STOCK ISSUANCE AND PARTICIPATION RIGHTS AGREEMENT
Exhibit
10.32
This
STOCK
ISSUANCE AND PARTICIPATION RIGHTS AGREEMENT
(this
“Agreement”)
is
entered into as of the 12th day of December 2007 (the “Effective
Date”),
by
and between MTV Networks, a division of Viacom International Inc., a Delaware
corporation, with offices at 0000 Xxxxxxxx, Xxx Xxxx, XX 00000 (“MTVN”)
and
GoFish Corporation, a Nevada corporation, with offices at 000 Xxxxxxx Xxxxxx,
00xx
Xxxxx,
Xxx Xxxxxxxxx, XX 00000 (the “Company”).
(MTVN
and the Company each referred to as a “Party”
and
collectively referred to as the “Parties”).
Any
capitalized term used in this Agreement but not otherwise defined shall have
the
meaning ascribed to such term in the License Agreement (as defined
below).
RECITALS
WHEREAS,
MTVN and
the Company are parties to that certain MTVN Media Player and Video Content
License, Distribution and Marketing Agreement, dated as of even date herewith
(the “License
Agreement”);
and
WHEREAS,
pursuant
to the License Agreement, MTVN and the Company have agreed to enter into this
Agreement, upon the terms and subject to the conditions of which, and as further
consideration for the rights and licenses granted under the License Agreement:
(1) the Company will issue to MTVN, and MTVN will accept from the Company,
1,000,000 shares (the “Shares”)
of
common stock of the Company, par value $0.001 per share and (2) the Company
will
grant MTVN a participation right in certain future financings of the
Company.
NOW,
THEREFORE,
MTVN
and the Company hereby agree as follows:
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I.
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ISSUANCE
OF SHARES
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A.
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Closing.
Upon the terms and subject to the conditions set forth in this Agreement,
as consideration for MTVN’s execution and delivery of the License
Agreement and the rights and licenses granted by MTVN under the License
Agreement, the Company shall issue the Shares to MTVN (registered
i/n/o
“Viacom International Inc.”), and MTVN shall accept the Shares from the
Company. MTVN’s execution and delivery of the License Agreement and the
rights and licenses granted by MTVN under the License Agreement shall
constitute full payment of the purchase price by MTVN for the Shares.
The
closing of the issuance of the Shares (the “Closing”)
shall take place concurrently herewith at the offices of Xxxxxx Xxxxxxx
& Xxxx LLP, Xxx Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, XX, or at such other
time and place as the Parties may mutually
agree.
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B.
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Conditions
to Closing.
MTVN’s obligation to accept the Shares at the Closing is subject to (i)
the execution and delivery of the License Agreement by the Company
and
(ii) the execution and delivery of this Agreement by the Company.
The
Company’s obligation to issue the Shares at the Closing is subject to (i)
the execution and delivery of the License Agreement by MTVN and (ii)
the
execution and delivery of this Agreement by
MTVN.
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C.
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Certificates.
One or more certificates evidencing ownership of the Shares shall
contain
the legends set forth in paragraph 4(F) hereof. In addition, MTVN
hereby
covenants and agrees that the Shares may only be disposed of in compliance
with state and federal securities laws. In connection with any transfer
of
the Shares that is not registered under the Securities Act of 1933,
as
amended (the “Securities
Act”),
the Company may require MTVN to provide to the Company an opinion
of
counsel reasonably satisfactory to the Company, to the effect that
such
transfer does not require registration of such transferred Shares
under
the Securities Act.
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D.
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Lock-up.
Notwithstanding anything to the contrary in this Agreement, MTVN
hereby
covenants and agrees that during the period commencing from the issuance
of the Shares as contemplated by this Agreement and ending on the
two-year
anniversary of the Effective Date, MTVN shall not, without the prior
written consent of the Company, offer, sell, agree to sell, assign,
transfer, pledge or otherwise dispose of the Shares (including, without
limitation, any pledge or, and/or grant of a security interest in,
some or
all of the Shares in connection with a margin account or other loan
secured by the Shares); provided,
however,
that no consent shall be necessary from the Company in the event
of any
such offer, sale, agreement to sell, assignment transfer, pledge
or other
disposition of the Shares to one or more of MTVN’s
affiliates.
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E.
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Listing
of Securities.
