REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 2, 1998, by
and between Skyline Multimedia Entertainment, Inc., a New York corporation
(the "Company"), and the person whose name appears on the signature page
attached hereto (individually a "Holder" and collectively, with the holders of
other shares of Series B Redeemable Convertible Preferred Stock the
"Holders").
WHEREAS, the Conversion Agreement dated September 2, 1998, between
the Company and the Holders (the "Conversion Agreement") provides for, upon
the Effective Date (as defined therein), the conversion (the "Conversion") of
$7.235 million principal amount of debt of the Company plus such accrued and
unpaid interest as set forth in the Conversion Agreement (the "Debt") into
shares of Series B Redeemable Convertible Preferred Stock of the Corporation,
$.01 par value per share (the "Series B Preferred Stock") at a conversion rate
and on such terms and conditions as set forth in the Conversion Agreement;
WHEREAS, said shares of Series B Preferred Stock are convertible into
shares of the Company's common stock, $.001 par value per share, as set forth
in the Company's Certificate of Designation of Series B Preferred Stock (such
converted shares of common stock are hereinafter collectively referred to as
the "Registrable Securities");
WHEREAS, pursuant to the terms of and in order to induce the Holders
to enter into the Conversion Agreement, the Company and the Holders have
agreed to enter into this Agreement; and
WHEREAS, it is intended by the Company and the Holders that this
Agreement shall become effective immediately upon the acquisition by the
Holders of the Preferred Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and in the Conversion Agreement, the Company and
the Holders hereby agree as follows:
1. Registration Rights.
(a) Demand Registration. After receipt of a written request (a "Registration
Request") from Holders collectively holding at least 25% of the total
number of Registrable Securities requesting that the Company effect the
registration of Registrable Securities under the Securities Act of 1933
(the "1933 Act") and specifying the intended method or methods of
disposition thereof, if any, the Company shall promptly notify all
Holders in writing of the receipt of such request and each such Holder
may elect (by written notice sent to the Company) within ten days from
the date of such Holder's receipt of the aforementioned Company's notice
to have all or any part of its Registrable Securities included in such
regis tration thereof pursuant to this Section 1(a); provided, however,
that, in the case of an
underwritten offering, the Company shall have the right to approve of the
underwriters selected by such Holders, such approval not to be
unreasonably withheld. Thereupon the Company shall, as expeditiously as
is possible, use commercially reasonable efforts to effect the
registration under the 1933 Act of all shares of Registrable Securities
which the Company has been so requested to register by such Holders for
sale, all to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of
the Registrable Securities so registered; provided, however, that,
subject to the provisions of the immediately following sentence, the
Company shall not be required to effect more than one registration of
Registrable Securities pursuant to this Section 1(a). The Company shall
have the right to defer the filing of any registration statement
requested pursuant to this Section 1(a) for a period not to exceed
ninety (90) days if in the good faith determination of the Board of
Directors of the Company the filing of such registration statement would
be materially adverse to the Company.
(b) Piggyback Registration. If the Company at any time proposes to register
any of its securities under the 1933 Act (other than in connection with
a merger or pursuant to Form S-8 or other comparable form) the Company
shall request that the managing underwriter (if any) of such
underwritten offering include the Registrable Securities in such
registration. If such managing underwriter agrees to include any of the
Registrable Securities in the underwritten offering, the Company shall
at such time give prompt written notice to all Holders of its intention
to effect such registration and of such Holders' rights under such
proposed registration, and upon the request of any Holder delivered to
the Company within twenty (20) days after giving of such notice (which
request shall specify the Registrable Securities intended to be disposed
of by such Holder and the intended method of disposition thereof), the
Company shall include such Registrable Securities held by each such
Holder requested to be included in such registration.
(c) Cooperation with Company. Holders will cooperate with the Company in all
respects in connection with this Agreement, including, timely supplying
all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the
registration and sale of the Registrable Securities.
