EXHIBIT 4.9
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (this "Agreement"),
dated as of January 31, 2002, is made by and between DSI Toys, Inc., a Texas
corporation (the "Company"), and MVII, LLC, a California limited liability
company ("MVII"). This Agreement amends and restates in its entirety that
certain Registration Rights Agreement between the Company and MVII dated as of
March 19, 2001, which is hereby terminated, canceled and replaced by this
Agreement.
RECITALS:
WHEREAS, in exchange for a contribution to the capital of the Company in
the amount of $2,700,000 on or about March 19, 2001, the Company has issued to
MVII a certain Amended and Restated Investment Warrant (the "Investment
Warrant") dated as of the date hereof granting MVII the right to convert such
Investment Warrant into shares of common stock, par value $.01 per share, of the
Company (the "Common Stock") during the conversion period set forth therein; and
WHEREAS, the Company and MVII desire to enter into this Agreement to
provide for the registration with the Securities and Exchange Commission (the
"Commission"), under certain circumstances, of the Common Stock into which the
Investment Warrant may be converted by MVII.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. REGISTRABLE SECURITIES. For purposes of this Agreement "Registrable
Securities" shall mean the shares of Common Stock issuable upon conversion of
the Investment Warrant. As to any particular Registrable Securities, once issued
such securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act of 1933, as amended (the "Securities Act")
and such securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of them shall not require registration or
qualification under the Securities Act or any state law in force at the time a
transferee proposes to sell or otherwise dispose of the Registrable Securities,
or (d) they shall have ceased to be outstanding.
2. REGISTRATION RIGHTS.
(a) RIGHT TO PIGGYBACK. If the Company proposes to register any of its
securities under the Securities Act (other than a registration on Form S-4 or
Form S-8, any other form used solely in connection with an employee benefit or
stock ownership plan, or any successor similar
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forms or any other form not available for registering the Registrable Securities
for sale to the public) and the registration form to be used may be used for the
registration of the Registrable Securities (a "Piggyback Registration"), then
the Company will give prompt written notice to MVII of its intention to effect
such a registration (each a "Piggyback Notice"). Subject to subparagraphs (i)
and (ii) below, the Company will include in such registration all Registrable
Securities which MVII requests that the Company include in such registration by
written notice given to the Company within fifteen (15) days after the date of
sending of the Piggyback Notice.
(i) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration
relates to an underwritten public offering of equity securities by the Company
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested (and consented to) to be included in
such registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the Company, the Company will
include in such registration: (A) first, the securities proposed to be sold by
the Company; (B) second, the shares of Common Stock owned by MVII (the "Prior
Shares") subject to registration rights granted pursuant to that certain
Registration Rights Agreement dated June 1, 1999; (C) third, the shares of
Common Stock owned by the DSI Group (as such term is defined in the Registration
Rights Agreement dated June 1, 1999) (the "DSI Group Shares"); (D) fourth, the
Xxxxxxx Shares (as such term is defined in that certain Registration Rights
Agreement dated January 7, 2000; (E) fifth, the Registrable Securities; and (F)
sixth, other securities requested to be included in such registration.
(ii) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration relates to an underwritten public offering of equity securities by
holders of the Company's securities and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested (and
consented to) to be included in such registration exceeds the number which can
be sold in an orderly manner within a price range acceptable to the holders
initially requesting such registration, the Company will include in such
registration: (A) first, the securities requested to be included therein by the
holders requesting such registration, (B) second, the Prior Shares, (C) third,
the DSI Group Shares, (D) fourth, the Xxxxxxx Shares, and (E) fifth, the
Registrable Securities.
(b) EXPENSES. All expenses incurred in connection with effecting each
registration pursuant to Section 2 hereof (other than underwriting fees,
disbursements, discounts and commissions relating to Registrable Securities,
which shall be borne by the holder of such Registrable Securities, and fees and
disbursements of counsel retained by such holder, which shall be borne by such
holder), including, without limitation, in each case, all registration, filing
and securities exchange fees; all fees and expenses of complying with securities
or blue sky laws; all word processing, duplicating and printing expenses,
messenger, delivery and shipping expenses; fees and disbursements of the
accountants and counsel for the Company including the expenses of any special
audits or "cold comfort" letters or opinions required by or incident to such
registrations; and premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable Securities and
any fees and disbursements of underwriters not relating to Registrable
Securities) shall be borne by equally by the Company and MVII.
