REGISTRATION RIGHTS AGREEMENT
by and among
PINNACLE ACQUISITION CORP. I, a Delaware corporation,
PINNACLE VENTURE FUND II LP, a Delaware limited partnership,
and
THE OTHER HOLDERS SIGNATORY HERETO
Dated as of June 25, 2021
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of June 25, 2021, by and among:
(i) Pinnacle Acquisition Corp. I, a Delaware corporation (the "Company");
(ii) Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Sponsor"); and
(iii) The other holders signatory hereto (each, a "Holder" and, collectively with the Sponsor, the "Holders"), namely: Marcus Yuen, Deborah Sinclair, Raymond Holtz, Nadia Petrova, and William K. Ashmore.
Each of the foregoing is sometimes referred to herein individually as a "party" and collectively as the "parties."
RECITALS
WHEREAS, the Company has consummated an initial public offering (the "IPO") of 20,000,000 units (the "Units") pursuant to the Registration Statement on Form S-1 (Registration No. 333-254891) declared effective by the United States Securities and Exchange Commission (the "SEC" or the "Commission") on May 24, 2021, with each Unit consisting of one share of Class A common stock, par value $0.0001 per share ("Class A Common Stock"), and one-half of one redeemable warrant, each whole warrant entitling the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share;
WHEREAS, in connection with the IPO, the Company entered into an Underwriting Agreement dated June 22, 2021 (the "Underwriting Agreement") with Ridgeline Whitfield Securities LLC, as representative of the several underwriters (the "Representative"), and Halyard Capital Markets Inc., as co-manager;
WHEREAS, the Sponsor holds 5,750,000 shares of Class B common stock of the Company, par value $0.0001 per share (the "Founder Shares"), purchased for an aggregate purchase price of $25,000 (approximately $0.004 per share), which Founder Shares are subject to forfeiture of up to 750,000 shares depending on the extent to which the underwriters exercise their over-allotment option;
WHEREAS, the Sponsor holds 7,000,000 private placement warrants (the "Private Placement Warrants"), purchased at a price of $1.50 per warrant for aggregate proceeds of $10,500,000, in a private placement that occurred simultaneously with the closing of the IPO, with up to 900,000 additional Private Placement Warrants purchasable upon full exercise of the over-allotment option (and up to 450,000 additional Private Placement Warrants upon partial exercise of 1,500,000 over-allotment Units);
WHEREAS, each Private Placement Warrant entitles the holder thereof to purchase one share of Class A Common Stock at an exercise price of $11.50 per share, subject to adjustment as set forth in the Warrant Agreement between the Company and Adriatic Health IT, as warrant agent;
WHEREAS, the Founder Shares are convertible into shares of Class A Common Stock on a one-for-one basis, subject to adjustment as provided in the Company's Amended and Restated Certificate of Incorporation, at the time of the Company's initial business combination;
WHEREAS, the Holders include the Sponsor and each of the Company's officers and directors who hold Founder Shares and/or Private Placement Warrants, or who may hereafter acquire Registrable Securities (as defined below);
WHEREAS, the Company's securities are listed on the Nasdaq Capital Market under the ticker symbols "PNACU" (Units), "PNAC" (Class A Common Stock), and "PNACW" (Warrants);
WHEREAS, the Holders and the Company desire to enter into this Agreement in order to grant the Holders certain registration rights with respect to their Registrable Securities on the terms and conditions set forth herein; and
WHEREAS, it is a condition to the closing of the IPO that the parties enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Section 1.1 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set forth below:
"Adverse Disclosure" means any public disclosure of material non-public information that, in the reasonable good faith judgment of the Board of Directors of the Company, (a) would be required to be made in a Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of any Prospectus and any amendment or supplement thereto in light of the circumstances under which they were made, not misleading, and (b) would be materially adverse to the Company or its business, operations, financial condition, or prospects if disclosed at such time.
"Agreement" means this Registration Rights Agreement, as amended, supplemented, or modified from time to time in accordance with the terms hereof.
"Block Trade" means any non-marketed underwritten offering that is not a Shelf Takedown, conducted on an overnight or similar basis.
"Board" or "Board of Directors" means the board of directors of the Company.
"Business Combination" means a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, as described in the Company's Amended and Restated Certificate of Incorporation.
"Class A Common Stock" means shares of Class A common stock, par value $0.0001 per share, of the Company.
"Class B Common Stock" means shares of Class B common stock, par value $0.0001 per share, of the Company (the Founder Shares).
"Closing Date" means June 25, 2021, the closing date of the IPO.
"Commission" or "SEC" means the United States Securities and Exchange Commission, or any successor governmental agency or authority performing similar functions.
