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EXHIBIT 10.35
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 9, 1997,
among Source Media, Inc., a Delaware corporation (the "Company"), the Investor
whose name appears under the heading "Northstar Investor " on the signature
page hereof (the "Northstar Investor") and the Investors whose names appear
under the heading "Pecks Investors" on the signature page hereof (the "Pecks
Investors" and, together with the Northstar Investor, the "Investors").
1. Background. This Amended and Restated Registration Rights
Agreement amends and restates in its entirety the Registration Rights Agreement
dated April 3, 1996, between Source Media, Inc., a Delaware corporation (the
"Company") and the Northstar Investor. Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Note Agreement dated as of April 9, 1997 (the "Note Agreement"), among
the Company, IT Network, Inc. and the Investors.
In consideration of the purchase by the Investors of the
Notes and the Warrants, and as an inducement to consummate the transactions
contemplated by the Note Agreement, the parties hereby covenant and agree as
follows:
2. Registration under Securities Act, etc.
2.1. Registration of Registrable Securities on Request. (a)
Request. The holder or holders of the Registrable Securities shall three times
have the right to request in writing that the Company effect an underwritten
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of all or part of such holders' Registrable Securities; provided, that
the aggregate Fair Market Value of the Registrable Securities to be so
registered is at least $2,500,000. Such requested registrations shall be made
as follows: the Northstar Investor shall have the right to request one such
registration, without the consent of any of the Pecks Investors; a majority of
the Pecks Investors shall have the right to request one such registration,
without the consent of the Northstar Investor; and the holder or holders of
more than 50% (by number of shares) of the Registrable Securities shall have
the right to request one such registration. The Company will promptly give
written notice of any such requested registration to all other holders of
Registrable Securities and all holders of Prior Registrable Shareholder
Securities, which holders shall be entitled to include their Registrable
Securities and Prior Registrable Shareholder Securities in such registration
subject to Sections 2.1(b) and 2.1(g). Thereupon the Company will use its best
efforts to effect the registrations under the Securities Act of:
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(i) the Registrable Securities which the Company
has been so requested to register by such holders; and
(ii) subject to Sections 2.1(b) and 2.1(g), all
other Registrable Securities and Prior Registrable
Shareholder Securities which the Company has been requested
to register by the holders thereof by written request given
to the Company within 30 days after the giving of such
written notice by the Company (which request shall specify
the intended method of disposition of such Registrable
Securities and Prior Registrable Shareholder Securities) all
to the extent requisite to permit the disposition of the
Registrable Securities and Prior Registrable Shareholder
Securities so to be registered.
(b) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 2.1, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless the managing underwriter of such offering shall have
advised each holder of Registrable Securities to be covered by such
registration in writing that the inclusion of such other securities would not
in the underwriter's reasonable judgment adversely affect the marketing or the
selling price of the Registrable Securities to be covered by such registration.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate registration form or prospectus of the
Commission (i) as shall be selected by the Company and as shall be reasonably
acceptable to the holders of more than 50% (by number of shares) of the
Registrable Securities so to be registered and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration. The Company agrees to include in any such registration statement
all information which holders of Registrable Securities being registered shall
reasonably request.
(d) Expenses. The Company will pay all Registration Expenses
in connection with the registration requests made pursuant to this Section 2.1.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected and shall not count as a requested registration pursuant to Section
2.1 (a) hereof (i) unless a registration statement with respect thereto has
become effective, (ii) if a registration statement has been filed with the
Commission and prior to its becoming effective a majority of holders of the
Registrable Securities to be registered has decided to terminate the
registration process, (iii) if after it has become effective, such registration
is interfered with by any
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stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not the fault of a holder of
Registrable Securities and the Registrable Securities covered thereby have not
been sold, or (iv) if the conditions to closing specified in the selling
agreement or underwriting agreement entered into in connection with such
registration are not satisfied or waived by the parties thereto.
(f) Underwriters. Any registration effected pursuant to this
Section 2.1 shall at the election of the holders of at least 50% (by number of
shares) of the Registrable Securities so to be registered be an underwritten
public offering on a firm commitment basis or a best efforts basis. The
managing underwriter or underwriters thereof shall be selected by the Company
and such underwriter as well as the price, terms and provisions of the offering
shall be subject to the approval of the Company and the holders of more than
50% (by number of shares) of the Registrable Securities so to be registered.
