REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of March 15, 2000 is made and entered into between HMG WORLDWIDE CORPORATION,
a Delaware corporation ("the Company"), and Societe Generale, a bank organized
under the laws of France (the "Purchaser").
WHEREAS, the Company has issued and sold $1,500,000 aggregate
principal amount of its 7% Convertible Notes Due March 15, 2003 (the "Notes"),
which Notes, together with, in certain circumstances, accrued interest thereon,
are convertible into such number of shares of Common Stock, $.01 par value per
share, of the Company as are specified in the Notes (the "Convertible Shares");
WHEREAS, the Company and the Purchaser have entered into that
certain Securities Purchase Agreement (the "Subscription Agreement"), dated as
of the date hereof, pursuant to which the Company has issued to the Purchaser
U.S.$1,500,000 aggregate principal amount of the Notes;
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Purchaser's agreement to enter into the Subscription
Agreement, the Company has agreed to provide the Purchaser with certain
registration rights with respect to the Conversion Shares (as defined below);
NOW, THEREFORE, in consideration of the premises,
representations, warranties, covenants and agreements contained herein and in
the Subscription Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms defined in the Subscription
Agreement shall have the same meanings herein as are ascribed to them therein.
In addition, the following terms shall have the meanings ascribed to them below:
"Purchaser" shall mean the Purchaser referenced in the
preamble, and, unless the context otherwise requires, shall include the
Purchaser for so long as it owns any Registrable Securities and any assignee or
transferee of the Notes or Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement.
"Registrable Securities" means all of the Convertible Shares
and any other securities issued or issuable upon conversion of the Notes as
provided therein (together, the "Conversion Shares") until (i) a registration
statement under the Securities Act covering the offer and sale of such
Conversion Shares has been declared effective by the Commission and such
Conversion Shares have
been disposed of pursuant to such effective registration statement, (ii) such
Conversion Shares are sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) such Conversion Shares have been
otherwise transferred and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive legend or
(iv) such time as, in the opinion of counsel to the Company, which counsel shall
be reasonably acceptable to the Purchaser, such Conversion Shares may be sold
without any time, volume or manner limitation pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
"Registration Statement" means the registration statement
filed by the Company pursuant to Section 2.1(a) and any additional Registration
Statement filed by the Company pursuant to Section 2.1(b).
"Underwriter" means a securities dealer that purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Registration Requirements. The Company shall use its best
efforts to effect the registration of the Registrable Securities (including
without limitation the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as would permit or facilitate the sale or distribution
of all the Registrable Securities in the manner (including manner of sale) and
in all states reasonably requested by the Purchaser. Such best efforts by the
Company shall include the following:
(a) The Company will as expeditiously as possible, and in no
event later than May 15, 2000 (the "Filing Deadline"), prepare and file with the
Commission a registration statement (the "Registration Statement") on Form S-3
(if use of such form is then available to the Company pursuant to the rules of
the Commission and, if not, on such other form promulgated by the Commission for
which the Company then qualifies and that counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the provisions of this
Agreement and in accordance with the intended method of distribution of such
Registrable Securities), and use its commercially reasonable efforts to cause
such filed Registration Statement to become effective by the Effectiveness
Deadline. The Company's obligation hereunder may, at the Company's option, be
accomplished by including the Registrable Securities in a registration statement
pursuant to which the Company also registers other securities of the Company.
The "Effectiveness Deadline" shall mean one hundred and twenty (120) days from
the date hereof; provided that such date shall be extended for such reasonable
additional number of days (not to exceed ninety (90) days) that the Company (i)
delays the timely filing of a report filed under the Exchange Act containing
financial statements (or that the Company requires in order to restate its
financial statements included in a report filed under the Exchange Act) or (ii)
delays the filing or effectiveness of the Registration Statement in order to
amend the disclosure included in the Registration Statement, in each case solely
as a result of the Company or any subsidiary entering into a transaction (such
as a merger or
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acquisition or disposition of a business) which transaction is required to be
reflected in such financial statements or which otherwise is required to be
reflected in the Registration Statement (together "Delaying Events"). The
Company will as expeditiously as possible prepare and file with the Commission
such amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective, for a period of not less than: (i) in the case of a
non-underwritten offering of Registrable Securities, until there shall no longer
be any Registrable Securities or (ii) with respect to an underwritten offering
of Registrable Securities, ninety (90) days after the commencement of the
distribution of all Registrable Securities covered by such Registration
Statement (but not before the expiration of the period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable), and the
Company will comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
Purchaser set forth in such Registration Statement.
