REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of July 2, 2001, by and between Riverdale LLC, a Delaware corporation
(the "Securityholder") and GenesisIntermedia, Inc., a Delaware corporation (the
"Company").
WHEREAS the Company and the Securityholder have entered into a letter
agreement dated July 2, 2001, pursuant to which Securityholder has made a
conditional commitment to provide loans to Company and to provide certain
investment banking services , each on the basis set forth therein (the
"Agreement");
WHEREAS as part of the Agreement, the Company is simultaneously herewith
issuing to the Securityholder warrants (the "Warrants") to purchase an aggregate
of 4,000,000 shares of the Company's common stock, par value $0.001 per share
(the "Common Stock") subject to the terms and conditions set forth in the
Warrant Agreement (as defined below);
WHEREAS as part of the Agreement, Ramy El-Batrawi, the Chairman and Chief
Executive Officer of the Company, has agreed to grant to the Securityholder
options (the "Options") to purchase an aggregate of 1,500,000 shares of the
Company's Common Stock subject to the terms and conditions set forth in the
Option Agreement (as defined below); and
WHEREAS the Company and the Securityholder wish to enter into this
Agreement to provide for certain registration rights for the shares of Common
Stock issuable upon exercise of the Warrants and underlying the Options.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the Company and the
Securityholder, intending legally to be bound, hereby agree as follows.
SECTION 1. DEFINITIONS. As used in this Agreement, capitalized terms used
herein and not otherwise defined shall have the meaning ascribed to them in, the
Warrant Agreement, the Option Agreement and the Letter Agreement. The following
terms shall have the following meanings:
"Affiliate" of any Person means any other Person who either directly or
indirectly is in Control of, is Controlled by, or is under common Control with
such Person.
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in the City of New York
are authorized by law, regulation or executive order to close.
"Capital Stock" shall mean any and all shares, interests, participation
rights or other equivalents (however designated) of capital stock of the
Company, and any and all rights, warrants and options to purchase any of the
foregoing.
"Closing" shall mean the date hereof.
"Commission" or "SEC" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Company" shall mean GenesisIntermedia, Inc., a Delaware corporation, and
any successor to GenesisIntermedia, Inc. by way of merger, consolidation, share
exchange, or other reorganization or recombination.
"Control" shall mean the power to direct the affairs of an entity by reason
of ownership of equity securities, by contract, or otherwise.
"Current Registration Statements" shall mean the Company's Registration
Statement on Form S-3 filed with the SEC on April 18, 2001 (SEC File No.
333-59122), as amended from time to time, and the Company's Registration
Statement on Form S-3 filed with the SEC on July 10, 2000 (SEC File No.
333-41120), as amended from time to time.
"Daily Delay Payment" shall mean a daily cash payment equal to $35,000.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
(or any similar successor federal statute), and the rules and regulations
thereunder, as the same are in effect from time to time.
"Option Agreement" shall mean the Option Agreement dated as of the date
hereof between Securityholder and Ramy El-Batrawi.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, any instrumentality, division, agency, body or department thereof).
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
"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.
"Registrable Class" shall mean the class of Capital Stock that includes the
Registrable Securities.
"Registrable Securities" shall mean (i) the Common Stock or the securities
issued or issuable to Securityholder upon exercise of the Warrants, (ii) all
Common Stock transferred or transferable to Securityholder upon exercise of the
Options, (iii) any common stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is issued
as) a dividend, split or reverse split, combination, recapitalization,
reclassification, merger or consolidation, exchange, or other distribution with
respect to, or in exchange for or in replacement of, the shares referenced in
(i) and (ii) above, excluding in all cases, however, any Registrable Securities
sold by the Securityholder in a transaction in which the Securityholder's rights
under this Agreement are specifically not assigned. In addition, should
Securityholder become an Affiliate of the Company while holding Registrable
Securities, then any other securities of the Company held by Securityholder
shall also be Registrable Securities. Notwithstanding the foregoing, common
stock or other securities shall only be treated as Registrable Securities if and
so long as they have not been (A) sold to or through a broker or dealer or
underwriter in a registered public distribution, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof (including Rule 144 promulgated
thereunder) so that all transfer restrictions, and restrictive legends with
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respect thereto, if any, are removed upon the consummation of such sale and
securities issuable upon any stock split, stock dividend, recapitalization or
similar event with respect to the foregoing.
"Registration Expenses" shall have the definition set forth in Section 7
hereof.
"Registration Statement" shall mean any registration statement which covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included therein, all amendments and supplements to
such Registration Statement, including post-effective amendments, all exhibits
and all material incorporated by reference in such Registration Statement.
