Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of February 10, 2006 (this
"Agreement"), is entered into by and among New Frontier Media, Inc., a Colorado
corporation (the "Company"), Marc Xxxxxxxx Xxxxxxxxx Trust dated May 11, 2001,
Xxxxxxxx Family Trust dated June 15, 2001 (the Marc Xxxxxxxx Xxxxxxxxx Trust and
Xxxxxxxx Family Trust are hereinafter referred to in the singular as an
"Investor" and collectively as the "Investors" or the "Trusts"), Marc Xxxxxxxx
Xxxxxxxxx, an individual, and Xxxxxxx Xxxxx Xxxxxxxx, an individual.
WHEREAS, the Company and the Investors have entered into that certain
Stock Purchase Agreement dated as of February 6, 2006 (the "Purchase
Agreement"), pursuant to which the Company has agreed to purchase from the
Trusts, and the Trusts have agreed to sell to the Company, (i) one hundred
percent (100%) of the issued and outstanding capital stock of MRG Entertainment,
Inc., a California corporation, and (ii) one hundred percent (100%) of the
issued and outstanding capital stock of Lifestyles Entertainment, Inc., a
California corporation (collectively, the "Shares"), on the terms and conditions
set forth in the Purchase Agreement; and
WHEREAS, the Purchase Agreement provides for a purchase price for the
Shares, consisting of, among other consideration, shares of Common Stock (as
hereafter defined); and
WHEREAS, the parties to the Purchase Agreement have agreed that the
Investors' rights to sell the Investor Shares (as defined below), and certain
other rights pertaining thereto, shall be as set forth and limited by the terms
of this Agreement.
WHEREAS, in order to induce the Investors to execute and deliver the
Purchase Agreement, the Company has agreed to provide each Investor with the
registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and obligations herein set forth, the parties hereto agree as set forth below.
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement:
"Act" means the Securities Act of 1933, as amended, or any successor
statute.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Associated Individual" means in the case of a Holder that is a Trust,
the trustee of such Trust.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Common Stock" means the common stock of the Company issued pursuant to
the Purchase Agreement or any other shares of capital stock or other securities
of the Company into which such shares of common stock shall be reclassified or
changed, including, by reason of a merger, consolidation, reorganization or
recapitalization. If such common stock has been so reclassified or changed, or
if the Company pays a dividend or makes a distribution on such common stock in
shares of capital stock, or subdivides (or combines) its outstanding shares of
such common stock into a greater (or smaller) number of shares of such common
stock, a share of such common stock shall be deemed to be such number of shares
of stock and amount of other securities to which a holder of a share of such
common stock outstanding immediately prior to such change, reclassification,
exchange, dividend, distribution, subdivision or combination would be entitled.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
"Holder" means, each person who owns Registrable Securities and is
either (i) named on the signature pages hereof as a Holder, or (ii) a person who
has agreed to be bound by the terms of this Agreement as if such person were a
Holder and is (A) a permitted transferee under Section 8.2 hereof, (B) upon the
death of any Holder that is an individual, the executor of the estate of such
Holder or any of such Holder's heirs, devisees, legatees or assigns or (C) upon
the disability of any Holder that is an individual, any guardian or conservator
of such Holder.
"Initiating Holders" means any single Holder who holds, or group of
Holders who together hold, a number of shares of Registrable Securities equal to
the Share Threshold.
"Investor Shares" means those shares of the Company's common stock
issued or otherwise delivered or paid to the Investors pursuant to the Purchase
Agreement.
"New Shares" shall mean any additional shares issued to an Investor as
a result of the items described in the definition of Common Stock.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts (including business
and family trusts) and other organizations, whether or not legal entities.
"Register", "Registered" and "Registration" refer to a registration
effected by preparing and filing, and causing to be effective, in accordance
with the Act a registration statement and the declaration or ordering of the
effectiveness of such registration statement in accordance with the Act.
