EXHIBIT 99.7
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INVESTOR REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October
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27, 2004, by and among DONOBI, INC., a Nevada corporation, with its principal
office located at 0000 Xxxxx Xxx XX, Xxxxxxxxx, XX 00000 (the "Company"), and
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the undersigned investors (each, an "Investor" and collectively, the
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"Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"),
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the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to the Investors secured
convertible debentures (the "Convertible Debentures") which shall be
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convertible into that number of shares of the Company's common stock, par
value $0.001 per share (the "Common Stock"), pursuant to the terms of the
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Securities Purchase Agreement for an aggregate purchase price of up to
Three Hundred Thousand U.S. Dollars ($300,000). Capitalized terms not
defined herein shall have the meaning ascribed to them in the Securities
Purchase Agreement.
B. To induce the Investors to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
there under, or any similar successor statute (collectively, the "1933
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Act"), and applicable state securities laws. NOW, THEREFORE, in
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consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investors hereby agree as
follows:
1. DEFINITIONS.
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As used in this Agreement, the following terms shall have the following
meanings:
a. "Person" means a corporation, a limited liability company, an
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association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental agency.
b. "Register," "registered," and "registration" refer to a registration
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effected by preparing and filing one or more Registration Statements
(as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis ("Rule 415"), and
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the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange SEC (the
"SEC").
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c. "Registrable Securities" means the shares of Common Stock issuable to
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Investors upon conversion of the Convertible Debentures pursuant to
the Securities Purchase Agreement and the Investor's Shares, as this
term is defined in the Standby Equity Distribution Agreement dated the
date hereof.
d. "Registration Statement" means a registration statement under the 1933
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Act which covers the Registrable Securities.
2. REGISTRATION.
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a. Subject to the terms and conditions of this Agreement, the Company
shall prepare and file, no later than forty five (45) days from the
date hereof (the "Scheduled Filing Deadline"), with the SEC a
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registration statement on Form S-1 or SB-2 (or, if the Company is then
eligible, on Form S-3) under the 1933 Act (the "Initial Registration
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Statement") for the registration for the resale by all Investors who
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purchased Convertible Debentures pursuant to the Securities Purchase
Agreement _________ shares of Common Stock to be issued upon
conversion of the Convertible Debentures issued pursuant to the
Securities Purchase Agreement and the Investor's Shares. The Company
shall cause the Registration Statement to remain effective until all
of the Registrable Securities have been sold. Prior to the filing of
the Registration Statement with the SEC, the Company shall furnish a
copy of the Initial Registration Statement to the Investors for their
review and comment. The Investors shall furnish comments on the
Initial Registration Statement to the Company within twenty-four (24)
hours of the receipt thereof from the Company.
b. Effectiveness of the Initial Registration Statement. The Company shall
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use its best efforts (i) to have the Initial Registration Statement
declared effective by the SEC no later than one hundred twenty (120)
days after the date hereof (the "Scheduled Effective Deadline") and
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(ii) to insure that the Initial Registration Statement and any
subsequent Registration Statement remains in effect until all of the
Registrable Securities have been sold, subject to the terms and
conditions of this Agreement. It shall be an event of default
hereunder if the Initial Registration Statement is not declared
effective by the SEC within one hundred twenty (120) days after filing
thereof.
c. Failure to File or Obtain Effectiveness of the Registration Statement.
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In the event the Registration Statement is not filed by the Scheduled
Filing Deadline or is not declared effective by the SEC on or before
the Scheduled Effective Date, or if after the Registration Statement
has been declared effective by the SEC, sales cannot be made pursuant
to the Registration Statement (whether because of a failure to keep
the Registration Statement effective, failure to disclose such
information as is necessary for sales to be made pursuant to the
Registration Statement, failure to register sufficient shares of
Common Stock or otherwise then as partial relief for the damages to
any holder of Registrable Securities by reason of any such delay in or
reduction of its ability to sell the underlying shares of Common Stock
(which remedy shall not be exclusive of any other remedies at law or
in equity), the Company will pay as liquidated damages (the
"Liquidated Damages") to the holder, at the holder's option, either a
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cash amount or shares of the Company's Common Stock within three (3)
business days, after demand therefore, equal to two percent (2%) of
the liquidated value of the Convertible Debentures outstanding as
Liquidated Damages for each thirty (30) day period after the Scheduled
Filing Deadline or the Scheduled Effective Date as the case may be.
The Company and the Investor hereby agree that no Liquidated Damages
shall be owed to the Investor in the event the Registration Statement
is not declared effective by the SEC on or before the Scheduled
Effective Date, provided that the Company has been diligent and used
its best efforts in working to have such Registration Statement
declared effective by the SEC.
d. Liquidated Damages. The Company and the Investor hereto acknowledge
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and agree that the sums payable under subsection 2(c) above shall
constitute liquidated damages and not penalties and are in addition to
all other rights of the Investor, including the right to call a
default. 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 subsections
bear a reasonable relationship to, 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 Company and the Investor reaching an agreement as to such
amounts was the uncertainty and cost of litigation regarding the
question of actual damages, and (iv) the Company and the Investor are
sophisticated business parties and have been represented by
sophisticated and able legal counsel and negotiated this Agreement at
arm's length.
