EXHIBIT 10.21
FORM OF
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of July 18, 2003 (this "AGREEMENt"), by
and among Auto Data Network, Inc., a Delaware corporation (the "COMPANy"), and
the Purchasers (as defined below).
W I T N E S S E T H :
WHEREAS, the Company is offering (the "OFFERING") an aggregate of up to
[______________________________] of shares of its Series A-2 Preferred Stock,
par value $.001 per share (the "SERIES A-2 PREFERRED STOCk"), exercisable for
shares of Common Stock (the "SECURITIEs");
WHEREAS, the Company desires to issue and sell to the persons listed on Schedule
A, attached hereto (each a "PURCHASEr," and collectively, the "PURCHASERs"), the
Securities as set forth in one or more Securities Purchase Agreements entered
into or to be entered into by and between the Company and each Purchaser (the
"SECURITIES PURCHASE AGREEMENt");
WHEREAS, the Company and the Purchasers have entered or will have entered into a
Securities Purchase Agreement;
WHEREAS, it is a condition precedent to the consummation of the transactions
contemplated by the Securities Purchase Agreement that the Company provide for
the rights set forth in this Agreement; and
WHEREAS, certain terms used in this Agreement are defined in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:
1. Registration Rights.
1.1 Required Registration. The Company shall use its reasonable best efforts to
prepare and file with the SEC within one hundred twenty (120) days following the
Initial Closing Date (as such term is defined in the Securities Purchase
Agreement) or the termination of the Offering, if no final Closing (as such term
is defined in the Securities Purchase Agreement) is held, as the case may be, a
registration statement on Form SB-1 or successor form or another form selected
by the Company that is available to it under the Securities Act which conforms
with all applicable rules and regulations (the "REQUIRED REGISTRATION
STATEMENt") with respect to all the Registerable Securities beneficially owned
by the Purchasers following the final Closing (as such term is defined in the
Securities Purchase Agreement) to permit the offer and re-sale from time to time
of such Registerable Securities in accordance with the methods of distribution
provided by the Purchasers. The Company shall use its reasonable best efforts to
cause the Required Registration Statement to become effective as promptly as
reasonably practicable thereafter, and in any event no later than December 31,
2003. The Company shall use its reasonable best efforts to keep such Required
Registration Statement continuously effective (the "EFFECTIVE PERIOD") for a
period of one year after the Required Registration Statement first becomes
effective plus whatever period of time as shall equal any period, if any, during
such one year period in which the Company was not current with its reporting
requirements under the Exchange Act. To the extent that the Registerable
Securities are not sold under the Required Registration Statement, the
Purchasers shall have the registration rights as enumerated in Sections 1.2, 1.3
and 1.4.
1.2 Demand Registrations.
(a) Requests for Registration. Subject to Sections 1.2(b) and 1.2(e) below, the
Purchasers holding at least 33% of the Registrable Securities (the "INITIATING
HOLDERs") may at any time after the completion of the Effective Period, or if
the Required Registration Statement has not been effective for more than ninety
(90) days immediately preceding any request under this Section 1.2(a), request
registration under the Securities Act of all or part of their Registrable
Securities on Form ▇-▇, ▇▇▇▇ ▇-▇ or any successor form of registration, or, if
available, on Form S-3 or any successor form of registration; provided that the
Initiating Holders (together with all other holders of Registrable Securities to
be included in such registration) propose to sell Registrable Securities to the
public of the greater of (i) an aggregate price (calculated based upon the
Market Price of the Registrable Securities on the date of filing of the
Registration Statement with respect to such Registrable Securities) to the
public of at least $1,000,000, or (ii) at least 25% of the then outstanding
Registrable Securities or, if less than (i) or (ii), then (iii) the remaining
Registrable Securities. Each such registration request shall specify the number
of Registrable Securities requested to be registered and if the offering is to
be an underwritten offering. Within ten (10) days after receipt of any such
request, the Company will give written notice of such requested registration to
all other holders of Registrable Securities and, subject to the provisions
hereof, will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within fifteen (15) days after the holder's receipt of the Company's notice. A
registration requested pursuant to this Section 1.2(a) are referred to herein as
a "DEMAND REGISTRATION." (b) Number of Registrations. The Purchasers and their
permitted transferees are entitled to request two (2) Demand Registrations, in
the aggregate; provided that if the Company is eligible to file a registration
statement on Form S-3, then
the Initiating Holders shall not request a registration on Form S-1. The Company
shall use its reasonable best efforts to cause any such Demand Registration to
become effective promptly, and in any event no later than one hundred (100) days
after it receives a request under Section 1.2(a) hereof; provided, that such one
