REGISTRATION RIGHTS AGREEMENT
Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT, dated as of December 21, 2005, by and between Datawave Systems
Inc., a Delaware corporation (the “Company”), Sigma Opportunity Fund, LLC, a Delaware limited
liability company (the “Rightsholder”), and, solely for purposes of Section 3 and the last sentence
of Section 4(a)(i) hereof, Integrated Technologies & Systems Ltd., a British Virgin Islands company
(“IT&S”).
WHEREAS, this Agreement has been entered into in connection with the purchase by the
Rightsholder from Integrated Technologies & Systems Ltd. of a Promissory Note (the “Note”), dated
February 1, 2005, in the aggregate principal amount of $600,000, which Note is convertible into
7,500,000 shares (the “Shares”) of common stock (the “Common Stock”) of the Company;
WHEREAS, the Company has consented to the transfer of the Note to Rightsholder; and
WHEREAS, in consideration of the Rightsholder purchasing the Note and becoming involved with
the Company, the Company has agreed to provide certain registration rights under the Securities Act
of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute
(collectively, the “Securities Act”), and applicable state securities laws.
NOW, THEREFORE, it is agreed as follows:
1. Registerable Securities. The term “Registerable Securities” shall mean (i) the Shares,
and (ii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with respect to, or in
exchange for, or in replacement of, the Shares. For the purposes of this Agreement, securities
will cease to be Registerable Securities when (A) such Registerable Securities are distributed to
the public pursuant to the Securities Act, or pursuant to an exemption from the registration
requirements of the Securities Act, including, but not limited to, Rules 144 and 144A promulgated
under the Securities Act, (B) such Registerable Securities are eligible for immediate resale
pursuant to Rule 144(k) promulgated under the Securities Act, or (C) such Registerable Securities
have been otherwise transferred and the Company, in accordance with applicable laws and
regulations, has delivered new certificates or other evidences of ownership for such securities
which are not subject to any stop transfer order or other restriction on transfer and such
Registerable Securities may be publicly resold (without volume or method of sale restrictions)
without registration under the Securities Act.
2. Registration Rights.
(a) The Company shall file a registration statement to register the Registerable Securities,
or the resale thereof, within 60 days after the date hereof, and will use its best commercially
reasonable efforts to cause such registration statement to become effective as soon as practicable
thereafter.
(b) If, at any time commencing after the date hereof and on or prior to two years from the
date hereof, the Company proposes to file a registration statement (a “Registration Statement”)
under the Securities Act with respect to an offering by the Company or any selling stockholders of
any of its equity securities (other than a registration statement on Form S-4 or Form S-8, or any
successor form or a registration statement filed solely in connection with an exchange offer, a
business combination transaction or an offering of securities solely to the existing stockholders
or employees of the Company), then the Company shall in each case give written notice (the
“Notice”) of such proposed filing to the Rightsholder at least twenty (20) days before the
anticipated filing date of such Registration Statement, which Notice shall offer the Rightsholder
the opportunity to include in such Registration Statement such amount of Registerable Securities
that are not then registered pursuant to an effective registration statement as they may request.
The Rightsholder shall advise the Company of such election in writing within ten (10) days after
the date of receipt of the Notice, specifying the amount of Registerable Securities for which
registration is requested (the “Election”). The Company shall include in any such Registration
Statement all Registerable Securities so requested to be included. Notwithstanding the foregoing,
if the underwriter(s) of any such offering of the Company shall be of the good faith opinion that
the total amount or kind of securities held by the Rightsholder and any other persons or entities
entitled to be included in such offering would adversely affect the success of such offering, then
the amount of securities to be offered for the accounts of Rightsholder and the other selling
securityholders included in the Registration Statement shall be reduced pro rata to the extent
necessary to reduce the total amount of securities to be included in such offering to the amount
recommended by the underwriter(s) thereof, whereupon the Company shall only be obligated to
register such limited portion (which may be none) of the Registerable Securities with respect to
which such Rightsholder have provided an Election. In no event shall the Company be required
pursuant to this Section 2(b) to reduce the amount of securities proposed to be registered by it
for its own account.