(b) The number of Registrable Securities covered by the
initial Registration Statement shall equal be a number of shares of Common Stock
of the Company equal to the Maximum Share Issuance (as defined in the Notes).
In the event that in the future Registrable Securities shall
consist of securities of the Company other than or in additional to the shares
of Common Stock referenced in the preceding paragraph, the Company shall as
expeditiously as possible (and in no event more than fifteen (15) days from the
date of the event that results in such change) file a post-effective amendment
to the Registration Statement (or if necessary file a new or additional
Registration Statement to reflect the registration of the offer and sale of such
additional or other securities and use its commercially reasonable efforts to
cause such post-effective amendment or new or additional Registration Statement
to become effective within ninety (90) days from the date of the event that
results in such change. In the event the filing of a new or additional
Registration Statement is required, references herein to the Registration
Statement shall also refer to such new or additional Registration Statement
(except that for purposes of Section 2.1(a) above, the Filing Deadline and
Effectiveness Deadline shall refer to the date of the expiration of the
respective fifteen (15) and ninety (90) day periods referenced above).
(c) The Company will, prior to filing the Registration
Statement or prospectus or any amendment or supplement thereto, furnish to the
Purchaser, and counsel to the Purchaser, and each Underwriter, if any, of the
Registrable Securities covered by such Registration Statement copies of such
Registration Statement and prospectus or any amendment or supplement thereto as
proposed to be filed, together with exhibits thereto, which documents will be
subject to review and approval by the foregoing (such approval not to be
unreasonably withheld or delayed), and thereafter furnish to the Purchaser, its
counsel and each Underwriter, if any, for their review and comment such number
of copies of such Registration Statement, each amendment and supplement thereto
(in each case including all exhibits thereto and documents incorporated by
reference therein), the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents or information
as the Purchaser, its counsel or each Underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities.
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(d) The Company will use its reasonable efforts to (i)
register or qualify such Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Purchaser may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such other
governmental agencies or authorities in the United States as may be necessary by
virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable the
Purchaser to consummate the disposition of the Registrable Securities; provided
that the Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent or subject itself to general service of process in any such
jurisdiction.
(e) The Company will promptly notify the Purchaser upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request for additional information by the
Commission or any other federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that (or the Company otherwise becomes aware of any
statement included in the Registration Statement, related prospectus or
documents that is untrue in any material respect or that requires the making of
any changes in the Registration Statement, related prospectus or documents so
that), in the case of the Registration Statement, it will not contain any 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, and
that in the case of the related prospectus, it will not contain any 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, in the light of the
circumstances under which they were made, not misleading; and (v) the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate (in which event the Company will promptly make
available to the Purchaser any such supplement or amendment to the Registration
Statement, and as applicable, related prospectus).
(f) The Company will enter into customary agreements
(including, if applicable, an underwriting agreement in customary form and that
is reasonably satisfactory to the Company) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities (the Purchaser may, at its option, require that any or
all of the representations, warranties and covenants of the Company to or for
the benefit of any applicable Underwriters also be made to and for the benefit
of the Purchaser).
