Exhibit 10.3
XXXXXX RECORDS, INC.
INVESTORS RIGHTS AGREEMENT
THIS INVESTORS RIGHTS AGREEMENT (the "Rights Agreement") is entered into as
of November 21, 2003, by and among Xxxxxx Records, Inc., a Delaware corporation
(the "Company"), and Xxxxxxx Xxxxxx and Xxx Xxxxxxxx (each a "Purchaser" and
collectively the "Purchasers").
RECITALS:
A. Concurrently herewith, the Company effected a recapitalization whereby
two new classes of common stock, Class A common stock and Class B common stock,
were authorized.
B. Pursuant to the recapitalization, shares of the Company's common stock
were converted into shares of Class A common stock and Class B common stock, and
as a result, the Purchasers each received 6,000,000 shares of Class A common
stock and 6,000,000 shares of Class B common stock, the latter of which are
convertible at any time at the option of each Purchaser into shares of Class A
common stock on a share-for-share basis (collectively, the "Shares").
C. In connection with the recapitalization, the Company agreed to execute
and deliver this Rights Agreement to the Purchasers.
AGREEMENT:
NOW, THEREFORE, in consideration for and of the foregoing and of the mutual
promises, covenants and conditions set forth herein and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Registration Rights.
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1.1 Definitions. As used in this Rights Agreement, the following terms
shall have the following respective meanings:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended, and the declaration
or ordering of the effectiveness of such registration statement.
(b) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(c) The term "Registrable Securities" means the 12,000,000 shares of
Class A Common Stock issued, the 12,000,000 shares of Class A Common Stock
issuable upon conversion of the issued shares of Class B Common Stock, and
any and all shares of Class A Common Stock or other securities issued or
issuable with respect to the Shares upon any stock split, stock dividend,
recapitalization or similar event; provided, however, that any and all
shares described herein which have been resold to the public or are
registered shall cease to be Registrable Securities upon such resale and
any shares as to which registration rights have terminated pursuant to
Section 1.13 below shall cease to be Registrable Securities upon such
termination.
(d) The terms "Holder" or "Holders" means any person or persons to
whom Registrable Securities were originally issued or qualifying
transferees under subsection 1.10 hereof who hold Registrable Securities.
(e) The term "Initiating Holders" means any Holder or Holders holding
fifty percent (50%) or greater of the aggregate of the Class A Common Stock
issued or issuable upon conversion of the Class B Common Stock that
collectively are Registrable Securities.
(f) The term "Securities Act" means the Securities Act of 1933, as
amended.
(g) The term "SEC" means the Securities and Exchange Commission.
(h) The term "Registration Expenses" shall mean all expenses incurred
by the Company in complying with subsections 1.2, 1.3 and 1.4 hereof,
including, without limitation, all registration, qualification and filing
fees, printing expenses, escrow fees, fees and disbursements of counsel for
the Company, blue sky fees and expenses, and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company, Selling Expenses and fees and disbursements of legal
counsel for the Holders.)
(i) The term "Holder Affiliates" means any of the mother, father,
descendants, brother(s), sister(s), or spouse of any Holder or any trustee
or trustees for the benefit of any one or more of the foregoing (including
such mother, father, brother(s), sister(s) or spouse).
(j) The term "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities.
1.2 Demand Registration.
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(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect a registration
with respect to Registrable Securities, the Company will:
(i) within ten (10) days give written notice of the proposed
registration to all other Holders; and
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(ii) as soon as practicable, subject to the limitations set
below, use its best efforts to effect all such registrations
(including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualifications under the
applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act
and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution
of all or such portion of such Initiating Holder's Registrable
Securities as are specified in such request, together with all or such
portion of the Registrable Securities of any Holder or Holders joining
in such request as are specified in a written request given within
thirty (30) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to
take any action to effect such registration pursuant to this
subsection 1.2(a):
(A) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of
process in effecting such registration unless the Company is
already subject to service in such jurisdiction and except as
required by the Securities Act;
(B) after the Company has effected two (2) such
registrations pursuant to this subsection 1.2(a) and such
registrations have been declared or ordered effective;
(C) during the period starting within the date sixty (60)
days prior to the Company's good faith estimate of the date of
filing of, and ending on a date ninety (90) days after the
effective date of, a Company-initiated registration; provided
that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become
effective; or
(D) if the Initiating Holders propose to dispose of shares
of Registrable Securities which may be immediately registered on
Form S-3 pursuant to a request made under Section 1.4 hereof.
