Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 4th day of May,
1999, between Gage LLC ( referred to as the "Holder"), and ImaginOn, Inc., a
corporation incorporated under the laws of the State of Delaware (the
"Company").
WHEREAS, pursuant to the Preferred Stock Purchase Agreement dated as
of May 4, 1999 (the "Purchase Agreement"), the Holder will be purchasing shares
of Preferred Stock and Warrants (hereinafter collectively referred to as the
"Securities" of the Company) of the Company at the Purchase Price as set forth
in the Purchase Agreement; All capitalized terms not hereinafter defined shall
have that meaning assigned to them in the Purchase Agreement; and
WHEREAS, the Company desires to grant to the Holder the registration
rights set forth herein with respect to the Securities set forth in the Purchase
Agreement.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term "Registrable
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Security" shall mean the Additional Shares, Underlying Shares and Warrant
Shares: (i) in respect of which a registration statement (covering these
securities) has not been declared effective by the SEC, (ii) which have not been
sold under circumstances under which all of the applicable conditions of Rule
144 (or any similar provision then in force) under the Securities Act ("Rule
144") are met, (iii) which have not been otherwise transferred to holders who
may trade such shares without restriction under the Securities Act, or (iv) the
sales of which, in the opinion of counsel to the Company, are subject to any
time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a Registrable Security. In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of Registrable Security as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Section.
Section 2. Restrictions on Transfer. The Holder acknowledges and
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understands that prior to the registration of the Registrable Securities as
provided herein, the Registrable Securities are "restricted securities" as
defined in Rule 144 promulgated under the Securities Act. The Holder understands
that no disposition or transfer of the Registrable Securities or the Securities
may be made by the Holder in the absence of (i) an opinion of counsel to the
Company that such transfer may be made without registration under the Securities
Act and state law, or (ii) such registration.
Section 3. Registration Rights.
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(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("SEC"), as soon as possible after the
Closing Date but not later than the 30/th/ calendar day after the Closing Date,
a primary shelf registration statement under the Securities Act (the "Shelf
Registration Statement"), at the sole expense of the Company (except as provided
in Section 3(c) hereof), in respect of the Registrable Securities, so as to
permit the resale of the Registrable Securities under the Securities Act. The
Company shall use its best efforts to cause the Shelf Registration Statement to
become effective on or before the 110/th/ calendar day after the Closing Date.
In the event the Shelf Registration Statement has not been filed by the 30/th/
calendar day after the Closing Date or has not been declared effective by the
SEC on or before the 110/th/ calendar day after the Closing Date, the Holder may
make a demand to the Company in writing (the "Demand Notice") via facsimile (the
Business Day in which the Company receives the Demand Notice in facsimile is
referred to as the "Demand Date") to require the Company to include the
Registrable
Securities for resale via a registration statement on Form S-3 or any other
available form (the "Resale Registration Statement", and along with the Shelf
Registration Statement referred to as the "Registration Statement"). In such
case the Company shall be required to file with the SEC the Resale Registration
Statement on or before the 30/th/ calendar day after the Demand Date at the sole
expense of the Company (except as provided in Section 3(c) hereof), in respect
of the Registrable Securities, so as to permit the resale of the Registrable
Securities under the Securities Act. The Company will use its best efforts to
cause the Resale Registration Statement to become effective on or before the
90/th/ calendar day after the Demand Date. The number of shares of Common Stock
designated in the Registration Statement to be registered shall be (i) 150% of
the number of Underlying Shares that would be required if the Preferred Stock
was issued and converted on the Trading Day immediately preceding the filing of
the Registration Statement, plus (ii) 100% of the Warrant Shares.
In the event the number of shares of Common Stock included in the
Registration Statement shall be insufficient to cover the number of Registrable
Securities due to the Holder via conversion and/or exercise or otherwise under
the terms of the Purchase Agreement, the Company agrees that it shall file
either a new Registration Statement including such additional shares or amend
the then existing Registration Statement. The Company agrees that in such event
it will file with the SEC either an amendment to the then existing Registration
Statement or a new Registration Statement within 30 days of when required
hereunder, and use its best efforts to cause either the amendment or such
Registration Statement to become effective within 90 calendar days from when
required. If such amendment or new Registration Statement is not filed and/or
declared effective in a timely manner as set forth herein, the Company shall be
subject to liquidated damages as pursuant to the provisions of Section 3(e)
below.
(b) The Company will maintain the Registration Statement, or
post-effective amendment filed under this Section 3 hereof current under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to the applicable Registration Statement,
(ii) the date the Company receives an opinion of counsel from the Holder that
the Registrable Securities may be sold under the provisions of Rule 144(k), or
other similar exemption (without volume limitation) or (iii) five years after
the Closing Date.
