of the Company, or of any other person, might in any way
indicate the predictable results of operations of the Company, or of ownership of the Shares.
(e) The Subscriber understands that no federal or state agency has passed on or made any
recommendation or endorsement of the Shares.
(f) The Subscriber is acquiring the Shares for his own account for investment and not with a
view to, or for resale in connection with, any distribution thereof within the meaning of the
Securities Act, in violation of the Securities Act or any applicable state securities law.
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(g) The Subscriber can bear the economic risk of losing his entire investment.
(h) The Subscriber understands that the Company is under no obligation to register any of the
Shares in the future, except as provided in the registration rights agreement substantially in the
form attached hereto as Exhibit A.
(i) The Subscriber’s overall commitment to investments that are not readily marketable is not
disproportionate to his net worth and his investment in the Shares will not cause such overall
commitment to become excessive.
(j) The Subscriber has adequate means of providing for his current needs and personal
contingencies and has no need for liquidity in his investment in the Shares.
(k) The Subscriber understands that (i) the Shares are restricted securities within the
meaning of Rule 144 promulgated under the Securities Act (“Rule 144”), (ii) the Shares have
not been registered under the Securities Act or any applicable state laws, (iii) the Company has no
obligation, and has made no commitment, to the Subscriber to register any of the Shares in order to
permit them to be publicly resold, except as provided in the registration rights agreement
substantially in the form attached hereto as Exhibit A, and (iv) the exemption from
registration under Rule 144 will not be available unless the terms and conditions of Rule 144 have
been complied with.
(l) He will not Transfer or offer to Transfer his Shares until he notifies the Company of his
intention to do so and until he has been notified by the Company that either (i) in the opinion of
counsel satisfactory to the Company, no registration (or perfection of any exemption) is required
with respect to such Transfer or offer to Transfer, or (ii) an appropriate registration statement
with respect to the Shares has been filed by the Company with the United States Securities and
Exchange Commission and any applicable state securities authority and declared effective by such
Commission and authority.
(m) The Subscriber understands that the representatives of the Company will make notations in
the appropriate records of the Company of the restrictions on the transferability of the Shares and
may stamp or affix to any document or instrument representing the Shares an appropriate legend
stating, in effect, that the Shares have not been registered under the Securities Act and that
transfers thereof are prohibited unless (among other things) such transfers comply with the
Securities Act and applicable state securities laws or unless an opinion of counsel satisfactory to
the Company is furnished by the Subscriber to the effect that an exemption from registration under
the Securities Act and applicable state securities laws is availably or is not required.
4. Other Matters.
(a) The Subscriber recognizes that the sale of the Shares to it is based upon representations
and warranties contained herein, and the Subscriber agrees to indemnify the Company and its
officers, directors, and shareholders and to hold each of them harmless against any liability,
costs, or expenses (including reasonable attorneys’ fees and costs) arising by reason of or in
connection with any misrepresentation or any breach of such warranties by the Subscriber, or
arising as a result of the sale or distribution of any of the Shares by the Subscriber in violation
of the Act, or other applicable law. The covenants, warranties, and representations contained
herein shall be for the benefit of the Company and its officers, directors, and shareholders and
each of them shall be entitled to all of the rights that such covenants, warranties, and
representations shall confer.
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(b) The Subscriber agrees that, except as provided herein, this Subscription Agreement or any
agreement made hereunder or pursuant hereto may not be cancelled, terminated, or revoked by him
except upon the written consent of the Company.
(c) The Subscriber agrees that this Subscription Agreement and the foregoing acknowledgments,
representations, and covenants are true and accurate as of the date of this Subscription Agreement,
shall be true and accurate as of the date of delivery of the Shares by the Company, and shall
survive such delivery, his admission as a shareholder of the Company, and any investigation made by
any party relying on the same or any acceptance or rejection of this subscription.