hundred (100) day period shall be reduced to sixty (60) days if the Company is
filing a Registration Statement on Form S-3. Except as provided in Section
1.2(c) below, a registration shall not constitute a Demand Registration until it
has become effective and remains continuously effective for the lesser of (i)
the period during which all Registrable Securities registered in the Demand
Registration are sold and (ii) 105 days; provided, however, that a registration
shall not constitute a Demand Registration if (x) after such Demand Registration
has become effective, such registration or the related offer, sale or
distribution of Registrable Securities thereunder is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court for any reason not attributable to the Initiating Holders and
such interference is not thereafter eliminated or (y) the conditions specified
in the underwriting agreement, if any, entered into in connection with such
Demand Registration are not satisfied or waived, other than by reason of a
failure by the Initiating Holders. (c) Withdrawal. If a holder of Registrable
Securities (each a "DESIGNATED HOLDEr" and collectively, the "DESIGNATED
HOLDERs") sends the Company a written request for inclusion of part or all of
such Designated Holder's Registrable Securities in a registration, such
Designated Holder shall not be entitled to withdraw or revoke such request
without the prior written consent of the Company unless the Designated Holders
reimburse the Company for the registration expenses set forth in Section 1.6(s)
with respect to such Demand Registration. If the Designated Holders fail to
reimburse the Company for such registration expenses, including, but not limited
to legal and accounting expenses, within thirty (30) days of receipt of notice
of such registration expenses, then such request shall constitute a Demand
Registration, unless such withdrawal or revocation was due to a material adverse
change to the Company. (d) Priority in Demand Registrations. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering, exceeds the number of Registrable Securities and
other securities, if any, which can be sold therein without materially and
adversely affecting the marketability of the offering (the "OFFERING QUANTITy"),
then the Company will include in such registration securities in the following
priority:
(i) First, for a demand made by the Initiating Holders, all Registrable
Securities owned by the Initiating Holders and the number of shares to be
offered for the account of all other Designated Holders, pro rata, based on the
amount of Registrable Securities held by each such holder and the amount of
Registrable Securities held by all such holders, on an as converted basis. To
the extent more than 22.5% of the Registrable Securities, so requested to be
registered by the Initiating Holders and the other Designated Holders are
excluded from an offering under this Section 1.2(d) (a "RELOAD EVENt"), then the
Designated Holders shall have the right to one additional Demand Registration
under, and subject to the limitations of, Section 3.1
upon the occurrence of each Reload Event (but in no event shall the number of
Demand Registrations pursuant to this Agreement exceed a total of three Demand
Registrations). (ii) Second, the number of shares to be offered for the account
of the Company. (iii) Third, to the extent (and only to the extent) that the
Offering Quantity exceeds the aggregate amount of securities to be sold in
clauses (i) and (ii), the Company will include in such registration any other
Registrable Securities requested to be included in such offering, and if the
number of such other holders' securities requested to be included exceeds the
Offering Quantity, then the Company shall include only each such requesting
holder's pro rata share of the Offering Quantity, based on the amount of
securities held by such holder, on an as converted basis; provided, that no
shares under clauses (ii) and (iii) shall be included on the holder's first
Demand Registration on Form S-3.
(e) Restrictions on Demand Registrations. The Company will not be obligated to
effect any Demand Registration within 120 days after the effective date of a
previous Demand Registration or other registration of securities of the Company
(other than a shelf registration under Rule 415 of the Securities Act or a
Registration Statement on Form S-8) for the account of the Initiating Holders
(so long as at least two-thirds of the Registrable Securities requested to be
included in such registration by the Initiating Holders were included) or any
other Designated Holder (so long as they had the opportunity to participate in
such registration and at least two-thirds of the Registrable Securities
requested to be included in such registration by the Designated Holders were
included). Such 120-day period shall be reduced to seventy five (75) days, if
less than two-thirds of the Registrable Securities requested to be registered
are included in such registration. In addition, the Company will not be
obligated to effect more than one Demand Registration within a nine (9) month
period.
(f) Selection of Underwriters. In connection with a Demand Registration that is
an underwritten offering, at the request of the Initiating Holders or otherwise,
the Company shall select a nationally recognized investment banking firm to
administer the offering, such selection to be subject to the approval of the
Initiating Holders which approval shall not be unreasonably withheld.