"Registration Statement" means any registration statement under the Act
of the Company that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including all amendments and supplements to such
registration statement, including pre- and post-effective amendments, all
exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
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"Registrable Securities" means shares of Common Stock unless (i) they
have been effectively registered under Section 5 of the Securities Act and
disposed of pursuant to an effective Registration Statement, (ii) such
securities can be freely sold and transferred without restriction under Rule 145
or any other restrictions under the Securities Act, or (iii) such securities
have been transferred pursuant to Rule 144 under the Securities Act or any
successor rule such that, after any such transfer referred to in such clause
(iii), such securities may be freely transferred without restriction under the
Securities Act.
"SEC" means the United States Securities and Exchange Commission or any
other agency administering the Act.
"Share Threshold" means that number of shares of Registrable Securities
equal to 1/2 of the number of Registrable Securities held by the Investors as of
the date of this Agreement.
ARTICLE II
SALE OF REGISTRABLE SECURITIES
2.1 Right to Sell Registrable Securities. Subject to the terms and
conditions of this Agreement:
(a) Every three months during the period beginning on June 30, 2007
(i.e., the last day of the fifth (5th) quarter following the Closing
Date, such date being referred to as the "First Sale Date"), and ending
on the second anniversary of the Closing Date, the Holders collectively
may sell a number of Investor Shares equal to one-eighth of the total
number of Investor Shares, plus all New Shares attributable to such
number of Investor Shares, subject to increase pursuant to Section
2.1(d). Notwithstanding the foregoing, the right of Holders to sell
Registrable Securities in each three month period in accordance with
this Section 2.1(a) shall not be cumulative except as set forth in
Section 2.1(d).
(b) Subject to applicable state and federal securities laws, (i)
beginning on the day following the second (2nd) anniversary of the
Closing Date, the Holders may sell any remaining Registrable Securities
held by them; and (ii) notwithstanding Section 2.1(a), an Investor may
sell any Registrable Securities held by such Investor if at any point
such Investor, if an individual, or his Associated Individual, if such
Investor is not an individual, is not employed by the Company or an
Affiliate of the Company for a reason other than such Investor's or
Associated Individual's (as applicable) voluntary termination of
employment or his being terminated for Cause in accordance with the
terms of his written employment agreement with the Company or its
Affiliate.
(c) Notwithstanding anything to the contrary contained in this
Section 2.1, no Holder may sell or otherwise transfer any Registrable
Securities unless such sale or transfer is made (i) in accordance with
the registration requirements of the Act or an exemption from such
registration and an opinion of counsel is delivered to the Company to
such effect, and (ii) in compliance with the volume limitations imposed
under Sections 2.1(a) or (b), as applicable.
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(d) Subject to the provisions of Section 3.2, in the event that the
Holders are unable during any quarterly period to sell Investor Shares
on a registered basis as a result of (i) any uncured breach by the
Company of the provisions of this Agreement or (ii) the existence of
any Delay or Interruption Period, then the Holders shall have the right
to sell, during any subsequent quarter, the number of Investor Shares
permitted to be sold pursuant to Section 2.1(a) plus an additional
number of Investor Shares equal to the difference between (x) the
number of Investor Shares actually sold during the quarter in which the
breach, Delay Period or Interruption Period occurred or continued and
(b) the number actually sold during such quarter.
