Exhibit 4.1
Registration Rights Agreement
This Registration Rights Agreement (the "Agreement") is made
and entered into to be effective as of the _____ day of
_____________________, 2006 (the "Effective Date") between
Digital Lifestyles Group Inc., a Delaware corporation (the
"Company"), and ______________________ (the "Holder").
R e c i t a l s:
A. The Company and Holder have entered into a letter
agreement dated December ___, 2005 ("Agreement"), a copy of which
is attached hereto as Exhibit A, in connection with current
amounts due to Holder by the Company under an existing credit
facility dated ______________________, 2004. Under the terms of
the Agreement, the Company shall, upon certain conditions being
met as more fully set forth in the Agreement, issue (the
"Issuance") to Holder shares of the Company's common stock
totaling _______________ shares (the "Shares").
B. In connection with the Issuance, the Company and Holder
desire to set forth the registration rights to be granted by the
Company to the Holder for the purpose of registering the Shares.
Now, Therefore, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth
herein and in the Agreement, the parties mutually agree as
follows:
A g r e e m e n t:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Approved Market" means the Nasdaq National Market, the New
York Stock Exchange, Inc., or the American Stock Exchange, Inc.
or such other securities market, in any such case which at the
time constitutes the principal securities market for the Common
Stock
"Business Day" means any day of the year, other than a
Saturday, Sunday, or other day on which the Commission is
required or authorized to close.
"Certificate of Incorporation" means the then current and
effective Certificate of Incorporation of the Company as filed
with the Secretary of State of the State of Delaware, as the same
may be amended from time to time.
"Closing Date" means the effective date of the Agreement.
"Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
"Common Stock" means the common stock, par value $0.03 per
share, of the Company and any and all shares of capital stock or
other equity securities of: (i) the Company which are added to or
exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of
any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital
structure of the Company; and (ii) any other corporation, now or
hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which
results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all
of the shares or assets of the Company, if immediately after such
merger, consolidation, reorganization or sale, the Company or the
stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission
promulgated thereunder.
"Family Member" means (a) with respect to any individual,
such individual's spouse, any descendants (whether natural or
adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals
together with any organization described in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or
limited liability company all of the equity interests of which
are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of
the beneficial interests of such trust.
"Form S-1" means such form under the Securities Act as in
effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Commission, which
permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the
Commission.
"Holder" means each Holder or any of his, her or its
respective successors and Permitted Assigns who acquire rights in
accordance with this Agreement with respect to the Registrable
Securities directly or indirectly from a Holder, including from
any Permitted Assignee.
"Inspector" means any attorney, accountant, or other agent
retained by a Holder for the purposes provided in Section 4(i).
"Permitted Assignee" means (a) with respect to a
partnership, its partners or former partners in accordance with
their partnership interests, (b) with respect to a corporation,
its shareholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its
members or former members in accordance with their interest in
the limited liability company, (d) with respect to an individual
party, any Family Member of such party, (e) an entity that is
controlled by, controls, or is under common control with a
transferor, or (f) a party to this Agreement.
The terms "register," "registered," and "registration"
refers to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means the Shares issued to the
Holder, excluding (i) any Registrable Securities that have been
publicly sold or may be sold immediately without registration
under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold
by a person in a transaction pursuant to a registration statement
filed under the Securities Act or (iii) any Registrable
Securities that are at the time subject to an effective
registration statement under the Securities Act.
"Registration Default Date" means the date which is six (6)
months following the Closing Date.
"Registration Default Period" means the period following the
Registration Default Date during which any Registration Event
occurs and is continuing.
"Registration Event" means the occurrence of any of the
following events:
(a) the Company fails to file with the SEC the
Registration Statement on or before the date by which the
Company is required to file the Registration Statement
pursuant to Section 3,
(b) the Registration Statement covering Registrable
Securities is not declared effective by the Commission on or
before the Registration Default Date,
(c) after the SEC Effective Date, sales cannot be made
pursuant to the Registration Statement for any reason
(including without limitation by reason of a stop order, or
the Company's failure to update the Registration Statement)
but except as excused pursuant to Section 3, or
(d) the Common Stock generally or the Registrable
Securities specifically are not listed or included for
quotation on an Approved Market, or trading of the Common
Stock is suspended or halted on the Approved Market, which
at the time constitutes the principal market for the Common
Stock.
