REGISTRATION RIGHTS AGREEMENT
Exhibit 10.8
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the [ ] day
of [ ], 2007, by and among TM Entertainment and Media, Inc., a Delaware corporation
(the “Company”) and the undersigned parties listed under Investor on the signature page hereto
(each, an “Investor” and collectively, the “Investors”).
WHEREAS, the Investors currently hold all of the issued and outstanding securities of the
Company; and
WHEREAS, the Investors and the Company desire to enter into this Agreement to provide the
Investors with certain rights relating to the registration of shares of Common Stock, Warrants and
Units held by them.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms used herein have the following meanings:
“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.
“Commission” means the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.
“Common Stock” means the common stock, par value $0.001 per share, of the Company.
“Company” is defined in the preamble to this Agreement.
“Demand Registration” is defined in Section 2.1.1.
“Demanding Holder” is defined in Section 2.1.1.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be in effect at the
time.
“Form S-3” is defined in Section 2.3.
“Indemnified Party” is defined in Section 4.3.
“Indemnifying Party” is defined in Section 4.3.
“Investor” is defined in the preamble to this Agreement.
“Investor Indemnified Party” is defined in Section 4.1.
“Majority-in-Interest” is defined in Section 2.1.1.
“Maximum Number of Securities” is defined in Section 2.1.4.
“Notices” is defined in Section 6.3.
“Piggy-Back Registration” is defined in Section 2.2.1.
“Register,” “Registered” and “Registration” mean a registration effected by preparing and
filing a registration statement or similar document in compliance with the requirements of the
Securities Act, and the applicable rules and regulations promulgated thereunder, and such
registration statement becoming effective.
“Registrable Securities” mean all of the shares of Common Stock and Warrants owned or held by
Investors. Registrable Securities include any warrants, shares of capital stock or other securities
of the Company issued as a dividend or other distribution with respect to or in exchange for or in
replacement of such Registrable Securities. As to any particular Registrable Securities, 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 and such
securities shall have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement; (b) such securities 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 public distribution of them shall not require registration under the Securities Act;
(c) such securities shall have ceased to be outstanding, or (d) the Registrable Securities are
saleable under Rule 144(k) of the Securities Act.
“Registration Statement” means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations promulgated
thereunder for a public offering and sale of Common Stock, Warrants and/or Units, as applicable
(other than a registration statement on Form S-4 or Form S-8, or their successors, or any
registration statement covering only securities proposed to be issued in exchange for securities or
assets of another entity).
“Release Date” means with respect to any shares of Common Stock the date on which such shares
of Common Stock are disbursed from escrow pursuant to that certain Securities Escrow Agreement
dated as of [ ], 2007 by and among the parties hereto and Continental Stock Transfer &
Trust Company.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect at the time.
2
“Underwriter” means a securities dealer who purchases any Registrable Securities as principal
in an underwritten offering and not as part of such dealer’s market-making activities.
“Unit” means a unit consisting of a share of Common Stock and a Warrant.
“Warrant” means a warrant to purchase one share of Common Stock.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
2.1.1 Request for Registration. At any time and from time to time on or after the Release
Date, the holders of a majority-in-interest (determined on a fully diluted basis, i.e., assuming
the exercise of all Warrants that are Registrable Securities (including Warrants forming a part of
Units)) (the “Majority-in-Interest”) of the Registrable Securities) held by the Investors or the
transferees of the Investors, may make a written demand for registration under the Securities Act
of all or part of their Registrable Securities (a “Demand Registration”). Any demand for a Demand
Registration shall specify the number of shares of Registrable Securities proposed to be sold and
the intended method(s) of distribution thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes to include all or a
portion of such holder’s Registrable Securities in the Demand Registration (each such holder
including shares of Registrable Securities in such registration, a “Demanding Holder”) shall so
notify the Company within fifteen (15) days after the receipt by the holder of the notice from the
Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable
Securities included in the Demand Registration, subject to Section 2.1.4 and the provisos set forth
in Section 3.1.1. The Company shall not be obligated to effect more than an aggregate of two (2)
Demand Registrations under this Section 2.1.1 in respect of Registrable Securities.