"Required Effective Date" shall mean September 27, 2001 or such earlier
date on which Ramy El-Batrawi shall have disposed in any way, including, but not
limited to, by the grant of any right to purchase, of any shares of Common Stock
owned by him
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 144A" shall mean Rule 144A promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Securities Act" shall mean the Securities Act of 1933, as amended (or any
similar successor federal statute), and the rules and regulations thereunder, as
the same are in effect from time to time.
"Shelf Registration" shall mean the registration of Registrable Securities
for sale on a continuous or delayed basis pursuant to Rule 415.
"Shelf Registration Statement" shall mean a Registration Statement filed in
connection with a Shelf Registration.
"Warrant Agreement" shall mean the Warrant Agreement dated as of the date
hereof between the Securityholder and the Company.
"Underwritten Offering" shall mean a registered offering in which
securities of the Company are sold to an underwriter for resale to the general
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT. The securities entitled to
the benefits of this Agreement are the Registrable Securities. This Agreement
will terminate with respect to the Securityholder at such time as Rule 144 or
another similar exemption under the Securities Act is available for the sale of
all of the Securityholder's Registrable Securities without restriction as to
volume.
SECTION 3. REQUIRED AND DEMAND REGISTRATIONS.
(a) REQUIRED REGISTRATION. The Company shall file a Registration Statement
as promptly as possible after the date hereof and shall cause to become
effective on or before the Required Effective Date relating to, the Registrable
Securities held by the Securityholder on the date hereof. To the extent
practicable, such Registration shall be effected as a Shelf Registration.
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(b) DEMAND REGISTRATION. Upon the written request of the Securityholder
requesting that the Company effect the Registration under the Securities Act, at
any time 90 days after the Closing, the Company will use its best efforts to
effect, as expeditiously as possible, the Registration under the Securities Act
of such Registrable Securities; provided, however, that the Company shall not be
obligated to effect more than two demand registrations pursuant to this Section
3. To the extent practicable, such Registration shall be effected as a Shelf
Registration but may, at the request of the Securityholder, be an underwritten
registration..
(c) EFFECTIVENESS OF REGISTRATION STATEMENT. The Company agrees to use its
best efforts to (i) cause the Registration Statement relating to any required or
demand registration pursuant to this Section 3 to become effective as promptly
as practicable; (ii) thereafter keep such Registration Statement effective
continuously for the period specified in the next succeeding paragraph; and
(iii) prevent the occurrence of any event of the kinds described in clauses (4),
(5) and (6) of Section 5(a)(iii).
A required or demand registration requested pursuant to this Section 3 will
not be deemed to have been effected unless the Registration Statement relating
thereto has become effective under the Securities Act and remained continuously
effective (except as otherwise permitted under this Agreement) for a period
ending on the date on which all Registrable Securities covered thereby are
eligible for sale without limitation as to volume pursuant to Rule 144), subject
to extension as provided in the final paragraph of Section 5(a), and the date on
which all Registrable Securities covered by such Registration Statement have
been sold and the distribution contemplated thereby has been completed;
provided, however, that if, after such Registration Statement has become
effective, the offering of the Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or similar order
of the SEC or other governmental agency or court (other than by reason of any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement or necessary to make the statements
therein not misleading, to the extent, but only to the extent, that such untrue
statement or omission is contained in any information furnished in writing by
the Securityholder to the Company specifically for inclusion therein), such
registration will be deemed not to have been effected. The Company undertakes to
use its best efforts to cause such interference to be removed or terminated.
(d) INCLUSION OF OTHER SECURITIES. The Company, and any other holder of the
Company's securities who has registration rights (an "additional requesting
holder"), may include its securities in any required or demand registration
effected pursuant to this Agreement; provided, however, that if the managing
underwriter or underwriters of a proposed Underwritten Offering contemplated
thereby advise the Securityholder in writing that the total amount or kind of
securities which the Company or any such additional requesting holder intends to
include in such proposed public offering is sufficiently large or of a type to
materially adversely affect the success of the proposed public offering
requested by the Securityholder, then the amount of securities to be offered for
the account of the Company or any such additional requesting holder, except
Securityholder, shall be reduced pro rata, to zero if necessary.
(e) DELAY OF REGISTRATION. Notwithstanding the terms of this Section 3, if
the Company shall furnish to the Securityholder a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
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its stockholders for such Registration Statement to be filed and it is therefore
essential to defer the filing of such Registration Statement, the Company shall
have the right to defer such filing for a period of not more than 90 days after
receipt of the request of the Securityholders; provided, however, that the
Company may not utilize this right with respect to a required registration
pursuant to Section 3 (a), more than once in any 12-month period with respect to
registration requests made pursuant to Section 3(b) provided that the aggregate
of the period of any such deferral and the period in which dispositions of
Registrable Securities are restricted pursuant to this Section 3 and Section
10(c) shall not exceed 120 days in any 12-month period.
