EXHIBIT 10.19
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as
of_________, 1999, by and between XXXXXX.XXX, INC., a Delaware corporation (the
"Company"),and Spiga Limited. (the "Subscriber").
WITNESSETH:
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WHEREAS, pursuant to the Securities Purchase Agreement dated as of the
date hereof (the "Subscription Agreement"), by and between the Company and the
Subscriber, the Company has agreed to issue and sell and the Subscriber has
agreed to purchase $1,500,000 of the Company's 5.75% Convertible Subordinated
Debentures (the "Debentures"), with the Debentures convertible into shares of
the Company's common stock, par value $.0001 per share (the "Shares"); and
WHEREAS, pursuant to the terms of the Debenture, the principal of the
Debenture may, at the option of the Company, be callable in exchange for
preferred shares which will also be convertible into Shares;
WHEREAS, pursuant to the terms of, and in partial consideration for,
the Subscriber's entering into the Subscription Agreement, the Company has
agreed to provide the Subscriber with certain registration rights with respect
to the Shares;
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Subscription Agreement and this Registration Rights Agreement, the Company and
the Subscriber agree as follows:
1. Certain Definitions. As used in this Agreement the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Company's Common Stock, par value $.0001
per share.
"Registrable Shares" shall mean (i) the Shares, (ii) any Common Stock
of the Company issued or issuable in respect of the Shares or upon any stock
split, stock dividend, recapitalization or similar event; provided, however,
that shares of Common Stock or other securities shall no longer be treated as
Registrable Shares if (a) they have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, (b)
they have been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act so that all transfer restrictions
and restrictive legends with respect thereto are removed upon consummation of
such sale or (c) the Shares are available for sale under the
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Securities Act (including Rule 144) in the opinion of counsel to the Company,
without compliance with the registration and prospectus delivery requirements of
the Securities Act so that no transfer restrictions or restrictive legends will
appear upon the Share certificates following the consummation of such sale.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses for up to five states, and
the reasonable expenses of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares.
2. Requested Registration. The Subscriber may request registration as set
forth below:
(a) Required Registration. The Company shall, as soon as practicable,
use its best efforts to effect such registration (including, without limitation,
the execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as would permit or facilitate the sale and distribution of all or such
Registrable Shares, provided, that the Company shall not be obligated to effect,
or to take any action to effect, any such registration pursuant to this Section
2, (i) after the Company has effected one such registration pursuant to this
Section 2(a) and such registration has been declared or ordered effective by the
Commission; or (ii) within the period starting with the date 60 days prior to
the Company's good faith estimated date of filing of, and ending 180 days
following the effective date of, any registered offering of the Company's
securities to the general public.
Subject to the foregoing limitations in clauses (i) and (ii) above,
the Company shall file a registration statement covering the Registrable Shares
so requested to be registered as soon as practicable after receipt or requests
of the holders having an aggregate initial purchase price of $750,000 or more,
but no later than 120 days following receipt of such request or requests.
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(b) Joining in Other Registrations. In addition, the Subscriber shall
have the right to include Registrable Shares in any registration statement filed
by the Company during the term of this Agreement (other than on Form S-8 or S-4)
and in such event, agrees to reduce the number of shares included therein pro
rate with other Holders, but in no event to less than 200,000 shares.
(c) Underwriters. If the Subscriber intends to distribute the
Registrable Shares by means of an underwriting, it shall so advise the Company.
(d) Penalties. If a registration statement relating to all of the
Registrable Shares is not effective by July 25, 1999, the Company shall as a
penalty issue to the Subscriber additional shares of Common Stock determined
multiplying the number of Registrable Shares by the applicable Daily Penalty set
forth in the following table:
Days after July 25, 1999 Daily
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Penalty
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1-30 0.0334%
31-60 0.0500%
61 and thereafter 0.0667%
The penalties shall accrue commencing on the first day following July 25, 1999
and will be issued and delivered to the Subscriber not less frequently that once
a month. Penalty Shares shall be deemed fully paid and non-assessable and shall
have the same rights to be included in a registration statement as Registrable
Shares. In no event shall any penalty be in respect of Penalty Shares.
(e) Agreement Not to File Additional Registrations. The Company agrees
that it will not file, nor will it permit its securities to be included in
registration statement filed pursuant to Section 2(a), above, until six months
after the registration set forth in Section 2(a) has been declared effective,
except:
(i) with the consent of Spiga Limited;
(ii) securities issuable upon the exercise of options and warrants
outstanding on the date of this agreement;
(iii) up to 525,000 shares that are the subject of an agreement to
register such shares between the Company and Xxxxxx Xxxxx, Xxxxx
Xxxx and KME Entertainment; or
(iv) securities and options which may be hereafter issued under the
Company's 1998 Equity Incentive Plan which may be issued at not
less than market price on the date of issuance.
