REGISTRATION RIGHTS AGREEMENT
Exhibit 10.22
Registration Rights Agreement (the “Agreement”), dated as of April 27, 2007, by and
between Teknik Digital Arts, Inc., a corporation organized under the laws of State of Nevada, with
its principal executive office at X.X. Xxx 0000-000, Xxxxxxxx, Xxxxxxx 00000 (the
“Company”), and Dutchess Private Equities Fund, Ltd .. , a Cayman Islands exempted company
with its principal office at 00 Xxxxxxxxxxxx Xxxxxx, Xxxxx 0, Xxxxxx, XX 00000 (the
“Holder”).
Now therefore, in consideration of the foregoing promises and the mutual covenants contained
hereinafter and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
Section 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following meanings:
“Execution Date” means the date of this Agreement set forth above.
“Investor” means Dutchess Private Equities Fund, Ltd, a Cayman Islands exempted company.
“Person” means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
“Potential Material Event” means any of the following: (i) the possession by the
Company of material information not ripe for disclosure in the Registration Statement, which shall
be evidenced by determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the Registration Statement would be detrimental to the business
and affairs of the Company, or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company, be adversely
affected by disclosure in the Registration Statement at such time, which determination shall be
accompanied by a good faith determination by the Board of Directors of the Company that the
Registration Statement would be materially misleading absent the inclusion of such information.
“Principal Market” shall mean The American Stock Exchange, National Association of
Securities Dealer’s, Inc., Over-the-Counter electronic bulletin board, the Nasdaq National Market
or The Nasdaq SmallCap Market whichever is the principal market on which the Common Stock of the
Company is listed.
“Register,” “Registered,” and “Registration” refer to the
Registration effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 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(s) by the United States Securities and
Exchange Commission (the “SEC”).
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“Registrable Securities” means (i) the shares of Common Stock issued or issuable
pursuant to the Investment Agreement, and (ii) any shares of capital stock issued or issuable with
respect to such shares of Common Stock, if any, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, which have not been (x) included in the
Registration Statement that has been declared effective by the SEC,
or (y) sold under
circumstances meeting all of the applicable conditions of Rule 144 (or any similar provision then
in force) under the 1933 Act.
“Registration Statement” means the registration statement of the Company filed under
the 1933 Act covering the Registrable Securities.
All capitalized terms used in this Agreement and not otherwise defined herein shall have the
same meaning ascribed to them as in the Investment Agreement.
Section 2. REGISTRATION.
(a) The Company shall, within twenty-one (21) days of the date of this Agreement, file with
the SEC the Registration Statement or Registration Statements (as is necessary) on Form S8-2 (or,
if such form is unavailable for such a registration, on such other form as is available for such
registration), covering the resale of all of the Registrable Securities, which Registration
Statement(s) shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such
Registration Statement also covers such indeterminate number of additional shares of Common Stock
as may become issuable upon stock splits, stock dividends or similar transactions. The Company
shall initially register for resale 12,500,000 shares of Common Stock which would be issuable on
the date preceding the filing of the Registration Statement based on the closing bid price of the
Company’s Common Stock on such date and the amount reasonably calculated that represents Common
Stock issuable to other parties as set forth in the Investment Agreement except to the extent that
the SEC requires the share amount to be reduced as a condition of effectiveness.
(b) The Company shall use all commercially reasonable efforts to have the Registration
Statement(s) declared effective by the SEC within ninety (90) calendar days after the Execution
Date.
(c) The Company agrees not to include any other securities in the Registration Statement
covering the Registrable Securities without Investor’s prior written consent which Investor may
withhold in its sole discretion. Furthermore, the Company agrees that it will not file any other
Registration Statement for other securities, until thirty calendar days after the Registration
Statement for the Registrable Securities is declared effective by the SEC.
Section 3. RELATED OBLIGATIONS.
