Blueprint





 







Exhibit 10.2

 



REGISTRATION RIGHTS AGREEMENT

 


This
Registration Rights Agreement (the “Agreement”) is made
and entered into as of this 20th day of November,
2019 by and among SharpSpring, Inc., a Delaware corporation (the
“Company”), and the “Investors” named in
that certain Purchase Agreement by and among the Company and the
Investors (the “Purchase Agreement”). Capitalized terms
used herein have the respective meanings ascribed thereto in the
Purchase Agreement unless otherwise defined herein.

 


The
parties hereby agree as follows:

 

1. Certain
Definitions.

 


As used
in this Agreement, the following terms shall have the following
meanings:

 


“Common Stock” means the
Company’s common stock, par value $0.001 per share, and any
securities into which such shares may hereinafter be
reclassified.

 


“Investors” means the
Investors identified in the Purchase Agreement and any Affiliate or
permitted transferee of any Investor who is a subsequent holder of
any Registrable Securities.

 


“Prospectus” means (i) any
prospectus (preliminary or final) included in any Registration
Statement, 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 such Registration Statement and
by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated
by reference in such prospectus, and (ii) any “free writing
prospectus” as defined in Rule 405 under the 1933
Act.

 


“Register,”
“registered” and
“registration” refer to a
registration made by preparing and filing a Registration Statement
or similar document in compliance with the 1933 Act (as defined
below), and the declaration or ordering of effectiveness of such
Registration Statement or document.

 


“Registrable Securities”
means (i) the Shares and (ii) any other securities issued or
issuable with respect to or in exchange for the Shares, whether by
merger, charter amendment, or otherwise; provided, that, a security
shall cease to be a Registrable Security (and the Company shall not
be required to maintain the effectiveness of any, or file another,
Registration Statement hereunder with respect thereto) for so long
as (a) a Registration Statement with respect to the sale of such
Registrable Securities is declared effective by the SEC under the
1933 Act and such Registrable Securities have been disposed of by
the holder thereof in accordance with such effective Registration
Statement, (b) such Registrable Securities have been previously
sold in accordance with Rule 144, or (c) such securities become
eligible for resale without volume or manner-of-sale restrictions
and without current public information pursuant to Rule 144 as set
forth in a written opinion letter to such effect, addressed,
delivered and acceptable to the Transfer Agent and the affected
holders (assuming that such securities and any securities issuable
upon exercise, conversion or exchange of which, or as a dividend
upon which, such securities were issued or are issuable, were at no
time held by any Affiliate of the Company), as reasonably
determined by the Company, upon the advice of counsel to the
Company and the Transfer Agent has issued certificates for such
Registrable Securities to the holder thereof, or as such holder may
direct, without any restrictive legend.

 




1








 





 





“Registration Statement”
means any registration statement of the Company filed under the
1933 Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material
incorporated by reference in such Registration
Statement.

 


“Required Investors” means
each Investor, who, together with its Affiliates, beneficially owns
(calculated in accordance with Rule 13d-3 under the 1934 Act) at
least 25% of the Registrable Securities and (B) the Investors who,
together with their Affiliates, beneficially own (calculated in
accordance with Rule 13d-3 under the 1934 Act) at least a majority
of the Registrable Securities then owned by the
Investors.

 


“SEC” means the U.S.
Securities and Exchange Commission.

 


 “1933
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

 


“1934 Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

2. Registration.

 

(a) Registration
Statement. Promptly following
the closing of the purchase and sale of the securities contemplated
by the Purchase Agreement (the “Closing Date”) but no
later than thirty (30) days after the Closing Date (the
“Filing Deadline”), the Company shall prepare and file
with the SEC one Registration Statement on Form S-3 covering the
resale of the Registrable Securities. Subject to any SEC comments,
such Registration Statement shall include the plan of distribution
attached hereto as Exhibit
A; provided, however, that no
Investor shall be named as an “underwriter” in the
Registration Statement without the Investor’s prior written
consent. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits,
stock dividends or similar transactions with respect to the
Registrable Securities. Such Registration Statement shall not
include any shares of Common Stock or other securities for the
account of any other holder without the prior written consent of
the Required Investors. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration
of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Investors and their counsel prior to its filing
or other submission. If a Registration Statement covering the
Registrable Securities is not filed with the SEC on or prior to the
Filing Deadline, the Company will make pro rata payments to each
Investor, as liquidated damages and not as a penalty, in an amount
equal to 1.5% of the aggregate amount invested by such Investor
pursuant to the Purchase Agreement for each 30-day period or pro
rata for any portion thereof following the Filing Deadline for
which no Registration Statement is filed with respect to the
Registrable Securities. Such payments shall constitute the
Investors’ exclusive monetary remedy for such events, but
shall not affect the right of the Investors to seek injunctive
relief. Such payments shall be made to each Investor in cash no
later than three (3) Business Days after the end of each 30-day
period.

