1
EXHIBIT 10.1
EXECUTION COPY
===================================
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
Dated as of October 30, 1997
by and among
SOURCE MEDIA, INC.
and
NATWEST CAPITAL MARKETS LIMITED
and
PRUDENTIAL SECURITIES INCORPORATED
as the Initial Purchasers
===================================
2
TABLE OF CONTENTS
Page
----
1. Definitions...................................................................................... 1
2. Shelf Registration............................................................................... 4
3. Registration Procedures.......................................................................... 5
4. Registration Expenses............................................................................ 13
5. Indemnification.................................................................................. 14
6. Rule 144......................................................................................... 18
7. Underwritten Registrations....................................................................... 18
8. Miscellaneous. .................................................................................. 18
(a) No Inconsistent Agreements......................................................... 18
(b) Adjustments Affecting Transfer Restricted Warrant Certificates..................... 19
(c) Amendments and Waivers............................................................. 19
(d) Notices............................................................................ 19
(e) Successors and Assigns............................................................. 20
(f) Counterparts....................................................................... 20
(g) Headings........................................................................... 21
(h) Governing Law...................................................................... 21
(i) Severability....................................................................... 21
(j) Preferred Stock Held by the Company or Their Affiliates............................ 21
(k) Third Party Beneficiaries.......................................................... 21
(i)
3
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
This Common Stock Registration Rights Agreement (the "Agreement") is dated
as of October 30, 1997, by and among Source Media, Inc., a Delaware corporation
(the "Company"), NatWest Capital Markets Limited and Prudential Securities
Incorporated (each an "Initial Purchaser" and collectively the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase Agreement,
dated October 23, 1997, among the Company and the Initial Purchasers (the
"Purchase Agreement"), which provides for the sale by the Company to the Initial
Purchasers of 800 units (the "Units") consisting of 1,000 shares of 13 1/2%
Senior PIK Preferred Stock (the "Preferred Stock") and 558.75 Warrants (the
"Warrants"), each Warrant to purchase one share of common stock. Full exercise
of the Warrants would result in the purchase of 447,000 shares of common stock
(the "Warrant Shares"), or approximately 3% of the Company's shares on a fully
diluted basis. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of the Initial Purchasers and their
direct and indirect transferees. The execution and delivery of this Agreement is
a condition to the obligation of the Initial Purchasers to purchase the Units
under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Advice: Has the meaning provided in the last paragraph of Section 3 hereof.
Agreement: Has the meaning provided in the first introductory paragraph
hereto.
Closing Date: Has the meaning provided in the Purchase Agreement.
Company: Has the meaning provided in the first introductory paragraph
hereto.
Effectiveness Date: The 75th day after the Filing Date.
Effectiveness Period: Has the meaning provided in Section 2(a) hereof.
Event Date: Has the meaning provided in Section 4(b) hereof.
4
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Filing Date: The day six months after the Issue Date.
Holder: Any holder of Warrant Shares.
Indemnified Person: Has the meaning provided in Section 5(c) hereof.
Indemnifying Person: Has the meaning provided in Section 5(c) hereof.
Initial Purchasers: Has the meaning provided in the first introductory
paragraph hereto.
Inspectors: Has the meaning provided in Section 3(o) hereof.
Issue Date: The date on which the Warrants were sold to the Initial
Purchasers pursuant to the Purchase Agreement.
NASD: Has the meaning provided in Section 3(s) hereof.
Participant: Has the meaning provided in Section 5(a) hereof.
Paying Agent: ChaseMellon as Paying Agent for the Warrant Certificates.
Persons: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Preferred Stock: Has the meaning provided in the second introductory
paragraph hereto.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any infor mation previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Warrant Shares covered by such Registration Statement including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
-2-
5
Purchase Agreement: Has the meaning provided in the second introductory
paragraph hereto.
Records: Has the meaning provided in Section 3(o) hereof.
Registration Statement: Any registration statement of the Company,
including that covers any of the Warrant Shares pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144(k): Rule 144(k) promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
Shelf Registration: Has the meaning provided in Section 2(a) hereof.
Shelf Registration Statement: shall mean a "shelf" registration statement
of the Company which covers all of the Warrant Shares on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
Underwritten registration or underwritten offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
Units: Has the meaning provided in the second paragraph hereto.
