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PATRIOT SCIENTIFIC CORPORATION
FORM 8-K
Current Report
EXHIBIT NO. 4.8
Registration Rights Agreement
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PATRIOT SCIENTIFIC CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
June 2, 1997, by and between PATRIOT SCIENTIFIC CORPORATION, a Delaware
corporation ("Company"), and SWARTZ INVESTMENTS, LLC, a Georgia limited
liability corporation, on behalf of itself and its designees or permitted
assigns ("Swartz" sometimes referred to herein, together with its designees or
permitted assigns, as "Holder" or "Holders") with respect to the Company's
offering ("Offering") of up to Three Million Dollars ($3,000,000) of Convertible
Term Debentures and/or Convertible Preferred Stock ("Securities") pursuant to
the Securities Purchase Agreements between the Company and certain investors.
1. REQUIRED REGISTRATION. The Company shall cause to be included
in the "Required Registration Statement" (as defined below) the resale of all of
the Common Stock ("Warrant Shares") issuable upon exercise of the warrants
("Warrants") issued to Holders on or about June 2, 1997 in connection with the
Offering. For purposes hereof, "Required Registration Statement" shall mean the
SEC registration statement filed on Form S-3 (or other appropriate form)
pursuant to the Registration Rights Agreement by and among the Company, CC
Investments, LDC and the Matthew Fund, N.V., on or about June 2, 1997 in
conjunction with the Offering, and thereafter shall not be obligated to effect a
Piggyback Registration under Section 2 hereof for as long as the Required
Registration Statement is maintained effective.
2. PIGGYBACK REGISTRATION. If (but without any obligation to do
so) the Company proposes to register any of its Common Stock under the Act in
connection with the public offering of such securities solely for cash (other
than (i) a registration relating solely to the sale of securities to
participants in a Company stock or other benefit plan, or (ii) a registration of
stock options, stock purchase or compensation or incentive plans or securities
issued or issuable pursuant to any such plan on Form S-8 or comparable form then
in effect), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given by
fax within ten (10) days after mailing of such notice by the Company, which
request shall state the intended method of disposition of such shares by such
Holder, the Company shall cause to be included in such registration all of the
Warrant Shares that each such Holder has requested to be registered (a
"Piggyback Registration").
3. EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1 or 2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company (and including the reasonable fees
and disbursements incurred of only one counsel for the selling Holders selected
by them) shall be borne by the Company.
4. INDEMNIFICATION. In the event any Warrant Shares are included
in a registration statement under this Agreement:
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(a) To the extent permitted by law, the Company will indemnify and hold
harmless each "Holder Indemnified Persons" (defined for purposes of this Section
4 as each Holder, the officers and directors of each Holder acting in their
capacity as such, any underwriter (as defined in the Act) for such Holder and
each person, if any, who controls such Holder or underwriter within the meaning
of the Act or the Securities Exchange Act of 1934, as amended (the "1934 Act")),
against any losses, claims, damages, expenses, or liabilities (joint or
several)("Losses") to which they may become subject under the Act, the 1934 Act
or other federal or state law, insofar as such Losses (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or (ii) the omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation by the Company of the Act, the 1934 Act, any
state securities law or rule or regulation promulgated under the Act, the 1934
Act, or any state securities law and the Company will reimburse each such Holder
Indemnified Person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Loss or action; provided,
however, that the indemnity agreement contained in this subsection 4(a) shall
not apply to amounts paid in settlement of any such Loss or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such Loss or action to the extent that it arises out of or is based upon
a Violation which occurs (i) in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder Indemnified Person, or (ii) the failure of such Holder
Indemnified Person to deliver a copy of the registration statement or the
prospectus, or any amendments or supplements thereto, after the Company or
underwriters has furnished such person with a sufficient number of copies of the
same.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the "Company Indemnified Persons" (defined for the purpose of
this Section 4 as the Company, each of its directors in their capacity as such,
each of its officers who have signed the registration statement in their
capacity as such, each person, if any, who controls the Company within the
meaning of the Act in their capacity as such, any underwriter and any other
Holder Indemnified Person selling securities in such registration statement),
against any Loss (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
Holder Indemnified Person may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such Loss (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company and any such Company
Indemnified Person in connection with investigating or defending any such Loss
or action; provided, however, that the indemnity agreement contained in this
subsection 4(b) shall not apply to amounts paid in settlement of any such Loss
or action if such settlement is effected without the consent of the Holder
(which consent shall not be unreasonably withheld); provided, that, in no event
shall any indemnity under this subsection 4(b) exceed the gross proceeds from
the offering received by such Holder.