1.3 Form S-3 Registration. If the Company is eligible to use Form S-3 under the
Securities Act (or any similar successor form) and shall receive from a
Purchaser and its permitted transferees (the "S-3 INITIATING HOLDERs") a written
request or requests that the Company effect a registration on such Form S-3,
including without limitation, pursuant to Rule 415 of the Securities Act and any
related qualification or compliance with respect to all or part of the
Registrable Securities owned by the S-3 Initiating Holders and its permitted
transferees (provided, that the S-3 Initiating Holders registering Registrable
Securities in such registration (together with all other holders of Registrable
Securities to be included in such registration) propose to sell their
Registrable Securities at an aggregate price (calculated based upon the Market
Price of the Registrable Securities on the date of filing of the Form S-3 with
respect to such Registrable Securities) to the public of no less than
$1,000,000), the Company shall (i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other holders
of Registrable Securities; and (ii) as soon as practicable, use reasonable best
efforts to file and effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of the Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other holder in the group of holders joining in such request
as is specified in a written request given within fifteen (15) days after the
holder's receipt of such written notice from the Company. No registration
requested by any S-3 Initiating Holders pursuant to this Section 1.3 shall be
deemed a registration pursuant to Sections 1.1 or 1.2.
1.4 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of its
securities under the Securities Act (other than pursuant to a Demand
Registration, a registration pursuant to Section 1.3 or a registration on Form
S-4 or S-8 or any successor or similar forms) and the registration form to be
used may be used for the registration of Registrable Securities, whether or not
for sale for its own account, the Company will give prompt written notice (but
in no event less than twenty five (25) days before the anticipated filing date)
to all holders of Registrable Securities, and such notice shall describe the
proposed registration and distribution and offer to all holders of Registrable
Securities the opportunity to register the number of Registrable Securities as
each such holder may request. The Company will include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within fifteen (15) days after the holders'
receipt of the Company's notice (a "PIGGYBACK REGISTRATION").
(b) Reasonable Efforts. The Company shall use all reasonable best efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggyback Registration to be included on the same terms and conditions as any
similar securities of the Company or any other security holder included therein
and to permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof.
(c) Withdrawal. Any Designated Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 1.4 by giving written notice to the Company
of its request to withdraw; provided, that in the event of such withdrawal
(other than pursuant to Section 1.4(f) hereof, the Company shall not be required
to reimburse such holder for the fees and expenses referred to in Section 1.6(s)
hereof incurred by such holder prior to such withdrawal, unless such withdrawal
was due to a material adverse change to the Company. The Company may withdraw a
Piggyback Registration at any time prior to the time it becomes effective.
(d) Priority in Registrations. If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing (with a copy to each party hereto requesting
registration of Registrable Securities) that in their opinion the number of
Registrable Securities requested to be included on a secondary basis in such
registration exceeds the number which can be sold in such offering without
materially and adversely affecting the marketability of such primary or
secondary offering (the "COMPANY OFFERING QUANTITY"), then the Company will
include in such registration securities in the following priority:
(i) First, the Company will include the securities the Company roposes to sell.
(ii) Second, the Company will include all Registrable Securities equested to be
included by any Designated Holder, and if the number of such Designated holders'
securities requested to be included exceeds the Company Offering Quantity, then
the Company shall include only each such requesting Designated Holders' pro rata
share of the shares available for registration by the Purchaser, based on the
amount of ecurities held by such holder, on an as converted basis.
(e) Cutback. If, as a result of the proration provisions of this Section 1.4,
any designated Holders shall not be entitled to include all Registrable
Securities in a Piggyback registration that such Designated Holders has
requested to be included, such holder may elect to withdraw his request to
include Registrable Securities in such registration but the Company shall be
required to reimburse such holder for the fees and expenses referred to in
Section 1.7(b) hereof incurred by such holder prior to such withdrawal.
1.5 Holdback Agreements.
(a) To the extent not inconsistent with applicable law, upon the request of the
Company or, in the case of an underwritten public offering, the underwriters
managing such underwritten offering of the Company's securities, each holder of
Registrable Securities who owns at least 5% of the outstanding capital stock of
the Company on an "as-converted" basis or is an officer or director of the
Company will not effect any public sale or distribution (other than those
included in the registration) of any securities of the Company, or any
securities, options or rights convertible into or exchangeable or exercisable
for such securities during the fourteen days prior to and the ninety (90) -day
period beginning on such effective date, unless (in the case of an underwritten
public offering) the managing underwriters otherwise agree to a shorter period
of time. Notwithstanding the foregoing, no Designated Holder shall be required
to enter into any such "lock up" agreement unless and until all of the Company's
executive officers and directors execute identical "lock up" agreements and the
Company uses commercially reasonable efforts to cause each holder of more than
5% of its outstanding capital stock to execute identical "lock up" agreements.
