REGISTRATION RIGHTS AGREEMENT
Exhibit 4.5
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into as of the
6th day of March, 2006 by and among Sun New Media, Inc., a corporation organized and
existing under the laws of the State of Minnesota (“Sun New Media” or the
“Company”), and Xxxxxx Partners L.P., a Delaware limited partnership (hereinafter referred
to as the “Investor”). Unless defined otherwise, capitalized terms herein shall have the
identical meaning as in the Note Purchase Agreement.
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Stock Purchase Agreement, Note Purchase Agreement (the “Note
Purchase Agreement”) and Warrant Agreements (the “Warrant Agreements”), of even date
herewith, by and among the Company and the Investor, as part of the consideration, Investor shall
receive Common Stock, Note and Warrants, which upon conversion and exercise, in accordance with the
terms of the Stock Purchase Agreement, Note Purchase Agreement and Warrant Agreement, entitle the
Investor to receive Shares of the Company; and
WHEREAS, the ability of the Investors to sell their Shares of Common Stock is subject to
certain restrictions under the 1933 Act; and
WHEREAS, as a condition to the Stock Purchase Agreement and Note Purchase Agreement, the
Company has agreed to provide the Investor with a mechanism that will permit such Investor, subject
to a market stand-off agreement, to sell its Shares of Common Stock in the future.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements,
and subject to the terms and conditions herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
INCORPORATION BY REFERENCE, SUPERSEDER
1.1 Incorporation by Reference. The foregoing recitals and the Exhibits attached hereto
and referred to herein, are hereby acknowledged to be true and accurate, and are incorporated
herein by this reference. Capitalized terms as used herein shall have the same meaning assigned in
the Note Purchase Agreement unless otherwise defined herein.
1.2 Superseder. This Agreement, to the extent that it is inconsistent with any other
instrument or understanding among the parties governing the affairs of the Company, shall supersede
such instrument or understanding to the fullest extent permitted by law. A copy of this Agreement
shall be filed at the Company’s principal office.
ARTICLE II
DEMAND REGISTRATION RIGHTS
2.1 Registrable Securities. For the purposes of this Agreement, “Registrable
Securities” or “Shares” means and includes the shares of the Company underlying the Note and
Warrants issued pursuant to the Note Purchase Agreement and Warrant Agreements. As to any
particular Registrable Securities, such securities will cease to be Registrable Securities when (a)
they have been effectively registered under the 1933 Act and disposed of in accordance with the
registration statement covering them, (b) they are or may be freely traded without registration
pursuant to Rule 144 under the 1933 Act (or any similar provisions that are then in effect), or (c)
they have been otherwise transferred and new certificates for them not bearing a restrictive legend
have been issued by the Company and the Company shall not have “stop transfer” instructions against
them.
2.2 Registration of Registrable Securities. The Company shall prepare and file within
ninety (90) days following the date hereof (the “Filing Date”) a registration statement
(the “Registration Statement”) covering the resale of all of the shares of the Registrable
Securities or such lesser number of Shares as agreed between the company and the Investor. The
Company shall use its best efforts to cause the Registration Statement to be declared effective by
the SEC on the earlier of (i) 180 days following the Closing Date with respect to the Registration
Statement, (ii) ten (10) days following the receipt of a “No Review” or similar letter from the SEC
or (iii) the first business day practicable following the day the SEC determines the Registration
Statement eligible to be declared effective (the “Required Effectiveness Date”). Nothing
contained herein shall be deemed to limit the number of Registrable Securities to be registered by
the Company hereunder. As a result, should the Registration Statement not relate to the maximum
number of Registrable Securities acquired by (or potentially acquirable by) the holders of the
Shares of the Company issued to the Investor pursuant to the Note Purchase Agreement, the Company
shall be required to promptly file a separate registration statement (utilizing Rule 462
promulgated under the 1933 Act, where applicable) relating to such Registrable Securities which
then remain unregistered. The provisions of this Agreement shall relate to any such separate
registration statement as if it were an amendment to the Registration Statement.
