Exhibit 10.7
Form of Registration Rights Agreement between Cool Entertainment, Inc. and each
of Xxxxxxx Kar Man Xxx, Xxxxxxx Xxxxx Xxxxxxx, Xxxxxxx Xxxxx Xxxx, and Xxxx
Xxxxxxx Xxxxxxxx dated March 1, 1999
CONFIDENTIAL CONFIDENTIAL
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of March 1,
1999, is made and entered into by and between COOL ENTERTAINMENT, INC., a
Colorado corporation ("Company") and XXXXXXX KAR MAN XXX ("Holder").
RECITALS
A. Holder has been issued 5,796,011 shares ("Shares") of the Company's
common stock ("Common Stock").
B. The Company desires to provide Holder with certain registration
rights with respect to the Shares owned by Holder upon the terms and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions hereinafter set forth, the parties hereto hereby
agree as follows:
1. DEFINITIONS.
1.1 "COMMON STOCK" means the Common Stock of the Company.
1.2 "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
1.3 "REGISTRABLE SECURITIES" means the Shares and any
securities issued or issuable with respect to such Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consideration or other reorganization. As to any
particular Registrable Securities, once issued, such shares shall cease to be
Registrable Securities when (a) such shares shall have been registered under the
Securities Act, the registration statement with respect to the sale of such
shares shall have become effective under the Securities Act and such shares
shall have been disposed of pursuant to such effective registration statement,
(b) such shares shall have been distributed pursuant to Rule 144 (or any similar
provision relating to the disposition of securities then in force) under the
Securities Act, (c) such shares shall have been otherwise transferred, new
certificates or other evidences of ownership for them not bearing a legend
restricting further transfer and not subject to any stop-transfer order or other
restrictions on transfer shall have been delivered by the Company and subsequent
disposition of such shares shall not require registration or qualification of
such shares under the Securities Act or any state securities laws then in force,
or (d) such shares shall cease to be outstanding.
1.4 "REGISTRATION EXPENSES" shall have the meaning set forth
in Section 2.3.
1.5 "SEC" shall mean the Securities and Exchange Commission.
1.6 "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
1.7 "SHARES" shall have the meaning set forth in the
recitals to this Agreement.
2. INCIDENTAL REGISTRATION.
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2.1 REGISTRATION RIGHTS. If the Company at any time proposes
to register any of its securities under the Securities Act, whether or not for
sale for its own account, in a manner which would permit registration of the
Registrable Securities for sale to the public under the Securities Act, the
Company shall offer Holder the opportunity to include in such registration
statement any or all of its Registrable Securities. The Company will use its
best efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
Holder, to the extent requisite to permit the disposition (in accordance with
such intended methods thereof) of the Registrable Securities so to be
registered; PROVIDED, that if such registration involves an underwritten or
"best efforts" offering, Holder must offer and sell the Registrable Securities
in a manner as contemplated in the registration statement and as reasonably
determined by the Company and the underwriters or agents selected by the
Company. The Company will pay all Registration Expenses (as hereinafter defined)
in connection with each registration of Registrable Securities requested
pursuant to this Agreement.
2.2 PRIORITY IN INCIDENTAL REGISTRATION. If a registration
pursuant to this Agreement involves an underwritten or "best efforts offering
and the managing underwriter or agent advises the Company in writing that, in
its opinion, the number of securities which the Company, Holder and any other
persons intend to include in such registration exceeds the number which would
have an adverse effect on such offering, including the price at which such
securities can be sold, the Company will include in such registration (i) first,
all the securities the Company proposes to sell for its own account, (ii)
second, a number of such securities equal to the number, in the opinion of such
underwriters or agents, which can be sold without having the adverse effect
referred to above, such amount to be allocated pro rata among Holder and other
persons having similar registration rights on the basis of the relative number
of securities Holder and other persons have requested to be included in such
registration.
2.3 REGISTRATION EXPENSES. As used in this Agreement,
"Registration Expenses" shall mean all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all SEC, stock exchange, National Association of Securities Dealers, Inc. or
Nasdaq registration and filing fees and expenses, fees and expenses of
compliance with securities or blue sky laws (including, without limitation,
reasonable fees and disbursements of counsel for the Company in connection with
blue sky qualification of the Registrable Securities), rating agency fees,
printing expenses, messenger and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public accountants
(including the expenses of any annual audit, special audit or "cold comfort"
letters required by or incident to such performance and compliance), securities
acts liability insurance (if the Company so desires), the reasonable fees and
expenses of any special experts retained by the Company in connection with such
registration, and fees and expenses of other persons retained by the Company.
