1
EXHIBIT 4.21
REGISTRATION RIGHTS AGREEMENT, by and among Dove Entertainment, Inc., a
California corporation (the "Company"), Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx
(collectively, the "Holder"). Capitalized terms used herein, if not otherwise
defined, shall have the meaning ascribed to them in the Escrow Agreement, dated
June __, 1997, by and between the Company and the Holder (the "Escrow
Agreement").
WHEREAS, pursuant to an Employee Termination Agreement between the
Company and the Holder (the "Termination Agreement"), the Company has agreed to
make certain payments to Holder for up to five years, and in connection
therewith, the Company has agreed to place in escrow 1,500 shares of its newly
issued Series E Preferred Stock, Stated Value $1,000 per share (the "Series E
Preferred Stock"), which Series E Preferred Stock will be convertible into
shares of Common Stock, par value $.01 per share of the Company as set forth in
the Certificate of Determination for the Series E Preferred Stock.
WHEREAS, a portion of the Series E Preferred Stock will be released
from escrow to the Holder upon the occurrence of a default by the Company of a
Payment Obligation under the Escrow Agreement.
WHEREAS, pursuant to the terms of and in order to induce the Holder to
enter into the Termination Agreement and the Escrow Agreement, the Company and
the Holder have agreed to enter into this Agreement;
WHEREAS, the shares of Common Stock issuable upon conversion of the
Series E Preferred Stock shall be hereinafter referred to as the "Registrable
Shares"; and
WHEREAS, it is intended by the Company and Holder that this Agreement
shall become effective immediately upon the deposit by the Company of the Series
E Preferred Stock into escrow.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Company and the Holder agree as follows:
1. Form S-3 Demand Registration.
(a) Subject to the conditions of this Section 1, if the Company shall
receive a written request from the Holder that the Company effect a registration
on Form S-3 (or any successor to Form S-3) or any similar short-form
registration statement and any related qualification or compliance under
applicable securities and blue sky laws with respect to all or a part of the
Released Registrable Shares (as defined below) the Company will, as soon as
practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of the Released Registrable Shares as
are specified in such request, provided, however, that the Company shall
1
2
not be obligated to effect any such registration, qualification or compliance
pursuant to this Section 1:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holder; or
(ii) if the Company shall furnish to the Holder a
certificate signed by the Chairman of the Board of
Directors of the Company stating that in the good
faith judgment of the Board of Directors of the
Company, it would be detrimental to the Company and
its shareholders for such Form S-3 registration to be
effected at such time, in which event the Company
shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more
than one hundred eighty (180) days after receipt by
the Company of the request of the Holder under this
Section 1; or
(iii) if the Company shall have previously filed a
registration on Form S-3 at the request of the Holder
with respect to the same Released Registrable Shares
or a registration statement covering the Released
Registrable Shares shall have previously been
declared effective or is being reviewed by the SEC;
or
(iv) in any jurisdiction in which the Company would be
required in connection therewith or as a condition
thereto to qualify to do business or to execute or to
file a general consent to service of process in
effecting such registration, qualification or
compliance.
"Released Registrable Shares" means those Registrable Shares released
from escrow (and, if the Registrable Shares have not yet been issued, the
Registrable Shares issuable upon conversion of the Series E Preferred Stock
released from escrow) due to the occurrence of a default by the Company of a
Payment Obligation under the Escrow Agreement. No shares need be registered
pursuant to this Agreement unless such shares are Released Registrable Shares.
(b) Holder's registration rights under this Section 1 shall expire if
all Registrable Shares have become Released Registrable Shares and all Released
Registrable Shares still held by the Holder may be sold under Rule 144 during
any one hundred eighty (180) day period.
2. Piggyback Registration. The Company shall notify the Holder no later
than twenty (20) days prior to the filing of any registration statement under
the Securities Act for purposes of any public offering of Common Stock by the
Company, on Form S-3 or any other available form, initiated by the Company (but
excluding registration statements relating to employee benefit plans or
arrangements or with respect to any reclassifications, reorganizations, business
combinations, acquisitions or other similar transactions or transactions
described in Rule 145 promulgated under the Securities Act or any registration
statement on a Form S-8 or S-
2
3
4 or any similar form which may be promulgated in the future) and will afford
Holder an opportunity to include in such registration statement all or part of
the Released Registrable Shares. If Holder desires to include in any such
registration statement all or any part of the Released Registrable Shares,
Holder shall, within ten (10) days after the date of the above-described notice
from the Company, so notify the Company in writing. Such notice shall state the
intended method of disposition of such Released Registrable Shares. If Holder
decides not to include all of the Released Registrable Shares in any
registration statement thereafter filed by the Company, Holder shall
nevertheless continue to have the right to include the Released Registrable
Shares in any subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its Common Stock, all
upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which the Company
gives notice under this Section 2 is for an underwritten offering, the Company
shall so advise the Holder. In such event, the right of the Holder to be
included in a registration pursuant to this Section 2 shall be conditioned upon
the Holder's participation in such underwriting and the inclusion of the
Released Registrable Shares in the underwriting to the extent provided herein.
