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Ex-10.37
SRS LABS, INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of January 28, 1998, by and between SRS Labs,
Inc., a California corporation (the "Company") and R.G.A. & Associates, Ltd.,
d/b/a ToteVision and VIP Labs(R) ("RGA") and Xxxxxxx X. Xxxxxxx, an individual
(together with RGA, the "Holder").
RECITAL
The Company desires to provide the Holder certain registration rights
and state in this Agreement the obligations with respect to registration rights.
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth herein, the Company and the Holder agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
(c) "Holder" shall mean the Holder as defined in the preamble to
this Agreement or anyone who holds outstanding Registrable Securities to whom
the registration rights conferred by this Agreement have been transferred in
compliance with this Agreement.
(d) "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement, and compliance with applicable
state securities laws of such states in which Holders notify the Company of
their intention to offer Registrable Securities.
(e) "Registrable Securities" shall mean all of the following to
the extent the same have not been sold to the public (i) any and all shares of
Common Stock of the Company originally issued by the Company to Holder pursuant
to the terms of the Asset Purchase Agreement between the Holder and the Company,
of even date herewith, (ii) stock issued to the Holder by the Company upon the
exercise of the warrant of even date herewith issued by the Company to the
Holder; or (iii) stock issued in respect of stock referred to in (i) or (ii)
above in any reorganization; or (iv) stock issued in respect of the stock
referred to in (i), (ii) or (iii) above as a result of a stock split, stock
dividend, recapitalization or combination. Notwithstanding the foregoing,
Registrable Securities shall not include otherwise Registrable Securities (i)
sold by a person in a transaction in which his rights under this Agreement are
not properly assigned; or (ii) (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale, (C) if the registration rights
associated with such securities have been terminated pursuant to Section 13 of
this Agreement or (D) saleable in accordance with Rule 144 during any
consecutive ninety (90) day period.
(f) "Rule 144" shall mean Rule 144 under the Securities Act or
any successor or similar rule as may be enacted by the Commission from time to
time, but shall not include Rule 144A.
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(g) "Rule 144A" shall mean Rule 144A under the Securities Act or
any successor or similar rule as may be enacted by the Commission from time to
time, but shall not include Rule 144.
(h) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations
thereunder, all as the same shall be in effect at the time.
2. RESTRICTIONS ON TRANSFERABILITY.
The Registrable Securities shall not be sold, assigned,
transferred or pledged except upon the conditions specified in this Agreement,
which conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Holder will cause any proposed purchaser, assignee,
transferee, or pledgee of the Registrable Securities held by a Holder to agree
to take and hold such securities subject to the provisions and upon the
conditions specified in this Agreement.
3. RESTRICTIVE LEGEND.
Each certificate representing Registrable Securities shall
(unless other permitted by the provisions of Section 4 below) be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities laws or
otherwise):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENTS COVERING THE
PURCHASE OF THESE SHARES AND RIGHTS TO REGISTER THESE SHARES AND RESTRICTING
THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
Each Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Registrable
Securities in order to implement the restrictions on transfer established in
this Agreement.
4. NOTICE OF PROPOSED TRANSFER.
The Holder of each certificate representing Registrable
Securities, by acceptance thereof, agrees to comply in all respects with the
provisions of this Section 4. Each such Holder agrees not to make any
disposition of all or any portion of any Registrable Securities unless and
until:
(a) There is in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) (i) Such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and
(ii) If reasonably requested by the Company, such Holder
shall furnish the Company with an opinion of counsel, reasonably satisfactory to
the Company that such disposition shall not require registration of such shares
under the Securities Act.
5. PIGGYBACK REGISTRATION.
(a) If at any time or from time to time the Company shall
determine to register any of its securities, for its own account or the account
of any of its shareholders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to an SEC Rule 145
transaction, a
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transaction relating solely to the sale of debt or convertible debt instruments
or a registration on any form (other than Form X-0, X-0 or S-3, or their
successor forms) which does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of Registrable Securities, the Company will:
(i) give to each Holder written notice thereof as soon as
practicable prior to filing the registration statement; and
(ii) include in such registration and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within ten (10) days after receipt of such written notice from
the Company, by any Holder or Holders, except as set forth in subsection (b)
below.
(b) If the registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders as a part of
the written notice given pursuant to subsection 5(a)(i). In such event, the
right of any Holder to registration pursuant to Section 5 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated, first, to
the Company, second, to any stockholder of the Company with superior
registration rights to those of the Holder, on a pro rata basis and then to the
Holder.
(c) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 5 prior to the effectiveness of
such registration whether or not the Holder has elected to include securities in
such registration. All registration expenses (as provide in Section 6 below) of
such withdrawn registration shall be borne by the Company.
6. EXPENSES OF REGISTRATION.
In addition to the fees and expenses contemplated by Section 7
hereof, all expenses incurred in connection with registrations pursuant to
Section 5 hereof, including without limitation all registration, filing and
qualification fees, printing expenses, fees and disbursements of counsel for the
Company and expenses of any special audits of the Company's financial statements
incidental to or required by such registration, shall be borne by the Company,
except that the Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities.