Neither the Company nor the underwriter shall amend, terminate or waive a "lock
up" agreement unless each "lock up" agreement with a Designated Holder is also
amended or waived in a similar manner or terminated, as the case may be.
(b) The Company shall have the right at any time to require that the Designated
Holders of Registrable Securities suspend further open market offers and sales
of Registrable Securities pursuant to a Registration Statement filed hereunder
whenever in the reasonable judgment of the Company after consultation with
counsel there is or may be in existence a Changing Event (as defined in Section
1.6(e)). The Company will give the Designated Holders notice of any such
suspension and will use all reasonable best efforts to minimize the length of
such suspension.
(c) The Company agrees not to effect any public sale or distribution of any of
its securities, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to registrations on Form S-4 or
S-8 or any successor thereto), during the period beginning on the effective date
of any Registration Statement in which the Designated Holders of Registrable
Securities are participating and ending on the earlier of (i) the date on which
all Registrable Securities registered on such Registration Statement are sold
and (ii) forty five (45) days after the effective date of such Registration
Statement (except securities covered by such Registration Statement).
1.6 Registration Procedures. Whenever any Registrable Securities are required to
be registered pursuant to this Agreement, the Company will use reasonable best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended methods of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC on any form, if not so otherwise provided for,
for which the Company qualifies, as soon as practicable after the end of the
period within which requests for registration may be given to the Company, a
Registration Statement with respect to the offer and sale of such Registrable
Securities and thereafter use reasonable best efforts to cause such Registration
Statement to become effective and remain effective until the completion of the
distribution contemplated thereby or the required time period under this
Agreement, whichever is shorter (and before filing such Registration Statement,
the Company will furnish to the counsel selected by the holders of a majority of
the Registrable Securities initiating such Registration Statement copies of all
such documents proposed to be filed); provided, however, that the Company may
postpone for not more than sixty (60) calendar days the filing or effectiveness
of a Demand Registration Statement if the Board of Directors, in its good faith
judgment, determines that such registration could reasonably be expected to have
a material adverse effect on the Company and its stockholders including, but not
limited to, any proposal or plan by the Company to engage in any acquisition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or similar transaction then under consideration (in
which event, the Designated Holders shall be entitled to withdraw such request,
and if such request is withdrawn such registration will not count as a Demand
Registration) by delivering written notice to the Designated Holders who
requested inclusion of Registrable Securities in such Registration Statement of
its determination to postpone such Registration Statement; provided, further,
that (i) the Company shall not disclose any information that could be deemed
material non-public information to any holder of Registrable Securities included
in a Registration Statement that is subject to such postponement, (ii) in no
event may the Company postpone a filing requested hereunder more than twice in
any twelve (12) month period; provided, that any two postponements must be at
least three (3) months apart; provided, further, that the Company shall delay
the effectiveness of any Demand Registration Statement if the SEC rules and
regulations prohibit the Company from declaring a Registration Statement
effective because its financial statements are stale at a time when its fiscal
year has ended or it has made an acquisition reportable under Item 2 of Form 8-K
or any other similar situation until the earliest time in which the SEC would
allow the Company to declare a Registration Statement effective (provided that
the Company shall use its reasonable best efforts to cure any such situation as
soon as possible so that the Registration Statement can be made effective at the
earliest possible time); (b) prepare and file with the SEC 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
a period provided for in the applicable Section above, or if not so provided,
for a period of twelve (12) (for a registration pursuant to Rule 415 of the
Securities Act) or, if such Registration Statement relates to an underwritten
offering, such period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities covered by such Registration
Statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such Registration Statement. In the event the
Company shall give any notice pursuant to Section 1.5(b), the applicable time
period mentioned in this Section 1.6(b) during which a Registration Statement is
to remain effective shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
1.5(b) to and including the date when each seller of a Registrable Security
covered by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 1.6(e); (c) furnish
to each seller of Registrable Securities, prior to filing a Registration
Statement, such number of copies of such Registration Statement, each amendment
and supplement thereto, the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller; (d) register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller and to keep each such registration or qualification (or exemption
therefrom) effective during the period which the Registration Statement is
required to be kept effective (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 subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction); (e) notify each seller of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event (a "CHANGING
