Exhibit 10.8
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July
2, 2001, is made and entered into among Cyber Digital Inc., a New York
corporation (the "Company"), and the Investors who are signatories hereto
("Investor" or "Investors") for their benefit and for the benefit of the Warrant
Recipients.
WHEREAS, the Company and the Investor have entered into that certain
Private Equity Line of Credit Agreement, dated as of the date hereof (the
"Investment Agreement"), pursuant to which the Company will issue, from time to
time, to the Investor up to $6,000,000 worth of Common Stock;
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor's agreement to enter into the Investment Agreement, the Company has
agreed to provide the Investor and Warrant Recipients with certain registration
rights with respect to the Registrable Securities (as defined in the Investment
Agreement);
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Investment
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows (capitalized terms used herein and
not defined herein shall have the meaning ascribed to them in the Investment
Agreement):
ARTICLE I
REGISTRATION RIGHTS
Section 1.1 FORM SB-2 REGISTRATION STATEMENTS.
(a) Filing of Form SB-2 Registration Statement. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC within
forty-five (45) days following the Subscription Date registration statements on
Form SB-2 under the Securities Act (the "Registration Statement" and together
with other registration statements to be filed pursuant hereto "Registration
Statements") for the registration of the resale by the Investor and Warrant
Recipients of Registrable Securities.
(b) Effectiveness of the Registration Statement. The Company shall use
its reasonable best efforts to have the Registration Statement declared
effective by the SEC by no later than one hundred twenty (120) days after the
Subscription Date and to insure that the Registration Statement remains in
effect throughout the term of this Agreement as set forth in Section 4.2,
subject to the terms and conditions of this Agreement.
(c) Failure to Obtain Effectiveness of Registration Statements. In the
event the Company fails for any reason to obtain the effectiveness of a
Registration Statement within the time period set forth in Section 1.1(b), the
Company shall pay to the Investors, collectively, within three Trading Days of
the date by which such Registration Statement was required to have been declared
effective, each Investor's Proportionate Share of the sum of $25,000 in
immediately available funds into an account designated by the Investor. In such
event, the Company will also pay to the Warrant Recipients, collectively, the
sum of $15,000 at the same time and in the same manner. Such payments shall be
made by wire transfer of immediately available funds.
(d) Failure to Maintain Effectiveness of Registration Statements. In the
event the Company fails to maintain the effectiveness of a Registration
Statement (or the underlying prospectus) throughout the period set forth in
Section 4.2, and the Investor holds any Registrable Securities at any time
during the period of such ineffectiveness (an "Ineffective Period"), the Company
shall pay to the Investor and Warrant Recipient in immediately available funds
into an account designated by the Investor or Warrant Recipient an amount equal
to one half of one percent (0.5%) of the aggregate purchase price of such
Registrable Securities which are issuable (payable to the Investor) and
aggregate Purchase Price (as defined in the Warrant) of the Warrant Shares
(payable to the Warrant Recipient) of all of the Registrable Securities then
held by the Investor and Warrant Recipient for each of the first four
seven-calendar-day periods (or portion thereof) of an Ineffective Period and one
percent (1.0%) for each subsequent seven-calendar-day periods (or portion
thereof) of such Ineffective Period. Such payments shall be made on the first
Trading Day after the earliest to occur of (i) the expiration of the Commitment
Period, (ii) the expiration of an Ineffective Period, (iii) the expiration of
the first twenty-eight calendar days of an Ineffective Period and (iv) the
expiration of each additional twenty-eight calendar-day period during an
Ineffective Period.
(e) The parties hereto acknowledge and agree that the sums payable under
Sections 1(c) or 1(d) above shall constitute liquidated damages and not
penalties. The parties further acknowledge that (i) the amount of loss or
damages likely to be incurred is incapable or is difficult to precisely
estimate, (ii) the amounts specified in such Sections bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred in connection with any failure by the Company to obtain or
maintain the effectiveness of a Registration Statement, (iii) one of the reasons
for the parties reaching an agreement as to such amounts was the uncertainty and
cost of litigation regarding the question of actual damages, and (iv) the
parties are sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated this Agreement
at arm's length.
