EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of October 17, 1996, by and
between Digital Video Systems, Inc., a Delaware corporation (the "Company"), and
the individuals named on the signature pages hereto (the "Shareholders").
W I T N E S S E T H
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WHEREAS, pursuant to the Agreement and Plan of Merger dated as of
October , 1996, by and among the Company, Digital Video Acquisition Co.
("Acquisition Co."), ViComp Technology, Inc., a Delaware corporation ("ViComp")
and the Shareholders (the "Merger Agreement"), Acquisition Co. will be merged
with and into ViComp with ViComp as the surviving corporation in such merger in
a transaction intended to qualify as a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
"Merger"); and
WHEREAS, the Merger Agreement provides that the Shareholders will have
certain incidental registration rights and it is a condition to the consummation
of the Merger that each of the Shareholders and the Company enter into this
Registration Rights Agreement;
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. Capitalized terms used herein but not otherwise
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defined shall have the meaning given to such terms in the Merger Agreement.
"Closing" shall mean the consummation of the Merger and the
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transactions contemplated thereby by the Company, Acquisition Co., ViComp and
the Shareholders.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, and the rules and regulations promulgated thereunder as the same may be
amended from time to time.
"Fair Market Value" shall mean the closing sales price for the
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Company's common stock or other traded securities of the Company, or the closing
bid if no sales were reported, as quoted on the Nasdaq National Market or Nasdaq
Small Cap Market, or on the principal established stock exchange as the
Company's stock shall become listed for the date the value is to be determined
(or if there are no sales for such date, then for the last preceding business
day on which there were sales), as reported in the Wall Street Journal or
similar publication.
"Person" shall mean any individual, partnership, joint venture,
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corporation, limited liability company, trust, joint stock company, business
trust, unincorporated association, joint venture, governmental authority or any
department or agency thereof or other entity of any nature whatsoever.
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
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and all rules and regulations promulgated thereunder as the same may be amended
from time to time.
"Shareholder Common Stock" shall mean the 491,253 shares of the
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Company's common stock issued to the Shareholders pursuant to the Merger
Agreement.
ARTICLE II
TRANSFERS OF SHARES
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2.1 Investment Intention; No Resales. Each Shareholder hereby
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represents and warrants that he is acquiring the Shareholder Common Stock for
investment solely for his own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Shareholder
agrees and acknowledges that he will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares
of the Shareholder Common Stock, or solicit any offers to purchase or otherwise
acquire or take a pledge of any shares of the Shareholder Common Stock, unless
such offer, transfer, sale, assignment pledge, hypothecation or other
disposition complies with the provisions of this Agreement and (i) such
transfer, sale, assignment, pledge or hypothecation or other disposition is
pursuant to an effective registration statement under the Securities Act and has
been registered under all applicable state securities or "blue sky" laws or (ii)
the Shareholder shall have furnished the Company with a written opinion in form
and substance reasonably satisfactory to the Company of counsel reasonably
satisfactory to the Company to the effect that no such registration is required
because of the availability of an exemption from registration under the
Securities Act and all applicable state securities or "blue sky" laws.
2.2 Restrictive Legend. Each certificate representing shares of
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Shareholder Common Stock which is issued to the Shareholder on or after the date
hereof shall bear the following legend on the face thereof:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). SUCH SHARES MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
SUCH REGISTRATION
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RIGHTS AGREEMENT AND UNLESS REGISTERED UNDER SAID ACT, OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE IN THE OPINION OF
COUNSEL FOR THE COMPANY.
2.3 Shareholder Common Stock Unregistered. Each Shareholder acknowledges
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and represents that he has been advised by the Company that:
(a) the offer and sale of the Shareholder Common Stock have not been
registered under the Securities Act;
(b) the Shareholder Common Stock must be held and the Shareholder
must continue to bear the economic risk of the investment in the Shareholder
Common Stock until (i) the Shareholder Common Stock is registered pursuant to an
effective registration statement under the Securities Act and all applicable
state securities laws or (ii) an exemption from such registration is available;
(c) when and if shares of the Shareholder Common Stock may be
disposed of without registration under the Securities Act in reliance on Rule
144, such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule;
(d) if the Rule 144 exemption is not available, public offer or sale
of Shareholder Common Stock without registration will require compliance with
some other exemption under the Securities Act;
(e) a restrictive legend in the form set forth Section 2.2 above
shall be placed on the certificates representing the Shareholder Common Stock;
and
(f) a notation shall be made in the appropriate records of the
Company indicating that the Shareholder Common Stock is subject to restrictions
on transfer, and appropriate stop-transfer instructions will be issued to the
Company's transfer agent with respect to the Shareholder Common Stock.