"Registration Statement" means the registration statement
required to be filed by the Company pursuant to Section 3.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute promulgated in
replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"SEC Effective Date" means the date the Registration
Statement is declared effective by the Commission.
"S-1 Blackout Period" means, with respect to a registration,
a period in each case commencing on the day immediately after the
Company notifies the Holder that they are required, pursuant to
Section 4(f), to suspend offers and sales of Registrable
Securities during which the Company, in the good faith judgment
of its Board of Directors, determines (because of the existence
of, or in anticipation of, any acquisition, financing activity,
or other transaction involving the Company, or the unavailability
for reasons beyond the Company's control of any required
financial statements, disclosure of information which is in its
best interest not to publicly disclose, or any other event or
condition of similar significance to the Company) that the
registration and distribution of the Registrable Securities to be
covered by such registration statement, if any, would be
seriously detrimental to the Company and its shareholders and
ending on the earlier of (1) the date upon which the material non-
public information commencing the S-1 Blackout Period is
disclosed to the public or ceases to be material and (2) such
time as the Company notifies the selling Holders that the Company
will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement
effective, or allow sales pursuant to such Registration Statement
to resume; provided, however, that the Company shall limit its
use of S-1 Blackout Periods, in the aggregate, to 45 Trading Days
in any 12-month period.
"Trading Day" means a day on whichever (a) the national
securities exchange, (b) the Nasdaq Stock Market, or (c) such
other securities market, in any such case which at the time
constitutes the principal securities market for the Common Stock,
is open for general trading of securities.
2. Term. This Agreement shall continue in full force and
effect for a period of two (2) years from the Effective Date or
for so long as an applicable registration statement has not been
declared effective by the Commission.
3. Registration on Form S-1.
(a) The Company shall, within six (6) months after the
Closing Date (the "Registration Filing Date"), file with the
Commission a registration statement on Form S-1 relating to the
resale by the Holders of all of the Registrable Securities;
provided, however, the Company shall not be obligated to effect
any such registration, qualification or compliance pursuant to
this Section 3, or keep such registration effective pursuant to
Section 4: (i) in any particular jurisdiction in which the
Company would be required to qualify to do business as a foreign
corporation or as a dealer in securities under the securities or
blue sky laws of such jurisdiction or to execute a general
consent to service of process in effecting such registration,
qualification or compliance, in each case where it has not
already done so; or (ii) during any S-1 Blackout Period.
(b) Failure to File Registration Statement. If a
Registration Event occurs, then the Company will make payments to
Purchaser as partial liquidated damages at the monthly rate of
$0.05 per share of Common Stock held and issued by Purchaser to
Holder, for each calendar month of the Registration Default
Period (pro rated for any period less than 30 days). Each such
payment shall be due and payable within five (5) days after the
end of each calendar month of the Registration Default Period
until the termination of the Registration Default Period and
within five (5) days after the termination. Such payments shall
be in partial compensation to Purchaser, and shall not constitute
such Purchaser's exclusive remedy for such events. All amounts
payable as partial liquidated damages to Purchaser hereunder
shall cease when such Purchaser no longer holds the Registrable
Securities.
(c) Demand Registration. Notwithstanding anything herein
to the contrary, and in addition to its obligations under Section
3(a) hereinabove, the Company shall:
(i) after receipt of a written request from the Holder
requesting that the Company effect a registration (a "Demand
Registration") under the Securities Act covering all or part
of the Registrable Securities held by such Holder which
specifies the intended method or methods of disposition
thereof, as expeditiously as is possible, but in any event
no later than 90 days after receipt of a written request for
a Demand Registration, file with the SEC and use its
reasonable best efforts to cause to be declared effective as
soon as reasonably practicable, a registration statement (a
"Demand Registration Statement") relating to all shares of
Registrable Securities which the Company has been so
requested to register by the Holder for sale, to the extent
required to permit the disposition (in accordance with the
intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered.
(ii) If the Company is eligible to use Form S-3, any
Demand Registration Statement may be required by the Holder
to be in an appropriate form under the Securities Act
relating to any or all of the Registrable Securities in
accordance with the methods and distribution set forth in
the Form S-3 and Rule 415 under the Securities Act (the
"Shelf Registration"). Any such demand to file a Form S-3
shall require the use of one Demand Registration. The
Holder shall be entitled to an aggregate of two
registrations of Registrable Securities.