3. RELATED OBLIGATIONS.
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a. The Company shall keep the Registration Statement effective pursuant
to Rule 415 at all times until the date on which the Investor shall
have sold all the Registrable Securities covered by such Registration
Statement (the "Registration Period"), which Registration Statement
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(including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to
Rule 424 promulgated under the 1933 Act, as may be necessary to keep
such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities shall
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such
Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company's filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or
any analogous report under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Company shall incorporate such report by
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reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on
which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement the Registration Statement.
c. The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge,
(i) at least one (1) copy of such Registration Statement as declared
effective by the SEC and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by
reference, all exhibits and each preliminary prospectus, (ii) ten (10)
copies of the final prospectus included in such Registration Statement
and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such other
documents as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities
owned by such Investor.
d. The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the
United States as any Investor reasonably requests, (ii) prepare and
file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the
Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all
times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a
condition thereto to (w) make any change to its certificate of
incorporation or by-laws, (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this Section 3(d), (y) subject itself to general taxation in any
such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify each
Investor who holds Registrable Securities of the receipt by the
Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in
the United States or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose.
e. As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Investor in writing of the
happening of any event as a result of which the prospectus included in
a Registration Statement, as then in effect, includes an untrue
statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement
or amendment to each Investor. The Company shall also promptly notify
each Investor in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness),
(ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information,
and (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate.
f. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration
Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction within the United
States of America and, if such an order or suspension is issued, to
obtain the withdrawal of such order or suspension at the earliest
possible moment and to notify each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution
thereof or its receipt of actual notice of the initiation or threat of
any proceeding for such purpose.
g. At the reasonable request of any Investor, the Company shall furnish
to such Investor, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from
the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, and
(ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of such Registration Statement, in form, scope
and substance as is customarily given in an underwritten public
offering, addressed to the Investors.
h. The Company shall make available for inspection by (i) any Investor
and (ii) one (1) firm of accountants or other agents retained by the
Investors (collectively, the "Inspectors") all pertinent financial and
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other records, and pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably deemed
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necessary by each Inspector, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall
agree, and each Investor hereby agrees, to hold in strict confidence
and shall not make any disclosure (except to an Investor) or use any
Record or other information which the Company determines in good faith
to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release
of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in
violation of this or any other agreement of which the Inspector and
the Investor has knowledge. Each Investor 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 its
expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential.
i. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or
state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order
from a court or governmental body of competent jurisdiction, or (iv)
such information has been made generally available to the public other
than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or
by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to such Investor and allow
such Investor, at the Investor's expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for,
such information.
j. The Company shall use its best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be
listed on each securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the
rules of such exchange or (ii) the inclusion for quotation on the
National Association of Securities Dealers, Inc. OTC Bulletin Board
for such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this
Section 3(j).
k. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, to facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such
names as the Investors may request.
l. The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
m. The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form
complying with the provisions of Rule 158 under the 0000 Xxx) covering
a twelve (12) month period beginning not later than the first day of
the Company's fiscal quarter next following the effective date of the
Registration Statement.
n. The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.
o. Within two (2) business days after a Registration Statement which
covers Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company
to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investors whose Registrable Securities are
included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the
form attached hereto as Exhibit A.
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p. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
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Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which an Investor has
entered into a contract for sale prior to the Investor's receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(f) or the first sentence of 3(e) and for which the Investor has not yet
settled.
5. EXPENSES OF REGISTRATION.
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All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.
6. INDEMNIFICATION.
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With respect to Registrable Securities which are included in a Registration
Statement under this Agreement:
a. To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend each Investor, the
directors, officers, partners, employees, agents, representatives of,
and each Person, if any, who controls any Investor within the meaning
of the 1933 Act or the 1934 Act (each, an "Indemnified Person"),
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against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several (collectively, "Claims")
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incurred in investigating, preparing or defending any action, claim,
suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party
thereto ("Indemnified Damages"), to which any of them may become
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subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other "blue sky"
laws of any jurisdiction in which Registrable Securities are offered
("Blue Sky Filing"), or the omission or alleged omission to state a
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material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) any untrue statement or
alleged untrue statement of a material fact contained in any final
prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading; or (iii) any
violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state
securities law, or any rule or regulation there under relating to the
offer or sale of the Registrable Securities pursuant to a Registration
Statement (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). The Company shall reimburse the
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Investors and each such controlling person promptly as such expenses
are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (x) shall
not apply to a Claim by an Indemnified Person arising out of or based
upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified
Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto; (y) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered
the prospectus made available by the Company, if such prospectus was
timely made available by the Company pursuant to Section 3(c); and (z)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9 hereof.
