MINIMUM BORROWING NOTE REGISTRATION RIGHTS AGREEMENT
This Minimum Borrowing Note Registration Rights Agreement (this
"Agreement") is made and entered into as of July 28, 2004, by and
between Global Digital Solutions, Inc., a New Jersey corporation (the
"Company"), and Laurus Master Fund, Ltd. (the "Purchaser").
This Agreement is made pursuant to the Security Agreement, dated as of
the date hereof, by and between the Purchaser and the Company (as
amended, modified or supplemented from time to time, the "Security
Agreement"), and pursuant to the Notes and the Warrants referred to
therein.
The Company and the Purchaser hereby agree as follows:
Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings
given such terms in the Security Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Common Stock" means shares of the Company's common stock, par value
$0.001 per share.
"Effectiveness Date" means, (i) with respect to the initial
Registration Statement required to be filed hereunder, a date no later
than one hundred twenty days (120) following the date hereof and (ii)
with respect to each additional Registration Statement required to be
filed hereunder, a date no later than thirty (30) days following the
applicable Filing Date.
"Effectiveness Period" shall have the meaning set forth in Section
2(a).
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and any successor statute.
"Filing Date" means, with respect to (1) the Registration Statement
which is required to be filed with respect to the Loans evidenced by a
Minimum Borrowing Note made on the initial funding date, the date which
is thirty (30) days after the date hereof, (2) with respect to each
$500,000 tranche of Loans evidenced by a Minimum Borrowing Note funded
after the date hereof, the date which is thirty (30) days after such
funding of such additional $500,000 of Loans evidenced by a Minimum
Borrowing Note and (3) with respect to shares of Common Stock issuable
to the Holder as a result of adjustments to the Fixed Conversion Price
made pursuant to Section 3.4 of the Revolving Note, Section 3.5 of the
Minimum Borrowing Notes, or Section 4 of the Warrant or otherwise,
thirty (30) days after the occurrence such event or the date of the
adjustment of the Fixed Conversion Price.
"Holder" or "Holders" means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 5(c).
"Indemnifying Party" shall have the meaning set forth in Section 5(c).
"Notes" has the meaning set forth in the Security Agreement.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to the Prospectus, including post-
effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock issued upon
the conversion of the each Note and issuable upon exercise of the
Warrants.
"Registration Statement" means each registration statement required to
be filed hereunder, including the Prospectus therein, amendments and
supplements to such registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 424" means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
"Trading Market" means any of the NASD OTCBB, NASDAQ SmallCap Market,
the Nasdaq National Market, the American Stock Exchange or the New York
Stock Exchange
"Warrants" means the Common Stock purchase warrants issued pursuant to
the Security Agreement.
Registration.
On or prior to each Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415. Each Registration Statement shall be on Form SB-2 (except if
the Company is not then eligible to register for resale the Registrable
Securities on Form SB-2, in which case such registration shall be on
another appropriate form in accordance herewith). The Company shall
cause each Registration Statement to become effective and remain
effective as provided herein. The Company shall use its reasonable
commercial efforts to cause the first such Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event no later than the
Effectiveness Date. The Company shall use its reasonable commercial
efforts to cause any subsequent such Registration Statement to be
declared effective under the Securities Act as promptly as possible
after the filing thereof, but in any event no later than sixty (60)
days after the filing thereof. The Company shall use its reasonable
commercial efforts to keep each Registration Statement continuously
effective under the Securities Act until the date which is the earlier
date of when (i) all Registrable Securities covered by such
Registration Statement have been sold or (ii) all Registrable
Securities covered by such Registration Statement may be sold
immediately without registration under the Securities Act and without
volume restrictions pursuant to Rule 144(k), as determined by the
counsel to the Company pursuant to a written opinion letter to such
effect, addressed and acceptable to the Company's transfer agent and
the affected Holders (each, an "Effectiveness Period").