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(c) Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 4, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; provided, further, that the
indemnifying party shall be responsible for the fees and expenses incurred by
only one (1) counsel for all indemnified parties. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 4, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 4.
(d) If the indemnification provided for in this Section 4 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any Loss, then the indemnifying party, in lieu of indemnifying the
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such Loss in such proportion as such court
finds appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and the indemnified party, on the other, in connection with the
statements or omissions that resulted in such Loss as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission to
state a material fact 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 statement or omission.
(e) The obligations of the Company and Holders under this Section 4
shall survive the completion of any offering of Warrant Shares in a registration
statement under this Agreement.
5. FURNISH INFORMATION. It shall be condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holders shall timely furnish to the Company such information
regarding themselves, the Warrant Shares held by them, and the intended method
of disposition of such securities as shall be required to effect the
registration of their Warrant Shares or to determine that registration is not
required pursuant to Rule 144 or other applicable provision of the Act, as well
as to execute any agreements as may be reasonably requested by the Company in
connection therewith.
6. MISCELLANEOUS
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(a) Company use its best efforts to maintain any registration statement
filed under this Agreement effective as provided above until the distribution
described in that registration statement has been completed or the Securities
are sold pursuant to Rule 144 of the Securities Act of 1933.
(b) Each Holder shall give the Company one business day's prior written
notice of any proposed sale of Warrant Shares under the registration statement,
and shall not make such sale unless (i) one business day lapses without response
from the Company, or (ii) the Company notifies the Holder in writing that the
registration statement requires a post-effective amendment or supplement to be
current. In the event of (ii) above, and subject to section 4 above, the Company
shall use its reasonable efforts to file a complete and accurate post-effective
amendment or supplement with the SEC and have any such amendment declared
effective as soon as reasonably possible and provide copies to the Holders to
enable them to sell their Warrant Shares in accordance with applicable law and
regulations.
(c) Any provision of this Agreement may be amended and the observance
thereof may be waived only with the written consent of the Company and the
Holders of a majority of the Warrant Shares. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder, each future
Holder, and the Company. The undersigned acknowledge that Holders of the Warrant
Shares are third party beneficiaries of this Agreement.
(d) All notices required or permitted under this Agreement shall be made
in writing signed by the party making the same, shall specify the section under
this Agreement pursuant to which it is given, and shall be addressed if to (i)
the Company at: Patriot Scientific Corporation, 10989 Via Frontera, San Diego,
California 92127, Attention: President, Telephone No. 619-674-5000, Telecopy No.
619-674-5005 and (ii) the Holders at their respective last address as the party
shall have furnished in writing as a new address to be entered on such register.
Any notice, except as otherwise provided in this Agreement, shall be made by fax
and shall be deemed given at the time of transmission of the fax.
(e) This Agreement shall terminate on the earlier of (i) the date that
is five (5) years from the date of this Agreement and (ii) the date that all of
the Warrants have been exercised and all of the resulting Warrant Shares have
been sold either under the Registration Statement or pursuant to Rule 144 of the
Securities Act of 1933; but without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination or (ii) other indemnification obligations under this Agreement.
(f) The rights of a Holder under this Agreement may be transferred to a
subsequent holder of the Holder's Warrant Shares (provided such transferee shall
provide to the Company, together with or prior to such transferee's request to
have such Registrable Shares included in a Demand Registration or Piggyback
Registration, a copy of this Agreement executed by such transferee agreeing to
be bound as a Holder by the terms of this Agreement).
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, U.S.A. applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Securities Exchange Act of 1934, which
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matters shall be construed and interpreted in accordance with such laws. Any
action brought to enforce, or otherwise arising out of, this Agreement shall be
heard an determined only in either a federal or state court sitting in the
county of Dover in the State of Delaware, U.S.A.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
PATRIOT SCIENTIFIC CORPORATION
By: /s/ LOWELL W. GIFFHORN
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Lowell W. Giffhorn
Chief Financial Officer
SWARTZ INVESTMENTS, LLC
By: _/s/ ERIC SWARTZ
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Eric Swartz
President
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