"Company" means Pinnacle Acquisition Corp. I, a Delaware corporation, and any successor entity thereto, whether by merger, consolidation, reorganization, or otherwise.
"Demand Notice" means a written notice from a Demand Right Holder to the Company demanding a Demand Registration in accordance with Section 2.1 hereof.
"Demand Registration" means a registration of Registrable Securities initiated by one or more Demand Right Holders pursuant to Section 2 of this Agreement.
"Demand Right Holder" means the Sponsor and any Holder that holds at least five percent (5%) of the then-outstanding Registrable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
"Founder Shares" means the 5,750,000 shares of Class B Common Stock initially issued to the Sponsor (subject to forfeiture of up to 750,000 shares depending on the exercise of the underwriters' over-allotment option), including any shares of Class A Common Stock issuable upon conversion thereof.
"Holder" means each of the Sponsor and the other persons signatory hereto, and any person who becomes a party to this Agreement pursuant to a Joinder Agreement executed and delivered in accordance with Section 8.7 hereof.
"IPO" means the initial public offering of Units of the Company pursuant to the Registration Statement on Form S-1 (Registration No. 333-254891).
"Joinder Agreement" means a joinder agreement substantially in the form attached hereto as Exhibit A.
"Letter Agreement" means the Letter Agreement dated June 25, 2021, among the Company, the Sponsor, the Representative, and each of the Company's officers and directors, providing for, among other things, lock-up and transfer restrictions with respect to the Founder Shares and Private Placement Warrants.
"Lock-Up Period" means the period during which the Founder Shares and Private Placement Warrants are subject to transfer restrictions under the Letter Agreement; specifically: (a) with respect to the Founder Shares, the period ending on the earlier of (i) one (1) year after the date of consummation of the Business Combination or (ii) the date on which the closing price of the Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any twenty (20) trading days within any thirty (30)-trading-day period commencing at least one hundred fifty (150) days after the date of consummation of the Business Combination; and (b) with respect to the Private Placement Warrants and the shares of Class A Common Stock issuable upon exercise thereof, the period ending thirty (30) days after the consummation of the Business Combination.
"Piggyback Registration" means a registration in which the Holders are entitled to include their Registrable Securities pursuant to Section 3 of this Agreement.
"Private Placement Warrants" means the warrants purchased by the Sponsor in a private placement concurrent with the closing of the IPO, consisting of 7,000,000 warrants (plus any additional warrants purchased upon exercise of the underwriters' over-allotment option), and any shares of Class A Common Stock issuable upon exercise thereof.
"Prospectus" means the prospectus included in any Registration Statement, including any preliminary prospectus, any final prospectus, any prospectus supplement, any free writing prospectus (as defined in Rule 405 under the Securities Act), and all amendments and supplements to the foregoing.
"Registrable Securities" means (i) the Founder Shares (including the shares of Class A Common Stock issuable upon conversion thereof); (ii) the Private Placement Warrants and the shares of Class A Common Stock issuable upon exercise thereof; (iii) any shares of Class A Common Stock or warrants purchased by a Holder in or after the IPO in the open market or otherwise; and (iv) any other equity securities of the Company issued or issuable with respect to any of the foregoing by way of stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, reorganization, or similar event. Notwithstanding the foregoing, securities shall cease to be Registrable Securities when: (x) a Registration Statement covering such securities has been declared effective by the Commission and such securities have been disposed of pursuant to such effective Registration Statement; (y) such securities are sold pursuant to Rule 144 under the Securities Act (or any successor provision thereto) and are no longer subject to any transfer restrictions imposed by applicable law or contract; or (z) such securities have ceased to be outstanding.
"Registration Expenses" has the meaning set forth in Section 4.1 of this Agreement.
"Registration Statement" means any registration statement of the Company filed with, or to be filed with, the Commission under the Securities Act, including any related Prospectus, amendments and supplements thereto, and all exhibits and materials incorporated by reference therein.
"Representative" means Ridgeline Whitfield Securities LLC, in its capacity as representative of the several underwriters of the IPO.
"Rule 144" means Rule 144 under the Securities Act (or any successor provision thereto).
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
"Shelf Registration Statement" means a registration statement filed pursuant to Section 2.4 of this Agreement on Form S-3 (or, if the Company is not then eligible to use Form S-3, on Form S-1 or any other appropriate form) providing for the registration and resale of Registrable Securities on a delayed or continuous basis pursuant to Rule 415 under the Securities Act.
"Sponsor" means Pinnacle Venture Fund II LP, a Delaware limited partnership, whose general partner is Pinnacle Venture Management II LLC, a Delaware limited liability company.
