EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the ___th day of January, 2002 (the "Effective Date") between I.D.
Systems, Inc., a Delaware corporation (the "Company"), and the parties set forth
on the signature pages hereto (each, a "Purchaser" and collectively, the
"Purchasers").
R E C I T A L S:
A. The Purchasers have purchased, in the aggregate, up to 1,000,000 shares
of the Company's Common Stock, par value $0.01 per share (as defined below)
pursuant to Subscription Agreements, each dated as of January __, 2002, (each, a
"Subscription Agreement" and collectively, the "Subscription Agreements"), by
and between the Company and each Purchaser.
B. The Company and the Purchasers desire to set forth the registration
rights to be granted by the Company to the Purchasers.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants, and conditions set forth herein and in the Subscription
Agreements, the parties mutually agree as follows:
A G R E E M E N T:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of Delaware, as
the same may be amended from time to time.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock, par value $0.01 per share, of
the Company and any and all shares of capital stock or other equity securities
of: (i) the Company which are added to or exchanged or substituted for the
Common Stock by reason of the declaration of any stock dividend or stock split,
the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the
Company own equity securities having in the aggregate more than 50% of the total
voting power of such other corporation.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Family Member" shall mean (a) with respect to any individual, such
individual's spouse, any descendants (whether natural, adopted or in the process
of adoption), any trust all of the beneficial interests of which are owned by
any of such individuals or by any of such individuals together with any
organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.
"Form S-3" shall mean such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the Commission which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the Commission.
"Holder" shall mean each Purchaser or any of such Holder's respective
successors and assigns who acquire rights in accordance with this Agreement with
respect to the Registrable Securities directly or indirectly from such Holder,
including any Permitted Assignee of such Holder.
"Permitted Assignee" shall mean (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests, (b)
with respect to a corporation, its shareholders in accordance with their
interest in the corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of
such party, (e) an entity that is controlled by, controls, or is under common
control with a transferor, or (f) a party to this Agreement.
The terms "register", "registered" and "registration" refers to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" shall mean shares of Common Stock issued to each
Purchaser pursuant to the Subscription Agreements, excluding (i) any Registrable
Securities that have been publicly sold or may be sold immediately without
registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"S-3 Blackout Period" shall mean, with respect to a Form S-3 registration,
a period not in excess of 60 calendar days in any calendar year during which the
Company, in the good faith judgment
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of its Board of Directors, determines (because of the existence of, or in
anticipation of, any acquisition, financing activity, or other transaction
involving the Company, or the unavailability for reasons beyond the Company's
control of any required financial statements, disclosure of information which is
in its best interest not to publicly disclose, or any other event or condition
of similar significance to the Company) that the registration and distribution
of the Registrable Securities to be covered by such S-3 Registration, if any,
would be seriously detrimental to the Company and its shareholders.
2. TERM. This Agreement shall continue in full force and effect for a
period of two (2) year from the Effective Date.
3. REGISTRATION.
(a) Registration on Form S-3. As promptly as reasonably practicable after
the date hereof, but in any event not later than April 10, 2002 (or such later
date as the Company and the Holders may agree on in the event the Termination
Date (as defined in the Placement Agent Agreement dated January 7, 2002, between
the Company and Sanders Morris Harris Inc.) is extended), the Company shall file
a shelf registration statement on Form SB-2 or, if the Company is eligible to
use such form, Form S-3 (or such successor forms) relating to the resale by the
Holders of all of the Registrable Securities; provided, however, that the
Company shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 3(a), or keep such registration effective
pursuant to Section 4: (i) in any particular jurisdiction in which the Company
would be required to qualify to do business as a foreign corporation or as a
dealer in securities under the securities or blue sky laws of such jurisdiction
or to execute a general consent to service of process in effecting such
registration, qualification or compliance, in each case where it has not already
done so; or (ii) during any S-3 Blackout Period. Notwithstanding the foregoing,
the Company shall use its best efforts to file a shelf registration on, if the
Company is eligible to use such form, Form S-3 prior to February 15, 2002.
(b) Piggyback Registration. If the Company shall determine to register for
sale for cash any of its Common Stock, for its own account or for the account of
others (other than the Holders), other than (i) a registration relating solely
to employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8) or (ii) a registration relating solely to
a Commission Rule 145 transaction, a registration on Form S-4 in connection with
a merger, acquisition, divestiture, reorganization or similar event, the Company
shall promptly give to the Holders written notice thereof (and in no event shall
such notice be given less than 30 calendar days prior to the filing of such
registration statement), and shall include in such registration (and any related
qualification under blue sky laws or other compliance) (a "Piggyback
Registration"), all of the Registrable Securities specified in a written request
or requests, made within 20 calendar days after receipt of such written notice
from the Company, by any Holder or Holders. However, the Company may, without
the consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company, in good faith, has elected to abandon its
proposal to register the securities proposed to be registered thereby. The
Company shall not be required to file more that one registration statement
pursuant to this Section 3(b).