2.1.2 Effective Registration. A registration will not count as a Demand Registration until
the Registration Statement filed with the Commission with respect to such Demand Registration
registering at least 75% of the Registrable Securities specified in the notice received pursuant to
Section 2.1.1, determined on the basis described in Section 2.1.1, has been declared effective and
the Company has complied with all of its obligations under this Agreement with respect thereto;
provided, however, that if, after such Registration Statement has been declared effective, the
offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop
order or injunction of the Commission or any other governmental agency or court, the Registration
Statement with respect to such Demand Registration will be deemed not to have been declared
effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a Majority-in-Interest of the Demanding Holders thereafter elect to continue
the offering; provided, further, that the Company shall not be obligated to file a second
Registration Statement until a Registration Statement that has been filed is counted as a Demand
Registration or is terminated.
3
2.1.3 Reduction of Offering. Subject to the piggy-back registration rights set forth in
those certain Unit Purchase Options issued to Pali Capital, Inc. or its designees in connection
with the Company’s initial public offering (the “Unit Purchase Options” and such registrable
securities, the “Option Securities”), which rights in no way shall be limited by the
Maximum Number of Securities to be included in the Registration Statement pursuant to this
Section 2.1.3, if the Company chooses to engage in an underwritten public offering of a Demand
Registration and if the managing underwriter or underwriters for a Demand Registration that is to
be an underwritten offering advises the Company and the Demanding Holders in writing that the
dollar amount or number of Registrable Securities which the Demanding Holders desire to sell, taken
together with all other shares of Common Stock or other securities which the Company desires to
sell and the shares of Common Stock or other securities, if any, as to which registration has been
requested pursuant to written contractual piggy-back registration rights held by other stockholders
of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of
securities that can be sold in such offering without adversely affecting the proposed offering
price, the timing, the distribution method, or the probability of success of such offering (such
maximum dollar amount or maximum number of securities, as applicable, the “Maximum Number of
Securities”), then the Company shall include in such registration: (i) first, the Registrable
Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in
accordance with the number of securities that each such Person has requested be included in such
registration, regardless of the number of securities held by each such Person (such proportion is
referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of
Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clause (i), the shares of Common Stock or other securities that the Company
desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third,
to the extent that the Maximum Number of Securities has not been reached under the foregoing
clauses (i) and (ii), the shares of Common Stock or other securities for the account of other
persons that the Company is obligated to register pursuant to written contractual arrangements with
such persons and that can be sold without exceeding the Maximum Number of Securities.
2.1.4 Withdrawal. If a Majority-in-Interest of the Demanding Holders disapprove of the
terms of any underwriting or are not entitled to include all of their Registrable Securities in any
offering, such Majority-in-Interest of the Demanding Holders may elect to withdraw from such
offering by giving written notice to the Company and the Underwriter or Underwriters of their
request to withdraw prior to the effectiveness of the Registration Statement filed with the
Commission with respect to such Demand Registration. If the Majority-in-Interest of the Demanding
Holders withdraws from a proposed offering relating to a Demand Registration, then such
registration shall not count as a Demand Registration provided for in Section 2.1.1.
2.2 Piggy-Back Registration.
2.2.1 Piggy-Back Rights. If at any time on or after the Release Date the Company proposes
to file a Registration Statement under the Securities Act with respect to an
4
offering of equity
securities, or securities or other obligations exercisable or exchangeable for, or convertible
into, equity securities, by the Company for its own account or for stockholders of the Company for
their account (or by the Company and by stockholders of the Company including, without limitation,
pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any
employee stock option or other benefit plan, (ii) for an exchange offer or
offering of securities solely to the Company’s existing stockholders, (iii) for an offering of
debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment
plan, then the Company shall (x) give written notice of such proposed filing to the holders of
Registrable Securities as soon as practicable but in no event less than ten (10) days before the
anticipated filing date, which notice shall describe the amount and type of securities to be
included in such offering, the intended method(s) of distribution, and the name of the proposed
managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale of such number of
Registrable Securities as such holders may request in writing within ten (10) days following
receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable
Securities to be included in such registration and shall use its reasonable best efforts to cause
the managing Underwriter or Underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and
conditions as any similar securities of the Company and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of distribution thereof. All
holders of Registrable Securities proposing to distribute their securities through a Piggy-Back
Registration that involves an Underwriter or Underwriters shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back
Registration.
