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EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
BETWEEN
ROCKTRON CORPORATION
AND
SRS LABS, INC.
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is entered into as
of May 21, 1998 by and between SRS LABS, INC., a Delaware corporation (the
"Company"), and Rocktron Corporation, a Michigan corporation ("Rocktron")
R E C I T A L S
A. Pursuant to that certain Asset Purchase Agreement dated May 21, 1998
(the "Asset Purchase Agreement") by and between the Company and Rocktron, the
Company shall issue 35,294 shares of common stock, U.S. $.001 par value per
share ("Common Stock"), of the Company to Rocktron.
B. As an inducement to enter into the Asset Purchase Agreement, the
Company desires to grant to the Holder, in conjunction with the transfer of the
35,294 shares of Common Stock (the "Shares").
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Asset
Purchase Agreement and in this Agreement, the Company and the Holder agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
I.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" shall mean Rocktron and any transferee of Registrable Shares
who, pursuant to Section 3.3 below, is entitled to registration rights
hereunder.
"Registrable Shares" shall mean the Shares and any shares of Common
Stock issued upon any stock split, stock dividend, recapitalization or similar
event with respect to such Shares; provided, however, that Registrable Shares
shall cease to be Registrable Shares: (a) after they have been resold in a
transaction which does not meet the requirements for the assignment of
registration rights as set forth in Section 3.3 hereof; (b) at such time as
Holder
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is able to dispose of all of his Registrable Shares in one three month
period pursuant to Rule 144; or (c) two (2) years from the date of this
Agreement, whichever is earlier.
"Registration Period" shall mean the period beginning on the date hereof
and ending two (2) years from the date hereof.
"Rule 144" shall mean Rule 144 under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
REGISTRATION RIGHTS
II.1 Piggyback Registration Rights.
(a) Whenever at any time during the Registration Period, the Company
proposes to register any of its securities under the Securities Act (other than
on Forms S-4 or S-8 or a registration statement on Form S-1 covering an employee
benefit plan), it shall each time give prompt written notice to each Holder of
its intention to do so and, upon the written request of each such Holder given
within thirty (30) days after the giving of any such notice (which request shall
state the proposed method of distribution of such shares of Common Stock), the
Company shall include in the proposed registration (the "Proposed Registration")
all Registrable Shares with respect to which the Company has received a written
request from each such Holder for inclusion therein within thirty (30) days
after receipt of the Company's notice. Except as may otherwise be provided in
this Agreement, Registrable Shares with respect to which such request for
registration has been received will be registered by the Company and offered to
the public pursuant to this Section 2.1 on the same terms and subject to the
same conditions as are applicable to the Proposed Registration.
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to subsection 2.1(a). In such event, the right
of any Holder to registration pursuant to Article II shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Shares in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through such underwriting
shall (together with the Company and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in
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good faith that marketing factors require a limitation of the number of shares
to be underwritten, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company, second, to any
stockholder of the Company with superior registration rights to those of the
Holder on a pro rata basis, and then to the Holder.
(c) Notwithstanding anything herein to the contrary, the Company may, to
the extent then permitted by applicable law, at any time prior to the effective
date of the Proposed Registration, determine in its sole discretion not to
effect such registration, in which event the Company shall have no further
obligation under this Section 2.1 to register shares of Common Stock under such
Proposed Registration, except that the Company shall reimburse the stockholders
for any out-of-pocket fees and expenses incurred by them in connection with such
Proposed Registration.
II.2 Registration Procedures.