If: (i) any Registration Statement is not filed on or prior to the
applicable Filing Date for such Registration Statement; (ii) a
Registration Statement filed hereunder is not declared effective by the
Commission by the date required hereby with respect to such
Registration Statement; (iii) after a Registration Statement is filed
with and declared effective by the Commission, such Registration
Statement ceases to be effective (by suspension or otherwise) as to all
Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period applicable to such
Registration Statement (without being succeeded immediately by an
additional Registration Statement filed and declared effective) for a
period of time which shall exceed 30 days in the aggregate per year or
more than 20 consecutive calendar days (defined as a period of 365 days
commencing on the date such Registration Statement is declared
effective); or (iv) the Common Stock is not listed or quoted, or is
suspended from trading on any Trading Market for a period of three (3)
consecutive Trading Days (provided the Company shall not have been able
to cure such trading suspension within 30 days of the notice thereof or
list the Common Stock on another Trading Market); (any such failure or
breach being referred to as an "Event," and for purposes of clause (i)
or (ii) the date on which such Event occurs, or for purposes of clause
(iii) the date which such 30 day or 20 consecutive day period (as the
case may be) is exceeded, or for purposes of clause (iv) the date on
which such three (3) Trading Day period is exceeded, being referred to
as "Event Date"), then until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as liquidated damages and
not as a penalty, equal to 2.0% for each thirty (30) day period
(prorated for partial periods) on a daily basis of the original
principal amount of each applicable Minimum Borrowing Note. While such
Event continues, such liquidated damages shall be paid not less often
than each thirty (30) days. Any unpaid liquidated damages as of the
date when an Event has been cured by the Company shall be paid within
three (3) days following the date on which such Event has been cured by
the Company.
(c) Within three (3) business days of the Effectiveness Date, the
Company shall cause its counsel to issue a blanket opinion in the form
attached hereto as Exhibit A, to the transfer agent stating that the
shares are subject to an effective registration statement and can be
reissued free of restrictive legend upon notice of a sale by the
Purchaser and confirmation by the Purchaser that it has complied with
the prospectus delivery requirements, provided that the Company has not
advised the transfer agent orally or in writing that the opinion has
been withdrawn. Copies of the blanket opinion required by this Section
2(c) shall be delivered to the Purchaser within the time frame set
forth above.
Registration Procedures. If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable
Securities under the Securities Act, the Company will, as expeditiously
as possible:
prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities, respond as promptly as possible
to any comments received from the Commission, and use its best efforts
to cause such Registration Statement to become and remain effective for
the Effectiveness Period with respect thereto, and promptly provide to
the Purchaser copies of all filings and Commission letters of comment
relating thereto;
prepare and file with the Commission such amendments and supplements to
such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement and to keep such
Registration Statement effective until the expiration of the
Effectiveness Period applicable to such Registration Statement;
furnish to the Purchaser such number of copies of the Registration
Statement and the Prospectus included therein (including each
preliminary Prospectus) as the Purchaser reasonably may request to
facilitate the public sale or disposition of the Registrable Securities
covered by such Registration Statement;
use its commercially reasonable efforts to register or qualify the
Purchaser's Registrable Securities covered by such Registration
Statement under the securities or "blue sky" laws of such jurisdictions
within the United States as the Purchaser may reasonably request,
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;
list the Registrable Securities covered by such Registration Statement
with any securities exchange on which the Common Stock of the Company
is then listed;
immediately notify the Purchaser at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result
of which the Prospectus contained 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 light of the
circumstances then existing; and
make available for inspection by the Purchaser and any attorney,
accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the
attorney, accountant or agent of the Purchaser.
4. Registration Expenses. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the
Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or "blue sky" laws,
fees of the NASD, transfer taxes, fees of transfer agents and
registrars, fees of, and disbursements incurred by, one counsel for the
Holders are called "Registration Expenses". All selling commissions
applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Holders beyond those
included in Registration Expenses, are called "Selling Expenses." The
Company shall only be responsible for Registration Expenses.
5. Indemnification.
(a)In the event of a registration of any Registrable Securities under
the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Purchaser, and its officers, directors
and each other person, if any, who controls the Purchaser within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons
may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement under which such Registrable Securities were registered under
the Securities Act pursuant to this Agreement, any preliminary
Prospectus or final Prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse the Purchaser, and each such person for any reasonable
legal or other expenses 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 or on behalf of the Purchaser or any such
person in writing specifically for use in any such document.