(d) The Subscriber agrees to execute any and all further documents necessary or advisable, in
the sole discretion of the Company, in connection with his becoming a holder of the Shares or any
portion thereof.
(e) Any notice, consent, or other communication to be given under this Subscription Agreement
by any party to any other party shall be in writing and shall be either (a) personally delivered,
(b) mailed by registered or certified mail, postage prepaid with return receipt requested, (c)
delivered by overnight express delivery service or same-day local courier service, or (d) delivered
by telex or facsimile transmission to the address set forth beneath the signature of the parties,
or at such other address as may be designated by the parties from time to time in accordance with
this Section. Notices delivered personally, by overnight express delivery service, or by local
courier service shall be deemed given as of actual receipt. Mailed notices shall be deemed given
two business days after mailing. Notices delivered by telex or facsimile transmission shall be
deemed given upon receipt by the sender of the answerback (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).
(f) The parties acknowledge and agree that this Subscription Agreement and the obligations and
undertakings of the parties hereunder will be performable in San Francisco, San Francisco County,
California. This Subscription Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware. If any action is brought to enforce or
interpret this Agreement, venue for such action shall be in San Francisco County, California.
(g) This Subscription Agreement constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof, and may be amended only by a writing executed by the party to
be bound thereby.
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IN WITNESS WHEREOF, the Subscriber has hereby executed this Agreement as of the date set forth
below.
| Printed Name of Subscriber: | Subscriber’s Street Address: | |||
| City | ||||
Signature of Subscriber
|
State | Zip Code | ||
| Title (if applicable) | Subscriber’s Social Security or Tax ID Number | |||
Dated effective as of: , 2005
| Accepted: TRIBEWORKS, INC. |
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| By: | ||||
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EXHIBIT “A”
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into as of
the ___day of ___, 2005 by and between TRIBEWORKS, INC., a Delaware corporation (the
“Company”) and, , a (the “Shareholder”).
R E C I T A L S:
WHEREAS, the Shareholder is acquiring (___) shares (the “Shares”) of
the Company’s common stock, par value $0.0004 per share (the “Common Stock”) pursuant to
that certain Subscription Agreement by and between the Company and the Shareholder of even date
herewith (the “Subscription Agreement”); and
WHEREAS, the Company desires to grant to the Shareholder certain registration rights relating
to the Shares and the Shareholder desires to obtain such registration rights, subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises, representations, warranties and
conditions set forth in this Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Definitions and References. For purposes of this Agreement, in addition to the definitions
set forth above and elsewhere herein, the following terms shall have the following meanings:
(a) The term “Commission” shall mean the Securities and Exchange Commission and any successor
agency.
(b) The terms “register”, “registered” and “registration” shall refer to a registration
effected by preparing and filing a registration statement or similar document in compliance with
the 1933 Act (as herein defined) and the declaration or ordering of effectiveness of such
registration statement or document.
(c) For purposes of this Agreement, the term “Registrable Stock” shall mean the Shares and the
Underlying Shares held by Shareholder. For purposes of this Agreement, any Registrable Stock shall
cease to be Registrable Stock when (i) a registration statement covering such Registrable Stock has
been declared effective and such Registrable Stock has been disposed of pursuant to such effective
registration statement, (ii) such Registrable Stock is sold pursuant to Rule 144 (or any similar
provision then in force) under the 1933 Act, (iii) such Registrable Stock is eligible to be sold
pursuant to Rule 144(k) under the 1933 Act, (iv) such Registrable Stock has been otherwise
transferred, no stop transfer order affecting such stock is in effect and the Company has delivered
new certificates or other evidences of ownership for such Registrable Stock not bearing any legend
indicating that such shares have not been registered under the 1933 Act, or (v) such Registrable
Stock is sold by a person in a transaction in which the rights under the provisions of this
Agreement are not assigned.