2.4 Rule 144 Reporting. The Company agrees to use its best efforts to:
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(a) Make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times from
and after the Effective Date;
(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 any Shareholder owns any Shareholder Common Stock
issued to such Shareholder pursuant to the Merger Agreement, inform such person
upon request as to its compliance with the reporting requirements of Rule 144
and of the Securities Act and the
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Exchange Act, and provide a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed as may reasonably
be requested in availing such Shareholder of any rule or regulation of the SEC
allowing a sale of any such securities without registration.
Anything to the contrary contained in this Section 2.4 notwithstanding, the
Company may deregister any of its securities under the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act. Nothing in this Section
shall be deemed to limit in any manner the restriction on sales of Shareholder
Common Stock contained in this Agreement.
ARTICLE III
REGISTRATION RIGHTS
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3.1 Demand Registration. If at any time commencing ten months from the
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date of the Company's initial public offering on Form SB-2, the Company shall
receive from holders of at least 50% of the shares of Shareholder Common Stock
held by Shareholders other than Dr. Edmund Sun, a written request that the
Company effect any registration of Shareholder Common Stock, the Company will:
(a) promptly give written notice of the proposed registration to all
other Shareholders; and
(b) file a registration statement (on Form S-3 or any successor form
or on Form S-1 if Form S-3 is not then available) with the SEC within 75 days
after the initiating Shareholders request and use its best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act) as would permit or
facilitate the sale and distribution of such shares of Shareholder Common Stock
as are specified in such request, together with all Shareholder Common Stock of
any Shareholders joining in such request as are specified in a written request
received by the Company within 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 any such registration, qualification or compliance pursuant to
this Section 3.1:
(i) 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;
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(ii) If, at such time as a request for registration pursuant to
this Section 3.1 is pending, the Company has already effected one such
registration pursuant to this Section 3.1, and such registration has been
declared or ordered effective; or
(iii) During the period starting with the date 60 days prior to
the filing of, and ending on a date three months following the effective date
of, a registration statement (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
Shareholder Common Stock).
3.2 Right to Include Securities. If at any time during the period ending
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24 calendar months from the Effective Date the Company proposes to register any
shares of its common stock under the Securities Act on Forms X-0, X-0, X-0 or
SB-2 or any successor or similar forms (except for (i) registrations on such
forms solely for registration of Shareholder Common Stock in connection with any
warrants, option, employee benefit or dividend reinvestment plan or a merger or
consolidation, (ii) registrations of Shareholder Common Stock relating to the
exercise of warrants that were included in the units sold in the Company's
initial public offering and (iii) any underwritten public offering for which a
registration statement is filed with the SEC within 90 days of the Effective
Date), whether or not for sale for its own account, it will each such time as
soon as practicable give written notice of its intention to do so to the
Shareholders. Upon the written request (which request shall specify the total
number of shares of Shareholder Common Stock intended to be disposed of by the
Shareholders) of any Shareholder made within 15 days after the receipt of any
such notice (10 days if the Company gives telephonic notice with written
confirmation to follow promptly thereafter, stating that (i) such registration
will be on Form S-3 and (ii) such shorter period of time is required because of
a planned filing date), the Company will use all reasonable efforts to effect
the registration under the Securities Act of all Shareholder Common Stock held
by the Shareholders which the Company has been so requested to register for sale
in the manner initially proposed by the Company. If the Company thereafter
determines for any reason in its sole discretion not to register or to delay
registration of the common stock, the Company may, at its election, give written
notice of such determination to the Shareholder and (i) in the case of a
determination not to register, shall be relieved of the obligation to register
any Shareholder Common Stock in connection with such registration and (ii) in
the case of a determination to delay registering, shall be permitted to delay
registering any Shareholder Common Stock of the Shareholder for the same period
as the delay in registration of such other securities.