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3. REGISTRATION PROCEDURES. Whenever MVII has requested that any
Registrable Securities be registered pursuant to this Agreement in compliance
with the requirements of Section 2 herein:
(a) the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of distribution thereof and will as expeditiously as possible;
(i) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will furnish to the counsel selected by MVII copies of all such
documents proposed to be filed;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective: (A)
with respect to a registration statement on Form S-1, for a period of up to
thirty days, and (B) with respect to a registration statement on any other form,
for a period of up to six months; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the intended
methods of distribution by the sellers thereof set forth in such registration
statement;
(iii) furnish to MVII such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, and such other documents, as MVII may reasonably request;
(iv) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
MVII reasonably requests and do any and all other acts or things which may be
reasonably necessary or advisable to enable MVII to consummate the disposition
in such jurisdictions of the Registrable Securities owned by MVII, provided that
the Company will not be required (A) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (B) to subject itself to taxation in any such jurisdiction, or (C)
to consent to general service of process in any such jurisdiction;
(v) furnish to MVII a copy, or, upon request, a signed counterpart,
addressed to MVII (and the underwriters, if any) of (A) an opinion of counsel
for the Company, dated the effective date of such registration statement (or, if
such registration includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), and (B) a "comfort" letter
addressed to the underwriters, dated the effective date of such registration
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statement (or, if such registration includes an underwritten public offering,
dated the date of the closing under the underwriting agreement), signed by the
independent public accountants who have audited the Company's financial
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities and, in the case
of the accountants' letter, such other financial matters, and, in the case of
the legal opinion such other legal matters, as MVII (or the underwriters, if
any) may reasonably request;
(vi) notify MVII, 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
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, and, at the request of MVII, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or of the determination by the Company that a
post-effective amendment to a registration statement would be required under the
Securities Act, and, at the request of MVII, the Company will prepare and file a
post-effective amendment to the registration statement as required under the
Securities Act.
(vii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and to be qualified for trading on each system on which similar
securities issued by the Company are from time to time qualified;
(viii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement and thereafter maintain such a transfer agent and registrar;
(ix) enter into such customary agreements and take all such other
actions as the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(x) make available for inspection by any underwriter participating
in any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such underwriter, all financial and
other records, pertinent corporate documents and properties of the Company, and
causes the Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such registration statement;
provided that any person to whom such information is provided shall agree to
keep it confidential and use it only in connection with such offering;
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(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve months beginning with the first day of the Company's
first full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder; and
(xii) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such registration statement for sale in
any jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order.
(b) The Company shall not be required to include any Registrable
Securities in any registration unless MVII furnishes to the Company in writing
such information with respect to MVII and the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing
and as shall be required by law or the Commission in connection therewith.
(c) If any such registration or comparable statement refers to MVII by
name or otherwise as the holder of any securities of the Company, MVII shall
have the right to require (i) the inclusion in such registration statement of
language, in form and substance reasonably satisfactory to MVII, to the effect
that the holding of such securities by MVII is not to be construed as a
recommendation by MVII of the investment quality of the Company's securities
covered thereby and that such holding does not imply that MVII will assist in
the meeting any future financial requirements of the Company, or (ii) in the
event that such reference to MVII is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to MVII;
provided, that the respect to this clause (ii) MVII shall furnish to the Company
an opinion of counsel to such effect, which opinion and counsel shall be
reasonably satisfactory to the Company.
(d) MVII agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in the subdivision (a)(vi) of this
Section 3, such person will forthwith discontinue such person's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such person's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (a)(vi) of this
Section 3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such person's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. Nothing contained in
this Agreement shall be deemed to require the Company to disclose any
information that, in the good faith opinion of the management of the Company, is
not yet required to be disclosed and would not be in the best interests of the
Company to disclose.
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4. UNDERWRITTEN OFFERINGS. If the Company at any time proposes to register
any of its securities under the Securities Act as contemplated by Section 2
hereof and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by MVII as provided in Section 2
hereof, arrange for such underwriters to include in the securities to be
distributed by such underwriters all of the Registrable Securities to be offered
and sold by MVII.
5. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to the provisions hereof, the Company will give MVII and one counsel or
firm of counsel and one accountant or firm of accountants representing MVII the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give MVII such access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of MVII's counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
6. INDEMNIFICATION.
(A) INDEMNIFICATION BY THE COMPANY. IN THE EVENT ANY REGISTRABLE
SECURITIES ARE INCLUDED IN A REGISTRATION STATEMENT HEREUNDER, TO THE EXTENT
PERMITTED BY LAW, THE COMPANY WILL, AND HEREBY DOES, INDEMNIFY AND HOLD HARMLESS
THE HOLDER OF SUCH REGISTRABLE SECURITIES, ITS DIRECTORS AND OFFICERS, EACH
OTHER PERSON WHO PARTICIPATES AS AN UNDERWRITER IN THE OFFERING OR SALE OF SUCH
SECURITIES AND EACH OTHER PERSON, IF ANY, WHO CONTROLS THE HOLDER OR ANY SUCH
UNDERWRITER WITHIN THE MEANING OF THE SECURITIES ACT, AGAINST ANY LOSSES,
CLAIMS, DAMAGES OR LIABILITIES, JOINT OR SEVERAL, TO WHICH THE HOLDER OR ANY
SUCH DIRECTOR OR OFFICER OR UNDERWRITER OR CONTROLLING PERSON MAY BECOME SUBJECT
UNDER THE SECURITIES ACT OR OTHERWISE, INSOFAR AS SUCH LOSSES, CLAIMS, DAMAGES
OR LIABILITIES (OR ACTIONS OR PROCEEDINGS, WHETHER COMMENCED OR THREATENED, IN
RESPECT THEREOF) ARISE OUT OF OR ARE BASED UPON ANY UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OF ANY MATERIAL FACT CONTAINED IN ANY REGISTRATION STATEMENT
UNDER WHICH SUCH SECURITIES WERE REGISTERED UNDER THE SECURITIES ACT, ANY
PRELIMINARY PROSPECTUS, FINAL PROSPECTUS OR SUMMARY PROSPECTUS CONTAINED
THEREIN, OR ANY AMENDMENT OR SUPPLEMENT THERETO, OR ANY OMISSION OR ALLEGED
OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED THEREIN OR
NECESSARY TO MAKE THE STATEMENTS THEREIN NOT MISLEADING, AND THE COMPANY WILL
REIMBURSE SUCH HOLDER AND EACH SUCH DIRECTOR, OFFICER, UNDERWRITER AND
CONTROLLER PERSON FOR ANY LEGAL OR ANY OTHER EXPENSES REASONABLY INCURRED BY
THEM IN CONNECTION WITH INVESTIGATING OR DEFENDING ANY SUCH LOSS, CLAIM,
LIABILITY, ACTION OR PROCEEDING; PROVIDED, THAT THE COMPANY SHALL NOT BE LIABLE
IN ANY SUCH CASE TO THE
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EXTENT THAT ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY (OR ACTION OR PROCEEDING IN
RESPECT THEREOF) OR EXPENSE ARISES OUT OF OR IS BASED UPON AN UNTRUE STATEMENT
OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION MADE IN SUCH
REGISTRATION STATEMENT, ANY SUCH PRELIMINARY PROSPECTUS, FINAL PROSPECTUS,
SUMMARY PROSPECTUS, AMENDMENT OR SUPPLEMENT IN RELIANCE UPON AND IN CONFORMITY
WITH WRITTEN INFORMATION FURNISHED TO THE COMPANY BY THE HOLDER EXPRESSLY FOR
USE IN THE PREPARATION THEREOF, AND PROVIDED FURTHER THAT THE COMPANY SHALL NOT
BE LIABLE TO ANY PERSON WHO PARTICIPATES AS AN UNDERWRITER IN THE OFFERING OR
SALE OF REGISTRABLE SECURITIES OR ANY OTHER PERSON WHO CONTROLS SUCH UNDERWRITER
WITHIN THE MEANING OF THE SECURITIES ACT, IN ANY SUCH CASE TO THE EXTENT THAT
ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY (OR ACTION OR PROCEEDINGS IN RESPECT
THEREOF) OR EXPENSE ARISES OUT OF SUCH PERSON'S FAILURE TO SEND OR GIVE A COPY
OF THE FINAL PROSPECTUS, AS THE SAME MAY BE THEN SUPPLEMENTED OR AMENDED, TO THE
PERSON ASSERTING AN UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR
ALLEGED OMISSION AT OR PRIOR TO THE WRITTEN CONFIRMATION OF THE SALE OF
REGISTRABLE SECURITIES TO SUCH PERSON IF SUCH STATEMENT OR OMISSION WAS
CORRECTED IN SUCH FINAL PROSPECTUS. SUCH INDEMNITY SHALL REMAIN IN FULL FORCE
AND EFFECT REGARDLESS OF ANY INVESTIGATION MADE BY OR ON BEHALF OF THE HOLDER OR
ANY SUCH DIRECTOR, OFFICER, UNDERWRITER OR CONTROLLING PERSON AND SHALL SURVIVE
THE TRANSFER OF SUCH SECURITIES BY THE HOLDER.
