Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 2004 (this
"Agreement"), is made by DYNTEK, INC., a Delaware corporation (the "Company"),
and the Purchasers set forth on Schedule 1 hereto ("Purchasers").
W I T N E S S E T H:
WHEREAS, pursuant to an 9% Senior Subordinated Convertible Note Purchase
Agreement, dated as of the date hereof, between the Company and the Purchasers
(the "Purchase Agreement"), the Company has agreed to issue and sell to the
Purchasers an aggregate of $4,438,775 in principal amount of the Company's 9%
Senior Subordinated Convertible Notes due October 15, 2007 (the "Notes"), which
Notes are convertible into shares (the "Underlying Shares") of common stock of
the Company, $0.0001 par value per share ("Common Stock"), in accordance with
the terms of the Purchase Agreement and the Notes. Additionally, pursuant to the
Purchase Agreement, the Company has agreed to provide to the Purchasers one or
more warrants (the "Warrants") to purchase shares of the Company's Common Stock.
WHEREAS, to induce the Purchasers to execute and deliver the Purchase
Agreement, the Company has agreed to provide to the Purchasers and their
permitted assigns certain registration rights under the Securities Act of 1933,
as amended (the "Securities Act"), and applicable state securities laws; and
WHEREAS, this Agreement, together with the Notes, the Purchase Agreement
and the Warrants, are hereinafter collectively referred to as the "Transaction
Documents".
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the Company and the Purchasers hereby agree as
follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Claims" shall have the meaning ascribed to it in Section
6(a).
(b) "Effective Date" means the 90th day following the Closing
Date.
(c) "Excess Liability" shall have the meaning ascribed to it in
Section 6(e).
(d) "Filing Date" means the 30th day following the Closing Date.
(e) "Holder" or "Holders" mean a holder or holders of Registrable
Securities.
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(f) "Indemnified Person" shall have the meaning ascribed to it in
Section 6(a).
(g) "Registrable Securities" shall mean (i) the Shares and the
shares of Common Stock or other securities issued or issuable
to the Purchaser or its permitted transferee or designee (a)
upon conversion of the Notes and upon the exercise of the
Warrants, the Placement Warrants and the Additional Warrants
or payment of interest or any installment of Mandatory
Prepayment (as defined in the Notes), or (b) upon any
distribution with respect to, any exchange for or any
replacement of such Notes or Warrants, or (c) upon any
conversion, exercise or exchange of any securities issued in
connection with any such distribution, exchange or
replacement; (ii) securities issued or issuable upon any stock
split, stock dividend, recapitalization or similar event with
respect to such shares of Common Stock; and (iii) any other
security issued as a dividend or other distribution with
respect to, in exchange for, or in replacement of, the
securities referred to in the preceding clauses.
(h) "Registration Period" shall have the meaning ascribed to it in
Section 2(ii).
(i) "Registration Statement" means a registration statement or
registration statements of the Company filed under the
Securities Act covering Registrable Securities.
(j) "Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act and pursuant
to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of
such registration statement by the United States Securities
and Exchange SEC (the "SEC").
(k) "Rule 144" shall have the meaning ascribed to it in Section 8.
(l) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(m) "Shares" means the Underlying Shares and the Warrant Shares.
(n) "Violations" shall have the meaning ascribed to it in Section
6(a).
(o) "Warrant Shares" means the shares of Common Stock issued or
issuable upon exercise of, or otherwise in respect of, the
Warrants, the Additional Warrants and the Placement Warrants.
Capitalized terms defined in the introductory paragraph or the recitals to
this Agreement shall have the respective meanings therein provided. Capitalized
terms used herein and not
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otherwise defined herein shall have the meanings set forth in the Purchase
Agreement or elsewhere in the Transaction Documents.