The Company agrees, (i) at any time the Common Stock is listed or
traded
on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq
Global Market, the Nasdaq Capital Market, the OTC Bulletin Board
or any
other trading market (each, a “Trading
Market”),
it will cause the Shares to be listed and admitted for trading on
such
Trading Market as promptly as possible, and (ii) it will take all
action
reasonably necessary to continue the listing and trading of its Common
Stock on such Trading Market and will comply in all material respects
with
the Company’s reporting, filing and other obligations under the bylaws or
rules of any such Trading Market.
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II.
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GRANT
OF PARTICIPATION RIGHT
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A.
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The
Company shall, at least fourteen (14) days prior to any issuance
by the
Company of any of its securities (other than Excluded Securities)
in a
transaction primarily for the purpose of raising capital (a “Financing”),
give written notice of such proposed issuance to MTVN (the “Participation
Right Notice”).
The Participation Right Notice shall describe the securities proposed
to
be issued by the Company and specify the number, price and payment
terms.
MTVN shall have the participation right, for a period of ten (10)
days
from such notice, to purchase, at the same price per security and
on
substantially the same terms and conditions (and subject to execution
of
substantially similar definitive documentation) as are being offered
to
other investors in such proposed Financing, such number of additional
securities of the Company equal to an aggregate of thirty-five percent
(35%) of the aggregate gross proceeds of such proposed Financing.
MTVN may
accept the Company’s offer as to the full number of securities offered to
it or any lesser number, by delivering written notice thereof to
the
Company prior to the expiration of the aforesaid ten (10) day period,
in
which case in the event of and upon the closing of such proposed
Financing, the Company shall sell, and MTVN shall purchase, at the
same
price per security and on the same terms and conditions (and subject
to
execution of substantially similar definitive documentation) as are
being
sold to other investors in such proposed Financing, the number of
securities agreed to be purchased by MTVN in such written notice.
If the
Company does not receive such written notice from MTVN prior to the
expiration of the aforesaid ten (10) day period, MTVN shall be deemed
to
have notified the Company that it does not elect to participate in
such
proposed Financing and the Company shall be free at any time, after
the
end of the aforesaid ten (10) day period and prior to sixty (60)
days
after the end of the aforesaid ten (10) day period, to sell to any
third
party or parties the number of such securities not agreed by MTVN
to be
purchased by it. However, if such third party sale or sales are not
consummated within such sixty (60) day period, the Company shall
not sell
such securities as shall not have been purchased within such period
without again complying with this paragraph. As used in this Agreement,
“Excluded
Securities”
shall mean (it is understood and agreed that the following list of
Excluded Securities is provided for the avoidance of doubt and that
Excluded Securities are not likely to be issued in any Financing)
(i)
securities issued to employees officers, directors, contractors,
advisors
or consultants of the Company pursuant to employee benefit plans,
arrangements or agreements approved by the Company’s Board of Directors,
(ii) securities issued or issuable upon exercise of any options,
warrants
or other rights to purchase any securities of the Company, (iii)
any
equity securities issued pursuant to a merger, acquisition or similar
business combination, (iv) shares issued in connection with any stock
split, stock dividend, or recapitalization of the Company and (v)
any
equity securities issued in connection with a public offering of
the
Company’s securities.
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B.
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The
Company’s obligations under the above paragraph shall terminate and be of
no further force or effect automatically and without further action
upon
the earlier of (i) a Change of Control in the Company (as defined
in
Section 9.3 of the License Agreement) or (ii) the termination or
expiration of the License
Agreement.
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2
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III.
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REPRESENTATIONS
AND WARRANTIES OF THE
COMPANY
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As
of the
date hereof, the Company hereby represents and warrants to MTVN as
follows:
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A.
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The
Company is duly incorporated, validly existing and in good standing
under
the laws of the State of Nevada, with the corporate power and authority
to
own and use its properties and assets and to carry on its business
as
currently conducted.
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B.
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The
Company has the requisite corporate power and authority to enter
into and
to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations
hereunder.
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C.
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The
authorized capital of the Company consists of 310,000,000 shares
of
capital stock, of which there are authorized 300,000,000 shares of
common
stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.001 par value per share. 24,130,276 shares of such common
stock
are issued and outstanding and no shares of such preferred stock
are
issued and outstanding. No securities of the Company are entitled
to
preemptive or similar rights, and no Person (as defined below) has
any
right of first refusal, preemptive right, right of participation,
or any
similar right to participate in the issuance of the Shares or the
other
transactions contemplated by this Agreement. “Person”
means an individual, corporation, partnership, limited liability
company,
limited general partnership, syndicate, person, trust, association,
organization or other entity.
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D.