At such time as the Company is obligated to prepare and file the Registration Statement with
the SEC pursuant to Section 2(a), the Company will effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and, with respect
thereto, the Company shall have the following obligations:
(a) The Company shall use all commercially reasonable efforts to cause such Registration
Statement relating to the Registrable Securities to become effective within ninety (90) days after
the Execution Date and shall keep such Registration Statement effective until the earlier to occur
of the date on which (A) the Investor shall have sold all the Registrable Securities; or (B) the
Investor has no right to acquire any additional shares of Common Stock under the Investment
Agreement (the “Registration Period”). The Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which they were made,
not misleading. The Company shall use all commercially reasonable efforts to respond to all SEC
comments within seven (7) business days from receipt of such comments by the Company. The Company
shall use all commercially reasonable efforts to cause the Registration Statement relating to the
Registrable Securities to become effective no later than five (5)
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business days after notice from the SEC that the Registration Statement may be declared effective.
The Investor agrees to provide all information which it is required by law to provide to the
Company, including the intended method of disposition of the Registrable Securities, and the
Company’s obligations set forth above shall be conditioned on the receipt of such information.
(b) The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus used in connection
with such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement effective during the
Registration Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities shall have been
disposed of in accordance with the intended methods of disposition by the Investor thereof as set
forth in such Registration Statement. In the event the number of shares of Common Stock covered by
the Registration Statement filed pursuant to this Agreement is at any time insufficient to cover
all of the Registrable Securities, the Company shall amend such Registration Statement, or file a
new Registration Statement (on the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based on the then Purchase
Price of the Common Stock and other relevant factors on which the Company reasonably elects to
rely), assuming the Company has sufficient authorized shares at that time, and if it does not,
within thirty (30) calendar days after such shares are authorized. The Company shall use
commercially reasonable efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof.
(c) The Company shall make available to the Investor whose Registrable Securities are
included in any Registration Statement and its legal counsel without charge (i) promptly after the
same is prepared and filed with the SEC at least one (1) copy of such Registration Statement and
any amendment(s) thereto, including financial statements and schedules, all documents incorporated
therein by reference and all exhibits, the prospectus included in such Registration Statement
(including each preliminary prospectus) and, with regards to such Registration Statement(s), any
correspondence by or on behalf of the Company to the SEC or the staff of the SEC and any
correspondence from the SEC or the staff of the SEC to the Company or its representatives; (ii)
upon the effectiveness of any Registration Statement, the Company shall make available copies of
the prospectus, via XXXXX, included in such Registration Statement and all amendments and
supplements thereto; and (iii) such other documents, including copies of any preliminary or final
prospectus, as the Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities.
(d) The
Company shall use commercially reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other securities or “blue
sky” laws of such states in the United States as the Investor reasonably requests; (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 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 reasonably necessary or advisable to qualify
the Registrable Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), or (y) subject itself to general taxation in any such jurisdiction. The Company
shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company
of any notification with respect to the suspension of the registration or qualification of any of
the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in
the United States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
(e) As promptly as practicable after becoming aware of such event, the Company shall notify
Investor in writing of the happening of any event as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a material fact or
omission to
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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 (“Registration
Default”) and use all diligent efforts to promptly prepare a supplement or amendment to such
Registration Statement and take any other necessary steps to cure the Registration Default (which,
if such Registration Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as defined below) and
to be incorporated by reference in the prospectus) to correct such untrue statement or omission,
and make available copies of such supplement or amendment to the Investor. The Company shall also
promptly notify the Investor (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when the Registration Statement or any post-effective amendment has
become effective (the Company will prepare notification of such effectiveness which shall be
delivered to the Investor on the same day of such effectiveness and by overnight mail),
additionally, the Company will promptly provide to the Investor, a copy of the effectiveness order
prepared by the SEC once it is received by the Company; (ii) of any request by the SEC for
amendments or supplements to the Registration Statement or related prospectus or related
information, (iii) of the Company’s reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate, (iv) in the event the Registration Statement is no
longer effective, or (v) if the Registration Statement is stale as a result of the Company’s
failure to timely file its financials or otherwise. The Company acknowledges that its failure to
cure the Registration Default within ten (10) business days will cause the Investor to suffer
damages in an amount that will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include a provision for liquidated damages. The parties acknowledge and agree that
the liquidated damages provision set forth in this section represents the parties’ good faith
effort to quantify such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. It is the intention of the parties that
interest payable under any of the terms of this Agreement shall not exceed the maximum amount
permitted under any applicable law. If a law, which applies to this Agreement, which sets the
maximum interest amount, is finally interpreted so that the interest in connection with this
Agreement exceeds the permitted limits, then: (1) any such interest shall be reduced by the amount
necessary to reduce the interest to the permitted limit; and (2) any sums already collected (if
any) from the Company which exceed the permitted limits will be refunded to the Company. The
Investor may choose to make this refund by reducing the amount that the Company owes under this
Agreement or by making a direct payment to the Company. If a refund reduces the amount that the
Company owes the Investor, the reduction will be treated as a partial payment.