(a) Whenever the Company is required by the provisions of this
Article II to include Registrable Shares in a Proposed Registration, the Company
shall (unless it shall have determined to withdraw or abandon the Proposed
Registration), as expeditiously as possible:
(i) Cooperate with the Holders and any underwriter responsible
for the sale of Registrable Shares in their review of the Company in connection
with such registration;
(ii) Prepare and file with the SEC 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
one hundred eighty (180) days from the day of its effectiveness and any
additional period as is necessary to correct any of the conditions referred to
in Section 2.2(a)(v)(A) or (B) below (the "Period of Availability") and to
comply with the provisions of the Securities Act and the Exchange Act, with
respect to the disposition of all securities covered by such registration
statement for such periods. At the expiration of the Period of Availability, the
Company may file a post-effective amendment to such registration statement to
deregister any unsold Registrable Shares;
(iii) Furnish to each Holder selling Registrable Shares pursuant
to the registration statement (a "Public Selling Stockholder"), without charge,
such number of copies of the prospectus forming a part of such registration
statement (including each preliminary prospectus) as conforms with the
requirements of the Securities Act, and such other documents as such Public
Selling Stockholder may reasonably request in order to facilitate the
disposition of such securities;
(iv) Use its best efforts to register or qualify the securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as counsel for the Public Selling Stockholders shall
reasonably request, and do any and all other acts and things which may be
necessary or advisable to enable the Public
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Selling Stockholders, or any underwriter offering such securities for the Public
Selling Stockholders, to consummate the disposition thereof in such
jurisdiction; provided, however, that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process in suits
other than those arising out of the offer or sale of the securities covered by
such registration statement in any jurisdiction where it is not now so subject;
(v) (A) Notify the Public Selling Stockholders, any time a
prospectus relating the Registrable Shares is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus forming a part of 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 (B) at the
request of the Public Selling Stockholders, prepare and furnish the Public
Selling Stockholders, without charge, with a reasonable number of copies of any
supplement to or any amendment of such prospectus that may be necessary so that,
as thereafter delivered to the purchasers of such securities, such prospectus
shall not include 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 in the light of the circumstances then existing; and
(vi) If appropriate under the circumstances, enter into an
underwriting agreement, in the form then customarily used by the underwriters
managing the public offering and consistent with the provisions of this Article
II, with the underwriters of the securities covered by such registration
statement.
(b) Each Public Selling Stockholder shall notify the Company, any time a
prospectus relating to the Registrable Shares is required to be delivered under
the Securities Act, of the happening of any event relating to such Public
Selling Stockholder, the Registrable Shares or the extended method of
disposition of such securities, as a result of which such prospectus 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. Each Public Selling Stockholder
shall furnish the Company with such information regarding the Registrable Shares
and the intended method of disposition of such securities as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.
II.3 Allocation of Expenses. Whenever the Company is required by the
provisions of this Article II to use its best efforts to effect the registration
of any shares of Common Stock under the Securities Act, the Company shall pay
all Registration Expenses in connection with any such registration.
"Registration Expenses" means all expenses incurred by the Company in complying
with this Article II, including, without limitation, all registration and filing
fees, printing expenses, expenses of complying with state securities or blue sky
laws, fees and disbursements of separate counsel for the Company and
accountants' fees and expenses incident to or required by any such registration.
All fees and disbursements of separate counsel for the Holders and counsel for
the underwriters and all
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other expenses of the Holders (including travel expenses) shall be borne by the
Holders. The underwriting commissions or discounts shall be borne pro rata by
the sellers of Common Stock pursuant to such registration statement, based on
the number of shares of Common Stock offered by each such seller (unless
otherwise agreed by such sellers). Notwithstanding the foregoing, the fees and
disbursements of counsel for the underwriters in a public offering pursuant to
Section 2.1 in which the Company is selling securities shall be borne by the
Company.