ARTICLE II
REGISTRATION PROCEDURES
Section 2.1 FILINGS; INFORMATION. The Company will facilitate the
registration of such Registrable Securities in accordance with the Investor's
and Warrant Recipient's intended methods of disposition thereof. Without
limiting the foregoing, the Company in each such case will do the following as
expeditiously as possible, but in no event later than the deadline, if any,
prescribed therefor in this Agreement:
(a) The Company shall prepare and file with the SEC a registration
statement on Form SB-2 (if use of such form is then available to the Company
pursuant to the rules of the SEC and, if not, on such other form promulgated by
the SEC for which the Company then qualifies and which counsel for the Company
shall deem appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with
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the provisions of this Agreement and in accordance with the intended method of
distribution of such Registrable Securities); use reasonable best efforts to
cause such filed Registration Statement to become and remain effective (pursuant
to Rule 415 under the Securities Act, if applicable, or otherwise); prepare and
file with the SEC 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 term of this Agreement; prepare and
file within one day after each Closing Date any prospectus supplement required
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the Investor set forth in such Registration Statement.
(b) The Company shall file all necessary amendments to the Registration
Statement in order to effectuate the purpose of this Agreement.
(c) If so requested by the managing underwriters, if any, or the holders
of a majority in aggregate amount of the Registrable Securities being
registered, the Company shall (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such holders agree should be included therein, and
(ii) make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 2.1(c)(ii) that would, in the opinion of counsel
for the Company, violate applicable law.
(d) In connection with the filing of a Registration Statement, the
Company shall enter into such agreements and take all such other reasonable
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the holders of a majority in aggregate
principal amount of the Registrable Securities being sold) in order to expedite
or facilitate the disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the registration is an underwritten registration, (i) make such
representations and warranties to the holders of such Registrable Securities and
the underwriters, if any, with respect to the business of the Company (including
with respect to businesses or assets acquired or to be acquired by the Company),
and the Registration Statement, prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the selling holders of such
Registrable Securities and the underwriters, if any, than those set forth herein
(or such other provisions and procedures acceptable to the holders of a majority
in aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters, if any); and (iii) deliver
such documents and certificates as may be reasonably requested by the holders of
a majority in aggregate principal amount of the Registrable Securities being
sold, their counsel and the managing underwriters, if any, to evidence the
continued validity of their representations and warranties made pursuant to
clause (i) above and to evidence compliance
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with any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(e) Five Trading Days prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto (excluding amendments deemed
to result from the filing of documents incorporated by reference therein), the
Company shall deliver to the seller of Registrable Securities and counsel
representing the seller of Registrable Securities, in accordance with the notice
provisions of Section 4.8, copies of such Registration Statement as proposed to
be filed, together with exhibits thereto, which documents will be subject to
review by such parties, and thereafter deliver to the seller of Registrable
Securities and its counsel, in accordance with the notice provisions of Section
4.8, such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the prospectus
included in such Registration Statement (including each preliminary prospectus)
and such other documents or information as the Investor or counsel may
reasonably request in order to facilitate the disposition of the Registrable
Securities.
(f) After the filing of the Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(g) The Company shall use its reasonable best efforts to (i) register or
qualify such Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States as the Investor may reasonably (in
light of its intended plan of distribution) request, and (ii) cause such
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Investor to consummate the disposition of the Registrable Securities; provided
that the Company will not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (g), subject itself to taxation in any such jurisdiction, or consent
or subject itself to general service of process in any such jurisdiction.
(h) The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of a Registration Statement
or related prospectus in respect of an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement and amendments or supplements to the Registration
Statement or related prospectus; (ii) the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt 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; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, 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 not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required
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to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and (v) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate; and the Company will promptly make
available to the Investor any such supplement or amendment to the related
prospectus.
(i) The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).
(j) The Company shall make available to the Investor (and will deliver
to Investor's counsel), subject to restrictions imposed by the United States
federal government or any agency or instrumentality thereof, copies of all
correspondence between the SEC and the Company, its counsel or auditors and will
also make available for inspection by the Investor and any attorney, accountant
or other professional retained by the Investor (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information reasonably requested
by any Inspectors in connection with such Registration Statement. Records that
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (ii) the disclosure
or release of such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or other
order from a court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the Inspectors shall
provide the Company with prompt notice of any such request or requirement so
that the Company may seek an appropriate protective order or waive such
Inspectors' obligation not to disclose such Records; and, provided further, that
if failing the entry of a protective order or the waiver by the Company
permitting the disclosure or release of such Records, the Inspectors, upon
advice of counsel, are compelled to disclose such Records, the Inspectors may
disclose that portion of the Records which counsel has advised the Inspectors
that the Inspectors are compelled to disclose. The Investor agrees that
information obtained by it solely as a result of such inspections (not including
any information obtained from a third party who, insofar as is known to the
Investor after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its affiliates unless
and until such information is made generally available to the public. The
Investor further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
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(k) The Company shall deliver, in accordance with the notice provisions
of Section 4.8, to the Investor a signed counterpart, addressed to the Investor,
of (1) an opinion or opinions of counsel to the Company, in such form reasonably
acceptable to the Investor, and (2) to the extent required by law or reasonably
necessary to effect a sale of Registrable Securities in accordance with
prevailing business practices at the time of any sale of Registrable Securities
pursuant to a Registration Statement, a comfort letter or comfort letters from
the Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Investor therefore reasonably requests.