Warrant Certificates: Means the Warrant Certificates as provided in the
Warrant Agreement.
Warrant Shares: Has the meaning provided in the second introductory
paragraph hereto.
-3-
6
Warrants: Has the meaning provided in the second introductory paragraph
hereto.
2. Shelf Registration
(a) Shelf Registration. The Company shall file with the SEC no later than
the Filing Date a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Warrant Shares (the
"Shelf Registration"). The Shelf Registration shall be on Form S-3 or another
appropriate form permitting registration of such Warrant Shares for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall not permit
any securities other than the Warrant Shares to be included in the Shelf
Registration, except to the extent that the Company is unable to obtain waivers
of registration rights from the persons listed on Schedule A which the Company
shall use its best efforts to obtain.
The Company shall use its best efforts to cause the Shelf Registration to
be declared effective under the Securities Act by the Effectiveness Date and to
keep the Shelf Registration continuously effective under the Securities Act
until the date which is two years from the Issue Date (the "Effectiveness
Period"), subject to extension pursuant to the last paragraph of Section 3
hereof, or such shorter period ending when all the Warrant Shares covered by the
Shelf Registration have been sold in the manner set forth and as contemplated in
the Shelf Registration or such Warrant Shares become eligible for resale without
volume restrictions pursuant to Rule 144(k) under the Securities Act.
(b) Withdrawal of Stop Orders. If the Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the Company
shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly supplement and
amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested for
such purpose by the Holders of a majority of the Warrant Shares covered by such
Registration Statement.
3. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 hereof, the Company shall effect such registration(s) to permit the
sale of the securities covered thereby in accordance with the intended method or
methods of disposition thereof, and pursuant thereto and in connection with any
Registration Statement filed by the Company hereunder, the Company shall:
-4-
7
(a) Prepare and file with the SEC prior to the Filing Date a Registration
Statement as prescribed by Section 2 hereof, and use its best efforts to cause
such Registration Statement to become effective and remain effective as provided
herein; provided, however, that, the Company shall, if requested in writing,
furnish to and afford the Holders of the Warrant Shares covered by such
Registration Statement and their counsel, a reasonable opportunity to review
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(in each case at least three business days prior to such filing). The Company
shall not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document under the immediately
preceding sentence, if the Holders of a majority of the Warrant Shares covered
by such Registration Statement or their counsel, shall object directly to the
Company in writing, which writing shall set forth a reasonable basis for such
objection.
(b) Prepare and file with the SEC such amendments and post-effective amend
ments to the Shelf Registration as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period, cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so sup plemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented;
the Company shall be deemed not to have used its best efforts to keep a
Registration Statement effective during the Effectiveness Period if it
voluntarily takes any action that would result in selling Holders of the Warrant
Shares covered thereby not being able to sell such Warrant Shares during that
period unless such action is required by applicable law or unless the Company
complies with this Agreement, including, without limitation, the provisions of
paragraph 3(j) hereof and the last paragraph of this Section 3.
(c) Notify the selling Holders of Warrant Shares and their counsel promptly
(but in any event within two business days), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any Holder
may, upon request, obtain, at the sole expense of the Company, one conformed
copy of such Registration Statement or post-effective amendment including
financial statements and schedules, documents incorporated or deemed to be
incorporated by reference and exhibits), (ii) of the issuance by the SEC of any
stop order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose,
-5-
8
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement, (iv) of the hap pening of any event, the existence of
any condition or any information becoming known that makes any statement made in
such 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 or amendments or supplements to
such Registration Statement, 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 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 light of the circumstances under which they were
made, not misleading, and (v) of the determination by the Company that a
post-effective amendment to a Registration Statement would be appro priate.
(d) Use its best efforts to prevent the issuance of any order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of a Prospectus or suspending the qualification (or exemption
from qualification) of any of the Warrant Shares for sale in any jurisdiction,
and, if any such order is issued, to use its best efforts to obtain the
withdrawal of any such order at the earliest possible moment.
(e) Furnish to each selling Holder of Warrant Shares who so requests and to
such Holder's counsel, at the sole expense of the Company, one conformed copy of
the Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(f) Deliver to each selling Holder of Warrant Shares and such Holder's
counsel, at the sole expense of the Company, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 3, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Warrant
Shares, in connection with the offering and sale of the Warrant Shares covered
by such Prospectus and any amendment or supplement thereto.