(g) Apportionment in Registrations Requested. If, in
connection with a registration requested pursuant to this Section 2.1, the
managing underwriter shall advise the Company in writing (with a copy to each
holder of Registrable Securities and Prior Registrable Shareholder Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to the holders of more
than 50% (by number of shares) of the Registrable Securities requested to be
included in such registration, the number of securities that are otherwise
entitled to be included in such registration shall be allocated in the
following manner: (i) all securities other than Registrable Securities,
including all Prior Registrable Shareholder Securities, shall be reduced, on a
pro rata basis (based on the number of securities requested to be included in
such registration) and (ii) if, after the exclusion of such securities, further
reductions are still required, the Registrable Securities requested to be
included in such registration shall be reduced pro rata among the holders
thereof requesting such registration on the basis of the percentage of the
Registrable Securities sought to be registered held by such holders of
Registrable Securities which have requested that such Registrable Securities be
included. In connection with any registration as to which the provisions of
this clause (g) apply, no securities other than Registrable Securities or, to
the extent not excluded as set forth above, Prior Registrable Shareholder
Securities shall be covered by such registration and if the pro ration as
aforesaid results in the exclusion of in excess of 15% of the Registrable
Securities sought to be registered, the holder or holders of more than 50% (by
number of shares) of the Registrable Securities may, at their sole option,
notify the Company that the request shall not be counted for purposes of
determining the number of registrations pursuant to Section 2.1
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hereof, and upon receipt of such notice the Company may, at its sole option,
determine not to register such securities.
2.2. Registrations on Form S-3. The Company shall use its
best efforts to qualify for registration on Form S-3 promulgated under the
Securities Act or any successor form thereto ("Form S-3") for secondary sales.
Anything contained in Section 2.1 to the contrary notwithstanding, at such time
as the Company shall have qualified for the use of Form S-3, the holder or
holders of the Registrable Securities shall have the right to request in
writing an unlimited number of registrations on Form S-3 of Registrable
Securities, which request or requests shall (i) specify the number of
Registrable Securities intended to be sold or disposed of and the holders
thereof and (ii) state the intended method of disposition of such Registrable
Securities. A requested registration on Form S-3 in compliance with this
Section 2.2 shall not count as a registration statement initiated pursuant to
Section 2.1 but shall otherwise be treated as a registration initiated pursuant
to, and shall, except as otherwise expressly provided in this Section 2.2, be
subject to Section 2.1.
2.3. "Piggyback" Registrations. (a) Right to Include
Registrable Securities. If the Company at any time proposes to register any of
its securities under the Securities Act (other than by a registration on Form
X-0, Xxxx X-0 or any successor or similar form, or in connection with a tender
offer, merger, or other acquisition, and other than pursuant to Section 2.1 or
Section 2.2), whether or not for sale for its own account, it will each such
time give prompt written notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this Section 2.3. Upon the
written request of any such holder made within 10 days after the date of any
such notice given in accordance with Section 7 hereof, the Company will use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the holders thereof, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered, provided that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to each holder of Registrable Securities
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to do so to request
that such registration be effected as a registration under Section 2.1 or
Section 2.2, and (ii) in the case of a determination to delay
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registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities. No
registration effected under this Section 2.3 shall relieve the Company of its
obligation to effect any registration upon request under Section 2.1 or Section
2.2. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2.3.
(b) Apportionment in "Piggyback" Registrations. If (i) a
registration pursuant to this Section 2.3 involves an underwritten offering of
the securities being registered, whether or not for sale for the account of the
Company, to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized national or regional standing under
underwriting terms appropriate for such a transaction, and (ii) the managing
underwriter of such underwritten offering shall inform the Company and the
holders of the Registrable Securities requesting such piggyback registration by
letter that marketing considerations require a limitation on the number of
securities that can be included in such registration, then the Company shall
include all securities proposed by the Company to be sold for its own account
or the maximum amount that the underwriter considers saleable and such
limitation on any remaining securities that may, in the opinion of the
underwriter, be sold will be imposed pro rata among all shareholders who are
entitled to include shares in such registration statement according to the
number of Registrable Securities and other securities each such shareholder
requested to be included in such registration statement. To the extent that any
Registrable Securities or other securities are excluded from the registration
pursuant to this Section 2.3(b), no shares of Common Stock issued to management
of the Company after the date hereof pursuant to a stock option (or any other
type of benefit plan) ("Option Shares") shall be included in such registration.