3. Registration Expenses.
IT&S shall pay all of the out-of-pocket expenses of the Company incurred in connection with
preparation and filing of the registration statement required to be filed pursuant to Section 2
hereof and any amendments or supplements thereto (including compliance with its obligations under
Section 4(a) below), and IT&S is included as a party to this Agreement expressly and solely for the
purposes of this Section 3 and the last sentence in Section 4(a)(i) hereof. Rightsholder shall be
responsible for and pay its own costs and expenses, including without limitation the costs of its
legal counsel in connection with the Registration Statement, and any expenses or commissions in
connection with the sale of its Registrable Securities.
4. Registration Obligations
(a) Obligations of the Company. The Company will, in connection with any registration
pursuant to Section 2 hereof:
(i) Prepare and file with the Securities and Exchange Commission (the “Commission”) a
Registration Statement with respect to the Registerable Securities in accordance with the method or
methods of distribution thereof as specified by the Rightsholder
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(except if otherwise directed by the Rightsholder); provided, however, that not
less than three business days prior to the filing of such Registration Statement or any related
prospectus or any amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (A) furnish to the Rightsholder and its legal
counsel, copies of all such documents proposed to be filed, and (B) at the request of the
Rightsholder cause its officers and directors, counsel and independent certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of counsel to the
Rightsholder, to conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall prepare and file with the Commission such post-effective amendments and supplements
to the Registration Statement as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registerable Securities until (A) such the securities cease to be
Registerable Securities or (B) two (2) years after the effective date of the Registration
Statement, whichever is earlier. Rightsholder will reimburse the Company for any reasonable out of
pocket expenses that the Company may incur for preparing and filing with the Commission such
post-effective amendments and supplements, other than ordinary filing and administrative expenses
associated with preparing and filing such post-effective amendments and supplements, if IT&S fails
to compensate the Company for such expenses, as provided in Section 3 of this Agreement, within 45
days after a request for compensation is made to IT&S by the Company. Upon Rightsholder providing
such compensation, Rightsholder will succeed the Company in the Company’s right to collect such
expenses from IT&S.
(ii) Notify the Rightsholder and its legal counsel as promptly as possible (A) with respect to
the Registration Statement or any post-effective amendment, when the same has become effective; (B)
of the issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registerable Securities or the initiation of any
action, claim, suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened (each, a
“Proceeding”) for that purpose; (C) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of the Registerable
Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for
such purpose; and (D) of the occurrence of any event that makes any statement made in the
Registration Statement or prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires any revisions to the
Registration Statement, prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit 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.
(iii) Furnish to the Rightsholder and its legal counsel, without charge, at least one
conformed copy of the Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be incorporated therein by
reference, 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
Commission.
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(iv) Prior to any public offering of the Registerable Securities, use reasonable efforts to
register or qualify or cooperate with the Rightsholder and its legal counsel in connection with the
registration or qualification (or exemption from such registration or qualification) of such
Registerable Securities for offer and sale under the securities or blue sky laws of such
jurisdictions within the United States as the Rightsholder requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective during the period when the
Registration Statement is effective and to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registerable Securities covered by
the Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any such jurisdiction
where it is not then so subject or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.
(v) Cooperate with the Rightsholder to facilitate the timely preparation and delivery of
certificates representing Registerable Securities that Rightsholder confirms to have been sold
pursuant to the Registration Statement, which certificates shall be free of all restrictive
legends, and to enable such Registerable Securities to be in such denominations and registered in
such names as the Rightsholder may request.
(vi) Use its reasonable efforts to cause all Registerable Securities relating to the
Registration Statement to be listed on any securities exchange, quotation system or market
(including Nasdaq), if any, on which similar securities issued by the Company are then listed.
(vii) Comply in all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 not later than 45 days after the end
of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal
year) commencing on the first day of the first fiscal quarter of the Company after the effective
date of the Registration Statement, which statement shall conform to the requirements of Rule 158.