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(g) The Company will make available to the Purchaser (and will
deliver to the Purchasers's counsel) and each Underwriter, if any, subject to
restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all correspondence between the Commission and
the Company, its counsel or auditors and will also make available for inspection
by the Purchaser, any Underwriter participating in any disposition pursuant to a
Registration Statement and any attorney, accountant or other professional
retained by the Purchaser or such Underwriter (collectively, the "Inspectors"),
all financial and other records, pertinent corporate documents and properties of
the Company (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
Company's officers and employees to supply all information reasonably requested
by any Inspectors in connection with such Registration Statement. Records that
the Company determines, in good faith, to be confidential and that it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary in the reasonable opinion of the
Inspectors to avoid or correct a misstatement or omission in the Registration
Statement or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests for information
or documents or a subpoena or other order from a court of competent jurisdiction
or other process; provided that prior to any disclosure or release pursuant to
clause (ii), the Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an appropriate
protective order or waive such Inspectors' obligation not to disclose such
Records; and, provided further, that if failing the entry of a protective order
or the waiver by the Company permitting the disclosure or release of such
Records, the Inspectors, upon advice of counsel, are compelled to disclose such
Records, the Inspectors may disclose that portion of the Records that counsel
has advised the Inspectors that the Inspectors are compelled to disclose. The
Company may require, as a condition to the disclosure to any Inspector of any
confidential information, that such Inspector execute and deliver to the Company
a written agreement, in form and substance reasonably satisfactory to the
Company, pursuant to which such Inspector agrees to the confidential treatment
of such information as contemplated above. The Purchaser agrees that information
obtained by it solely as a result of such inspections (not including any
information obtained from a third party who, insofar as is known to the
Purchaser after reasonable inquiry, is not prohibited from providing such
information by a contractual, legal or fiduciary obligation to the Company)
shall be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its Affiliates unless
and until such information is made generally available to the public. The
Purchaser further agrees that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to the Purchaser and to each
Underwriter, if any, a signed counterpart, addressed to the Purchaser and such
Underwriter, of (1) an opinion or opinions of counsel to the Company, and (2) a
comfort letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Purchaser or the managing Underwriter therefor reasonably requests. The Company
agrees that, (x) upon effectiveness of the Registration Statement and (y) if
requested by the Purchaser, upon the effectiveness of each amendment thereto
subsequent to the effectiveness of the Registration Statement whether by the
filing of a post-effective amendment thereto or the incorporation by
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reference of reports subsequently filed with the Commission, it will cause to be
delivered to the Purchaser (i) if applicable, a comfort letter in customary form
from its independent public accountants and (ii) if applicable, an opinion of,
counsel to the Company, covering customary matters, including the absence of any
untrue statement of a material fact or omission to state any material fact
required to be stated therein or necessary to make the statements contained in
the Registration Statement and in the case of the related prospectus (as so
amended), in the light of the circumstances in which they were made not
misleading.
(i) The Company will comply with all applicable rules and
regulations of the Commission, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act, and will make
available to its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company will appoint a transfer agent and registrar
for all Registrable Securities covered by the Registration Statement not later
than the effective date of the Registration Statement.
(k) The Company shall take all steps necessary to enable the
Holders to avail themselves of the prospectus delivery mechanism set forth in
Rule 153 (or successor thereto) under the Securities Act, if available.
(l) In connection with an underwritten offering, the Company
will cooperate, to the extent reasonably requested by the managing Underwriter
for the offering or the Purchaser, in customary efforts to sell the securities
under the offering, including, without limitation, participating in "road shows"
on a schedule as shall be reasonably satisfactory to, and not unduly burdensome
on, the Company; provided that the Company shall not be obligated to participate
in more than one such offering in any twelve (12)-month period and any such
participation by the Company shall be at the expense of the managing Underwriter
or the Purchaser unless the Company shall also be offering securities in such
underwritten offering.
The Company may require the Purchaser promptly to furnish in
writing to the Company such information regarding the intended methods of
distribution of the Registrable Securities as the Company may from time to time
reasonably request and such other information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the Commission or the NASD or any state
securities commission or similar authority. If the Purchaser fails to provide
such information requested in connection with such registration within ten (10)
business days after receiving such written request, then the Company may cease
pursuit of such registration until such information is provided.
The Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
2.1(e)(iv) hereof, the Purchaser will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Purchaser's receipt of the copies of the
supplemented
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or amended prospectus contemplated by Section 2.1(e) hereof, and, if so directed
by the Company, the Purchaser will deliver to the Company all copies, other than
permanent file copies then in the Purchaser's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice.
SECTION 2.2. Registration Expenses. In connection with registration
hereunder, the Company shall pay the following registration expenses incurred in
connection therewith (the "Registration Expenses"): (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a single firm of counsel in
connection with blue sky qualifications of the Registrable Securities), (iii)
printing expenses, (iv) the Company's internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing or quotation of the Registrable Securities, (vi) fees and
disbursements of counsel for the Company and customary fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any (A) opinion letters or costs associated with delivery by counsel
to the Company of an opinion letter or opinion letters or (B) comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters, in each case required by or requested
pursuant to Section 2.1(h) hereof), (vii) the fees and expenses of any special
experts retained by the Company in connection with such registration and (viii)
reasonable fees and expenses of a single firm of counsel of the Purchaser with
respect to such registration (including without limitation its review of the
Registration Statement and due diligence with respect thereto and related
matters through the period that registration is required hereunder). The Company
shall have no obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Registrable Securities, or the cost of any special
audit required by the Purchaser, such costs to be borne by the Purchaser.