"Suspension Period" has the meaning set forth in Section 2.5 of this Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated June 22, 2021, among the Company, the Sponsor, and Ridgeline Whitfield Securities LLC, as representative of the several underwriters named therein.
Section 1.2 Rules of Construction.
Unless the context otherwise requires:
(a) All references in this Agreement to "Sections," "Exhibits," and "Schedules" are to Sections of, and Exhibits and Schedules attached to, this Agreement.
(b) The headings and titles of the Sections and Exhibits of this Agreement are for convenience of reference only and shall not affect the meaning or interpretation of this Agreement.
(c) The word "including" (and with correlative meaning, "include" and "includes") means including without limitation.
(d) Words in the singular shall be deemed to include the plural, and vice versa, and words of one gender shall be deemed to include the other genders, as the context requires.
(e) The word "or" is not exclusive.
(f) The words "herein," "hereof," "hereto," "hereunder," and similar words refer to this Agreement in its entirety and not to any particular Section or provision of this Agreement.
(g) References to any statute, rule, or regulation shall be deemed to include all amendments thereto and all successor statutes, rules, and regulations, unless the context otherwise requires.
(h) References to any agreement or instrument shall be deemed to refer to such agreement or instrument as amended, supplemented, or otherwise modified from time to time, unless the context otherwise requires.
(i) References to any person shall include such person's successors and permitted assigns.
SECTION 2. DEMAND REGISTRATION
Section 2.1 Right to Demand.
At any time and from time to time commencing after the expiration of the Lock-Up Period (as defined in the Letter Agreement dated June 25, 2021), any Demand Right Holder may deliver a Demand Notice to the Company requesting that the Company register all or any part of such Demand Right Holder's Registrable Securities under the Securities Act. The Demand Notice shall specify (a) the number and type of Registrable Securities proposed to be registered, (b) the intended method or methods of disposition thereof (including whether the offering is proposed to be an underwritten offering), and (c) such other information as the Company may reasonably require to prepare and file a Registration Statement covering such Registrable Securities. If the Demand Right Holder intends for the Demand Registration to involve an underwritten offering, the Demand Notice shall so state, and the Company shall include such information in the written notice to other Holders given pursuant to Section 2.2 below.
Section 2.2 Notice to Other Holders.
Upon receipt of a Demand Notice, the Company shall promptly (and in any event within ten (10) business days after receipt thereof) give written notice of such proposed Demand Registration to all other Holders of Registrable Securities. Such notice shall describe the proposed registration, including the number and type of Registrable Securities to be registered, the intended method or methods of disposition, and whether the Demand Registration will involve an underwritten offering. Each such other Holder may, within ten (10) business days after receipt of the Company's notice, request in writing that the Company include all or a specified portion of such Holder's Registrable Securities in the Demand Registration. Any Holder's failure to respond within such ten (10) business day period shall be deemed a waiver of such Holder's right to include Registrable Securities in such Demand Registration, but shall not affect such Holder's rights with respect to any subsequent Demand Registration or Piggyback Registration.
Section 2.3 Filing and Effectiveness.
Following receipt of a Demand Notice in compliance with Section 2.1 (together with any requests from other Holders received pursuant to Section 2.2), the Company shall:
(a) file a Registration Statement covering the Registrable Securities specified in the Demand Notice (and any Registrable Securities requested to be included by other Holders pursuant to Section 2.2) as promptly as practicable and in any event within thirty (30) days of the Company's receipt of the Demand Notice;
(b) use its commercially reasonable efforts to cause such Registration Statement to be declared effective by the Commission as promptly as practicable after filing thereof; and
(c) use its commercially reasonable efforts to keep such Registration Statement continuously effective for a period of at least one hundred twenty (120) days following the date on which the Commission declares the Registration Statement effective (or such shorter period as may be required for all Registrable Securities covered thereby to be sold or otherwise disposed of in accordance with the intended method or methods of disposition set forth in the Registration Statement).
Section 2.4 Shelf Registration.
At the written request of any Demand Right Holder, the Company shall file a Shelf Registration Statement on Form S-3 (or, if the Company is not then eligible to use Form S-3, on Form S-1 or such other appropriate form under the Securities Act) covering the resale of all Registrable Securities held by the Holders on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. The Company shall use its commercially reasonable efforts to cause such Shelf Registration Statement to become effective as promptly as practicable after the filing thereof and to remain continuously effective until the earlier of (a) the date on which all Registrable Securities covered thereby have been sold or otherwise disposed of pursuant thereto and (b) the date on which there are no longer any Registrable Securities outstanding. Any Demand Registration effected as a Shelf Registration Statement shall not count against the three (3) Demand Registrations available under Section 2.6 unless such Shelf Registration Statement is declared effective by the Commission and remains effective for at least sixty (60) consecutive days (or, if earlier, until all Registrable Securities covered thereby have been sold).