(b)In the event of a registration of the Registrable Securities under
the Securities Act pursuant to this Agreement, the Purchaser will
indemnify and hold harmless the Company, and its officers, directors
and each other person, if any, who controls the Company within the
meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such persons may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact which was furnished in writing by the
Purchaser to the Company expressly for use in (and such information is
contained in) the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary Prospectus or final Prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and each such
person for any reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action, provided, however, that the Purchaser will
be liable in any such case if and only 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 in writing to
the Company by or on behalf of the Purchaser specifically for use in
any such document. Notwithstanding the provisions of this paragraph,
the Purchaser shall not be required to indemnify any person or entity
in excess of the amount of the aggregate net proceeds received by the
Purchaser in respect of Registrable Securities in connection with any
such registration under the Securities Act.
(c)Promptly after receipt by a party entitled to claim indemnification
hereunder (an "Indemnified Party") of notice of the commencement of any
action, such Indemnified Party shall, if a claim for indemnification in
respect thereof is to be made against a party hereto obligated to
indemnify such Indemnified Party (an "Indemnifying Party"), notify the
Indemnifying Party in writing thereof, but the omission so to notify
the Indemnifying Party shall not relieve it from any liability which it
may have to such Indemnified Party other than under this Section 5(c)
and shall only relieve it from any liability which it may have to such
Indemnified Party under this Section 5(c) if and to the extent the
Indemnifying Party is prejudiced by such omission. In case any such
action shall be brought against any Indemnified Party and it shall
notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with
counsel satisfactory to such Indemnified Party, and, after notice from
the Indemnifying Party to such Indemnified Party of its election so to
assume and undertake the defense thereof, the Indemnifying Party shall
not be liable to such Indemnified Party under this Section 6(c) for any
legal expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof; if the Indemnified Party retains
its own counsel, then the Indemnified Party shall pay all fees, costs
and expenses of such counsel, provided, however, that, if the
defendants in any such action include both the indemnified party and
the Indemnifying Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which
are different from or additional to those available to the Indemnifying
Party or if the interests of the Indemnified Party reasonably may be
deemed to conflict with the interests of the Indemnifying Party, the
Indemnified Party shall have the right to select one separate counsel
and to assume such legal defenses and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the Indemnifying Party as incurred.
(d)In order to provide for just and equitable contribution in the event
of joint liability under the Securities Act in any case in which either
(i) the Purchaser, or any officer, director or controlling person of
the Purchaser, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities
Act may be required on the part of the Purchaser or such officer,
director or controlling person of the Purchaser in circumstances for
which indemnification is provided under this Section 5; then, and in
each such case, the Company and the Purchaser will contribute to the
aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the
percentage that the public offering price of its securities offered by
the Registration Statement bears to the public offering price of all
securities offered by such Registration Statement, provided, however,
that, in any such case, (A) the Purchaser will not be required to
contribute any amount in excess of the public offering price of all
such securities offered by it pursuant to such Registration Statement;
and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 10(f) of the Act) will be entitled to
contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
6. Representations and Warranties.
(a)The Common Stock of the Company is registered pursuant to Section
12(b) or 12(g) of the Exchange Act and, except with respect to certain
matters which the Company has disclosed to the Purchaser on Schedule
12(u) to the Security Agreement, the Company has timely filed all proxy
statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has
filed [(i) its Annual Report on Form 10-K for the fiscal year ended
March 31, 2003 and (ii) its Quarterly Report on Form 10-Q for the
fiscal quarters ended June 30, 2003, September 30, 2003, December 31,
2003 and March 31, 2004] (collectively, the "SEC Reports"). Each SEC
Report was, at the time of its filing, in substantial compliance with
the requirements of its respective form and none of the SEC Reports,
nor the financial statements (and the notes thereto) included in the
SEC Reports, as of their respective filing dates, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the
SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed) and fairly present in
all material respects the financial condition, the results of
operations and the cash flows of the Company and its subsidiaries, on a
consolidated basis, as of, and for, the periods presented in each such
SEC Report.