b. In connection with a Registration Statement, each Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 6(a),
the Company, each of its directors, each of its officers, employees,
representatives, or agents and each Person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act (each an
"Indemnified Party"), against any Claim or Indemnified Damages to
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which any of them may become subject, under the 1933 Act, the 1934 Act
or otherwise, insofar as such Claim or Indemnified Damages arise out
of or is based upon any Violation, in each case to the extent, and
only to the extent, that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), such Investor will reimburse
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided,
further, however, that the Investor shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale
of Registrable Securities pursuant to such Registration Statement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission
of material fact contained in the prospectus was corrected and such
new prospectus was delivered to each Investor prior to such Investor's
use of the prospectus to which the Claim relates.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses of not
more than one (1) counsel for such Indemnified Person or Indemnified
Party to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified Party
or Indemnified Person shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action
or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action
or claim. The indemnifying party shall keep the Indemnified Party or
Indemnified Person fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action,
claim or proceeding effected without its prior written consent;
provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall,
without the prior written consent of the Indemnified Party or
Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has been
made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except
to the extent that the indemnifying party is prejudiced in its ability
to defend such action.
d. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
e. The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii)
any liabilities the indemnifying party may be subject to pursuant to
the law.
7. CONTRIBUTION.
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To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no
seller of Registrable Securities guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT.
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With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any similar rule or regulation of the SEC that
may at any time permit the Investors to sell securities of the Company to the
public without registration ("Rule 144") the Company agrees to:
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a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's obligations under
Section 4(c) of the Securities Purchase Agreement) and the filing of
such reports and other documents as are required by the applicable
provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as
may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. AMENDMENT OF REGISTRATION RIGHTS.
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Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and Investors
who then hold at least two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to fewer than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.
10. MISCELLANEOUS.
-------------
a. A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices
or elections from two (2) or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of
such Registrable Securities.
b. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt,
when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one (1) business day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for
such communications shall be:
If to the Company, to: Donobi, Inc.
0000 Xxxxx Xxx XX
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to an Investor, to its address and facsimile number on the Schedule
of Investors attached hereto, with copies to such Investor's
representatives as set forth on the Schedule of Investors or to such
other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile
machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
d. The laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and the Investors as its stockholders.
All other questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal
laws of the State of New Jersey, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of
New Jersey or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of New Jersey.
Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Superior Courts of the State of New Jersey,
sitting in Xxxxxx County, New Jersey and federal courts for the
District of New Jersey sitting Newark, New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other
jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
e. This Agreement, the Irrevocable Transfer Agent Instructions, the
Securities Purchase Agreement and related documents including the
Convertible Debenture and the Escrow Agreement dated the date hereof
by and among the Company, the Investors set forth on the Schedule of
Investors attached hereto, and Xxxxx Xxxxxxxx, Esq. (the "Escrow
------
Agreement") and the Security Agreement dated the date hereof (the
---------
"Security Agreement") constitute the entire agreement among the
-------------------
parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This
Agreement, the Irrevocable Transfer Agent Instructions, the Securities
Purchase Agreement and related documents including the Convertible
Debenture, the Escrow Agreement and the Security Agreement supersede
all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
f. This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
i. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby. The language used in this
Agreement will be deemed to be the language chosen by the parties to
express their mutual intent and no rules of strict construction will
be applied against any party.
j. This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other
Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Investor Registration
Rights Agreement to be duly executed as of day and year first above written.
COMPANY:
DONOBI, INC.
By: /s/ Xxxxxxx Xxxxxx, III
--------------------------
Name: Xxxxxxx Xxxxxx, III
Title: President & CEO
SCHEDULE I
----------
SCHEDULE OF INVESTORS
---------------------
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYER
Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: General Partner Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By: ________________________
Name: Xxxx X. Xxxxxx
Its: Portfolio Manager
With a copy to: Xxxxx Xxxxxxxx, Esq. 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
-------------------------
Florida Atlantic Stock Transfer, Inc.
0000 Xxx Xxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
Re: DONOBI, INC.
-------------
Ladies and Gentlemen:
We are counsel to Donobi, Inc., a Nevada corporation (the "Company"), and
-------
have represented the Company in connection with that certain Securities Purchase
Agreement (the "Securities Purchase Agreement") entered into by and among the
------------------------------
Company and the investors named therein (collectively, the "Investors") pursuant
---------
to which the Company issued to the Investors shares of its Common Stock, par
value US$_____ per share (the "Common Stock"). Pursuant to the Purchase
-------------
Agreement, the Company also has entered into a Registration Rights Agreement
with the Investors (the "Investor Registration Rights Agreement") pursuant to
--------------------------------------
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the "1933 Act"). In connection with the
--------
Company's obligations under the Registration Rights Agreement, on ____________
____, the Company filed a Registration Statement on Form ________ (File No.
333-_____________) (the "Registration Statement") with the Securities and
-----------------------
Exchange SEC (the "SEC") relating to the Registrable Securities which names each
---
of the Investors as a selling stockholder there under.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
XXXXXXXXXXX & XXXXXXXX LLP
By:
cc: [LIST NAMES OF INVESTORS]