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Upon
the issuance of the Shares as contemplated by this Agreement, the
Shares
shall be duly and validly issued, fully-paid and nonassessable, free
and
clear of any lien, except for restrictions on the transfer of securities
arising under federal or state securities laws and regulations and
except
as contemplated by paragraph I.D of this
Agreement.
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E.
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The
execution, delivery and performance of this Agreement by the Company
and
the consummation of the transactions contemplated hereby do not and
will
not (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational
or charter documents; or (ii) except as would not reasonably be expected
to result in a material adverse effect in the Company’s business assets,
financial condition or results of operations, conflict with, or constitute
a default (or an event that with notice or lapse of time or both
would
become a default) under of any agreement to which the Company or
any of
its subsidiaries is a party, result in a violation of any law, rule,
regulation, order, judgment, induction, decree or other restrictions
of
any court or governmental authority to which the Company or any of
its
subsidiaries is subject or by which any of their assets are bound
or
otherwise subject.
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F.
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The
Company has filed all reports, forms or other information required
to be
filed by it under the Securities Exchange Act of 1934, as amended
(the
“Exchange
Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the twelve
months preceding the date hereof or such shorter period as the Company
was
required by law to file such reports (the foregoing materials and
all
exhibits included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being collectively
referred to herein as the “SEC
Reports”)
on a timely basis or has timely filed a valid extension of such time
of
filing and has filed any such SEC Reports prior to the expiration
of any
such extension. As of their respective dates, the SEC Reports complied
in
all material respects with the requirements of the Securities Act
and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any
untrue
statement of material fact or omitted to state a material fact required
to
be stated therein or necessary in order make the statements therein,
in
light of the circumstances under which they were made, not misleading.
The
financial statements of the Company included in the SEC Reports comply
in
all material respects with applicable accounting requirements and
the
rules and regulations of the Commission with respect thereto as in
effect
at the time of filing (or amendment thereto, as applicable). Such
financial statements have been prepared in accordance with GAAP applied
on
a consistent basis during the periods involved, except as may be
otherwise
specified in such financial statements or the notes thereto, and
fairly
present in all material respects the financial position of the Company
and
its consolidated Subsidiaries as of and for the dates thereof and
the
results of operations and cash flows for the periods then ended,
subject,
in the case of unaudited statements, to normal, immaterial, year-end
audit
adjustments. For purposes of this Agreement, any reports, forms or
other
information provided to the Commission whether by filing, furnishing
or
otherwise providing, is included in the term “filed” (or any derivations
thereof).
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3
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G.
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Except
as specified in the SEC Reports, the Company has not, since October
27,
2006, received notice from any Trading Market to the effect that
the
Company is not in compliance with the listing or maintenance requirements
thereof. The Company is, and has no reason to believe that it will
not in
the foreseeable future continue to be, in compliance with the listing
and
maintenance requirements for continued listing of the Common Stock
on the
Trading Market on which the Common Stock is currently listed or quoted.
The issuance and sale of the Shares under this Agreement does not
contravene the rules and regulations of the Trading Market on which
the
Common Stock is currently listed or quoted, and no approval of the
shareholders of the Company thereunder is required for the Company
to
enter into and to consummate the transactions contemplated by this
Agreement, including, without limitation, to issue and deliver the
Shares
to MTVN as contemplated by this
Agreement.
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IV.
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REPRESENTATIONS
AND WARRANTIES OF MTVN
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As
of the
date hereof, MTVN hereby represents and warrants to the Company as
follows:
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A.
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MTVN
understands and acknowledges that: (i) the Shares have neither been
registered under the Securities Act nor qualified under any state
securities laws; (ii) the Shares are being offered and issued pursuant
to
an exemption from registration contained in the Securities Act and
qualification provisions of applicable state securities laws; and
(iii)
the availability of such exemption and qualification provisions depends
in
part on, and the Company will rely upon the accuracy and truthfulness
of,
our representations contained in this Agreement to the extent they
impact
such exemption and MTVN hereby consents to such
reliance.
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B.
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MTVN
understands and acknowledges that the Shares may not be offered,
resold,
pledged or otherwise transferred except (i) pursuant to an exemption
from
registration under the Securities Act or pursuant to an effective
registration statement in compliance with Section 5 under the Securities
Act and (ii) in accordance with all applicable securities laws of
the
states of the United States.
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C.
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MTVN
is acquiring the Shares solely for its own account for investment
and not
for the interest of any other person and not with a view to, or in
connection with, any resale or distribution of the Shares or any
part
thereof. MTVN has no agreement, arrangement or other understanding
with
any Person to sell, transfer or pledge the Shares or any part thereof
or
which would guarantee MTVN any profit or against any loss with respect
to
such Shares, and MTVN has no plan to enter into such an agreement
or
arrangement; provided,
however,
that it is understood and agreed that the transfer to an affiliate
of MTVN
as contemplated by the proviso in paragraph I.D. shall not mean that
this
representation and warranty was inaccurate.
