Exhibit 10.4
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of April ___, 2005, by and between On2 Technologies, Inc., a Delaware
corporation (the "Company"), and Wildform, Inc., a California corporation
("Wildform").
This Agreement is made pursuant to the Support and Maintenance Agreement
dated as of April ___, 2005 (the "Flix Agreement") by and between the Company
and Wildform pursuant to which, among other matters, On2 has agreed to issue to
Wildform 280,000 unregistered shares of Common Stock of the Company in payment
for services to be rendered by Wildform to On2.
The parties agree as follows:
ARTICLE I
Section 1.01. Definitions. Capitalized terms used herein without
definition shall have the meanings given to them in (i) the Asset Purchase and
Software License Agreement dated as of April 4, 2005 (the "Asset Purchase
Agreement") by and between the Company and Wildform or (ii) the Flix Agreement.
The terms set forth below are used herein as so defined:
"Commission" has the meaning specified therefor in Section 1.02 of
this Agreement.
"Common Stock" means the common stock, par value .01 per share, of
the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Holder" means Wildform.
"Inspector" has the meaning specified therefor in Section 2.01 this
Agreement.
"Losses" has the meaning specified therefor in Section 2.07 of this
Agreement.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, business
trust, trust or unincorporated entity.
"Records" has the meaning specified therefor in Section 2.03 of this
Agreement.
"Registrable Securities" means the Shares, until such time as such
securities cease to be Registrable Securities pursuant to Section 1.02 hereof.
"Registration Expenses" has the meaning specified therefor in
Section 2.06 of this Agreement.
"Registration Statement" has the meaning specified therefor in
Section 2.01 of this Agreement.
"Securities Act" has the meaning specified therefor in Section 1.02
of this Agreement.
"Shares" means 280,000 shares of Common Stock issued to Wildform in
connection with the Flix Agreement. -
Section 1.02 Restrictions on Transferability. None of the Registrable
Securities may be sold, assigned, transferred, pledged or otherwise disposed of,
whether or not for value, except in compliance with applicable securities laws.
The Holder will be permitted to sell, assign, transfer, pledge or otherwise
dispose Registrable Securities only (i) if a Registration Statement covering
such Registrable Security has been declared effective by the Securities and
Exchange Commission (the "Commission") and such Registrable Security has been
sold or disposed of pursuant to such effective Registration Statement; (ii) such
Registrable Security is disposed of pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act"); (iii) such
Registrable Security is eligible to be, and at the time of determination can be,
disposed of pursuant to paragraph (k) of Rule 144 (or any similar provision then
in force) under the Securities Act; or (iv) (iv) such transfer of the
Registrable Securities is exempt from the registration requirements under the
Securities Act. (each of (i) through (iv) above shall be a "Disposition Event").
Upon the occurrence of a Disposition Event, the provisions of this Agreement
shall no longer apply to the shares of the Common Stock that theretofore were
Registrable Securities and such shares shall cease to be Registrable Securities.
Section 1.03 Restrictive Legend.
(a) Shares of Stock. Each certificate representing Registrable Securities
shall be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws or otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"). THESE SHARES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE SECURITIES ACT.
(b) Stop Transfer Instructions. The Holder consents to the Company's
making a notation on its records and giving instructions to any transfer agent
of the Registrable Securities in order to implement the restrictions on transfer
established in this Agreement.