2. Mandatory Registration.
(i) The Company shall prepare and file with the SEC not later than the
Filing Date a Registration Statement or Registration Statements (as necessary)
on Form S-3 covering the resale of all of the Registrable Securities, in an
amount sufficient to cover the resale of the Shares issuable upon conversion of
the Notes and exercise of the Warrants, the Additional Warrants, and the
Placement Warrants and payments of interest and installments of Mandatory
Prepayments (as defined in the Notes) on the Notes. In the event that Form S-3
is unavailable and/or inappropriate for such a registration of all the
Registrable Securities, the Company shall use such other form or forms as are
available and appropriate for such a registration. Any Registration Statement
prepared pursuant hereto shall register for resale at least 16,000,000 shares of
Common Stock, which includes such number of shares as are in good faith
estimated by the Company to be issuable due to the operation of the
anti-dilution provisions of the Purchase Agreement, the Warrants, the Additional
Warrants and the Placement Warrants. The Company shall use its commercially
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effective Date; provided that, if (1) the Registration
Statement is not filed by the Filing Date, (2) the Registration Statement is not
declared effective by the Effective Date, (3) the Registration Statement
required to be filed by the Company pursuant to this Section shall cease to be
available for use by any holder of the Note which is named therein as a selling
stockholder for any reason (including, without limitation, by reason of a stop
order, a material misstatement or omission in such Registration Statement or the
information contained in such Registration Statement having become outdated), or
(4) the Company fails, refuses or is otherwise unable timely to issue, Shares
upon conversion of the Notes or upon exercise of the Warrants in accordance with
the terms of the Notes and the Warrants, or certificates therefor as required
under the Transaction Documents, then the Company shall pay to each Purchaser an
amount equal to one percent (1%) per 30-day period of the purchase price paid
for the Notes purchased by such Purchaser. Thereafter, for every 30 days that
pass during which any of the events described in clauses (1), (2), (3) and (4)
above occurs and is continuing (the "Blackout Period"), the Company shall pay to
each Purchaser an additional amount equal to one percent (1%) of the purchase
price paid for the Notes purchased by such Purchaser. Each such payment shall be
due within five days of the end of each calendar month of the Blackout Period
until the termination of the Blackout Period and within five (5) days after such
termination. Such payments shall be in partial compensation to the Purchaser,
and shall not constitute the Purchaser's exclusive remedy for such events. The
Blackout Period shall terminate upon (x) the filing of the Registration
Statement in the case of clause (1) above; (y) the effectiveness of the
Registration Statement in the case of clauses (2) and (3) above; and (z)
delivery of such shares or certificates in the case of clause (4) above.
(ii) The Company shall use its best efforts to keep each Registration
Statement effective (pursuant to Rule 415 if available) at all times until such
date as is the earlier of (i) the
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date on which all of the Registrable Securities have been sold and (ii) the date
on which the Registrable Securities (in the opinion of counsel to each Purchaser
and reasonably acceptable to legal counsel for the Company) may be immediately
sold without restriction (including without limitation as to volume restrictions
by each holder thereof) without registration under the Securities Act (the
"Registration Period").
(iii) If any offering pursuant to a Registration Statement, pursuant to
Section 2 hereof, involves an underwritten offering (which may only be with the
consent of the Company), each Purchaser shall have the right to select legal
counsel and an investment banker or bankers and manager or managers to
administer to the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
(iv) If the Registrable Securities are registered for sale under the
Securities Act, the Purchasers shall cease any distribution of such shares under
the Registration Statement not more than once in any 12-month period, for up to
30 days, upon the request of the Company if: (x) such distribution would require
the public disclosure of material non-public information concerning any
transaction or negotiations involving the Company or any of its affiliates that,
in the good faith judgment of the Company's Board of Directors, would materially
interfere with such transaction or negotiations, (y) such distribution would
otherwise require premature disclosure of information that, in the good faith
judgment of the Company's Board of Directors, would adversely affect or
otherwise be detrimental to the Company or (z) the Company proposes to file a
registration statement under the Securities Act for the offering and sale of
securities for its own account in an underwritten offering and the managing
underwriter therefor shall advise the Company in writing that in its opinion the
continued distribution of the Registrable Securities would adversely affect the
offering of the securities proposed to be registered for the account of the
Company. The Company shall promptly notify each Purchaser at such time as (i)
such transactions or negotiations have been otherwise publicly disclosed or
terminated, or (ii) such non-public information has been publicly disclosed or
counsel to the Company has determined that such disclosure is not required due
to subsequent events.
(v) The Company shall permit a single firm of counsel designated by the
Purchasers to review such Registration Statement, and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof and any correspondence between the Company and the SEC relating to the
Registration Statement) (collectively, the "Registration Documents") a
reasonable period of time prior to their filing with the SEC, and not file (or
send) any Registration Documents in a form to which such counsel reasonably
objects and will not request acceleration of such Registration Statement without
prior notice to such counsel. The sections of such Registration Statement
covering information with respect to the Purchasers, the Purchaser's beneficial
ownership of securities of the Company or the Purchasers intended method of
disposition of Registrable Securities shall conform to the information provided
to the Company by each of the Purchasers.