(iii) The Company shall not be required to effect a
registration pursuant to this Section 3:
(1) pursuant to a written opinion of counsel for
the Company, all the Registrable Securities can be sold
pursuant to Rule 144 in any three month period (such
date being the "144 Sale Date"); or
(2) during the period starting with the date 45
days prior to the Company's estimated date of filing
of, and ending on the date 90 days immediately
following the effective date of, any registration
statement pertaining to an underwritten public offering
of newly issued securities of the Company with respect
to which the Holder has the right to request inclusion
of Registrable Securities pursuant to Section 3,
provided that the Company is actively employing in good
faith commercially reasonable efforts to cause such
registration to become effective.
(d) Piggy-Back Registration.
(i) If (but without any obligation to do so) the
Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other
than the Holder) any of its stock or other securities under
the Securities Act in connection with the public offering of
such securities on any form (other than a registration
statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to
employees of the Company pursuant to any employee benefit
plan, respectively) (a "Piggy-Back Registration"), it will
promptly (and in any case at least 45 days before the
initial filing with the SEC of such piggy-back registration
statement (the "Piggy-Back Registration Statement")) give
written notice to each Holder, which notice shall set forth
the intended method of disposition of the securities
proposed to be registered by the Company. The notice shall
offer to include in such filing the aggregate number of
shares of Registrable Securities as the Holder may request.
If the Holder desires to have its Registrable Securities
registered under this Section 3, such Holder shall advise
the Company in writing within 20 days after the date of
receipt of such offer from the Company, setting forth the
amount of such Registrable Securities for which registration
is requested. The Company shall thereupon include in such
filing the number or amount of Registrable Securities for
which registration is so requested, subject to provisions of
Section 3 below, and shall use its reasonable best efforts
to effect registration of such Registrable Securities under
the Securities Act; provided, however, that the Company
shall not be obligated to include any Registrable Securities
in any such registration, qualification or compliance,
pursuant to this Section 3 after the 144 Sale Date.
(ii) The Company shall have the right to terminate or
withdraw any Piggy-Back Registration initiated by it under
this Section 3 prior to the effectiveness of such Piggy-Back
Registration whether or not the Holder has elected to
include securities in such Piggy-Back Registration.
(iii) If the Piggy-Back Registration relates to an
underwritten public offering and the managing underwriter of
such proposed public offering advises in writing that, in
its opinion, the amount of Registrable Securities requested
to be included in the Piggy-Back Registration then, in the
event that the Company initiated the Piggy-Back
Registration, the Company shall include in such Piggy-Back
Registration first, the securities the Company proposes to
register and second, the securities of all other selling
security holders, including the Holder, to be included in
such Piggy-Back Registration in an amount which together
with the securities the Company proposes to register to be
allocated among such selling security holders on a pro rata
basis (based on the number of securities of the Company held
by each such selling security holder).
4. Registration Procedures. In the case of each
registration, qualification, or compliance effected by the
Company pursuant to Section 3 hereof, the Company will keep
Holder including securities therein reasonably advised in writing
as to the initiation of each registration, qualification, and
compliance and as to the completion thereof. At its expense with
respect to any registration statement filed pursuant to Section
3, the Company will use its commercially reasonable best efforts
to:
(a) prepare and file with the Commission with respect to
such Registrable Securities, a registration statement on Form S-
1, and use its commercially reasonable efforts to cause such
registration statement to become and remain effective at least
for a period ending with the first to occur of (i) the sale of
all Registrable Securities covered by the registration statement,
(ii) the availability under Rule 144 for the Holder to
immediately, freely resell without restriction all Registrable
Securities covered by the registration statement, and (iii) two
(2) years after a registration statement filed pursuant to
Section 3 is declared effective by the Commission (in either
case, the "Effectiveness Period"); provided, however, if at the
end of such one-year period, any Holder is not able to
immediately, freely resell all Registrable Securities that it
owns, the Effectiveness Period shall continue until terminated
pursuant to clause (i) or (ii); provided that no later than five
business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial
filing of any registration statement, the Company shall notify
Holder of the Registrable Securities covered by such registration
statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered;
(b) if a registration statement is subject to review by the
Commission, promptly respond to all comments and diligently
pursue resolution of any comments to the satisfaction of the
Commission;
(c) 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 keep such
registration statement effective during the Effectiveness Period
(but in any event at least until expiration of the 90-day period
referred to in Section 4(3) of the Securities Act and Rule 174,
or any successor thereto, thereunder, if applicable), and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement during such period in accordance with the intended
method(s) of disposition by the sellers thereof set forth in such
registration statement;
(d) furnish, without charge, to each Holder of Registrable
Securities covered by such registration statement (i) a
reasonable number of copies of such registration statement
(including any exhibits thereto other than exhibits incorporated
by reference), each amendment and supplement thereto as such
Holder may request, (ii) such number of copies of the prospectus
included in such registration statement (including each
preliminary prospectus and any other prospectus filed under Rule
424 under the Securities Act) as such Holder may request, in
conformity with the requirements of the Securities Act, and (iii)