Notwithstanding the foregoing provisions of this Section 3(e), if the
Registration Statement relating to the required Registration provided for in
Section 3(a) has not become effective on or before the Required Effective Date,
then the Company shall pay to the Securityholder a Daily Delay Payment for each
Business Day following the Required Effective Date that such Registration
Statement is not so effective. Notwithstanding the foregoing, there shall be
excluded from the calculation of the number of days that such Registration
Statement has not been declared effective delays that are solely attributable to
delays in the Securityholder providing information required for the Registration
Statement. Each Daily Delay Payment will be payable to the Securityholder in
cash or other immediately available funds on the date that such Daily Delay
Payment is incurred.
SECTION 4. PIGGYBACK REGISTRATION. If the Company at any time proposes to
file a registration statement with respect to any class of equity securities,
whether for its own account (other than the Current Registration Statements or
in connection with any registration statement contemplated by Section 3 or a
registration statement on Form S-4 or S-8 (or any successor or substantially
similar form), or a registration statement filed in connection with an exchange
offer or offering or securities solely to the Company's existing
securityholders), or for the account of a holder of securities of the Company (a
"Requesting Securityholder"), then the Company shall in each case give written
notice of such proposed filing to the Securityholder at least 15 Business Days
before the anticipated filing date of any such registration statement by the
Company, and such notice shall offer to the Securityholder the opportunity to
have any or all of the Registrable Securities held by the Securityholder
included in such registration statement. If the Securityholder desires to have
its Registrable Securities registered under this Section 4, the Securityholder
shall so advise the Company in writing within 15 days after the date of receipt
of such notice (which request shall set forth the amount of Registrable
Securities for which registration is requested), and the Company shall include
in such Registration Statement all such Registrable Securities so requested to
be included therein. Notwithstanding the foregoing, if the managing underwriter
or underwriters of any such proposed public offering advises the Company in
writing that the total amount or kind of securities which the Securityholder,
the Company and any other persons or entities intended to be included in such
proposed public offering is sufficiently large to materially adversely affect
the success of such proposed public offering, then (A) the amount or kind of
securities to be offered for the accounts of the Company and holders of
securities of the Company (except for the Securityholder), to the extent that
the Company did not initiate such registration for its own account or such
holders of securities are not Requesting Securityholders, shall first be reduced
pro rata, and (B) if the amount of securities to be offered for such accounts is
reduced to zero, to the extent further reduction is necessary, the amount or
kind of securities to be offered for the account of the Securityholder shall
next be reduced to the extent necessary to reduce the total amount or kind of
securities to be included in such proposed public offering to the amount or kind
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recommended by such managing underwriter or underwriters before the securities
offered by the Company, to the extent the Company has initiated the registration
for its own account, or any Requesting Securityholder, are so reduced. If the
securities proposed to be included by the Securityholder are reduced, then
number of registration requests permitted to the Securityholder pursuant to
Section 3(a) shall be increased by one for each such reduction.
Notwithstanding the foregoing, the Company may withdraw any registration
statement that is subject to this Section 4 at any time prior to the time it
became effective.
SECTION 5. REGISTRATION PROCEDURES.
(a) GENERAL. In connection with the Company's Registration obligations
hereunder, the Company will:
(i) prepare and file with the SEC a new Registration Statement or such
amendments and post-effective amendments to an existing Registration
Statement as may be necessary to keep such Registration Statement effective
for the time periods set forth in Section 3, provided that no Registration
Statement shall be required to remain in effect after all Registrable
Securities covered by such Registration Statement have been sold and
distributed as contemplated by such Registration Statement, and, provided,
further, that as soon as practicable, but in no event later than three
Business Days before filing such Registration Statement, any related
Prospectus or any amendment or supplement thereto, other than any amendment
or supplement which is automatically and solely made as a result of
incorporation by reference of documents filed with the SEC subsequent to
the filing of such Registration Statement, the Company shall furnish to the
Securityholder and the underwriters, if any, copies of all such documents
proposed to be filed, which documents shall be subject to the review of the
Securityholder.