ARTICLE III
PAYMENTS BY THE COMPANY
SECTION 3.1 Payments by the Company. In the event the Registration
Statement is not filed by the Filing Deadline or declared effective by the
Effectiveness Deadline (or after the Registration Statement has been declared
effective by the Commission, sales of all the Registrable Securities (including
any Registrable Securities required to be registered pursuant to Section 2.1(b)
hereof) cannot be made pursuant to the Registration Statement (by reason of a
stop order, the Company's failure to update such Registration Statement, the
need to file and have declared effective a post-effective amendment or any other
reason outside the control of the Purchaser), then the Company will make
payments to the Purchaser in such amounts and at such times as shall be
determined pursuant to this Section 3.1 as partial relief for the damages to the
Purchaser by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity), provided that in the event of a
Delaying Event requiring the filing of a post-effective amendment to the
Registration Statement, no payment shall be required to the extent sales of
Registrable Securities cannot be made pursuant to the Registration Statement for
periods aggregating no more than ninety (90) days in any 365-day period. The
Company shall pay to the Purchaser an amount equal to (i) (A) .01 times (B) the
aggregate principal amount of the Notes held by the Purchaser (including,
without limitation, Notes
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that have been converted into Registrable Securities then held by such Purchaser
but excluding any Notes as to which the Notes received upon conversion have been
sold) times (ii) the sum of: (A) the number of months (prorated per day for
partial months) following the Filing Deadline that the Registration Statement is
not filed pursuant to Section 2.1(a) or following the Effectiveness Deadline
that the Registration Statement is not declared effective by the Commission, as
the case may be, plus (B) the number of months (prorated per day for partial
months) following the Effectiveness Deadline that sales cannot be made pursuant
to the Registration Statement after the Registration Statement has been declared
effective. Such amounts shall be paid in cash or, at the Purchaser's option, may
be received in a number of shares of Common Stock as determined based upon the
applicable Conversion Price (as defined in the Notes) on each date that such
payment is due. Any shares of Common Stock so issued shall constitute
Registrable Securities. If the Purchaser desires to receive the amounts due
hereunder in shares of Common Stock, it shall so notify the Company in writing
at least two (2) business days prior to the date on which such amounts are
payable and such shares of Common Stock shall be delivered on the last day upon
which the cash amount would otherwise be due in accordance with the following
sentence. Payments of cash pursuant hereto shall be made within three (3)
business days after the end of the period that gives rise to such obligation,
provided that, if any such period extends for more than thirty (30) days,
payments shall be made for each such thirty (30) day period within three (3)
business days after the end of such thirty (30) day period.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Purchaser, its partners, Affiliates, officers,
directors, employees and duly authorized agents, and each Person or entity, if
any, who controls the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with the partners,
Affiliates, officers, directors, employees and duly authorized agents of such
controlling Person or entity (collectively, the "Controlling Persons"), from and
against any loss, claim, damage, liability, reasonable attorneys' fees, costs or
expenses and costs and expenses of investigating and defending any such claim
(collectively, "Damages"), joint or several, and any action in respect thereof
to which the Purchaser, its partners, Affiliates, officers, directors, employees
and duly authorized agents, and any such Controlling Person may become subject
under the Securities Act or otherwise, insofar as such Damages (or proceedings
in respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or prospectus relating to the Registrable Securities or any
preliminary prospectus, or arises out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus or
preliminary prospectus, in the light of the circumstances in which they were
made) not misleading, except insofar as the same are based upon information
furnished in writing to the Company by the Purchaser or an Underwriter expressly
for use therein, and shall reimburse the Purchaser, its partners, Affiliates,
officers, directors, employees and duly authorized agents, and each such
Controlling Person for any legal and other expenses reasonably incurred by the
Purchaser, its partners, Affiliates, officers, directors, employees and duly
authorized agents, or any such Controlling Person in investigating or defending
or preparing to defend against any such Damages or proceedings as such expenses
are
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incurred; provided, however, that the Company shall not be liable to the
Purchaser to the extent that any such Damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Purchaser failed to send or deliver a copy of the final prospectus with or prior
to the delivery of written confirmation of the sale by the Purchaser to the
Person asserting the claim from which such Damages arise, and (ii) the final
prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission; provided further, however, that
the Company shall not be liable in any such case to the extent that any such
Damages arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission in any prospectus if (x) such untrue
statement or omission or alleged omission is corrected in an amendment or
supplement to such prospectus, and (y) having previously been furnished by or on
behalf of the Company with copies of such prospectus as so amended or
supplemented, the Purchaser thereafter fails to deliver such prospectus as so
amended or supplemented prior to or concurrently with the sale of a Registrable
Security to the Person asserting the claim from which such Damages arise. The
Company also agrees to indemnify any Underwriters of the Registrable Securities,
their officers and directors and each Person or entity who controls such
Underwriters on customary terms.