(c) Underwriting. If a Piggyback Registration is for a registered public
offering involving an underwriting, the Company shall so advise the Holders in
writing or as a part of the written notice
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given pursuant to Section 3(b). In such event the right of any Holder to
registration pursuant to Section 3(b) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and any other shareholders of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 3(c), if the underwriter or the Company determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all Registrable Securities
from such registration and underwriting. The Company shall so advise all Holders
(except those Holders who have indicated to the Company their decision not to
distribute any of their Registrable Securities through such underwriting), and
the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any, shall be allocated among such Holders as
follows:
(i) In the event of a Piggyback Registration that is initiated by the
Company, the number of shares that may be included in the registration and
underwriting shall be allocated first to the Company and then to all
selling shareholders, including the Holders, who have requested to sell in
the registration on a pro rata basis according to the number of shares
requested to be included; and
(ii) In the event of a Piggyback Registration that is initiated by the
exercise of demand registration rights by a shareholder or shareholders of
the Company (other than the Holders), then the number of shares that may be
included in the registration and underwriting shall be allocated first to
such selling shareholders who exercised such demand and then to all selling
shareholders, including the Holders, who have requested to sell in the
registration, on a pro rata basis according to the number of shares
requested to be included.
(d) No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such person may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided,
however, that, if by the withdrawal of such Registrable Securities a greater
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation.
4. REGISTRATION PROCEDURES. In the case of each registration, qualification
or compliance effected by the Company pursuant to Section 3 hereof, the Company
will keep each Holder reasonably advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense with respect to any registration statement filed pursuant to Section
4, the Company will use its reasonable best efforts to:
(a) prepare and file with the Commission with respect to such Registrable
Securities, a registration statement on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable
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Securities in accordance with the intended method(s) of distribution thereof,
and use its best efforts to cause such registration statement to become and
remain effective at least for a period ending with the first to occur of (i) the
sale of all Registrable Securities covered by the registration statement, (ii)
the availability under Rule 144 for the Holder to immediately, freely resell
without restriction all Registrable Securities covered by the registration
statement, and (iii) one year (in the case of a registration on Form Sb-2;
provided, however, that if the Company files a registration on Form SB-2 and
subsequently becomes eligible to use Form S-3, it will file a post-effective
amendment to such Form SB-2 on Form S-3 prior to the end of such one-year period
and use its best efforts to cause such registration statement as amended to
become and remain effective for a total of two years) or two years (in the case
of a registration on Form S-3) after a registration statement filed pursuant to
Section 3(a) is declared effective by the Commission or 90 days after a
Piggyback Registration is declared effective by the Commission (in either case,
the "Effectiveness Period"); provided that no later than five business days
before filing with the Commission a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of any registration statement, the Company shall (i)
furnish to the underwriters, if any, and to one counsel ("Holders Counsel")
selected by the Holders of a majority of the Registrable Securities covered by
such registration statement copies of all such documents proposed to be filed
(excluding any exhibits other than applicable underwriting documents), in
substantially the form proposed to be filed, which documents shall be subject to
the review of the underwriters and such counsel, and (ii) notify each Holder of
Registrable Securities covered by such registration statement of any stop order
issued or threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(b) 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 during the
Effectiveness Period (but in any event at least until expiration of the 90-day
period referred to in Section 4(3) of the Securities Act and Rule 174, or any
successor thereto, thereunder, if applicable), and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
method(s) of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish, without charge, to each Holder and each underwriter, if any,
of Registrable Securities covered by such registration statement one (1) signed
copy of such registration statement (excluding any exhibits thereto other than
applicable underwriting documents), each amendment and supplement thereto
(including one (1) conformed copy to each Holder and one (1) signed copy to each
managing underwriter and in each case including all exhibits thereto), and such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any other prospectus filed under Rule
424 under the Securities Act) as such Holders may request, in conformity with
the requirements of the Securities Act, and such other documents as such Holder
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Holder, but only during the Effectiveness Period;
(d) use its best efforts to register or qualify such Registrable Securities
under such other applicable securities or blue sky laws of such jurisdictions as
any Holder, and underwriter, if any, of Registrable Securities covered by such
registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things
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which may be reasonably necessary or advisable to enable such Holder and each
underwriter, if any, to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder; provided that the Company shall 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 paragraph (d), (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(e) immediately notify the managing underwriter, if any, and each Holder 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
which comes to the Company's attention if as a result of such event 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 not misleading and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall 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 not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of an
S-3 Blackout Period, in which case no supplement or amendment need be furnished
(or Exchange Act filing made) until the termination of such suspension or S-3
Blackout Period; and
(f) comply, and continue to comply during the period that such registration
statement is effective under the Securities Act, in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission with respect to the disposition of all securities
covered by such registration statement, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
Each Holder of Registrable Securities agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(e) hereof or of the commencement of an S-3 Blackout Period, such Holder shall
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by Section
4(e) hereof or notice of the end of the S-3 Blackout Period, and, if so directed
by the Company, such Holder shall deliver to the Company (at the Company's
expense) all copies (including, without limitation, any and all drafts), other
than permanent file copies, then in such Holder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 4(b) hereof shall be extended by the greater of (i) ten
business days or (ii) the number of days during the period from and including
the date of the giving of such notice pursuant to Section 4(e) hereof to and
including the date when each Holder of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 4(e) hereof.