3.3 Priority in Incidental Registration. In a registration pursuant to
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this Article III, if the managing underwriter of any such underwritten offering
shall inform the Company by letter of its belief that the number of shares of
Shareholder Common Stock to be included in such registration would adversely
affect its ability to effect such offering, then the Company will be required to
include in such registration only that number of shares of Shareholder Common
Stock which it is so advised should be included in such offering. Shares of
Shareholder Common Stock proposed by the Company to be registered for issuance
by the Company shall have the first priority and all other shares of Shareholder
Common Stock to be registered, including any and
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all shares of Shareholder Common Stock owned by the Shareholders shall be given
second priority without preference among the relevant holders. If less than all
of the shares of Shareholder Common Stock are to be registered, such shares of
Shareholder Common Stock shall be included in the registration pro rata based on
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the total number of shares sought to be registered other than for issuance by
the Company.
3.4 Custody Agreement and Power of Attorney. Upon delivering a request
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under this Article III, each of the Shareholders seeking registration of its
shares of Shareholder Common Stock will, if requested by the Company, execute
and deliver a custody agreement and power of attorney in form and substance
reasonably satisfactory to the Company with respect to such Selling
Securityholder's (defined below) shares of Shareholder Common Stock to be
registered pursuant to this Article III (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things that such Selling Securityholder will deliver to and deposit in
custody with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Shareholder Common Stock (duly endorsed in blank
by the registered owner or owners thereof or accompanied by duly executed stock
powers in blank) and irrevocably appoint said custodian and attorney-in-fact as
such Selling Securityholder's agent and attorney-in-fact with full power and
authority to act under the Custody Agreement and Power of Attorney on such
Selling Securityholder's behalf with respect to the matters specified therein.
Such Selling Securityholder shall also execute such other agreements as the
Company may reasonably request to further evidence the provisions of this
Article III.
3.5 Registration Procedures. In connection with the Company's obligations
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pursuant to this Article III, the Company will use all reasonable efforts to
effect such registration and the Company will promptly:
(a) prepare and file with the SEC as soon as practicable after
request for registration hereunder the requisite registration statement to
effect such registration and use all reasonable efforts to cause such
registration statement to become effective and to remain continuously effective
until the earlier to occur of (x) 180 days following the date on which such
registration statement is declared effective or (y) the termination of the
offering being made thereunder;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
shares of Shareholder Common Stock covered by such registration statement until
such Shareholder Common Stock has been sold or such lesser period of time as the
Company, any seller of such Shareholder Common Stock or any underwriter is
required under the Securities Act to deliver a prospectus in accordance with the
intended methods of disposition by the sellers of such Shareholder Common Stock
set forth in such registration statement or supplement to such prospectus;
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(c) furnish to each and any stockholder which owns shares of
Shareholder Common Stock covered by such registration statement (the "Selling
Securityholders") and the managing underwriter, if any, at least one executed
original of the registration statement and such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits) such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act as
may reasonably be requested by such Selling Securityholder.