such other documents as such Holder may reasonably request in
order to facilitate the disposition of the Registrable Securities
owned by such Holder, but only during the Effectiveness Period;
(e) use its commercially reasonable best efforts to
register or qualify such Registrable Securities under such other
applicable securities or blue sky laws of such jurisdictions as
any Holder of Registrable Securities covered by such registration
statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be
made by the time the applicable registration statement is deemed
effective by the Commission) and do any and all other acts and
things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in such jurisdictions
of the Registrable Securities owned by such Holder; provided that
the Company shall not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (e), (ii) subject
itself to taxation in any such jurisdiction, or (iii) consent to
general service of process in any such jurisdiction;
(f) notify each Holder of such Registrable Securities at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event
which comes to the Company's attention if as a result of such
event the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading and the Company shall
promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate
reports under the Exchange Act) so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus
shall not contain an 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 not misleading, unless
suspension of the use of such prospectus otherwise is authorized
herein or in the event of an S-1 Blackout Period, in which case
no supplement or amendment need be furnished (or Exchange Act
filing made) until the termination of such suspension or S-1
Blackout Period;
(g) comply, and continue to comply during the period that
such registration statement is effective under the Securities
Act, in all material respects with the Securities Act and the
Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities
covered by such registration statement, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve (12) months, but
not more than eighteen (18) months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
(h) as promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities being offered
or sold pursuant to the Registration Statement of the issuance by
the Commission of any stop order or other suspension of
effectiveness of the Registration Statement at the earliest
possible time;
(i) make available for inspection by any Holder and any
Inspector retained by such Holder, at such Holder's sole expense,
all Records as shall be reasonably necessary to enable such
Holder to exercise its due diligence responsibility, and cause
the Company's officers, directors, and employees to supply all
information which such Holder or any Inspector may reasonably
request for purposes of such due diligence; provided, however,
that such Holder shall hold in confidence and shall not make any
disclosure of any record or other information which the Company
determines in good faith to be confidential, and of which
determination such Holder is so notified at the time such Holder
receives such information, unless (i) the disclosure of such
record is necessary to avoid or correct a misstatement or
omission in the Registration Statement and a reasonable time
prior to such disclosure the Holder shall have informed the
Company of the need to so correct such misstatement or omission
and the Company shall have failed to correct such misstatement of
omission, (ii) the release of such record is ordered pursuant to
a subpoena or other order from a court or governmental body of
competent jurisdiction or (iii) the information in such record
has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential
information in such records to any Inspector until and unless
such Inspector shall have entered into a confidentiality
agreement with the Company with respect thereto, substantially in
the form of this Section 4(i), which agreement shall permit such
Inspector to disclose records to the Holder who has retained such
Inspector. Each Holder agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the
records deemed confidential. The Company shall hold in
confidence and shall not make any disclosure of information
concerning an Holder provided to the Company pursuant to this
Agreement unless (i) disclosure of such information is necessary
to comply with federal or state securities laws, (ii) disclosure
of such information is necessary to avoid or correct a
misstatement or omission in the Registration Statement, (iii)
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 a
Holder is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice
to such Holder and allow such Holder, at such Holder's expense,
to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
(j) use its best efforts to cause all the Registrable
Securities covered by the Registration Statement to be quoted on
the Over-the-Counter Bulletin Board or Pink Sheets Market or such
other principal securities market on which securities of the same
class or series issued by the Company are then listed or traded;
(k) provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities at all times;
(l) cooperate with the Holder of Registrable Securities
being offered pursuant to the Registration Statement to
facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement
and enable such certificates to be in such denominations or
amounts as the Holders may reasonably request and registered in
such names as the Holders may request;
(m) take all other reasonable actions necessary to expedite
and facilitate disposition by the Holders of the Registrable
Securities pursuant to the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of
Registrable Securities agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind
described in Section 4(f) hereof or of the commencement of an S-1
Blackout Period, such Holder shall discontinue disposition of
Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt
of the copies of the supplemented or amended prospectus
contemplated by Section 4(f) hereof or notice of the end of the S-
1 Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense)
all copies (including, without limitation, any and all drafts),
other than permanent file copies, then in such Holder's
possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period
mentioned in Section 4(a)(iii) hereof shall be extended by the
greater of (i) ten business days or (ii) the number of days
during the period from and including the date of the giving of
such notice pursuant to Section 4(f) hereof to and including the
date when each Holder of Registrable Securities covered by such
registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 4(f)
hereof.
