ANTI-DILUTION AGREEMENT
Exhibit 4.6
This Anti-Dilution Agreement (this “Agreement”) is made and entered into as of February 12,
2004, by and among NGTV, a California corporation (the “Company”), Xxxx Xxxxxxx LLC, Xxxxx Xxxxx,
and Xxxxxxx Xxxxxxxx LLC (each referred to herein as a “Principal Shareholder” and collectively as
the “Principal Shareholders”) and the purchasers participating in the Financing (each referred to
herein as an “Investor” and collectively referred to as the “Investors”).
RECITALS
WHEREAS, the Investors are acquiring shares of Common Stock in connection with or pursuant to
a financing of up to $7,000,000 of Units of the Company, with each Unit consisting of one share of
Common Stock and one-half of one Common Stock purchase warrant pursuant to a Subscription Agreement
of even date herewith (the “Financing”).
WHEREAS, the Company, the Principal Shareholders, and the Investors have negotiated an Initial
Dilution as set forth on the table attached hereto as Exhibit “A” (the “Initial Dilution”).
WHEREAS, the Company entered into that certain engagement letter, dated as of November 20,
2002, with Acclaim Financial Group (“Acclaim”), pursuant to which under certain terms and
conditions the Company would issue to Acclaim an option to purchase up to 4,250,000 shares of
Common Stock, a copy of which agreement is attached hereto as Exhibit “B” (the “Acclaim Option”).
WHEREAS, the Company entered into that certain engagement letter, dated as of February 1,
2002, with Xxxxxx Capital Markets Group, Inc. (“Xxxxxx”), pursuant to which under certain terms and
conditions the Company would issue to Xxxxxx a warrant to purchase shares of Common Stock equal to
five percent (5%) of the then outstanding fully diluted capital stock of the Company (894,848
shares of Common Stock), a copy of which agreement is attached hereto as Exhibit “C” (the “Xxxxxx
Warrant”).
WHEREAS, the Company entered into an agreement with Manatt, Xxxxxx & Xxxxxxxx, LLP (“Manatt”),
pursuant to which under certain terms and conditions the Company would issue to Manatt a warrant to
purchase up to 336,927 shares of Common Stock (the “Manatt Warrant”), a copy of which is attached
hereto as Exhibit “D”.
WHEREAS, the Company disputes the validity of the Acclaim Option, the Xxxxxx Warrant and the
Manatt Warrant (the “Disputed Warrants”) and its obligations thereunder.
WHEREAS, the Company, the Principal Shareholders and the Investors have agreed to provide for
certain anti-dilution rights to the Principal Shareholders and the Investors in the event the
Company is forced to issued shares of Common Stock pursuant to the Disputed Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and
for valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged,
the parties to this Agreement (hereinafter collectively called the “Parties” and individually a
“Party”) agree as follows:
AGREEMENT
1. DEFINITIONS. As used in this Agreement, the following terms have the following
respective meaning:
(a) “Common Stock” means common stock of the Company.
(b) “Disputed Shares” means only shares of Common Stock issued pursuant to the Acclaim Option,
the Xxxxxx Warrant or the Mannat Warrant.
(c) “Initial Dilution” means the number of shares set forth on Exhibit A hereto, or as may be
adjusted in the event the Financing does not subscribe the maximum offering amount of $7,000,000.
(d) “Securities” means all if the Common Stock, convertible securities, options, warrants, or
other rights to acquire securities of the Company on a fully diluted basis.
2. Issuance of Additional Shares. In the event the Company issues any Disputed Shares, the
Company shall forthwith issue the number of shares of Common Stock in accordance with the
following:
(a) Investors. The Total-Investors set forth on Exhibit “A” hereto will be issued, on
a pro-rata basis in accordance with their current registration instructions, the number of fully
paid and non-assessable shares of Common Stock equal to the number of Disputed Shares.
(b) Strategic Principals. The Strategic Principals set forth on Exhibit A hereto will
be issued, on a pro-rata basis, the number of fully paid and non-assessable shares of Common Stock
equal to 30% of the Disputed Shares divided by 35%.
3. Placement Agent. Standard Securities Capital Corporation, as placement agent for the
Financing, represents that it is authorized to sign this Agreement for and on behalf of each
Investor. Accordingly, each Investor will have the rights under this Agreement as if an original
signatory hereto.