EVENT") as a result of which, the prospectus included in such. Registration
Statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and, at the request of any such
seller, the Company will as soon as possible prepare and furnish to such seller
(a "CORRECTION EVENT") a reasonable number of copies of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made; (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on The Nasdaq Stock Market or the
Nasdaq SmallCap trading system or the Nasdaq OTC Bulletin Board; (g) provide a
transfer agent and registrar for all such Registrable Securities not later than
the effective date of such Registration Statement; (h) enter into such customary
agreements (including underwriting agreements in customary form with any
underwriter selected pursuant to 1.2(f)) and take all such other actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities, including causing its officers to
participate in "road shows" and other information meetings organized by an
underwriter selected pursuant to Section 1.2(f); (i) make available for
inspection by any seller of Registrable Securities, 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,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such Registration Statement;
(j) before filing a Registration Statement or prospectus or any amendments or
supplements thereto, the Company shall provide counsel selected by the
Designated Holders holding a majority of the Registrable Securities being
registered in such registration ("HOLDERS' COUNSEl") and any other Inspector (as
defined below) with an adequate and appropriate opportunity to review and
comment on such Registration Statement and each prospectus included therein (and
each amendment or supplement thereto) to be filed with the SEC, subject to such
documents being under the Company's control, and the Company shall notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC; (k) otherwise comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering the period of at least
twelve months beginning with the first day of the Company's first full calendar
quarter after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder; (l) in the event of the issuance of any stop order
suspending the effectiveness of a Registration Statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any securities included in such Registration Statement for sale
in any jurisdiction, the Company will use its reasonable best efforts promptly
to obtain the withdrawal of such order; (m) obtain one or more comfort letters,
dated the effective date of such Registration Statement (and, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement), signed by the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request; (n) provide a legal opinion of the
Company's outside counsel, dated the effective date of such Registration
Statement (and, if such registration includes an underwritten offering, dated
the date of the closing under the underwriting agreement), with respect to the
Registration Statement, each amendment and supplement thereto, the prospectus
included therein (including the preliminary prospectus) and such other documents
relating thereto in customary form and covering such matters of the type
customarily covered by legal opinions of such nature; (o) subject to execution
and delivery of mutually satisfactory confidentiality agreements, make available
at reasonable times for inspection by any seller of Registrable Securities, any
managing underwriter participating in any disposition of such Registrable
Securities pursuant to a Registration Statement, Holders' Counsel and any
attorney, accountant or other agent retained by any managing underwriter (each,
an "INSPECTOr" and collectively, the "INSPECTORs"), all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries (collectively, the "RECORDs") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's and its subsidiaries' officers, directors and employees, and the
independent public accountants of the Company, to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement; (p) subject to execution and delivery of mutually satisfactory
confidentiality agreements, keep Holders' Counsel advised as to the initiation
and progress of any registration hereunder including, but not limited to,
providing Holders' Counsel with all correspondence with the SEC; (q) cooperate
with each seller of Registrable Securities and each underwriter participating in
the disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD; and (r) take all
other steps reasonably necessary to effect the registration of the Registrable
Securities contemplated hereby. (s) Registration Expenses. All expenses incident
to the Company's performance of or compliance with this Agreement including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions, which will be paid by the sellers of Registrable Securities) and
other Persons retained by the Company will be borne by the Company, and the
Company will pay its internal expenses (including, without limitation, all
salaries and expenses of its Employees performing legal or accounting duties),
the expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed or on The Nasdaq National Market, Nasdaq SmallCap Market
or the OTC Bulletin Board trading system. Without limitation, the foregoing
shall include, with respect to each Registration Statement hereunder, the fees,
charges and disbursements up to $25,000 of one counsel to the Designated Holders
(which shall be designated by a majority in interest of the Designated Holders
of Registrable Securities participating in the proposed sale pursuant to the
Registration Statement in question); provided, however, that the Company shall
have no obligation to pay any underwriting discounts or commissions attributable
to the sale of Registrable Securities and any of the expenses incurred by such
Designated Holders which are not payable by the Company, such costs to be borne
by such Designated Holder or Holders.