3. Obligations of the Company. In connection with the registration of the
Registrable Securities, the Company shall do each of the following:
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(a) Prepare and file with the SEC the Registration Statements
required by Section 2 of this Agreement and such amendments (including
post-effective amendments) and supplements to the Registration Statements and
the prospectuses used in connection with the Registration Statements, as may be
necessary to keep the Registration Statements effective at all times during the
Registration Period, and, during the Registration Period, to comply with the
provisions of the Securities Act with respect to the disposition of all of the
Registrable Securities until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in the Registration Statements;
(b) The Company shall promptly furnish, after such Registration
Statements are prepared, filed with the SEC, publicly disseminated and
distributed and received by the Company, to each Purchaser and its legal
counsel, a copy of any such Registration Statement, each preliminary prospectus,
each final prospectus, and all amendments and supplements thereto and such other
documents as each Purchaser may reasonably request in order to facilitate the
disposition of its Registrable Securities;
(c) As soon as practicable for the Company and its counsel, but no
later than two business days after receipt thereof, furnish to each Purchaser
and its counsel copies of all correspondence between the Company and the SEC
with respect to any Registration Statement or amendment or supplement thereto
filed pursuant to this Agreement;
(d) Use commercially reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statements under such
other securities or blue sky laws, if applicable, of such jurisdictions as the
Purchaser may reasonably request, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof at all times during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period and (iv)
take all other actions necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions, except that the Company shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements of
this subsection (d) be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of process
in any such jurisdiction;
(e) List such securities on The Nasdaq National Market, if the
Company's securities are listed on such market, and all the other national
securities exchanges on which any securities of the Company are then listed, and
file any filings required by The Nasdaq National Market and/or such other
securities exchanges; provided, however, that no representation is made that the
Company will remain listed on the Nasdaq National Market;
(f) Notify each Purchaser and (if requested by such Purchaser)
confirm such advice in writing, (i) when or if the prospectus or any prospectus
supplement or post-effective
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amendment has been filed with the SEC, and, with respect to any Registration
Statement or any post-effective amendment, when the same has been declared
effective by the SEC, (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or the prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Shares for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose, and (v) of the happening of any event as a
result of which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(g) If any fact contemplated by clause (v) of paragraph (f), above,
shall exist, promptly prepare a supplement or post-effective amendment to the
Registration Statement or the related prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchaser of the Registrable Securities, the prospectus will
not contain an untrue statement of material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(h) If the Company has consented to an underwritten offering and
such offering is underwritten, at the request of any Purchaser, to furnish on
the effective date of the applicable Registration Statement and on the date that
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration: (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters and
to such Purchaser, stating that such registration statement has become effective
under the Securities Act and that (A) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Securities Act and (B) the registration statement, the related
prospectus and each amendment or supplement thereof comply as to form in all
material respects with the requirements of the Securities Act (except that such
counsel need not express any opinion as to financial statements or other
financial data contained therein) and (ii) a letter dated such date from the
Company's independent public accountants addressed to the underwriters and to
such Purchaser, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters may reasonably request;
(i) Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration
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Statement and to enable such certificates for the Registrable Securities to be
in such denominations or amounts, as the case may be, as the Purchaser may
reasonably request, and registered in such names as the Purchasers may request;
and, within three business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to each
Purchaser) an appropriate instruction and opinion of such counsel, satisfactory
to the Company, and the Purchaser and its legal counsel;
(j) Enter into customary agreements (including, in the case of an
underwritten offering, underwriting agreements in customary form, and including
provisions with respect to indemnification and contribution in customary form
and consistent with the provisions relating to indemnification and contribution
contained herein) and take all other customary and appropriate actions in order
to expedite or facilitate the disposition of such Registrable Securities and in
connection therewith:
(i) make such representations and warranties to each Purchaser
and the underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in similar underwritten offerings;
(ii) to the extent requested and customary for the relevant
transaction, enter into a securities sales agreement with any Purchaser and such
representative of such Purchaser as such Purchaser shall select relating to the
Registration and providing for, among other things, the appointment of such
representative as agent for such Purchaser for the purpose of soliciting
purchases of Registrable Securities, which agreement shall be customary in form,
substance and scope and shall contain customary representations, warranties and
covenants; and
(iii) deliver such customary documents and certificates as may
be reasonably requested by any Purchaser whose Registrable Securities are being
sold or by the managing underwriters, if any.