6. Registration Expenses. The Company shall pay all
expenses in connection with any registration, including, without
limitation, all registration, filing, stock exchange and NASD
fees, printing expenses, all fees and expenses of complying with
securities or blue sky laws, the fees and disbursements of
counsel for the Company and of its independent accountants.
Except as provided above in this Section 6 and Section 9, the
Company shall not be responsible for the expenses of any attorney
or other advisor employed by a Holder of Registrable Securities.
7. Assignment of Rights. No Holder may assign its rights
under this Agreement to any party without the prior written
consent of the Company; provided, however, that a Holder may
assign its rights under this Agreement without such restrictions
to a Permitted Assignee as long as (a) such transfer or
assignment is effected in accordance with applicable securities
laws; (b) such transferee or assignee agrees in writing to become
subject to the terms of this Agreement; and (c) the Company is
given written notice by such Holder of such transfer or
assignment, stating the name and address of the transferee or
assignee and identifying the Registrable Securities with respect
to which such rights are being transferred or assigned.
8. Information by Holder. The Holder or Holders of
Registrable Securities included in any registration shall furnish
to the Company such information regarding such Holder or Holders
and the distribution proposed by such Holder or Holders as the
Company may request in writing.
9. Indemnification.
(a) In the event of the offer and sale of Registrable
Securities held by Holders under the Securities Act, the Company
shall, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder, its directors,
officers, partners, each other person who participates as an
underwriter in the offering or sale of such securities, and each
other person, if any, who controls or is under common control
with such Holder or any such underwriter within the meaning of
Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, and expenses to which
the Holder or any such director, officer, partner or underwriter
or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether
commenced or threatened, 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 shares were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein 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, and the Company shall reimburse the Holder, and each
such director, officer, partner, underwriter and controlling
person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any
such loss, claim, damage, liability, action or proceeding;
provided that the Company shall not be liable in any such case
(i) to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by
or on behalf of such Holder specifically stating that it is for
use in the preparation thereof or (ii) if the person asserting
any such loss, claim, damage, liability (or action or proceeding
in respect thereof) who purchased the Registrable Securities that
are the subject thereof did not receive a copy of an amended
preliminary prospectus or the final prospectus (or the final
prospectus as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such
person because of the failure of such Holder or underwriter to so
provide such amended preliminary or final prospectus and the
untrue statement or alleged untrue statement or omission or
alleged omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final
prospectus (or the final prospectus as amended or supplemented).
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holders, or any
such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the
Holder.
(b) As a condition to including any Registrable Securities
to be offered by a Holder in any registration statement filed
pursuant to this Agreement, each such Holder agrees to be bound
by the terms of this Section 9 and to indemnify and hold
harmless, to the fullest extent permitted by law, the Company,
its directors and officers, and each other person, if any, who
controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such
director or officer or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto. The indemnity claimed under
this Section 9(b) shall be limited to such statements or alleged
statements or omissions or alleged omissions made in reliance
upon and in conformity with written information about such Holder
as such Holder shall have furnished to the Company specifically
for use or inclusion in the registration statement. Such Holder
shall reimburse the Company, and each such director, officer, and
controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating, defending, or
settling and such loss, claim, damage, liability, action, or
proceeding; provided, however, that the limit of the indemnity
found in this Section 9(b) shall in no event exceed the net
proceeds from the offering received by such Holder. Such
indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such
director, officer or controlling person and shall survive the
transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving
a claim referred to in Section 9(a) or (b) hereof (including any
governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the indemnifying party of the commencement of
such action; provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 9(a) or (b)
hereof, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in
the reasonable judgment of counsel to such indemnified party a
conflict of interest between such indemnified and indemnifying
parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the
indemnifying party shall be entitled to participate in and to
assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the
defense thereof, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the
assumption of the defenses thereof or the indemnifying party
fails to defend such claim in a diligent manner, other than
reasonable costs of investigation. Neither an indemnified nor an
indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the 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 party of a release from all liability in respect of
such claim or litigation. Notwithstanding anything to the
contrary set forth herein, and without limiting any of the rights
set forth above, in any event any party shall have the right to
retain, at its own expense, counsel with respect to the defense
of a claim.