(d) The term “Holder” shall mean the Shareholder or any transferee or assignee thereof to whom
the rights under this Agreement are assigned in accordance with Section 10 hereof, provided
that the Shareholder or such transferee or assignee shall then own the Registrable Stock.
Exhibit A-1
(e) The term “1933 Act” shall mean the Securities Act of 1933, as amended.
(f) An “affiliate of such Holder” shall mean a person who controls, is controlled by or is
under common control with a Holder, or the spouse or children (or a trust exclusively for the
benefit of the spouse and/or children) of a Holder, or, in the case of a Holder that is a
partnership, its partners.
(g) The term “Person” shall mean an individual, corporation, partnership, trust, limited
liability company, unincorporated organization or association or other entity, including any
governmental entity.
(h) The term “Requesting Holder” shall mean a Holder or Holders of in the aggregate at least a
majority of the Registrable Stock.
(i) References in this Agreement to any rules, regulations or forms promulgated by the
Commission shall include rules, regulations and forms succeeding to the functions thereof, whether
or not bearing the same designation.
2. Demand Registration.
(a) Commencing on the date that is six months after the date hereof, any Requesting Holder may
make a written request to the Company (specifying that it is being made pursuant to this Section 2)
that the Company file a registration statement under the 1933 Act (or a similar document pursuant
to any other statute then in effect corresponding to the ▇▇▇▇ ▇▇▇) covering the registration of
Registrable Stock. In such event the Company shall (i) within ten (10) days thereafter notify in
writing all other Holders of Registrable Stock of such request, and (ii) use its best efforts to
cause to be registered under the 1933 Act all Registrable Stock that the Requesting Holders and
such other Holders have, without forty-five (45) days after the Company has given such notice,
requested be registered.
(b) If the Requesting Holders intend to distribute the Registrable Stock covered by their
request by means of an underwritten offering, they shall so advise the Company as a part of their
request pursuant to Section 2(a) above, and the Company shall include such information in the
written notice referred to in clause (i) of Section 2(a) above. In such event, the Holder’s right
to include its Registrable Stock in such registration shall be conditioned upon such Holder’s
participation in such underwritten offering and the inclusion of such Holder’s Registrable Stock in
the underwritten offering to the extent provided in this Section 2. All Holders proposing to
distribute Registrable Stock through such underwritten offering shall enter into an underwriting
agreement in customary form with the underwriter or underwriters. Such underwriter or underwriters
shall be selected by a majority in interest of the Requesting Holders and shall be approved by the
Company, which approval shall not be unreasonably withheld; provided, that all of the
representations and warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of such Holders and that
any or all of the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall be conditions precedent to the obligations of such Holders; and
provided further, that no Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the Registrable Stock of such Holder and such
Holder’s intended method of distribution and any other representation required by law or reasonably
required by the underwriter.
Exhibit A-2
(c) Notwithstanding any other provision of this Section 2 to the contrary, if the managing
underwriter of an underwritten offering of the Registrable Stock required to be registered pursuant
to this Section 2 advises the Requesting Holders in writing that in its opinion marketing factors
require a limitation of the number of shares to be underwritten, the Requesting Holders shall so
advise all Holders of Registrable Stock that would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Stock that may be included in such underwritten offering shall
be allocated among all such Holders, including the Requesting Holders, in proportion (as nearly as
practicable) to the amount of Registrable Stock requested to be included in such registration by
each Holder at the time of filing the registration statement; provided, that in the event
of such limitation of the number of shares of Registrable Stock to be underwritten, the Holders
shall be entitled to an additional demand registration pursuant to this Section 2. If any Holder
of Registrable Stock disapproves of the terms of the underwriting, such Holder may elect to
withdraw by written notice to the Company, the managing underwriter and the Requesting Holders.