(f) The Company shall use all commercially reasonable efforts to prevent the issuance of any
stop order or other suspension of effectiveness of the Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if
such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the
earliest possible moment and to notify the Investor holding Registrable Securities being sold of
the issuance of such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding concerning the effectiveness of the registration statement.
(g) The Company shall permit the Investor and one (1) legal counsel, designated by the
Investor, to review and comment upon the Registration Statement and all amendments and supplements
thereto at least one (1) calendar day prior to their filing with the SEC.
However, any postponement of a filing of a Registration Statement or any postponement of a
request for acceleration or any postponement of the effective date or effectiveness of a
Registration Statement by written request of the Investor (collectively, the “Investor’s Delay”)
shall not act to trigger any penalty of any kind, or any cash amount due or any in-kind amount due
the Investor from the Company under any and all agreements of any nature or kind between the
Company and the Investor. The event(s) of an Investor’s Delay shall act to suspend all obligations
of any kind or nature of the Company under any and all agreements of any nature or kind between
the Company and the Investor.
(h) At the request of the Investor, the Company’s counsel shall furnish to the Investor an
opinion letter confirming the effectiveness of the registration statement. Such opinion letter
shall be issued as of the date of the effectiveness of the registration statement and be in form
suitable to the Investor.
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(i) The Company shall hold in confidence and not make any disclosure of information
concerning the Investor unless (i) disclosure of such information is necessary to comply with
federal or state securities laws, (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 final, non-appealable 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 Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of such information
concerning the Investor is sought in or by a court or governmental body of competent jurisdiction
or through other means, give prompt written notice to the Investor and allow the Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a
protective order covering such information.
(j) The Company shall use all commercially reasonable efforts to maintain designation and
quotation of all the Registrable Securities covered by any Registration Statement on the Principal
Market. If, despite the Company’s commercially reasonable efforts, the Company is unsuccessful in
satisfying the preceding sentence, it shall use commercially reasonable efforts to cause all the
Registrable Securities covered by any Registration Statement to be listed on each other national
securities exchange and automated quotation system, if any, on which securities of the same class
or series issued by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or system. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this Section 30).
(k) The Company shall cooperate with the Investor to facilitate the prompt preparation and
delivery of certificates representing the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates to be in such denominations or amounts, as the
case may be, as the Investor may reasonably request (and after any sales of such Registrable
Securities by the Investor, such certificates not bearing any restrictive legend).
(l) The Company shall provide a transfer agent for all the Registrable Securities not later
than the effective date of the first Registration Statement filed pursuant hereto.
(m) If requested by the Investor, the Company shall (i) as soon as reasonably practical
incorporate in a prospectus supplement or post-effective amendment such information as the
Investor reasonably determines should be included therein relating to the sale and distribution of
Registrable Securities, including, without limitation, information with respect to the offering of
the Registrable Securities to be sold in such offering; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as reasonably possible after being
notified of the matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably
requested by the Investor.
