REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of November 12, 1998, by and
among NewStar Media Inc., a California corporation (the "COMPANY"), and Apollo
Partners, LLC and Xxxxxx Xxxxxxxxxx, as Purchasers (each a "PURCHASER" and
collectively, the "PURCHASERS").
WHEREAS, the Purchasers are acquiring securities of the Company
pursuant to a Stock Purchase Agreement dated the date hereof among the Company
and the Purchasers (the "STOCK PURCHASE AGREEMENT"; capitalized terms used in
this Registration Rights Agreement without definition shall have the meanings
ascribed thereto in the Stock Purchase Agreement).
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and intending to be legally bound, the parties hereto agree as
follows:
1. REGISTRATION RIGHTS
1.1 (a) The Company shall as expeditiously as practicable, but in any
event not later than December 31, 1998, prepare and file with the Securities and
Exchange Commission (the "COMMISSION") one or more registration statements
(individually and collectively, the "REGISTRATION STATEMENT") under the
Securities Act of 1933 (the "1933 ACT"), providing for the registration of the
Shares (together with all shares of Common Stock issued in connection therewith,
including by way of a stock split or other adjustment or stock dividend, the
"REGISTRABLE SECURITIES") for sale by the Purchasers, then holding such
securities (including with respect to Apollo Partners, LLC., its principals who
for the purpose of this Agreement shall be included in the term "PURCHASER").
Thereafter, the Company shall use its reasonable best efforts to cause such
Registration Statement to be declared effective not later than February 26,
1999. If at any time after the Registration Statement becomes effective, the
Registration Statement is not available for sales by any Purchaser, then the
Company shall, as expeditiously as possible, prepare and file with the
Commission, to the extent required, an amendment or new registration statement
in order to afford such Purchaser the benefit of the registration contemplated
in this Section 1.1, and shall use its reasonable best efforts to have such
amendment or new registration statement declared effective as promptly as
practicable.
(b) Notwithstanding the foregoing, in the event that the Company
proposes to undertake an underwritten public offering immediately prior to the
filing of or during the pendency or effectiveness of the Registration Statement,
each Purchaser will be obligated to either (x) join the underwritten offering
with respect to all or a portion of the Registerable Securities requested by
such Purchaser to be included therein (subject to the approval of the managing
underwriter, which may exclude such shares entirely or require pro rata cut-back
with other selling shareholders, and/or (y) execute a "lock-up" agreement with
respect to the sale or other disposition of any Registrable Securities not so
included or permitted to be included for a period commencing with the filing of
the related registration statement and ending 90 days after the effective date
of the related Registration Statement, but in any event not more than 135 in the
aggregate.
1.2. REGISTRATION PROCEDURES.
(a) The Registration Statement may be in any form for which the
Company then qualifies or which counsel for the Company deems appropriate;
(b) Before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall furnish to counsel selected
by the Purchasers, copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel, and after the filing of
the Registration Statement, the Company will promptly notify the Purchasers of
any stop order issued or, to the knowledge of the Company, threatened by the
Commission and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered;
(c) The Company shall prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep the registration statement
effective for so long as any of the Registrable Securities remain owned by a
Purchaser, and so long as such registration is necessary to permit the public
resale thereof without any limitation on the amount of such sales pursuant to
Rule 144 under the Securities Act or otherwise, and comply with the provisions
of the 1933 Act with respect to the disposition of all Registrable Securities
during such period in accordance with the intended methods of disposition set
forth in the registration statement;
(d) The Company shall furnish to each Purchaser, before filing
the Registration Statement, if requested, copies of the Registration Statement
as proposed to be filed, and thereafter furnish to each Purchaser such number of
copies of the Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in the
registration statement (including each preliminary prospectus) and such other
document as the Purchasers may reasonably request in order to facilitate the
disposition of the Registrable Securities;
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(e) The Company shall use its commercially reasonable efforts to
register or qualify the Registerable Securities covered by such Registration
Statement under the securities or blue sky laws of such jurisdictions as the
Purchasers shall reasonably request (provided that the Company shall not be
required to consent to general service of process for all purposes in any
jurisdiction where it is not then qualified to do business) and do any and all
other acts or things which may be necessary or advisable to enable such seller
to consummate the public sale or other disposition in such jurisdictions of such
Registrable Securities;
(f) The Company shall notify the each Purchaser, at any time when
a prospectus relating thereto is required to be delivered under the 1933 Act, of
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 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 at the request of the Purchasers prepare and
furnish to such seller 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 purchasers of Registrable 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 then existing;
(g) The Company shall furnish, at the request of each Purchaser
on the date that the Registration Statement becomes effective, (a) an opinion,
dated such date, of the independent counsel representing the Company for the
purposes of such registration, addressed to the Purchasers, stating that such
registration statement has become effective under the 1993 Act; and (b) a
letter, dated such date, from the independent certified public accountants of
the Company addressed to the Purchasers making such request, stating that they
are independent certified public accountants within the meaning of the 1933 Act,
and that in the opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or the
prospectus, or any amendment or supplemental thereto, comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act,
and covering such other matters (including information as to the period ending
not more than five (5) business days prior to the date of such letter) with
respect to the registration, if independent certified public accountants are
normally requested to provide comfort on such matters, as such Purchaser may
reasonably request.