Subject to the foregoing clauses (A) through (B), the Company shall
file a registration statement covering the Registrable Securities so
requested to be registered as soon as practical, but in any event within
ninety (90) days, after receipt of the request or requests of the
Initiating Holders; provided, however, that if the Company shall furnish to
such Holders a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgment of the
Company's board of directors (the "Board of Directors"), it would be
detrimental to the Company and its stockholders for such registration
statement to be filed on or before the date filing would be required and it
is therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer such filing for a period of not
more than one hundred twenty (120) days after the furnishing of such a
certificate of deferral; and provided, further, however, that the Board of
Directors shall not exercise such right to defer a filing more than once in
any period of twelve (12) consecutive months.
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(b) Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as part of their request
made pursuant to subsection 1.2(a) and the Company shall include such
information in the written notice referred to in subsection 1.2(a)(i). In
such event, the underwriter shall be selected by a majority in interest of
the Initiating Holders and shall be reasonably acceptable to the Company.
The right of any Holder to registration pursuant to subsection 1.2 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters. Notwithstanding any
other provision of this subsection 1.2, if the underwriter advises the
Initiating Holders in writing that marketing factors require a limitation
of the number of shares to be underwritten, the Initiating Holders shall so
advise all Holders who have elected to participate in such offering, and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders
thereof in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by such Holders. If any Holder of
Registrable Securities disapproves of the terms of the underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. Any Registrable Securities
which are excluded from the underwriting by reason of the underwriter's
marketing limitation or withdrawn from such underwriting shall be withdrawn
from such registration.
(c) Company Shares. If the managing underwriter has not limited the
number of Registrable Securities to be underwritten, the Company, employees
of the Company and other holders of the Company's Class A Common Stock may
include securities for its (or their) own account in such registration if
the managing underwriter so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration
and underwriting will not thereby be limited.
1.3 Company Registration.
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(a) Registration. 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 stockholders other than the Holders (other than
in connection with a registration relating solely to employee stock option
or purchase plans, a registration on Form S-4, a registration relating
solely to an SEC Rule 145 transaction, or a registration on any other form
or any successor to such form, 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) within thirty (30) days prior to the filing of such
registration statement give to each Holder written notice thereof and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance with applicable laws), and in
any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made within twenty (20)
days after receipt of such written notice from the Company, by any
Holder or Holders, except as set forth in subsection 1.3(b) below.
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(b) Underwriting. If the registration of which the Company gives
notice 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 1.3(a)(i). In such event the right of any Holder to
registration pursuant to subsection 1.3 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 this subsection 1.3, if the underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, or may
exclude Registrable Securities entirely from such registration and
underwriting. In the event of a cutback by the underwriters of the number
of Registrable Securities to be included in the registration and
underwriting, the Company shall so advise all Holders of Registrable
Securities which would otherwise be registered and underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among
Holders requesting registration in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by each of such
Holders as of the date of the notice pursuant to subsection 1.3(a)(i)
above. If any Holder disapproves of the terms of any such underwriting, he
may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
1.4 Form S-3.
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In addition to the rights and obligations set forth in subsection 1.2(a)
above, if Holders holding thirty percent (30%) or more of the Registrable
Securities then outstanding request that the Company file a registration
statement on Form S-3 (or any successor to Form S-3) for the public offering of
shares of Registrable Securities and the Company is then a registrant entitled
to use Form S-3 to register the shares for such an offering, the Company shall
use its best efforts to cause such shares to be registered for the offering as
soon as practicable on Form S-3 (or any successor form to Form S-3); provided,
however, the Company shall not be required to effect a registration pursuant to
this subsection 1.4:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(b) if the Company, within twenty (20) days of the receipt of the
request of the notice described in subsection 1.4(a), gives notice of its
bona fide intention to effect the filing of a registration statement with
the SEC within one hundred twenty (120) days of receipt of such request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities),
and does so file within said one hundred twenty (120) day period and makes
reasonable efforts to cause such registration to become effective;
(c) during a period of one hundred eighty (180) days following the
effective date of a registration statement other than registration
statements filed pursuant to this subsection 1.4;
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(d) if the Company shall furnish to the Holders requesting
registration under section 1.4(a) a certificate signed by the President or
Chief Executive Officer of the Company stating that in the good faith
judgment of the Board of Directors, it would be detrimental to the Company
and its stockholders for such registration statement to be filed on or
before the date filing would be required and it is therefore essential to
defer the filing of such registration statement, in which case the Company
shall have the right to defer such filing for a period of not more than one
hundred (120) days after the furnishing of such a certificate of deferral;
provided, however, that the Board of Directors shall not exercise such
right to defer a filing more than once in any period of twelve (12)
consecutive months period; or
(e) if the Company has, within the twelve (12) month period preceding
the date of a request to register shares on Form S-3 already effected two
registrations on Form S-3 for the Holders pursuant to this Subsection 1.4.