2.2.2 Reduction of Offering. Subject to the piggy-back registration rights set forth in the
Unit Purchase Options, which rights in no way shall be limited by the Maximum Number of Securities
to be included in the Registration Statement pursuant to this Section 2.2.2, if the managing
Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering
advises the Company and the holders of Registrable Securities in writing that the dollar amount or
number of securities which the Company desires to sell, taken together with shares of Common Stock
or other securities, if any, as to which registration has been demanded pursuant to written
contractual arrangements with persons other than the holders of Registrable Securities hereunder,
the Registrable Securities as to which registration has been requested under this Section 2.2, and
the shares of Common Stock or other securities, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other stockholders of the
Company, exceeds the Maximum Number of Securities, then the Company shall include in any such
registration:
(i) If the registration is undertaken for the Company’s account: (A) first, the shares of
Common Stock or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of
Securities has not been reached under the foregoing clause (A), the shares of Common Stock or other
securities, if any, that are Registrable Securities, as to which
5
registration has been requested
pursuant to the applicable written contractual piggy-back registration rights of such security
holders, Pro Rata, that can be sold without exceeding the Maximum Number of Securities; and (C)
third, to the extent that the Maximum Number of Securities has not been reached under the foregoing
clauses (A) and (B), the shares of Common Stock or other securities for the account of other
persons that the Company is obligated to
register pursuant to written contractual piggy-back registration rights with such persons and
that can be sold without exceeding the Maximum Number of Securities; and
(ii) If the registration is a “demand” registration undertaken at the demand of persons other
than the holders of Registrable Securities pursuant to written contractual arrangements with such
persons, (A) first, the shares of Common Stock or other securities for the account of the demanding
persons that can be sold without exceeding the Maximum Number of Securities; (B) second, to the
extent that the Maximum Number of Securities has not been reached under the foregoing clause (A),
the shares of Common Stock or other securities that the Company desires to sell that can be sold
without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum
Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of
Common Stock or other securities comprised of Registrable Securities, Pro Rata, as to which
registration has been requested pursuant to the terms hereof, that can be sold without exceeding
the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of
Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common
Stock or other securities for the account of other persons that the Company is obligated to
register pursuant to written contractual arrangements with such persons, that can be sold without
exceeding the Maximum Number of Securities.
2.2.3 Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s
request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written
notice to the Company of such request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the result of a withdrawal by
persons making a demand pursuant to written contractual obligations) may withdraw a registration
statement at any time prior to the effectiveness of the Registration Statement. Notwithstanding any
such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable
Securities in connection with such Piggy-Back Registration as provided in Section 3.3.
2.3 Registrations on Form S-3. The holders of Registrable Securities may at any time and
from time to time, request in writing that the Company register the resale of any or all of such
Registrable Securities on Form S-3 or any similar short-form registration which may be available at
such time (“Form S-3”); provided, however, that the Company shall not be obligated to effect such
request through an underwritten offering. Upon receipt of such written request, the Company will
promptly give written notice of the proposed registration to all other holders of Registrable
Securities, and, as soon as practicable thereafter, effect the registration of all or such portion
of such holder’s or holders’ Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities or other securities of the Company,
6
if any, of
any other holder or holders joining in such request as are specified in a written request given
within fifteen (15) days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration pursuant to this Section
2.3(i) if Form S-3 is not available for such offering or (ii) if the holders of the Registrable
Securities, together with the holders of any other securities of the Company entitled to inclusion
in such registration, propose to sell Registrable Securities and such other securities
(if any) at any aggregate price to the public of less than $500,000. Registrations effected
pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to
Section 2.1.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required to effect the registration of
any Registrable Securities pursuant to Section 2, the Company shall use its reasonable best efforts
to effect the registration and sale of such Registrable Securities in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in connection with any such
request:
3.1.1 Filing Registration Statement. The Company shall, as expeditiously as possible and in
any event within sixty (60) days after receipt of a request for a Demand Registration pursuant to
Section 2.1, prepare and file with the Commission a Registration Statement on any form for which
the Company then qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall use its reasonable best
efforts to cause such Registration Statement to become and remain effective for the period required
by Section 3.1.3; provided, however, that the Company shall have the right to defer any Demand
Registration for up to thirty (30) days, and any Piggy-Back Registration for such period as may be
applicable to deferment of any demand registration to which such Piggy-Back Registration relates,
in each case if the Company shall furnish to the holders a certificate signed by the Chief
Executive Officer or Chairman of the Board of the Company stating that, in the good faith judgment
of the Board of Directors of the Company, it would be materially detrimental to the Company and its
stockholders for such Registration Statement to be effected at such time; provided further,
however, that the Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than once in any 365-day period in respect of a Demand
Registration hereunder.