 


 




 

2








 





 




(b) Expenses.
The Company will pay all expenses associated with effecting the
registration of the Registrable Securities, including filing and
printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities
for sale under applicable state securities laws, listing fees,
documented fees and out-of-pocket expenses of one counsel to the
Investors up to an aggregate of $10,000 and the Investors’
other reasonable out-of-pocket expenses in connection with the
registration, but excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar
securities industry professionals with respect to the Registrable
Securities being sold.

 

(c) Effectiveness.

 

(i) The
Company shall use commercially reasonable efforts to have any
Registration Statement declared effective as soon as practicable.
The Company shall notify the Investors by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24)
hours, after any Registration Statement is declared effective and
shall simultaneously provide the Investors with copies of any
related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A) a
Registration Statement covering the Registrable Securities is not
declared effective by the SEC prior to the earlier of (i) five (5)
Business Days after the SEC shall have informed the Company that no
review of the Registration Statement will be made or that the SEC
has no further comments on the Registration Statement or (ii) the
90th
day after the Closing Date, or (B)
after a Registration Statement has been declared effective by the
SEC, sales cannot be made pursuant to such Registration Statement
for any reason (including without limitation by reason of a stop
order, or the Company’s failure to update the Registration
Statement), but excluding any Allowed Delay (as defined below) or
the inability of any Investor to sell the Registrable Securities
covered thereby due to market conditions, then the Company will
make pro rata payments to each Investor, as liquidated damages and
not as a penalty, in an amount equal to 1.5% of the aggregate
amount invested by such Investor pursuant to the Purchase Agreement
for each 30-day period or pro rata for any portion thereof
following the date by which such Registration Statement should have
been effective (the “Blackout Period”). Such payments
shall constitute the Investors’ exclusive monetary remedy for
such events, but shall not affect the right of the Investors to
seek injunctive relief. The amounts payable as liquidated damages
pursuant to this paragraph shall be paid monthly within three (3)
Business Days of the last day of each month following the
commencement of the Blackout Period until the termination of the
Blackout Period. Such payments shall be made to each Investor in
cash.

 

(ii) For
not more than twenty (20) consecutive days or for a total of not
more than forty-five (45) days in any twelve (12) month period, the
Company may suspend the use of any Prospectus included in any
Registration Statement contemplated by this Section in the event
that the Company determines in good faith that such suspension is
necessary to (A) delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the
time is not, in the good faith opinion of the Company, in the best
interests of the Company or (B) amend or supplement the affected
Registration Statement or the related Prospectus so that such
Registration Statement or Prospectus shall not include an 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 the Prospectus in light of the
circumstances under which they were made, not misleading (an
“Allowed Delay”); provided, that the Company shall
promptly (a) notify each Investor in writing of the commencement of
an Allowed Delay, but shall not (without the prior written consent
of an Investor) disclose to such Investor any material non-public
information giving rise to an Allowed Delay, (b) advise the
Investors in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay and (c) use
commercially reasonable efforts to terminate an Allowed Delay as
promptly as practicable.