(b)The Common Stock is listed for trading on the NASD OTCBB and
satisfies all requirements for the continuation of such listing. The
Company has not received any notice that its Common Stock will be
delisted from the NASD OTCBB or that the Common Stock does not meet all
requirements for the continuation of such listing.
(c)Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any
security under circumstances that would cause the offering of the
Securities pursuant to the Security Agreement to be integrated with
prior offerings by the Company for purposes of the Securities Act which
would prevent the Company from selling the Common Stock pursuant to
Rule 506 under the Securities Act, or any applicable exchange-related
stockholder approval provisions, nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause
the offering of the Common Stock to be integrated with other offerings
(other than such concurrent offering to the Purchaser).(d)The Warrants,
the Notes and the shares of Common Stock which the Purchaser may
acquire pursuant to the Warrants and the Notes are all restricted
securities under the Securities Act as of the date of this Agreement.
The Company will not issue any stop transfer order or other order
impeding the sale and delivery of any of the Registrable Securities at
such time as such Registrable Securities are registered for public sale
or an exemption from registration is available, except as required by
federal or state securities laws.
(e)The Company understands the nature of the Registrable Securities
issuable upon the conversion of each Note and the exercise of each
Warrant and recognizes that the issuance of such Registrable Securities
may have a potential dilutive effect. The Company specifically
acknowledges that its obligation to issue the Registrable Securities is
binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders
of the Company.
(f)Except for agreements made in the ordinary course of business, there
is no agreement that has not been filed with the Commission as an
exhibit to a registration statement or to a form required to be filed
by the Company under the Exchange Act, the breach of which could
reasonably be expected to have a material and adverse effect on the
Company and its subsidiaries, or would prohibit or otherwise interfere
with the ability of the Company to enter into and perform any of its
obligations under this Agreement in any material respect.(g)The Company
will at all times have authorized and reserved a sufficient number of
shares of Common Stock for the full conversion of each Note and
exercise of the Warrants.
7. Each Holder holding Registrable Shares to be included in any
registration shall furnish to Company such information regarding the
Holder and the disposition proposed by the Holder as Company may
reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement
8. With a view to making available to the Holders the benefits
of Rule 144 promulgated under the Securities Act and any other rule or
regulation of the Commission that may, at any time, permit Holders to
sell securities of Company to the public without registration, Company
agrees to:
8.1 make and keep available adequate current public information
as described in paragraph (c) of Rule 144 under the Securities Act;
8.2 file with the Commission in a timely manner all reports and
other documents required to be filed by Company under the Securities
Act and the Exchange Act, as amended; and
8.3 furnish to each Holder, upon request, a written statement by
Company as to its compliance with the requirements of said paragraph (c)
of Rule 144, and of the Exchange Act, a copy of the most recent annual
and quarterly reports of Company, and such other reports and documents of
company as any such holder may reasonably request to avail itself of said
Rule 144 or any similar rule or regulation of the Commission allowing it
to sell any such securities without registration.
9. Miscellaneous.
Remedies. In the event of a breach by the Company or by a Holder, of
any of their respective obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including
recovery of damages, will be entitled to specific performance of its
rights under this Agreement.
(b) No Piggyback on Registrations. Except as set forth on Schedule
9(b) hereto, neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof
enter into any agreement providing any such right for inclusion of
shares in the Registration Statement to any of its security holders.
Except as and to the extent specified in Schedule 9(b) hereto, the
Company has not previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person
that have not been fully satisfied.
(c) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to any Registration Statement.
(d) Discontinued Disposition. Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the
Company of the occurrence of a Discontinuation Event (as defined
below), such Holder will forthwith discontinue disposition of such
Registrable Securities under the applicable Registration Statement
until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of
any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph. For purposes of this Section 7(d), a
"Discontinuation Event" shall mean (i) when the Commission notifies the
Company whether there will be a "review" of such Registration Statement
and whenever the Commission comments in writing on such Registration
Statement (the Company shall provide true and complete copies thereof
and all written responses thereto to each of the Holders); (ii) any
request by the Commission or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement
or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv)
the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and/or
(v) the occurrence of any event or passage of time that makes the
financial statements included in such Registration Statement ineligible
for inclusion therein or any statement made in such 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 such Registration Statement, Prospectus
or other documents so that, in the case of such Registration Statement
or 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 light of the circumstances under which they were made, not
misleading.