II.4 Indemnification. In connection with any registration of Registrable
Shares pursuant to this Article II:
(a) The Company agrees to indemnify and hold harmless each Holder
and each underwriter (within the meaning of the Securities Act) with respect to
such Holders' Registrable Shares, and each person, if any, controlling (within
the meaning of the Securities Act) such Holder or any such underwriter and each
director or officer of each of the foregoing, from and against any and all
losses, claims, damages or liabilities, joint or several, to which such Holder,
underwriter, controlling person, director or officer or any of them may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, or in any post-effective amendment
thereto, or in any preliminary prospectus or prospectus thereunder, or in any
supplement to any such prospectus, or arise out of or are based upon the
omission or alleged omission to state in any of the foregoing documents a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party for
any legal or any other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or
proceeding; provided, however, that (i) the Company shall not be liable to any
such Holder or any such underwriter, controlling person, director or officer 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 any of the foregoing documents in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Holder or any underwriter with respect to the
Registrable Shares, any person controlling such Holder or any such underwriter,
as the case may be, specifically for use in the preparation of any such
documents, and (ii) the Company shall not be liable to any such underwriter,
controlling person, director or officer, to the extent that such statement or
omission was contained in a preliminary prospectus and corrected in final or
amended or supplemented prospectus and such Holder or any such underwriter
failed to deliver a copy of such final or amended or supplemented prospectus to
the person suing on the basis of such statement or omission within the time
required by the Securities Act; and provided, further, that the Company shall
not be required to indemnify any such underwriter unless such underwriter shall
have delivered to the Company its written agreement (i) to indemnify the
Company, each of its directors, each officer of the Company who shall have
signed such registration statement or any amendment thereto, each person named
in such registration statement or any amendment thereto as about to become a
director of the Company, and each person controlling the Company in a like
manner as that provided with respect to the Public Selling
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Stockholders in Section 2.4(b) (insofar as any actual or alleged untrue
statement or omission is made in any of the foregoing documents in reliance upon
and in conformity with any information furnished in writing to the Company by or
on behalf of such underwriter expressly for use in the preparation of any such
documents), and (ii) to be bound by the provisions of Section 2.4(c).
(b) Each Public Selling Stockholder hereby agrees to indemnify and hold
harmless the Company, each of its directors, each officer of the Company who
shall sign any registration statement under which Registrable Shares held by the
Company are registered or any amendment thereto, each person named in any such
registration statement or amendment as about to become a director of the
Company, and each person controlling (within the meaning of the Securities Act)
the Company from and against any and all losses, claims, damages or liabilities,
joint or several, to which the Company or any of them may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, or any post-effective amendment thereto or in any
preliminary prospectus or prospectus thereunder, or in any supplement to any
such prospectus, or arise out of or are based upon the omission or alleged
omission to state in any of the foregoing documents a material fact required to
be stated therein or necessary to make the statements therein not misleading, in
each case to the extent but only to the extent that such statement or omission
was made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of such Public Selling Stockholder
expressly for use in the preparation of any of such documents, and agrees to
reimburse each such indemnified party for any legal or any other expenses
reasonably incurred by it in connection with the investigation or defending any
such loss, claim, damage, liability or proceeding; provided, however, that (a)
such Public Selling Stockholder shall have no liability for any untrue
statements or omissions as to which such Public Selling Stockholder shall have
timely notified the Company in writing and the Company shall have thereafter
failed to correct in the final prospectus or a supplement to the prospectus, and
(b) the liability of each Public Selling Stockholder under these indemnification
provisions shall be limited to an amount equal to the public offering price of
the shares sold by such Public Selling Stockholder, unless such liability arises
out of or is based on willful misconduct by such Public Selling Stockholder.
(c) Promptly after receipt by an indemnified party under Section 2.4(a)
or 2.4(b) 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 under either such subsection, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may have to
any indemnified party except to the extent the indemnifying party has been
actually prejudiced by such omission. In case any such action shall be brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein, and, to the extent that it shall wish, jointly with any other
indemnifying party, similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such
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indemnified party. 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 under this Section 2.4 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If, for any reason, the indemnification provided for in Section
2.4(a) and in Section 2.4(b) is not available to the indemnified parties, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the relative benefits received
by the indemnified party and the indemnifying party, but also the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations.
ARTICLE III
GENERAL PROVISIONS
III.1 Attorneys' Fees. In any action, litigation or proceeding between
the parties arising out of or in relation to this Agreement, the prevailing
party in such action shall be awarded, in addition to any damages, injunctions
or other relief and without regard to whether or not such matter be prosecuted
to final judgment, such party's costs and expenses, including reasonable
attorneys' fees. Such award shall include post-judgment attorneys' fees and
costs and the same shall not be deemed as merged into the final judgment.