 


 




 

3








 





 




(d) Rule
415; Cutback If at any time 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 under the 1933 Act or requires any Investor to be named as
an “underwriter”, the Company shall use its best
efforts to persuade the SEC that the offering contemplated by a
Registration Statement is a bona fide secondary offering and not an
offering “by or on behalf of the issuer” as defined in
Rule 415 and that none of the Investors is an
“underwriter”. The Investors shall have the right to
participate or have their counsel participate in any meetings or
discussions with the SEC regarding the SEC’s position and to
comment or have their counsel comment on any written submission
made to the SEC with respect thereto. No such written submission
shall be made to the SEC to which the Investors’ counsel
reasonably objects. In the event that, despite the Company’s
best efforts and compliance with the terms of this Section 2(d),
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
(collectively, the “SEC Restrictions”); provided,
however, that the Company shall not agree to name any Investor as
an “underwriter” in such Registration Statement without
the prior written consent of such Investor. Any cut-back imposed on
the Investors pursuant to this Section 2(d) shall be allocated
among the Investors on a pro rata basis, unless the SEC
Restrictions otherwise require or provide or the Investors
otherwise agree. No liquidated damages shall accrue as to any Cut
Back Shares until such date as the Company is able to effect the
registration of such Cut Back Shares in accordance with any SEC
Restrictions (such date, the “Restriction Termination
Date” of such Cut Back Shares). From and after the
Restriction Termination Date applicable to any Cut Back Shares, all
of the provisions of this Section 2 (including the liquidated
damages provisions) shall again be applicable to such Cut Back
Shares; provided, however, that (i) the Filing Deadline for the
Registration Statement including such Cut Back Shares shall be ten
(10) Business Days after such Restriction Termination Date, and
(ii) the date by which the Company is required to obtain
effectiveness with respect to such Cut Back Shares under Section
2(c) shall be the 60th
day immediately after the Restriction
Termination Date.

 

(e) Right
to Piggyback Registration.

 

(i) If
at any time following the date of this Agreement that any
Registrable Securities remain outstanding and are not freely
tradable under Rule 144 (A) there is not one or more effective
Registration Statements covering all of the Registrable Securities
and (B) the Company proposes for any reason to register any shares
of Common Stock under the 1933 Act (other than pursuant to a
registration statement on Form S-4 or Form S-8 (or a similar or
successor form)) with respect to an offering of Common Stock by the
Company for its own account or for the account of any of its
stockholders, it shall at each such time promptly give written
notice to the holders of the Registrable Securities of its
intention to do so (but in no event less than twenty (20) days
before the anticipated filing date) and, to the extent permitted
under the provisions of Rule 415 under the 1933 Act, include in
such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein
within ten (10) days after receipt of the Company’s notice (a
“Piggyback Registration”). Such notice shall offer the
holders of the Registrable Securities the opportunity to register
such number of shares of Registrable Securities as each such holder
may request and shall indicate the intended method of distribution
of such Registrable Securities.

 


 




 

4








 





 




(ii) Notwithstanding
the foregoing, (A) if such registration involves an underwritten
public offering, the Investors must sell their Registrable
Securities to, if applicable, the underwriter(s) at the same price
and subject to the same underwriting discounts and commissions that
apply to the other securities sold in such offering (it being
acknowledged that the Company shall be responsible for other
expenses as set forth in Section 2(b)) and subject to the Investors
entering into customary underwriting documentation for selling
stockholders in an underwritten public offering, and (B) if, at any
time after giving written notice of its intention to register any
Registrable Securities pursuant to Section 2(e)(i) and prior to the
effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason
not to cause such registration statement to become effective under
the 1933 Act, the Company shall deliver written notice to the
Investors and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration; provided, however, that nothing contained in this
Section 2(e)(ii) shall limit the Company’s liabilities and/or
obligations under this Agreement, including, without limitation,
the obligation to pay liquidated damages under this Section
2.

 

(iii) If
a Piggyback Registration is initiated as a primary underwritten
offering on behalf of the Company and the managing underwriter
advises the Company and the holders of Registrable Securities (if
any holders of Registrable Securities have elected to include
Registrable Securities in such Piggyback Registration) in writing
that in its reasonable and good faith opinion the number of shares
of Common Stock proposed to be included in such registration,
including all Registrable Securities and all other shares of Common
Stock proposed to be included on behalf of the Company in such
underwritten offering, exceeds the number of shares of Common Stock
which can be sold in such offering and/or that the number of shares
of Common Stock proposed to be included in any such registration
would adversely affect the price per share of the Common Stock to
be sold in such offering, the Company shall include in such
registration or takedown (i) first, the shares of Common Stock that
the Company proposes to sell; and (ii) second, the shares of Common
Stock requested to be included therein by holders of Registrable
Securities, allocated pro rata among all such holders on the basis
of the number of Registrable Securities owned by each such holder
or in such manner as they may otherwise agree.