(ii) not file any Registration Statement or amendment thereto or any
Prospectus or any supplement thereto (other than any amendment or
supplement which is automatically and solely made as a result of
incorporation by reference of documents filed with the SEC subsequent to
the filing of such Registration Statement) to which the managing
underwriters of the applicable offering, if any, or the Securityholder
shall have reasonably objected in writing to the effect that such
Registration Statement or amendment thereto or Prospectus or supplement
thereto does not comply in all material respects with the requirements of
the Securities Act (provided that the foregoing shall not limit the right
of the Securityholder when its shares are covered by a Registration
Statement to reasonably object, within two Business Days after receipt of
such documents, to any particular information that is to be contained in
such Registration Statement, amendment, Prospectus or supplement that
relates specifically to the Securityholder, including, without limitation,
any information describing the manner in which the Securityholder acquired
such Registrable Securities and the intended method or methods of
distribution of such Registrable Securities), and if the Company is unable
to file any such document due to the objections of such underwriters or the
Securityholder, the Company shall use its best efforts to cooperate with
such underwriters and the Securityholder to prepare, as soon as
practicable, a document that is responsive in all material respects to the
reasonable objections of such underwriters and the Securityholder; cause
the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act
applicable to the Company with respect to the disposition of all securities
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covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) notify the Securityholder promptly (1) when a new Registration
Statement, Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any new Registration
Statement or post-effective amendment, when it has become effective, (2) of
any request by the SEC for amendments or supplements to any Registration
Statement or Prospectus or for additional information, (3) of the issuance
by the SEC of any comments with respect to any filing, (4) of any stop
order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose, (5) in the case of an
Underwritten Offering, if at any time the representations and warranties of
the Company contemplated by paragraph (xii) below cease to be true and
correct as of any time they are required to be true and correct, (6) of any
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose and (7) of the happening of any event which makes any
statement of a material fact made in any Registration Statement, Prospectus
or any document incorporated therein by reference untrue or which requires
the making of any changes in any Registration Statement, Prospectus or any
document incorporated therein by reference in order to make the statements
therein (in the case of any Prospectus, in the light of the circumstances
under which they were made) not misleading; and make every reasonable
effort to obtain as promptly as practicable the withdrawal of any order or
other action suspending the effectiveness of any Registration Statement or
suspending the qualification or registration (or exemption therefrom) of
the Registrable Securities for sale in any jurisdiction;
(iv) if reasonably requested by the managing underwriter or
underwriters or the Securityholder when Registrable Securities are being
sold in connection with an Underwritten Offering, promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriters and the Securityholder agree should be included
therein relating to the sale of the Registrable Securities, including,
without limitation, information with respect to the aggregate number of
shares of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with respect to
any other terms of the Underwritten Offering of the Registrable Securities
to be sold in such offering; and promptly make all required filings of such
Prospectus supplement or post-effective amendment;
(v) promptly after the filing of any document which is to be
incorporated by reference into a Registration Statement or Prospectus,
provide a copy of such document to the Securityholder;
(vi) furnish to the Securityholder, without charge, the number of
manually signed copies and as many conformed copies as may reasonably be
requested, of the then effective Registration Statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(vii) deliver to the Securityholder, without charge, as many copies of
the then effective Prospectus (including each prospectus subject to
completion) and any amendments or supplements thereto as the Securityholder
may reasonably request;
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(viii) use reasonable best efforts to register or qualify or cooperate
with the Securityholder and its counsel in connection with the registration
or qualification of such Registrable Securities for offer and sale under
the securities or blue sky laws of such jurisdictions as the Securityholder
reasonably requests in writing and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the then effective
Registration Statement; provided, however, that the Company will not be
required to (1) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify, but for this paragraph (viii) or (2)
subject itself to general taxation in any such jurisdiction where it would
not otherwise be subject to such taxation;
(ix) cooperate with the Securityholder to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable
such Registrable Securities to be in such denominations and registered in
such names as the Securityholder may request at least two Business Days
prior to any sale of Registrable Securities to the underwriters or any
other Person;
(x) upon the occurrence of any event contemplated by clause (7) of
paragraph (iii) above, promptly prepare and furnish to the Securityholder a
reasonable number of copies of a supplement or post-effective amendment to
the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(xi) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange (or quotation system
operated by a national securities association) on which securities of the
same class issued by the Company are then listed, and provide a transfer
agent for such Registrable Securities no later than the effective date of
such Registration Statement;
(xii) in the case of an Underwritten Offering, enter into an
underwriting agreement and take all such other actions in connection
therewith in order to expedite and facilitate the disposition of such
Registrable Securities, in each case as is reasonable and customary, and in
connection therewith, (1) make such representations and warranties to the
Securityholder and the underwriters in form, substance and scope as are
customarily made by issuers to underwriters in secondary underwritten
offerings; (2) 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 underwriters and the Securityholder and
shall cover the matters customarily covered in opinions requested in
secondary underwritten offerings and such other matters as may be
reasonably requested by the Securityholder and underwriters); (3) obtain