ARTICLE III
REQUEST FOR REGISTRATION
3.1 Request by Initiating Holders. In the event the Company shall
receive from Initiating Holders a written request (a "Demand
Notice") that the Company effect any Registration with respect to
all or a part of the Registrable Securities which may be sold by
the Holders in accordance with the terms of this Agreement, the
Company shall:
(a) promptly give written notice of the proposed Registration to
all other Holders; and
(b) as soon as practicable, but in any event not later than
sixty (60) days following receipt of the Demand Notice,
prepare and file a Registration Statement on the appropriate
form for the registration and sale, in accordance with the
intended method or methods of distribution, of the total
number of Registrable Securities specified by the Holders in
such Demand Notice, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request given
within thirty (30) days after receipt of written notice from
the Company given pursuant to Section 3.1(a) (a "Demand
Registration"), which may, at the request of the Holders, be
a "shelf" registration (a "Shelf Registration") pursuant to
Rule 415 under the Securities Act to the extent that the
Company is at the time eligible to use Form S-3;
(c) use its best efforts to cause the Registration Statement to
be declared effective as promptly as practicable and to take
all other actions (including, without limitation, the
execution of an undertaking to file post-effective
amendments, appropriate qualifications under the applicable
blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Act
and any other governmental requirements or regulations) as
may be requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such
request; and
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(d) use commercially reasonable efforts to keep each
Registration Statement filed pursuant to this Section 3.1
continuously effective and usable for the resale of the
Registrable Securities covered thereby (i) in the case of a
Registration that is not a Shelf Registration, for a period
of 180 days from the date on which the SEC declares such
Registration Statement effective and (ii) in the case of a
Shelf Registration, for a period of two years from the date
on which the SEC declares such Registration Statement
effective, in either case (x) until such earlier date as all
of the Registrable Securities covered by such Registration
Statement have been sold pursuant to such Registration
Statement, and (y) as such period may be extended pursuant
to Section 3.2. The time period for which the Company is
required to maintain the effectiveness of any Registration
Statement shall be extended by the aggregate number of days
of all Delay Periods and all Interruption Periods occurring
with respect to such Registration and such period and any
extension thereof is hereinafter referred to as the
"Effectiveness Period."
Notwithstanding the foregoing, the Company shall not be obligated to
take any action to effect such Registration pursuant to this Article III:
(a) at any time prior to the last day of the fifth (5th) full
quarter following the Closing Date;
(b) at any time during which the Company's common stock is not
listed for trading on the Nasdaq National Market System or
another recognized stock exchange;
(c) at any time during which the Holders may sell up to
one-eighth of the aggregate amount of the Registrable
Securities during a 90-day period pursuant to Rule 144 of
the Act or pursuant to an effective Shelf Registration
Statement.
3.2 Right of Company to Delay Filings. The Company shall be entitled
to postpone the filing of any Registration Statement otherwise
required to be prepared and filed by the Company pursuant to
Section 3.1, or suspend the use of any effective Registration
Statement under this Section 3.2, for a reasonable period of
time, but not in excess of 90 days (a "Delay Period"), if the
Board of Directors of the Company determines that in the Board of
Directors' reasonable judgment and good faith the registration
and distribution of the Registrable Securities covered or to be
covered by such Registration Statement would have a material
adverse effect on the business of the Company or any transaction
involving the Company or otherwise would materially interfere
with any pending financing, acquisition or corporate
reorganization or other corporate development involving the
Company or any of its Affiliates or otherwise would require
premature disclosure thereof and promptly gives the Holders
written notice of such determination, containing a general
statement of the reasons for such postponement and an
approximation of the period of the anticipated delay; provided,
however, that (i) the aggregate number of days included in all
Delay Periods during any consecutive 12 months shall not exceed
the aggregate of (x) 90 days minus (y) the number of days
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occurring during all Interruption Periods during such consecutive
12 months and (ii) a period of at least 90 days shall elapse
between the termination of any Delay Period or Interruption
Period and the commencement of the immediately succeeding Delay
Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Securities to
be registered shall have the right to withdraw the request for
registration by giving written notice from the Holders of a
majority of the Registrable Securities that were to be registered
to the Company within 90 days after receipt of the notice of
postponement or, if earlier, the termination of such Delay Period
(and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of requests for
registration to which the Holders of Registrable Securities are
entitled pursuant to this Section 3.2). The Company shall not be
entitled to initiate or continue a Delay Period unless it shall
(A) concurrently prohibit sales by all other security holders
under registration statements covering securities held by such
other security holders and (B) in accordance with the Company's
policies from time to time in effect, forbid purchases and sales
in the open market by senior executives of the Company.