SECTION 4.2. Indemnification by the Purchaser. The Purchaser agrees to
indemnify and hold harmless the Company, its partners, Affiliates, officers,
directors, employees and duly authorized agents and each Person or entity, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
Person, to the same extent as the foregoing indemnity from the Company to the
Purchaser, but only with reference to information related to the Purchaser or
its plan of distribution, furnished in writing by the Purchaser or on the
Purchaser's behalf expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its partners, Affiliates, officers, directors, employees
or duly authorized agents or any such controlling Person or its partners,
Affiliates, officers, directors, employees or duly authorized agents, in respect
of which indemnity may be sought against the Purchaser, the Purchaser shall have
the rights and duties given to the Company, and the Company or its partners,
Affiliates, officers, directors, employees or duly authorized agents, or such
controlling Person, or its partners, Affiliates, officers, directors, employees
or duly authorized agents, shall have the comparable rights and duties given to
the Purchasers by Section 4.1. The Purchaser also agrees to indemnify and hold
harmless any Underwriters of the Registrable Securities with reference to the
same information as to which it agrees to indemnify the Company referenced
above, their officers and directors and each Person who controls such
Underwriters on customary terms. The Company shall be entitled to receive
indemnities on customary terms from Underwriters, selling brokers, dealer
managers and similar securities industry professionals 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 the Registration Statement.
SECTION 4.3. Conduct of Indemnification Proceedings. Promptly after
receipt by any person or entity in respect of which indemnity may be sought
pursuant to Section 4.1 or 4.2 (an "Indemnified Party") of notice of any claim
or the commencement of any action, the Indemnified Party shall, if a claim in
respect thereof is to be made against the Person against whom such
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indemnity may be sought (an "Indemnifying Party"), notify the Indemnifying Party
in writing of the claim or the commencement of such action; in the event an
Indemnified Party shall fail to give such notice as provided in this Section 4.3
and the Indemnifying Party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, the indemnification provided for in Section
4.1 or 4.2 shall be reduced to the extent of any actual prejudice resulting from
such failure to so notify the Indemnifying Party; provided, that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2. If any
such claim or action shall be brought against an Indemnified Party, the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified Indemnifying Party, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be
sought by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Company and such Indemnified Party, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
SECTION 4.4. Contribution. If the indemnification provided for in this
Article IV is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages (i) as between the Company and the
Purchaser on the one hand and the Underwriters on the other, in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Purchaser, on the one hand, and the Underwriters, on the other hand, from
the offering of the Registrable Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Company and the
Purchaser, on the one hand, and of the Underwriters, on the other hand, in
connection with the statements or omissions
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which resulted in such Damages, as well as any other relevant equitable
considerations, and (ii) as between the Company, on the one hand, and the
Purchaser, on the other hand, in such proportion as is appropriate to reflect
the relative fault of the Company and of the Purchaser in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Purchaser, on the one
hand, and the Underwriters, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Purchaser bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the
Purchaser, on the one hand, and of the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether the untrue 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 and the Purchaser
or by the Underwriters. The relative fault of the Company, on the one hand, and
of the Purchaser, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 4.4 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and the Purchaser shall in no event be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities of the Purchaser were offered to the public (less
underwriting discounts and commissions) less the amount paid by the Purchaser to
the Company for the Notes exceeds the amount of any damages that the Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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 misrepresentation.
ARTICLE V
MISCELLANEOUS
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SECTION 5.1. Term. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate on such date as there shall be
no Registrable Securities; provided, however, that the provisions of Article IV
hereof shall survive any termination of this Agreement.
SECTION 5.2. Rule 144. The Company covenants that it will file all
reports required to be filed by it under the Securities Act and the Exchange Act
and that it will take such further action as registered holders of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable the Purchaser to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144, as such Rule may be amended from time to time, or (b) any similar rule
or regulation hereafter adopted by the Commission. If at any time the Company is
not required to file such reports, it will, upon the request of any registered
holder of Registrable Securities, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144, within the limitations
of the exemption provided thereby. Upon the request of the Purchaser, the
Company will deliver to the Purchaser a written statement as to whether it has
complied with such requirements.