(b) Obligations of Rightsholder. In connection with any registration of Registerable
Securities of the Rightsholder pursuant to Section 2 hereof:
(i) It shall be a condition precedent to the obligations of the Company to file the
registration statement pursuant to this Agreement that Rightsholder furnish to the Company such
information regarding the distribution of such Registerable Securities and Rightsholder and of the
intended method of disposition of such securities as shall be reasonably required to effect the
registration of the Registerable Securities, all as the Company may from time to time reasonably
request;
(ii) Rightsholder shall notify the Company in writing two business days in advance of selling
any Shares pursuant to the Registration Statement.
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(iii) Rightsholder, upon receipt of notice from the Company of the occurrence of any event
that makes any statement made in the Registration Statement or prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, prospectus or other documents so that,
in the case of the Registration Statement or the prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit 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, shall forthwith discontinue disposition of Registerable
Securities pursuant to the Registration Statement covering such Registerable Securities until
Rightsholder is advised in writing by the Company that the use of the applicable prospectus may be
resumed or until the Company delivers copies of supplemented or amended prospectuses.
5. Regulation M; Participation in Underwritten Registration. Rightsholder is
familiar with the provisions and restrictions of Regulation M under the Securities Exchange Act of
1934, and the rules and regulations thereunder, or any similar successor statute (collectively, the
“Exchange Act”), and understands that the anti-manipulation rules of Regulation M may apply to
sales of Shares in the market and to the activities of the Rightsholder and its affiliates.
Rightsholder shall comply with Regulation M in connection with any sales of its Registerable
Securities. Rightsholder further agrees that it may not participate in any underwritten
registration hereunder unless such Rightsholder (i) agrees to sell such Rightsholder’s securities
on the basis provided in any underwriting arrangements and (ii) completes and executes all
customary questionnaires, appropriate and limited powers of attorney, escrow agreements,
indemnities, underwriting agreements, lock-up agreements with respect to securities not being sold
and such other customary documents reasonably required under the terms of such underwriting
arrangement.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, Rightsholder and its respective officers, directors,
and members and each Person who controls (within the meaning of the Securities Act or the Exchange
Act) such Persons from and against any and all losses, claims, damages, liabilities (or actions or
proceedings in respect thereof, whether or not such indemnified party is a party thereto) and
expenses (including reasonable costs of investigation and legal expenses), joint or several (each,
a “Loss” and collectively “Losses”), arising out of or based upon (i) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement under which Registerable
Securities were registered under the Securities Act (including any final, preliminary or summary
prospectus contained therein or any amendment thereof or supplement thereto or any documents
incorporated by reference therein) or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements therein (in the
case of a prospectus or preliminary prospectus, in light of the circumstances under which they were
made) not misleading; provided, however, that the Company shall not be liable to any indemnified
party in any such case to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in any such Registration
Statement (including any final, preliminary or
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summary prospectus contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein) in reliance upon and in conformity with written
information furnished to the Company by Rightsholder expressly for use in connection with such
registration; This indemnity shall be in addition to any liability the Company may otherwise have.
Such indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of Rightsholder or any indemnified party and shall survive the transfer of such securities
by Rightsholder.
