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EXHIBIT 10.14
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of February 27, 1998 by
and among Pacific Rim Entertainment, Inc., a Delaware corporation (the
"Company") and Xxxx X. Xxxxx (the "Holder"), the sole shareholder of X.X. Xxxxx,
Inc., a Texas corporation ("Acquiree").
W I T N E S S E T H:
WHEREAS, the Company and the Holder are parties to an Agreement and
Plan of Merger dated as of February 27, 1998 (the "Merger Agreement") pursuant
to which Acquiree has elected to effectuate a merger with a newly formed
subsidiary of the Company (the "Merger");
WHEREAS, pursuant to the Merger, the Holder is to receive 105.3 shares
of the Company's Series C Convertible Preferred Stock having an aggregate
liquidation amount of $1,580,000 (the "Preferred Stock");
WHEREAS, the parties hereto desire to set forth their agreement
concerning the registration under the Securities Act of 1933, as amended, of the
Common Stock issued to the Holder in connection with the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
(a) "Closing" shall mean that date upon which a closing
of the Merger occurs.
(b) "Company" shall mean Pacific Rim Entertainment, Inc.
(c) "Exchange Act" shall mean the Securities Exchange Act
of 1934.
(d) "Holder" shall mean Xxxx X. Xxxxx, the sole
shareholder of Acquiree.
(e) "Merger" shall mean the Merger of Xxxxx Acquisition
Corp., a newly formed, wholly owned subsidiary of the Company, into Acquiree
pursuant to the terms of the Merger Agreement.
(f) "Person" means an individual, a partnership (general
or limited), corporation, limited liability company, joint venture, business
trust, cooperative, association or other form of business organization, whether
or not regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
(g) "Registration Statement" shall mean a Registration
Statement of the Company filed with the SEC pursuant to the provisions of
Section 2 of this Agreement which
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covers the resale of the Restricted Stock on an appropriate form then permitted
by the SEC to be used for such registration and the sales contemplated to be
made thereby under the Securities Act, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such Registration Statement,
including any pre- and post-effective amendments thereto, in each case including
the prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
(h) "Restricted Stock" shall mean all or any shares of
Common Stock of the Company that may be issued to the Holder upon conversion of
the Preferred Stock, and any additional shares of Common Stock or other equity
securities of the Company issued or issuable in respect of any such Preferred
Stock by way of a stock dividend or stock split, in connection with a
combination, exchange, reorganization, recapitalization or reclassification of
Company securities, or pursuant to a merger, division, consolidation or other
similar business transaction or combination involving the Company; provided
that: as to any particular shares of Restricted Stock, such securities shall
cease to constitute Restricted Stock (i) when a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of thereunder, or
(ii) when and to the extent such securities are permitted to be distributed
pursuant to Rule 144 (or any successor provision to such Rule) under the
Securities Act or are otherwise freely transferable to the public without
further registration under the Securities Act.
(i) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
any relevant time.
(j) "SEC" shall mean the United States Securities and
Exchange Commission.
(k) "Trading Day" shall mean any day on which the New
York Stock Exchange is open for trading.
Capitalized terms used in this Registration Rights Agreement and not
otherwise defined herein shall have the same meaning ascribed thereto in the
Merger Agreement.
2. Shelf Registration.
(a) As soon as practicable, however, no earlier than
ninety (90) days following the Merger, the Company shall use its best efforts to
prepare and file a Registration Statement with the SEC and use its best efforts
to, as promptly as possible, have such Registration Statement declared effective
for the purpose of facilitating the public resale of the Common Stock which may
be issued to the Holder upon the conversion of the Preferred Stock; provided,
however, the public resale of such shares of Common Stock shall be limited to
those sales which realize for the Holder gross sales proceeds not to exceed
$1,000,000 during the twelve (12) month period immediately following Closing and
any shares not otherwise disposed of during this twelve (12) month period shall
not be available for resale until the expiration of the twenty four (24) month
period immediately following Closing.
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(b) Except with respect to the shares of Common Stock
permitted to be sold by the Holder pursuant to subparagraph 2(a) above, the
remainder of the shares of the Company's Common Stock owned or acquired by the
Holder pursuant to the Merger may not, without the written consent of the
Company, be subject to any transfer, disposition, sale or encumbrance for a
period of the later of: (i) twenty-four (24) months from the Closing, or (ii)
twelve (12) months from the date of receipt of any such Company Common Stock.