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D.
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MTVN
is not acquiring the Shares as a result of any advertisement, article,
notice or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television
or radio
or presented at any seminar or any other general solicitation or
general
advertisement.
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E.
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MTVN
is an “accredited investor” as defined in Rule 501(a) under the Securities
Act. MTVN is not a registered broker-dealer under Section 15 of the
Exchange Act. MTVN has such knowledge, sophistication and experience
in
business and financial matters so as to be capable of evaluating
the
merits and risks of such investment. MTVN is able to bear the economic
risks of an investment in the Shares and is able to afford a complete
loss
of such investment. MTVN can afford to hold the Shares for an indefinite
period of time and MTVN has no need for liquidity in an investment
in the
Shares.
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4
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F.
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MTVN
understands and acknowledges that there will be placed on the certificates
evidencing the Shares, or any substitutions therefor, the following
legends:
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"THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, IN EACH CASE AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO GOFISH CORPORATION.
THESE
SECURITIES ARE ALSO SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN
THE
STOCK ISSUANCE AND PARTICIPATION RIGHTS AGREEMENT, DATED AS OF DECEMBER 12,
2007, BY AND BETWEEN MTV NETWORKS, A DIVISION OF VIACOM INTERNATIONAL INC.
AND
GOFISH CORPORATION.”
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G.
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MTVN
acknowledges that prior to MTVN’s decision to make an investment in the
Shares, MTVN has reviewed the SEC Reports as necessary to make an
informed
investment decision with respect to MTVN’s investment in the
Shares.
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H.
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MTVN
acknowledges that an investment in the Shares involves, and has considered
carefully before deciding to make an investment in the Shares, certain
risks and uncertainties set forth in the SEC Reports, including those
identified under the heading “Risk Factors” in the Company’s most recent
Quarterly Report on Form 10-QSB and the Company’s most recent Annual
Report on Form 10-KSB, filed with the Securities and Exchange Commission.
MTVN has taken full cognizance of, understands such risks, and has
obtained sufficient information to evaluate the merits and risks
of an
investment in the Shares. MTVN understands and acknowledges that
no
federal or state agency has passed on or made any recommendations
or
endorsements with respect to MTVN’s acquisition of the
Shares.
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I.
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In
making its decision to make an investment in the Shares, MTVN has
relied
solely upon its own independent investigation made by it and its
legal
counsel and advisors. MTVN understands and agrees that, except as
set
forth in this Agreement, neither the Company nor the Company’s management
is making any representations or warranties of any kind respecting
the
Shares or any economic returns or tax related effects that may result
from
MTVN’s acquisition of the Shares, except for the express representations
and warranties of the Company contained in this Agreement. MTVN disclaims
reliance upon any statements, representations, warranties or projections
by the Company respecting the Company, the Shares or the present
or future
value of the Shares, except for the express representations and warranties
of the Company contained in this
Agreement.
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5
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V.
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MISCELLANEOUS
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A.
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No
Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of the
Parties hereto and their permitted assigns, except that neither this
Agreement nor either Party’s
rights or obligations hereunder shall
be assigned or transferred by either Party without the prior written
consent of the other Party
and any attempted assignment without
such written consent shall be void ab
initio
and of no force and effect; provided,
however, that (a) no consent shall be necessary from the Company
in the
event of any one or more assignments of any and/or all rights or
obligations hereunder, to one or more of MTVN’s affiliates or any
successor entity(ies) resulting from a merger, acquisition or
consolidation, spin-off, divestiture or otherwise succeeding to all
or a
substantial portion of the assets or business of MTVN.
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B.
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Notices.
All notices and other communications required or permitted under
this
Agreement shall be in writing and delivered personally, mailed, first
class mail, postage prepaid, or via a nationally recognized overnight
courier, to the applicable Party at the addresses set forth below,
unless,
by notice, a Party changes or supplements the addressee and addresses
for
giving notice. All notices shall be deemed given on the date of
delivery.
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If
to
MTVN:
MTV
Networks, a division of Viacom International Inc.
Attention:
Xxxx Xxxxxxx, EVP Digital Distribution and Business Development
0000
Xxxxxxxx
Xxx
Xxxx,
XX 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Email:
Xxxx.Xxxxxxx@xxxx.xxx
With
a
copy to:
MTV
Networks, a division of Viacom International Inc.