Section 2.5 Suspension / Blackout.
Notwithstanding anything to the contrary contained in this Section 2, the Company may postpone the filing or effectiveness of a Registration Statement, or suspend the use of any Prospectus forming part of a Registration Statement, for a period not to exceed sixty (60) consecutive days (each such period, a "Suspension Period") if the Board of Directors of the Company determines in good faith that such filing, effectiveness, or use would:
(a) require the Company to make an Adverse Disclosure; or
(b) materially interfere with any bona fide material financing, acquisition, disposition, corporate reorganization, or other similar transaction involving the Company or any of its subsidiaries then under consideration by the Board of Directors.
The Company shall not invoke the right set forth in this Section 2.5 more than two (2) times in any twelve (12)-month period, and the aggregate number of days comprising all Suspension Periods during any twelve (12)-month period shall not exceed one hundred twenty (120) days. The Company shall promptly notify each Holder of Registrable Securities of the commencement and termination of each Suspension Period (without disclosing the content or nature of any material non-public information giving rise thereto). Each Holder agrees that, upon receipt of notice of the commencement of a Suspension Period, such Holder shall forthwith discontinue the disposition of Registrable Securities pursuant to the applicable Registration Statement and Prospectus until such Holder is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and, if so directed by the Company, each Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Registrable Securities.
Section 2.6 Number of Demand Registrations.
The Demand Right Holders shall be entitled to an aggregate of three (3) Demand Registrations under this Section 2. A Demand Registration shall not be counted as one of the three (3) permitted Demand Registrations if:
(a) the Registration Statement relating thereto does not become effective or is not maintained effective for the requisite period specified in Section 2.3(c) (unless such failure to become or remain effective is due to the act or omission of the Demand Right Holder(s) initiating the demand);
(b) the offering of Registrable Securities pursuant to such Demand Registration is interfered with by any stop order, injunction, or similar order or requirement of the Commission or any court of competent jurisdiction, and such interference is not the result of any act or omission by the requesting Demand Right Holder(s); or
(c) the conditions to closing specified in any underwriting agreement entered into in connection with such Demand Registration are not satisfied or waived (other than by reason of a default by the Demand Right Holder(s) initiating the demand).
Section 2.7 Minimum Amount.
The Company shall not be required to effect a Demand Registration unless the Registrable Securities to be registered in connection with such Demand Registration have an aggregate market value (based on the closing price of the Class A Common Stock on the Nasdaq Capital Market on the trading day immediately preceding the date of the Demand Notice) of at least $10,000,000. For purposes of this Section 2.7, the market value of any Private Placement Warrants shall be determined based on the closing price of the publicly traded warrants of the Company on the Nasdaq Capital Market on the trading day immediately preceding the date of the Demand Notice.
Section 2.8 Timing Restrictions.
Notwithstanding anything to the contrary contained in this Section 2, the Company shall not be required to effect a Demand Registration:
(a) during the period commencing thirty (30) days prior to the Company's estimated filing date of, and ending ninety (90) days following the effective date of, a Company-initiated registration statement (other than a registration statement on Form S-4 or Form S-8 or any successor forms thereto); or
(b) within one hundred twenty (120) days after the effective date of a prior Demand Registration effected pursuant to this Section 2.
Section 2.9 Underwritten Offerings.
If a Demand Registration involves an underwritten offering:
(a) Selection of Underwriter(s). The Demand Right Holder(s) initiating the demand shall have the right to select the managing underwriter or underwriters for such underwritten offering, subject to the Company's prior written approval (such approval not to be unreasonably withheld, conditioned, or delayed).
(b) Underwriting Agreement. The Company shall enter into an underwriting agreement in customary form with the managing underwriter(s) selected in accordance with Section 2.9(a) and shall provide such information, execute such documents, and take such other actions as may be reasonably required by the managing underwriter(s) or as may be customary in connection with underwritten public offerings of equity securities.
(c) Cutback. If the managing underwriter(s) advise the Company and the Demand Right Holder(s) initiating the demand that, in the managing underwriter's reasonable opinion, the total amount of securities requested to be included in such underwritten offering exceeds the amount that can be sold in such offering without materially and adversely affecting the price, timing, or distribution of the offering or the market for the securities to be offered, then the securities to be included in such underwritten offering shall be allocated in the following order of priority:
(i) first, the Registrable Securities requested to be included in such offering by the Demand Right Holder(s) initiating the demand, allocated pro rata among such Demand Right Holder(s) based on the number of Registrable Securities each such Demand Right Holder has requested to be included;
(ii) second, the Registrable Securities requested to be included by other Holders who delivered timely requests for inclusion pursuant to Section 2.2, allocated pro rata among such other Holders based on the number of Registrable Securities each such Holder has requested to be included; and
(iii) third, any other securities that the Company proposes to register for its own account or for the account of any other person.
