EXHIBIT 10.33
INVESTOR REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of December 13, 2004, by and among DCI USA, INC., a Delaware
corporation (the "Company"), and the undersigned investors (each,
an "Investor" and collectively, the "Investors").
WHEREAS:
A. In connection with the Securities Purchase Agreement by
and among the parties hereto of even date herewith (the
"Securities Purchase Agreement"), 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 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 Securities Purchase Agreement for an
aggregate purchase price of Five Hundred Thousand Dollars
($500,000). 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 thereunder, or any similar
successor statute (collectively, the "1933 Act"), and applicable
state securities laws.
NOW, THEREFORE, in 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.
As used in this Agreement, the following terms shall have
the following meanings:
(a) "Person" means a corporation, a limited liability
company, an association, a partnership, an organization, a
business, an individual, a governmental or political subdivision
thereof or a governmental agency.
(b) "Register," "registered," and "registration" refer
to a registration 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 the declaration or ordering of
effectiveness of such Registration Statement(s) by the United
States Securities and Exchange SEC (the "SEC").
(c) "Registrable Securities" means the shares of Common
Stock issuable to Investors upon conversion of (i) the
Convertible Debentures pursuant to the Securities Purchase
Agreement and (ii) the Investor's Shares.
(d) "Registration Statement" means a registration
statement under the 1933 Act which covers the Registrable
Securities.
2. REGISTRATION.
(a) Subject to the terms and conditions of this
Agreement, the Company shall promptly prepare and file, no later
than 45 days after even date herein (the "Scheduled Filing
Deadline"), with the SEC a 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 Statement") for the
registration for the resale by all Investors who purchased
Convertible Debentures pursuant to the Securities Purchase
Agreement 15,000,000 shares of the Company's Common Stock issued
upon conversion of the Convertible Debentures issued pursuant to
the Securities Purchase Agreement. The Company shall cause the
Registration Statement to remain effective until all of the
Registrable Securities have been sold.
(b) Effectiveness of the Initial Registration
Statement. The Company shall use its best efforts (i) to have
the Initial Registration Statement declared effective by the SEC
no later than hundred and fifteen (115) after the filing thereof
(the "Scheduled Effective Deadline") and (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 filed 45 days after even
date herein or the Initial Registration Statement is not declared
effective by the SEC within hundred and fifteen (115) days after
filing thereof.
(c) Failure to File or Obtain Effectiveness of the
Registration Statement. 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
Deadline, 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"), and not as a
penalty, to the holder, at the holder's option, either a cash
amount or shares of the Company's Common Stock 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 Deadline as the case may be. Any Liquidated Damages
payable hereunder shall not limit, prohibit or preclude the
Investor from seeking any other remedy available to it under
contract, at law or in equity. The Liquidated Damages shall
offset against the proceeds to be paid by the Investor in the
last tranche under the Convertible Debentures or, if the last
tranche has been paid to the Company, then the Company shall pay
the Investor the Liquidated Damages within three (3) business
days of the Investor making written demand.
(d) Liquidated Damages. The Company and the Investor
hereto acknowledge 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.
(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 (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 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) Upon five (5) days prior written notice by the
Investor, which notice shall not be given more than one (1) time
per calendar quarter, 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
other records, and pertinent corporate documents and properties
of the Company (collectively, the "Records"), as shall be
reasonably deemed 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.
(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.
(a) 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.
(b) The Investor shall use its best efforts to furnish
a response to any Company's inquiry within three (3) business
days after receipt of such inquiry.
5. EXPENSES OF REGISTRATION.
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.
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"), 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") incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto ("Indemnified Damages"), to which any of them may
become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in 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 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 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.
Notwithstanding anything to the contrary herein or in any other
agreement entered into between the Company and the Investor, the
Company acknowledges and agrees that it is solely responsible and
shall indemnify each Indemnified Person for the contents of any
registration statement, prospectus or other filing made with the
SEC or otherwise used in the offering of the Company's
securities (except as such disclosure relates solely to the
Investor and then only to the extent that such disclosure
conforms with information furnished in writing by the Investor to
the Company), even if the Investor or its agents as an
accommodation to the Company participate or assist in the
preparation of such registration statement, prospectus or other
SEC filing. The Company shall retain its own legal counsel to
review, edit, confirm and do all things such counsel deems
necessary or desirable to such registration statement, prospectus
or other SEC filing to ensure that it does not contain an untrue
statement or alleged untrue statement of material fact or omit or
alleged to omit a material fact necessary to make the statements
made therein, in light of the circumstances under which the
statements were made, not misleading. 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 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.
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.
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:
(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.
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: DCI USA, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxx & Associates
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, 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 Investor shall bear all commissions and other
selling expenses incurred in connection with the sale of the
registered securities covered under this Agreement.
(e) The laws of the State of New Jersey 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.
(f) 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 (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.
(g) This Agreement shall inure to the benefit of and be
binding upon the permitted successors and assigns of each of the
parties hereto.
(h) The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) 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.
(j) 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.
(k) 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.
(l) 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.
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:
DCI USA, INC.
By: /s/ Xxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxxxxx
Title: Chairman
SCHEDULE I
SCHEDULE OF BUYERS
Name Signature Address/Facsimile
Number of Buyer
Cornell Capital By: Yorkville Advisors, 000 Xxxxxx Xxxxxx -
Partners, LP LLC Suite 3700
Its: General Partner Xxxxxx Xxxx, XX 00000
Facsimile: (201)
985-8266
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Its: Portfolio Manager
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
INSERT NAME OF INVESTOR
Attention:
Re: DCI USA, INC.
Ladies and Gentlemen:
We are counsel to DCI USA, Inc., a Delaware 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 $.001 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 SB-2 (File No. ____-
_____________) (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,
[COMPANY COUNSEL]
By:
cc: [LIST NAMES OF INVESTORS]