(g) Prior to any public offering of Warrant Shares to use its best efforts
to register or qualify such Warrant Shares (and to cooperate with selling
Holders of Warrant Shares and their counsel in connection with the registration
or qualification (or exemption from such registration or qualification) of such
Warrant Shares) for offer and sale under
-6-
9
the securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder, reasonably request in writing; provided, however, that
where Warrant Shares are offered other than through an underwritten offering,
the Company agrees to cause their counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 3(g); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Warrant Shares covered by the applicable Registration Statement; provided,
however, that the Company shall not be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to taxation
in excess of a nominal dollar amount in any such jurisdiction where it is not
then so subject.
(h) Cooperate with the selling Holders of Warrant Shares, to facilitate the
timely preparation and delivery of certificates representing Warrant Shares to
be sold, which certificates shall not bear any restrictive legends and shall be
in a form eligible for deposit with The Depository Trust Company; and enable
such Warrant Shares to be in such denominations and registered in such names as
the Holders may reasonably request.
(i) Use its best efforts to cause the Warrant Shares covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof, to dispose of such Warrant Shares, except as may be required solely as
a consequence of the nature of a selling Holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(j) Upon the occurrence of any event contemplated by paragraph 3(c)(v) or
3(c)(vi) hereof, as promptly as practicable prepare and (subject to Section 3(a)
hereof) file with the SEC, at the sole expense of the Company, a supplement or
post-effective amend ment to the Registration Statement or a supplement to the
related Prospectus or any docu ment incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Warrant Shares being sold thereunder any such
Prospectus will not contain 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, in light of the circumstances under which they were made,
not misleading; provided, that this Section 3(j) shall not be deemed to require
the Company to disclose any information that, in the good faith opinion of the
management of the Company, is not yet required to be disclosed and would not be
in the best interests of the Company to disclose, so long as the Company
complies with all applicable laws and government regulations and the last
paragraph of this Section 3.
-7-
10
(k) Prior to the effective date of the first Registration Statement
relating to the Warrant Shares, provide a CUSIP number for the Warrant Shares.
(l) In connection with any underwritten offering initiated by the Company
of Warrant Shares pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of securities similar to the
Warrant Certificates and take all such other actions as are reasonably requested
by the managing underwriter or underwriters in order to facilitate the
registration or the disposition of such Warrant Shares and, in such connection,
(i) make such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Company and its respective
subsidiaries and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, as
are customarily made by Company to underwriters in underwritten offerings of
securities similar to the Warrant Certificates, and confirm the same in writing
if and when requested; (ii) obtain the written opinion of counsel to the Company
and written updates thereof in form, scope and substance reasonably satisfactory
to the managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings of securities similar to the Warrant Certificates and such other
matters as may be reasonably requested by the managing underwriter or
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of any of the Company or of any business acquired by any of the
Company for which financial state ments and financial data are, or are required
to be, included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of securities similar to the Warrant
Certificates and such other matters as reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 5 hereof (or such other provisions and
procedures acceptable to Holders of a majority of Warrant Shares covered by such
Registration Statement and the managing underwriter or underwriters or agents)
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(m) Make available for inspection by any selling Holder of such Warrant
Shares being sold and any attorney, accountant or other agent retained by any
such selling Holder (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable busi ness hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
-8-
11
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its respective subsidiaries to make available for inspection all information
reasonably requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to be
confidential and any Records which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is, in the opinion of counsel (a copy of which
shall be delivered to the Company) for any Inspector, necessary or advisable in
connection with any action, claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and arising out of, based
upon, relating to, or involving this Agreement, or any transactions contemplated
hereby or arising hereunder, or (iv) the information in such Records has been
made gener ally available to the public. Each selling Holder of Warrant Shares
will be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the secu rities of the Company unless and
until such information is generally available to the public. Each selling Holder
of such Warrant Shares will be required to further agree 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 to undertake
appropriate action to prevent disclosure of the Records deemed confidential at
the Company's sole expense.