SECTION 3. PIGGYBACK REGISTRATION
Section 3.1 Right to Include.
If at any time after the Closing Date the Company proposes to register any of its securities under the Securities Act (whether for its own account or for the account of any stockholder of the Company), other than (a) a registration on Form S-4 or Form S-8, or any successor forms thereto, (b) a registration relating solely to the offer and sale of securities to employees, directors, or consultants of the Company or its subsidiaries pursuant to any employee benefit plan or equity incentive plan, or (c) a registration relating to a transaction described in Rule 145 under the Securities Act (or any successor provision), the Company shall give written notice to each Holder of Registrable Securities of such proposed registration at least fifteen (15) days prior to the anticipated filing date of the Registration Statement relating to such registration. Such notice shall describe the proposed registration, including the type and number of securities to be registered, the intended method or methods of disposition, the identity of any proposed managing underwriter(s), and the estimated price range (to the extent then known).
Each Holder of Registrable Securities shall have the right, exercisable by delivering written notice to the Company within ten (10) business days after receipt of the Company's notice described in this Section 3.1, to request inclusion of all or any specified portion of such Holder's Registrable Securities in such registration (a "Piggyback Registration"). The Company shall use its commercially reasonable efforts to include in such registration all Registrable Securities with respect to which the Company has received timely written requests for inclusion, subject to the cutback provisions of Section 3.2 below.
Section 3.2 Priority in Piggyback Registrations.
If the managing underwriter of an underwritten offering for which the Holders have exercised Piggyback Registration rights advises the Company that, in the managing underwriter's reasonable opinion, the total amount of securities requested to be included in such offering exceeds the amount that can be sold in such offering without materially and adversely affecting the price, timing, or distribution of the offering or the market for the securities to be offered, then the Company shall include securities in such registration and offering in the following order of priority:
(i) first, the securities that the Company proposes to sell for its own account;
(ii) second, the Registrable Securities requested to be included by the Holders, allocated pro rata among the Holders based on the number of Registrable Securities each Holder has requested to be included in such registration (or in such other proportion as may be mutually agreed among such Holders); and
(iii) third, any other securities requested to be included by any other holders of registration rights of the Company, allocated pro rata among such other holders based on the number of securities each such holder has requested to be included.
No registration effected under this Section 3 shall relieve the Company of its obligation to effect any Demand Registration upon proper request therefor pursuant to Section 2.
Section 3.3 Withdrawal.
Any Holder of Registrable Securities may withdraw all or any portion of its Registrable Securities from a Piggyback Registration at any time prior to the effectiveness of the applicable Registration Statement by delivering written notice of withdrawal to the Company. Upon receipt of such notice, the Company shall use its commercially reasonable efforts to remove from such Registration Statement the Registrable Securities specified in such withdrawal notice.
The Company may withdraw or abandon a proposed registration at any time prior to the effectiveness of the applicable Registration Statement without any obligation to any Holder of Registrable Securities, and any such withdrawal or abandonment shall not be counted as a Demand Registration for purposes of Section 2.6 hereof.
Section 3.4 No Obligation to Proceed.
Nothing in this Section 3 shall create any obligation on the part of the Company to register any of its securities for its own account or for the account of any other stockholder, or to include any securities other than those of the Company in any registration initiated by the Company. The Company's decision to file a registration statement for its own account shall be made in the sole discretion of the Board of Directors.
SECTION 4. REGISTRATION EXPENSES
Section 4.1 Company Bears Expenses.
All Registration Expenses incurred in connection with any Demand Registration or Piggyback Registration effected (or sought to be effected) under this Agreement shall be borne by the Company, regardless of whether any such registration is completed or any Registration Statement is declared effective. As used in this Agreement, "Registration Expenses" means all fees, costs, and expenses incurred by the Company in effecting any registration hereunder or in complying with its obligations under this Agreement with respect thereto, including without limitation:
(a) all SEC registration and filing fees (including any fees relating to filings required to be made with FINRA);
(b) all fees associated with listing the Registrable Securities on the Nasdaq Capital Market or any other national securities exchange on which the Class A Common Stock is then listed;
(c) all printing and duplication expenses (including expenses of printing Registration Statements, Prospectuses, and any amendments or supplements thereto, and the cost of any special financial printing);
(d) all messenger, telephone, and delivery expenses;
(e) all fees and disbursements of the Company's legal counsel (currently Calderwood & Harkness LLP, or such other counsel as the Company may from time to time engage in connection with its securities law matters);
(f) all fees and disbursements of the Company's independent registered public accounting firm (currently Trask, Worthington & Giordano LLP, PCAOB ID 6241), including the costs of any audits, comfort letters, or agreed-upon procedures required in connection with a registration;
(g) all fees and expenses incurred in connection with the qualification or registration of the Registrable Securities under state securities or "blue sky" laws of such jurisdictions as the selling Holders or managing underwriter(s) may reasonably request, including reasonable fees of blue sky counsel;
(h) all FINRA filing fees; and
(i) reasonable fees and disbursements of one (1) counsel to the selling Holders participating in such registration, selected by the Holders of a majority-in-interest of the Registrable Securities being registered, in an amount not to exceed $50,000 per registration.