SECTION 5.3. Restrictions on Sale by the Company and Others. If, and to
the extent, reasonably requested by the managing Underwriter or Underwriters in
the case of an underwritten public offering, that includes Registrable
Securities as contemplated by Section 2.1, the Company agrees and it shall use
its best efforts to cause its Affiliates to agree not to effect any public sale
or distribution of any securities similar to those being registered in
accordance with Section 2.1 hereof, or any securities convertible into or
exchangeable or exercisable for such securities, during the thirty (30) days
prior to, and during the period beginning on the effective date of the
Registration Statement (except as part of the Registration Statement) until all
of the Registrable Securities offered thereunder have been sold pursuant to such
underwritten public offering, provided, however, that such period shall not
exceed ninety (90) days.
SECTION 5.4. Amendment and Modification. Any provision of this
Agreement may be waived, provided that such waiver is set forth in a writing
executed by the party against whom the enforcement of such waiver is sought. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of the registered holders of a majority of the then outstanding
Notes (for the purposes of determining whether the consent of such holders has
been obtained, the registered holders of issued and outstanding Registrable
Securities shall be deemed to hold the Notes that were converted into such
Registrable Securities. Notwithstanding the foregoing, the waiver of any
provision hereof with respect to a matter that relates exclusively to the rights
of registered holders of Registrable Securities whose securities are being
resold pursuant to the Registration Statement and does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by registered holders of a majority of the Registrable Securities being so
resold; provided that the provisions of this sentence may not be amended,
modified or supplemented except in accordance with the provisions of the
immediately preceding sentence. No course of dealing between or among any
Persons having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
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SECTION 5.5. Successors and Assigns; Entire Agreement. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that the benefits and rights contemplated hereunder to be provided to
any holder of Notes or Registrable Securities shall be limited to the registered
holder thereof. The Purchaser may assign its rights under this Agreement to any
subsequent holder of Notes or Conversion Shares, provided that the Company shall
have the right to require any such subsequent holder of Notes or Registrable
Securities to execute a counterpart of this Agreement as a condition to such
holder's claim to any rights hereunder. This Agreement, together with the
Subscription Agreement and the Notes, sets forth the entire agreement and
understanding (written or oral) between the parties as to the subject matter
hereof and thereof and merges and supersedes all prior discussions, agreements
and understandings of any and every nature among them with respect to such
subject matter.
SECTION 5.6. Separability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
SECTION 5.7. Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
that are given with respect to this Agreement shall be in writing and shall be
personally served or deposited in the mail, registered or certified, return
receipt requested, postage prepaid, or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or to such other address as such
party shall have specified most recently by written notice: (i) if to the
Company, to: HMG Worldwide Corporation, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000, Attention: Chief Financial Officer, Facsimile No.: (000) 000-0000;
with copies (which shall not constitute notice) to: Xxxxxx Xxxxxx Xxxxxx & Xxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxxx, Esq.,
Facsimile No.: (000)000-0000; and (ii) if to the Purchaser: Societe Generale,
c/o XX Xxxxx Securities Corporation, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxxxx Xxxxxx, Facsimile No.: (000) 000-0000, with
copies (which shall not constitute notice) to: Xxxxx, Day, Xxxxxx & Xxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: J. Xxxx Xxxx, Esq.,
Facsimile No.: (000) 000-0000. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by telegram, telex
or facsimile. Notice otherwise sent as provided herein shall be deemed given on
the third business day following the date mailed or on the second business day
following delivery of such notice by a reputable air courier service.
SECTION 5.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
SECTION 5.9. Headings. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
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SECTION 5.10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original instrument and all
of which together shall constitute one and the same instrument.
SECTION 5.11. Further Assurances. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
SECTION 5.12. Remedies. In the event of a breach or a threatened breach
by any party to this Agreement of its obligations under this Agreement, any
party injured or to be injured by such breach will be entitled to specific
performance of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in this Agreement and
granted by law. The parties agree that the provisions of this Agreement shall be
specifically enforceable, it being agreed by the parties that the remedy at law,
including monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
HMG WORLDWIDE CORPORATION
By:
---------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Chief Operating Officer
and Chief Financial Officer
SOCIETE GENERALE
By:
---------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Authorized Signatory
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