3.1.2 Copies. The Company shall, prior to filing a Registration Statement or prospectus, or
any amendment or supplement thereto, furnish without charge to the holders of Registrable
Securities included in such registration, and such holders’ legal counsel, copies of such
Registration Statement as proposed to be filed, each amendment and supplement to such Registration
Statement (in each case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities included in such
registration or legal counsel for any such holders may request in order to facilitate the
disposition of the Registrable Securities owned by such holders.
7
3.1.3 Amendments and Supplements. The Company shall prepare and file with the Commission
such amendments, including post-effective 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 in compliance with the provisions of the Securities Act until
all Registrable Securities and other securities covered by such
Registration Statement have been disposed of in accordance with the intended method(s) of
distribution set forth in such Registration Statement (which period shall not exceed the sum of one
hundred eighty (180) days plus any period during which any such disposition is interfered with by
any stop order or injunction of the Commission or any governmental agency or court) or such
securities have been withdrawn.
3.1.4 Notification. After the filing of a Registration Statement, the Company shall
promptly, and in no event more than two (2) business days after such filing, notify the holders of
Registrable Securities included in such Registration Statement of such filing, and shall further
notify such holders promptly and confirm such advice in writing in all events within two (2)
business days of the occurrence of any of the following: (i) when such Registration Statement
becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes
effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the
Company shall take all actions required to prevent the entry of such stop order or to remove it if
entered); and (iv) any request by the Commission for any amendment or supplement to such
Registration Statement or any prospectus relating thereto or for additional information or of the
occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the securities covered by such Registration
Statement, such prospectus will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the statements therein not
misleading, and promptly make available to the holders of Registrable Securities included in such
Registration Statement any such supplement or amendment; except that before filing with the
Commission a Registration Statement or prospectus or any amendment or supplement thereto, including
documents incorporated by reference, the Company shall furnish to the holders of Registrable
Securities included in such Registration Statement and to the legal counsel for any such holders,
copies of all such documents proposed to be filed sufficiently in advance of filing to provide such
holders and legal counsel with a reasonable opportunity to review such documents and comment
thereon, and the Company shall not file any Registration Statement or prospectus or amendment or
supplement thereto, including documents incorporated by reference, to which such holders or their
legal counsel shall object.
3.1.5 State Securities Laws Compliance. The Company shall use its reasonable best efforts
to (i) register or qualify the Registrable Securities covered by the Registration Statement under
such securities or “blue sky” laws of such jurisdictions in the United States as the holders of
Registrable Securities included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such Registrable Securities
covered by the Registration Statement to be registered with or approved by such other Governmental
Authorities as may be necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be necessary or
8
advisable to enable the holders of
Registrable Securities included in such Registration Statement to consummate the disposition of
such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph or subject itself to taxation in any such jurisdiction.
3.1.6 Agreements for Disposition. The Company shall enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the disposition of such Registrable
Securities. The representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall
also be made to and for the benefit of the holders of Registrable Securities included in such
registration statement. No holder of Registrable Securities included in such registration statement
shall be required to make any representations or warranties in the underwriting agreement except,
if applicable, with respect to such holder’s organization, good standing, authority, title to
Registrable Securities, lack of conflict of such sale with such holder’s material agreements and
organizational documents, and with respect to written information relating to such holder that such
holder has furnished in writing expressly for inclusion in such Registration Statement. Holders of
Registrable Securities shall agree to such covenants and indemnification and contribution
obligations for selling stockholders as are customarily contained in agreements of that type.