(c) Notwithstanding anything to the contrary contained
herein, the Company's obligation in subparagraph 2(a) above shall extend only to
the inclusion of the Restricted Stock in a Registration Statement filed under
the Securities Act. The Company shall have no obligation to assure the terms and
conditions of distribution, to obtain a commitment from an underwriter relative
to the sale of the Restricted Stock or to otherwise assume any responsibility
for the manner, price or terms of the distribution of the Restricted Stock.
Furthermore, the Company shall not be restricted in any manner from including
within the Registration Statement or the distribution, issuance or resale of any
of its or any other securities.
(d) The Holder of Restricted Stock shall not effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the ninety (90) days prior to the
commencement of any underwritten primary offering to be undertaken by the
Company of shares of its own common stock (the "Primary Offering"), which may
also include other securities, and ending 180 days after completion of any such
Primary Offering, unless the managing underwriter of such Primary Offering
otherwise agrees. If, however, the registration or ability to resell any of the
Restricted Stock is delayed by virtue of this subparagraph 2(d), then, and in
that event, the time period identified in subparagraph 2(a) within which Holder
may sell up to $1,000,000 of Restricted Stock, may be extended by a period
equivalent to the delay caused by subparagraph 2(d).
3. Registration Procedures. Whenever it is obligated to register
any Restricted Stock pursuant to this Agreement, the Company shall:
(a) prepare and file with the Commission a Registration
Statement with respect to the Restricted Stock in the manner set forth at
Paragraph 2 hereof and use its best efforts to cause such Registration Statement
to become effective as promptly as possible and to remain effective for that
period necessary to comply with subparagraphs 2(a) and 2(d) herein.
(b) prepare and file with the Commission 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 for the period specified in subparagraph 3(g) below and to comply with
the provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such Registration Statement in accordance with the
Holder's intended method of disposition set forth in such Registration Statement
for such period;
(c) furnish to the Holder and to each underwriter, if
any, such number of copies of the Registration Statement and the prospectus
included therein (including each
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preliminary prospectus), as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such Registration Statement;
(d) use its best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the securities or
blue sky laws of such jurisdictions as the Holder, or, in the case of an
underwritten public offering, the managing underwriter shall reasonably request;
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) immediately notify the Holder under such Registration
Statement and each underwriter, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required or necessary to be stated therein in
order to make the statements contained therein not misleading in light of the
circumstances under which they were made;
(f) make available for inspection by the Holder, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by the Holder or
any such 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 the
Holder, underwriter, attorney, accountant or agent in connection with such
Registration Statement;
(g) if the Common Stock of the Company is listed on any
securities exchange or automated quotation system, the Company shall use its
best efforts to list (with the listing application being made at the time of the
filing of such Registration Statement or as soon thereafter as is reasonably
practicable) the Restricted Stock covered by such Registration Statement on such
exchange or automated quotation system;
(h) enter into normal and customary underwriting
arrangements or an underwriting agreement and take all other reasonable and
customary actions if the Holder sells his shares of Restricted Stock pursuant to
an underwriting (however, in no event shall the Company, in connection with such
underwriting, be required to undertake any special audit of a fiscal period in
which an audit is normally not required);
(i) notify the Holder if there are any amendments to the
Registration Statement, any requests by the SEC to supplement or amend the
Registration Statement, or of any threat by the SEC or state securities
commission to undertake a stop order with respect to sales under the
Registration Statement; and
(j) cooperate in the timely removal of any restrictive
legends from the shares of Restricted Stock in connection with the resale of
such shares covered by an effective Registration Statement.
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4. Expenses.
(a) For the purposes of this Paragraph (4), the term
"Registration Expenses" shall mean: all expenses incurred by the Company in
complying with paragraph (2) of this Agreement, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, "blue sky" fees,
fees of the National Association of Securities Dealers, Inc. ("NASD"), fees and
expenses of listing shares of Restricted Stock on any securities exchange or
automated quotation system on which the Company's shares are listed and fees of
transfer agents and registrars. The term "Selling Expenses" shall mean: all
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and all accountable or non-accountable expenses paid to any
underwriter in respect of the sale of Restricted Stock.
