If to Seller		If to Purchaser
Rockstar Consortium US LP		Spherix Incorporated
Legacy Town Center 1, 7160 N. Dallas Parkway, Suite 250		7927 Jones Branch Drive
Plano, TX 75024		Tysons Corner, Virginia 22102
Attn: Chief IP Counsel		Attn:  Chief Executive Officer

Patent No.

Serial No.

Country

Filing Date

Issue Date

Title

5,752,195

08/758,887

US

12/02/96

05/12/98

CORDLESS TELEPHONE TERMINAL

5,581,599

08/175,534

US

12/30/93

12/03/96

CORDLESS TELEPHONE TERMINAL

2133859

2,133,859

CA

10/07/94

12/14/99

CORDLESS TELEPHONE TERMINAL

3459674

05-353441

JP

12/29/93

08/08/03

CORDLESS TELEPHONE TERMINAL

5,892,814

08/750,046

US

12/23/96

04/06/99

FLEXIBLE, TAPELESS, PERSONALIZED AUTO-ATTENDANT TELEPHONE

6,614,899

09/494,721

US

01/03/00

02/09/03

METHOD AND APPARATUS FOR PROVIDING ADVANCED IP TELEPHONY SERVICES IN AN INTELLIGENT ENDPOINT

6,965,614

09/557,530

US

04/24/00

11/15/05

METHOD AND SYSTEM FOR COMMUNICATIONS BETWEEN DIFFERENT TYPES OF DEVICES

Exhibit B

 

Patents

 

Country		Serial Number				Patent Number				Date Issued				Date Filed
US			08/758,887				5752195				12-05-98				02-12-96
US			08/175,534				5581599				03-12-96				30-12-93
CA			2,133,859				2133859				14-12-99				07-10-94
JP			05-353441				3459674				08-08-03				29-12-93
US			08/750,046				5892814				06-04-99				23-12-96
US			09/494,721				6614899				09-02-03				03-01-00
US			09/557,530				6965614				15-11-05				24-04-00

Exhibit C

Hypothetical Examples of Calculation of Participation Payments

Waterfall				Floor				Ceiling				Pcnt RS				Pcnt SPEX
	A			$	8			$	50				30.00	%			70.00	%
	B			$	50			$	100				40.00	%			60.00	%
	C			$	100			$	500				50.00	%			50.00	%
	D			$	500			$	1,000				60.00	%			40.00	%
	E			$	1,000				+				70.00	%			30.00	%
Part payment to RS towards Target Return; No additional SPEX participation. Reduced 'Purchaser's Initial Return'
Scenario I
Recoveries								$	15,000,000
Legal					25	%		$	3,750,000
Net								$	11,250,000
RS Target Ret								$	13,000,000
								RS				SPEX				Tot				Bal to apply
Fixed Consid									4,000,000				0				4,000,000				11,250,000
Initial Return									0				5,535,714				5,535,714				5,714,286
Target Return w/o Waterfall						A			5,714,286								5,714,286				0
																	0				0
																	0				0
																	0				0
									9,714,286				5,535,714				15,250,000
									63.70	%			36.30	%
Payment to RS of Target Return plus excess to SPEX to begin to equalize distribution for First tier Waterfall 70/30
Scenario II
Recoveries								$	30,000,000
Legal					25	%		$	7,500,000
Net								$	22,500,000
RS Target Ret								$	13,000,000
								RS				SPEX				Tot				Bal to apply
Fixed Consid									4,000,000				0				4,000,000				22,500,000
Initial Return									0				8,000,000				8,000,000				14,500,000
Target Return plus Waterfall						A			9,000,000				5,500,000				14,500,000				0
																	0				0
																	0				0
																	0				0
									13,000,000				13,500,000				26,500,000
									49.06	%			50.94	%

 