"cold comfort" letters and updates thereof from the independent certified
public accountants of the Company addressed to the Securityholder and the
underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings; (4) provide such indemnification and
contribution undertakings pursuant to such underwriting agreement as are
customarily included in such agreements or reasonably required by such
underwriters; and (5) deliver such documents and certificates as may be
reasonably requested by the Securityholder and the managing underwriters to
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evidence compliance with clause (1) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by
the Company in respect of the relevant offering. The above shall be done at
each closing under such underwriting or similar agreement;
(xiii) provide a CUSIP number for the Registrable Securities no later
than the effective date of such Registration Statement;
(xiv) in the case of any nonunderwritten offering: (1) obtain
customary and reasonable opinions of counsel to the Company at the time of
effectiveness of such Registration Statement covering such offering and
updates thereof of customary frequency, addressed to the Securityholder;
(2) obtain "cold comfort" letters from the independent certified public
accountants of the Company at the time of effectiveness of such
Registration Statement and, upon the request of the Securityholder, updates
thereof of customary frequency, in each case addressed to the
Securityholder and covering matters that are no more extensive in scope
than would be customarily covered in "cold comfort" letters and updates
obtained in secondary underwritten offerings by issuers with similar market
capitalization and reporting and financial histories; provided that any
letter or update described in this clause (2) shall only be required to the
extent such letters are being issued in respect of nonunderwritten
secondary offerings under then prevailing accounting practices; and (3)
deliver a certificate of a senior executive officer of the Company at the
time of effectiveness of such Registration Statement and, upon the request
of the Securityholder, updates thereof of customary frequency, such
certificates to cover matters no more extensive in scope than those matters
customarily covered in officer's certificates delivered in connection with
underwritten offerings by issuers with similar market capitalization and
reporting and financial histories;
(xv) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and the federal and state securities laws
relating to such registration and the distribution of the securities being
offered and make generally available to its securities holders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act, no later than 60 days after the end of any 12-month period (or 120
days, if such period is a fiscal year) commencing at the end of any fiscal
quarter in which the Registrable Securities are sold to underwriters in a
firm commitment or best efforts offering, or, if not sold to underwriters
in such an offering, beginning with the first month of the first fiscal
quarter commencing after the effective date of such Registration Statement,
which earning statements shall cover such 12-month periods;
(xvi) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc.;
(xvii) make available for inspection by a representative of the
Securityholder, any underwriter participating in any disposition pursuant
to such Registration, and any attorney or accountant retained by the
Securityholder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company and cause the Company's
officers, directors and employees to supply all information reasonably
requested by, and to cooperate fully with, any such representative,
underwriter, attorney or accountant in connection with such Registration,
and otherwise to cooperate fully in connection with any due diligence
investigation; provided that such representatives, underwriters or
accountants enter into a confidentiality agreement, in form and substance
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reasonably satisfactory to the Company, prior to the release or disclosure
to them of any such information, records or documents;
(xviii) subject to the proviso in paragraph (viii) above, cause the
Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the Securityholder, or the
underwriters, if any, thereof to consummate the disposition of such
Registrable Securities (other than as may be required by the governmental
agencies or authorities of any foreign jurisdiction and other than as may
be required by a law applicable to the Securityholder by reason of its own
activities or business other than the sale of Registrable Securities); and
(xix) use its best efforts to take all action necessary or advisable
to effect such Registration in the manner contemplated by this Agreement
and the applicable Registration Statement.
The Company may require the Securityholder to furnish to the Company such
information regarding the Securityholder and the distribution of such securities
as the Company may from time to time reasonably request in writing.
(b) THE SECURITYHOLDER'S OBLIGATIONS AND RESTRICTIONS. In connection with
any Registration Statement in which the Securityholder is participating, the
Securityholder will furnish to the Company in writing such information as the
Company reasonably requests which is required for use in connection with any
such Registration Statement or related Prospectus. The Securityholder agrees by
acquisition of such Registrable Securities that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
5(a)(iii), the Securityholder will forthwith discontinue disposition of
Registrable Securities pursuant to the then current Prospectus until (1) the
Securityholder is advised in writing by the Company that a new Registration
Statement covering the offer of Registrable Securities has become effective
under the Securities Act or (2) the Securityholder receives copies of a
supplemented or amended Prospectus contemplated by Section 5(a)(x), or until the
Securityholder is advised in writing by the Company that the use of the
Prospectus may be resumed. If the Company shall have given any such notice
during a period when a required or demand Registration is in effect or if any
action is taken by the Company that results in the Securityholder not being able
to dispose of such Registrable Securities during the applicable period, without
limiting any other remedy available to the Securityholder, the Company shall
extend the period during which such Registration Statement shall be maintained
effective pursuant to this Agreement by the number of days during which any such
disposition of Registrable Securities is discontinued pursuant to this paragraph
or as a result of such action. The Company shall use its best efforts to limit
the duration of any discontinuance with respect to the disposition of
Registrable Securities pursuant to this paragraph. The Company shall use its
reasonable best efforts to keep the Securityholder informed from time to time of
the status of such discontinuance and shall, as soon as permitted by law, give a
notice which will permit the Securityholder to resume disposing of the
Registrable Securities under this Section..