 

3. Company
Obligations. The Company will
use commercially reasonable efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and
pursuant thereto the Company will, as expeditiously as
possible:

 

(a) use
commercially reasonable efforts to cause such Registration
Statement to become effective and to remain continuously effective
for a period that will terminate upon the earlier of (i) the date
on which all Registrable Securities covered by such Registration
Statement as amended from time to time, have been sold or otherwise
disposed of pursuant to the Registration Statement or in a
transaction in which the transferee receives freely tradable
shares., and (ii) the date on which the Registrable Securities no
longer constitute “Registrable Securities” pursuant to
the definition thereof (the “Effectiveness Period”) and
advise the Investors in writing when the Effectiveness Period has
expired;

 


 




 

5








 





 




(b) prepare
and file with the SEC such amendments and post-effective amendments
to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the
Effectiveness Period and to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered thereby;

 

(c) provide
copies to and permit counsel designated by the Investors to review
each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any document to which such counsel reasonably
objects;

 

(d) furnish
to the Investors and their legal counsel (i) promptly after the
same is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days
after the filing date, receipt date or sending date, as the case
may be) one (1) copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or
on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than
any portion thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of
copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as each
Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor
that are covered by the related Registration
Statement;

 

(e) use
commercially reasonable efforts to (i) prevent the issuance of any
stop order or other suspension of effectiveness and, (ii) if such
order is issued, obtain the withdrawal of any such order at the
earliest possible moment;

 


(f) prior to any public offering of Registrable
Securities, use commercially reasonable efforts to register or
qualify or cooperate with the Investors and their counsel in
connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or
blue sky laws of such jurisdictions requested by the Investors and
do any and all other commercially reasonable acts or things
necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section
3(f), or (iii) file a general consent to service of process in any
such jurisdiction;

 

(g) use
commercially reasonable efforts to cause all Registrable Securities
covered by a Registration Statement to be listed (or continue to be
listed) on each securities exchange, interdealer quotation system
or other market on which similar securities issued by the Company
are then listed;

 


 




 

6








 





 




(h) immediately
notify the Investors, at any time prior to the end of the
Effectiveness Period, upon discovery that, or upon the happening of
any event as a result of which, the Prospectus includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing,
and promptly prepare, file with the SEC and furnish to such holder
a supplement to or an amendment of such Prospectus as may be
necessary so that such Prospectus shall not include an 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 not misleading in light of the circumstances then
existing;

 

(i) otherwise
use commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934
Act, including, without limitation, Rule 172 under the 1933 Act,
file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Investors 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 Investors are
required to deliver 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; and make available to its
security holders, as soon as reasonably practicable, but not later
than the Availability Date (as defined below), an earnings
statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act, including Rule 158 promulgated thereunder
(for the purpose of this subsection 3(i), “Availability
Date” means the 45th day following the end of the fourth
fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter
is the last quarter of the Company’s fiscal year,
“Availability Date” means the 90th day after the end of
such fourth fiscal quarter); and

 