(b) Indemnification by the Rightsholder. Rightsholder agrees to indemnify and hold
harmless, to the full extent permitted by law, the Company, its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act and the Exchange Act)
from and against any Losses arising out of or based upon any untrue statement of a material fact or
any omission of a material fact required to be stated in the Registration Statement under which
such Registerable Securities were registered under the Securities Act (including any final,
preliminary or summary prospectus contained therein or any amendment thereof or supplement thereto
or any documents incorporated by reference therein), or necessary to make the statements therein
(in the case of a prospectus or preliminary prospectus, in light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that such untrue statement
or omission has been contained in any information furnished in writing by Rightsholder to the
Company specifically for inclusion in such Registration Statement. This indemnity shall be in
addition to any liability such Rightsholder may otherwise have. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of the Company or any
indemnified party. In no event shall the liability of Rightsholder hereunder be greater in amount
than the dollar amount of the gross proceeds before expenses and commissions to the Rightsholder
under the sale of the Registerable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided, that any delay or failure to so notify the
indemnifying party shall relieve the indemnifying party of its obligations hereunder only to the
extent, if at all, that it is actually and materially prejudiced by reason of such delay or
failure) and (ii) permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any Person entitled to
indemnification hereunder shall have the right to select and 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 in writing to pay such fees or
expenses, (B) the indemnifying party shall have failed to assume the defense of such claim within a
reasonable time after having received notice of such claim from the Person entitled to
indemnification hereunder and to employ counsel reasonably satisfactory to such Person, (C) in the
reasonable judgment of any such Person, based upon advice of its counsel, a conflict of interest
exists between such Person and the indemnifying party with respect to such claims or (D) the
indemnified party has reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or in addition to
those available to the indemnifying party (in which case, if the Person notifies the indemnifying
party, the indemnifying party shall not have the right to assume the defense of such
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claim on behalf of such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made without its
consent, but such consent may not be unreasonably withheld; provided, that an indemnifying party
shall not be required to consent to any settlement involving the imposition of any material
obligations on such indemnifying party other than financial obligations for which such indemnified
party will be indemnified hereunder. If the indemnifying party assumes the defense, the
indemnifying party shall have the right to settle such action without the consent of the
indemnified party; provided, that the indemnifying party shall be required to obtain such consent
(which consent shall not be unreasonably withheld) if the settlement includes any admission of
wrongdoing on the part of the indemnified party or any restriction on the indemnified party or its
officers or directors. No indemnifying party shall consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to each indemnified party of an unconditional release from all liability in respect to
such claim or litigation. The indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm at any one time from all such
indemnified party or parties.
7. Counterparts. This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
8. Entire Agreement. This Agreement and the documents and instruments and other agreements
among the parties hereto as contemplated by or referred to herein, constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof.
9. Severability. In the event that any provision of this Agreement or the application
thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or
unenforceable provision.
10. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction of any state or federal court within the State and City of New York,
in connection with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner authorized by the
laws of the State of New York for such persons and waives and
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covenants not to assert or plead any objection which they might otherwise have to such jurisdiction
and such process.
11. Assignment. The right to include Registerable Securities in a Registration Statement
pursuant to Section 2 may not be assigned.
12. Amendments and Waivers. Except as otherwise provided herein, the provisions of this
Agreement may not be amended, modified or supplemented without the written consent of the Company
and the Rightsholder. The Rightsholder or the Company may, by written notice to the others, (i)
waive any of the conditions to its obligations hereunder or extend the time for the performance of
any of the obligations or actions of the other, (ii) waive any inaccuracies in the representations
of the other contained in this Agreement or in any documents delivered pursuant to this Agreement,
(iii) waive compliance with any of the covenants of the other contained in this Agreement or (iv)
waive or modify performance of any of the obligations of the other. No action taken pursuant to
this Agreement, including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action or compliance with any
representation, warranty, condition or agreement contained herein. Waiver of the breach of any one
or more provisions of this Agreement shall not be deemed or construed to be a waiver of other
breaches or subsequent breaches of the same provisions.
13. Notices. All notices, requests, demands or other communications provided for herein
shall be in writing and shall be deemed to have been given when personally delivered or sent by (i)
registered or certified mail, return receipt requested, (ii) nationally recognized overnight
courier service or (iii) facsimile transmission electronically confirmed addressed if to the
Company, to Datawave Systems Inc., Wayne Interchange Plaza One, 000 Xxxxx 00 Xxxx, 0xx Xxxxx,
Xxxxx, XX 00000, Attn: Xxxxxx Xxxxxxx, Facsimile: (000) 000-0000; if to Rightsholder, to Sigma
Opportunity Fund, LLC, c/o Sigma Capital Advisors, managing member, 000 Xxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, XX 00000, Attn: Xxxx Xxxx, Facsimile: (000) 000-0000; with a copy to Xxxxxxxx & Xxxxx,
LLP, 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, XX 00000, Attn: Xxxxx X. Xxxxx, Esq., Facsimile: (000)
000-0000, if to IT&S, to Integrated Technologies & Systems Ltd., Akara Buildings, 24, Xx Xxxxxx
Street, Road Town, Tortola, British Virgin Islands, Facsimile: 011-44-208-871-1836; or to such
other person or address as either party shall designate to the other from time to time in writing
forwarded in like manner.