2.3 Registration Statement Form. Registrations under Section 2.2 shall be on the
appropriate registration form of the SEC as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition specified in the
Registration Statement; provided, however, such intended method of disposition shall not include an
underwritten offering of the Registrable Securities.
2.4 Expenses. The Company will pay all Registration expenses in connection with any
registration required by under Sections 2.2 herein.
2.5 Effective Registration Statement. A registration requested pursuant to Sections 2.2
shall not be deemed to have been effected (i) unless a registration statement with respect thereto
has become effective within the time period specified herein, provided that a registration which
does
not become effective after the Company filed a registration statement with respect thereto by
reason of the refusal to proceed of any holder of Registrable Securities (other than a refusal to
proceed based upon the advice of counsel in the form of a letter signed by such counsel and
provided to the Company relating to a disclosure matter unrelated to such holder) shall be deemed
to have been effected by the Company unless the holders of the Registrable Securities shall have
elected to pay all Registration Expenses in connection with such registration, (ii) if, after it
has become effective, such registration becomes subject to any stop order, injunction or other
order or extraordinary requirement of the SEC or other governmental agency or court for any reason
or (iii) if, after it has become effective, such registration ceases to be effective for more than
the allowable Black-Out Periods (as defined herein).
2.6 Plan Of Distribution. The Company hereby agrees that the Registration Statement shall
include a plan of distribution section reasonably acceptable to the Investor; provided, however,
such plan of distribution section shall be modified by the Company so as to not provide for the
disposition of the Registrable Securities on the basis of an underwritten offering.
2.7 Liquidated Damages. If, after six (6) months from the date hereof, in the event the
Company does not register Registrable Securities pursuant to the requirements of Section 2.2
herein, or if the Registration Statement filed pursuant to Section 2.2 herein is not declared
effective, or if the Registrable Securities are registered pursuant to an effective Registration
Statement and such Registration Statement or other Registration Statement(s) demanded by Investor
including the Registrable Securities is not effective in the period from six months from the date
hereof through two years following the date hereof, the Company shall, for each such month, as
liquidated damages and not as a penalty, reduce the warrant exercise prices by 5% a month, such
adjustment shall be made no later than the tenth business day of the calendar month next succeeding
the month in which such day occurs. In addition, if the Company has not filed a registration
statement within the ninety day period after closing as specified in Section 2.2, the Company
shall, for each such month after ninety days from closing and until the filing of a registration
statement, as liquidated damages and not as a penalty, reduce the warrant exercise prices by 5% a
month, such adjustment shall be made no later than the tenth business day of the calendar month
next succeeding the month in which such day occurs.
The parties agree that the only damages payable for a violation of the terms of this Agreement with
respect to which liquidated damages are expressly provided shall be such liquidated damages.
Nothing shall preclude the Investor from pursuing or obtaining specific performance or other
equitable relief with respect to this Agreement.
The parties hereto agree that the liquidated damages provided for in this Section constitute a
reasonable estimate of the damages that may be incurred by the Investor by reason of the failure of
the Registration Statement(s) to be filed or declared effective in accordance with the provisions
hereof.
The obligation of the Company terminates when the holder of shares of Registrable Securities no
longer holds more than ten percent (10%) of its shares of Registrable Securities.
ARTICLE III
INCIDENTAL REGISTRATION RIGHTS
3.1 Right To Include (“Piggy-Back”) Registrable Securities. Provided that the Registrable
Securities have not been registered, if at any time after the date hereof but before the second
anniversary of the date hereof, the Company proposes to register any of its securities under the
1933 Act (other than by a registration in connection with an acquisition in a manner which would
not permit registration of Registrable Securities for sale to the public, on Form S-8, or any
successor form thereto, on Form S-4, or any successor form thereto and other than pursuant to
Section 2), on an underwritten basis (either best-efforts or firm-commitment), then, the Company
will each such time give prompt written notice to all holders of Registrable Securities of its
intention to do so and of such holders of Registrable Securities’ rights under this Section 3.1.