1.7 Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the fullest extent
permitted by law, each holder of Registrable Securities and its general or
limited partners, officers, directors, members, managers, employees, advisors,
representatives, agents and Affiliates (collectively, the "REPRESENTATIVEs")
from and against any loss, claim, damage, liability, attorney's fees, cost or
expense and costs and expenses of investigating and defending any such claim
(collectively, the "LOSSEs"), joint or several, and any action in respect
thereof to which such holder of Registrable Securities or its Representatives
may become subject under the Securities Act or otherwise, insofar as such Losses
(or actions or proceedings, whether commenced or threatened, in respect thereto)
arise out of or are based upon (i) any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, prospectus or preliminary
or summary prospectus or any amendment or supplement thereto or (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company shall reimburse each such holder of Registrable Securities and its
Representatives for any legal or any other expenses incurred by them in
connection with investigating or defending or preparing to defend against any
such Loss, action or proceeding; provided, however, that the Company shall not
be liable to any such holder or other indemnity in any such case to the extent
that any such Loss (or action or proceeding, whether commenced or threatened, in
respect thereof) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission, made in such Registration
Statement, any such prospectus or preliminary or summary prospectus or any
amendment or supplement thereto, in reliance upon, and in conformity with,
written information prepared and furnished to the Company by such holder of
Registrable Securities or its Representatives expressly for use therein or by
failure of such holder of Registrable Securities to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder of Registrable Securities with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any Registration Statement in which the holders of
Registrable Securities are participating pursuant to this Agreement, the holders
of Registrable Securities will furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such Registration Statement or prospectus and, to the fullest extent permitted
by law, each such holder of Registrable Securities will indemnify and hold
harmless the Company and its Representatives from and against any Losses,
severally but not jointly, and any action in respect thereof to which the
Company and its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) the
purchase or sale of Registrable Securities during a suspension as set forth in
Section 1.5(b) after written receipt of notice of such suspension, (ii) any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, prospectus or preliminary or summary prospectus or any
amendment or supplement thereto, or (iii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but, with respect to clauses (ii) and (iii) above, only
to the extent that such untrue statement or omission is made in such
Registration Statement, any such prospectus or preliminary or summary prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
written information prepared and furnished to the Company by such holder of
Registrable Securities expressly for use therein or by failure of such holder of
Registrable Securities to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder of Registrable Securities with a sufficient number of
copies of the same, and such holder of Registrable Securities will reimburse the
Company and each Representative for any legal or any other expenses incurred by
them in connection with investigating or defending or preparing to defend
against any such Loss, action or proceeding; provided, however, that such holder
of Registrable Securities shall not be liable in any such case to the extent
that prior to the filing of any such Registration Statement or prospectus or
amendment or supplement thereto, such holder of Registrable Securities has
furnished in writing to the Company information expressly for use in such
Registration Statement or prospectus or any amendment or supplement thereto
which corrected or made not misleading information previously furnished to the
Company; provided, further, however, that the obligation to indemnify will be
individual to each such holder of registrable Securities and will be limited to
the net amount of proceeds received by such holder of Registrable Securities
from the sale of Registrable Securities pursuant to such Registration Statement.
(c) Promptly after receipt by any Person in respect of which indemnity may be
sought pursuant to Section 1.7(a) or 1.7(b) (an "INDEMNIFIED PARTy") of notice
of any claim or the commencement of any action, the Indemnified Party shall, if
a claim in respect thereof is to be made against the Person against whom such
indemnity may be sought (an "INDEMNIFYING PARTy"), promptly notify the
Indemnifying Party in writing of the claim or the commencement of such action;
provided, that the failure to notify the Indemnifying Party shall not relieve
the Indemnifying Party from any liability which it may have to an Indemnified
Party otherwise than under Section 1.7(a) or 1.7(b) except to the extent of any
actual prejudice resulting therefrom. If any such claim or action shall be
brought against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its
Representatives who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party against the
Indemnifying Party, but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the written opinion of counsel to such Indemnified Party, representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest between them, it being understood, however, that
the Indemnifying Party shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for all Indemnified
Parties. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any claim or pending or threatened
proceeding in respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such claim or proceeding other than the
payment of monetary damages by the Indemnifying Party on behalf of the
Indemnified Party. Whether or not the defense of any claim or action is assumed
by the Indemnifying Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its consent, which consent will not be
unreasonably withheld.