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3. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. Selling
Expenses shall be borne by the Subscriber.
4. Registration Procedures. The Company shall advise the Subscriber of
the initiation of a registration under this Agreement and as to the completion
thereof. At its expense, the Company will:
(a) Use reasonable efforts to keep such registration effective for a
period of 180 days or until the Subscriber has completed the distribution
described in the registration statement relating thereto, whichever first
occurs.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement; and
(c) Furnish such number of prospectuses and other documents incidental
thereto, including any amendment of or supplement to the prospectus, as the
Subscriber from time to time may reasonably request.
5. Indemnification.
(a) The Company will indemnify the Subscriber with respect to which
registration has been effected pursuant to this Agreement against all claims,
losses, damages and liabilities (or actions, proceedings or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or other
document incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and will reimburse the Subscriber for any legal and any other
expenses as they are reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided, however,
that the indemnity contained in this Section 5(a) shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Company, and provided, further
that the Company shall not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by the Subscriber and stated to be specifically for use in the
registration statement filed pursuant to this Agreement. The foregoing indemnity
agreement is further subject to the condition that insofar as it relates to any
untrue prospectus, such indemnity agreement shall not inure to the benefit of
the foregoing unindemnified parties if copies of a final prospectus correcting
the misstatement, or alleged misstatement, omission or alleged omission upon
which such loss, liability, claim or damage is based is timely delivered to such
indemnified party and a copy thereof was not furnished to the person asserting
the loss, liability, claim or damage.
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(b) The Subscriber will indemnify the Company, each of its directors
and officers and each person who controls the Company within the meaning of the
Securities Act and the rules and regulations thereunder against all claims,
losses, damages and liabilities (or actions, proceedings, or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or other
document incident to any such registration or based upon any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation of
the Securities Act or any rule or regulation thereunder applicable to the
Company and will reimburse the Company, and its directors, officers, partners,
persons, underwriters or control persons for any legal or any other expense
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, and only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) relating to such holder is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by the Subscriber and stated to be specifically for use therein;
provided, however, that the obligations of the Subscriber shall be limited to an
amount equal to the proceeds to the Subscriber of Registrable Shares sold under
such registration and provided, further, that such indemnification obligations
shall not apply if the Company modifies or changes to a material extent the
written information furnished by such Holder.
(c) Each party entitled to indemnification under this Section 5 (an
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such Indemnified Party's expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement. No
Indemnifying Party, in the defense of any such claim or litigation, shall except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
6. Information by Holder of Registrable Shares. The Subscriber shall
furnish to the Company such information regarding the Subscriber and the
distribution proposed by such holder of Registrable Shares as the Company may
reasonably request in writing and as shall he reasonably required in connection
with any registration referred to in this Agreement.
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7. Transfers or Assignments of Registration Rights. The Subscriber's
rights under this Agreement to cause the Company to register the Registrable
Shares may be transferred or assigned by the Subscriber only to affiliates of
the Subscriber or to a purchaser of at least 500,000 Shares and such assignment
shall only be effective upon delivery of written notice of such assignment to
the Company within thirty (30) days of the assignment. Upon such assignment the
assignee shall have all the rights and obligations of the Subscriber hereunder.
8. Miscellaneous
8.l Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of New York without giving effect to
conflict of laws.
8.2 Successors and As. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
8.3 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
8.4 Notices etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand or by messenger or courier delivery
service, addressed (a) if to the Subscriber, at the address set forth in the
Subscription Agreement or at such other address as the Subscriber shall have
furnished to the Company in writing, or (b) if to the Company, at 000 Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000 or at such other address as the Company
shall have furnished to the Subscriber in writing.
8.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Registrable Shares, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power, or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.6 Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
8.7 Severability. In the case any provision of this agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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8.8 Amendments. This provisions of this Agreement may be amended at
any time and form time to time, and particular provisions of this Agreement may
be waived, with and only with an agreement or consent in writing signed by the
Company and by the owners of all of the Registrable Shares as of the date of
such amendment or waiver.
8.9 Termination of Registration Rights. This Agreement shall terminate
on February 1, 2002.
The foregoing Registration Rights Agreement is hereby executed as of
the date first above written.
XXXXXX.XXX, INC.
By: /s/
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Name:
Title:
Subscriber:
Spiga Limited
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(Name - Please Print)
By:
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Name:
Title:
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The foregoing Registration Rights Agreement is hereby executed as of
the date first above written. XXXXXX.XXX, INC.
XXXXXX.XXX, INC.
By:
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Name:
Title:
Subscriber:
Spiga Limited
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(Name - Please Print)
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Director
