EXHIBIT 10.23(b)
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (the "Agreement") is made and
entered as of this nineteenth day of December, 1999 by and between ImaginOn,
Inc., a corporation organized under the laws of Delaware, USA (the "Company"),
and the "Investors" named in that certin Purchase Agreement of even date
herewith by and between the Company and the Investors (the "Purchase
Agreement").
The parties hereby agree as follows:
1. Certain Definitions
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As used in this Agreement, the following terms shall have the
following meanings:
"Additional Registrable Securities" shall mean the shares of
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Common Stock, if any, issued to the Investors pursuant to Section 7.1 of the
Purchase Agreement.
"Common Stock" shall mean the Company's shares of Common Stock,
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par value $0.01 per share.
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"Investors" shall mean the purchasers identified int he Purchase
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Agreement and any affiliate of any Investor who is a subsequent holder of any
Common Stock, Warrant or Registrable Securities.
"Prospectus" shall mean the prospectus included in any
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Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities and Additional 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" refer to a
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registration made by preparing and filing a registration statement or similar
document in compliance with the 1933 Act (as defined below), and the declaration
or ordering of effectiveness of such registration statement or document.
"Registrable Securities" shall mean the shares of Common Stock
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issued and issuable to the Investors pursuant to the Purchase Agreement (other
than additional shares of Common Stock issuable pursuant to Section 7.1 of the
Purchase Agreement) and issuable upon the exercise of the Warrants, and any
securities issued with respect to, or in exchange for, such securities.
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"Registration Statement" shall mean any registration statement of
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the Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities or Additional Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
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"1933 Act" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations promulgated thereunder.
"Warrants" mean the warrants to purchase shares of Common Stock
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issued to the Investors pursuant to the Purchase Agreement.
Other capitalized terms used herein but not defined herein shall
have the meaning provided therefor in the Purchase Agreement.
2. Registration.
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(a) Registration Statement. Promptly following the closing of
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the transactions contemplated by the Purchase Agreement (the "Closing Date")
(but no later than 45 days after the Closing Date), the Company shall prepare
and file with the SEC one Registration Statement on Form S-1 covering the resale
of the Registrable Securities. Such Registration Statement shall cover, to the
extent allowable under the 1933 Act and the Rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. No securities shall be included in the
Registration Statement without the consent of the Investors other than the
Registrable Securities. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to (and subject to the
approval of) the Investors and their counsel prior to its filing or other
submission which approval shall not be unreasonably withheld or delayed.
(b) Expenses. The Company will pay all expenses associated with
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the registration and in addition shall pay the reasonable fees of counsel to the
Investors relating thereto in an amount not to exceed $5,000, excluding
discounts, commissions, fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals.
(c) Effectiveness.
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(i) The Company shall use its best efforts to have the
Registration Statement declared effective as soon as practicable. If (A) the
Registration Statement is not declared effective by the SEC within 90 days
following the Closing Date (or 120 days following the Closing Date in the case
of a registration statement which is subject to a full
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SEC review) (the "Registration Date"), or (B) after the Registration Statement
has been declared effective by the SEC, sales cannot be made pursuant to the
Registration Statement for any reason but except as excused pursuant to
subparagraph (ii) below, then the Company will make payments to each Investor,
as damages and not as a penalty, for any 30 day period or portion thereof
following the Registration Date during which any of the events described in (A)
or (B) above occurs and is continuing (the "Blackout Period") in an amount equal
to 2% of the aggregate Purchase Price paid by such Investor to the Company on
the Closing Date. The amounts payable as damages pursuant to this paragraph
shall be payable in lawful money of the United States and shall be paid on
demand from time to time following the commencement of the Blackout Period until
the termination of the Blackout Period. The same remedy shall be available in
the case of any suspension from trading or delisting from the Nasdaq Stock
Market. The remedies set forth in this section are not intended to be exclusive,
and shall be in addition to any other remedies available at law or equity.
Amounts payable as damages hereunder shall cease when such Investor no longer
holds Warrants or Registrable Securities, or Additional Registrable Securities,
as applicable.
(ii) The Company may terminate or suspend effectiveness of
any registration contemplated by this Section one time for a period of not more
than twenty (20) days if the Company shall deliver to the Investors 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 (A) be
seriously detrimental to the business of the Company for such registration to be
effected or remain effective at such time, (B) interfere with any proposed or
pending material corporate transaction involving the Company or any of its
subsidiaries, or (C) result in any premature disclosure thereof. In such a case,
the Company shall not disclose to the Investors any facts or circumstances
constituting material non-public information, without the prior written consent
of Investors. The duration of the MFN Period provided for in the Purchase
Agreement will be extended by the number of days of any termination or
suspension of the effectiveness of any registration contemplated by this
Section.
(d) Underwritten Offering. If any offering pursuant to a Registration
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Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably
satisfactory to the Company.
(e) Promptly following the issuance of any Additional Registrable
Securities, the Company shall file a Registration Statement, which may serve as
a post-effective amendment to any other registrations statement, and use its
best efforts to have such Registration Statement covering the Additional
Registrable Securities declared effective as soon as possible. All time
periods, provisions and remedies covering the registration of Registrable
Securities shall apply, mutatis mutandis, to the registration of the Additional
Registrable Securities.