(c) ADDITIONAL PROCEDURES FOR SHELF REGISTRATION. If the Securityholder
becomes entitled to receive any securities in respect of Registrable Securities
that were already included in a Shelf Registration Statement, subsequent to the
date such Shelf Registration Statement is declared effective, and the Company is
unable under the securities laws to add such securities to the then-effective
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Shelf Registration Statement, the Company, as promptly as reasonably
practicable, shall file, in accordance with the procedures more particularly set
forth in Section 5(a), an additional Shelf Registration Statement with respect
to any such new Registrable Securities. The Company shall use its best efforts
to have any such additional Registration Statement declared effective as
promptly as reasonably practicable after such filing and to keep such additional
Shelf Registration Statement continuously effective during the period specified
in the second paragraph of Section 3(b). A request to file an additional Shelf
Registration Statement pursuant to this paragraph shall not constitute a demand
under Section 3(b).
SECTION 6. HOLDBACK AND LOCK-UP AGREEMENTS.
(a) In the case of any underwritten offering of Registrable Securities
pursuant to Section 3, including under any Shelf Registration Statement, each of
the Company and Ramy El-Batrawi agrees, if and to the extent requested in
writing by the managing underwriter or underwriters administering such offering,
as promptly as reasonably practicable prior to the commencement of the 15-day
period referred to below, not to effect any public sale or distribution (other
than sales pursuant to the same Registration Statement, as permitted under this
Agreement, or the Current Registration Statements, or any registration on Form
S-8 or S-4 (or any successor or substantially similar form or a registration
statement filed in connection with an exchange offer or offering of securities
solely to the Company's existing securityholders)), of any equity securities of
the Company during the period beginning 15 days prior to the closing date of
each underwritten offering of Registrable Securities and during the period
ending on the earlier of (i) 90 days after such closing date and (ii) the date
such sale or distribution is permitted by such managing underwriter or
underwriters. Any agreement entered into after the date of this Agreement
pursuant to which the Company issues or agrees to issue any privately placed
securities similar to any issue of the Registrable Securities shall contain a
provision under which holders of such securities agree not to effect any public
sale or distribution of any such securities during such period.
(b) The Securityholder agrees that for a period of one year from the date
hereof it shall not directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale or loan of securities), grant any
option to purchase or otherwise transfer or dispose of (other than to Affiliates
of the Securityholder (and the equityholders of any successor entities thereto)
and their Affiliates that agree to be similarly bound) any of the Options or
Warrants, the Registrable Securities provided, however, that if Ramy El-Batrawi
or any entity controlled by him disposes of any shares of Company common stock,
including by grant of options thereon, during that one-year period other than
pursuant to exercise of the Option, then the obligation on the part of the
Securityholder not to dispose of such securities shall be terminated and the
Securityholder shall thereafter be entitled to sell any of the Options or
Warrants or the Registrable Securities in any lawful manner..
SECTION 7. REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications or registrations (or the
obtaining of exemptions therefrom) of the Registrable Securities), printing
expenses (including expenses of printing Prospectuses), messenger and delivery
expenses, internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance or compliance), securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
Registration hereunder, fees and expenses of other Persons retained by the
Company, fees and expenses of one counsel for the Holders selected by the
Securityholder, incurred in connection with each Registration hereunder, and
reasonable out-of-pocket expenses incurred by the Securityholder (all such
expenses being referred to as "Registration Expenses"), shall be borne by the
Company, whether or not any registration statement becomes effective; provided,
that Registration Expenses shall not include any underwriting discounts,
commissions or fees attributable to the sale of the Registrable Securities
(other than sales of securities for the account of the Company).