(B) INDEMNIFICATION BY THE HOLDERS. THE COMPANY MAY REQUIRE, AS A
CONDITION TO INCLUDING ANY REGISTRABLE SECURITIES IN ANY REGISTRATION STATEMENT
FILED PURSUANT TO SECTION 3 HEREOF, THAT THE COMPANY SHALL HAVE RECEIVED AN
UNDERTAKING SATISFACTORY TO IT FROM THE HOLDER OF SUCH REGISTRABLE SECURITIES,
TO INDEMNIFY AND HOLD HARMLESS (IN THE SAME MANNER AND TO THE SAME EXTENT AS SET
FORTH IN SUBDIVISION (A) OF THIS SECTION 6) EACH UNDERWRITER, EACH PERSON WHO
CONTROLS SUCH UNDERWRITER WITHIN THE MEANING OF THE SECURITIES ACT, THE COMPANY,
EACH DIRECTOR OF THE COMPANY, EACH OFFICER OF THE COMPANY AND EACH OTHER PERSON,
IF ANY, WHO CONTROLS THE COMPANY WITHIN THE MEANING OF THE SECURITIES ACT, WITH
RESPECT TO ANY STATEMENT OR ALLEGED STATEMENT IN OR OMISSION OR ALLEGED OMISSION
FROM SUCH REGISTRATION STATEMENT, ANY PRELIMINARY PROSPECTUS, FINAL PROSPECTUS
OR SUMMARY PROSPECTUS CONTAINED THEREIN, OR ANY AMENDMENT OR SUPPLEMENT THERETO,
IF SUCH STATEMENT OR ALLEGED STATEMENT OR OMISSION OR ALLEGED OMISSION WAS MADE
IN RELIANCE UPON AND IN STRICT CONFORMITY WITH WRITTEN INFORMATION FURNISHED TO
THE COMPANY BY THE HOLDER EXPRESSLY FOR USE IN THE PREPARATION OF SUCH
REGISTRATION STATEMENT, PRELIMINARY PROSPECTUS, FINAL PROSPECTUS, SUMMARY
PROSPECTUS, AMENDMENT OR SUPPLEMENT; PROVIDED THAT THE HOLDER SHALL
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NOT BE LIABLE TO THE COMPANY OR ANY PERSON WHO PARTICIPATES AS AN UNDERWRITER IN
THE OFFERING OR SALE OF REGISTRABLE SECURITIES OR ANY OTHER PERSON, IF ANY, WHO
CONTROLS SUCH UNDERWRITER WITHIN THE MEANING OF THE SECURITIES ACT, IN ANY SUCH
CASE TO THE EXTENT THAT ANY SUCH LOSS, CLAIM, DAMAGE, LIABILITY (OR ACTION OR
PROCEEDING IN RESPECT THEREOF) OR EXPENSE ARISES OUT OF SUCH PERSON'S FAILURE TO
SEND OR GIVE A COPY OF THE FINAL PROSPECTUS, AS THE SAME MAY BE THEN
SUPPLEMENTED OR AMENDED, TO THE PERSON ASSERTING AN UNTRUE STATEMENT OR ALLEGED
UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION AT OR PRIOR TO THE WRITTEN
CONFIRMATION OF THE SALE OF REGISTRABLE SECURITIES TO SUCH PERSON IF SUCH
STATEMENT OR OMISSION WAS CORRECTED IN SUCH FINAL PROSPECTUS. SUCH INDEMNITY
SHALL REMAIN IN FULL FORCE AND EFFECT, REGARDLESS OF ANY INVESTIGATION MADE BY
OR ON BEHALF OF ANY UNDERWRITER, THE COMPANY OR ANY SUCH DIRECTOR, OFFICER OR
CONTROLLING PERSON AND SHALL SURVIVE THE TRANSFER OF SUCH SECURITIES BY THE
HOLDER. IN NO EVENT SHALL THE LIABILITY OF THE HOLDER UNDER THIS SECTION 6(B) BE
GREATER IN AMOUNT THAN THE DOLLAR AMOUNT OF THE PROCEEDS RECEIVED BY THE HOLDER
UPON THE SALE OF THE REGISTRABLE SECURITIES GIVING RISE TO SUCH INDEMNIFICATION
OBLIGATION.