Notwithstanding the foregoing, if the registration referred to herein involves
an underwritten offering of securities being registered for sale by holders of
securities other than Registrable Securities pursuant to the exercise by such
holders of demand registration rights, the Company will include in such
registration the securities proposed by such holders to be sold and may
decrease the number of Registrable Securities and such other securities
exercising "piggyback" registration rights proposed to be sold in such
registration (pro rata on the basis of the percentage of the securities sought
to be registered by such holders of Registrable Securities, and such other
securities exercising "piggyback" registration rights) to the extent necessary
to reduce the number of securities to be included in the registration to the
level recommended by the managing underwriter. To the extent that any
Registrable Securities or other securities are excluded from the registration
pursuant to this Section 2.3(b), for a registration involving demand
registration rights of holders of Prior Right Holder, no securities shall be
offered for sale for the account of the
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Company and no Option Shares shall be included in the registration.
2.4. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities and under the Securities Act as provided in Sections 2.1, 2.2 and
2.3, the Company will as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or
in any event no later than 45 days after the end of the
period within which requests for registration may be given to
the Company) file with the Commission the requisite
registration statement to effect such registration and
thereafter use its best efforts to cause such registration
statement to become effective, provided that the Company may
discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances
specified in Section 2.3(a), its securities which are
Registrable Securities) at any time prior to the effective
date of the registration statement relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement until such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or if the
registration is on Form S-1 for 6 months, whichever period is
shorter;
(iii) furnish to each seller of Registrable
Securities covered by such registration statement such number
of conformed copies of such registration statement and of
each such amendment and supplement thereto, such number of
copies of the prospectus contained in such registration
statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule
424 or Rule 430A under the Securities Act, in conformity with
the requirements of the Securities Act, and such other
documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities or blue
sky laws of such jurisdictions as
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each seller thereof shall reasonably request, to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and take any other
action which may be reasonably necessary to enable such
seller to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that the Company
shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of
this subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such
jurisdiction or subject itself to be required to pay any
franchise or income taxes in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable
Securities a signed counterpart, addressed to such seller,
except as provided in (y) below (and the underwriters, if
any), of
(x) an opinion of counsel for the Company,
dated the effective date of such registration
statement (and, if such registration includes an
underwritten public offering, dated the date of the
closing under the underwriting agreement),
reasonably satisfactory in form and substance to
counsel for all such sellers or, if such
registration includes an underwritten public
offering, to such underwriter, and
(y) a "comfort" letter, dated the effective
date of such registration statement (and, if such
registration includes an underwritten public
offering, dated the date of the closing under the
underwriting agreement), signed by the independent
public accountants who have certified the Company's
financial statements included in such registration
statement, addressed to each seller, to the extent
the same can be reasonably obtained, and addressed
to the underwriters, if any, covering substantially
the same matters with respect to such registration
statement (and the prospectus included therein) and,
in the case of the accountants' letter, with respect
to events subsequent to the date of such financial
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statements, as are customarily covered in
accountants' letters delivered to the underwriters
in underwritten public offerings of securities and
such other financial matters as such seller or such
holder (or the underwriters, if any) may reasonably
request;
(vii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading in
the light of the circumstances under which they were made,
and at the request of any such seller or holder promptly
prepare to furnish to such seller or holder a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter
delivered to the Investors of such securities, such
prospectus shall 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 under which
they were made;
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of
the Securities Act, and, in the case of a registration
requested pursuant to Section 2.1 or 2.2 hereof, will furnish
to each such seller at least two business days prior to the
filing thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any
thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement
does not comply in all material respects with the
requirements of the Securities Act or of the rules or
regulations thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by
such registration statement from
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and after a date not later than the effective date of such
registration statement; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on any
securities exchange on which any of the Registrable
Securities is then listed.