4. Notices. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the Party to be notified, (ii) when sent by
confirmed facsimile if sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of receipt.
5. Severability. In the event one or more of the provisions of this Agreement should, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been
contained herein and the Parties hereto shall, to the extent permissible by applicable law, amend
this Agreement so as to make effective and enforceable the intent of this Agreement.
6. Counterparts. This Agreement may be executed in two or more counterparts, including
counterparts transmitted by facsimile, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7. Assignment. The Investors’ rights and the Principal Shareholders’ rights under this
Agreement may not be assigned, transferred or otherwise delegated to any other party, except with
the prior written consent of the Company.
8. Amendments. This Agreement may not be modified or amended, or any of the provisions of
this Agreement waived, except by written agreement of all of the Parties.
9. Interpretation. If any claim is made by a Party relating to any conflict, omission or
ambiguity in the provisions of this Agreement, no presumption or burden of proof or persuasion will
be implied because this Agreement was prepared by or at the request of any Party or its counsel.
The Parties waive any statute or rule of law to the contrary.
10. Titles and Subtitles. The titles of the sections and subsections of this Agreement are
for convenience of reference only and are not to be considered in construing this Agreement.
11. Entire Agreement. This Agreement constitutes the full and entire understanding among
the Parties with regard to the subjects hereof and no Party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements except as specifically
set forth herein.
SIGNATURE PAGES FOLLOW
IN WITNESS WHEREOF, each of the undersigned has duly executed this Anti-Dilution Agreement as
of the date first written above.
| “Company” NGTV |
||||
| By: | /s/ Xxxxxxx Xxx | |||
| Xxxxxxx Taj, | ||||
| Chief Executive Officer | ||||
| “PRINCIPAL SHAREHOLDERS” | ||||
| XXXXXXX XXXXXXXX LLC | ||||
By:
|
/s/ Xxxxxxx Xxxxxxxx
|
|||
| Xxxxxxx Xxxxxxxx, | ||||
| Authorized Signatory | ||||
| XXXX XXXXXXX LLC | ||||
By:
|
/s/ Xxxx Xxxxxxx | |||
| Xxxx Xxxxxxx, | ||||
| Authorized Signatory | ||||
| /s/ Xxxxx Xxxxx | ||||
| XXXXX XXXXX | ||||
| STANDARD SECURITIES CAPITAL CORPORATION | ||||
| on behalf of Investors | ||||
By:
|
/s/ Xxxx Xxxxxxxx | |||
| Xxxx Xxxxxxxx, | ||||
| President and Chief Executive Officer | ||||
EXHIBIT A
| Shares/Warrants/Options | Initial Dilution | |||||||
Founders: |
||||||||
Existing Common Stock |
28,280,000 | 31.00 | % | |||||
Existing Employee Options |
3,648,500 | 4.00 | % | |||||
Total-Founders |
31,928,500 | 35.00 | % | |||||
Investors: |
||||||||
Modena $250,000 |
8,977,680 | 9.84 | % | |||||
HJG Note $250,000@$0.305 |
819,672 | 0.90 | % | |||||
Offering $6,750,000@$0.305 |
22,131,148 | 24.26 | % | |||||
Total-Investors |
31,928,500 | 35.00 | % | |||||
Strategic Principals: |
||||||||
Xxxx Xxxxxxx-Stock |
5,623,977 | 6.17 | % | |||||
Xxxx Xxxxxxx-Options |
2,280,607 | 2.50 | % | |||||
Xxxxx Xxxxx-Stock |
5,623,977 | 6.17 | % | |||||
Xxxxx Xxxxx-Options |
2,280,607 | 2.50 | % | |||||
Xxxx Xxxxxxxx-Stock |
5,623,977 | 6.17 | % | |||||
Xxxx Xxxxxxxx-Options |
2,280,607 | 2.50 | % | |||||
Xxxxx Xxxxx-Stock |
3,648,971 | 4.00 | % | |||||
Total-Strategic Principals |
27,362,725 | 30.00 | % | |||||
Grand Total |
91,219,725 | 100.00 | % | |||||
EXHIBIT B
ACCLAIM AGREEMENT
EXHIBIT C
XXXXXX AGREEMENT
EXHIBIT D
MANATT WARRANT