(d) If the indemnification provided for in this Section 1.7 is unavailable to
the Indemnified Parties in respect of any Losses referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the holders of the
Registrable Securities on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company on the one hand and the holders of the
Registrable Securities on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
holder of the Registrable Securities on the other shall be determined by
reference to, among other things, whether any action taken, including any untrue
or alleged untrue statement of a material fact, or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the holders of the Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 1.7(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. The amount paid or payable by an Indemnified Party as a result of the
Losses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 1.7, no holder of the Registrable Securities shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of such holder were offered to the public exceeds the
amount of any Losses which such holder has otherwise paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Each holder's obligations to
contribute pursuant to his Section 1.7 is several in the proportion that the
proceeds of the offering received by such holder of the Registrable Securities
bears to the total proceeds of the offering received by all the holders of the
Registrable Securities and not joint.
1.8 Participation in Underwritten Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s), provided, that each holder of
Registrable Securities shall not be required to sell more than the number of
Registrable Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.
(b) Each Person that is participating in any registration hereunder agrees that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 1.6(e) above, such Person will forthwith discontinue
the disposition of its Registrable Securities pursuant to the Registration
Statement until such Person's receipt of the copies of a supplemented or amended
prospectus as contemplated by such Section 1.6(e).
1.9 Current Public Information. The Company covenants that it will file all
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, and will use
reasonable best efforts to take such further action as the Purchaser may
reasonably request, all to the extent required to enable the holders of
Registrable Securities to sell Registrable Securities pursuant to Rule 144 or
Rule 144A adopted by the SEC under the Securities Act or any similar rule or
regulation hereafter adopted by the SEC. The Company shall, upon the request of
a Designated Holder, deliver to such Designated Holder a written statement as to
whether it has complied with such requirements.
2. Transfers of Certain Rights.
2.1 Transfer. The rights granted to the Purchaser under this Agreement may be
transferred subject to the provisions of Sections 2.2 and 2.3; provided that
nothing contained herein shall be deemed to permit an assignment, transfer or
disposition of the Registrable Securities in violation of the terms and
conditions of the Securities Purchase Agreement, the Certificate of Designations
of the Series A-2 Preferred Stock, or applicable law.
2.2 Transferees. Any transferee to whom rights under this Agreement are
transferred shall, as a condition to such transfer, deliver to the Company a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser under this Agreement to the same extent
as if such transferee were a Purchaser hereunder.
2.3 Subsequent Transferees. A transferee to whom rights are transferred pursuant
to this Section 2 may not again transfer such rights to any other person or
entity, other than as provided in Sections 2.1 or 2.2 above.
3. Certain Definitions. The following capitalized terms shall have the meanings
ascribed to them below: "Affiliate" means any Person that directly or indirectly
controls, or is under control with, or is controlled by such Person. As used in
this definition, "control" (including with its correlative meanings, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
"Closing Price" means, with respect to the Registrable Securities (a) if the
shares are listed or admitted for trading on any national securities exchange or
included in The Nasdaq National Market or Nasdaq SmallCap Market, the last
reported sales price as reported on such exchange or market; (b) if the shares
are not listed or admitted for trading on any national securities exchange or
included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of
the last reported closing bid and asked quotation for the shares as reported on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or a similar service if NASDAQ is not reporting such information; (c)
if the shares are not listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market or
quoted by NASDAQ or a similar service, the average of the last reported bid and
asked quotation for the shares as quoted by a market maker in the shares (or if
there is more than one market maker, the bid and asked quotation shall be
obtained from two market makers and the average of the lowest bid and highest
asked quotation). In the absence of any available public quotations for the
Common Stock, the Board and a majority of the Holders shall determine in good
faith the fair value of the Common Stock"Common Stock" means the common stock,
par value $0.001 per share, of the Company.
"Employees" means any current, former, or retired employee, office consultant,
advisor, independent contractor, agent, officer or director of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Market Price" means, on any date of determination, the average of the daily
Closing Price of the Registrable Securities for the immediately preceding thirty
(30) days on which the national securities exchanges are open for trading.
"Person" means any individual, company, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.
"Registrable Securities" means, subject to the immediately following sentence,
(i) shares of Common Stock issued or issuable upon the conversion of shares of
Series A-2 Preferred Stock acquired from the Company pursuant to the Securities
Purchase Agreement, (ii) any shares of Common Stock issued or issuable directly
or indirectly with respect to the securities referred to in clause (i) and (ii)
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization, and
(iii) any other shares of Common Stock held by a Person holding Registrable
Securities other than shares of Common Stock which have ceased to be Registrable
Securities. As to any particular shares of Common Stock constituting Registrable
Securities, such shares of Common Stock will cease to be Registrable Securities
when they (x) have been effectively registered under the Securities Act and
disposed of in accordance with a Registration Statement covering them, (y) have
been sold to the public pursuant to Rule 144 (or by similar provision under the
Securities Act), or (z) are eligible for resale under Rule 144(k) (or by similar
provision under the. Securities Act) without any limitation on the amount of
securities that may be sold under paragraph (e) thereof.