2. Registration Procedures. If and whenever the Company is required by any of
the provisions of this Agreement to use its commercially reasonable efforts to
effect the registration of any of the Registerable Securities under the 1933
Act, the Company shall (except as otherwise provided in this Agreement), as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement and shall use commercially
reasonable efforts to cause such registration statement to become
effective until the earlier of 270 days from the effective date of such
registration statement or such securities become capable of being
publicly sold without registration under the 1933 Act pursuant to Rule
144 or otherwise;
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(b) subject to Section 2(a) above, 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 and to comply with the provisions of
the 1933 Act with respect to the sale or other disposition of the
securities covered by such registration statement whenever the Holder or
Holders of such securities shall desire to sell or otherwise dispose of
the same;
(c) furnish to each Holder such numbers of copies of a summary prospectus or
other prospectus, including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the requirements of the
1933 Act, and such other documents, as such Holder may reasonably
request in order to facilitate the public sale or other disposition of
the securities owned by such Holder;
(d) use commercially 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 each Holder shall
reasonably request, and do any and all other acts and things which may
be necessary or advisable to enable such Holder to consummate the public
sale or other disposition in such jurisdictions of the securities owned
by such Holder, except that the Company shall not for any such purpose
be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any
general consent to service of process;
(e) use commercially reasonable efforts to list such securities on any
securities exchange on which any securities of the Company is then
listed, if the listing of such securities is then permitted under the
rules of such exchange;
(f) enter into and perform its obligations under an underwriting agreement,
if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(g) notify each Holder of Registerable Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the 1933 Act, of the happening of any event of which it has knowledge 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; and
(h) take such other actions as shall be reasonably requested by any Holder
to facilitate the registration and sale of the Registerable Securities;
provided, however, that the Company shall not be obligated to take any
actions not specifically required elsewhere herein which in the
aggregate would cost in excess of $5,000.
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3. Expenses. All expenses incurred in any registration of the Holders'
Registrable Securities under this Agreement shall be paid by the Company,
including, without limitation, printing expenses, fees and disbursements of
counsel for the Company, expenses of any audits to which the Company shall
agree or which shall be necessary to comply with governmental requirements in
connection with any such registration, all registration and filing fees for
the Holders' Registrable Securities under federal and state securities laws,
expenses of complying with the securities or blue sky laws of any
jurisdictions pursuant to Section 2(d), and up to $5,000 of professional fees
and expenses of all Holders in the aggregate per registration; provided,
however, the Company shall not be liable for (a) any discounts or commissions
to any underwriter; (b) any stock transfer taxes incurred with respect to
Registerable Securities sold in the offering or (c) the fees and expenses of
counsel or other advisors for any Holder, or the Holders in the aggregate, in
excess of $5,000.
4. Indemnification. In the event any Registerable Securities are included in
a registration statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other indemnity provided to
any Holder, either in connection with the Offering or otherwise, to the
extent permitted by law, the Company shall indemnify and hold harmless
each Holder, the affiliates, officers, directors and partners of each
Holder, any underwriter (as defined in the 0000 Xxx) for such Holder,
and each person, if any, who controls such Holder or underwriter (within
the meaning of the 1933 Act or the Securities Exchange Act of 1934 (the
"Exchange Act")), against any losses, claims, damages or liabilities
(joint or several) to which they may become subject under the 1933 Act,
the Exchange Act or other federal or state securities 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"): (i) 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, (ii) the omission or alleged omission to state therein 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, (iii) any violation or alleged violation by the
Company of the 1933 Act or the Exchange Act, or (iv) any state
securities law or any rule or regulation promulgated under the 1933 Act,
the Exchange Act or any state securities law, and the Company shall
reimburse each such Holder, affiliate, officer or director or partner,
underwriter or controlling person for reasonable legal or other expenses
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability, action or expense; provided, however,
that the Company shall not be liable to any Holder 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 information furnished for use in connection with
such registration by any such Holder or any other officer, director,
partner, affiliate, underwriter or controlling person of any of the
foregoing.
(b) Holder Indemnity. Each Holder shall indemnify and hold harmless the
Company, its affiliates, its counsel, officers, directors, stockholders
and representatives, any underwriter
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(as defined in the 0000 Xxx) and each person, if any, who controls
the Company or the underwriter (within the meaning of the 1933 Act or
the Exchange Act), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under
the 1933 Act, the Exchange Act or any state securities law, and the
Holder shall reimburse the Company and each such affiliate, counsel,
officer, director, stockholder, representative, underwriter or
controlling person of any of the foregoing for reasonable legal or
other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; insofar
as such losses, claims, damages or liabilities (or actions with
respect thereof) arise out of or are based upon any statements or
information provided by such Holder to the Company in connection with
the registration, offer or sale of Registerable Securities.