Section 4.2 Selling Expenses.
Notwithstanding Section 4.1 above, each selling Holder shall bear its proportionate share (based on the number of Registrable Securities sold by such Holder relative to the aggregate number of Registrable Securities sold by all selling Holders in such offering) of all underwriting discounts, selling commissions, and transfer taxes, if any, applicable to the sale of such Holder's Registrable Securities in any registration effected under this Agreement.
SECTION 5. REGISTRATION PROCEDURES
Section 5.1 Company Obligations.
Whenever the Company is required to effect the registration of Registrable Securities under this Agreement, the Company shall use its commercially reasonable efforts to effect such registration in a manner that permits the sale and distribution of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Registration Statement, and in connection therewith the Company shall:
(a) prepare and file with the Commission a Registration Statement on the appropriate form under the Securities Act with respect to the Registrable Securities to be registered and use its commercially reasonable efforts to cause such Registration Statement to become effective as promptly as practicable after filing; prepare and file with the Commission such amendments (including post-effective amendments) and supplements to such Registration Statement and the related Prospectus as may be necessary to keep such Registration Statement continuously effective for the period required under this Agreement and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement;
(b) furnish to each selling Holder and to each managing underwriter, if any, without charge, such number of copies of the Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), and the Prospectus (including each preliminary prospectus and all amendments and supplements thereto) as such selling Holder or managing underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities covered by such Registration Statement;
(c) use its commercially reasonable efforts to register or qualify the Registrable Securities under the securities or "blue sky" laws of such jurisdictions within the United States as any selling Holder or managing underwriter may reasonably request and to maintain such registrations and qualifications in effect for the period required under this Agreement; provided, however, 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 Section 5.1(c), (ii) subject itself to taxation in any such jurisdiction where it would not otherwise be subject to taxation, or (iii) consent to general service of process in any jurisdiction where it would not otherwise be subject to such service;
(d) promptly notify each selling Holder and each managing underwriter, if any, of (i) the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation or threatening of any proceedings for such purpose, (ii) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (iii) the receipt by the Company of any comments from the Commission or any request by the Commission for amendments or supplements to any Registration Statement or Prospectus or for additional information;
(e) use its commercially reasonable efforts to cause all Registrable Securities covered by such Registration Statement to be listed on the Nasdaq Capital Market or such other national securities exchange on which the Class A Common Stock is then listed, and to cause such listing to remain in effect for the period required under this Agreement;
(f) enter into customary agreements (including, in the case of an underwritten offering, an underwriting agreement in customary form with the managing underwriter(s)) and take such other actions as are reasonably required in order to expedite or facilitate the registration and disposition of the Registrable Securities;
(g) make available for inspection by any selling Holder and its counsel, any managing underwriter participating in any disposition of Registrable Securities and its counsel, and any accountant retained by any such selling Holder or underwriter, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company's officers, directors, and employees to supply all information reasonably requested by any such selling Holder, underwriter, counsel, or accountant in connection with such Registration Statement; provided, however, that any such person gaining access to non-public information of the Company shall execute and deliver a customary confidentiality agreement in form reasonably satisfactory to the Company;
(h) cooperate with any due diligence investigation conducted by or on behalf of the managing underwriter(s) and, in connection with any underwritten offering, furnish (i) a certificate signed by an officer of the Company confirming such matters as the underwriter(s) may reasonably request, (ii) an opinion of the Company's legal counsel addressed to the underwriter(s) covering such matters as are customarily covered in opinions delivered in comparable underwritten offerings, and (iii) comfort letters from the Company's independent registered public accounting firm addressed to the underwriter(s) covering such financial and accounting matters as are customarily covered in comfort letters delivered in comparable underwritten offerings;
(i) use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary by virtue of the business and operations of the Company to enable the selling Holder(s) to consummate the disposition of the Registrable Securities; and
(j) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and any other governmental agency or authority, and make generally available to the Company's security holders, as soon as reasonably practicable, a consolidated earnings statement satisfying the provisions of Section 11(a) of the Securities Act (including, at the Company's option, Rule 158 thereunder).