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(h) The Company shall make available for inspection by the
Purchasers and any attorney, accountant or other professional retained by any
Purchaser or any underwriter (collectively, the "INSPECTORS"), all financial and
other records, permanent corporate documents and properties of the Company
(collectively, the "RECORDS") as are reasonably necessary to enable them to
exercise due diligence, and cause the Company's officers, directors, and
employees to supply all information reasonably requested by such Inspectors in
connection with the registration statement. The Purchasers further agree that
they will, upon learning that disclosure of such Records is sought in a court of
component jurisdiction, give notice to the Company and allow the Company at its
expense to undertake appropriate action to prevent disclosure of the Records
deemed confidential;
(i) The Company shall otherwise use its commercially reasonable
efforts to comply with all applicable rules and regulations of the Commission,
and make generally available to its security holders, as soon as reasonably
practicable an earnings statement satisfying the provisions of Section 11(a) of
the 1933 Act and covering a period of twelve months, beginning within three
months after the effective date of the Registration Statement;
(j) The Company shall use its commercially reasonable efforts to
cause all Registrable Securities to be listed on each securities exchange (if
any) on which similar securities issued by the Company are then listed; and
(k) The Company shall provide a transfer agent and registrar for
all of the Registrable Securities not later then the effective date of such
Registration Statement.
1.3. DISCONTINUANCE OF DISPOSITION. The Purchasers, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 1.2 (f) shall forthwith discontinue disposition of the Registrable
Securities until the Purchaser receives copies of the supplemented or amended
prospectus contemplated by Section 1.2 (f) or until it is advised in writing
(the "ADVICE") by the Company that the use of the prospectus may be resumed and
has received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus.
1.4. INFORMATION TO BE FURNISHED BY PURCHASERS. Each Purchaser all
furnish to the Company such information and execute such documents regarding the
Registrable Securities held by such Purchaser and the intended method of
disposition thereof as the Company shall reasonably request in connection with
the action to be taken by the Company.
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1.5. EXPENSES OF REGISTRATION. The Company shall pay all expenses
incurred by the Company in complying with Section 1.1 and 1.3 (other than the
underwriter's discounts and commissions and fees and expenses of special counsel
to the Purchasers, if any), including, without limitation, all registration and
filing fees (including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), fees and expenses of complying with
securities and blue sky laws, printing expenses, fees, and disbursements of
counsel to the Company, and of the Company's independent public accountants.
1.6. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Purchaser,
its executive officers, directors and controlling persons (within the meaning of
the 0000 Xxx) and each person who participates as an underwriter or controlling
person of an underwriter (within the meaning of the 0000 Xxx) with respect to a
Registration Statement pursuant to Section 1.1 against any losses, claims,
damages or liabilities to which any of them may become subject under the 1933
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or allegedly untrue statement of any material fact contained in a registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, and
will reimburse any of them for any legal or other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable hereunder in any such case if any such loss, claim, damage or
liability arise out of or is based upon any untrue statement or allegedly untrue
statement or omission or alleged omission made in such registration statement,
prospectus or amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Company for such purpose by such
Purchaser or by its representative.