Payment to RS of Target Return plus excess to SPEX to further equalize distribution for First tier Waterfall 70/30
Scenario III
Recoveries						$	50,000,000
Legal			25	%		$	12,500,000
Net						$	37,500,000
RS Target Ret						$	13,000,000
						RS				SPEX				Tot				Bal to apply
Fixed Consid							4,000,000				0				4,000,000				37,500,000
Initial Return							0				8,000,000				8,000,000				29,500,000
Target return plus Waterfall				A			9,000,000				20,500,000				29,500,000				0
															0				0
															0				0
															0				0
							13,000,000				28,500,000				41,500,000
							31.33	%			68.67	%
Payment to RS of Target Return plus excess to SPEX and RS equal to First tier Waterfall 70/30
Scenario IV
Recoveries						$	60,000,000
Legal			25	%		$	15,000,000
Net						$	45,000,000
RS Target Ret						$	13,000,000
						RS				SPEX				Tot				Bal to apply
Fixed Consid							4,000,000				0				4,000,000				45,000,000
Initial Return							0				8,000,000				8,000,000				37,000,000
Target Return							9,000,000				0				9,000,000				28,000,000
Waterfall				A			1,700,000				26,300,000				28,000,000				0
							14,700,000				34,300,000				49,000,000
							30.00	%			70.00	%
Payment to RS of Target Return plus excess to SPEX and RS equal to First tier Waterfall 70/30 and Second Tier 60/40
Scenario V
Recoveries						$	100,000,000
Legal			25	%		$	25,000,000
Net						$	75,000,000
RS Target Ret						$	13,000,000
						RS				SPEX				Tot				Bal to apply
Fixed Consid							4,000,000				0				4,000,000				75,000,000
Initial Return							0				8,000,000				8,000,000				67,000,000
Target Return							9,000,000				0				9,000,000				58,000,000
Waterfall			A				2,000,000				27,000,000				29,000,000				29,000,000
			B				11,600,000				17,400,000				29,000,000				0
							26,600,000				52,400,000				79,000,000
							33.67	%			66.33	%

 

Exhibit D

LOCK-UP AGREEMENT

[__], 2013

Ladies and Gentlemen:

           The undersigned is a beneficial owner of shares of capital stock, or securities convertible into or exercisable or exchangeable for the capital stock (each, a “ Company Security ”) of Spherix Incorporated, a Delaware corporation (the “ Company ”).

1.            Lockup.   For other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees, for the benefit of the Company, that, during the period beginning on the date hereof and ending on the ealier of (i) the date that the undersigned no longer owns Company Securities and (ii) the date that the Company’s Common Stock achieves a trading volume of at least 50,000 shares per day and a closing price of at least $15 per share for a period of five consecutive days (the “ Lockup Period ”), the undersigned will not directly or indirectly, (i) offer, sell, offer to sell, contract to sell, hedge, pledge, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or sell (or announce any offer, sale, offer of sale, contract of sale, hedge, pledge, sale of any option or contract to purchase, purchase of any option or contract of sale, grant of any option, right or warrant to purchase or other sale or disposition), or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future), any Company Security, beneficially owned, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), by the undersigned on the date hereof or hereafter acquired or (ii) enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any Company Security, whether or not any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of any Company Security.

2.     Leak-Out Provision .  During the Lockup Period, the undersigned may sell the Company Securities provided that the undersigned does not sell more than 10% of the average daily volume of the common stock in any given trading day, as reported by the NASDAQ Stock Market.

3. Permitted Transfer.   Notwithstanding the foregoing, the undersigned (and any transferee of the undersigned) may transfer any Company Security: (i) as a bona fide gift or gifts, provided that prior to such transfer the donee or donees thereof agree in writing to be bound by the restrictions set forth herein, (ii) to any trust, partnership, corporation or other entity formed for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, provided that prior to such transfer a duly authorized officer, representative or trustee of such transferee agrees in writing to be bound by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, (iii) to non-profit organizations qualified as charitable organizations under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or (iv) if such transfer occurs by operation of law, such as rules of descent and distribution, statutes governing the effects of a merger or a qualified domestic order, provided that prior to such transfer the transferee executes an agreement stating that the transferee is receiving and holding any Company Security subject to the provisions of this Letter Agreement. For purposes hereof, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

3.            Opinion of Counsel .  Any Company Security of the undersigned shall contain a restrictive “lock-up” legend governed by the terms of this Letter Agreement.  The Company’s transfer agent shall only accept an opinion of counsel to remove such legend from counsel acceptable to Company.

4.            Governing Law. This Letter Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

5.            Miscellaneous. This Letter Agreement will become a binding agreement among the undersigned as of the date hereof.  This Letter Agreement (and the agreements reflected herein) may be terminated by the mutual agreement of the Company and the undersigned, and if not sooner terminated, will terminate upon the expiration date of the Lockup Period. This Letter Agreement may be duly executed by facsimile and in any number of counterparts, each of which shall be deemed an original, and all of which together shall be deemed to constitute one and the same instrument. Signature pages from separate identical counterparts may be combined with the same effect as if the parties signing such signature page had signed the same counterpart. This Letter Agreement may be modified or waived only by a separate writing signed by each of the parties hereto expressly so modifying or waiving such agreement.

[SIGNATURE PAGES FOLLOW]

     Very truly yours,                                                   

Number of shares of Common Stock owned: ________

Other Company Securities owned: ___________

Certificate Numbers: _____________________________

Accepted and Agreed to:

Spherix Incorporated

By:                                                                

     Name:

     Title:

 

  EXHIBIT E

REGISTRATION RIGHTS RIDER

 
 

I.1            Registration Statement .