(n) The Company shall use all commercially reasonable efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to facilitate the disposition
of such Registrable Securities.
(o) The Company shall otherwise use all commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration hereunder.
(p) Within one (1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the transfer agent for
such Registrable Securities, with copies to the Investor, confirmation that such Registration
Statement has been declared effective by the SEC.
(q) The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to the Registration Statement.
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Section 4. OBLIGATIONS OF THE INVESTOR.
(a) At least five (5) calendar days prior to the first anticipated filing date of the
Registration Statement the Company shall notify the Investor in writing of the information the
Company requires from the Investor for the Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities and the Investor agrees to furnish to the
Company that information regarding itself, the Registrable Securities and the intended method of
disposition of the Registrable Securities as shall reasonably be required to effect the
registration of such Registrable Securities and the Investor shall execute such documents in
connection with such registration as the Company may reasonably request. The Investor covenants
and agrees that, in connection with any sale of Registrable Securities by it pursuant to the
Registration Statement, it shall comply with the “Plan of Distribution” section of the then
current prospectus relating to such Registration Statement.
(b) The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the preparation and filing
of any Registration Statement hereunder, unless the Investor has notified the Company in writing
of an election to exclude all of the Investor’s Registrable Securities from such Registration
Statement.
(c) The Investor agrees that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first sentence of 3(e), the
Investor will immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until the Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e)
Section 5. EXPENSES OF REGISTRATION.
All expenses, other than underwriting discounts and commissions and other than as set forth
in the Investment Agreement, incurred in connection with registrations including comments, filings
or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printing and accounting fees, and fees and disbursements of
counsel for the Company or for the Investor shall be paid by the Company.
Section 6. INDEMNIFICATION.
In the event any Registrable Securities are included in the Registration Statement under this
Agreement:
(a) To the fullest extent permitted by law, the Company, under this Agreement, will, and
hereby does, indemnify, hold harmless and defend the Investor who holds Registrable Securities,
the directors, officers, partners, employees, counsel, agents, representatives of, and each
Person, if any, who controls, any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs,
attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively,
“Claims”), incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject 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 in the Registration
Statement or any post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in
which the Investor has requested in writing that the Company register or qualify the Shares
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which the
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statements therein were made, not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact 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 or alleged
omission to state therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not misleading, or (iii)
any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement
(the matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”). Subject to the restrictions set forth in Section 6(c) the Company shall
reimburse the Investor and each such controlling person, promptly as such expenses are incurred
and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which is due to the inclusion in the
Registration Statement of the information furnished to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto; (ii) shall not be available to the extent such Claim is
based on (a) a failure of the Investor to deliver or to cause to be delivered the prospectus made
available by the Company or (b) the Indemnified Person’s use of an incorrect prospectus despite
being promptly advised in advance by the’ Company in writing not to use such incorrect prospectus;
(iii) any claims based on the manner of sale of the Registrable Securities by the Investor or of
the Investor’s failure to register as a dealer under applicable securities laws; (IV) any omission
of the Investor to notify the Company of any material fact that should be stated in the
Registration Statement or prospectus relating to the Investor or the manner of sale; and (v) any
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 resale of the Registrable Securities by the Investor
pursuant to the Registration Statement.