Upon the written request of any such holders of Registrable Securities made within ten (10) days
after the receipt of any such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holders of Registrable Securities and the intended method of
disposition thereof), the Company will, subject to the terms of this Agreement, use its
commercially reasonable best efforts to effect the registration under the 1933 Act of the
Registrable Securities, to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of such Registrable Securities so to be registered, by
inclusion of such Registrable Securities in the registration statement which covers the securities
which the Company proposes to register, provided that if, at any time after written notice of its
intention to register any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any reason either not
to register or to delay registration of such securities, the Company may, at its election, give
written notice of such determination to each holders of Registrable Securities and, thereupon, (i)
in the case of a determination not to register, shall be relieved of this obligation to register
any Registrable Securities in connection with such registration (but not from its obligation to pay
the Registration Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to do so to request that such registration
be effected as a registration under Section 2, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration effected under this
Section 3.1 shall relieve the Company of its obligation to effect any registration upon request
under Section 2. The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 3.1. The right provided
the Holders of the Registrable Securities pursuant to this Section shall be exercisable at their
sole discretion and will in no way limit any of the Company’s obligations to pay the Securities
according to their terms.
3.2 Priority In Incidental Registrations. If the managing underwriter of the underwritten
offering contemplated by this Section 3 shall inform the Company and holders of the Registrable
Securities requesting such registration by letter of its belief that the number of securities
requested to be included in such registration exceeds the number which can be sold in such
offering, then the Company will include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (i) first securities proposed by the
Company to be sold for its own account, and (ii) second Registrable Securities and (iii) securities
of other selling security holders requested to be included in such registration.
ARTICLE IV
REGISTRATION PROCEDURES
4.1 Registration Procedures. If and whenever the Company is required to effect the
registration of any Registrable Securities under the 1933 Act as provided in Section 2.2, the
Company shall, as expeditiously as possible:
(i) prepare and file with the SEC the Registration Statement, or amendments thereto, to effect
such registration (including such audited financial statements as may be required by the 1933 Act
or the rules and regulations promulgated thereunder) and thereafter use its commercially reasonable
best efforts to cause such registration statement to be declared effective by the SEC, as soon as
practicable, but in any event no later than the Required Effectiveness Date (with respect to a
registration pursuant to Section 2.2); provided, however, that before filing such registration
statement or any amendments thereto, the Company will furnish to the counsel selected by the
holders of Registrable Securities which are to be included in such registration, copies of all such
documents proposed to be filed;
(ii) with respect to any registration statement pursuant to Section 2.2, prepare and file with
the SEC such amendments and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement effective and to
comply with the provisions of the 1933 Act with respect to the disposition of all Registrable
Securities covered by such registration statement until the earlier to occur of twenty four (24)
months after the date of this Agreement (subject to the right of the Company to suspend the
effectiveness thereof for not more than 20 consecutive Trading Days or an aggregate of 30 Trading
Days during each six month period (each a “Black-Out Period”)) or such time as all of the
securities which are the subject of such registration statement cease to be Registrable Securities
(such period, in each case, the “Registration Maintenance Period”). The Company must
notify the Investor within twenty four (24) hours prior to any Black-Out Period;
(iii) furnish to each holder of Registrable Securities covered by such registration statement
such number of conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the 1933 Act, in conformity with
the requirements of the 1933 Act, and such other documents, as such holder of Registrable
Securities and underwriter, if any, may reasonably request in order to facilitate the public sale
or other disposition of the Registrable Securities owned by such holder of Registrable Securities;
(iv) use its commercially reasonable best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement under such other U.S.