III.2 Termination. This Agreement shall terminate in its entirety upon
the earlier of: (a) the occurrence of a sale of the Company (including by way of
merger or a sale of substantially all of its assets); (b) at such time as Holder
is able to dispose of all of his Registrable Shares in one three-month period
pursuant to the provisions of Rule 144; or (c) two (2) years from the date
hereof. Notwithstanding the foregoing, the provisions of Section 2.4 shall
survive the termination of this Agreement.
III.3 Assignment of Registration Rights. The right to cause the Company
to include the Holder's Registrable Shares in any registration pursuant to
Article II may be assigned to a transferee or assignee who acquires more than
one-half of the shares of Registrable Shares originally held by Rocktron (as
adjusted for stock splits, stock dividends, recapitalizations or similar events
after the date hereof), provided that the Company is given written notice of
such assignment prior to such assignment.
III.4 Further Assurances. Each of the parties hereto shall, during the
term hereof, take all actions necessary to effectuate the purposes and intent
hereof.
III.5 No Third Party Beneficiaries. Except as otherwise specifically
provided herein (e.g., Article II), the parties hereto together with any persons
or entities entitled to indemnification hereunder shall have the sole right to
enforce the performance of
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the provisions of this Agreement, and no other person shall be entitled to, or
shall have any claim, right, title or interest to or in any such matters by
virtue of this Agreement.
III.6 Amendments; Waiver. No amendment of or modification to this
Agreement shall be effective unless it shall be in writing and signed by the
Company and by Holders holding at least a majority of the issued and outstanding
shares of Common Stock held in the aggregate by such Holders. No waiver of any
provision of this Agreement shall be effective unless contained in a writing
referred specifically to such provision and signed by the party against whom the
waiver is alleged.
III.7 Notices. All notices or other communication required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
by telex, cable, facsimile or telecopy, or sent postage prepaid, by first class,
registered or certified mail, or sent by reputable overnight courier service,
and shall be deemed given when so delivered by hand, upon confirmation of
transmission if sent by telex, cable, facsimile or telecopy, or if mailed, five
(5) days after being sent by first class, registered or certified mail, or if
sent by reputable overnight courier service, on the second day after being sent,
as follows, or to such other address as may be hereafter designated by the
respective parties hereto in accordance with these notice provisions:
(i) if to the Company:
SRS Labs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Vice President,
Chief Financial Officer and Secretary
with a copy by the same means to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx Xxxxxx, Esq.
(ii) If to Holder,
Rocktron Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx., President
Fax: (000) 000-0000
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with a copy by the same means to:
Xxxxxxxx, Xxxxxxxxx & Associates, P.C.
000 X. Xxxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
III.8 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
III.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
III.10 Entire Agreement. This Agreement, together with the Asset
Purchase Agreement, contain the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter.
III.11 Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
III.12 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without regard to its
conflicts of law principles.
III.13 Venue. As part of the consideration for the Company's grant of
the registration rights provided for herein, the parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the courts of
the State of California, County of Orange, and/or the United States District
Court for the Central District of California (Southern Division) for any
actions, suits, controversies or proceedings arising out of or relating to this
agreement and the transactions contemplated hereby (and the parties agree not to
commence any action, suit or proceeding relating thereto except in such courts),
and further agree that service of any process, summons, notice or document by
U.S. registered mail to the respective addresses set forth above shall be
effective service of process for any action, suit or proceeding brought against
the parties in any such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any action, suit,
controversies or proceeding arising out of this agreement or the transactions
contemplated hereby, in the courts of the State of California, County of Orange
and/or the United States District Court for the Central District of California
(Southern Division), and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any
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such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient or improper forum.
(Signature Page Follows)
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[SIGNATURE PAGE -- REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
"COMPANY" SRS LABS, INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxx,
President and Chief Operating Officer
"ROCKTRON" ROCKTRON CORPORATION, a Michigan corporation
By: /s/ XXXXX X. XXXXXX, XX.
-----------------------------------------
Xxxxx X. Xxxxxx, Xx.,
President
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