Further, such holders shall cooperate fully in the preparation of the Registration Statement and
other documents relating to any offering in which they include securities pursuant to Section 2
hereof. Each holder shall also furnish to the Company such information regarding itself, the
Registrable Securities held by such holder, as applicable, and the intended method of disposition
of such securities as shall be reasonably required to effect the registration of the Registrable
Securities.
3.1.7 Cooperation. The principal executive officer of the Company and all other officers
and members of the management of the Company shall cooperate fully in any offering of Registrable
Securities hereunder, which cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering materials and related
documents, and participation in meetings with Underwriters, attorneys, accountants and potential
investors.
3.1.8 Records. The Company shall make available for inspection by the holders of
Registrable Securities included in such Registration Statement, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney, accountant or other
professional retained by any holder of Registrable Securities included in such Registration
Statement or any Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors and employees to supply all information
requested by any of them in connection with such Registration Statement.
3.1.9 Opinions and Comfort Letters. The Company shall furnish to each holder of Registrable
Securities included in any Registration Statement a signed counterpart,
9
addressed to such holder,
of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort
letter from the Company’s independent public accountants delivered to any Underwriter. In the event
no legal opinion is delivered to any Underwriter, the Company shall furnish to each holder of
Registrable Securities included in such Registration Statement, at any time that such holder elects
to use a prospectus, an opinion of counsel to the
Company to the effect that the Registration Statement containing such prospectus has been
declared effective and that no stop order is in effect.
3.1.10 Earnings Statement. The Company shall comply with all applicable rules and
regulations of the Commission and the Securities Act, and make available to its stockholders, as
soon as practicable, an earnings statement covering a period of twelve (12) months, beginning
within three (3) months 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.
3.1.11 Listing. The Company shall use its reasonable best efforts to cause all Registrable
Securities included in any registration to be listed on such exchanges or otherwise designated for
trading in the same manner as similar securities issued by the Company are then listed or
designated or, if no such similar securities are then listed or designated, in a manner
satisfactory to the holders of a Majority-in-Interest of the Registrable Securities included in
such registration.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale
registration on Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company,
pursuant to a written xxxxxxx xxxxxxx compliance program adopted by the Company’s Board of
Directors, of the ability of all “insiders” covered by such program to transact in the Company’s
securities because of the existence of material non-public information, each holder of Registrable
Securities included in any registration shall immediately discontinue disposition of such
Registrable Securities pursuant to the Registration Statement covering such Registrable Securities
until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv)
or the restriction on the ability of “insiders” to transact in the Company’s securities is removed,
as applicable, and, if so directed by the Company, each such holder will deliver to the Company all
copies, other than permanent file copies then in such holder’s possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such notice.
3.3 Registration Expenses. The Company shall bear all costs and expenses incurred in
connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration
pursuant to Section 2.2, and any registration on Form S-3 effected pursuant to Section 2.3, and all
expenses incurred in performing or complying with its other obligations under this Agreement,
whether or not the Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky”
laws (including fees and disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company’s
10
internal expenses (including,
without limitation, all salaries and expenses of its officers and employees); (v) the fees and
expenses incurred in connection with the listing of the Registrable Securities as required by
Section 3.1.11; (vi) National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested pursuant to
Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in
connection with such registration and (ix) the fees and expenses of one legal counsel selected by
the holders of a Majority-in-Interest of the Registrable Securities included in such registration.
The Company shall have no obligation to pay any underwriting discounts or selling commissions
attributable to the Registrable Securities being sold by the holders thereof, which underwriting
discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling stockholders and the Company shall bear the expenses of the underwriter pro
rata in proportion to the respective amount of shares each is selling in such offering.