The securities so withdrawn shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the contrary, the Company shall not be
required to effect a registration pursuant to this Section 2 during the period starting with the
fourteenth (14th) day immediately preceding the date of an anticipated filing by the
Company of, and ending on a date ninety (90) days following the effective date of, a registration
statement pertaining to a public offering of securities for the account of the Company;
provided, that the Company shall actively employ in good faith all reasonable efforts to
cause such registration statement to become effective; and provided further, that the
Company’s estimate of the date of filing such registration statement shall be made in good faith.
(e) The Company shall be obligated to effect and pay for a total of only one (1) registration
pursuant to this Section 2, unless increased pursuant to Section 2(c) hereof; provided,
that a registration requested pursuant to this Section 2 shall not be deemed to have been effected
for purposes of this Section 2(e), unless (i) it has been declared effective by the Commission (ii)
if it is a shelf registration, it has remained effective for the period set forth in Section 3(b),
(iii) the offering of Registrable Stock pursuant to such registration is not subject to any stop
order, injunction or other order or requirement of the Commission (other than any such action
prompted by any act or omission of the Holders), and (iv) no limitation of the number of shares of
Registrable Stock to be underwritten has been required pursuant to Section 2(c) hereof.
3. Obligations of the Company. Whenever required under Section 2 to effect the
registration of any Registrable Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for at least two (2) years or such shorter period which will
terminate when all Registrable Stock covered by such registration statement has been sold (but not
before the expiration of the forty (40) or ninety (90) day period referred to in Section 4(3) of
the 1933 Act and Rule 174 thereunder, if applicable), and comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the sellers thereof set forth
in such registration statement;
(b) furnish to each Holder and any underwriter of Registrable Stock to be included in a
registration statement copies of such registration statement as filed and each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus included in such
Exhibit A-3
registration statement (including each preliminary prospectus) and such other documents as
such Holder may reasonably request in order to facilitate the disposition of the Registrable Stock
owned by such Holder;
(c) use its best efforts to register or qualify such Registrable Stock under such other
securities or blue sky laws of such jurisdictions as any selling Holder or any underwriter of
Registrable Stock reasonably requests, and do any and all other acts which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of
the Registrable Stock owned by such Holder; provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(c) hereof, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any such jurisdiction;
(d) use its best efforts to cause the Registrable Stock covered by such registration statement
to be registered with or approved by such other governmental agencies or other authorities as may
be necessary by virtue of the business and operations of the Company to enable the selling Holders
thereof to consummate the disposition of such Registrable Stock;
(e) notify each selling Holder of such Registrable Stock and any underwriter thereof, at any
time when a prospectus relating thereto is required to be delivered under the 1933 Act (even if
such time is after the period referred to in Section 3(a)), of the happening of any event as a
result of which the prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances being made not misleading, and prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Stock, such prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances being made not misleading;
(f) make available for inspection by any selling Holder, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the “Inspectors”), all financial
and other records, pertinent corporate documents and properties of the Company (collectively, the
“Records”), and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Inspector, as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, in connection with such registration
statement. Records or other information which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records or other information is necessary to avoid or
correct a misstatement or omission in the registration statement, or (ii) the release of such
Records or other information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each selling Holder shall, upon learning that disclosure of such Records or
other information is sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure
of the Records or other information deemed confidential;
(g) furnish, at the request of any Requesting Holder, on the date that such shares of
Registrable Stock are delivered to the underwriters for sale pursuant to such registration or, if
such Registrable Stock is not being sold through underwriters, on the date that the registration
statement with respect to such shares of Registrable Stock becomes effective, (1) a signed opinion,
dated such date, of the legal counsel representing the Company for the purposes of such
registration, addressed to the
Exhibit A-4
underwriters, if any, and if such Registrable Stock is not being sold through underwriters,
then to the Requesting Holders as to such matters as such underwriters or the Requesting Holders,
as the case may be, may reasonably request and as would be customary in such a transaction; and (2)
a letter dated such date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable Stock is not being sold through
underwriters, then to the Requesting Holders and, if such accountants refuse to deliver such letter
to such Holder, then to the Company (i) stating that they are independent certified public
accountants within the meaning of the 1933 Act and that, in the opinion of such accountants, the
financial statements and other financial data of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act, and (ii) covering such other
financial matters (including information as to the period ending not more than five (5) business
days prior to the date of such letter) with respect to the registration in respect of which such
letter is being given as the Requesting Holders may reasonably request and as would be customary in
such a transaction;
(h) enter into customary agreements (including if the method of distribution is by means of an
underwriting, an underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the Registrable Stock to
be so included in the registration statement;
(i) otherwise use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably practicable, but not
later than eighteen (18) months after the effective date of the registration statement, an earnings
statement covering the period of at least twelve (12) months beginning with the first full month
after the effective date of such registration statement, which earnings statements shall satisfy
the provisions of Section 11(a) of the 1933 Act; and
(j) use commercially reasonable efforts to cause all such Registrable Stock to be listed on
any national securities exchange or quotation system on which similar securities issued by the
Company are then listed or traded.