(l) The Company shall otherwise comply with all applicable rules and
regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act. (m) The Company shall
appoint a transfer agent and registrar for all such Registrable Securities
covered by such Registration Statement not later than the effective date of such
Registration Statement.
(n) The Company may require the Investor to promptly furnish in writing
to the Company such information as may be legally required in connection with
such registration including, without limitation, all such information as may be
requested by the SEC or the National Association of Securities Dealers. The
Investor agrees to provide such information requested in connection with such
registration within ten (10) business days after receiving such written request
and the Company shall not be responsible for any delays in obtaining or
maintaining the effectiveness of the Registration Statement directly caused by
the Investor's failure to timely provide such information.
Section 2.2 REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities exchange
listing and fees required by the National Association of Securities Dealers,
(ii) all registration, filing, qualification and other fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all word processing, duplicating, printing,
messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audits or comfort letters or
costs associated with the delivery by independent certified public accountants
of such special audit(s) or comfort letter(s) requested pursuant to Section
2.1(l) hereof), (vii) the fees and expenses of any special experts retained by
the Company in connection with such registration, (viii) premiums and other
costs of policies of insurance against liabilities arising out of any public
offering of the Registrable Securities being registered, and (ix) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities,
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which shall be payable by each seller of Registrable Securities pro rata on the
basis of the number of Registrable Securities of each such seller that are
included in a registration under this Agreement.
ARTICLE III
INDEMNIFICATION AND CONTRIBUTION
Section 3.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each seller of Registrable Securities, its partners,
affiliates, officers, directors, employees and duly authorized agents, and each
Person, if any, who controls the seller of Registrable Securities within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
together with the partners, affiliates, officers, directors, employees and duly
authorized agents of such controlling Person or entity (collectively, the
"Controlling Persons"), from and against any loss, claim, damage, liability,
costs and expenses (including, without limitation, reasonable attorneys' fees
and disbursements and costs and expenses of investigating and defending any such
claim) (collectively, "Damages"), and any action or proceeding in respect
thereof to which the seller of Registrable Securities, its partners, affiliates,
officers, directors, employees and duly authorized agents, and any such
Controlling Person may become subject under the Securities Act or otherwise as
incurred and, insofar as such Damages (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
prospectus relating to the Registrable Securities or any preliminary prospectus,
or arises out of, or are based upon, any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by the seller of Registrable
Securities expressly for use therein, and shall reimburse the seller of
Registrable Securities, its partners, affiliates, officers, directors, employees
and duly authorized agents, and each such Controlling Person for any legal and
other expenses reasonably incurred by the seller of Registrable Securities, its
partners, affiliates, officers, directors, employees and duly authorized agents,
or any such Controlling Person, as incurred, in investigating or defending or
preparing to defend against any such Damages or actions or proceedings;
provided, however, that the Company shall not be liable to the seller of
Registrable Securities to the extent that any such Damages arise out of or are
based upon an untrue statement or omission made in any preliminary prospectus if
(A) the seller of Registrable Securities failed to send or deliver a copy of the
final prospectus delivered by the Company to the seller of Registrable
Securities with or prior to the delivery of written confirmation of the sale by
the seller of Registrable Securities to the Person asserting the claim from
which such Damages arise, and (B) the final prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, or (C) such untrue statement or omission made in any prospectus was
furnished to the Company by a seller of Registrable Securities or described such
seller of Registrable Securities in a manner consistent with representations
made by any Investor in the Investment Agreement.