5. REGISTRATION EXPENSES. The Company shall pay all expenses in connection
with any registration, including, without limitation, all registration, filing,
stock exchange and NASD fees,
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printing expenses, all fees and expenses of complying with securities or blue
sky laws, the fees and disbursements of counsel for the Company and of its
independent accountants, and the reasonable fees and disbursements of a Holders
Counsel; provided that, in any underwritten registration, each party shall pay
for its own underwriting discounts and commissions and transfer taxes. Except as
provided above in this Section 5 and Section 8, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.
6. ASSIGNMENT OF RIGHTS. No Holder may assign its rights under this
Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement
without such restrictions to a Permitted Assignee.
7. INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing.
8. INDEMNIFICATION.
(a) In the event of the offer and sale of Registrable Securities held by
Holders under the Securities Act, the Company shall, and hereby does, indemnify
and hold harmless, to the fullest extent permitted by law, each Holder, its
directors, officers, partners, each other person who participates as an
underwriter in the offering or sale of such securities, and each other Person,
if any, who controls or is under common control with such Holder or any such
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, and expenses to which
the Holder or any such director, officer, partner or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such shares were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by or on behalf of such Holder
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares
by the Holder.
(b) The Company may require as a condition to including any Registrable
Securities to be offered by a Holder in any registration statement filed
pursuant to this Agreement, the Company shall
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have received an agreement from such Holder to be bound by the terms of this
Section 8, including an undertaking reasonably satisfactory to it from such
Holder, to indemnify and hold the Company, its directors and officers and each
other Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information about such Holder as
a Holder of the Company furnished to the Company; provided, however, that such
indemnity agreement found in this Section 8(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 8(a) or (b) hereof (including any governmental action), such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 8(a) or (b) hereof, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in the reasonable
judgment of counsel to such indemnified party a conflict of interest between
such indemnified and indemnifying parties may exist or the indemnified party may
have defenses not available to the indemnifying party in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party fails to defend
such claim in a diligent manner, other than reasonable costs of investigation.
Neither an indemnified nor an indemnifying party shall be liable for any
settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. Notwithstanding anything to the contrary set forth herein, and
without limiting any of the rights set forth above, in any event any party shall
have the right to retain, at its own expense, counsel with respect to the
defense of a claim.
(d) In the event that an indemnifying party does or is not permitted to
assume the defense of an action pursuant to Section 8(c) or in the case of the
expense reimbursement obligation set forth in Section 8(a), the indemnification
required by Section 8(a) and (b) hereof shall be made by periodic
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payments of the amount thereof during the course of the investigation or
defense, as and when bills received or expenses, losses, damages, or liabilities
are incurred.
(e) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), 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, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
(f) Other Indemnification. Indemnification similar to that specified in the
preceding subsections of this Section 8 (with appropriate modifications) shall
be given by the Company and each Holder of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the
Securities Act.
9. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(b) Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, executors and administrators of the parties hereto. In the
event the Company merges with, or is otherwise acquired by, a direct or indirect
subsidiary of a publicly-traded company, the Company shall condition the merger
or acquisition on the assumption by such parent company of the Company's
obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices or other communications which are required or
permitted under this Agreement shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
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If to the Company: I.D. Systems, Inc.
One University Plaza
Hackensack, New Jersey 07601
Attention: President
If to the Purchasers: To each Purchaser at the address
set forth on Exhibit A
with a copy to: Sanders Morris Harris Inc.
600 Travis, Suite 3100
Houston, Texas 77002
Attention: Dean Oakey
or at such other address as any party shall have furnished to the other parties
in writing.
(e) Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any Holder of any Registrable Securities, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy of such Holder nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Holder of any breach or default under this
Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
(g) Severability. In the case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended at any time
and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the holders of an 80% majority of the number of shares of
Registrable Securities outstanding as of the date of such amendment or waiver.
The Purchasers acknowledge that by the operation of this Section 9(h), the
holders of an 80% majority of the outstanding Registrable Securities may have
the right and power to diminish or eliminate all rights of the Purchasers under
this Agreement.
(i) Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of at least a majority of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.
10
This Registration Rights Agreement is hereby executed as of the date first
above written.
COMPANY:
I.D. SYSTEMS, INC.
By:
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Name:
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Its:
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PURCHASERS:
By:
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Name:
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Its:
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By:
--------------------------------
Name:
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Its:
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By:
--------------------------------
Name:
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Its:
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By:
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Name:
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Its:
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11
Exhibit A
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Purchaser Addresses
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12