ARTICLE II
Section 2.01. Registration. On or prior to the nine-month anniversary of
the date hereof, the Company will prepare and file with the Commission a
registration statement under the Securities Act (the "Registration Statement")
effecting the registration of the Shares. If Company, in its sole discretion,
determines that the method of disposition shall be an underwritten public
offering, Company may designate the managing underwriter of such offering,
subject to the approval of Wildform, which approval shall not be withheld
unreasonably. The Registration Statement will be filed on a form available to
the Company, with respect to the Shares. The Company will use commercially
reasonable efforts to cause such Registration Statement to become effective
prior to the 12-month anniversary of the date hereof. The Company agrees to:
(1) 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 for
the distribution period (determined pursuant to subparagraph (11) below) and as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
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(2) furnish to each Holder and to each underwriter such number of
copies of the Registration Statement and the prospectus included therein
(including each preliminary prospectus and each document incorporated by
reference therein to the extent then required by the rules and regulations of
the Commission) as such Persons may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities covered by
such Registration Statement;
(3) if applicable, use commercially reasonable efforts to register
or qualify the Registrable Securities covered by such Registration Statement
under the securities or blue sky laws of such jurisdictions as the Holder or, in
the case of an underwritten public offering, the managing underwriter, shall
reasonably request, provided that the Company will not be required to qualify
generally to transact business in any jurisdiction where it is not then required
to so qualify or to take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(4) immediately notify Holder and each underwriter, at any time when
a prospectus relating to such Registration Statement is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus contained in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any 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 as promptly as
practicable amend or supplement the prospectus or take other appropriate action
so that the prospectus does not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(5) in the case of an underwritten public offering, enter into such
customary agreements, including an underwriting agreement, and furnish, at the
request of the underwriters, such opinions of counsel, and "cold comfort"
letters from the independent accountants for the Company as are, in each case,
customary in form and substance;
(6) make available for inspection by Holder (or its designated
representative), any underwriter participating in any distribution pursuant to
such Registration Statement, and any attorney, accountant or other agent
retained by such representative of the Holder or underwriter (the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records"), and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement; provided that the
Company may require the Inspectors to conduct their investigation in a manner
that does not unreasonably disrupt the Company's operations and to execute such
reasonable confidentiality agreements as the Company may reasonably determine to
be advisable;
(7) cause the Registrable Securities to be listed on any national
securities exchange if the Common Stock is or becomes so listed;
(8) use commercially reasonable efforts to keep effective and
maintain for the period specified in subparagraph (11) a registration,
qualification, approval or listing obtained to cover the Registrable Securities
as may be necessary for the Holder to dispose thereof and shall from time to
time amend or supplement any prospectus used in connection therewith to the
extent necessary in order to comply with applicable law;
(9) use commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Holder to consummate the disposition of such
Registrable Securities;
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(10) take such other actions as are reasonably requested by the
Holder or the underwriters, if any, in order to expedite, facilitate or
consummate the disposition of such Registrable Securities; and
(11) the period of distribution of Registrable Securities in a firm
commitment underwritten public offering shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it
(but not more than six months) and the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable Securities covered thereby or eighteen months.
Holder, upon receipt of notice from the Company of the happening of any
event of the kind described in subsection (4) of this Section 2.03, shall
forthwith discontinue disposition of the Registrable Securities until Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
subsection (4) of this Section 2.03 or until it is advised in writing by the
Company that the use of the prospectus may be resumed, and it has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the Company, Holder will, or
will request the managing underwriter or underwriters, if any, to, deliver to
the Company (at the Company's expense) all copies in their possession or
control, other than permanent file copies then in Holder's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice; provided, however, that the Company may not require the Holder
to discontinue disposition of the Registrable Securities for more than 90 days
in any one-year period. If the Company shall give any such notice, the time
periods specified in subsection (11) of this Section 2.03 shall be extended by
the number of days during the period from and including the date of the giving
of such notice to and including the date when Holder shall have received the
copies of the supplemented or amended prospectus contemplated by subsection (4)
of this Section 2.03 hereof or the notice that they may resume use of the
prospectus.
In connection with each registration hereunder with respect to an
underwritten public offering, the Company and Holder agrees to enter into a
written agreement with the managing underwriter or underwriters selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between
underwriters and companies of the Company's size and investment stature,
provided that such agreement shall not contain any such provision applicable to
the Company or the Holder that is inconsistent with the provisions hereof; and
further provided, that the time and place of the closing under said agreement
shall be as mutually agreed upon among the Company, the Holder and such managing
underwriter; and provided further that the Holder shall not be required to
indemnify the underwriters except with respect to information regarding the
Holder furnished in writing by or on behalf of the Holder expressly for
inclusion in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, and the
liability of the Holder shall not be greater in amount than the dollar amount of
the proceeds received by the Holder from the sale of the Registrable Securities
giving rise to such indemnification. Each the Holder shall supply to the Company
the information relating to the Holder that is required by the Securities Act
and the rules and regulations thereunder to be included in a Registration
Statement which registers Registrable Securities of the Holder and the Holder
shall execute all consents, powers of attorney, registration statements and
other documents reasonably required to be signed by the Holder in order to
effectuate the registration or disposition of Registrable Securities by the
Holder.
Section 2.02. Expenses.
(1) "Registration Expenses" means all expenses incident to the
Company's performance under or compliance with this Agreement, including without
limitation, all registration and filing fees, blue sky fees and expenses,
printing expenses, listing fees, fees and disbursements of counsel and
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independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable out-of-pocket expenses; provided,
however, that Registration Expenses shall not include any expenses incurred
directly by the Holder for legal counsel.
(2) The Company will pay all Registration Expenses in connection
with each Registration Statement filed pursuant to this Agreement, whether or
not the Registration Statement becomes effective.