In addition, the inclusion of the Released Registrable Shares may be further
conditioned upon the Holder agreeing to a lock-up of such Released Registrable
Shares for a period not to exceed 180 days. If Holder participates in such
underwriting, Holder shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company and perform its obligations under such agreement. Notwithstanding any
other provision of the Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number of Released
Registrable Shares to be underwritten, the number of shares of Common Stock that
may be included in the underwriting shall be allocated first to the Company,
then to any other holder of Common Stock exercising a demand registration as to
the registration statement in question, and then, to the extent any Released
Registrable Shares are to be included in such offering, to the Holder. No such
reduction shall reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting.
(b) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2
prior to the effectiveness of such registration whether or not the Holder has
elected to include securities in such registration. The Registration Expenses
(as defined below) of such withdrawn registration shall be borne by the Company
in accordance with Section 4 hereof.
(c) Expiration. Holder's registration rights under this Section 2 shall
expire (i) if all Registrable Shares have been previously sold by the Holder, or
(ii) if all Registrable Shares have become Released Registrable Shares and (A)
all Released Registrable Shares still held by the Holder may be sold under Rule
144 without regard to the volume limitations set forth therein or (B) if one or
more registration statements covering all Registrable Shares shall have
previously been declared effective or is being reviewed by the SEC.
3
4
3. Expenses of Registration. Except as specifically provided herein,
all Registration Expenses (as defined below) incurred in connection with any
registration under Sections 1 or 2 shall be borne by the Company. All Selling
Expenses (as defined below) incurred in connection with any registrations
hereunder shall be borne by the Holder. The Company shall not, however, be
required to pay for expenses of any registration proceeding, including, without
limitation, Registration Expenses, begun pursuant to Section 1, the request of
which has been subsequently withdrawn by the Holder unless the withdrawal is
based upon material adverse information concerning the Company of which the
Holder was not aware, or deemed to be aware of, at the time of such request. As
used herein, "Registration Expenses" means all expenses incurred by the Company
in complying with Sections 1 or 2 including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company), and "Selling Expenses" means all underwriting discounts
and selling commissions applicable to the sale of Registrable Shares and the
fees and disbursements of all advisors, including, without limitation, counsel
and accountants, of the Holder.
4. Obligations of the Company. Whenever required to effect the
registration of any Released Registrable Shares, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Released Registrable Shares within forty five (45) days and use all
reasonable efforts to cause such registration statement to become effective and,
upon the request of the Holder, keep such registration statement effective for
up to one hundred eighty (180) days or, if earlier, until the Holder has
completed the distribution related thereto.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Released Registrable
Shares covered by such registration statement.
(c) Furnish to the Holder such reasonable number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as Holder may
reasonably request in order to facilitate the disposition of Released
Registrable Shares owned by Holder in accordance with the registration
statement.
(d) Use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to execute or to file a general
consent to service of process in any such states or jurisdictions.
4
5
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Holder shall also enter
into and perform its obligations under such an agreement.
(f) Notify Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Prior to the effective date of any registration statement covering
Released Registrable Shares, use its reasonable efforts to provide a CUSIP
number for the Released Registrable Shares.
(h) Use its reasonable efforts to cause the Released Registrable
Securities to be (i) listed on each securities exchange, if any, on which
securities of the Company are then listed or (ii) authorized to be quoted on the
NASDAQ SmallCap Market or the NASDAQ National Market if the securities so
qualify.
(i) Maintain a transfer agent and registrar for the Company's Common
Stock.
5. Delay of Registration. Furnishing Information. Holder shall not have
any right to obtain or seek an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Agreement. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Sections 1 or 2 that the Holder shall furnish to the Company such information
regarding themselves, the Released Registrable Shares held by them and the
intended method of disposition of such securities, and any other information, as
shall be required by the Company to effect the registration of the Released
Registrable Shares.