The Company may require each selling Holder of Registrable Stock as to which any registration
is being effected to furnish to the Company such information regarding the distribution of such
Registrable Stock as the Company may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e) hereof, such Holder will forthwith discontinue
disposition of Registrable Stock pursuant to the registration statement covering such Registrable
Stock until such Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) hereof, and, if so directed by the Company, such Holder will deliver
to the Company (at the Company’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus covering such Registrable Stock current at the time of
receipt of such notice. In the event the Company shall give any such notice, the Company shall
extend the period during which such registration statement shall be maintained effective pursuant
to this Agreement (including the period referred to in Section 3(a)) by the number of days during
the period from and including the date of the giving of such notice pursuant to Section 3(e) hereof
to and including the date when each selling Holder of Registrable Stock covered by such
registration statement shall have received the copies of the supplemented or amended prospectus
contemplated by Section 3(e) hereof.
Exhibit A-5
4. Incidental Registration. Commencing immediately after the date of Closing (as
defined in the Subscription Agreement), if the Company determines that it shall file a registration
statement under the 1933 Act (other than a registration statement on a Form S-4 or S-8 or filed in
connection with an exchange offer or an offering of securities solely to the Company’s existing
stockholders) on any form that would also permit the registration of the Registrable Stock and such
filing is to be on its behalf and/or on behalf of selling holders of its securities for the general
registration of its common stock to be sold for cash, at each such time the Company shall promptly
give each Holder written notice of such determination setting forth the date on which the Company
proposes to file such registration statement, which date shall be no earlier than thirty (30) days
from the date of such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received by the Company no
later than twenty (20) days after the date of the Company’s notice, the Company shall use its best
efforts to cause to be registered under the 1933 Act all of the Registrable Stock that each such
Holder has so requested to be registered. If, in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering, in the written opinion of the
placement agent, or if there is none, the Company), the total amount of such securities to be so
registered, including such Registrable Stock, will exceed the maximum amount of the Company’s
securities which can be marketed (i) at a price reasonably related to the then current market value
of such securities, or (ii) without otherwise materially and adversely affecting the entire
offering, then the amount of Registrable Stock to be offered for the accounts of Holders shall be
reduced pro rata to the extent necessary to reduce the total amount of securities to be included in
such offering to the recommended amount; provided, that if securities are being offered for
the account of other Persons as well as the Company, such reduction shall not represent a greater
fraction of the number of securities intended to be offered by Holders than the fraction of similar
reductions imposed on such other Persons other than the Company over the amount of securities they
intended to offer.