1.5 Expenses of Registration.
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All Registration Expenses incurred in connection with any registration
pursuant to this Section 1 shall be borne by the Company except that the Company
shall not be required to pay for expenses of any registration proceeding begun
pursuant to subsection 1.2 or 1.4, the request for which has been subsequently
withdrawn by the Initiating Holders (in which case, such expenses shall be borne
by the Holders requesting such withdrawal).
1.6 Registration Procedures.
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In the case of each registration, qualification or compliance effected by
the Company pursuant to this Rights Agreement, the Company will keep each Holder
participating therein advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof.
Except as otherwise provided in subsection 1.5, at its expense the Company will:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to ninety
(90) days or, if a shorter period, until securities included in the
registration statement are sold; provided, however, that (i) such 90-day
period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration
at the request of an underwriter of Common Stock (or other securities) of
the Company; and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such 90-day period shall be extended, if necessary, to keep
the registration statement effective until all such Registrable Securities
are sold, provided that Rule 415, or any successor rule under the Act,
permits an offering on a continuous or delayed basis, and provided further
that applicable rules under the Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective
amendment which (i) includes any prospectus required by Section 10(a)(3) of
the Act or (ii) reflects facts or events representing a material or
fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (i) and (ii) above to be contained in periodic reports filed
pursuant to Section 13 or 15(d) of the 1934 Act in the registration
statement.
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(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by
them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such United States jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such states or
jurisdictions.
(e) 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 Securities Act or 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 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.
(f) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or market on which
similar securities issued by the Company are then listed or quoted.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are
not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated such date, from the
independent public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
(h) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
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1.7 Indemnification.
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(a) The Company will indemnify and defend each Holder of Registrable
Securities and each of its officers, directors and partners, and each
person controlling such Holder, with respect to which a registration,
qualification or compliance has been effected pursuant to this Rights
Agreement, and each underwriter, if any, and each person who controls any
underwriter of the Registrable Securities held by or issuable to such
Holder, against all claims, losses, expenses, damages and liabilities (or
actions in respect thereto) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any
registration statement or prospectus incident to such registration, or
based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement
therein not misleading, or any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law
applicable to the Company or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any such state law 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, however, that the indemnity agreement
contained in this subsection 1.7(a) shall riot apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); and provided further, 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 written information furnished to the Company by such
Holder or underwriter specifically for use therein; and provided further,
that the agreement of the Company to indemnify any underwriter and any
person who controls such underwriter contained herein with respect to any
such preliminary prospectus shall not inure to the benefit of an
underwriter, from whom the person asserting any such claim, loss, damage,
liability or action purchased the stock which is the subject thereof, if at
or prior to the written confirmation of the sale of such stock, a copy, of
the prospectus (or the prospectus as amended or supplemented) was not sent
to delivered to such person, excluding the documents incorporated therein
by reference, and the untrue statement or omission of a material fact
contained in such preliminary prospectus was corrected in the prospectus
(or the prospectus as amended or supplemented).
(b) Each Holder will, if Registrable Securities held by or issuable to
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify and defend 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 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 registration statement or prospectus
incident to such registration, 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
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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, offering
circular, prospectus or other document in reliance upon and in conformity
with written information furnished to the Company by the Holder in an
instrument duly executed by such Holder specifically for use therein;
provided, however, that the indemnity agreement contained in this
subsection 1.7(b) shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability or action if such settlement is effected
without the consent of the Holder (which consent shall not be unreasonably
withheld); and provided further, that the total amount for which any Holder
shall be liable under this subsection 1.7(b) shall not in any event exceed
the aggregate gross proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration not
including underwriter's commissions and discounts.
(c) Each party entitled to indemnification under this subsection 1.7
(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 claim 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,
however, 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 its own 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 prejudice to the
Indemnifying Party; and provided, further, however, that an Indemnified
Party (together with all other Indemnified Parties which may be represented
without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained
by the Indemnifying Party would be inappropriate due to a conflict of
interests between such Indemnified Party and any other party represented by
such counsel in such proceeding. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of the
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 to such claim or litigation. No Indemnified
Party shall be entitled to indemnification hereunder if such Indemnified
Party consents to entry of any judgment or enters into any settlement
without the consent of the Indemnifying Party. Any Indemnified Party shall
cooperate with the Indemnifying Party in the defense of any claim or
litigation brought against such Indemnified Party.