Notwithstanding the foregoing, the Company may defer its
obligations under Section 2.1 and Section 2.2 to file a registration statement,
but not its obligations to initiate the process of preparing the applicable
registration statement, for a period of no more than (i) 90 days in any 365-day
period, if the Company's Board of Directors determines in good faith based upon
a written opinion of counsel that filing such a registration statement would
require a public disclosure by the Company, which disclosure would interfere
with a material transaction then under consideration by the Company, provided
that once such information has been publicly disclosed, the Company shall
promptly proceed to fulfill its obligations under Section 2.1 and (ii) 180 days
from the most recent effective date of any registration statement of the
Company filed under the Securities Act and pursuant to Section 2.1 occurring
prior to the request for registration made pursuant to Section 2.1.
The Company may require each proposed seller of Registrable
Securities as to which any registration is being effected to promptly furnish
the Company, as a condition precedent to including such holder's Registrable
Securities in any registration, such information regarding such seller and the
distribution of such securities as the Company may from time to time reasonably
request in writing.
Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities that upon receipt of any notice from the Company
of the happening of any event of the kind described in subdivision (vii) of
this Section 2.4, such holder will forthwith discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until such holder's receipt of the
copies of the supplemented or amended prospectus contemplated by subdivision
(vii) of this Section 2.4 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice. Nothing
in this paragraph shall relieve the Company of its obligations under Section
2.4(vii) to promptly prepare a supplement or amendment at the request of any
seller or holder as set forth in Section 2.4(vii).
2.5. Underwritten Offerings. (a) Requested Underwritten
Offerings. If requested by the underwriters for any offering by holders of
Registrable Securities pursuant to a
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registration requested under Section 2.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the Company, to holders of more
than 50% (by number of shares) of the Registrable Securities included in such
registration and the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally prevailing in
agreements of this type, including, without limitation, indemnities to the
effect and to the extent provided in Section 2.7. The holders of the
Registrable Securities will cooperate with the Company in the negotiation of
the underwriting agreement and will give consideration to the reasonable
requests of the Company regarding the form thereof, provided that nothing
herein contained shall diminish the foregoing obligations of the Company. The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their option, require
that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements typical in an
offering of that type, including those regarding such holder, such holder's
Registrable Securities, and such holder's intended method of distribution, any
other information supplied by such holder to the Company for use in the
Registration Statement and any other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.3 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in Section 2.3 and subject to the
provisions of Sections 2.3(a), 2.3(b) and 2.4, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and
may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities. Any such
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holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties, or agreements typical in
an offering of this type, including those regarding such holder, such holder's
Registrable Securities and such holder's intended method of distribution, any
other information supplied by such holder to the Company for use in the
Registration Statement and any other representation required by law.
2.6. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the holders of
Registrable Securities registered under such registration statement, the
underwriters, if any, and their respective counsel (such holders' counsel to be
appointed by the holders of more than 50% (by number of shares) of Registrable
Securities so to be registered, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.7. Indemnification. (a) Indemnification by the Company. In
the event of any registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold harmless
the seller of any Registrable Securities covered by such registration
statement, its directors and officers, each other Person who participates as an
underwriter in the offering or sale of such securities and such other Person,
if any, who controls such seller or any such underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such seller or any such director or officer or underwriter
or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse such seller
and each such director, officer, underwriter and controlling person for any
legal or any other expenses reasonably
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incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that the Company
will not be liable in any such case 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 made in such
registration statement, said preliminary or final prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such seller,
specifically for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, officer, underwriter or controlling person
and shall survive the transfer of such securities by such seller.