14. Other Remedies. Except as otherwise provided herein, any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
15. Further Assurances. Each party hereto covenants and agrees with all other parties
hereto to promptly execute, deliver, file and/or record such agreements, instruments, certificates
and other documents and to do and perform such other and further acts and things as any other party
hereto may reasonably request or as may otherwise be necessary or proper to consummate and perfect
the transactions contemplated hereby.
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16. Representations. The parties hereto warrant and agree as follows:
(a) Available Information. Rightsholder acknowledges to the Company that it is
familiar with the business, management, operations, financial condition and affairs of the Company
and is therefore able to evaluate the merits and risks of a purchase of the Note. The Company
represents to the Rightsholder that, to the best of the Company’s knowledge, the reports it has
filed with the Commission do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. To the best of the Company’s knowledge,
the Company has filed all reports required to be filed with the Commission since January 1, 2005.
(b) Restricted Securities. The Company covenants that, concurrently with the
execution of this Agreement, it consents to the transfer of the Note to Rightsholder and that, upon
request of Rightsholder, it will reissue a new promissory note in exchange for the Note upon the
same terms to Rightsholder in the name of Rightsholder. Rightsholder acknowledges that the
Company’s consent to the transfer of the Note from IT&S to Rightsholder is based on the exemption
referred to as the “Section 4(1-1/2)” exemption and is in reliance on the opinion provided by legal
counsel for IT&S, a copy of which was provided to Rightsholder and its legal counsel, and is in
reliance on the representations made by Rightsholder in this Section 16. Rightsholder
understands and agrees that the Note (including any new note issued in exchange therefor) will be
restricted within the meaning of the Securities Act, and may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an exemption therefrom. The Company
warrants that the Note (and any new note issued in exchange therefor) is valid and enforceable,
cannot be prepaid and is convertible into 7,500,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends, reorganizations and the like).
(c) Legend. Rightsholder understands and acknowledges that the Note and the
certificates representing the Shares upon conversion of the Note shall bear a legend substantially
as follows until (i) such securities shall have been registered under the Act; or (ii) in the
opinion of counsel for the Company such securities may be sold without registration under the
Securities Act as well as any applicable “Blue Sky” or state securities laws:
“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE
SECURITIES LAWS, OR UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.”
(d) Investment. The Note and, until effectiveness of a registration statement
registering the Shares for resale by Rightsholder, any Shares to be acquired by Rightsholder, will
be acquired for investment purposes only for Rightsholder’s own account and not with a view to the
distribution thereof.
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(e) Accredited Investor. Rightsholder is an “Accredited Investor” as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Rightsholder is able to
bear the economic risk of the purchase of the Note, including a complete loss of Rightsholder’s
investment in the Note.
(f) Financial Experience. The Rightsholder represents and warrants that by reason of
Rightsholder’s business or financial experience, Rightsholder has the capacity to protect
Rightsholder’s own interests in connection with the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by themselves
or their duly authorized respective officers, all as of the date first written above.
| DATAWAVE SYSTEMS INC. |
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| By: | /s/ Xxxxxx Xxxxxxx | |||
| Xxxxxx Xxxxxxx | ||||
| CEO | ||||
| |
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| SIGMA OPPORTUNITY FUND, LLC By: Sigma Capital Advisors, LLC, managing member |
||||
| By: | /s/ Xxxx Xxxx | |||
| Xxxx Xxxx | ||||
| Manager | ||||
| |
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| INTEGRATED TECHNOLOGIES & SYSTEMS LTD. |
||||
| By: | /s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx | ||||
| President | ||||
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