Attention:
Ms. Xxxxxxxxx Xxxxxxxx, EVP and Deputy General Counsel,
Business
& Legal Affairs
0000
Xxxxxxxx
Xxx
Xxxx,
XX 00000-0000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Email:
Xxxx.Xxxxxxxx@xxxxxxxx.xxx
If
to
Company:
GoFish
Corporation
Attention:
Xxxxxxx Xxxxxx, President
000
Xxxxxxx Xxxxxx
Xxx
Xxxxxxxxx, XX 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Email:
xxxxxxx@xxxxxxxxx.xxx
6
With
a
copy to:
Xxxxxxxx
& Xxxxxxxx LLP
Attention:
Xxxx X. Xxxxxxxx III, Esq.
Address:
000 Xxxxxx Xxxxxx
Xxx
Xxxxxxxxx, 00000
Telephone:
(000) 000-0000
Telecopy:
(000) 000-0000
Email:
xxxxxxxxx@xxxx.xxx
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C.
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Governing
Law and Interpretation; WAIVER OF JURY TRIAL.
This Agreement and all disputes, claims, actions, suits or other
proceedings arising hereunder shall be governed by, and construed
in
accordance with, the substantive law of the State of New York applicable
to contracts wholly made and to be performed within the State of
New York.
Each Party irrevocably submits to the sole and exclusive jurisdiction
of
the courts of New York State and the Federal courts of the Southern
District of New York, situated in the City, County and State of New
York.
Each Party irrevocably consents to the exercise of personal jurisdiction
over each of the Parties by such courts and waives any right to plead,
claim or allege that New York is an inconvenient forum. This Agreement
may
be executed in any number of counterparts, all of which taken together
shall constitute one single agreement between the Parties. Notwithstanding
the foregoing, each Party agrees that a final judgment in any such
suit,
action or other proceeding shall be conclusive and may be enforced
in
other jurisdictions by suit on the judgment or in any other manner
provided by law. EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY
JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND
AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT
A JURY.
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D.
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Amendment;
Waiver; Severability.
No amendment, modification, waiver or discharge of any provision
of this
Agreement shall be valid unless made in writing and signed by an
authorized representative of the Party against enforcement is sought.
No
failure or delay by either Party to exercise any right or enforce
any
obligation shall impair or be construed as a waiver or on-going waiver
of
that or any or other right or power, unless made in writing and signed
by
both Parties. If any provision of this Agreement is held to be illegal,
invalid or unenforceable, the remaining provisions of this Agreement
shall
be unimpaired and remain in full force and
effect.
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E.
|
Survival.
Any provision of this Agreement which, either by its terms or to
give
effect to its meaning, must survive, shall survive the cancellation,
expiration or termination of this Agreement. The representations
and
warranties of the Parties shall survive the Closing notwithstanding
any
knowledge that any Party may have and notwithstanding any investigation
conducted by any Party.
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F.
|
Entire
Agreement.
This Agreement and the License Agreement constitute the entire agreement
between the Parties and supersedes any prior or inconsistent agreements,
negotiations, representations and promises, written or oral with
respect
to the subject matter hereof.
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G.
|
Headings.
The headings and the paragraphs in this Agreement are for convenience
only
and shall not control or affect the meaning or construction of any
of the
provisions of this Agreement.
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H.
|
Counterparts.
This Agreement may be executed in one or more counterparts, all of
which
shall be considered one and the same agreement and each of which
shall be
deemed an original, and will become effective when one or more
counterparts have been signed by a party and delivered to the other
parties. Copies of executed counterparts transmitted by telecopy,
telefax
or other electronic transmission service shall be considered original
executed counterparts for purposes of this paragraph V.H., provided
that
receipt of copies of such counterparts is confirmed.
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[Signature
Page Follows]
7
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement as of the Effective Date.
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MTV
NETWORKS a division of VIACOM
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GOFISH
CORPORATION
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||||
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INTERNATIONAL
INC.
|
|||||
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By:
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/s/
Xxxxxxx X. Xxxxxxxx
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By:
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/s/
Xxxxxxx Xxxxxx
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||
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Name:
Xxxxxxx X. Xxxxxxxx
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Name:
Xxxxxxx Xxxxxx
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||||
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Title:
Executive Vice President, General Counsel,
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Title:
President
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||||
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Secretary
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|||||
[SIGNATURE
PAGE TO STOCK ISSUANCE AND PARTICIPATION RIGHTS AGREEMENT]
8