3. REGISTRATION PROCEDURE. In effecting the registration of the
Registrable Securities as provided in this Agreement, the Company shall, at its
sole expense:
(a) Prepare and file with the SEC a registration statement
with respect to the Registrable Securities and use its best efforts to cause
such registration statement to become effective; PROVIDED, HOWEVER, that before
filing with the SEC a registration statement or prospectus or any amendments or
supplements thereto, the Company will (i) furnish to counsel selected by Holder
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (ii) notify Holder of any stop order
issued or threatened by the SEC and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
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(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to keep such registration
statement effective for a period of not less than ninety (90) days or such
shorter period which will terminate when all Registrable Securities covered by
such registration statement have been sold, and comply with the provisions of
the Act with respect to the disposition of all the Registrable Securities
covered by such registration statement during such period;
(c) Furnish to Holder copies of the registration statement,
each amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration statement (including each
preliminary prospectus) in conformity with the requirements of the Securities
Act and such other documents as Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by Holder;
(d) Use its best efforts to register or qualify the
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by Holder and do any and all
other acts and things which may be reasonably necessary or advisable to enable
Holder to consummate the disposition in such jurisdictions of the Registrable
Securities owned by Holder;
(e) Use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Holder to consummate the
disposition of such Registrable Securities;
(f) Immediately notify Holder 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 included in such
registration statement contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and the Company will promptly prepare and
furnish to Holder a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(g) Enter into such customary agreements and take all such
other actions as Holder reasonably requests in order to expedite or facilitate
the disposition of such Registrable Securities, including customary
indemnification;
(h) Make available for inspection by Holder and any
attorney, accountant or other agent retained by Holder (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such Inspector in connection with such registration statement; and
(i) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC.
The Company may require Holder to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.
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Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph 3(f),
Holder will forthwith discontinue disposition of Registrable Securities,
pursuant to the registration statement covering such Registrable Securities
until Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph 3(f), and, if so directed by the Company, Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in Holder's possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice. In
the event the Company shall give any such notice, the period mentioned in
paragraph 3(b) shall be extended by the greater of (i) three months or (ii) the
number of days during the period from and including the date of the giving of
such notice pursuant to paragraph 3(f) to and including the date when Holder
shall have received the copies of the supplemented or amended prospectus
contemplated by paragraph 3(f).
4. INDEMNIFICATION.
4.1 INDEMNIFICATION BY THE COMPANY. In connection with the
registration of the Registrable Securities under the Securities Act pursuant to
this Agreement, the Company will, and it hereby does, indemnify and hold
harmless, to the full extent permitted by law, Holder, and each other person, if
any, who controls Holder within the meaning of the Securities Act, against any
and all losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with the Company's prior
written consent) to which Holder or any such controlling person may become
subject under the Securities Act, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses arising out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse Holder and
each such controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending such loss, claim,
liability, action or proceedings; PROVIDED, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expenses arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment or supplement thereto
or in any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by Holder or controlling person specifically stating
that it is for use in the preparation thereof; and PROVIDED, FURTHER, that the
Company will not be liable to Holder or any such controlling person under the
indemnity agreement in this Section 4.1 with respect to any preliminary
prospectus as then amended or supplemented as the case may be, to the extent
that any such loss, claim, damage or liability of Holder or such controlling
person results from the fact that Holder or such controlling person sold
Registrable Securities to a person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
(including any documents incorporated by reference therein), whichever is most
recent, if the Company has previously furnished copies thereof to Holder or such
controlling person and such final prospectus, as then amended or supplemented,
has corrected any such misstatement or omission. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
Holder or such controlling person and shall survive the transfer of such
securities by Holder.
4.2 INDEMNIFICATION BY HOLDER. The Company may require, as a
condition to including the Registrable Securities in any registration statement
filed in accordance with this Agreement, that the Company shall have received an
undertaking reasonably satisfactory to it from
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Holder, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 4.1) the Company and its controlling persons
and all other prospective sellers and their respective controlling persons
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instruction duly executed by Holder specifically stating
that it is for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement, or a
document incorporated by reference into any of the foregoing. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of the Company or Holder and shall survive the transfer of such
securities by Holder; PROVIDED, HOWEVER, that Holder shall not be liable to
the Company under this Section 4.2 for any amounts exceeding the product of
the purchase price per Registrable Security and the number of Registrable
Securities being sold pursuant to such registration statement or prospectus
by Holder.