(d) In the event that an indemnifying party does or is not
permitted to assume the defense of an action pursuant to Section
9(c) or in the case of the expense reimbursement obligation set
forth in Section 9(a) and (b), the indemnification required by
Section 9(a) and (b) hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills received or expenses, losses, damages,
or liabilities are incurred.
(e) If the indemnification provided for in this Section 9
is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim,
damage or expense referred to herein, the indemnifying party, in
lieu of indemnifying such indemnified party hereunder, shall (i)
contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative
fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or omission relates to information supplied by the
indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission), or (ii)
if the allocation provided by clause (i) above is not permitted
by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, not only the
proportionate relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on
the other, as well as any other relevant equitable
considerations. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent
misrepresentation.
(f) Other Indemnification. Indemnification similar to that
specified in the preceding subsections of this Section 9 (with
appropriate modifications) shall be given by the Company and each
Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any
federal or state law or regulation or governmental authority
other than the Securities Act.
10. Miscellaneous
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
and the United States of America, both substantive and remedial.
Any judicial proceeding brought against either of the parties to
this agreement or any dispute arising out of this Agreement or
any matter related hereto may be brought in the courts of the
State of New York or in the United States District Court for the
Southern District of New York and, by its execution and delivery
of this agreement, each party to this Agreement accepts the
jurisdiction of such courts. The foregoing consent to
jurisdiction shall not be deemed to confer rights on any person
other than the parties to this Agreement.
(b) Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the successors, Permitted Assigns, executors and
administrators of the parties hereto. In the event the Company
merges with, or is otherwise acquired by, a direct or indirect
subsidiary of a publicly traded company, the Company shall
condition the merger or acquisition on the assumption by such
parent company of the Company's obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full
and entire understanding and agreement between the parties with
regard to the subjects hereof.
(d) Notices, etc. All notices or other communications which
are required or permitted under this Agreement shall be in
writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid,
or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered
as of the date so delivered:
If to the Company: Digital Lifestyles Group, Inc.
000 Xxxx Xxxxxx Xxxx
#0
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx
If to the Holder: Laurus Master Fund, Ltd.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx, Esq.
or at such other address as any party shall have furnished
to the other parties in writing.
(e) Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any Holder of any
Registrable Securities, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or
remedy of such Holder nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereunder occurring; nor shall
any waiver of any single breach or default be deemed a waiver of
any other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or character
on the part of any Holder of any breach or default under this
Agreement, or any waiver on the part of any Holder of any
provisions or conditions of this Agreement, must be in writing
and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement, or
by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
(f) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.
(g) Severability. In the case any provision of this
Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be
amended at any time and from time to time, and particular
provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the
Holder of Registrable Securities as of the date of such amendment
or waiver.
(i) Limitation on Subsequent Registration Rights. After
the date of this Agreement, the Company shall not, without the
prior written consent of the Holder enter into any agreement with
any holder or prospective holder of any securities of the Company
that would grant such holder registration rights senior to those
granted to the Holders hereunder.
[Remainder of page intentionally left blank. Signature page to
follow.]
This Registration Rights Agreement is hereby executed as of
the date first above written.
COMPANY:
DIGITAL LIFESTYLES GROUP, INC.
By:__________________________
Name: Xxxx Xxxx
Its: Chief Executive Officer
HOLDER:
LAURUS MASTER FUND, LTD.
By:
_____________________________
Name:
Its:
EXHIBIT A
Letter Agreement Dated December ___, 2005