Section 3.2 INDEMNIFICATION BY SELLER OF REGISTRABLE SECURITIES. Each
seller of Registrable Securities agrees to indemnify and hold harmless the
Company and each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and each
officer of the Company who signs the Registration Statement, the Company's
directors, together with the partners, affiliates,
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officers, directors, employees and duly authorized agents of such controlling
Person or entity (collectively, the "Controlling Persons"), from and against any
Damages, and any action or proceeding in respect thereof to which the Company
and Controlling Person may become subject under the Securities Act or otherwise
as incurred and, insofar as such Damages (or actions or proceedings in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
prospectus relating to the Registrable Securities or any preliminary prospectus,
or arises out of, or are based upon, any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, only insofar as the same are based upon
information furnished in writing to the Company by the seller of Registrable
Securities expressly for use therein, and shall reimburse the Company and each
such Controlling Person for any legal and other expenses reasonably incurred by
the Company, or any such Controlling Person, in investigating or defending or
preparing to defend against any such Damages or actions or proceedings;
provided, however, that the seller of Registrable Securities shall be limited to
the proportion of any such loss, claim, damage, liability or expense which is
equal to the proportion that the public offering price of the Registrable
Securities sold by the seller under such Registration Statement bears to the
total public offering price of all securities offered thereunder, but not in any
event to exceed the net proceeds received by the seller of Registrable
Securities from the sale of Registrable Securities covered by such registration
statement.
Section 3.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by any person or entity in respect of which indemnity may be sought
pursuant to Section 3.1 or 3.2 (an "Indemnified Party") of notice of any claim
or the commencement of any action, the Indemnified Party shall, if a claim in
respect thereof is to be made against the person or entity against whom such
indemnity may be sought (the "Indemnifying Party"), notify the Indemnifying
Party in writing of the claim or the commencement of such action; in the event
an Indemnified Party shall fail to give such notice as provided in this Section
3.3 and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, the indemnification provided for in Section
3.1 and 3.2 shall be reduced to the extent of any actual prejudice resulting
from such failure to so notify the Indemnifying Party; provided, that the
failure to notify the Indemnifying Party shall not relieve it from any liability
that it may have to an Indemnified Party otherwise than under Section 3.1 or
3.2. If any such claim or action shall be brought against an Indemnified Party,
and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall
be entitled to participate therein, and, to the extent that it wishes, jointly
with any other similarly notified Indemnifying Party, to assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Party. After
notice from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided that the Indemnified Party
shall have the right to employ separate counsel to represent the Indemnified
Party and its controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) in the reasonable judgment of the Company and such Indemnified
Party, representation of both parties by the same counsel
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would be inappropriate due to actual or potential conflicts of interest between
them, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such claim or action or separate but substantially
similar or related claims or actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys together with appropriate local
counsel) at any time for all Indemnified Parties, or for fees and expenses that
are not reasonable. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any claim or pending
or threatened proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability arising out of such claim or
proceeding. Whether or not the defense of any claim or action is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent, which consent will not be
unreasonably withheld.
Section 3.4 OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding paragraphs of this Article 3 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act. The provisions of this Article III
shall be in addition to any other rights to indemnification, contribution or
other remedies which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.
Section 3.5 CONTRIBUTION. If the indemnification provided for in this
Article III is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and the Investor on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Investor in connection with
such statements or omissions, as well as other equitable considerations. The
relative fault of the Company on the one hand and of the Investor on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Investor
agree that it would not be just and equitable if contribution pursuant to this
Section 3.5 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding sentence. The amount paid or payable by an
Indemnified Party as a result of the Damages referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.5, the Investor shall in no
event be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of the seller of Registrable
Securities were sold to the public (less underwriting discounts and commissions)
exceeds the amount of any damages which the Investor has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Section 3.6 UNDERWRITER LIABILITY. Nothing contained in this Agreement
or any document delivered herewith shall require that the Investor become, or
imply that the Investor is, an -underwriter as defined in the Exchange Act or
Securities Act, nor a "statutory underwriter." The Investor shall not be
required to take any action or assume any liability or obligation which would or
could impose underwriter or "statutory underwriter" status or liability on the
Investor.
ARTICLE IV
MISCELLANEOUS
Section 4.1 NO OUTSTANDING REGISTRATION RIGHTS. The Company represents
and warrants to the seller of Registrable Securities that there is not in effect
on the date hereof any agreement by the Company pursuant to which any holders of
securities of the Company have a right to cause the Company to register or
qualify such securities under the Securities Act or any securities or blue sky
laws of any jurisdiction that would conflict or be inconsistent with any
provision of this Agreement or the Investment Agreement. The Company further
represents and warrants that upon issuance, the Registrable Securities will not
have been issued or sold in violation of any preemptive or other similar rights
of holders of any securities of the Company or any other person.