3.4 Information. The holders of Registrable Securities shall provide such information as
may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with
the preparation of any Registration Statement, including amendments and supplements thereto, in
order to effect the registration of any Registrable Securities under the Securities Act pursuant to
Section 2 and in connection with the Company’s obligation to comply with federal and applicable
state securities laws.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each
Investor and each other holder of Registrable Securities, and each of their respective officers,
employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any,
who controls an Investor and each other holder of Registrable Securities (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Investor Indemnified
Party”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether
joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement)
of a material fact contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained in the Registration Statement, or any amendment or supplement to such
Registration Statement, or arising out of or based upon any omission (or alleged omission) to state
a material fact required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration; and the Company shall promptly reimburse the
Investor Indemnified Party for any legal and any other expenses reasonably incurred by such
Investor Indemnified Party in connection with investigating and defending any such expense, loss,
judgment, claim, damage, liability or action; provided, however, that the Company will not be
11
liable in any such case to the extent that any such expense, loss, claim, damage or liability
arises out of or is based upon any untrue statement or allegedly untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or
summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by such selling holder expressly for use therein.
The Company also shall indemnify any Underwriter of the Registrable Securities, their
officers, affiliates, directors, partners, members and agents and each person who controls
such Underwriter on substantially the same basis as that of the indemnification provided above in
this Section 4.1.
4.2 Indemnification by Holders of Registrable Securities. Each selling holder of
Registrable Securities will, in the event that any registration is being effected under the
Securities Act pursuant to this Agreement of any Registrable Securities held by such selling
holder, indemnify and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other selling holder and each other person, if any, who controls
another selling holder or such underwriter within the meaning of the Securities Act, against any
losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such
losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or allegedly untrue statement of a material fact contained in
any Registration Statement under which the sale of such Registrable Securities was registered under
the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in
the Registration Statement, or any amendment or supplement to the Registration Statement, or arise
out of or are based upon any omission or the alleged omission to state a material fact required to
be stated therein or necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information furnished in writing to the
Company by such selling holder expressly for use therein, and shall reimburse the Company, its
directors and officers, and each other selling holder or controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigation or defending any such
loss, claim, damage, liability or action. Each selling holder’s indemnification obligations
hereunder shall be several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling holder from the sale of Registrable Securities which gave rise to
such indemnification obligation.
4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person of any
notice of any loss, claim, damage or liability or any action in respect of which indemnity may be
sought pursuant to Section 4.1 or 4.2, such person (the “Indemnified Party”) shall, if a claim in
respect thereof is to be made against any other person for indemnification hereunder, notify such
other person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability
or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may
have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is
actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with
respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party
shall be entitled to participate in such claim or action, and, to
12
the extent that it wishes,
jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of such claim or action, the Indemnifying
Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that in any action in which both the Indemnified Party
and the Indemnifying Party are named as defendants,
the Indemnified Party shall have the right to employ separate counsel (but no more than one
such separate counsel) to represent the Indemnified Party and its controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may be sought by the
Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be
paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified
Party, representation of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless
such judgment or settlement includes an unconditional release of such Indemnified Party from all
liability arising out of such claim or proceeding.
4.4 Contribution.
4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is
unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action
referred to herein, then each such 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, claim, damage, liability or action in such proportion as is appropriate to reflect the
relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the
actions or omissions which resulted in such loss, claim, damage, liability or action, as well as
any other relevant equitable considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
4.4.2 The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in the
immediately preceding Section 4.4.1.
4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending any such
13
action or claim.
Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be
required to contribute any amount in excess of the dollar amount of the net proceeds (after payment
of any underwriting fees, discounts, commissions or taxes) actually received by such holder from
the sale of Registrable Securities which gave rise to such contribution obligation. 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.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file any reports required to be filed by
it under the Securities Act and the Exchange Act and shall take such further action as the holders
of Registrable Securities may reasonably request, all to the extent required from time to time to
enable such holders to sell Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such
Rules may be amended from time to time, or any similar Rule or regulation hereafter adopted by the
Commission.
6. MISCELLANEOUS.
6.1 Other Registration Rights. Except with respect to those securities issued or issuable
upon exercise of the Unit Purchase Options, the Company represents and warrants that no person,
other than a holder of the Registrable Securities, has any right to require the Company to register
any shares of the Company’s capital stock for sale or to include shares of the Company’s capital
stock in any registration filed by the Company for the sale of shares of capital stock for its own
account or for the account of any other person.