5. Holdback Agreement — Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law, each Holder whose Registrable Stock is
included in a registration statement agrees not to effect any public sale or distribution of the
issue being registered or a similar security of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the
1933 Act, during the fourteen (14) days prior to, and during the one hundred eighty (180) day
period beginning on, the effective date of such registration statement (except as part of the
registration), if and to the extent requested by the Company in the case of a nonunderwritten
public offering or if and to the extent requested by the managing underwriter or underwriters in
the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others. The Company agrees (i) not
to effect any public sale or distribution of any securities similar to those being registered, or
any securities convertible into or exchangeable or exercisable for such securities, during the
fourteen (14) days prior to, and during the ninety (90) day period beginning on, the effective date
of any registration statement in which Holders are participating (except as part of such
registration), if and to the extent requested by the Holders in the case of a non-underwritten
public offering or if and to the extent requested by the managing underwriter or underwriters in
the case of an underwritten public offering; and (ii) that any agreement entered into after the
date of this Agreement pursuant to which the Company issues or agrees to issue any securities
convertible into or exchangeable or exercisable for such securities (other than pursuant to an
effective registration statement) shall contain a provision under which holders of such securities
agree not to effect any public sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to Rule 144 under the 1933 Act.
Exhibit A-6
6. Expenses of Registration. The Company shall bear all expenses incurred in
connection with each registration pursuant to Sections 2 and 4 of this Agreement, excluding
underwriters’ discounts and commissions, but including, without limitation, all registration,
filing and qualification fees, word processing, duplicating, printers’ and accounting fees
(including the expenses of any special audits or “cold comfort” letters required by or incident to
such performance and compliance), exchange listing fees or National Association of Securities
Dealers fees, messenger and delivery expenses, all fees and expenses of complying with securities
or blue sky laws, fees and disbursements of counsel for the Company. The selling Holders shall
bear and pay the underwriting commissions and discounts applicable to the Registrable Stock offered
for their account in connection with any registrations, filings and qualifications made pursuant to
this Agreement.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify, to the full
extent permitted by law, each Holder, its officers, directors and agents and each Person who
controls such Holder (within the meaning of the ▇▇▇▇ ▇▇▇) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statement therein (in case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The Company will also indemnify any
underwriters of the Registrable Stock, their officers and directors and each Person who controls
such underwriters (within the meaning of the ▇▇▇▇ ▇▇▇) to the same extent as provided above with
respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any registration statement in which
a Holder is participating, each such Holder will furnish to the Company in writing such information
with respect to such Holder as the Company reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify, to the extent permitted by law, the
Company, its directors and officers and each Person who controls the Company (within the meaning of
the ▇▇▇▇ ▇▇▇) against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information with respect to such Holder so furnished in
writing by such Holder. Notwithstanding the foregoing, the liability of each such Holder under this
Section 7(b) shall be limited to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises out of or is based on willful
misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification
hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such
Person of any written notice of the commencement of any action, suit, proceeding or investigation
or threat thereof made in writing for which such Person will claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such indemnified party, a
conflict of interest may exist between such indemnified party and the indemnifying party with
respect to such claim, permit the indemnifying party to assume the defense of such claims with
counsel reasonably satisfactory to such indemnified party. Whether or not such defense is assumed
by the indemnifying party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably withheld). Failure
by such Person to
Exhibit A-7
provide said notice to the indemnifying party shall itself not create liability except to the
extent of any injury caused thereby. No indemnifying party will 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 of such
claim or litigation. If the indemnifying party is not entitled to, or elects not to, assume the
defense of a claim, it will not be obligated to pay the fees and expenses of more than one (1)
counsel with respect to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other such indemnified
parties with respect to such claim, in which event the indemnifying party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnity provided for in this Section 6 is
unavailable to, or is insufficient to hold harmless, an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, or provides a lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnifying party on the one hand and the indemnified party on the other
but also the relative fault of the indemnifying party and the indemnified party as well as any
other relevant equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties; and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in Section 7(c), any legal or other fees
or expenses reasonably incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 7(d) were determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
If indemnification is available under this Section 7, the indemnifying parties shall indemnify
each indemnified party to the full extent provided in Sections 7(a) and 7(b) without regard to the
relative fault of said indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 6.