(d) use all reasonable efforts (i) to register or qualify all shares
of Shareholder Common Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions where an exemption is not
available as the Selling Securityholders shall reasonably request, (ii) to keep
such registration or qualification in effect for so long as such registration
statement remains in effect and (iii) to take any other action which may be
reasonably necessary or advisable to enable the Selling Securityholders to
consummate the disposition in such jurisdictions of such Shareholder Common
Stock, provided that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified, subject itself
to taxation in any such jurisdiction or take any action which would subject it
to general service of process in any such jurisdiction;
(e) notify the Selling Securityholders and the managing underwriter,
if any, promptly, and confirm such advice 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, (ii) of any request by the SEC for amendments or
supplements to a registration statement or related prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceedings
for that purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the registered
securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or information
becoming known which requires the making of any changes in a registration
statement or related prospectus so that such documents 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 (vi) of the Company's reasonable determination that a post-effective
amendment to a registration statement would be appropriate;
(f) make every reasonable effort 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 registered securities for
sale in any jurisdiction, at the earliest possible moment;
(g) upon the occurrence of any event contemplated by clause (e)(v)
above, prepare a supplement or post-effective amendment to the applicable
registration statement or
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related prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the securities being sold thereunder, such prospectus will not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading;
(h) use its best efforts to furnish to the Selling Securityholders a
signed counterpart, addressed to the Selling Securityholders and the
underwriters, if any, of (A) an opinion of counsel for the Company, and (B) a
"comfort" letter, signed by the independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such registration statement, covering substantially the same
matters with respect to such registration statement (and the prospectus included
therein) and, in the case of the accountant's letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountant's letters delivered to
underwriters in underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in the case of the
accountant's letter, such other financial matters, and in the case of the legal
opinion, such other legal matters, as the Selling Securityholders or the
underwriters may reasonably request;
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to the Selling
Securityholders an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder, no later than 90 days
after the end of any 12-month period beginning after the effective date of a
registration statement pursuant to which shares of Shareholder Common Stock are
sold, which statement shall cover such 12-month period;
(j) cooperate with Selling Securityholders and the managing
underwriters if any, to facilitate the timely preparation and delivery of
certificates representing shares of Shareholder Common Stock to be sold; and
enable such shares of Shareholder Common Stock to be in such denominations and
registered in such names as the Selling Securityholders or the managing
underwriters, if any, may request at least two business days prior to any sale
of shares of Shareholder Common Stock to the underwriters;
(k) use its best efforts to cause the shares of Shareholder Common
Stock covered by the applicable registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the Selling Securityholder(s) or the underwriters, if any, to
consummate the disposition of such shares of Shareholder Common Stock;
(l) cause all shares of Shareholder Common Stock covered by the
registration statement to be listed on each securities exchange, if any, or
Nasdaq, on which securities of such class, series and form issued by the
Company, if any, are then listed or traded if requested by the managing
underwriters, if any, or the holders of a majority of the shares or units of
Shareholder Common Stock covered by the registration statement and entitled
hereunder to be so listed;
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(m) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD") and in the
performance of any due diligence investigation by any underwriter (including any
qualified independent underwriter that is required to be retained in accordance
with the rules and regulations of the NASD); and
(n) as soon as practicable prior to the filing of any document which
is to be incorporated by reference into the registration statement or the
prospectus (after initial filing of the registration statement) provide copies
of such document to the Selling Securityholders and to the managing
underwriters, if any, and make the Company's representatives available for
discussion of such document and consider in good faith making such changes in
such document prior to the filing thereof as the Selling Securityholders or such
underwriters may reasonably request.
The Company may require each Selling Securityholder to furnish to the
Company such information regarding such Selling Securityholder and the
distribution of such securities as the Company may from time to time reasonably
request in writing in order to comply with the Securities Act.
Each of the Shareholders agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section
3.5(e)(ii), (iii), (iv), (v) or (vi) hereof, it will forthwith discontinue
disposition pursuant to such registration statement of any shares of Shareholder
Common Stock covered by such registration statement or prospectus until its
receipt of the copies of the supplemented or amended prospectus relating to such
registration statement or prospectus or until it is advised in writing by the
Company that the use of the applicable prospectus may be resumed (and the period
of such discontinuance shall be excluded from the calculation of the period
specified in clause (x) of Section 3.5(a)) and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in their possession, of the prospectus covering such
securities in effect at the time of receipt of such notice. Each of the
Shareholders agrees to furnish the Company a signed counterpart, addressed to
the Company and the underwriters, if any, of an opinion of counsel covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) as are customarily covered in opinions of
selling stockholder's counsel delivered to the underwriters in underwritten
public offerings of securities (and dated the dates such opinions are
customarily dated) and such other legal matters as the Company or the
underwriters may reasonably request.
3.6 Incidental Underwritten Offerings. If the Company at any time
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proposes to register any shares of its common stock under the Securities Act as
contemplated by Section 3.2 and such shares are to be distributed by or through
one or more underwriters, the Company and the Securityholders who hold shares of
Shareholder Common Stock to be distributed by such underwriters in accordance
with Section 3.2 hereof shall be parties to the underwriting agreement between
the Company and such underwriters and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of them and that
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any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to their obligations.