(b) Except as otherwise provided herein, the Company will
pay all Registration Expenses in connection with the Registration Statement
filed pursuant to paragraph (2) of this Agreement. All Selling Expenses in
connection with any Registration Statement filed pursuant to paragraph (2) of
this Agreement shall be borne by the participating Holder in proportion to the
number of shares sold by each, or by such persons other than the Company (except
to the extent the Company may be a seller) as they may agree.
5. Obligations of Holder.
(a) In connection with each registration hereunder, the
selling Holder will furnish to the Company in writing such information with
respect to such seller and the securities held by such seller, and the proposed
distribution by him or them as shall be reasonably requested by the Company in
order to assure compliance with federal and applicable state securities laws, as
a condition precedent to including such seller's Restricted Stock in the
Registration Statement. The selling Holder also shall agree to promptly notify
the Company of any changes in such information included in the Registration
Statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact required or necessary to
be stated therein in order to make the statements contained therein not
misleading in light of the circumstances then existing.
(b) In connection with each registration pursuant to this
Agreement, the Holder will not effect sales thereof until notified by the
Company of the effectiveness of the Registration Statement, and thereafter will
suspend such sales after receipt of telegraphic or written notice from the
Company to suspend sales to permit the Company to correct or update a
Registration Statement or prospectus. At the end of any period during which the
Company is obligated to keep a Registration Statement current, the Holder
included in said Registration Statement shall discontinue sales of shares
pursuant to such Registration Statement upon receipt of notice from the Company
of its intention to remove from registration the shares covered by such
Registration Statement which remain unsold, and the Holder shall notify the
Company of the number of shares registered which remain unsold immediately upon
receipt of such notice from the Company.
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6. Information Blackout.
At any time when a Registration Statement effected pursuant to
Paragraph 2 relating to Restricted Stock is effective, upon written notice from
the Company to the Holder that the Company has determined in good faith that
sale of Restricted Stock pursuant to the Registration Statement would require
disclosure of non-public material information, the Holder shall suspend sales of
Restricted Stock pursuant to such Registration Statement until such time as the
Company notifies the Holder that such material information has been disclosed to
the public or has ceased to be material or that sales pursuant to such
Registration Statement may otherwise be resumed.
7. Indemnification
(a) The Company agrees to indemnify, to the extent
permitted by law, the Holder of Restricted Stock, its officers and directors and
each Person who controls the Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact contained in any Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished to the Company by
the Holder for use therein or by the Holder's failure to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements thereto
after the Company has furnished the Holder with a sufficient number of copies of
the same.
(b) In connection with any Registration Statement in
which the Holder of Restricted Stock is participating, the Holder shall furnish
to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such Registration Statement
or prospectus and, to the extent permitted by law, shall indemnify the Company,
its directors and officers 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 or alleged untrue statement of material
fact contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished by the Holder; provided that the obligation to indemnify shall be
limited to the net amount of proceeds received by the Holder from the sale of
Restricted Stock pursuant to such Registration Statement.
(c) Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit
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such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall 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, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
(b) Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement 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 Holder.
(d) Notices. All communications under this Agreement
shall be sufficiently given if delivered by hand or by overnight courier or
mailed by registered or certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Xx. Xxxx Xxxxxxxxxx
Chief Executive Officer
Pacific Rim Entertainment, Inc.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
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with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx, P.C.
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(ii) if to the Holder, to the address identified
on the books and records of the Company.
or, at such other address as any of the parties shall have furnished in writing
to the other parties hereto.
(e) Successors and Assigns; Holder as Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and assigns, and the agreements of the Company
herein shall inure to the benefit of the Holder and his respective successors
and assigns.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Entire Agreement; Survival; Termination. This
Agreement is intended by the parties as a final expression of their agreement
and 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. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
PACIFIC RIM ENTERTAINMENT, INC.
By: Xxxx Xxxxxxxxxx
________________________________
Name:
Title:
HOLDER:
Xxxx X. Xxxxx
___________________________________
Xxxx X. Xxxxx
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