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to indemnify
and hold harmless, to the full extent permitted by law, but without duplication,
the Securityholder, its officers, directors, employees, partners, principals,
equity holders, managed or advised accounts, advisors and agents, and each
Person who controls the Securityholder (within the meaning of the Securities
Act), against all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and reasonable legal fees and expenses)
resulting from (1) any untrue statement of a material fact in, or any omission
of a material fact required to be stated in, any Registration Statement or
Prospectus or necessary to make the statements therein (in the case of a
Prospectus in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by the Securityholder, its
agents, representatives, partners, employers, officers and directors expressly
for use therein, (2) any violation or alleged violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any registration, qualification or compliance effected by the
Company pursuant to its obligations hereunder, or (3) any failure to register or
qualify Registrable Securities in any state where the Company or its agents have
affirmatively undertaken or agreed to undertake such registration or
qualification on behalf of the Securityholder in connection with the Company's
obligations hereunder; provided, however, that the indemnification provided for
in this Section 8(a) shall not inure to the benefit of the Securityholder with
respect to any sale or disposition of Registrable Securities by the
Securityholder in violation of the provisions of Section 5(b) hereof.
(b) INDEMNIFICATION BY THE SECURITYHOLDER. In connection with any
Registration Statement in which the Securityholder is participating, the
Securityholder hereby agrees to indemnify and hold harmless, to the full extent
permitted by law, but without duplication, the Company, its officers, directors,
shareholders, employees, advisors and agents, and each Person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of
material fact in, or any omission of a material fact required to be stated in,
the Registration Statement or Prospectus or necessary to make the statements
therein (in the case of a Prospectus in light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished in
writing by the Securityholder to the Company specifically for inclusion therein.
12
If so requested, the Securityholder also agrees to indemnify and hold harmless
underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 8(b). In no
event shall the liability of the Securityholder of be greater in amount than the
dollar amount of the net proceeds received by the Securityholder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
The Company and the other Persons described above shall be entitled to request
indemnities from underwriters participating in the distribution, to the same
extent as provided above with respect to information so furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such indemnified Person
unless (A) the indemnifying party has agreed to pay such fees or expenses, (B)
the indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to the indemnified party in a timely
manner or (C) in the reasonable judgment of any such Person, based upon advice
of its counsel, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). The indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnified party will be required to 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 of such claim or
litigation. An indemnifying party who is not entitled to, or elects not to,
assume the defense of the claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, as well as one local counsel in
each relevant jurisdiction.
(d) CONTRIBUTION. If for any reason the indemnification provided for in
Section 8(a) or Section 8(b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Section 8(a) and Section
8(b), then the indemnifying party shall contribute to the amount paid or payable
by the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party, determined by reference to whether
the untrue statement of a material fact or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on one part, or the
Securityholder, on another part, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, provided that indemnifying Securityholder shall not be required to
contribute an amount greater than the dollar amount of the net proceeds received
by the Securityholder with respect to the sale of the Registrable Securities
giving rise to such indemnification obligation less any amounts otherwise paid
13
or payable by such indemnifying party as damages, penalties or otherwise in
connection with such matter. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentations.
SECTION 9. RULES 144 AND 144A. The Company shall use its reasonable best
efforts to make publicly available and available to the Securityholder, pursuant
to Rule 144, such information as is necessary to enable the Securityholder to
make sales of Registrable Securities pursuant to that Rule. The Company shall
use its reasonable best efforts to file timely with the SEC all documents and
reports required of the Company under the Exchange Act. After the Company
completes the Registration, the Company shall furnish to the Securityholder,
upon request, a written statement executed on behalf of the Company as to
compliance with the current public information requirements of Rule 144. In
addition, the Company will provide to the Securityholder or any potential
purchaser of a Registrable Security, upon any such Person's reasonable request,
the information required by paragraph (d)(4) of Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) If any of the Registrable Securities covered by a demand Registration
hereunder are to be sold in an Underwritten Offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Securityholder (or, in the case of a registration
initiated pursuant Section 4, the holders of a majority of the securities
included in such offering (on a Registrable Class equivalent basis)); provided
further that such investment bankers and managers must be reasonably
satisfactory to the Company, acting in good faith, based on identified business
reasons specific to such bankers or managers.