(b) Indemnification by the Investors. Each Investor will,
and hereby does, severally and not jointly, indemnify and hold harmless (in the
same manner and to the same extent as set forth in subdivision (a) of this
Section 2.7) the Company, each director of the Company, each officer of the
Company and each other Person, if any, who controls the Company within the
meaning of the Securities Act with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Investor
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that, except in cases where the liability of each seller
hereunder is attributable to such seller's gross negligence or willful
misconduct, the liability of each seller hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense which is equal
to the proportion that the public offering price of shares sold by such seller
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not to exceed the proceeds (net of
underwriting discounts and commissions) received by such seller from the sale
of Registrable Securities covered by such registration statement. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer
or controlling Person and shall survive the transfer of such securities by such
Investor with respect to information furnished by such Investor prior to such
transfer.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
2.7, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying
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party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.7, except to the extent that the
indemnifying party is prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
party and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 2.7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section 2.7 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
2.8. Adjustments Affecting Registrable Securities. The
Company will not effect or permit to occur any combination or subdivision of
shares which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
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Commission: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
Common Stock: All shares now or hereafter authorized and designated as
the Common Stock of the Company and stock of any other class with
which such shares may hereafter have been exchanged or reclassified.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fair Market Value: (i) The Market Price, if any, of the Common Stock,
or (ii) if no Market Price exists, the value (which shall not take
into effect any minority discounts) of the Common Stock as determined
by a nationally recognized investment banking firm designated by the
Investors and reasonably acceptable to the Company; and provided,
further, that if the parties cannot agree on such a firm, each party
shall choose a nationally recognized investment banking firm, which
shall choose a third firm which shall be nationally recognized and
that third firm shall determine the Fair Market Value, which
determination shall be final and binding. The cost relating to
retaining any investment banking firm(s) in accordance herewith shall
be borne by the Company.
Market Price: The value determined in accordance with the following
provisions:
(i) if such security is listed on a national
securities exchange registered under the Exchange Act, a price equal
to the average of the closing sales prices for such security on such
exchange for each day during the 20 trading days preceding the day of
the initial written request for a demand registration; and
(ii) if not so listed under clause (i) above and
such security is quoted on the NASDAQ system, a price equal to the
average of the average of the closing bid and asked prices for such
security quoted on such system each day during the 20 trading days
preceding the day of the initial written request for a demand
registration.
Other Permitted Transferee: with respect to any Shareholder who is a
natural person:
(i) Any person related by lineal or collateral
consanguinity to such Shareholder or to the spouse of such
Shareholder;
(ii) the spouse of such Shareholder or of any person
described in clause (i) above; and
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(iii) all persons related to those persons described
in clause (i) or clause (ii) by lineal or collateral consanguinity.
For purposes of this definition of Other Permitted Transferee (i)
adopted persons shall be considered the natural born child of their
adoptive parents; (ii) lineal consanguinity is that relationship that
exists between persons of whom one is descended (or ascended) in a
direct line from the other, as between son, father, grandfather,
great-grandfather; and (iii) collateral consanguinity is that
relationship that exists between persons who have the same ancestors,
but who do not descend (or ascend) from the other, as between uncle
and nephew, or cousin and cousin.
Person: A corporation, an association, a partnership, a limited
liability company, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
Prior Registrable Shareholder Securities: (a) All shares of Common
Stock held by the Prior Right Holders or any Shareholder Relation of a
Prior Right Holder on the date hereof or (b) Common Stock by way of
stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other
reorganization or otherwise upon any required adjustments, in all
cases in respect of shares of Common Stock referred to in (a) above.
[As to any particular Prior Registrable Shareholder Securities, such
securities shall cease to be Prior Registrable Shareholder 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 disposed of in accordance with such
registration statement, (b) they shall have been distributed to the
public pursuant to Rule 144 (or any successor provision) under the
Securities Act, or (c) they shall have ceased to be outstanding.]
Prior Right Holders: The Purchasers in connection with the [1995
Purchase and Rights Agreement] listed under the heading "Purchaser" on
Exhibit A attached hereto.
Registrable Securities: (i) The Common Stock issuable upon the
conversion of Warrants held by the Investors and any Warrants or
Common Stock by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise upon any required adjustments,
and (ii) in any underwritten public offering contemplated by this
Agreement, if acceptable to the underwriters thereof, the Warrants
sold in accordance with the terms thereof to
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the underwriters for exercise and sale of the shares of Common Stock
issued upon exercise of such Warrants.