(c) Notice; Right to Defend. Promptly after receipt by an indemnified party
under this Section 4 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party
under this Section 4, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in and if the indemnifying party agrees in writing
that it will be responsible for any costs, expenses, judgments, damages
and losses incurred by the indemnified party with respect to such claim,
jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually 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 the indemnified party reasonably believes that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or 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 shall relieve such indemnifying party of
any liability to the indemnified party under this Agreement only if and
to the extent that such failure is prejudicial to its ability to defend
such action, and 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 Agreement.
(d) Contribution. If the indemnification provided for in this Agreement is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense 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 statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant
equitable considerations. The relevant fault of the indemnifying party
and the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a
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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.
(e) Survival of Indemnity. The indemnification provided by this Agreement
shall be a continuing right to indemnification and shall survive the
registration and sale of any Registerable Securities by any person
entitled to indemnification hereunder and the expiration or termination
of this Agreement.
5. Assignment of Registration Rights. The rights of the Holders under this
Agreement, including the rights to cause the Company to register Registerable
Securities may not be assigned without the written prior consent of the
Company; provided, however, that this Agreement may be assigned or transferred
to any affiliate of the Holder in connection with the permitted transfer of
Series B Preferred Stock to such affiliate.
6. Remedies.
(a) Time is of Essence. The Company agrees that time is of the essence of
each of the covenants contained herein and that, in the event of a
dispute hereunder, this Agreement is to be interpreted and construed in
a manner that will enable the Holders to sell their Registerable
Securities as quickly as possible after such Holders have indicated to
the Company that they desire their Registerable Securities to be
registered. Any delay on the part of the Company not expressly permitted
under this Agreement, whether material or not, shall be deemed a
material breach of this Agreement.
(b) Remedies Upon Default or Delay. The Company acknowledges the breach of
any part of this Agreement may cause irreparable harm to a Holder and
that monetary damages alone may be inadequate. The Company therefore
agrees that the Holder shall be entitled to injunctive relief or such
other applicable remedy as a court of competent jurisdiction may
provide. Nothing contained herein will be construed to limit a Holder's
right to any remedies at law, including recovery of damages for breach
of any part of this Agreement.
7. Notices.
(a) All communications under this Agreement shall be in writing and shall be
mailed by first class mail, postage prepaid, or telegraphed or telexed
with confirmation of receipt or delivered by hand or by overnight
delivery service,
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(i) If to the Company, at:
Skyline Multimedia Entertainment, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, X.X. 00000
Facsimile No.: (000) 000-0000
Attn: President
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
or at such other address or fax number as may have been
furnished to the Holders in writing by the Company.
(ii) If to any Holder of any Registerable Securities, to the
address of such Holder as it appears in the stock ledger of
the Company.
(b) Any notice so addressed, when mailed by registered or certified mail
shall be deemed to be given three days after so mailed, when telegraphed
or telexed shall be deemed to be given when transmitted, or when
delivered by hand or overnight shall be deemed to be given when
delivered.
8. 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 each of the Holders.
9. Amendment and Waiver. This Agreement may be amended, and the observance of
any term of this Agreement may be waived, but only with the written consent of
the Company and the Holders of securities representing a majority of the
Registerable Securities; provided, however, that no such amendment or waiver
shall take away any registration right of any Holder of Registerable
Securities or reduce the amount of reimbursable costs to any Holder of
Registerable Securities in connection with any registration hereunder without
the consent of such Holder; further provided, however, that without the
consent of any other Holder of Registerable Securities, any Holder may from
time to time enter into one or more agreements amending, modifying or waiving
the provisions of this Agreement if such action does not adversely affect the
rights or interest of any other Holder of Registerable Securities. No delay on
the part of any party in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by any
party of any right, power or remedy preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy.
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10. 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 the same instrument.
11. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York, without giving effect
to conflicts of law principles.
12. 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.
13. 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.
[Remainder Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 2nd day of September, 1998.
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Executive Director of Operations
and Finance and
Co-Chief Executive Officer
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Signature of Holder
-------------------------------------
Print Name of Holder
-------------------------------------
Print Address of Holder
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