(C) NOTICES OF CLAIMS, ETC. PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED
PARTY OF NOTICE OF THE COMMENCEMENT OF ANY ACTION OR PROCEEDING INVOLVING A
CLAIM REFERRED TO IN THE PRECEDING SUBDIVISIONS OF THIS SECTION 6, SUCH
INDEMNIFIED PARTY WILL, IF A CLAIM IN RESPECT THEREOF IS TO BE MADE AGAINST AN
INDEMNIFYING PARTY, GIVE WRITTEN NOTICE TO THE LATTER OF THE COMMENCEMENT OF
SUCH ACTION; PROVIDED THAT THE FAILURE OF ANY INDEMNIFIED PARTY TO GIVE NOTICE
AS PROVIDED HEREIN SHALL NOT RELIEVE THE INDEMNIFYING PARTY OF ITS OBLIGATIONS
UNDER THE PRECEDING SUBDIVISIONS OF THIS SECTION 6, EXCEPT TO THE EXTENT THAT
THE INDEMNIFYING PARTY IS ACTUALLY PREJUDICED BY SUCH FAILURE TO GIVE NOTICE. IN
CASE ANY SUCH ACTION IS BROUGHT AGAINST AN INDEMNIFIED PARTY, UNLESS IN SUCH
INDEMNIFIED PARTY'S REASONABLE JUDGMENT A CONFLICT OF INTEREST BETWEEN SUCH
INDEMNIFIED AND INDEMNIFYING PARTIES MAY EXIST IN RESPECT OF SUCH CLAIM, THE
INDEMNIFYING PARTY SHALL BE ENTITLED TO PARTICIPATE IN AND TO ASSUME THE DEFENSE
THEREOF, JOINTLY WITH ANY OTHER INDEMNIFYING PARTY SIMILARLY NOTIFIED TO THE
EXTENT THAT IT MAY WISH, WITH COUNSEL REASONABLY SATISFACTORY TO SUCH
INDEMNIFIED PARTY, AND AFTER NOTICE FROM THE INDEMNIFYING PARTY TO SUCH
INDEMNIFIED PARTY OF ITS ELECTION SO TO ASSUME THE DEFENSE THEREOF, THE
INDEMNIFYING PARTY SHALL NOT BE LIABLE TO SUCH INDEMNIFIED PARTY FOR ANY LEGAL
OR OTHER EXPENSES SUBSEQUENTLY INCURRED BY THE LATTER IN CONNECTION WITH THE
DEFENSE THEREOF OTHER THAN REASONABLE COSTS OF INVESTIGATION. NO INDEMNIFYING
PARTY SHALL, WITHOUT THE CONSENT OF THE INDEMNIFIED PARTY, CONSENT TO ENTRY OF
ANY JUDGMENT OR ENTER INTO ANY
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SETTLEMENT WHICH DOES NOT INCLUDE AS AN UNCONDITIONAL TERM THEREOF THE GIVING BY
THE CLAIMANT OR PLAINTIFF TO SUCH INDEMNIFIED PARTY OF A FULL RELEASE FROM ALL
LIABILITY IN RESPECT TO SUCH CLAIM OR LITIGATION.
(D) OTHER INDEMNIFICATION. INDEMNIFICATION SIMILAR TO THAT SPECIFIED IN
THE PRECEDING SUBDIVISIONS OF THIS SECTION 6 (WITH APPROPRIATE MODIFICATIONS)
SHALL BE GIVEN BY THE COMPANY AND THE HOLDER WITH RESPECT TO ANY REQUIRED
REGISTRATION OR OTHER QUALIFICATION OF SECURITIES UNDER ANY FEDERAL OR STATE LAW
OR REGULATION OF ANY GOVERNMENTAL AUTHORITY OTHER THAN THE SECURITIES ACT.
(E) INDEMNIFICATION PAYMENTS. 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
EXPENSE, LOSS, DAMAGE OR LIABILITY IS INCURRED.
