Restrictions on Transfer Clause Example from Business Contracts

Restrictions on Transfer. 5.1. Securities Law Restrictions. Subscriber agrees not to sell, transfer, pledge, hypothecate or otherwise dispose of all or any part of the Shares unless, prior thereto (a) a registration statement on the appropriate form under the Securities Act (the " Registration Statement") and applicable state securities laws with respect to the Shares proposed to be transferred shall then be effective or (b) the Company has received an opinion from counsel reasonably satisfactory to the Company, that suc...h registration is not required because such transaction is exempt from registration under the Securities Act and the rules promulgated by the Securities and Exchange Commission thereunder and with all applicable state securities laws. 5.2. Lock-up. Subscriber acknowledges that the Shares will not be transferrable, assignable or saleable until 30 days after the completion of the initial business combination, except to permitted transferees as described in the Registration Statement. Subscriber further acknowledges that the securities acquired or to be acquired hereby by the Subscriber as the underwriter of the Company's IPO, including the Subscriber's related persons, associated persons and affiliates (as those terms are defined in FINRA Rules 5110 and 5121) in connection with the IPO and as described in the Registration Statement, for the IPO, the prospectus for the Registration Statement, are subject to lock-up in compliance with FINRA Rule 5110(e)(1) for a period of 180 days from the effective date of the Registration Statement and can only be transferred or sold pursuant to the exceptions in FINRA Rule 5110(e)(2). Further, any such securities are subject to the limitation on registration rights in FINRA Rule 5110(g)(8). 5.3. Restrictive Legends. Any certificates representing the Shares shall have endorsed thereon legends substantially as follows: "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL, IS AVAILABLE." "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP." 5.4. Additional Shares or Substituted Securities. In the event of the declaration of a share dividend, the declaration of an extraordinary dividend payable in a form other than shares, a spin-off, a share split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding Shares without receipt of consideration, any new, substituted or additional securities or other property which are by reason of such transaction distributed with respect to any shares subject to this Section 5 or into which such shares thereby become convertible shall immediately be subject to this Section 5 and Section 3. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of shares subject to this Section 5 and Section 3. 5.5. Registration Rights. Subscriber acknowledges that the Shares are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only after certain conditions are met or they are registered pursuant to a registration rights agreement to be entered into with the Company prior to the closing of the IPO (the "Registration Rights Agreement"). The Company agrees to enter into the Registration Rights Agreement with Subscriber prior to or on the date of the IPO. View More