(f) Upon becoming eligible to file registration statements on Form S-
3 for secondary offerings, the Company shall file with the Commission such
amendments to the Registration Statement and the prospectus used in connection
therewith as may be necessary to convert the Registration Statement from a
registration statement on Form S-1 to a registration statement on Form S-3.
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3. Company Obligations. The Company will use its best efforts to
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effect the registration of the Registrable Securities and Additional Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company
will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period that will
terminate upon the earlier of the date on which all Registrable Securities or
Additional Registrable Securities, as the case may be, covered by such
Registration Statement, as amended from time to time, have been sold or until
such time as they become eligible for distribution pursuant to Rule 144(k), or
any successor provision thereof, under the 1933 Act (the "Registration Period");
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement and the Prospectus as may be
necessary to keep the Registration Statement effective for the period specified
in Section 3(a) and to comply with the provisions of the 1933 Act and the 1934
Act with respect to the distribution of all Registrable Securities and
Additional Registrable Securities; provided that, at a time reasonably prior to
the filing of a Registration Statement or Prospectus, or any amendments or
supplements thereto, the Company will furnish to the Investors copies of all
documents proposed to be filed, which documents will be subject to the comments
of the Investors;
(c) permit a single firm of counsel designated by the Investors
to review the Registration Statement and all amendments and supplements thereto
no fewer than ten (10) days prior to their filing with the SEC, and not file any
document in a form to which such counsel reasonably objects;
(d) furnish to the Investors and their legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of copies of a
Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities and
Additional Registrable Securities owned by such Investor;
(e) if the Investors select underwriters for the offering, the
Company shall enter into and perform its reasonable obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering;
(f) at the request of the Investors, the Company shall furnish,
on the date that Registrable Securities or Additional Registrable Securities, as
applicable, are delivered to an underwriter, if any, for sale in connection with
the Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company for purposes of such Registration
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Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the underwriter and the Investors and
(ii) a letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters and the Investors;
(g) make reasonable effort to prevent the issuance of any stop
order or other suspension of effectiveness and, if such order is issued, obtain
the withdrawal of any such order at the earliest possible moment;
(h) furnish to each Investor at least five copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules by courier pursuant to the notice
requirements of Section 11.4 of the Purchase Agreement;
(i) prior to any public offering of Registrable Securities or
Additional Registrable Securities, use its best efforts to register or qualify
or cooperate with the Investors and their counsel in connection with the
registration or qualification of such Registrable Securities or Additional
Registrable Securities, as applicable, for offer and sale under the securities
or blue sky laws of all U.S. jurisdictions and do any and all other reasonable
acts or things necessary or advisable to enable the distribution in such
jurisdictions of the Registrable Securities or Additional Registrable Securities
covered by the Registration Statement, provided the Company shall not be
required to provide a general consent to the service of process in any
jurisdiction in which its business or operations does not otherwise require such
consent;
(j) cause all Registrable Securities or Additional Registrable
Securities covered by the Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(k) immediately notify the Investors, at any time when a
Prospectus relating to the Registrable Securities or Additional Registrable
Securities is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such holder,
promptly prepare and furnish to such holder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities or
Additional Registrable Securities, as applicable, such Prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; and
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such
other actions as may be
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reasonably necessary to facilitate the registration of the Registrable
Securities and Additional Registrable Securities hereunder.
4. Obligations of the Investors.
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(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities or Additional Registrable Securities, if applicable,
that each Investor shall furnish in writing to the Company such information
regarding itself, the Registrable Securities or Additional Registrable
Securities, as applicable, held by it and the intended method of disposition of
the Registrable Securities or Additional Registrable Securities, as applicable,
held by it as shall be reasonably required to effect the registration of such
Registrable Securities or Additional Registrable Securities, as applicable, and
shall execute such documents in connection with such registration as the Company
may reasonably request. At least ten (10) business days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor if such
Investor elects to have any of the Registrable Securities or Additional
Registrable Securities included in the Registration Statement.
(b) Each Investor, by its acceptance of the Registrable
Securities and Additional Registrable Securities, if any, agrees to cooperate
with the Company as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities or Additional Registrable Securities, as applicable,
from the Registration Statement.
(c) If the Investors determine to engage the services of an
underwriter, the Investors agrees to enter into and perform its obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the dispositions of the
Registrable Securities or Additional Registrable Securities, as applicable.
(d) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event rendering the Registration Statement
no longer effective, such Investor will immediately discontinue disposition of
Registrable Securities or Additional Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities or Additional
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus filed with the SEC and declared effective
and, if so directed by the Company, such Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession of the
Prospectus covering the Registrable Securities or Additional Registrable
Securities, as applicable, current at the time of receipt of such notice.
(e) No Investor may participate in any underwritten registration
hereunder unless it (i) agrees to sell the Registrable Securities or Additional
Registrable Securities, as
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applicable, on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to the terms of this Agreement.