(b) Each Purchaser shall indemnify and hold harmless the Company,
its executive officers, directors and controlling persons (within the meaning of
the 0000 Xxx) and each person who participates as an underwriter or controlling
person of an underwriter (within the meaning of the 0000 Xxx) with respect to a
registration statement pursuant to Section 1.1 against any losses, claims,
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damages or liabilities to which any of them may become subject under the 1933
Act or otherwise insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, in reliance upon and in
conformity with written information furnished to the supplement thereof, in
reliance upon and in conformity with written information furnished to the
Company by each Purchaser or by its representative, and will reimbursement any
of them for any legal or other expenses reasonably incurred by them in
connection with investigating or defending, any such, loss, claim, damage,
liability or action.
(c) A party's obligation to indemnify (the "indemnifying party")
and the other party's rights to indemnity and payment (the "indemnified party")
under Section 1.6 is contingent upon the indemnified party (i) giving the
indemnifying party prompt written notice of such claim; (ii) allowing the
indemnifying party to have sole right to control and direct the investigation,
preparation and defense of any such claim or action and all negotiations for its
settlement or compromise; and (iii) providing reasonable assistance to the
indemnifying party, such assistance to be solely at the cost and expense of the
indemnifying party. The indemnified party, at its own expense, shall be entitled
to participate in the defense and to receive copies of all pleadings and other
papers in connection with the claim.
(d) If for any reason the indemnification provided for in the
preceding Sections 1.6 (a) and 1.6 (b) is unavailable to an indemnified party as
contemplated by those sections, then the indemnifying party will contribute to
the amount paid or payable to 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,
provided that no Purchaser will not be required to contribute in an amount
greater than the difference between the net proceeds received by such Purchaser
with respect to the sale of any Registrable Securities and all amounts already
contributed by such Purchaser with respect to such claims.
1.7. UNDERWRITING AGREEMENT. If the Registrable Securities are to be
sold pursuant to a registration statement in an underwritten offering in which
no shares of the Company are being sold for the account of the Company, the
Company agrees to enter into an underwriting agreement with the underwriter or
underwriters (who shall be subject to the approval of the Company) containing
customary representations and warranties with respect to the business and
operations of the Company, including without limiting the generality of the
foregoing, customary provisions with respect to indemnification by the Company
of the underwriters of such offering.
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2. MISCELLANEOUS
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2.1. OWNER OF REGISTRABLE SECURITIES. The Company may deem and treat
the person in whose name the Registrable Securities are registered as the
absolute owner thereof for all purposes whatsoever.
2.2. SUCCESSORS. This Agreement shall be binding upon and shall inure
to the benefit of the successors and assigns of each Purchaser, and the term
"Purchaser" shall be deemed to be include each such holder of Registrable
Securities. This Agreement shall be binding upon and shall inure to the benefit
of the Company and its successors and assigns.
2.3. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without regard
to such state's conflicts of law principles.
2.4. NOTICE. Any notice or other communication required or permitted
hereunder shall be sufficiently given only if sent by facsimile transmission or
by registered or certified mail, postage prepaid, addressed as follows or to
such other address or addresses as may hereafter be furnished in writing by
notice similarly given by one party to the other:
To the Company: NewStar Media Inc.
0000 Xxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The Purchasers: Apollo Partners Ltd.
000 0xx Xxxxxx
Xxxxx #0000
Xxx Xxxx, XX 00000
Xxx Xxxxxxxxxx
NewStar Media
0000 Xxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
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With a required
copy to: Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Xxxx Xxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
2.5. FULL AGREEMENT. This Agreement sets forth the entire understanding
of the parties with respect to transactions contemplated hereby, and shall not
be modified or amended except by written agreement of all parties hereto.
2.6. HEADINGS. The headings of the Sections of this Agreement are
inserted for convenience of reference only and shall not be considered a part
hereof.
2.7. COUNTERPARTS. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first forth above.
THE COMPANY:
NEWSTAR MEDIA INC.
By: /s/ XXXX XXXXXX
-------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President & Chief
Financial Officer
THE PURCHASERS:
APOLLO PARTNERS, LLC
By: /s/ XXXXXXXX X. XXXXX
-------------------------------------
Xxxxxxxx Xxxxx
Manager
/s/ XXX XXXXXXXXXX
----------------------------------------
Xxxxxx Xxxxxxxxxx
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