federal or state securities laws or U.S. state blue sky laws as any U.S. holder of Registrable
Securities thereof shall reasonably request, to keep such registrations or qualifications in effect
for so long as such registration statement remains in effect, and take any other action which may
be reasonably necessary to enable such holder of Registrable Securities to consummate the
disposition in such jurisdictions of the securities owned by such holder of Registrable Securities,
except that the Company shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but for the requirements
of this subdivision (iv) be obligated to be so qualified or to consent to general service of
process in any such jurisdiction;
(v) use its commercially reasonable best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the U.S. holder of Registrable Securities
thereof to consummate the disposition of such Registrable Securities;
(vi) notify the Investor and its counsel promptly and confirm such advice in writing promptly
after the Company has knowledge thereof:
(a) when the Registration Statement, the prospectus or any prospectus supplement related
thereto or post-effective amendment to the Registration Statement has been filed, and, with respect
to the Registration Statement or any post-effective amendment thereto, when the same has become
effective;
(b) of any request by the SEC for amendments or supplements to the Registration Statement or
the prospectus or for additional information;
(c) of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings by any Person for that purpose; and
(d) of the receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such purpose;
(vii) notify each holder of Registrable Securities covered by such registration statement, at
any time when a prospectus relating thereto is required to be delivered under the 1933 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 facts 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 of Registrable Securities promptly prepare and furnish to such holder of Registrable
Securities 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 securities, 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; use its best
efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest practicable time;
(viii) otherwise use its commercially reasonable best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of
the 1933 Act and Rule 158 thereunder;
(ix) enter into such agreements and take such other actions as the Investors shall reasonably
request in writing (at the expense of the requesting or benefiting Investors) in order to expedite
or facilitate the disposition of such Registrable Securities; and
(x) use its commercially reasonable best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which any of the Registrable Securities
are then listed.
The Company may require each holder of Registrable Securities as to which any registration is
being effected to furnish the Company such information regarding such holder of Registrable
Securities and the distribution of such securities as the Company may from time to time reasonably
request in writing.
4.2 The Company will not file any registration statement pursuant to Section 2.2, or amendment
thereto or any prospectus or any supplement thereto to which the Investors shall reasonably object,
provided that the Company may file such documents in a form required by law or upon the advice of
its counsel.
4.3 The Company represents and warrants to each holder of Registrable Securities that it has
obtained all necessary waivers, consents and authorizations necessary to execute this Agreement and
consummate the transactions contemplated hereby other than such waivers, consents and/or
authorizations specifically contemplated by the Note Purchase Agreement.
4.4 Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company
of the occurrence of any event of the kind described in subdivision (viii) of Section 4.1, such
Holder will forthwith discontinue such holder of Registrable Securities’ disposition of Registrable
Securities pursuant to the Registration Statement relating to such Registrable Securities until
such holder of Registrable Securities’ receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (viii) of Section 4.1 and, if so directed by the Company,
will deliver to the Company (at the Company’s expense) all copies, other than permanent file
copies, then in such Holder’s possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.
ARTICLE V
UNDERWRITTEN OFFERINGS
5.1 Incidental Underwritten Offerings. If the Company at any time proposes to register any
of its securities under the 1933 Act as contemplated by Section 3.1 and such securities are to be
distributed by or through one or more underwriters, the Company will, if requested by any holder of
Registrable Securities as provided in Section 3.1 and subject to the provisions of Section 3.2, use
its commercially reasonable best efforts to arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such holder among the securities to be distributed
by such underwriters. In no event shall any Investor be deemed an underwriter for purposes of this
Agreement.
5.2 Participation In Underwritten Offerings. No holder of Registrable Securities may
participate in any underwritten offering under Section 3.1 unless such holder of Registrable
Securities (i) agrees to sell such Person’s securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by the holders of a majority of
Registrable Securities to be included in such underwritten offering and (ii) completes and executes
all questionnaires, indemnities, underwriting agreements and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements. Notwithstanding the
foregoing, no underwriting agreement (or other agreement in connection with such offering) shall
require any holder of Registrable Securities to make a representation or warranty to or agreements
with the Company or the underwriters other than representations and warranties contained in a
writing furnished by such holder of Registrable Securities expressly for use in the related
registration statement or representations, warranties or agreements regarding such holder of
Registrable Securities, such holder’s Registrable Securities and such holder’s intended method of
distribution and any other representation required by law.