(j) With
a view to making available to the Investors the benefits of Rule
144 (or its successor rule) and any other rule or regulation of the
SEC that may at any time permit the Investors to sell shares of
Common Stock to the public without registration, the Company
covenants and agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144,
until the earlier of (A) six months after such date as all of the
Registrable Securities may be sold without restriction by the
holders thereof pursuant to Rule 144 or any other rule of similar
effect or (B) such date as all of the Registrable Securities shall
have been resold pursuant to a Registration Statement, Rule 144 or
otherwise in a transaction in which the transferee receives freely
tradable shares; (ii) file with the SEC in a timely manner all
reports and other documents required of the Company under the 1934
Act; and (iii) furnish to each Investor upon request, as long as
such Investor owns any Registrable Securities, (A) a written
statement by the Company that it has complied with the reporting
requirements of the 1934 Act, (B) a copy of the Company’s
most recent Annual Report on Form 10-K or Quarterly Report on Form
10-Q, and (C) such other information as may be reasonably requested
in order to avail such Investor of any rule or regulation of the
SEC that permits the selling of any such Registrable Securities
without registration. In the event that the Company fails to comply
with the requirements of this Section 3(j) after the 180th day
after the Closing Date, the Company will make pro rata payments to
each Investor, as liquidated damages and not as a penalty, in an
amount equal to 1.5% of the aggregate amount invested by such
Investor pursuant to the Purchase Agreement for each 30-day period
or pro rata for any portion thereof until such failure is
cured; provided,
however, that only Investors
that have not sold or otherwise disposed of all of their
Registrable Securities prior to such failure shall be entitled to
receive liquidated damages pursuant to this Section 3. Such
payments shall constitute the Investors’ exclusive monetary
remedy for such events, but shall not affect the right of the
Investors to seek injunctive relief. Such payments shall be made to
each Investor in cash no later than three (3) Business Days after
the end of each 30-day period.

 


 




 

7








 





 




4. Due
Diligence Review; Information.
The Company shall make available, during normal business hours, for
inspection and review by the Investors, advisors to and
representatives of the Investors (who may or may not be affiliated
with the Investors and who are reasonably acceptable to the
Company), all financial and other records, all SEC Filings (as
defined in the Purchase Agreement) and other filings with the SEC,
and all other corporate documents and properties of the Company as
may be reasonably necessary for the purpose of enabling the
Investors to obtain the benefits of the defense to liability
specified in Sections 11(b)(3) and 12(a)(2) of the 1933 Act
(collectively, the “Due Diligence Defense”), and cause
the Company’s officers, directors and employees, within a
reasonable time period, to supply all such information reasonably
requested by the Investors or any such representative, advisor or
underwriter in connection therewith (including, without limitation,
in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the
filing and effectiveness of the Registration Statement for the sole
purpose of enabling the Investors and such representatives,
advisors and underwriters and their respective accountants and
attorneys to conduct the inquiry required for the Investors to
obtain the benefit of the Due Diligence Defense with respect to
such Registration Statement.

 


Notwithstanding the
foregoing, the Company shall not disclose material nonpublic
information to the Investors, or to advisors to or representatives
of the Investors, unless prior to disclosure of such information
the Company identifies such information as being material nonpublic
information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept
such material nonpublic information for review and any Investor
wishing to obtain such information enters into an appropriate
confidentiality agreement with the Company with respect
thereto.

 

5. Obligations
of the Investors.

 

(a) Each
Investor shall furnish in writing to the Company such information
regarding itself, the Registrable Securities 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 execute such documents in
connection with such registration as the Company may reasonably
request. At least five (5) Business Days prior to the first
anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires
from such Investor if such Investor elects to have any of the
Registrable Securities included in the Registration Statement. An
Investor shall provide such information to the Company at least two
(2) Business Days prior to the first anticipated filing date of
such Registration Statement if such Investor elects to have any of
the Registrable Securities included in the Registration
Statement.

 

(b) Each
Investor, by its acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration
Statement hereunder, unless such Investor has notified the Company
in writing of its election to exclude all of its Registrable
Securities from such Registration Statement.

 


 




 

8








 





 




(c) Each
Investor agrees that, upon receipt of any notice from the Company
of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to
Section 3(h) hereof, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Investor
is advised by the Company that such dispositions may again be
made.

 

6. Indemnification.

 

(a) Indemnification
by the Company. The Company
will indemnify and hold harmless each Investor and its officers,
directors, members, managers, partners, trustees, employees and
agents and other representatives, successors and assigns, and each
other person, if any, who controls such Investor within the meaning
of the 1933 Act, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject
under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue
statement or omission or alleged omission of any material fact
contained in any Registration Statement, any Prospectus, or any
amendment or supplement thereof; (ii) any blue sky application or
other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or
all of the Registrable Securities under the securities laws thereof
(any such application, document or information herein called a
“Blue Sky Application”); (iii) the omission or alleged
omission to state in a Blue Sky Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (iv) any violation by the Company or its
agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such
registration; or (v) any failure to register or qualify the
Registrable Securities included in any such Registration Statement
in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake
such registration or qualification on an Investor’s behalf
and will reimburse such Investor, and each such officer, director
or member and each such controlling person for any documented legal
or other out-of-pocket expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided,
however,
that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by such Investor or any such controlling person in
writing specifically for use in such Registration Statement or
Prospectus.