The Company may, at its option, require that any or all of the representations
and warranties by, and the other agreements on the part of the Selling
Securityholders to and for the benefit of such underwriters shall also be made
to and for the benefit of the Company.
3.7 Preparation; Reasonable Investigation. In connection with the
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preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Selling Securityholders,
the underwriters and their respective counsel and accountants the opportunity
(but such Persons shall not have the obligation) to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the SEC, and, to the extent practicable, each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records (to the extent customarily given to the underwriters of the Company's
securities) and such opportunities to discuss the business of the Company with
its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of the Selling
Securityholders, and the underwriters' respective outside counsel to conduct a
reasonable investigation within the meaning of the Securities Act.
3.8 Limitations, Conditions and Qualifications to Obligations under
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Registration Covenants. The obligations of the Company to use its reasonable
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efforts to cause shares of Shareholder Common Stock to be registered under the
Securities Act are subject to each of the following limitations, conditions and
qualifications:
(a) The Company shall be entitled to postpone for a reasonable period
of time the filing or effectiveness of, or suspend the rights of Selling
Securityholders to make sales pursuant to, any registration statement otherwise
required to be prepared, filed and made and kept effective by it hereunder (but
the duration of such postponement or suspension may not exceed the earlier to
occur of (w) 15 days after the cessation of the circumstances described in
clauses (i) and (ii) below or (x) 120 days after the date of the determination
of the Board of Directors referred to below, and the duration of such
postponement or suspension shall be excluded from the calculation of the period
specified in clause (x) of Section 3.5(a)) if the Board of Directors of the
Company determines in good faith that (i) there is a material undisclosed
development in the business or affairs of the Company (including any pending or
proposed financing, recapitalization, acquisition or disposition), the
disclosure of which at such time could be adverse to the Company's interests or
(ii) the Company has filed a registration statement with the SEC. such
registration statement has not yet been declared effective, the Company is using
its reasonable best efforts to have such registration statement declared
effective, and the underwriters with respect to such registration advise that
such registration would be adversely affected. If the Company shall so delay
the filing of a registration statement, it shall, as promptly as possible,
notify the Selling Securityholders of such determination, and the Selling
Securityholders shall have the right (y) in the case of a postponement of the
filing or effectiveness of a registration statement to withdraw the request for
registration by giving written notice to the Company within 10 days after
receipt of the Company's notice or (z) in the case of a suspension of the right
to
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make sales, to receive an extension of the registration period equal to the
number of days of the suspension.
(b) The Company's obligations shall be subject to the obligations of
the Selling Securityholders, which each of the Shareholders hereby acknowledges,
to furnish all information and materials and to take any and all actions as may
be required under applicable federal and state securities laws and regulations
to permit the Company to comply with all applicable requirements of the SEC and
to obtain any acceleration of the effective date of such registration statement.
(c) The Company shall not be obligated to cause any special audit to
be undertaken in connection with any registration pursuant hereto unless such
audit is requested by the underwriters with respect to such registration.
3.9 Expenses. The Company will pay all reasonable out-of-pocket costs and
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expenses incurred in connection with each registration of Shareholder Common
Stock pursuant to this Agreement, including, without limitation, any and all
filing fees payable to the SEC, fees with respect to filings required to be made
with stock exchanges, Nasdaq and the NASD, fees and expenses of compliance with
state securities or blue sky laws, printing expenses, fees and disbursements of
counsel and accountants of the Company, including costs associated with comfort
letters, and fees and expenses of other Persons retained by the Company, but
excluding underwriters' expenses (including discounts, commissions and fees of
underwriters and expenses included therein of selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
securities being registered) and legal expenses of any Person other than the
Company) but including fees and expenses of any qualified independent
underwriter required to participate in such registration pursuant to applicable
law or the requirements of the NASD, The Company shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), and the expense of securities
law liability insurance and rating agency fees, if any.