(F) CONTRIBUTION. IF THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION 6
FROM THE INDEMNIFYING PARTY IS UNAVAILABLE TO AN INDEMNIFIED PARTY HEREUNDER IN
RESPECT OF ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES REFERRED TO
HEREIN, THEN THE INDEMNIFYING PARTY, IN LIEU OF INDEMNIFYING SUCH INDEMNIFIED
PARTY, SHALL CONTRIBUTE TO THE AMOUNT PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY
AS A RESULT OF SUCH LOSS, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES IN SUCH
PROPORTION AS IS APPROPRIATE TO REFLECT THE RELATIVE FAULT OF THE INDEMNIFYING
PARTY AND INDEMNIFIED PARTIES IN CONNECTION WITH THE ACTIONS WHICH RESULTED IN
SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES, AS WELL AS ANY OTHER
RELEVANT EQUITABLE CONSIDERATIONS. THE RELATIVE FAULT OF SUCH INDEMNIFYING PARTY
AND INDEMNIFIED PARTIES SHALL BE DETERMINED BY REFERENCE TO, AMONG OTHER THINGS,
WHETHER ANY ACTION IN QUESTION, INCLUDING ANY UNTRUE STATEMENT OF MATERIAL FACT
OR OMISSION OR ALLEGED OMISSION TO STATE A MATERIAL FACT, HAS BEEN MADE BY, OR
RELATES TO INFORMATION SUPPLIED BY, SUCH INDEMNIFYING PARTY OR INDEMNIFIED
PARTIES, AND THE PARTIES' RELATIVE INTENT, KNOWLEDGE, ACCESS TO INFORMATION AND
OPPORTUNITY TO CORRECT OR PREVENT SUCH ACTION. THE AMOUNT PAID OR PAYABLE BY A
PARTY AS A RESULT OF THE LOSSES, CLAIMS, DAMAGES, LIABILITIES AND EXPENSES
REFERRED TO ABOVE SHALL BE DEEMED TO INCLUDE, SUBJECT TO THE LIMITATIONS SET
FORTH IN SECTION 6(C) HEREOF, ANY LEGAL OR OTHER FEES OR EXPENSES REASONABLY
INCURRED BY SUCH PARTY IN CONNECTION WITH ANY INVESTIGATION OR PROCEEDING.
THE PARTIES HERETO AGREE THAT IT WOULD NOT BE JUST AND EQUITABLE IF
CONTRIBUTION PURSUANT TO THIS SECTION 6(F) WERE DETERMINED BY PRO
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RATA ALLOCATION OR BY ANY OTHER METHOD OF ALLOCATION WHICH DOES NOT TAKE ACCOUNT
OF THE EQUITABLE CONSIDERATIONS REFERRED TO IN THE IMMEDIATELY PRECEDING
PARAGRAPH. NOTWITHSTANDING THE PROVISIONS OF THIS SECTION 6(F), NO UNDERWRITER
SHALL BE REQUIRED TO CONTRIBUTE ANY AMOUNT IN EXCESS OF THE AMOUNT BY WHICH THE
TOTAL PRICE AT WHICH THE REGISTRABLE SECURITIES UNDERWRITTEN BY IT AND
DISTRIBUTED TO THE PUBLIC WERE OFFERED TO THE PUBLIC EXCEEDS THE AMOUNT OF ANY
DAMAGES WHICH SUCH UNDERWRITER HAS OTHERWISE BEEN REQUIRED TO PAY BY REASON OF
SUCH UNTRUE OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION, AND THE
HOLDER SHALL BE REQUIRED TO CONTRIBUTE ANY AMOUNT IN EXCESS OF THE AMOUNT BY
WHICH THE TOTAL PRICE AT WHICH THE REGISTRABLE SECURITIES WERE OFFERED TO THE
PUBLIC EXCEEDS THE AMOUNT OF ANY DAMAGES WHICH THE HOLDER HAS OTHERWISE BEEN
REQUIRED TO PAY BY REASON OF SUCH UNTRUE STATEMENT OR OMISSION. NO PERSON GUILTY
OF FRAUDULENT MISREPRESENTATION (WITHIN THE MEANING OF SECTION 11(F) OF THE
SECURITIES ACT) SHALL BE ENTITLED TO CONTRIBUTION FROM ANY PERSON WHO WAS NOT
GUILTY OF SUCH FRAUDULENT MISREPRESENTATION.