 

(b) Indemnification
by the Investors. Each Investor
agrees, severally but not jointly, to indemnify and hold harmless,
to the fullest extent permitted by law, the Company, its directors,
officers, employees, stockholders and each person who controls the
Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expense (including reasonable
attorney fees) resulting from any untrue statement of a material
fact or any omission of a material fact required to be stated in
the Registration Statement or Prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by
such Investor to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement
thereto. In no event shall the liability of an Investor be greater
in amount than the dollar amount of the proceeds (net of all
expenses paid by such Investor in connection with any claim
relating to this Section 6 and the amount of any damages such
Investor has otherwise been required to pay by reason of such
untrue statement or omission) received by such Investor upon the
sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification
obligation.

 


 




 

9








 





 




(c) Conduct
of Indemnification Proceedings.
Any person entitled to indemnification hereunder shall (i) give
prompt notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided
that any person entitled to
indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such
fees or expenses, or (b) the indemnifying party shall have failed
to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of
any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if
the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such person);
and provided,
further,
that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its
obligations hereunder, except to the extent that such failure to
give notice shall materially adversely affect the indemnifying
party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection
with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time
for all such indemnified parties. No indemnifying party will,
except with the consent of the indemnified party, consent to entry
of any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation.

 

(d) Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such
fraudulent misrepresentation. In no event shall the contribution
obligation of a holder of Registrable Securities be greater in
amount than the dollar amount of the proceeds (net of all expenses
paid by such holder in connection with any claim relating to this
Section 6 and the amount of any damages such holder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the
sale of the Registrable Securities giving rise to such contribution
obligation.

 

7. Miscellaneous.

 

(a) Amendments
and Waivers. Any term of this
Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the
written consent of the Company and the Required
Investors.

 


 




 

10








 





 




(b) Notices.
All notices and other communications provided for or permitted
hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.

 

(c) Assignments
and Transfers by Investors. The
provisions of this Agreement shall be binding upon and inure to the
benefit of the Investors and their respective successors and
assigns. An Investor may transfer or assign, in whole or from time
to time in part, to one or more persons its rights hereunder in
connection with the transfer of Registrable Securities by such
Investor to such person, provided that such Investor complies with
all laws applicable thereto and provides written notice of
assignment to the Company promptly after such assignment is
effected.

 

(d) Assignments
and Transfers by the Company.
This Agreement may not be assigned by the Company (whether by
operation of law or otherwise) without the prior written consent of
the Required Investors; provided,
however, that in the event that
the Company is a party to a merger, consolidation, share exchange
or similar business combination transaction in which the Common
Stock is converted into the equity securities of another Person,
from and after the effective time of such transaction, such Person
shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term
“Company” shall be deemed to refer to such Person and
the term “Registrable Securities” shall be deemed to
include the securities received by the Investors in connection with
such transaction unless such securities are otherwise freely
tradable by the Investors after giving effect to such
transaction.

 

(e) Benefits
of the Agreement. The terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the
parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their
respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 

(f) Counterparts;
Faxes. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the
same instrument. This Agreement may be delivered via facsimile or
other form of electronic communication, which shall be deemed an
original.

 

(g) Titles
and Subtitles. The titles and
subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.

 

(h) Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any
respect.

 


 




 

11








 





 




(i) Further
Assurances. The parties shall
execute and deliver all such further instruments and documents and
take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

 

(j) Entire
Agreement. This Agreement is
intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.

 

(k) Governing
Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of
the State of New York without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the courts of the State of New
York located in New York County and the United States District
Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of
this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may
be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of
any such suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH
RESPECT TO OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

 


 




 

12








 






IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.

 

The
Company:                                                 
SHARPSPRING, INC.


 


 


 


By:
/s/ 
Brad Stanczak


Name:
Brad Stanczak


Title:
Chief Financial Officer


 


 




 

13








 





The
Investors:                                                  
SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P.