5.3 Preparation; Reasonable Investigation. In connection with the preparation and filing of
each registration statement under the 1933 Act pursuant to this Agreement, the Company will give
the holders of Registrable Securities registered under such registration statement, and their
respective counsel and accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, and will give each of them such access to its books and records and
such opportunities to discuss the business of the Company with its officers and the independent
public accountants who have certified its financial statements as shall be necessary, in the
reasonable opinion of such holders’ and such underwriters’ respective counsel, to conduct a
reasonable investigation within the meaning of the 1933 Act.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Company. In the event of any registration of any securities of
the Company under the 1933 Act, the Company will, and hereby does agree to indemnify and
hold harmless the holder of any Registrable Securities covered by such registration statement, its
directors and officers, each other Person who participates as an underwriter in the offering or
sale of such securities and each other Person, if any, who controls such holder or any such
underwriter within the meaning of the 1933 Act against any losses, claims, damages or liabilities,
joint or several, to which such holder or any such director or officer or underwriter or
controlling person may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such securities were
registered under the 1933 Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, 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, and the Company will reimburse such holder and each such director, officer,
underwriter and controlling person for any legal or any other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, liability, action or
proceeding, 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 expense arises
out of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such holder or underwriter stating that it is for use in
the preparation thereof and, provided further that the Company shall not be liable to any Person
who participates as an underwriter in the offering or sale of Registrable Securities or to any
other Person, if any, who controls such underwriter within the meaning of the 1933 Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of such Person’s failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, within the time required by the 1933
Act to the Person asserting the existence of an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected in such final prospectus or
an amendment or supplement thereto. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by such holder.
6.2 Indemnification by the Investor. The Company may require, as a condition to including
any Registrable Securities in any registration statement filed pursuant to this Agreement, that the
Company shall have received an undertaking satisfactory to it from the prospective holder of such
Registrable Securities, to indemnify and hold harmless (in the same manner and to the same extent
as set forth in Section 6.1) the Company, each director of the Company, each officer of the Company
and each other Person, if any, who controls the Company within the meaning of the 1933 Act, with
respect to any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, 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 instrument duly executed by such holder of
Registrable Securities specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Any such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such Investor. The indemnification by
the Investors shall be limited to $250,000.
6.3 Notices Of Claims, Etc. Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in Sections 6.1 and Section
6.2, such indemnified party will, if claim in respect thereof is to be made against an
indemnifying party, 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 Sections 6.1 and Section 6.2, except to the extent that
the indemnifying party is actually 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
judgment a conflict of interest between such indemnified and indemnifying parties may exist in
respect of such claim, the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified, to the extent that
the indemnifying party 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 shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall, without the consent of
the indemnified party, consent to entry of any judgment or enter into any settlement of any such
action 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, or a covenant not to xxx, in
respect to such claim or litigation. No indemnified party shall consent to entry of any judgment or
enter into any settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
6.4 Other Indemnification. Indemnification similar to that specified in Sections 6.1 and
Section 6.2 (with appropriate modifications) shall be given by the Company and each holder of
Registrable Securities (but only if and to the extent required pursuant to the terms herein) with
respect to any required registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the 1933 Act.
6.5 Indemnification Payments. The indemnification required by Sections 6.1 and Section 6.2
shall be made by periodic payments of the amount thereof during the course of the investigation or
defense, as and when loss, damage or liability is incurred.