(b) In connection with any Registration Statement in which investor is participating, the
Investor agrees to severally and jointly indemnify, hold harmless and defend, to the same extent
and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act and the Company’s agents (collectively
and together with an Indemnified Person, an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such Violation is due to the
inclusion in the Registration Statement of the written information furnished to the Company by the
Investor expressly for use in connection with such Registration Statement; and, subject to Section
6(c), the Investor will reimburse any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 6(b) and the agreement with respect to contribution contained
in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall only be liable under
this Section 6(b) for that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive the resale of the
Registrable Securities by the Investor pursuant to the Registration Statement. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section
6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the preliminary prospectus
were corrected on a timely basis in the prospectus, as then amended or supplemented. This
indemnification provision shall apply separately to each Investor and liability hereunder shall
not be joint and several.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of
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notice of the commencement of any action or proceeding (including any governmental action or
proceeding) Involving a Claim, such Indemnified Person or Indemnified Party 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 the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or Indemnified Party and
the indemnifying party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such counsel
shall be selected by the Investor, if the Investor are entitled to indemnification hereunder, or
the Company, if the Company is entitled to indemnification hereunder, as applicable. The
Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or Claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall
keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of
the defense or any settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without its written consent,
provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition
its consent. No indemnifying party shall, without the consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in
respect to such Claim. Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to
all third parties, firms or corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.
(d) The indemnity agreements contained herein shall be in addition to (i) any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
Section 7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set forth in Section 6;
(ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(1) of the 0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution
by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
Section 8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investor the benefits of Rule 144 promulgated under
the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the
Investor to sell securities of the Company to the public without registration (“Rule
144”), provided that the Investor holds any Registrable Securities are eligible for resale
under Rule 144 (k), the Company agrees to:
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(a) in Rule 144; make and keep public information available, as those terms are understood and defined
(b) file with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such
requirements (it being understood that nothing herein shall limit the Company’s obligations under
Section 5(c) of the Investment Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
(c) furnish to the Investor, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act,
(ii) a copy of the most recent annual or quarterly 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 Investor to sell such securities pursuant to Rule 144 without
registration.
The rights and obligations under this Agreement shall not be assignable.
Section 10. AMENDMENT OF REGISTRATION RIGHTS.
The provisions of this Agreement may be amended only with the written consent of the Company
and Investor.
Section 11. MISCELLANEOUS.
(a) Any notices or other communications required or permitted to be given under the terms of
this Agreement that must be in writing will be deemed to have been delivered (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile (provided a confirmation of
transmission is mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight delivery service, in
each case properly addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Teknik Digital Arts, Inc.
X.X. Xxx 0000-000
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
X.X. Xxx 0000-000
Xxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor:
Dutchess Private Equities Fund,
ltd. 00 Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ltd. 00 Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Each party shall provide five (5) business days prior notice to the other party of any change
in address, phone number or facsimile number.
(b) 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.
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(c) This Agreement and the Transaction Documents constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein and
therein.
(d) This Agreement and the Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter hereof and thereof.
(e) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof. Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the feminine. This Agreement shall
not be construed as if it had been prepared by one of the parties, but rather as if all the
parties had prepared the same.
(f) This Agreement may be executed in two or more identical counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
(g) Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(h) In case any provision of this Agreement is held by a court of competent jurisdiction to
be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Agreement will not in any way be
affected or impaired thereby.
Section 12. DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW
All disputes arising under this agreement shall be governed by and interpreted in accordance
with the laws of the Commonwealth of Massachusetts, without regard to principles of conflict of
laws. The parties to this agreement will submit all disputes arising under this agreement to
arbitration in Boston, Massachusetts before a single arbitrator of the American Arbitration
Association (“AAA”). The arbitrator shall be selected by application of the rules of the AAA, or
by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to
practice law in the Commonwealth of Massachusetts. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section. Nothing contained herein shall
prevent the party from obtaining an injunction.
***
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SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT
Your signature on this Signature Page evidences your agreement to be bound by the terms and
conditions of the Investment Agreement and the Registration Rights Agreement as of the date first
written above.
The undersigned signatory hereby certifies that he has read and understands the Registration
Rights Agreement, and the representations made by the undersigned in this Registration Rights
Agreement are true and accurate, and agrees to be bound by its terms.
DUTCHESS PRIVATE EQUITIES FUND, LTD. |
||||
By: | ||||
Xxxxxxx X. Xxxxxxxx, Director | ||||
TEKNIK DIGITAL ARTS INC. |
||||
By: | ||||
Xxxx Xxxx, CEO | ||||
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