(d) If the indemnification provided for in this Section 1.7 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to, any losses, claims, damages or liabilities referred to
herein, the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall, to the extent permitted by applicable law,
contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the
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violation(s) that resulted in such loss, claim, damage 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
a court of law 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
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; provided, that in no event shall any
contribution by a Holder hereunder exceed the net proceeds from the
offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 1.7
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. 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 to such claim
or litigation.
(f) The indemnification provided for in this Section 1.7 shall be
superseded by indemnification provided for in an underwriting agreement
entered into by the Company and an underwriter of Registrable Securities
with respect to which a registration has been effected pursuant to this
Rights Agreement.
1.8 Information by Holder.
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Any 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, qualification or compliance referred to herein.
1.9 Rule 144 Reporting.
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With a view to making available to Holders the benefits of certain rules
and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees at all times
to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and
(c) so long as a Holder owns any Registrable Securities, to furnish to
such Holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144 and of the Securities Act and the Exchange Act, a copy of the most
recent annual or quarterly reports of the Company, and such other reports
and documents so filed by the Company as the Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing such
Holder to sell any such securities without registration.
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1.10 Transfer of Registration Rights.
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Holders' rights to cause the Company to register their securities and keep
information available, granted to them by the Company under subsections 1.2,
1.3, 1.4 and 1.9, may be assigned (but only with all related obligations) to a
transferee or assignee; provided, however, that the Company is given written
notice by such 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.
1.11 Termination of Registration Rights.
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The obligations of the Company pursuant to this Section 1 shall terminate
(i) as to any Holder, at such time as such Holder is able to sell all such
Registrable Securities held by such Holder within a single three month period
under Rule 144 or such Holder is able to sell all Registrable Securities held by
it pursuant to Rule 144(k) promulgated under the Securities Act, or (ii) once
all Registrable Securities are registered.
2. General.
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2.1 Waivers and Amendments.
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With the written consent of the record or beneficial holders of fifty
percent (50%) of the Registrable Securities, the obligations of the Company and
the rights of Purchaser under this Rights Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely). Upon the
effectuation of each such waiver, consent, agreement of amendment or
modification, the Company shall promptly give written notice thereof to the
record holders of the Registrable Securities who have not previously consented
thereto in writing.
2.2 Governing Law.
-------------------
This Rights Agreement shall be governed in all respects by the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.
2.3 Successors and Assigns.
----------------------------
Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
2.4 Entire Rights Agreement.
-----------------------------
Except as set forth below, this Rights Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
2.5 Notices, etc.
------------------
All notices and other communications required or permitted hereunder shall
be in writing and shall be sent via facsimile, overnight courier service or
mailed by certified mail, postage prepaid, return receipt requested, addressed
or sent (i) if to a Purchaser, at the address or facsimile number of the
Purchaser set forth in the Company's records, or at such other address or number
as the Purchaser shall have furnished to the Company in writing, or (ii) if to
the Company, at the Company's principal place of business or at such other
address or number as the Company shall have furnished to the Purchasers in
writing, and shall be effective (i) upon delivery if sent by facsimile (with a
confirming receipt); (ii) one day after delivery to an overnight courier
service; or (iii) three (3) days after deposit with the United States Post
Office if mailed postage prepaid by regular mail or airmail.
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2.6 Severability.
------------------
In case any provision of this Rights Agreement shall be invalid, illegal,
or unenforceable, the validity, legality and enforceability of the remaining
provisions of this Rights Agreement or any provision of the other Agreements
shall not in any way be affected or impaired thereby.
2.7 Titles and Subtitles.
--------------------------
The titles of the sections and subsections of this Rights Agreement are for
convenience of reference only and are not to be considered in construing this
Rights Agreement.
2.8 Counterparts.
------------------
This Rights Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
instrument.
2.9 Aggregation of Stock.
--------------------------
All shares held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
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IN WITNESS WHEREOF, the parties hereby have executed this Investors Rights
Agreement on the date first above written.
"COMPANY"
XXXXXX RECORDS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
President and Chief Executive Officer
"PURCHASERS"
/s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
/s/ Xxx Xxxxxxxx
-----------------------------------------
Xxx Xxxxxxxx
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