6. Indemnification. In the event any Registrable Shares are included in
a registration statement under Sections 1 or 2:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless Holder against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively, a
"Violation") by the Company: (a) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (b) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
5
6
statements therein not misleading or (c) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities or
blue sky law or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities or blue sky law in connection with the
offering covered by such registration statement; and the Company will reimburse
Holder for any reasonable legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld;
provided, further, however, that the Company shall not be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Holder or an underwriter in an underwritten offering;
provided, further, however, that the Company will not be responsible for any
losses, claims, damages, liabilities or actions arising out of or based upon any
Violation which was corrected in a subsequent prospectus which was not timely
distributed to the person or entity which led to such loss, claim, damage,
liability or action.
(b) To the extent permitted by law, Holder will indemnify and hold
harmless the Company, each of its directors, officers and legal counsel and each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act, any underwriter and any other holder selling securities
under such registration statement or any of such underwriter's or other holder's
partners, directors, officers, legal counsel or any person who controls such
underwriter or holder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, legal counsel,
controlling person, underwriter, other such holder, or partner, director,
officer, legal counsel or controlling person of such underwriter or other holder
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are 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 by or on behalf of
Holder for use in connection with such registration; and Holder will reimburse
any reasonable legal or other expenses reasonably incurred by the Company or any
such director, officer, legal counsel, controlling person, underwriter or other
holder, or partner, officer, director, legal counsel or controlling person of
such underwriter or other holder in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, further, however, that in no event shall
any indemnity under this Section exceed the gross proceeds from the offering
received or receivable by Holder.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action (including any governmental action),
such indemnified party will,
6
7
if a claim in respect thereof is to be made against any indemnifying party under
this Section, 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 the defense
thereof with counsel reasonably satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation of
such indemnified party by the counsel retained by the indemnifying party would
be inappropriate due to actual or probable potential differing interests between
such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section,
but the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section.
(d) If the indemnification provided for in this Section is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party, on the one hand, and of the indemnified party, on the
other hand, in connection with the Violations that resulted in such loss, claim,
damage or liability, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, however, that in no event shall any contribution by Holder hereunder
exceed the gross proceeds from the offering received or receivable by Holder. No
person guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The obligations of the Company and Holder under this Section shall
survive completion of any offering of Registrable Shares in a registration
statement. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. In the event any offering of Registrable Shares is underwritten, and
the underwriting agreement provides for indemnification and/or contribution by
the Company and the Holder the indemnification and/or
7
8
contribution obligations of the Company and the Holder hereunder shall in no
event exceed the obligations of the parties set forth in such underwriting
agreement.
7. Assignment of Registration Rights. The rights to cause the Company
to register Released Registrable Shares pursuant to this Agreement may not be
assigned by Holder without the prior written consent of the Company.
8. Amendment of Registration Rights. Any provision 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 the Holder. Any amendment or waiver effected
in accordance with this Section shall be binding upon Holder and the Company. By
acceptance of any benefits under this Agreement, Holder hereby agrees to be
bound by the provisions hereunder.
9. Rule 144 Reporting. With a view to making available to the Holder
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Released Registrable Shares to the public without registration, the
Company agrees to use its reasonable effort to: (a) make and keep public
information available, as those terms are understood and defined in SEC Rule 144
or any similar or analogous rule promulgated under the Securities Act, at all
times after the date hereof until all of the Released Registrable Shares have
been sold pursuant to an effective registration statement or are no longer
outstanding or all of the Common Stock are redeemed; (b) file with the SEC, in a
timely manner, all reports and other documents required of the Company under the
Exchange Act; and (c) so long as Holder owns any Released Registrable Shares,
furnish or make available to Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144 of the Securities Act, and of the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company and such other reports and documents as
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.
10. Effectiveness of Registration Statement. The Company shall use its
best efforts to obtain the effectiveness of a registration statement within
ninety (90) days after the date such registration statement is filed.
11. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and the Holder.
12. Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and same instrument.
8
9
13. Governing Law. This Agreement shall be construed in accordance with
and governed by the internal laws of the State of California, without giving
effect to the conflicts of law principles thereof or the actual domicile of the
parties.
14. Invalidity of Provisions. If any provision of this agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
15. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
9
10
IN WITNESS WHEREOF, the parties have executed this agreement as of the
___ day of June, 1997.
DOVE ENTERTAINMENT, INC.
By: /s/ XXXXX XXXXXXX /s/ XXXXXXX XXXXX
---------------------------- ----------------------------------
Xxxxxx Xxxxxxx Xxxxxxx Xxxxx
/s/ XXXXXXX XXXXXX
----------------------------------
Xxxxxxx Xxxxxx
[Registration Rights Agreement]
10