(b) No Person may participate in any Underwritten Offering hereunder unless
such Person (i) agrees to sell such Person's Registrable Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 10 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
(c) The Securityholder hereby agrees that, during the period of duration
(up to, but not exceeding, 15 days prior to the closing date of the Underwritten
Offering and 90 days thereafter) specified by an underwriter of a Registrable
Class or other securities of the Company of the same class as Registrable
Securities, following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
such underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees, Affiliates of the
Securityholder (and the equityholders of any successor entities thereto) and
their Affiliates that agree to be similarly bound) any Registrable Securities of
the Company of the same class as those offered pursuant to such registration
statement held by it at any time during such period except Registrable
Securities included in such Registration; provided, however, that:
14
(i) all officers and directors of the Company, all holders of in
excess of one percent of any class of securities of the Company, and all
other persons with registration rights (whether or not pursuant to this
Agreement) enter into agreements which are no less restrictive;
(ii) the aggregate of the period in which dispositions of Registrable
Securities are restricted pursuant to this Section 10(c) and any period
during which the filing of a registration statement is deferred pursuant to
Section 3(a) and Section 3(d) or otherwise shall not exceed 90days in any
12-month period;
(iii) such restriction shall not prevent sales pursuant to Rule 144 or
private placement sales to purchasers, Affiliates of the Securityholder
(and the equityholders of any successor entities thereto) and their
Affiliates that agree to similar restrictions (which agreements shall not
be required for sales made pursuant to Rule 144); and
(iv) this Section 10(c) shall not apply when the Securityholder
beneficially owns less than 2% of any class of securities of the Company.
In order to enforce the foregoing covenant, the Securityholder will, if
requested in writing, execute an agreement in the form provided by the
underwriter containing terms which are consistent with the provisions of this
Section.
SECTION 11. NO INCONSISTENT AGREEMENTS. The Company has not previously and
shall not in the future enter into any agreement, arrangement or understanding
with respect to its securities that is inconsistent with the rights granted to
the Securityholder in this Agreement or otherwise conflicts with the provisions
hereof.
SECTION 12. AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this Section 12, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the
Securityholder.
SECTION 13. REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically or to recover
damages or to exercise any other remedy available to it at law or in equity. The
foregoing rights and remedies shall be cumulative and the exercise of any right
or remedy provided herein shall not preclude any Person from exercising any
other right or remedy provided herein. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
SECTION 14. NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air-courier guaranteeing overnight delivery:
15
(a) If to the Securityholder:
Riverdale LLC
c/o Icahn Associates
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Company:
GenesisIntermedia, Inc.
0000 Xxxxxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Ramy El-Batrawi
Facsimile: 000-000-0000
and thereafter at such other address as may be designated from time to time by
notice given in accordance with the provisions of this Section 14.
(c) All such notices and other communications shall be deemed to have been
delivered and received (i) in the case of personal delivery, telecopier or
telegram, on the date of such delivery (assuming delivery is confirmed), (ii) in
the case of overnight guaranteed delivery air courier, on the Business Day after
the date when sent and (iii) in the case of mailing, on the third Business Day
following such mailing.
SECTION 15. SUCCESSORS AND ASSIGNS. Any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by the
Securityholder in connection with the transfer of its Registrable Securities
without the prior written consent of the Company; provided (a) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being transferred
or assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 6 (if applicable to the transferor); and
(c) such transferee or assignee (i) agrees to act through a single
representative with the Securityholder for the purpose of exercising rights,
receiving notices and taking action hereunder, or (ii) acquires all of the
shares of Registrable Securities held by the Securityholder or at least one
million (1,000,000) shares of such Registrable Securities (subject to
appropriate adjustment for stock splits, stock dividends, combinations and other
recapitalizations). Subject to the foregoing, any such transferee or assignee
shall be subject to all rights and obligations hereunder and, if requested by
the Company, shall agree in writing to be bound by the terms of this Agreement.
Subject to the foregoing, this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto, including
without limitation and without the need for an express assignment, subsequent
holders of the Registrable Securities.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
16
SECTION 17. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 18. GOVERNING LAW. This Agreement shall be governed by, construed
and enforced in accordance with, the laws of the State of New York without
regard to the principles thereof relating to conflict of laws. Service of
process on the parties in any action arising out of or relating to this
Agreement shall be effective if mailed to the parties in accordance with Section
14 hereof. The parties hereto waive all right to trial by jury in any action or
proceeding to enforce or defend any rights under this Agreement.
SECTION 19. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 20. ENTIRE AGREEMENT. This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 21. ATTORNEYS' FEES. In any proceeding brought to enforce any
provision of this Agreement, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
[Remainder of Page Intentionally Left Blank]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SECURITYHOLDER:
RIVERDALE LLC
By: ________________________________
Xxxxxx X. Xxxxxxxx
Manager
COMPANY:
GENESISINTERMEDIA, INC.
By: ________________________________
Xxxx X. El-Batrawi
Chairman and Chief Executive Officer
AGREED AND ACCEPTED
FOR PURPOSES OF SECTIONS
6 AND 11-21 ONLY:
-------------------------
Xxxx X. El-Batrawi