3.3 Underwriting. If the Company in its sole discretion decides to
employ the services of one or more underwriters in connection the
Demand Request made by the Initiating Holder(s), the choice of
such underwriter(s) shall be determined in the sole discretion of
the Company. The Company shall (together with all Holders
proposing to distribute 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 this Agreement, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of
the number of shares to be underwritten, the Initiating Holders
shall so advise all Holders of Registrable Securities, and the
number of shares of Registrable Securities that may be included
in the offering and the underwriting shall be limited to the
number advised by the underwriters and shall be allocated among
all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such
Holders (or in such other manner as may be agreed by the
Holders). If any Holder of Registrable Securities disapproves of
the terms of the underwriting, he may elect to withdraw therefrom
by written notice to the Company, the underwriter and the
Initiating Holders. Any Registrable Securities which are excluded
from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwriting shall be withdrawn
from such Registration.
ARTICLE IV
INTENTIONALLY OMITTED
ARTICLE V
EXPENSES OF REGISTRATION; REGISTRATION PROCEDURES
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5.1 Expenses of Registration. All expenses incurred in connection with
any Registration pursuant to this Agreement, including, without limitation,
all Registration, filing and qualification fees, printing expenses, fees
and disbursements of counsel for the Company and expenses of any special
audits of the Company's financial statements incidental to or required by
such Registration, shall be borne by the Company except as follows:
(a) If the Company is not registering any shares for its own account
pursuant to any Registration effected under Article III, then the
selling Holders shall bear all expenses incurred in connection with any
special audits of the Company's financial statements incidental to or
required by such Registration (it being understood that customary
comfort letters and SAS 72 reviews, including the procedures necessary
to deliver such comfort letters and reviews, do not constitute special
audits);
(b) The Company shall not be required to pay for expenses of any
Registration proceeding begun pursuant to Article III if the request
for such Registration is subsequently withdrawn by the Initiating
Holders, in which case such expenses shall be borne by the Holders
requesting such withdrawal; provided, however, that, if such withdrawal
was based on the Company's failure to comply in any material respect
with its obligations hereunder; and
(c) The Company shall not be required to pay fees of legal counsel
of a Holder, or underwriters' fees, discounts or commissions which
relate exclusively to the Registrable Securities of a Holder sold in
connection with a Registration effected solely pursuant to Article III.
5.2 Registration Procedures. In the case of each Registration effected
by the Company pursuant to this Agreement, the Company will keep each
Holder participating therein advised in writing as to the initiation of
each Registration and as to the completion thereof. In addition, in
connection with such Registration, the Company shall:
(a) furnish such number of prospectuses and amendments thereto, and
such other documents incident thereto, as a Holder from time to time
may reasonably request;
(b) without limiting the immediately preceding paragraph, furnish,
at least five business days before filing a registration statement that
registers such Registrable Securities, a prospectus relating thereto or
any amendments or supplements relating to such a registration statement
or prospectus, to the Holders, and copies of all such documents
proposed to be filed;
(c) 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 in the manner required by this Agreement and to comply with
the provisions of the Act with respect to the sale or other disposition
of such Registrable Securities;
(d) notify in writing the Holders promptly (i) of the receipt by the
Company of any notification with respect to any comments by the SEC
with respect to such registration statement or prospectus or any
amendment or supplement thereto or any request by the SEC for the
amending or supplementing thereof or for additional information with
respect thereto, (ii) of the receipt by the Company of any notification
with respect to the issuance by the SEC of any stop order suspending
the effectiveness of such registration statement or prospectus or any
amendment or supplement thereto or the initiation or threatening of any
proceeding for that purpose and (iii) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
such Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purposes;
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(e) register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions as a Holder
reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable the Holders to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by the Holders;
(f) furnish to the Holders such number of copies of a summary
prospectus, if any, or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such
other documents as a Holder may reasonably request in order to
facilitate the public sale or other disposition of such Registrable
Securities;
(g) notify the Holders on a timely basis at any time when a
prospectus relating to such Registrable Securities is required to be