 

(a)           As promptly as possible, and in any event on or prior to the date that is thirty (30) days from the Stock Consideration Issuance Date (as defined below) (the “Filing Date”), the Company shall prepare and file with the Securities and Exchange Commission (the ‘SEC”) a registration statement (the “Registration Statement”) covering the resale of the Registrable Securities (as defined below) for an offering to be made on a continuous basis pursuant to Rule 415; provided, however , that if at any time and notwithstanding the best efforts of the Company, the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 as a result of a characterization by the SEC of the transaction described by the Registration Statement as a primary offering by the Company, the Company shall use its best efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415. In the event that, despite the Company’s best efforts and compliance with the terms of this Section I.1 the SEC refuses to alter its position, the Company shall, (i) remove from the Registration Statement such portion of the Registrable Securities (the “ Cut Back Shares ” ) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 and the Company shall have no liability to the Seller as a result of the Registration Statement covering less than all of the Registrable Securities under the circumstances described in this proviso. The Company represents and warrants to the Seller that there are no circumstances of which it is currently aware that might cause the SEC to conclude that some or all of the Registrable Securities are not eligible to be made on a delayed or continuous basis under the provisions of Rule 415. Within nine (9) months, or such earlier time as permitted by the SEC, of the initial registration filed hereunder being declared effective, the Company shall file an additional registration statement containing the Cut Back Shares. With regard to the new Registration Statement, all of the provisions of this Section I.1 shall again be applicable to the Cut Back Shares. The Registration Statement shall be on Form S-1, Form S-3 or on such other appropriate form, in accordance with the Securities Act and the Exchange Act.

 

(b)           The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but in any event prior to the date that is ninety (90) days from the Stock Consideration Issuance Date (the “Required Effectiveness Date”), and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of the date that all shares of Common Stock covered by such Registration Statement have been sold or can be sold publicly under Rule 144 (the “Effectiveness Period”); provided that, upon notification by the SEC that a Registration Statement will not be reviewed or is no longer subject to further review and comments, the Company shall request acceleration of such Registration Statement within three (3) Trading Days after receipt of such notice and request that it become effective on 4:00 p.m. New York City time on the Registration Statement Effective Date and promptly file a prospectus supplement for any Registration Statement, whether or not required under Rule 424 (or otherwise).

 

(c)           The Company shall notify the Seller in writing promptly after receiving notification from the SEC that the Registration Statement has been declared effective.

 

(d)           Notwithstanding anything in the Agreement or this Rider to the contrary, after 90 consecutive Trading Days of continuous effectiveness of the initial Registration Statement filed and declared effective pursuant to this Agreement, the Company may, by written notice to the Seller, suspend sales under a Registration Statement after the Registration Statement Effective Date thereof and/or require that the Seller immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a material merger, acquisition or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintain a Registration Statement at such time or (B) it is in the best interests of the Company to suspend sales under such registration at such time. Upon receipt of such notice, the Seller shall immediately discontinue any sales of Registrable Securities pursuant to such registration until the Seller is advised in writing by the Company that the current Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. The Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and the ability of the Seller to publicly resell their Registrable Securities pursuant to such effective Registration Statement.

 

(e)            Piggyback Registration . If the Company at any time proposes to register any of its securities under a Registration Statement (except with respect to Registration Statements on Forms S-4, S-8 or another form not available for registering the Registrable Securities for sale to the public), for sale to the public, each such time it will give written notice at the applicable address of record to the Seller of its intention to do so. Upon the written request of any of the Seller, given within 30 days after delivery to the Seller of such notice, the Company will, subject to the limits contained herein, use its best efforts to cause such Registrable Securities to be included in any such Registration Statement to be filed by the Company, all to the extent required to permit the sale or other disposition of said Registrable Securities; provided , however , that if the Company is advised in writing in good faith by any managing underwriter of the securities of the Company being offered in a public offering pursuant to such Registration Statement that the amount to be sold by the Seller is greater than the amount which can be offered without adversely affecting the offering, the Company may reduce the amount offered for the accounts of the Seller to a number deemed satisfactory by such managing underwriter.

 

I.2            Registration Procedures . In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)           Not less than two (2) Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto, furnish via email to Seller copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the review of the Seller. The Company shall reflect in each such document when so filed with the SEC such comments regarding the Seller and the plan of distribution as the Seller may reasonably and promptly propose no later than one (1) Trading Day after the Seller has been so furnished with copies of such documents as aforesaid.