Section 5.2 Holder Obligations.
In connection with any registration effected under this Agreement:
(a) Each selling Holder shall furnish to the Company in writing such information and documents regarding itself, its Registrable Securities, and the intended method or methods of disposition of the Registrable Securities held by such Holder as the Company may reasonably request in order to prepare the Registration Statement and any related Prospectus and to comply with applicable securities laws. Each selling Holder agrees to promptly notify the Company of any change in such information that would require an amendment or supplement to the Registration Statement or Prospectus.
(b) Each selling Holder agrees to cooperate with the Company, the managing underwriter(s), and their respective counsel in connection with the registration and sale of the Registrable Securities and to comply with all applicable provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder, and all applicable state securities laws, in connection with the offer, sale, and delivery of the Registrable Securities.
Section 5.3 Rule 144 Reporting.
With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the Commission that may at any time permit a Holder to sell securities of the Company to the public without registration under the Securities Act, the Company shall:
(a) make and keep available adequate current public information with respect to the Company, as those terms are understood and defined in Rule 144(c) under the Securities Act (or any successor provision), at all times after the effective date of the first Registration Statement filed by the Company for an offering of its securities to the general public;
(b) file with the Commission in a timely manner all reports and other documents required to be filed by the Company under the Exchange Act at any time after the Company has become subject to such reporting requirements; and
(c) furnish to any Holder, promptly upon request, (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports, information, and documents of the Company as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.
SECTION 6. INDEMNIFICATION
Section 6.1 Indemnification by the Company.
The Company shall indemnify, defend, and hold harmless each selling Holder of Registrable Securities, each underwriter (if any) who participates in an offering of Registrable Securities, and each of their respective officers, directors, members, partners, employees, agents, and representatives, and each person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the foregoing (each, a "Holder Indemnitee"), from and against any and all losses, claims, damages, liabilities, judgments, and expenses (including reasonable and documented attorneys' fees and expenses of investigation and litigation) (collectively, "Losses") arising out of or based upon:
(a) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any amendment or supplement thereto (including any documents incorporated by reference therein), or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in light of the circumstances under which they were made) not misleading; or
(b) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under any of the foregoing, in connection with any registration effected pursuant to this Agreement.
Provided, however, that the Company shall not be liable under this Section 6.1 for any Losses to the extent that such Losses arise out of or are based upon any untrue statement or alleged untrue statement, or any omission or alleged omission, made in any Registration Statement or Prospectus in reliance upon and in conformity with written information furnished to the Company by a selling Holder or underwriter specifically for use or inclusion in such Registration Statement or Prospectus.
Section 6.2 Indemnification by Selling Holders.
Each selling Holder of Registrable Securities shall, severally and not jointly, indemnify, defend, and hold harmless the Company, each of its directors, each of its officers who signed the applicable Registration Statement, each underwriter (if any) who participates in an offering of such Holder's Registrable Securities, and each person who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the foregoing (each, a "Company Indemnitee"), from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any amendment or supplement thereto, or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement, or such omission or alleged omission, was made in reliance upon and in conformity with written information furnished to the Company by such selling Holder specifically for use or inclusion in such Registration Statement or Prospectus.
Provided, however, that each selling Holder's aggregate liability under this Section 6.2 shall in no event exceed the amount equal to the net proceeds received by such selling Holder from the sale of Registrable Securities in the offering giving rise to such liability (after deducting all underwriting discounts, commissions, and transfer taxes applicable to such sale).
Section 6.3 Contribution.
If the indemnification provided for in Sections 6.1 and 6.2 above is unavailable to, or insufficient to hold harmless, an indemnified party in respect of any Losses for which such indemnified party is entitled to indemnification hereunder, 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 fault of the indemnifying party, on the one hand, and of the indemnified party, on the other hand, in connection with the statements or omissions that resulted in such Losses, 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 the omission or alleged omission of 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.
The parties agree that it would not be just and equitable if contribution pursuant to this Section 6.3 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this Section 6.3. The amount paid or payable by an indemnified party as a result of the Losses referred to in this Section 6.3 shall be deemed to include, subject to the limitations set forth above, any reasonable and documented legal or other expenses incurred by such indemnified party in connection with investigating or defending any such action or claim.
Notwithstanding anything to the contrary in this Section 6.3, no selling Holder shall be required to contribute any amount in excess of the amount equal to the net proceeds received by such selling Holder from the sale of Registrable Securities in the offering giving rise to such liability (after deducting all underwriting discounts, commissions, and transfer taxes applicable to such sale). 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.