"Registration Statement" means any registration statement of the Company filed
under the Securities Act which covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such registration
statement.
"SEC" means the United States Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
4. Miscellaneous.
4.1 Recapitalizations, Exchanges, etc. The provisions of this Agreement shall
apply to the full extent set forth herein with respect to (i) the Securities,
(ii) any and all shares of Common Stock into which the Securities are converted,
exchanged or substituted in any recapitalization or other capital reorganization
by the Company and (iii) any and all equity securities of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in conversion of, in
exchange for or in substitution of, the Securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date hereof. The Company
shall cause any successor or assign (whether by merger, consolidation, sale of
assets or otherwise) to enter into a new registration rights agreement with the
Designated Holders on terms substantially the same as this Agreement as a
condition of any such transaction.
4.2 No Inconsistent Agreements. The Company has not and shall not enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Purchasers in this Agreement or grant any additional registration
rights to any Person or with respect to any securities which are not Registrable
Securities which are prior in right to or inconsistent with the rights granted
in this Agreement. The Purchasers expressly acknowledge and agree that the
Company is granting registration rights to holders of Series A-1 Preferred Stock
which are substantially identical to those granted to the Purchasers, that such
registration rights are permitted under this Section 4.2, and that holders of
such registration rights shall be treated pari passu with holders of the
registration rights granted under this Agreement with respect to priority in
piggy-back registrations, and vice versa.
4.2 Amendments and Waivers. The provisions of this Agreement may be amended and
the Company may take action herein prohibited, or omit to perform any act herein
required to be performed by it, if, but only if, the Company has obtained the
written consent of holders of at least a majority of the Registrable Securities
then in existence.
4.3 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
4.4 Counterparts. This Agreement may be executed in one or more counterparts
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
4.5 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy, telex or similar writing) and
shall be deemed given or made as of the date delivered, if delivered personally
or by telecopy (provided that delivery by telecopy shall be followed by delivery
of an additional copy personally, by mail or overnight courier), one day after
being delivered by overnight courier or three days after being mailed by
registered or certified mail (postage prepaid, return receipt requested), to the
parties at the following addresses (or to such other address or telex or
telecopy number as a party may have specified by notice given to the other party
pursuant to this provision):
If to the Company, to:
Auto Data Network, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser, to:
The address or facsimile number of each Purchaser as recorded in the
stockholders records of the Company.
4.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws rules or provisions.
4.7 Forum; Service of Process. Any legal suit, action or proceeding brought by
any party or any of its affiliates arising out of or based upon this Agreement
shall be instituted in any federal or state court in New York County, New York,
and each party waives any objection which it may now or hereafter have to the
laying of venue or any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.
4.8 Captions. The captions, headings and arrangements used in this Agreement are
for convenience only and do not in any way limit or amplify the terms and
provisions hereof.
4.9 No Prejudice. The terms of this Agreement shall not be construed in favor of
or against any party on account of its participation in the preparation hereof.
4.10 Words in Singular and Plural Form. Words used in the singular form in this
Agreement shall be deemed to import the plural, and vice versa, as the sense may
require.
4.11 Remedy for Breach. The Company hereby acknowledges that in the event of any
breach or threatened breach by the Company of any of the provisions of this
Agreement, the holders of the Registrable Securities would have no adequate
remedy at law and could suffer substantial and irreparable damage. Accordingly,
the Company hereby agrees that, in such event, the holders of the Registrable
Securities shall be entitled, and notwithstanding any election by any holder of
the Registrable Securities to claim damages, to obtain a temporary and/or
permanent injunction to restrain any such breach or threatened breach or to
obtain specific performance of any such provisions, all without prejudice to any
and all other remedies which any holder of the Registrable Securities may have
at law or in equity.
4.12 Successors and Assigns; Third Party Beneficiaries. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto, each subsequent holder of the Registrable Securities and their
respective successors and assigns and executors , administrators and heirs.
Holders of the Registrable Securities are intended third party beneficiaries of
this Agreement and this Agreement may be enforced by such holders.
4.13 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.].
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date and year first written above. AUTO
DATA NETWORK, INC.
By:_________________________________
Name:
Title:
By:_________________________________
Name: ______________
Title: Secretary