(k) The Company shall hold in confidence and not make any disclosure
of information concerning any Purchaser provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws and/or the requests of any self-regulatory organizations, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning any Purchaser is sought
in or by a court or governmental body of competent jurisdiction, give prompt
notice to such Purchaser prior to making such disclosure, and allow such
Purchaser, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
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4. Obligations of the Purchaser to Provide Information. In connection with
the registration of the Registrable Securities, each Purchaser shall furnish 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 requested in writing by the Company to effect the
registration of such Registrable Securities, and each Purchaser shall execute
any and all such documents in connection with such registration as the Company
and its legal counsel may reasonably request. At least ten business days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Purchaser in writing of the information the Company requires
of any Purchaser to be included in the Registration Statement. Each Purchaser
shall give sufficient notice to the Company before selling any Registrable
Securities so that the Company may prepare and file any necessary post-effective
amendments to the Registration Statement or such additional filings as shall be
necessary or desirable.
5. Expenses of Registration. All expenses and fees, other than Purchaser's
brokerage discounts or commissions, incurred in connection with registrations,
filings or qualifications pursuant to Section 3, including, without limitation,
all registration, listing, and qualification fees, printing and accounting fees,
and the fees and disbursements of counsel for the Company, and the fees and
disbursements of one counsel to the Purchasers with respect to each Registration
Statement filed pursuant hereto, shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) The Company will indemnify and hold harmless the Purchasers,
their investment advisor and sub-advisors, their officers, directors, members,
partners and shareholders, and each person, if any, who controls any Purchasers
within the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such Registration Statement,
or contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
to state therein any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state or foreign securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state or
foreign
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securities law (the matters in foregoing clauses (i) through (iii) being,
collectively, "Violations"). The Company shall, subject to the provisions of
Section 6(b) below, reimburse each Purchaser, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees for one counsel
to the Purchasers and other reasonable costs and expenses incurred by it in
connection with the investigation or defense of any such violation or Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (i) apply to any Claim
arising out of or based upon reliance upon information furnished in writing to
the Company by or on behalf of any Indemnified Person for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) with respect to any preliminary prospectus, inure to
the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the final prospectus, as then amended or supplemented, if such final
prospectus was timely made available by the Company pursuant to Section 3(b)
hereof; (iii) be available to the extent that such Claim is based upon a failure
of any Purchaser to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the
Company pursuant to Section 3(b) hereof; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by any Purchaser pursuant to Section 9.
(b) Each Purchaser will indemnify the Company and its officers and
directors against any Claims arising out of or based upon a Violation which
occurs in reliance upon information furnished in writing to the Company, by or
on behalf of such Purchaser, for use in connection with the preparation of the
Registration Statement (including any modifications, amendments or supplements
thereto), subject to such limitations and conditions as are applicable to the
indemnification provided by the Company in this Section 6; provided, however,
that in no event shall any indemnity by such Purchaser under this Section 6
exceed the amount of the net proceeds received by such Purchaser in connection
with the offering effected through such Registration Statement.
(c) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and to the
extent that the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnified
Person, provided, however, that an Indemnified Person shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
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indemnifying party, the representation by such counsel of the Indemnified Person
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person and any other party
represented by such counsel in such proceeding. In such event, the Company shall
pay for only one legal counsel for the Purchasers, and such legal counsel shall
be selected by the Purchasers. The failure to deliver written notice to an
indemnifying party within a reasonable time after the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person under this Section 6, except to the extent that the
indemnifying party is materially prejudiced in its ability to such action. The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
(d) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, 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 such
Indemnified Person of an unconditional and irrevocable release from all
liability in respect of such claim or litigation.
(e) Notwithstanding the foregoing, to the extent that any provisions
relating to indemnification or contribution contained in the underwriting
agreements entered into among the Company, the underwriters and any Purchaser in
connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in such underwriting agreements shall be
controlling as to the Registrable Securities included in the public offering.
7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited under applicable law, the indemnifying party
agrees to contribute to the amount paid or payable by such indemnified party as
a result of such loss, claim, damage, liability or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and the Indemnified Person on the other hand in connection with the
statements or omissions which resulted in such Claim, as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the Indemnified Person shall be determined by reference to, among other
things, whether the untrue statement of a material fact or the omission to state
a material fact on which such Claim is based relates to information supplied by
the indemnifying party or by the Indemnified Person, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding the forgoing, (a) no contribution
shall be made under circumstances where the payor would not have been liable for
indemnification under the fault standards set forth in Section 6, (b) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net proceeds received
by such seller from the sale of such Registrable Securities. The Company and the
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if any
Purchaser and any
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other party were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in this Section.