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
disposed of in accordance with such registration statement, (b) they
shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, or (c) they shall have
ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with Section 2, including, without
limitation, all registration, filing and National Association of
Securities Dealers, Inc. fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the reasonable
fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, the reasonable fees and disbursements of a
single counsel retained by the holder or holders of more than 50% (by
number of shares) of the Registrable Securities being registered,
premiums and other costs of policies of insurance obtained by the
Company against liabilities arising out of the public offering of the
Registrable Securities being registered and any fees and disbursements
of underwriters customarily paid by issuers or sellers of securities,
including reasonable fees of underwriters counsel incurred in the
qualification of the Securities under blue sky laws, but excluding all
agency fees and commissions, underwriting discounts and commissions
and transfer taxes, if any.
Securities Act: The Securities Act of 1933, as amended.
Shareholder Relation: (i) Any Other Permitted Transferee of an
individual Shareholder, (ii) any inter-vivos trust whose principal
beneficiary is such individual Shareholder or any Other Permitted
Transferee of such individual Shareholder created during their
respective lifetimes and not as a result of death, (iii) any family
limited partnership in which an individual Shareholder is a general or
limited partner, and (iv) the legal representative or guardian of such
individual Shareholder or any Other Permitted Transferee of such
individual Shareholder appointed during their respective lifetimes and
not as a result of death.
Warrants: As defined in the Note Agreement.
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4. Rule 144. If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company will file the reports required to be filed by it, and in the manner
required to be filed by it, under the Securities Act and the Exchange Act (or,
if the Company is not required to file such reports, will, upon the request of
any holder of Registrable Securities, make publicly available other
information) and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time or
(b) any similar rule or regulation hereafter adopted by the Commission ("Rule
144"). Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has complied
with such requirements.
5. Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of the holder
or holders of 66 2/3% or more (by number of shares) of Registrable Securities.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
2.1 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such securities will not reduce the amount of
the Registrable Securities of the holders which is included, (b) to make a
demand registration similar to that set forth in Section 2.1 hereof prior to
(i) the earlier date on which the Investors have made one demand registration
or two years from the date hereof or (ii) within one hundred and eighty (180)
days after the effective date of a registration made pursuant to Section 2.1
hereof, or (c) to have registration rights that are inconsistent with or
superior to the rights provided herein.
7. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may upon
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the giving of written notice to the Company, at its election, be treated as the
holder of such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable Securities
contemplated by this Agreement. The Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
8. Notices. All communications provided for hereunder shall
be sent by first-class mail or overnight courier and (a) if addressed to a
party other than the Company, addressed to such party in the manner set forth
in the Note Agreement, as the case may be, or at such other address as such
party shall have furnished to the Company in writing, or (b) if addressed to
any other holder of Registrable Securities, at the address that such holder
shall have furnished to the Company in writing, or, until any such other holder
so furnishes to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an address to the
Company, or (c) if addressed to the Company, at 0000 Xxxxxx Xxxx Xxxx, Xxxxx
0000, Xxxxxx, XX 00000 to the attention of its President, or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
9. Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. In addition, and whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company shall also be for the
benefit of and enforceable by any subsequent holder of any Registrable
Securities or Prior Registrable Shareholder Securities, subject to the
provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein.
10. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
11. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed
by, the laws of the State of New York.
12. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
SOURCE MEDIA, INC.
By:
--------------------------------------
Xxxxxxx X. Xxxx
Chief Financial Officer and
Treasurer
THE NORTHSTAR INVESTOR:
NORTHSTAR HIGH TOTAL RETURN FUND
By:
--------------------------------------
Xxxxxx Xxx Dial
Vice President
THE PECKS INVESTORS:
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
---------------------------------
Xxxxxx X. Xxxxxx
Managing Director
DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ICI AMERICAN HOLDINGS
INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
---------------------------------
Xxxxxx X. Xxxxxx
Managing Director
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DECLARATION OF TRUST FOR DEFINED
BENEFIT PLAN OF ZENECA HOLDINGS INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
---------------------------------
Xxxxxx X. Xxxxxx
Managing Director
THE X.X. XXXXXXXXX FAMILY FOUNDATION
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
---------------------------------
Xxxxxx X. Xxxxxx
Managing Director
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