Section 6.4 Notice of Claims.
An indemnified party shall give prompt written notice to the indemnifying party of any claim, action, suit, or proceeding (each, a "Claim") for which indemnification or contribution may be sought under this Section 6 (including a description in reasonable detail, to the extent known, of the facts and circumstances giving rise to such Claim and an estimate, if practicable, of the amount of Losses that have been or may be suffered by the indemnified party); provided, however, that the failure of an indemnified party to give such notice shall not relieve the indemnifying party of its obligations under this Section 6, except to the extent that the indemnifying party is actually and materially prejudiced by such failure.
The indemnifying party shall be entitled, at its option and at its own expense, to assume the defense of any such Claim with counsel reasonably satisfactory to the indemnified party. If the indemnifying party assumes the defense of any such Claim, the indemnified party shall have the right to participate in such defense at its own expense; provided, however, that the indemnified party shall have the right to retain separate counsel at the indemnifying party's expense (it being understood that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (plus any applicable local counsel) for all indemnified parties) if (a) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with an actual or potential conflict of interest, (b) the defendants in, or targets of, any such Claim include both the indemnified party and the indemnifying party and the indemnified party has reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party, or (c) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such Claim within a reasonable period of time after receipt of notice thereof.
No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned, or delayed), settle, compromise, or consent to the entry of any judgment with respect to any Claim unless such settlement, compromise, or judgment (i) includes as an unconditional term thereof the giving by the claimant or plaintiff of a full and unconditional release from all liability in respect of such Claim to each indemnified party and (ii) does not include any statement as to or any admission of fault, culpability, or failure to act by or on behalf of any indemnified party.
Section 6.5 Survival.
The indemnification and contribution obligations of the parties under this Section 6 shall survive the sale or other transfer of any Registrable Securities by any Holder and the termination of this Agreement, and shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified party.
SECTION 7. LOCK-UP
Section 7.1 Lock-Up in Underwritten Offerings.
In connection with any underwritten offering of the Company's equity securities (whether pursuant to a Demand Registration, a Piggyback Registration, or otherwise), each Holder shall, if and to the extent requested by the managing underwriter(s), enter into a customary lock-up agreement pursuant to which such Holder agrees not to (a) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise transfer or dispose of, directly or indirectly, any Registrable Securities (or any securities convertible into, or exercisable or exchangeable for, Registrable Securities) (other than those Registrable Securities included in such underwritten offering), or (b) enter into any swap, hedge, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such Registrable Securities, in each case for a period of up to ninety (90) days following the date of the final prospectus relating to such underwritten offering (or such shorter period as the managing underwriter(s) may agree to in their sole discretion).
The Company shall similarly agree, if and to the extent requested by the managing underwriter(s), not to effect any public sale or distribution of its equity securities (or any securities convertible into, or exercisable or exchangeable for, equity securities) during such lock-up period, subject to customary exceptions, including (i) any securities issued pursuant to employee benefit plans, equity incentive plans, or dividend reinvestment plans existing on the date of the underwriting agreement and (ii) any securities issued pursuant to the conversion or exercise of convertible or exercisable securities outstanding on the date of the underwriting agreement.
SECTION 8. MISCELLANEOUS
Section 8.1 Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
Section 8.2 Consent to Jurisdiction; Waiver of Jury Trial.
Each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of any state court sitting in the Borough of Manhattan in the City of New York, or any federal court of the United States of America sitting in the Southern District of New York, and any appellate court from any thereof, for the purposes of any action, suit, or proceeding arising out of or relating to this Agreement or any transaction contemplated hereby, and each party agrees not to commence any such action, suit, or proceeding except in such courts.
Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, (a) any objection that it may now or hereafter have to the laying of venue of any action, suit, or proceeding arising out of or relating to this Agreement or any transaction contemplated hereby in any court referred to in this Section 8.2, and (b) the defense of an inconvenient forum to the maintenance of any such action, suit, or proceeding in any such court.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, AND ENFORCEMENT HEREOF.
Section 8.3 Notices.
All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered personally to the recipient, (b) when sent by confirmed electronic mail (with a copy sent by another method specified herein within two (2) business days thereafter), (c) one (1) business day after being sent by nationally recognized overnight courier service (with confirmation of delivery), or (d) five (5) business days after being sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company:
Pinnacle Acquisition Corp. I 388 Embarcadero Center, Suite 2400 San Francisco, California 94111
Attention: Marcus Yuen, Chairman & CEO
Email: myuen@pinnaclevc.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 900 Third Avenue, 28th Floor New York, New York 10022
Attention: Jennifer Kwon
Email: jkwon@calderwoodharkness.com