delivered under the 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 light of the
circumstances then existing and, at the request of a Holder, prepare
and furnish to the Holders 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 offerees of such shares, 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 light of the
circumstances then existing;
(h) use its best efforts to obtain from its counsel an opinion or
opinions in customary form as reasonably required by the Holders;
(i) provide a transfer agent and registrar (which may be the same
entity and which may be the Company) for such Registrable Securities;
(j) issue to any underwriter to which the Holders holding such
Registrable Securities may sell shares in such offering certificates
evidencing such Registrable Securities;
(k) list such Registrable Securities on any national securities
exchange on which any shares of the Company's common stock are listed
or, if the Company's common stock is not listed on a national
securities exchange, use its best efforts to qualify such Registrable
Securities for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc.;
(l) use its best efforts to take all other steps necessary to effect
the registration of such Registrable Securities contemplated hereby;
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(m) if such offering is an underwritten offering, make available for
inspection by any Holder of Registrable Securities included in such
Registration Statement, any underwriter participating in any offering
pursuant to such Registration Statement, and any attorney, accountant
or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records and
other information, pertinent corporate documents and properties of any
of the Company and its subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibilities; provided, however, that the
Records that the Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are confidential shall
not be disclosed to any Inspector unless such Inspector signs a
confidentiality agreement reasonably satisfactory to the Company (which
shall permit the disclosure of such Records in such Registration
Statement or the related Prospectus if necessary to avoid or correct a
material misstatement in or material omission from such Registration
Statement or Prospectus) or either (i) the disclosure of such Records
is necessary to avoid or correct a misstatement or omission in such
Registration Statement, or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction; provided further, however, that (A) any decision
regarding the disclosure of information pursuant to subclause (i) above
shall be made only after consultation with counsel for the applicable
Inspectors and the Company, and (B) with respect to any release of
Records pursuant to subclause (ii) above, each Holder of Registrable
Securities agrees that it shall, promptly after learning that
disclosure of such Records is sought in a court having jurisdiction,
give notice to the Company so that the Company, at the Company's
expense, may undertake appropriate action to prevent disclosure of such
Records; and
(n) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Securities being sold in connection
therewith (including those reasonably requested by the managing
underwriters) in order to expedite or facilitate the disposition of
such Registrable Securities, and in such connection, (i) use
commercially reasonable efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managing
underwriters and counsel to the Holders of the Registrable Securities
being sold), addressed to each selling Holder of Registrable Securities
covered by such Registration Statement and each of the underwriters as
to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such counsel and underwriters, (ii) use commercially
reasonable efforts to obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each
selling holder of Registrable Securities covered by the Registration
Statement (unless such accountants shall be prohibited from so
addressing such letters by applicable standards of the accounting
profession) and each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings, (iii)
if requested and if an underwriting agreement is entered into, provide
indemnification provisions and procedures customary for underwritten
public offerings, but in any event no less favorable to the indemnified
parties than the provisions set forth in Section 8 hereof. The above
shall be done at each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
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(o) Each Holder of Registrable Securities covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5.2(e)(ii),
5.2(e)(iii) or 5.2(g), that such Holder shall discontinue disposition
of any Registrable Securities covered by such Registration Statement or
the related prospectus until receipt of the copies of the supplemented
or amended prospectus contemplated by Section 5(g) hereof, or until
such Holder is advised in writing (the "Advice") by the Company that
the use of the applicable prospectus may be resumed, and has received
copies of any amended or supplemented prospectus or any additional or
supplemental filings which are incorporated, or deemed to be
incorporated, by reference in such prospectus (such period during which
disposition is discontinued being an "Interruption Period") and, if
requested by the Company, the Holder shall deliver to the Company (at
the expense of the Company) all copies then in its possession, other
than permanent file copies then in such holder's possession, of the
prospectus covering such Registrable Securities at the time of receipt
of such request.