5. Indemnification.
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(a) Indemnification by Company. The Company agrees to indemnify
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and hold harmless, to the fullest extent permitted by law the Investors, each of
their officers, directors, partners and employees and each person who controls
the Investors (within the meaning of the 0000 Xxx) against all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses imposed on such person caused by (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or any preliminary prospectus or any amendment or
supplement thereto or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are based upon any
information furnished in writing to the Company by such Investors, expressly for
use therein, or (ii) any violation by the Company of any federal, state or
common law, rule or regulation applicable to the Company in connection with any
Registration Statement, Prospectus or any preliminary prospectus, or any
amendment or supplement thereto, and shall reimburse in accordance with
subparagraph (c) below, each of the foregoing persons for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claims. The foregoing is subject to the condition that, insofar as the
foregoing indemnities relate to any untrue statement, alleged untrue statement,
omission or alleged omission made in any preliminary prospectus or Prospectus
that is eliminated or remedied in any Prospectus or amendment or supplement
thereto, the above indemnity obligations of the Company shall not inure to the
benefit of any indemnified party if a copy of such corrected Prospectus or
amendment or supplement thereto had been made available to such indemnified
party and was not sent or given by such indemnified party at or prior to the
time such action was required of such indemnified party by the 1933 Act and if
delivery of such Prospectus or amendment or supplement thereto would have
eliminated (or been a sufficient defense to) any liability of such indemnified
party with respect to such statement or omission. Indemnity under this Section
5(a) shall remain in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the permitted
transfer of the Registrable Securities and Additional Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. In
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connection with any registration pursuant to the terms of this Agreement, each
Investor will furnish to the Company in writing such information as the Company
reasonably requests concerning the holders of Registrable Securities and
Additional Registrable Securities or the proposed manner of distribution for use
in connection with any Registration Statement or Prospectus and agrees,
severally but not jointly, to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors, officers, employees, stockholders
and each person who controls the Company (within the meaning of the 0000 Xxx)
against any losses, claims, damages, liabilities
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and expense (including reasonable attorney's fees) resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary prospectus or
amendment or supplement thereto 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 holder of
Registrable Securities or Additional Registrable Securities to the Company
specifically for inclusion in such Registration Statement or Prospectus or
amendment or supplement thereto. In no event shall the liability of a holder of
Registrable Securities or Additional Registrable Securities be greater in amount
than the dollar amount of the proceeds received by such holder upon the sale of
the Registrable Securities or Additional Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled
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to indemnification hereunder shall (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 that any person
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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 person unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person or (c) in the reasonable
judgment of any such person, based upon written advice of its counsel, a
conflict of interest exists 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); and
provided, further, that the failure of any indemnified party to give notice as
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provided herein shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice shall
materially adversely affect the indemnifying party in the defense of any such
claim or litigation. It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable for fees or
expenses of more than one separate firm of attorneys at any time for all such
indemnified parties. No indemnifying party will, except with the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that 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.
(d) Contribution. If for any reason the indemnification
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provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as expressly
specified therein, 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 indemnified party
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and the indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from
any person not guilty of such fraudulent misrepresentation. In no event shall
the contribution obligation of a holder of Registrable Securities or Additional
Registrable Securities be greater in amount than the dollar amount of the
proceeds received by it upon the sale of the Registrable Securities or
Additional Registrable Securities giving rise to such contribution obligation.
6. Miscellaneous.
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(a) Amendments and Waivers. This Agreement may be amended only
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by a writing signed by the parties hereto. The Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of each Investor.
(b) Notices. All notices and other communications provided for
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or permitted hereunder shall be made as set forth in Section 11.4 of the
Purchase Agreement.
(c) Assignments and Transfers by Investors. This Agreement and
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all the rights and obligations of the Investors hereunder may not be assigned or
transferred to any transferee or assignee except as set forth herein. The
Investors may make such assignment or transfer to any transferee or assignee of
any Common Stock, Warrant or Registrable Securities, or Additional Registrable
Securities, provided, that (i) such transfer is made expressly subject to this
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Agreement and the transferee agrees in writing to be bound by the terms and
conditions hereof, and (ii) the Company is provided with written notice of such
assignment.
(d) Assignments and Transfers by the Company. This Agreement may
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not be assigned by the Company without the prior written consent of each
Investor, except that without the prior written consent of the Investors, but
after notice duly given, the Company shall assign its rights and delegate its
duties hereunder to any successor-in-interest corporation, and such
successor-in-interest shall assume such rights and duties, in the event of a
merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets.
(e) Benefits of the Agreement. The terms and conditions of this
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Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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(g) Titles and Subtitles. The titles and subtitles used in this
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Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Severability. If one or more provisions of this Agreement
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are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms to the fullest extent permitted by law.
(i) Further Assurances. The parties shall execute and deliver
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all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties
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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. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
(k) Applicable Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
The Company: IMAGINON, INC.
By:_________________________
Name:
Title:
The Investors: [___________________________]
By:_________________________
Name:
Title:
By:_________________________
Name:
Title:
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