3.10 Indemnification.
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(a) Indemnification by the Company. In connection with any
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registration pursuant hereto in which shares of Shareholder Common Stock are to
be disposed of, the Company shall indemnify and hold harmless, to the full
extent permitted by law, each of the Shareholders and, when applicable, its
officers, directors, agents and employees and each Person who controls any of
the Shareholders (within the meaning of the Securities Act or the Exchange Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus 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, including, without
limitation, any loss, claim, damage, liability or expense resulting from the
failure to keep a prospectus current, except insofar as the same (i) are caused
by or contained in any information furnished in writing to the Company by any
member of the Shareholder Group
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expressly for use therein or (ii) are caused by any of the Shareholders' failure
to deliver a copy of the current prospectus after the Company has furnished any
such Shareholders with a sufficient number of copies of such prospectus or (iii)
arise in respect of any offers to sell or sales made during any period when any
of the Shareholders is required to discontinue sales under Section 3.5(e). The
Company shall also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each person who controls such Persons (within
the meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Shareholders and shall
enter into an indemnification agreement with such Persons containing such terms,
if requested.
(b) Indemnification by the Shareholders. In connection with each
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registration statement effected pursuant hereto in which shares of Shareholder
Common Stock are to be disposed of, each of the Shareholders shall, severally
and jointly, indemnify and hold harmless, to the full extent permitted by law,
the Company, each other Selling Securityholder and their respective directors
officers agents and employees and each Person who controls the Company and each
other Selling Securityholder (within the meaning of the Securities Act and the
Exchange Act) against any losses, claims, damages, liabilities and expenses
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in such registration statement or prospectus
or preliminary prospectus or necessary to make the statements therein not
misleading, to the extent but only to the extent, that such untrue statement or
omission is contained in any information furnished in writing by such
Shareholders to the Company expressly for inclusion in such registration
statement or prospectus. In no event shall the liability of the Shareholders
hereunder be greater in amount than the dollar amount of the proceeds received
by the Shareholders upon the sale of the securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder shall give prompt notice to the indemnifying party of
any claim with respect to which it shall seek indemnification and shall permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided, however, that any
-------- -------
Person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (i)
the indemnifying party shall have agreed to pay such fees or expenses, or (ii)
the indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person or (iii) in the opinion of
outside counsel to such Person there may be one or more legal defenses available
to such Person which are different from or in addition to those available to the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person), If such defense is not assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any settlement made
without its consent (but such consent shall not be unreasonably withheld). No
indemnified party shall be
12
required to consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a written release in form and substance
reasonably satisfactory to such indemnified party from all liability in respect
of such claim or litigation. An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim shall not be obligated to pay the
fees and expenses of more than one firm of counsel (and, if necessary, local
counsel) for all parties indemnified by such indemnifying party with respect to
such claim, unless in the written opinion of outside counsel to an indemnified
party a conflict of interest as to the subject matter exists between such
indemnified party and another indemnified party with respect to such claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of additional counsel for such indemnified party.
(d) Contribution. If for any reason the indemnification provided for
------------
herein is unavailable to an indemnified party or is insufficient to hold it
harmless as contemplated hereby, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claims damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations,
provided that in no event shall the liability of the Shareholders for such
contribution and indemnification exceed, in the aggregate, the dollar amount of
the proceeds received by the Shareholders upon the sale of securities giving
rise to such indemnification and contribution obligation.
3.11 Participation in Underwritten Registrations. None of the Shareholders
-------------------------------------------
or their Permitted Transferees may participate in any underwritten registration
hereunder unless each of the Shareholders or their Permitted Transferees which
is a Selling Securityholder (a) agrees to sell such its shares of Shareholder
Common Stock on the basis provided in and in compliance with any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and to comply with Rules 10b-6 and 10b-7 under the Exchange Act,
and (b) completes and executes all questionnaires, appropriate and limited
powers-of-attorney, escrow agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided that all such documents shall be consistent with the
--------
provisions hereof.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Recapitalizations, Exchanges, Etc. Affecting Shareholder Common Stock.
---------------------------------------------------------------------
The provisions of this Agreement shall apply, to the full extent set forth
herein with respect to Shareholder Common Stock, to any and all shares of
capital stock of the Company or any successor or assign of the Company (whether
by merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of the Shareholder Common Stock,
by reason of any stock dividend, stock split, stock issuance, reverse
13
stock split, combination recapitalization, reclassification, merger,
consolidation or otherwise. Upon the occurrence of any of such events, amounts
hereunder shall be appropriately adjusted by the Board of Directors of the
Company.