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ARTICLE VI
INDEMNIFICATION
6.1 To the extent permitted by applicable law, the Company will
indemnify each Holder of Registrable Securities, each of its officers,
directors and partners, and each person controlling such Holder, with
respect to which such Registration has been effected pursuant to this
Agreement, and each underwriter, if any, and each Person who controls any
underwriter of the Registrable Securities held by or issuable to such
Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereto) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) 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
any rule or regulation promulgated under the Act or any state securities
law applicable to the Company in connection with any such Registration, and
will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter
and each Person who controls any such underwriter, for any reasonable legal
and any other expenses incurred in connection with investigating, defending
or settling any such claim, loss, damage, liability or action, provided
that the indemnity contained in this Section 6.1 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 (which
consent will not be reasonably withheld, conditioned or delayed) and
provided further that the Company will not be liable in any such case to
the extent that any such claim, loss, damage or liability arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company (including any false or untrue representation or
warranty made by any Investor in the Purchase Agreement) by such Holder or
underwriter specifically for use therein.
6.2 Each Holder (severally but not jointly with any other Holder or
Holders) will, if Registrable Securities held by or issuable to such Holder
are included in the securities as to which such Registration is being
effected, indemnify the Company, each of its directors and officers, each
legal counsel and independent accountants of the Company, each underwriter,
if any, of the Company's securities covered by such a registration
statement, each Person who controls the Company within the meaning of the
Act, and each other such Holder, each of its officers, directors and
partners and each Person controlling such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or 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, and
will reimburse the Company, such Holders, such directors, officers,
partners, Persons or underwriters for any reasonable investigating,
defending, or settling any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission)
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 such Holder specifically for use therein;
provided, however, that that the maximum amount of liability of any Holder
in respect of indemnification and defense required by this Section 6.2
shall be limited to an amount equal to the net proceeds actually received
by such Holder from the sale of Registrable Securities effected pursuant to
such Registration; and provided further that the indemnity contained in
this Section 6.2 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 Holder (which consent will not be unreasonably
withheld, conditioned or delayed).
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6.3 Each party entitled to indemnification under this Article VI (the
"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
litigation, shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld, conditioned or delayed), and the
Indemnified Party may participate in such defense at such 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 hereunder, unless, and to the extent, such failure resulted in
actual detriment to the Indemnifying Party. 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.
6.4 If the indemnification provided for in Article VI is applicable in
accordance with its terms but is legally unavailable to the Indemnified
Party in respect of any losses set forth above, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and such Indemnified Party, on the other hand,
shall be determined by reference to, among other things, whether any action
in question, including any untrue statement of a material fact or omission
or alleged omission to state a material fact, has been taken by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
The amount paid or payable by a party as a result of any such losses shall
be deemed to include any legal or other fees or expenses incurred by such
party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.4 were determined by pro rata allocation or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 6.4, an Indemnifying Party
that is a Holder shall not be required to contribute any amount which is in
excess of the amount by which the total proceeds received by such Holder
from the sale of the Registrable Securities sold by such Holder (net of all
underwriting discounts and commissions) exceeds the amount of any damages
that such Indemnifying Party has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
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ARTICLE VII
RULE 144 INFORMATION
7.1 Rule 144 Information. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit
the sale of the Registrable Securities to the public without registration,
the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Act or the Exchange Act, and for so long as the
Company remains subject to the periodic reporting requirements under
Section 13 or 15(d) of the Exchange Act.
(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act
(at any time after it has become subject to such reporting
requirements).
(c) Furnish to any Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of
Rule 144 under the Act (at any time after 90 days after the effective
date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the Act and
the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the
Company and other information in as such Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing such
Holder to sell any such securities without Registration.
ARTICLE VIII
MISCELLANEOUS
8.1 Information by Holder. The Holder or Holders of Registrable
Securities included in any Registration shall promptly furnish to the
Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request
in writing to the extent such information is required in order to effect
such Registration in accordance with the Act.