(n) Comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Warrant Shares are sold to underwriters in a firm commitment or
best efforts underwritten offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(o) Cooperate with each seller of Warrant Shares covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Warrant Shares and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
-9-
12
(p) Use its best efforts to take all other steps necessary or advisable to
effect the registration of the Warrant Shares covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Warrant Shares as to which any
Registration Statement is being effected to furnish to the Company such
information regarding such seller and the distribution of such Warrant Shares as
the Company may, from time to time, reasonably request. The Company may exclude
from such Registration Statement the Warrant Shares of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. Each seller as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such seller not materially misleading.
Each Holder of Warrant Shares agrees by acquisition of such Warrant Shares
that, upon actual receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(c)(ii), 3(c)(iv), 3(c)(v), or 3(c)(vi)
hereof, such Holder will forthwith discontinue disposition of such Warrant
Shares covered by such Registration Statement or Prospectus to be sold by such
Holder, until such Holder's receipt of the copies of the supple mented or
amended Prospectus contemplated by Section 3(j) hereof, or until it is advised
in writ ing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event the Company shall give any such notice, each
of the Effectiveness Period shall be extended by the number of days during such
periods from and including the date of the giving of such notice to and
including the date when each seller of Warrant Shares covered by such
Registration Statement shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 3(j) hereof or (y) the Advice. In the
event the Company does not give any such notice within five business days, each
Holder shall return such Registration Statement or Prospectus to the Company or
destroy all copies of such Registration Statement or Prospectus; and if so
requested by the Company, shall certify that all copies of the Registration
Statement or Prospectus were destroyed.
4. Registration Expenses. All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not the Shelf Registration is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings with the SEC, (B) fees with respect
to filings required to be made with the NASD in connection with an underwritten
offering and (C) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disbursements of
the Company's counsel in connection with Blue Sky qualifications of the Warrant
Shares and determination of the eligibility of the Warrant Shares for investment
under the laws of such jurisdictions where the holders of Warrant Shares are
located, (ii) printing expenses, including, without limitation, expenses of
printing certificates for Warrant Shares in a form eligible for deposit with The
Depository Trust
-10-
13
Company and of printing Prospectuses if the printing of Prospectuses is
requested by Holders of a majority of the Warrant Shares or the managing
underwriter or underwriters, if any, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 3(m)(iii) hereof (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance by or incident to such performance), (vi) rating agency fees, if
any, (vii) Securities Act liability insurance, if the Company desires such
insurance, (viii) fees and expenses of all other Persons retained by the
Company, (ix) internal expenses of the Company (including, without limitation,
all salaries and expenses of officers and employees of the Company performing
legal or accounting duties), (x) the expense of any annual audit, (ix) the fees
and expenses incurred in connection with the listing of the securities to be
registered on any securities exchange or any inter-dealer quotation system, if
applicable, and (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
5. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Holder of Warrant Shares offered pursuant to a Shelf Registration
Statement, the affiliates, directors, officers, agents, representatives and
employees of each such Person or its affiliates, and each other Person, if any,
who controls any such Person or its affiliates within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant") from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Warrant Shares is registered
(or any amendment thereto) or related Prospectus (or any amendments or
supplements thereto) or any related preliminary prospectus, or caused by,
arising out of or 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 light of the circumstances under which they were made, not
misleading; provided, however, that the Company will not be required to
indemnify a Participant if (i) such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished to
the Company in writing by or on behalf of such Participant expressly for use
therein or (ii) if such Participant sold to the person asserting the claim the
Warrant Shares which are the subject of such claim and such untrue statement or
omission or alleged untrue statement or omission was contained or made in any
pre liminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and such Participant
failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Warrant Shares sold to such Person if required by applicable laws, unless
such failure to deliver or provide a copy of the
-11-
14
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 3 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify and
hold harmless the Company, its respective directors, officers, agents,
representatives, employees and each Person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each Participant,
but only (i) with reference to information furnished to the Company in writing
by or on behalf of such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus or (ii) with respect to any untrue statement or representation made
by such Participant in writing to the Company.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person shall have the right to retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
actually incurred by such counsel related to such proceeding; provided, however,
that the failure to so notify the Indemnifying Person shall not relieve it of
any obligation or liability which it may have hereunder or otherwise (unless and
only to the extent that such failure results in the loss or compromise of any
material rights or defenses by the Indemnifying Person). In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person shall
have failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that, unless there exists a conflict among
Indemnified Persons, the Indemnifying Person shall not, in connection with any
one such proceeding or separate but substantially similar related proceeding in
the same jurisdiction arising out of the same general allegations, be liable for
the reasonable fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of Warrant
Shares sold by all such Participants and any such separate firm for the Company,
its directors, their officers and such control Persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its prior written
consent, but if settled
-12-
15
with such consent or if there be a final non-appealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, the Indemnifying Person agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admis sion of fault, culpability or failure to
act by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in Sections 5(a) and 5(b) hereof is
for any reason unavailable to, or insufficient to hold harmless, an Indemnified
Person in respect of any losses, claims, damages or liabilities referred to
therein, then each Indemnifying Person under such paragraphs, in lieu of
indemnifying such Indemnified Person thereunder and in order to provide for just
and equitable contribution, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Preferred
Stock or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
fault of the parties 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 on the one hand or such Participant or such other
Indemnified Person, as the case may be, on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purposes) 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 Person 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 above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant
-13-
16
from sales of Warrant Shares exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid 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.
