EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 29,
1998, by and among FOCUS ENHANCEMENTS, INC., a corporation organized under the
laws of the State of Delaware (the "Company"), and PC Video Conversion, Inc., a
corporation organized under the laws of the state of California ("PCV").
WHEREAS:
A. In connection with the Purchase and Sale Agreement of even date herewith by
and between the Company and PCV (the "Purchase Agreement"), the Company has
agreed, upon the terms and subject to the conditions contained therein, to
issue and sell to PCV one hundred twenty-two thousand seven hundred
ninety-six (122,796) shares of the Company's common stock, par value $.01
per share, unregistered with restrictive legends (the "Common Stock"); and
B. To induce PCV to execute and deliver the Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act
of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "Securities Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and PCV
hereby agree as follows:
1. DEFINITIONS.
a) As used in this Agreement, the following terms shall have the following
meanings:
(i) "Seller" means PCV.
(ii) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule
415 under the Securities Act or any successor rule providing for
offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the
"SEC").
(iii)"Registrable Securities" means the Common Shares issued or issuable
pursuant to the Purchase Agreement.
(iv) "Registration Statement" means any registration statement of the
Company under the Securities Act required to be filed pursuant hereto
(including all amendments or supplements to any such Registration
Statement).
b) Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
a) Mandatory Registration. The Company shall use its diligent business efforts
to ensure the registration of the Registrable Securities by the one hundred
twentieth (120th) day following the date hereof. In connection therewith,
the Company shall prepare, and, as soon as practicable, but in no event
later than, on or before the one hundred twentieth (120th) day following
the date hereof (the "Filing Date"), file with the SEC a Registration
Statement on Form S-3 or, if Form S-3 is not then available, on such form
of Registration Statement as is then available to effect a registration of
all of the Registrable Securities, covering the resale of all of the
Registrable Securities.
b) Eligibility for Form S-3. The Company represents and warrants that, as of
the date of this agreement, it meets the requirements for the use of Form
S-3 for registration of the sale by Seller and any transferee or assignee
of the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as
to maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
c) The Company shall prepare and file with the SEC the Registration Statement
required by Section 2(a) as soon as practicable after the date hereof (but
in no event later than the Filing Date), and cause such Registration
Statement relating to Registrable Securities to become effective as soon as
practicable after such filing, and keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is the
earlier of (i) the date on which all of the Registrable Securities have
been sold and (ii) the date on which all of the Registrable Securities (in
the reasonable opinion of counsel to Seller) may be immediately sold to the
public without registration or restriction pursuant to Rule 144(k) under
the Securities Act or any successor provision (the "Registration Period"),
which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein and all documents incorporated
by reference therein) shall not contain any 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.
d) The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement
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and the prospectus used in connection with the Registration Statement as
may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by Seller or sellers
thereof as set forth in the Registration Statement.
e) The Company shall furnish to Seller (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company,
one copy of the Registration Statement and any amendment thereto, each
preliminary prospectus, final prospectus and each amendment or supplement
thereto, and each letter written by or on behalf of the Company to the SEC
or the staff of the SEC regarding the registrable securities (including,
without limitation, any request to accelerate the effectiveness of any
Registration Statement or amendment thereto), and each item of
correspondence from the SEC or the staff of the SEC, in each case relating
to such Registration Statement (other than any portion, if any, thereof
which contains information for which the Company has sought confidential
treatment), (ii) on the date of effectiveness of the Registration Statement
or any amendment thereto, a notice stating that the Registration Statement
or amendment has been declared effective, and (iii) such number of copies
of a prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as Seller may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by Seller.
f) The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of the Commonwealth of Massachusetts,
(ii) prepare and file such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration
Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary
or advisable to qualify the Registrable Securities for sale in the state of
California; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (b) subject itself to general taxation
in any such jurisdiction, (c) file a general consent to service of process
in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.
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g) As promptly as practicable after becoming aware of such event, the Company
shall notify Seller of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material
fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver one
such supplement or amendment to Seller.
h) The Company shall use its best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at
the earliest practicable moment (including in each case by amending or
supplementing such Registration Statement) and to notify Seller of the
issuance of such order and the resolution thereof (and if such Registration
Statement is supplemented or amended, deliver such number of copies of such
supplement or amendment to Seller as Seller may reasonably request).
i) The Company shall hold in confidence and not make any disclosure of
information concerning Seller provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other
order from a court or governmental body of competent jurisdiction, (iv)
such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement, or (v) Seller
consents to the form and content of any such disclosure. The Company agrees
that it shall, upon learning that disclosure of such information concerning
Seller is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to Seller prior to
making such disclosure, and allow Seller, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
j) The Company shall comply with all applicable laws related to the
Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the SEC.)
All obligations of the Company under this Section 3 (except for those
obligations set forth in paragraph (l) of this Section 3) shall terminate
as soon as Seller no longer owns any Registrable Securities.