6.6 Contribution. If the indemnification provided for in Sections 6.1 and Section 6.2 is
unavailable to an indemnified party in respect of any expense, loss, claim, damage or liability
referred to therein, 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
expense, loss, claim, damage or liability (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the holder of Registrable Securities
or underwriter, as the case may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on the one hand and of
the holder of Registrable Securities or underwriter, as the case may be, on the other in connection
with the statements or omissions which resulted in such expense, loss, damage or liability, as well
as any other relevant equitable considerations. The relative benefits received by the Company on
the one hand and the holder of Registrable Securities or underwriter, as the case may be, on the
other in connection with the distribution of the Registrable Securities shall be deemed to be in
the same proportion as the total net proceeds received by the Company from the initial sale of the
Registrable Securities by the Company to the purchasers bear to the gain, if any, realized by all
selling holders participating in such offering or the underwriting discounts and commissions
received by the underwriter, as the case may be. The relative fault of the Company on the one hand
and of the holder of Registrable Securities or underwriter, as the case may be, on the other shall
be determined by reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission to state a material fact relates to information supplied by the
Company, by the holder of Registrable Securities or by the underwriter and the parties’ relative
intent, knowledge, access to information supplied by the Company, by the holder of Registrable
Securities or by the underwriter and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission, provided that the foregoing
contribution agreement shall not inure to the benefit of any indemnified party if indemnification
would be unavailable to such indemnified party by reason of the provisions contained herein, and in
no event shall the obligation of any indemnifying party to contribute under this Section 6.6 exceed
the amount that such indemnifying party would have been obligated to pay by way of indemnification
if the indemnification provided for hereunder had been available under the circumstances.
The Company and the holders of Registrable Securities agree that it would not be just and
equitable if contribution pursuant to this Section 6.6 were determined by pro rata allocation (even
if the holders of Registrable Securities and any 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 losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the limitations set forth
herein, 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 6.6, no holder of Registrable Securities or
underwriter shall be required to contribute any amount in excess of the amount by which (i) in the
case of any such holder, the net proceeds received by such holder from the sale of Registrable
Securities in the applicable Registration Statement or (ii) in the case of an underwriter, the
total price at which the Registrable Securities purchased by it and distributed to the public were
offered to the public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the 0000 Xxx) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
ARTICLE VII
RULE 144
7.1 Rule 144. The Company shall file in a timely manner the reports required to be filed by
the Company under the 1933 Act and the 1934 Act (including but not limited to the reports under
Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 adopted by
the SEC under the 0000 Xxx) and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, will, upon the request of any holder of Registrable
Securities, make publicly available other information) and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent required from time to
time to enable such holder to sell Registrable Securities without registration under the 1933 Act
within the limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as such Rule
may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the
SEC. Upon the request of any holder of Registrable Securities, the Company will deliver to such
holder a written statement as to whether it has complied with the requirements of this Section 7.1.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments And Waivers. This Agreement may be amended and 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 the holder or holders of the sum of the fifty-one percent (51%) or more of the shares of (i)
Registrable Securities issued at such time, plus (ii) Registrable Securities issuable upon exercise
or conversion of the Securities then constituting derivative securities (if such Securities were
not fully exchanged or converted in full as of the date such consent if sought). Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 8.1, whether or not such Registrable Securities shall have been marked
to indicate such consent.
8.2 Nominees For Beneficial Owners. In the event that any Registrable Securities are held
by a nominee for the beneficial owner thereof, the beneficial owner thereof may, at its election,
be treated as the holder of such Registrable Securities for purposes of any request or other action
by any holder or holders of Registrable Securities pursuant to this Agreement or any determination
of any number of percentage of shares of Registrable Securities held by a holder or holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner’s beneficial ownership or such Registrable Securities.