Section 4.2 TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Put Shares
and Warrant Shares (i) have been disposed of pursuant to the Registration
Statement, (ii) have been sold under circumstances under which all of the
applicable conditions of Rule 144 (or any similar provision then in force) under
the Securities Act ("Rule 144") are met, (iii) have been otherwise transferred
to holders who may trade such shares without restriction under the Securities
Act, and the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend, or (iv) may be
sold without any time, volume or manner limitations pursuant to Rule 144(k) (or
any similar provision then in effect) under the Securities Act in the opinion of
counsel to the Company, which counsel shall be reasonably acceptable to the
holder of Registrable Securities; provided, however, that such registration
rights shall not terminate sooner than two years following the end of the
Commitment Period. Notwithstanding the foregoing, paragraph (d) of Section 1.1,
Article III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.
Section 4.3 RULE 144. The Company covenants that it will file all
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as holders of Registrable Securities
may reasonably request, all to the extent required from time to time to enable
the seller of Registrable Securities to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, as such Rule may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the SEC. If at any time the
Company is not required to file such reports, it will, upon the request of any
holder of Registrable Securities, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144. Upon the request of the
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seller of Registrable Securities, the Company will deliver to the seller of
Registrable Securities a written statement as to whether it has complied with
such requirements.
Section 4.4 CERTIFICATE. The Company will, at its expense, forthwith
upon the request of any holder of Registrable Securities, deliver to such holder
a certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's SEC
file number, (d) the number of shares of each class of stock outstanding as
shown by the most recent report or statement published by the Company, and (e)
whether the Company has filed the reports required to be filed under the
Exchange Act for a period of at least ninety (90) days prior to the date of such
certificate and in addition has filed the most recent annual report required to
be filed thereunder.
Section 4.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
the parties to this Agreement. 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 Company has obtained the written consent of the holders of a majority
of the then outstanding Registrable Securities. Notwithstanding the foregoing,
the waiver of any provision hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities being sold
by such holders; provided that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence. No course of dealing between or among any
Person having any interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or obligations of
any person under or by reason of this Agreement.
Section 4.6 SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Investor and
Warrant Recipients may assign their rights under this Agreement to any
subsequent holder the Registrable Securities, provided that the Company shall
have the right to require any holder of Registrable Securities to execute a
counterpart of this Agreement as a condition to such holder's claim to any
rights hereunder. The Investor may unequivocally assign its rights hereunder to
any other Investor or a subsidiary of itself or of another Investor without the
consent of the Company. This Agreement, together with the Investment Agreement
set forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
Section 4.7 SEPARABILITY. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
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Section 4.8 NOTICES. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) personally served, (ii) delivered by reputable express
courier service with charges prepaid, or (iii) transmitted by hand delivery,
telegram or facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice. Any notice or
other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery, personal delivery or delivery by facsimile,
with accurate confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day
during normal business hours where such notice is to be received), (b) on the
second business day following the date of delivery to the express courier
service, addressed to the address below, or upon actual receipt of such
delivery, whichever shall first occur. The addresses for such communications
shall be:
If to Cyber Digital Inc.:
Cyber Digital Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
With a copy to (which communication shall not constitute notice):
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
If to the Investor:
To the address and telecopier number set forth on the signature
page hereto
with a copy to (which communication shall not constitute notice):
Grushko & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 4.8 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 4.9 GOVERNING LAW. This Agreement shall be subject to the same
choice of law, venue and jurisdiction as the Investment Agreement and construed
under the laws of the
00
Xxxxx xx Xxx Xxxx, without giving effect to provisions regarding conflicts of
law or choice of law.
Section 4.10 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
Section 4.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
Section 4.12 FURTHER ASSURANCES. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
Section 4.13 REMEDIES. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
Section 4.14
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THIRD PARTY BENEFICIARIES. The Warrant Recipients are expressly made
third-party beneficiaries of the agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.
CYBER DIGITAL, INC.
By:________________________________
------------------------------------
GRENVILLE FINANCIAL LTD. - Investor
Trident Xxxxxxxx
X.X. Xxx 000
Xxxx Xxxx, Xxxxxxx, B.V.I.
Fax: 000-000-000-0000
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