4. OBLIGATIONS OF THE SELLER.
In connection with the registration of the Registrable Securities, the
Seller shall have the following obligations:
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a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of Seller, that Seller shall furnish to the Company
such information regarding itself, the Registrable Securities held by it
and the intended method of disposition of the Registrable Securities held
by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request.
b) Seller, by Seller's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder.
c) Seller agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Sections 3(e) or 3(f),
Seller will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until Seller's receipt of the copies of the supplemented or amended
prospectus contemplated by Sections 3(e) or 3(f) and, if so directed by the
Company, Seller shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Seller's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION.
All reasonable expenses incurred in connection with registrations,
filings or qualifications pursuant to Section 2, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Company
shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a) To the extent permitted by law, the Company will indemnify, hold harmless
and defend (i) Seller, and (ii) the directors, officers, partners, members,
employees, agents and each person who controls Seller within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), if any, (each, an
"Indemnified Person"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any
of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material
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fact in a Registration Statement or the omission or alleged omission to
state therein a material fact required to be stated or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading,
or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other applicable securities law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse the Seller and each other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly
for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent
of the Company, which consent shall not be unreasonably withheld; and (iii)
with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified Person if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section
3(c) hereof, and the Indemnified Person was promptly advised in writing not
to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by Seller pursuant to
Section 9 hereof.
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b) In connection with any Registration Statement in which Seller is
participating, Seller agrees to indemnify, hold harmless and defend, to the
same extent and in the same manner set forth in Section 6(a), the Company,
each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act, and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers
or any person who controls such stockholder within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any
of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished to the Company by Seller expressly for use in
connection with such Registration Statement; and subject to Section 6(c)
Seller will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them
in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of Seller, which consent shall
not be unreasonably withheld; provided, further, however, that Seller shall
be liable under this Agreement (including this Section 6(b) and Section 7)
for only that amount as does not exceed the net proceeds actually received
by Seller as a result of the sale of Registrable Securities pursuant to
such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such
Indemnified Party. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
c) Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of
the commencement thereof, and the indemnifying party shall have the right
to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
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the case may be; provided, however, that such indemnifying party shall not
be entitled to assume such defense and an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation
by such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party
and any other party represented by such counsel in such proceeding or the
actual or potential defendants in, or targets of, any such action include
both the Indemnified Person or the Indemnified Party and the indemnifying
party and any such Indemnified Person or Indemnified Party reasonably
determines that there may be legal defenses available to such Indemnified
Person or Indemnified Party which are different from or in addition to
those available to such indemnifying party. The indemnifying party shall
pay for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be
selected by Seller, if the Seller is entitled to indemnification hereunder,
or by the Company, if the Company is entitled to indemnification hereunder,
as applicable. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
not relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the extent that
the indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that (i) no contribution shall be made under
circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (ii) no
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
8. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company
and Seller. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon Seller and the Company.
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9. MISCELLANEOUS.
a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities.
If the Company receives conflicting instructions, notices or elections from
two or more persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.
b) Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy,
and shall be effective five (5) days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or
by courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Seller:
Attn: Xxxxx Xxxx
PC Video Conversion, Inc.
00000 Xxxxxx Xxxxx, Xxxxx X
Xxxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxx Xxxxx, Esq.
Suite 301
0000 Xxx Xxxxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and to Company if delivered personally, sent by facsimile or nationally
recognized overnight delivery service, or mailed by certified mail, postage
prepaid, addressed to:
Attn: Xxxxxx X. Xxxxxx
FOCUS Enhancements, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Attn: General Counsel
FOCUS Enhancements, Inc.
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000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
c) Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall
not operate as a waiver thereof.
d) This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts applicable to contracts made and
to be performed in The Commonwealth of Massachusetts. Seller irrevocably
consents to the jurisdiction of the United States federal courts and the
state courts located in The Commonwealth of Massachusetts in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees
that all claims in respect of such suit or proceeding may be determined in
such courts. Seller irrevocably waives the defense of an inconvenient forum
to the maintenance of such suit or proceeding. Seller further agrees that
service of process upon Seller, mailed by first class mail shall be deemed
in every respect effective service of process upon Seller in any such suit
or proceeding. Nothing herein shall affect the Company's right to serve
process in any other manner permitted by law. Seller agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in
any other lawful manner.
e) This Agreement and the Purchase Agreement (including all schedules and
exhibits thereto) constitute the entire agreement among the parties hereto
with respect to the subject matter hereof and thereof. This Agreement and
the Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.
f) Subject to the requirements of Section 9 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of
the parties hereto.
g) The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
h) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
i) Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
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reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
j) For purposes of this Agreement, the term "business day" means any day other
than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law, regulation or
executive order to close.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
FOCUS ENHANCEMENTS, INC.
By:
Name: Xxxxxx X. Xxxxxx
Its: Chief Executive Officer
SELLER:
PC VIDEO CONVERSION, INC.
By:
Name: Xxxxx Xxxx
Its: President
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