(e) Piggy-Back Registrations. If at any time during any
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities required to be covered
during such Effectiveness Period and the Company shall determine to
prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their
then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written
notice of such determination and, if within fifteen (15) days after
receipt of such notice, any such Holder shall so request in writing,
the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be
registered, to the extent the Company may do so without violating
registration rights of others which exist as of the date of this
Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to obtaining any required
the consent of any selling stockholder(s) to such inclusion under such
registration statement.
(f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing
and signed by the Company and the Holders of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of certain Holders and that does
not directly or indirectly affect the rights of other Holders may be
given by Holders of at least a majority of the Registrable Securities
to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the
immediately preceding sentence.
(g) Notices. Any notice or request hereunder may be given to the
Company or the Purchaser at the respective addresses set forth below or
as may hereafter be specified in a notice designated as a change of
address under this Section 7(g). Any notice or request hereunder shall
be given by registered or certified mail, return receipt requested,
hand delivery, overnight mail or telecopy (confirmed by mail). Notices
and requests shall be, in the case of those by hand delivery, deemed to
have been given when delivered to any party to whom it is addressed, in
the case of those by mail or overnight mail, deemed to have been given
three (3) business days after the date when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when
confirmed. The address for such notices and communications shall be as
follows:
If to the Company: Global Digital Solutions, Inc.
000 Xxxxx Xxxxxxx Xxxxx
Suite 000
Xxxx Xxxxx
Xxxx Xxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile:
With a copy to: Xxxx X. Creme
Merra, Kanakis, Creme & Xxxxxx, P.C.
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: 000-000-0000
If to a Purchaser: To the address set forth under
such Purchaser name on the
signature pages hereto.
If to any other Person who is then the registered Holder:
To the address of such Holder as it appears in the stock transfer books
of the Company or such other address as may be designated in writing
hereafter in accordance with this Section 7(g) by such Person.
Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. The Company may
not assign its rights or obligations hereunder without the prior
written consent of each Holder. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under
the Notes and the Securities Purchase Agreement with the prior written
consent of the Company, which consent shall not be unreasonably
withheld.
Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement shall be commenced exclusively in the
state and federal courts sitting in the City of New York, Borough of
Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives,
and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
Proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any
such Proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the
other party for its reasonable attorneys fees and other costs and
expenses incurred with the investigation, preparation and prosecution
of such Proceeding.
Cumulative Remedies. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force
and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and
employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.
Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
GLOBAL DIGITAL SOLUTIONS, INC.
By:_____________________________
Name:___________________________
Title:____________________________
LAURUS MASTER FUND, LTD.
By:______________________________
Name:____________________________
Title:_____________________________
Address for Notices:
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Grin
Facsimile: 000-000-0000
EXHIBIT A
[Month __, 2004]
[Continental Stock Transfer
& Trust Company
Two Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx]
Re: Global Digital Solutions, Inc.. Registration Statement on Form
[SB-2]
Ladies and Gentlemen:
As counsel to Global Digital Solutions, Inc., a New Jersey corporation
(the "Company"), we have been requested to render our opinion to you in
connection with the resale by the individuals or entitles listed on
Schedule A attached hereto (the "Selling Stockholders"), of an
aggregate of [amount] shares (the "Shares") of the Company's Common
Stock.
A Registration Statement on Form [SB-2] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares
was declared effective by the Securities and Exchange Commission on
[date]. Enclosed is the Prospectus dated [date]. We understand that
the Shares are to be offered and sold in the manner described in the
Prospectus.
Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our
opinion that the Shares have been registered for resale under the Act
and new certificates evidencing the Shares upon their transfer or re-
registration by the Selling Stockholders may be issued without
restrictive legend. We will advise you if the registration statement
is not available or effective at any point in the future.
Very truly yours,
[Company counsel]
Schedule A
Selling Stockholder R/N/O Shares Being
Offered
15