6.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and
obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in
part. This Agreement and the rights, duties and obligations of the holders of Registrable
Securities hereunder may be freely assigned or delegated by such holder of Registrable Securities
in conjunction with and to the extent of any transfer of Registrable Securities by any such holder.
This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of
each of the parties and their respective successors and the permitted assigns of the Investors or
holder of Registrable Securities or of any assignee of the Investors or holder of Registrable
Securities. This Agreement is not intended to confer any rights or benefits on any persons that are
not party hereto other than as expressly set forth in Article 4 and this Section 6.2.
6.3 Notices. All notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”) required or permitted to be given hereunder or which are given with
respect to this Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram,
telex or facsimile, addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the date of
14
service or
transmission if personally served or transmitted by telegram, telex or facsimile; provided, that if
such service or transmission is not on a business day or is after normal business hours, then such
notice shall be deemed given on the next business day. Notice otherwise sent as provided herein
shall be deemed given on the next business day following timely delivery of such notice to a
reputable air courier service with an order for next-day delivery.
To the Company:
TM Entertainment and Media, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: [(000) 000-0000]
Facsimile: [ ]
Attn: Xxxxxxxx X. Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: [(000) 000-0000]
Facsimile: [ ]
Attn: Xxxxxxxx X. Xxxxx
with a copy to:
Xxxxxxxx Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, Esq.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, Esq.
To an Investor, to such Investor c/o:
TM Entertainment and Media, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: [(000) 000-0000]
Facsimile: [ ]
Attn: Xxxxxxxx X. Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: [(000) 000-0000]
Facsimile: [ ]
Attn: Xxxxxxxx X. Xxxxx
6.4 Severability. This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity or enforceability of
this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may
be possible that is valid and enforceable.
6.5 Counterparts. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute one and the same
instrument.
6.6 Entire Agreement. This Agreement (including all agreements entered into pursuant hereto
and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire
agreement of the parties with respect to the subject matter hereof and
15
supersede all prior and
contemporaneous agreements, representations, understandings, negotiations and discussions between
the parties, whether oral or written.
6.7 Modifications and Amendments. No amendment, modification or termination of this
Agreement shall be binding upon any party unless executed in writing by such party.
6.8 Titles and Headings. Titles and headings of Sections of this Agreement are for
convenience only and shall not affect the construction of any provision of this Agreement.
6.9 Waivers and Extensions. Any party to this Agreement may waive any right, breach or
default which such party has the right to waive, provided that such waiver will not be effective
against the waiving party unless it is in writing, is signed by such party, and specifically refers
to this Agreement. Waivers may be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding
breach thereof nor of any other agreement or provision herein contained. No waiver or extension of
time for performance of any obligations or acts shall be deemed a waiver or extension of the time
for performance of any other obligations or acts.
6.10 Remedies Cumulative. In the event that the Company fails to observe or perform any
covenant or agreement to be observed or performed under this Agreement, the Investor or any other
holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or
action at law, whether for specific performance of any term contained in this Agreement or for an
injunction against the breach of any such term or in aid of the exercise of any power granted in
this Agreement or to enforce any other legal or equitable right, or to take any one or more of such
actions, without being required to post a bond. None of the rights, powers or remedies conferred
under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be
cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement
or now or hereafter available at law, in equity, by statute or otherwise.
6.11 Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to conflicts of law principles that would
result in the application of the substantive laws of another jurisdiction. Each of the parties
hereby agrees that any action, proceeding or claim against it arising out of or relating in any way
to this Agreement shall be brought and enforced in the courts of the State of New York or the
United States District Court for the Southern District of New York (each, a “New York Court”), and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the
parties hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
6.12 Waiver of Trial by Jury. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR
16
RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE INVESTOR IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed
and delivered by their duly authorized representatives as of the date first written above.
| TM ENTERTAINMENT AND MEDIA, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| INVESTORS: [ ] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| [Other Investors] |