8. Participation in Underwritten Registrations. No Holder may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s securities
on the basis provided in any underwriting arrangements approved by the Holders entitled hereunder
to approve such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably required under the
terms of such underwriting arrangements.
9. Rule 144. After a registration statement has been filed under the 1933 Act and
declared effective by the Commission, the Company covenants that it will file the reports required
to be filed by
Exhibit A-8
it under the 1933 Act and the Securities Exchange Act of 1934, as amended, and the rules and
regulations adopted by the Commission thereunder; and it will take such further action as any
Holder may reasonably request, all to the extent required from time to time to enable such Holder
to sell Registrable Stock without registration under the 1933 Act within the limitation of the
exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
10. Transfer of Registration Rights. The registration rights of any Holder under this
Agreement with respect to any Registrable Stock may be transferred to any transferee of such
Registrable Stock; provided that such transfer may otherwise be effected in accordance with
applicable securities laws; provided further, that the transferring Holder shall give the
Company written notice at or prior to the time of such transfer stating the name and address of the
transferee and identifying the securities with respect to which the rights under this Agreement are
being transferred; provided further, that such transferee shall agree in writing, in form
and substance satisfactory to the Company, to be bound as a Holder by the provisions of this
Agreement; and provided further, that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities by such transferee
is restricted under the 1933 Act. Except as set forth in this Section 10, no transfer of
Registrable Stock shall cause such Registrable Stock to lose such status.
11. Mergers, Etc. The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the surviving corporation
unless the proposed surviving corporation shall, prior to such merger, consolidation or
reorganization, agree in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to “Registrable Stock” shall be deemed to be references to
the securities which the Holders would be entitled to receive in exchange for Registrable Stock
under any such merger, consolidation or reorganization; provided, however, that the
provisions of this Section 11 shall not apply in the event of any merger, consolidation or
reorganization in which the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely of (i) cash, (ii)
securities of the acquiring corporation which may be immediately sold to the public without
registration under the 1933 Act, or (iii) securities of the acquiring corporation which the
acquiring corporation has agreed to register within ninety (90) days of completion of the
transaction for resale to the public pursuant to the 1933 Act.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter into any
agreement with respect to its securities which is inconsistent with the rights granted to the
Holders in this Agreement.
(b) Remedies. Each Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive (to the extent permitted by law) the defense in any action for specific
performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departures from the provisions hereof
Exhibit A-9
may not be given unless the Company has obtained the written consent of the Holders of at
least a majority of the Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto. Nothing in this Agreement, express or implied, is
intended to confer upon any Person other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware applicable to contracts made and to be performed
wholly within that state, without regard to the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.
(g) Headings. The headings in this Agreement are used for convenience of reference
only and are not to be considered in construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under this Agreement shall be given in
writing and shall be delivered in person or by telecopy or by overnight courier guaranteeing no
later than second business day delivery, directed to (i) the Company at the address set forth below
its signature hereof or (ii) a Holder at the address of the Shareholder set forth below its
signature hereof. Any party may change its address for notice by giving ten (10) days advance
written notice to the other parties. Every notice or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier service, with receipt acknowledged.
(i) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the Holders shall be
enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full force and effect
notwithstanding any breach or purported breach of, or relating to, the Subscription Agreement.
13. Recitals. The recitals are hereby incorporated in the Agreement as if fully set
forth herein.
Exhibit A-10
14. Facsimile Signature. This Agreement may be executed by facsimile copy and any
such facsimile copy bearing the facsimile signature of any party hereto shall have full legal force
and effect and shall be binding against the party having executed this Agreement by facsimile.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Exhibit A-11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written hereinabove.
| TRIBEWORKS, INC. |
||||
| By: | ||||
| J. ▇▇▇▇▇ ▇▇▇▇▇, Director | ||||
| ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||||
| SHAREHOLDER | ||||
| By: | ||||
Exhibit A-12