4.3 NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement of any action
or proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 4, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; PROVIDED, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 4, except to the extent that the indemnifying party
is actually materially prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in such indemnified
party's reasonable judgement a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof, and the indemnifying party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a 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, 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, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
4.4 OTHER INDEMNIFICATION. Indemnification similar to that
specified in the preceding Sections 4.1, 4.2 and 4.3 (with appropriate
modifications) shall be given by the Company and Holder with respect to any
required registration or other qualification of securities under any federal or
state law or regulation of governmental authority other than the Securities Act.
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5. NO INCONSISTENT AGREEMENTS. The Company will not hereafter
enter into any agreement with respect to any of its securities which is
inconsistent with the rights granted to Holder in this Agreement.
6. REMEDIES. The Company acknowledges and agrees that in the
event of any breach of this Agreement by it, Holder would be irreparably harmed
and could not be made whole by monetary damages. The Company accordingly agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate and that Holder, in addition to any other remedy to which they
may be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction for such
action.
7. GENERAL PROVISIONS.
7.1 WAIVERS. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be deemed
to constitute a waiver by the party taking such action or compliance with any
representation, warranty, covenant, or agreement contained herein or in any
ancillary document. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach. The waiver by any party of any of the conditions precedent to
its respective obligations under this Agreement shall not preclude it from
seeking redress for breach of this Agreement.
7.2 NOTICES. All notices and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, by courier service,
telecopied, or mailed by registered or certified mail, postage prepaid, return
receipt requested, to the party to whom the same is so delivered or mailed:
(a) if to the Company:
Cool Entertainment, Inc.
c/o 0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Attn: Xxxxxxx Xxx
(b) if to Holder:
Xxxxxxx X.X. Xxx
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
or to such other address as any of the above shall have specified by notice
hereunder. Notices delivered personally, by mail or telecopied shall be deemed
communicated as of actual receipt.
7.3 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement among the parties hereto with respect to the subject matter
hereof, and supersedes any and all prior agreements and undertakings, oral or
written, concerning the subject matter hereof. This Agreement may not be changed
or terminated orally, and may only be changed or terminated by a writing signed
by the party against whom such change or termination is sought.
7.4 BINDING EFFECT; BENEFITS. This Agreement shall inure to
the benefit of and shall be binding upon and enforceable by the parties hereto
and their respective heirs, legal representatives, successors, and assigns.
Nothing in this Agreement, expressed or implied, is intended to or shall confer
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on any person other than the parties hereto any rights, remedies, obligations,
or liabilities under or by reason of this Agreement.
7.5 HEADINGS. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
7.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which, when executed, shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
7.7 RULES OF CONSTRUCTION. In this Agreement, unless the
context otherwise requires, words in the singular include the plural, and in the
plural include the singular, and words of the masculine gender include the
feminine and the neuter, and, when the sense so indicates, words of the neuter
gender may refer to any gender.
7.8 ASSIGNMENT. This Agreement is not assignable without the
prior written consent of the nonassigning party or parties.
7.9 GOVERNING LAW; VENUE. The validity, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
Washington. Any action commenced hereunder shall be conducted before a court of
appropriate jurisdiction in King County, Washington.
7.10 COOPERATION. The parties agree to execute such further
documents and take such further actions as necessary to carry out the provisions
of this Agreement and to fully accomplish its purpose and intent.
7.11 ATTORNEYS' FEES. The prevailing party in any proceedings
arising in connection with this Agreement shall be entitled to reimbursement for
his or its reasonable costs incurred in connection therewith, including
attorneys' fees.
7.12 SET-OFF. Each party hereto shall be entitled to set-off
against any amount it may owe to any other party under this Agreement or any
other agreement executed in connection herewith any and all amounts that are due
to that party by such other party under or in connection with the terms of this
Agreement.
"THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK"
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7.13 TIME OF ESSENCE. Time is of essence in connection with
the performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and date first above written.
COOL ENTERTAINMENT, INC.
(a Colorado Corporation)
By:
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Xxxxxxx X.X. Xxx
"Company"
XXXXXXX KAR MAN XXX
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