4.2 Binding Effect. The provisions of this Agreement shall be binding
--------------
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. In the case of a transferee
permitted under this Agreement, such transferee shall be deemed the Shareholder
hereunder; provided, however, that no transferee shall derive any rights under
--------
this Agreement unless and until such transferee has executed and delivered to
the Company a valid undertaking and becomes bound by the terms of this
Agreement.
4.3 Amendment; Waiver. This Agreement may be amended only by a written
-----------------
instrument signed by the parties hereto. No waiver by either party hereto of
any of the provisions hereof shall be effective unless set forth in a writing
executed by the party so waiving.
4.4 Notices. All notices, requests, demands and other communications
-------
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a domestic
address by recognized overnight delivery service (e.g., Federal Express) and
----
upon receipt, if sent by certified or registered mail, return receipt requested.
In each case notice shall be sent to:
(a) if to the Company, addressed to:
Digital Video Systems, Inc.
0000 Xxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
with a copy to:
Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
(b) If to a Shareholder, to him at his address set forth on the
signature pages hereto.
14
4.5 Governing Law. This Agreement shall be governed by and construed,
-------------
interpreted and the rights of the parties determined in accordance with the laws
of the State of California without regard to choice of law principles hereof.
4.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
4.7 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
4.8 Cumulative Remedies. All rights and remedies of the party hereto are
-------------------
cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
4.9 Waiver of Right to Trial by Jury. Each party to this Agreement hereby
--------------------------------
waives its rights to a trial by jury.
4.10 Injunctive Relief. The Shareholder and his Permitted Transferees each
-----------------
acknowledges and agrees that a violation of any of the terms of this Agreement
will cause the Company irreparable injury for which adequate remedy at law is
not available. Accordingly, it is agreed that the Company shall be entitled to
an injunction restraining order or other equitable relief to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States or
any state thereof, in addition to any other remedy to which it may be entitled
at law or equity.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DIGITAL VIDEO SYSTEMS, INC.
By:
----------------------------------
Name:
Title:
SHAREHOLDERS:
--------------------------------------
Name: Dr. Edmund Sun
Address:
--------------------------------------
Name: Xxxxx X. Xxxxxxxxxxx, Xx.
Address:
--------------------------------------
Name: Xxxx Xxxx
Address:
--------------------------------------
Name: Xxxxxxx Xxxxxx
Address:
--------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Address:
--------------------------------------
Name: Xxx Xxxx
Address:
--------------------------------------
Name: Xxxxxxx Xxxx
Address:
16
TABLE OF CONTENTS
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Page
----
ARTICLE I DEFINITIONS.................................................. 1
1.1 Defined Terms................................................ 1
ARTICLE II TRANSFERS OF SHARES.......................................... 2
2.1 Investment Intention; No Resales............................. 2
2.2 Restrictive Legend........................................... 2
2.3 Shareholder Common Stock Unregistered........................ 3
2.4 Rule 144 Reporting........................................... 3
ARTICLE III REGISTRATION RIGHTS.......................................... 4
3.1 Right to Include Securities.................................. 4
3.2 Priority in Incidental Registration.......................... 5
3.3 Custody Agreement and Power of Attorney...................... 5
3.4 Registration Procedures...................................... 5
3.5 Incidental Underwritten Offerings............................ 9
3.6 Preparation; Reasonable Investigation........................ 9
3.7 Limitations, Conditions and Qualifications to Obligations
under Registration Covenants................................. 9
3.8 Expenses..................................................... 10
3.9 Indemnification.............................................. 10
3.10 Participation in Underwritten Registrations.................. 12
ARTICLE IV MISCELLANEOUS................................................ 13
4.1 Recapitalizations, Exchanges, Etc. Affecting Shareholder
Common Stock................................................. 13
4.2 Binding Effect............................................... 13
4.3 Amendment; Waiver............................................ 13
4.4 Notices...................................................... 13
4.5 Governing Law................................................ 14
4.6 Counterparts................................................. 14
4.7 Invalidity................................................... 14
4.8 Cumulative Remedies.......................................... 14
4.9 Waiver of Right to Trial by Jury............................. 14
4.10 Injunctive Relief............................................ 14
i.