SPECIAL
SITUATIONS TECHNOLOGY FUND, L.P.


SPECIAL
SITUATIONS TECHNOLOGY FUND II, L.P.


 


 


 


By:
/s/ 
Adam Stettner


Name:
Adam Stettner


Title:
General Partner


 




 

14








 






GREENHAVEN ROAD
CAPITAL FUND 1, LP


GREENHAVEN ROAD
CAPITAL FUND 2, LP


 


By:
Greenhaven Road Investment Management, LP


As
Investment Manager


 


By:
/s/ Scott Stewart Miller,
Jr.


Name:
Scott Stewart Miller, Jr.


Title:
Authorized Signatory


 




 

15








 







Exhibit A



Plan of Distribution

 


The
selling stockholders, which as used herein includes donees,
pledgees, transferees or other successors-in-interest selling
shares of common stock or interests in shares of common stock
received after the date of this prospectus from a selling
stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions.
These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing
market price, at varying prices determined at the time of sale, or
at negotiated prices.

 


The
selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:

 



 
-

ordinary brokerage
transactions and transactions in which the broker-dealer solicits
purchasers;





 



 
-

block trades in
which the broker-dealer will attempt to sell the shares as agent,
but may position and resell a portion of the block as principal to
facilitate the transaction;





 



 
-

purchases by a
broker-dealer as principal and resale by the broker-dealer for its
account;





 



 
-

an exchange
distribution in accordance with the rules of the applicable
exchange;





 



 
-

privately
negotiated transactions;





 



 
-

short sales
effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;





 



 
-

through the writing
or settlement of options or other hedging transactions, whether
through an options exchange or otherwise;





 



 
-

broker-dealers may
agree with the selling stockholders to sell a specified number of
such shares at a stipulated price per share;





 



 
-

a combination of
any such methods of sale; and





 



 
-

any other method
permitted by applicable law.





 


The
selling stockholders may, from time to time, pledge or grant a
security interest in some or all of the shares of common stock
owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and
sell the shares of common stock, from time to time, under this
prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer
the shares of common stock in other circumstances, in which case
the transferees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this
prospectus.

 




 

16








 





 





In
connection with the sale of our common stock or interests therein,
the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn
engage in short sales of the common stock in the course of hedging
the positions they assume. The selling stockholders may also sell
shares of our common stock short and deliver these securities to
close out their short positions, or loan or pledge the common stock
to broker-dealers that in turn may sell these securities. The
selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions or
the creation of one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of
shares offered by this prospectus, which shares such broker-dealer
or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

 


The
aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the
common stock less discounts or commissions, if any. Each of the
selling stockholders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in
part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this
offering.

 


The
selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the
Securities Act of 1933, provided that they meet the criteria and
conform to the requirements of that rule.

 


The
selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests
therein may be "underwriters" within the meaning of Section 2(11)
of the Securities Act. Any discounts, commissions, concessions or
profit they earn on any resale of the shares may be underwriting
discounts and commissions under the Securities Act. Selling
stockholders who are "underwriters" within the meaning of Section
2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act.

 


To the
extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices
and public offering prices, the names of any agents, dealer or
underwriter, any applicable commissions or discounts with respect
to a particular offer will be set forth in an accompanying
prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this
prospectus.

 


In
order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions
only through registered or licensed brokers or dealers. In
addition, in some states the common stock may not be sold unless it
has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is
complied with.

 




 

17








 






 


 We have
advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares
in the market and to the activities of the selling stockholders and
their affiliates. In addition, to the extent applicable we will
make copies of this prospectus (as it may be supplemented or
amended from time to time) available to the selling stockholders
for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any
broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities
arising under the Securities Act.

 


We have
agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities
laws, relating to the registration of the shares offered by this
prospectus.

 


We have
agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective
until the earlier of (i) the date that such securities become
eligible for resale without volume or manner-of-sale restrictions
and without current public information pursuant to Rule 144 and
certain other conditions have been satisfied, or (ii) all of the
securities have been sold or otherwise disposed of pursuant to the
registration statement of which this prospectus forms a part or in
a transaction in which the transferee receives freely tradable
shares.

 


 


 




 

18