IF INDEMNIFICATION IS AVAILABLE UNDER THIS SECTION 6, THE INDEMNIFYING
PARTIES SHALL INDEMNIFY EACH INDEMNIFIED PARTY TO THE FULL EXTENT PROVIDED IN
SECTION 6(A) THROUGH SECTION 6(E) HEREOF WITHOUT REGARD TO THE RELATIVE FAULT OF
SAID INDEMNIFYING PARTY OR INDEMNIFIED PARTY OR OTHER EQUITABLE CONSIDERATION
PROVIDED FOR IN THIS SECTION 6(F).
7. FORMS. All references herein to particular forms of registration
statements are intended to include, and shall be deemed to include, references
to all successor forms which are intended to replace, or to apply to similar
transactions as, the forms herein referenced.
8. TRANSFER OF REGISTRATION RIGHTS. The registration rights granted
hereunder may be transferred by MVII at any time, in whole or in part, without
the consent of the Company and the terms and provisions set forth in this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of MVII, whether so expressed or not.
Notwithstanding the foregoing provisions of this Section 8, the registration
rights granted hereunder with respect to any Registrable Securities may not be
transferred if (a) a registration statement with respect to the disposition of
such Registrable Securities shall have become effective under the Securities Act
and such Registrable Securities shall have been disposed of pursuant to such
effective registration statement, or (b) such Registrable Securities shall have
been sold under circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the Securities Act are met.
9. MISCELLANEOUS.
(a) NOTICES. All notices, consents, and other communications under this
Agreement shall be in writing and shall be delivered personally or by facsimile
transmission (with a
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copy sent by overnight delivery service or by first class certified or
registered mail) or by overnight delivery service or 72 hours after having been
mailed by first class certified or registered mail, return receipt requested,
postage prepaid:
If to the Company, at DSI Toys, Inc., 0000 X. Xxx Xxxxxxx Xxxxxxx X.,
Xxxxx X, Xxxxxxx, Xxxxx 00000, Attention: President (fax: 713/000-0000), or at
such other address or addresses as may have been furnished in writing by the
Company to MVII, with a copy to Carrington, Coleman, Xxxxxx & Xxxxxxxxxx,
L.L.P., 000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: Xxxxx X.
Xxxxxxx, Esq. (fax: 214/000-0000).
If to MVII, at MVII, LLC, 000 Xxxx Xxxxxx, Xxx Xxxx Xxxxxx, XX 00000,
Attention: E. Xxxxxx Xxxxxx (fax: 805/000-0000) or at such other address or
addresses as may have been furnished in writing by MVII to the Company, with a
copy to Andre, Morris & Buttery, 0000 Xxxxxxx Xxxxxx, Xxx Xxxx Xxxxxx, XX 00000,
Attention: J. Xxxx Xxxxxxx, Esq. (fax: 805/000-0000).
Notices provided in accordance with this paragraph (a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) REMEDIES. Any person having rights under any provision of this
Agreement to enforce such rights specifically to recover damages caused by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or other
security) for specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
amendment, modification, termination or cancellation of this Agreement shall be
effective unless made in writing signed by all of the parties hereto.
(d) SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(e) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
(f) HEADINGS. The headings of this Agreement are for convenience only
and do not constitute a part of this Agreement.
(g) GOVERNING LAW. The construction, validity and interpretation of this
Agreement will be governed by the internal laws of the State of Texas without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Texas or any other
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jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
(h) FURTHER ASSURANCES. Each party to this Agreement hereby covenants
and agrees, without the necessity of any further consideration, to execute and
deliver any and all such further documents and take any and all such other
actions as may be necessary or appropriate to carry out the intent and purposes
of this Agreement and to consummate the transactions contemplated hereby.
(i) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same documents.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
THE COMPANY:
DSI TOYS, INC.,
a Texas corporation
By: /s/ XXXXXX X. XXXXXXXXXX
-----------------------------------
Name: XXXXXX X. XXXXXXXXXX
---------------------------------
Title: CHIEF FINANCIAL OFFICER
---------------------------------
MVII:
MVII, LLC,
a California limited liability company
By: /s/ E. XXXXXX XXXXXX
-----------------------------------
Name: E. XXXXXX XXXXXX
----------------------------------
Title: MANAGER
---------------------------------
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