8. Reports Under Exchange Act. With a view to making available to the
Purchasers the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Purchasers to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) furnish to any Purchaser so long as such Purchaser owns
Shares or Notes promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of the Securities Act and
the Exchange Act, (ii) a copy of the most recent annual or periodic report of
the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Purchaser to sell such securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by any Purchaser to any transferee of the Registrable
Securities or Notes held by such Purchaser if: (a) such Purchaser agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment; (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of such
transferee or assignee; (c) at or before the time the Company receives the
written notice contemplated by clause (b) of this sentence, the transferee or
assignee agrees in writing to be bound by all of the provisions contained
herein; and (d) the transfer of the relevant Registrable Securities complies
with the restrictions set forth in Section 4 of the Purchase Agreement.
10. Amendment of Registration Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and each Purchaser. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon such Purchaser
and the Company.
11. Termination of Registration Rights. The obligations of the Company
under this Agreement shall terminate on the earlier of (i) the sale of the
Registrable Securities pursuant to an effective registration statement and (ii)
with respect to each Purchaser, if such Purchaser is eligible to sell under Rule
144(k) under the Securities Act.
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12. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities or Notes convertible into such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities or Notes.
(b) Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be effective upon personal
delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at (i) the address set forth
below or (ii) at such other addresses as a party may designate by ten days
advance written notice to each of the other parties hereto.
COMPANY: DynTek, Inc.
00000 Xxx Xxxxxx Xxx.
Xxxxxx, XX 00000
Attention:
Tel.: (000) 000-0000
Fax: (000) 000-0000
With copies to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
PURCHASERS:
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Tel.:
Fax:
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000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Tel.:
Fax:
With copies to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York, without giving effect to
conflicts of laws issues. Each of the parties agrees to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. This Agreement may be signed in two or more counterparts, each of
which shall be deemed an original. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such validity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in any other
jurisdiction. Subject to the provisions of Section 10 hereof, this Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement.
(e) This Agreement, together with the other Transaction Documents,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure for the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
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(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The Company acknowledges that any failure by the Company to
perform its obligations under Section 2, or any delay in such performance could
result in direct and indirect damages to the Purchasers, and the Company agrees
that, in addition to any other liability the Company may have by reason of any
such failure or delay, the Company shall be liable for all direct and
consequential damages caused by any such failure or delay. Nothing herein shall
limit each Purchaser's right to pursue any claim seeking such direct or
consequential damages.
(i) The initial number of Registrable Securities included in any
Registration Statement and each increase to the number of Registrable Securities
included therein shall be allocated pro rata among the Purchasers based on the
number of Registrable Securities held by each Purchaser at the time of such
establishment or increase, as the case may be. In the event a Purchaser shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included in a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Purchasers, pro rata based on the number of shares of
Registrable Securities then held by such Purchasers. For the avoidance of doubt,
the number of Registrable Securities held by a Purchaser shall be determined as
if all Warrants then outstanding and held by a Purchaser were exercised for
Registrable Securities.
(j) The Company acknowledges that the obligations of each Purchaser
under this Agreement, are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under this Agreement. The
decision of each Purchaser to enter into this Agreement has been made by such
Purchaser independently of any other Purchaser. The Company further acknowledges
that nothing contained in this Agreement, and no action taken by any Purchaser
pursuant hereto (including, but not limited to, the (i) inclusion of a Purchaser
in a Registration Statement and any amendments or supplements thereto and (ii)
review by, and consent to, such Registration Statement and any amendments or
supplements thereto by a Purchaser), shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated hereby. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation, the rights rising out of
this Agreement, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any proceeding for such purpose.
(k) Each Purchaser has been represented by its own separate legal
counsel in their review and negotiation of this Agreement. For reasons of
administrative convenience only, this Agreement has been prepared by counsel for
one of the Purchasers. Such counsel does not represent all of the Purchasers but
only such Purchaser and the other Purchasers have retained
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their own individual counsel with respect to the transactions contemplated
hereby. The Company has elected to provide all Purchasers with the same terms
and Agreement for the convenience of the Company and not because it was required
or requested to do so by the Purchasers. The Company acknowledges that such
procedure with respect to this Agreement in no way creates a presumption that
the Purchasers are in any way acting in concert or as a group with respect to
this Agreement or the transactions contemplated hereby or thereby.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK,
THE EXECUTION PAGE FOLLOWS.
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IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by the undersigned as of the date set forth above.
DYNTEK, INC.
By:
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Name:
Title:
By:
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Name:
Title:
By:
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Name:
Title:
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SCHEDULE 1
1