8.2 Assignment. Each Holder's registration rights under this Agreement
may be assigned to or succeeded in favor of (voluntarily or not), to any
transferee which (a) is an eligible transferee under all applicable federal
and state securities laws, and such transfer is not expressly prohibited
under agreements between or among such Holder and the Company; (b) executes
a counterpart of this Agreement in place of the transferring Holder with
the Company; (c) is an Associated Individual; and (d) to which all of the
Holder's shares of Common Stock have been transferred.
8.3 Delay of Registration. No Holder shall have any right to take any
action to restrain, enjoin or otherwise delay any Registration as the
result of any controversy that may arise with respect to the interpretation
or implementation of any provisions of this Agreement.
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8.4 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior and contemporaneous arrangements or understandings
with respect thereto. In the event of any inconsistency or conflict between
one or more provision of this Agreement and any provision of the Purchase
Agreement, the provisions of this Agreement shall control and prevail.
8.5 Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by facsimile,
nationally-recognized overnight courier (with guaranteed next business day
delivery) or first class registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing
by such party to the other parties:
(a) if to the Company, to:
New Frontier Media, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxxxx
Fax Number: (000) 000-0000
With a copy (which shall not constitute effective notice) to:
E. Xxx Xxxxxxxx, Esq.
Kamlet Shepherd & Xxxxxxxx, LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 0, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: 303.825.1185
(b) if to a Holder, to the Investors at their addresses set forth on
the signature page hereof;
With a copy (which shall not constitute effective
notice) to:
Xxxxxxx Xxxx, Esq.
Wolf, Xxxxxx Xxxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: 310.479.1422
All such notices, requests, consents and other communications shall be
deemed to have been delivered (i) in the case of personal delivery or delivery
by facsimile, on the date of such delivery (to be confirmed by a transmission
page in the event of delivery by facsimile); (ii) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch; and (iii) in the case of mailing, on the fifth business day after the
posting thereof.
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8.6 Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of original or facsimile counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement. Any
counterpart or other signature to this Agreement that is delivered by
facsimile shall be deemed for all purposes as constituting good and valid
execution and delivery by such party of this Agreement.
8.7 Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
8.8 Governing Law; Consent to Jurisdiction and Venue. This Agreement
shall be governed by and interpreted in accordance with the laws of the
State of Colorado. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City and County of
Denver or the state courts of the State of Colorado sitting in the City and
County of Boulder in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.
8.9 Severability. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction,
shall be ineffective, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction. Notwithstanding the foregoing, if such provision
could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be
so narrowly drawn, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.
8.10 Attorneys' Fees. If an action (including arbitration) is brought
to interpret or enforce any of the terms of this Agreement, or because of a
party's breach of any provision of this Agreement, the losing party shall
pay the prevailing party's reasonable attorneys' fees, costs and expenses,
court costs and other costs of action incurred in connection with the
prosecution or defense of such action, whether or not the action is
prosecuted to a final judgment. In addition to the foregoing award of
attorneys' fees, the prevailing party shall be entitled to its reasonable
attorneys' fees incurred in any post judgment proceeding to enforce any
judgment in connection with this Agreement. This paragraph is separate and
several and shall survive the merger of this paragraph into any judgment.
[SIGNATURE PAGE(S) TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
THE COMPANY:
------------
NEW FRONTIER MEDIA, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------
Name: Xxxxxxx Xxxxxx
----------------------
Title: CEO
----------------------
SELLERS:
--------
MARC XXXXXXXX XXXXXXXXX
TRUST DATED MAY 11, 2001
By: /s/ Xxxx X. Xxxxxxxxx
------------------------
Xxxx X. Xxxxxxxxx, Trustee
XXXXXXXX FAMILY TRUST
DATED JUNE 15, 2001
By: /s/ Xxxxxxx Xxxxxxxx
------------------------
Xxxxxxx Xxxxxxxx, Trustee
ACKNOWLEDGED AND AGREED TO:
/s/ Marc Xxxxxxxx Xxxxxxxxx
--------------------------------------
Marc Xxxxxxxx Xxxxxxxxx, an individual
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx, an individual
16