8.3 Notices. Except as otherwise provided in this Agreement, all notices, requests and
other communications to any Person provided for hereunder shall be in writing and shall be given to
such Person (a) in the case of a party hereto other than the Company, addressed to such party in
the manner set forth in the Note Purchase Agreement or at such other address as such party shall
have furnished to the Company in writing, or (b) in the case of any other holder of Registrable
Securities, at the address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and at the address of
the last holder of such Registrable Securities who has furnished an address to the Company, or (c)
in the case of the Company, at the address set forth on the signature page hereto, to the attention
of its President, or at such other address, or to the attention of such other officer, as the
Company shall have furnished to each holder of Registrable Securities at the time outstanding. Each
such notice, request or other communication shall be effective (i) if given by mail, 72 hours after
such communication is deposited in the mail with first class postage prepaid, addressed as
aforesaid or (ii) if given by any other means (including, without limitation, by fax or air
courier), when delivered at the address specified above, provided that any such notice, request or
communication shall not be effective until received.
8.4 Assignment. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto. In addition, and whether or not any express assignment shall
have been made, the provisions of this Agreement which are for the benefit of the parties hereto
other than the Company shall also be for the benefit of and enforceable by any subsequent holder of
any Registrable Securities. Each of the Holders of the Registrable Securities agrees, by accepting
any portion of the Registrable Securities after the date hereof, to the provisions of this
Agreement including, without limitation, appointment of the Investors’ Representative to act on
behalf of such Holder pursuant to the terms hereof which such actions shall be made in the good
faith discretion of the Investors’ Representative and be binding on all persons for all purposes.
8.5 Descriptive Headings. The descriptive headings of the several sections and paragraphs
of this Agreement are inserted for reference only and shall not limit or otherwise affect the
meaning hereof.
8.6 Governing Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without giving effect to applicable principles of conflicts of
law.
8.7 Jurisdiction. This Agreement shall be exclusively governed by and construed in
accordance with the laws of the State of New York. If any action is brought among the parties with
respect to this Agreement or otherwise, by way of a claim or counterclaim, the parties agree that
in any such action, and on all issues, the parties irrevocably waive their right to a trial by
jury. Exclusive jurisdiction and venue for any such action shall be the State or Federal Courts
serving the State of New York. In the event suit or action is brought by any party under this
Agreement to enforce any of its terms, or in any appeal therefrom, it is agreed that the prevailing
party shall be entitled to reasonable attorneys fees to be fixed by the arbitrator, trial court,
and/or appellate court.
8.8 Entire Agreement. This Agreement embodies the entire agreement and understanding
between the Company and each other party hereto relating to the subject matter hereof and
supercedes all prior agreements and understandings relating to such subject matter.
8.9 Severability. If any provision of this Agreement, or the application of such provisions
to any Person or circumstance, shall be held invalid, the remainder of this Agreement, or the
application of such provision to Persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
8.10 Binding Effect. All the terms and provisions of this Agreement whether so expressed or
not, shall be binding upon, inure to the benefit of, and be enforceable by the parties and their
respective administrators, executors, legal representatives, heirs, successors and assignees.
8.11 Preparation of Agreement. This Agreement shall not be construed more strongly against
any party regardless of who is responsible for its preparation. The parties acknowledge each
contributed and is equally responsible for its preparation.
8.12 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement
herein, nor shall nay single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
8.13 Counterparts. This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed shall be deemed to
be an original, but all of which taken together shall constitute one and the same agreement. A
facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Investors and the Company have as of the date first written above
executed this Agreement.
SUN NEW MEDIA, INC. |
||
/s/ Xxxxx Xx |
||
By: Xxxxx Xx Title: Chairman |
||
INVESTOR |
||
| XXXXXX PARTNERS LP | ||
| By: Xxxxxx Capital Advisors, LLC, its General Partners | ||
By: |
/s/ Xxxxxx Xxxxxx Xxxxxx | |||
| Xxxxxx Xxxxxx Xxxxxx | ||||
| President | ||||
| 000 Xxxxx Xxxxxx, 0xx Xxxxx | ||||
| Xxx Xxxx XX 00000 | ||||