 

(b)           Prepare and file with the SEC such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to the Registration Statement or any amendment thereto; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Seller thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c)           Notify the Seller as promptly as reasonably possible, and (if requested by the Seller confirm such notice in writing no later than two Trading Days thereafter, of any of the following events: (i) the SEC notifies the Company whether there will be a “review” of any Registration Statement; (ii) the SEC comments in writing on any Registration Statement; (iii) any Registration Statement or any post-effective amendment is declared effective; (iv) the SEC or any other Federal or state governmental authority requests any amendment or supplement to any Registration Statement or Prospectus or requests additional information related thereto; (v) the SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (vi) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vii) the financial statements included in any Registration Statement become ineligible for inclusion therein or any Registration Statement or Prospectus or other document contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(d)           Use its commercially reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible.

(e)           If requested by the Seller, provide the Seller without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

 

(f)           Promptly deliver to the Seller, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by the Seller in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.

 

(g)           Prior to any public offering of Registrable Securities, use its best efforts to register or qualify or cooperate with the selling Seller in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as the Seller requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided , however , that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

 

(h)           Cooperate with the Seller to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Agreement or this Rider and under law, of all restrictive legends, and to enable such certificates to be in such denominations and registered in such names as any such Seller may reasonably request.

 

(i)           Cooperate with any reasonable due diligence investigation undertaken by the Seller in connection with the sale of Registrable Securities, including, without limitation, by making available documents and information; provided that the Company will not deliver or make available to the Seller material, nonpublic information unless the Seller requests in advance in writing to receive material, nonpublic information and agrees to keep such information confidential.

 

(j)           Comply with all rules and regulations of the SEC applicable to the registration of the Registrable Securities.

 

(k)           It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Rider to the Agreement with respect to the Registrable Securities of the Seller that the Seller furnish to the Company such information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall complete and execute such documents in connection with such registration as the Company may reasonably request.

 

(l)           The Company shall comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Seller in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Seller are required to make available a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

 

I.3            Registration Expenses . The Company shall pay all fees and expenses incident to the performance of or compliance with (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market

 

I.4            Indemnification

 

(a)            Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless the Seller, the officers, directors, partners, members, agents and employees of the Seller, each Person who controls any the Seller (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section I.4 (c) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (y) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Stock Consideration, or (z) the status of Indemnified Party as holder of the Stock Consideration (unless, and only to the extent that, such action, suit or claim is based, including in part, upon a breach of the Seller’s representations, warranties or covenants under the Transaction Documents or any conduct by the Seller that constitutes fraud, gross negligence or willful misconduct) or (iv) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or arising out of or relating to 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 or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding the Seller furnished in writing to the Company by the Seller for use therein, or to the extent that such information relates to the Seller or the Seller's proposed method of distribution of Registrable Securities and was reviewed and expressly approved by the Seller in writing expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company to the Seller and the Seller seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.

 

(b)            Indemnification by Seller . The Seller shall, severally and not jointly, indemnify and hold harmless the Company and its directors, officers, agents and employees to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that (i) such untrue statements or omissions are based solely upon information regarding the Seller furnished to the Company by the Seller in writing expressly for use therein, or to the extent that such information relates to the Seller or the Seller’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by the Seller expressly for use in the Registration Statement, such Prospectus or such form of prospectus or in any amendment or supplement thereto. In no event shall the liability of the Seller hereunder be greater in amount than the dollar amount of the net proceeds received by the Seller upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

(c)            Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

(d)           An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

 

(e)            Contribution . If a claim for indemnification under Section I.4 (a ) or (b ) is unavailable to an Indemnified Party (by reason of public policy or otherwise), 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 and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section I.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 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 the immediately preceding paragraph. Notwithstanding the provisions of this Section I.4 (e ), the Seller will not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by the Seller from the sale of the Registrable Securities subject to the Proceeding exceed the amount of any damages that the Seller has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

 

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

I.5           Dispositions. The Seller agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell its Registrable Securities in accordance with the Prospectus. The Seller further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections I.2(c)(v), (vi) or (vii), the Seller will discontinue disposition of such Registrable Securities under the Registration Statement until the Seller is advised in writing by the Company that the use of the Prospectus, or amended Prospectus, as applicable, may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph

 

Capitalized Terms not otherwise defined in the Agreement or this Rider shall have the following definitions:

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Losses ” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

“ Person ” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.

 

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing

 

“ Prospectus ” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“ Registrable Securities ” means the Stock Consideration, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

 

“ Registration Statement ” means each registration statement required to be filed under hereunder, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre-and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

“ Registration Statement Effective Date ” means the date that the Registration Statement is first declared effective by the SEC.

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Stock Consideration ” means the common shares of Company Stock issued to the Seller pursuant to the Confidential Patent Purchase Agreement, as amended.

 

“ Stock Consideration Issuance Date ” means the date the Stock Consideration is issued to the Seller by the Company.

 

“ Transaction Documents ” means the Agreement and all schedules and exhibits thereto and this Rider.