Section 2.03. Indemnification. (1) In the event of a registration of any
Registrable Securities under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless Holder and each Person, if any, who
controls Holder within the meaning of the Securities Act and the Exchange Act,
against any losses, claims, damages or liabilities (including reasonable
attorneys' fees) ("Losses"), joint or several, to which Holder or such
controlling Person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Losses (or actions 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
Registrable Securities were registered under the Securities Act pursuant to this
Agreement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
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
will reimburse as incurred Holder and each such controlling Person for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Loss or actions; provided, however, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by Holder or its controlling Person in writing
specifically for use in such Registration Statement or prospectus.
(2) Holder agrees to indemnify and hold harmless the Company, its
directors, officers, employees and agents and each Person, if any, who controls
the Company within the meaning of the Securities Act or of the Exchange Act to
the same extent as the foregoing indemnity from the Company to Holder, but only
with respect to information regarding Holder furnished by or on behalf of Holder
for inclusion in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto; provided,
however, that the liability of Holder shall not be greater in amount than the
dollar amount of the proceeds received by Holder from the sale of the
Registrable Securities giving rise to such indemnification.
(3) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party under this Section 2.07, unless (and only to the
extent) the indemnifying party shall have been materially prejudiced by such
failure to give notice, and such failure to give notice shall not relieve the
indemnifying party from any obligation of indemnification or contribution
arising otherwise than under this Section 2.07. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof 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 and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 2.07 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that, (i) if the indemnifying party
has failed to assume the defense and employ counsel or (ii) if the defendants in
any such action include both the indemnified party and the indemnifying party
and counsel to the indemnified party shall have reasonably concluded that the
interests of the indemnified party conflict with the interests of the
indemnifying party, then the indemnified party shall have the right to select a
separate counsel reasonably acceptable to the indemnifying party and to assume
such legal defense and otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate counsel and other
reasonable expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
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(4) If the indemnification provided for in this Section 2.07 is
unavailable to the Company or the Holder or is insufficient to hold them
harmless in respect of any Losses, 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 Losses as between the
Company on the one hand and Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
Holder on the other in connection with the statements or omissions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and Holder on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statements of a material fact or the omission or alleged omission to
state a material fact has been made by, or relates to, information supplied by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such 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 is not guilty of such fraudulent misrepresentation.
Section 2.08. Reports Under the Securities Act and Exchange Act. With a
view to making available to the Holder the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission that
may at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:
(a) Use reasonable commercial efforts to file with the SEC in a timely
manner and make and keep available all reports and other documents required of
the Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements and the filing and availability of such
reports and other documents is required for the applicable provisions of Rule
144; and
(b) take such action as reasonably is necessary to enable the Holder to
utilize Form S-3 for the sale of their Registrable Securities.
ARTICLE III
Section 3.01. Representations and Warranties. The Company represents and
warrants and agrees with Wildform that the execution, delivery and performance
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby have been or will be as of the Closing Date duly authorized
by all necessary corporate action required to be taken on the part of Buyer.
This Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable in accordance
with its terms.
Section 3.02. Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by telecopy,
courier service or personal delivery:
(1) if to Holder, at the most current address given by Holder to the
Company in accordance with the provisions of this Section 3.02, which address
initially is the address set forth in the Asset Purchase Agreement,
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(2) if to the Company, initially at its address set forth in the
Asset Purchase Agreement, and
(3) for each, thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 3.02.
All such notices and communications shall be deemed to have been received
at the time delivered by hand, if personally delivered; when receipt
acknowledged, if telecopied; and on the next business day if timely delivered to
an air courier guaranteeing overnight delivery.
Section 3.03. Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including subsequent holders of Registrable Securities.
Section 3.04. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Agreement.
Section 3.05. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
Section 3.06. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS AGREEMENT WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 3.07. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.
Section 3.08. Entire Agreement. This Agreement, together with the Asset
Purchase Agreement and the Flix Agreement, are intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities issued by the Company to Wildform under the Flix Agreement. This
Agreement, the Flix Agreement, and the Asset Purchase Agreement supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
Section 3.09. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
Section 3.10. Amendment. This Agreement may be amended only by means of a
written amendment signed by the Company and by Holder.
Section 3.11. Assignment of Rights. The rights of Holder under this
Agreement may be not be assigned or transferred
Section 3.12 Penalty. If the Registration Statement is not effective on
the 12-month anniversary of the date hereof (the "Registration Deadline"), and
the Acquisition Shares are not otherwise eligible for sale under Rule 144 (or
any similar provision then in force) under the Securities Act of 1933, then, on
the Registration Deadline and on each monthly anniversary of the Registration
Deadline until the registration statement has become effective, the Company
shall pay to Wildform an additional "late fee penalty" amount in cash equal to
five percent (5%) of the aggregate monetary value of the Shares, as determined
based on the ten-day volume-weighted average price of the On2 common stock as of
the date hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Wildform, Inc.
By:
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Name:
Title:
On2 Technologies, Inc.
By:
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Name:
Title:
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