(f) The indemnity and contribution agreements contained in this Section 5
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
6. Rule 144. The Company covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner in accordance
with the requirements of the Securities Act and the Exchange Act and, if at any
time the Company is not required to file such reports, it will, upon the request
of any Holder of Warrant Shares, make publicly available annual reports and such
information, documents and other reports of the type specified in Sections 13
and 15(d) of the Exchange Act. The Company further covenants for so long as any
Warrant Shares remain outstanding, to make available to any Holder or beneficial
owner of Warrant Shares in connection with any sale thereof and any prospective
purchaser of such Warrant Shares from such Holder or beneficial owner the
information required by the Securities Act in order to permit resales of such
Warrant Shares pursuant to Rule 144.
7. Underwritten Registrations. If any of the Warrant Shares covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of a majority of such Warrant Shares
included in such offering and reasonably acceptable to the Company.
No Holder of Warrant Shares may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Warrant Shares on the basis provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
8. Miscellaneous. (a) No Inconsistent Agreements. The Company has not
entered, as of the date hereof, and the Company shall not, after the date of
this Agreement, enter into any agreement with respect to any of its securities
that is inconsistent with the rights granted to the Holders of Warrant Shares in
this Agreement or otherwise conflicts with the provisions hereof. Other than as
provided in Schedule A attached hereto, the Company has not entered and none of
the Company will enter into any agreement with respect to any of its securities
which will grant to any Person piggy-back registration rights with respect to a
Registration Statement.
-14-
17
(b) Adjustments Affecting Warrant Shares. The Company shall not, directly
or indirectly, take any action with respect to the Warrant Shares as a class
that would adversely affect the ability of the Holders of Warrant Shares to
include such Warrant Shares in a registration undertaken pursuant to this
Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of the Holders of not less than a majority of the then outstanding
Warrant Shares. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders of Warrant Shares whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Warrant Shares may be
given by Holders of at least a majority of the Warrant Shares being sold by such
Holders pursuant to such Registration Statement; provided, however, that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, next-day air courier or facsimile:
1. if to a Holder of the Warrant Shares, at the most current address of
such Holder, set forth on the records of the registrar under the
Indenture, with a copy in like manner to the Initial Purchasers as
follows:
NatWest Capital Markets Limited
000 Xxxxxxxxxxx
Xxxxxx, XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxx Xxxx
with a copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
2. if to the Initial Purchasers, at the addresses specified in Section
10(d)(1);
-15-
18
3. if to the Company, as follows:
Source Media, Inc.
0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
with a copy to:
Xxxxxxxx & Knight, P.C.
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign holds Registerable Preferred Stock.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
-16-
19
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
-17-
20
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first written above.
Company:
SOURCE MEDIA, INC.
By: /s/ XXXXXXX X. XXXX
---------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written:
NATWEST CAPITAL MARKETS LIMITED
By: /s/ NS GOULBECK
---------------------------
Name: NS Goulbeck
Title: Director
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ XXXXXXXXXXX X. XXXXXX
---------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: Managing Director
-1-