7. REGISTRATION PROCEDURES.
In the case of each registration effected by the Company pursuant
to this Agreement, the Company will keep each Holder participating therein
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense the Company will:
(a) keep such registration effective for a reasonable period as
necessary to permit the Holder or Holders to complete the distribution described
in the registration statement relating thereto, but in no event longer than 270
days;
(b) promptly prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act, and to keep such registration statement effective for that
period of time specified in Section 7(a) above;
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(c) furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(d) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practical moment;
(e) register or qualify such Registrable Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the managing
underwriter reasonably requires, and keep such registration or qualification
effective during the period set forth in Section 7(a) above, provided that the
Company shall not be required to qualify to business or file a general consent
to service of process in any such jurisdictions in connection therewith or as a
condition thereto;
(f) cause all Registrable Securities covered by such
registrations to be listed on each securities exchange, including Nasdaq, on
which similar securities issued by the Company are then listed or, if no such
listing exists, use reasonable best efforts to list all Registrable Securities
on one of the New York Stock Exchange, the American Stock Exchange or Nasdaq;
and
(g) in an underwritten public offering, cause its accountants to
issue to the underwriter or the Holders comfort letters and updates thereof, in
customary form and covering matters of the type customarily covered in such
letters with respect to underwritten offerings;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
underwriters, if any, reasonably, request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; provided,
that any records, documents and other information made available to such persons
under this Section 7(i) shall be kept confidential by such persons and such
persons, if requested by the Company, shall execute a confidentially agreement
in a form provided by the Company;
(j) notify each Holder, at any time a prospectus covered by such
registration statement is required to be delivered under the Securities Act, of
the happening of any event of which it has knowledge 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 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.
8. INDEMNIFICATION.
(a) In the event of a registration of any of the Registrable
Securities under the Securities Act, the Company will indemnify and hold
harmless each Holder of such Registrable Securities thereunder, each underwriter
of such Registrable Securities thereunder and each other person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Holder, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions 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 Registrable Securities were
registered under the Securities Act, any final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
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any violation by the Company of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon information furnished to the
Company by such Holder or underwriter specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration is being effected, indemnify and hold harmless the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company and each underwriter within the meaning of the Securities Act, and
each other such Holder, each of its officers, directors and partners and each
person controlling such Holder, against all claims, losses, expenses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, 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 will reimburse the Company, such Holders, such directors,
officers, partners, persons or underwriters for any reasonable legal or any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with information furnished to the Company by such Holder specifically
for use therein.
(c) Each party entitled to indemnification under this Section 8
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claims as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in actual detriment to
the Indemnifying Party. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
(d) If the indemnification provided for in Section 8(a) or 8(b)
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, claim, damage, expense or liability referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, expense or liability
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss, claim,
damage, expense or liability as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification contained in the underwriting agreements entered
into among the selling Holders, the Company and the
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underwriters in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall be controlling as to the Registrable Securities included in the public
offering.
(f) The indemnification provided by this Section 8 shall be a
continuing right to indemnification and shall survive the registration and sale
of any securities by any Person entitled to indemnification hereunder and the
expiration or termination of this Agreement.
9. INFORMATION BY HOLDER.
The Holder or Holders of Registrable Securities included in any
registration shall promptly furnish to the Company such information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration referred to herein.
10. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities of a Holder and keep information available
granted to a Holder by the Company under Sections 5, 6 and 7 may be assigned by
a Holder to any partner or shareholder of such Holder, to any other Holder, or
to a transferee or assignee who receives at least [50,000] shares of Registrable
Securities (as adjusted for stock splits and the like); provided, that the
Company is given written notice by the Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
11. TERMINATION OF RIGHTS. The rights of any particular Holder to cause
the Company to include the Holder's Shares in any registration under Sections 5
shall terminate with respect to such Holder at such time as such Holder is able
to dispose of all of his Registrable Securities in one three-month period
pursuant to the provisions of Rule 144.
12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Holders as follows:
(a) The execution, delivery and performance of this Agreement by
the Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or Bylaws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, subject to:
(i) applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance and moratorium laws and other laws of general application
affecting enforcement of creditors' rights generally and
(ii) the availability of equitable remedies as such
remedies may be limited by equitable principles of general applicability
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
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13. MISCELLANEOUS.
(a) Amendments. This Agreement may be amended only by a writing
signed by the Company and the Holders of more than fifty percent (50%) of the
Registrable Securities, as constituted from time to time. The Holders hereby
consent to future amendments to this Agreement that permit future investors,
including without limitation employees, officers or directors of the Company, to
be made parties hereto and to become Holders of Registrable Securities;
provided, however, that no such future amendment may materially impair the
rights of the Holders hereunder without obtaining the requisite consent of the
Holders, as set forth above.
(b) Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute a single instrument.
(c) Notices, Etc. All notices, requests, consents and other
communications required or provided for herein to any party shall be deemed to
be sufficient if contained in a written instrument, and shall be deemed to be
given when: (a) delivered in person; (b) delivered by overnight receipted
courier service; or (c) sent by facsimile transmission with delivery confirmed
and followed by delivery pursuant to Subsection (b) hereof, which notice is
addressed to the party at the address set forth below, or such other address as
may hereafter be designated in writing by the party.
If to the Company: SRS Labs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxx, XX 00000
Attention: Xxxxx X. Xxxxx,
Vice President and Chief Financial Officer
with a copy to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to Holder:
VIP Labs(R)
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
with a copy to:
Van Valkenberg Xxxxxx Law Group P.L.L.C. 0000
0xx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxx Xxxxxxxxxx, Esq.
(d) Nonpublic Information. Any other provisions of this Agreement
to the contrary notwithstanding, the Company's obligation to file a registration
statement, or cause such registration statement to become and remain effective,
shall be suspended during the period in which there exists at the time material
non-public information relating to the Company which, in the reasonable opinion
of the Company, should not be disclosed.
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(e) Delay of Registration. No Holder shall have the right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
(f) Severability. If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(g) Dilution. If, and as often as, there is any change in the
Common Stock by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
(h) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware without regard to principles
of conflict of law.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY: SRS LABS, INC.
a California corporation
/s/ XXXXXXX X. SEDMARK
-----------------------------------
Xxxxxxx X. Xxxxxx, President
HOLDER: R.G.A. & ASSOCIATES, LTD.
a Washington corporation
/s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx, President
/s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx, an individual
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