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and blue sky laws (including, without limitation, all attorneys' fees
of the Company) shall be borne by the Company. The Holder shall bear the cost,
pro rata, of underwriting discounts and commissions, if any, applicable to the
Registrable Securities being registered and the fees and expenses of their
counsel. The Company shall qualify any of the Registrable Securities for sale in
such states as the Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 8 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers. The Company at its
expense will supply the Holder with copies of the Registration Statement and the
prospectus or offering circular included therein and other related documents in
such quantities as may be reasonably requested by the Holder.
(d) Unless otherwise agreed to in writing by the Holder, the Company
shall only be permitted to include the Registrable Securities in the
Registration Statement. The Company represents that as of the date hereof it is
not obligated to file a registration statement on behalf of any other Person
and/or entity not a party to this Agreement.
(e) In the event the Resale Registration Statement to be filed by the
Company pursuant to Section 3(a) above is not filed with the SEC on or before
the 30/th/ calendar day after the Demand Date and/or the Registration Statement
is not declared effective by the SEC on or before the 90/th/ calendar day after
the Demand Date, then the Company will pay the Holder (pro rated on a daily
basis), as liquidated damages for such failure and not as a penalty, two percent
(2%) of the Purchase Price (and in the case of the Warrants two percent (2%) of
the cash value on such date, where the "cash value" of each Warrant Share is
equal to the Bid Price of the Common Stock on such date less the Exercise Price
per share of Common Stock) of the then outstanding shares of Preferred Stock for
every 30 calendar day period until the Registration Statement has been filed
and/or declared effective. Such payment of the liquidated damages shall be made
to the Holder in cash, immediately upon demand, provided, however, that the
payment of such liquidated
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damages shall not relieve the Company from its obligations to register the
Registrable Securities pursuant to this Agreement. If the Company does not remit
the damages to the Holder as set forth above, the Company will pay the Holder's
reasonable costs of collection, including attorneys fees, in addition to the
liquidated damages. The registration of the Registrable Securities pursuant to
this provision shall not affect or limit the Holder's other rights or remedies
as set forth in this Agreement.
(f) The Company agrees that within five calendar days after being
notified by the SEC that the Registration Statement has been cleared to go
effective, the Company it will declare the Registration Statement effective. The
Company also agrees that it shall respond in writing to any questions and/or
comments from the SEC which relate to the Registration Statement within ten
calendar days of receipt of such question or comment.
Section 4. Cooperation with Company. The Holder will cooperate with the
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Company in all respects in connection with this Agreement, including timely
supplying (in writing if so reasonably requested) all information reasonably
requested by the Company and executing and returning all documents reasonably
requested in connection with the registration and resale of the Registrable
Securities.
Section 5. Registration Procedures. Whenever the Company is required by
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any of the provisions of this Agreement to effect the registration of any of the
Registrable Securities under the Securities Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as possible:
(a) prepare and file with the SEC such amendments and supplements
to the Registration Statements 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 sale or other
disposition of all securities covered by such registration statement whenever
the Holder of such securities shall desire to sell or otherwise dispose of the
same (including prospectus supplements with respect to the sales of securities
from time to time in connection with a registration statement pursuant to Rule
415 promulgated under the Securities Act);
(b) furnish to the Holder such numbers of copies of a summary
prospectus or other prospectus, including a preliminary prospectus or any
amendment or supplement to any prospectus, in conformity with the requirements
of the Securities Act, and such other documents, as the Holder may reasonably
request in order to facilitate the resale of the Registrable Securities owned by
the Holder;
(c) register and qualify the securities covered by the Registration
Statement under such other securities or blue sky laws of such jurisdictions as
the Holder shall reasonably request, and do any and all other acts and things
which may be necessary or advisable to enable the Holder to consummate the
public sale or other disposition in such jurisdiction of the securities owned by
the Holder, except that the Company shall not for any such purpose be required
to qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified or to file therein any general consent to service of
process;
(d) list such securities on the NASDAQ Small Cap Market or other
securities exchange, including, but not limited to, a national securities
exchange, on which any securities of the Company are then listed, if the listing
of such securities is then permitted under the rules of such market or exchange;
(e) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(f) notify the Holder of Registrable Securities covered by the
Registration Statement any time when a prospectus relating thereto covered by
the Registration Statement is required to be delivered under the Securities Act,
of the happening of any event of which it has knowledge as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
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required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
Section 6. Assignment. The rights granted the Holder under this
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Agreement may be assigned by giving the Company written assignment of such
transfer and such assignee agrees to be bound by the terms herein. This
Agreement is binding upon and inures to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns.
Section 7. Termination of Registration Rights. The rights granted
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pursuant to this Agreement shall terminate as to the Holder (and permitted
transferee under Section 6 above) upon the occurrence of any of the following:
(a) all of the Holder's securities subject to this Agreement have
been registered;
(b) all of the Holder's securities subject to this Agreement may be
sold without such registration pursuant to Rule 144 (without volume limitation)
promulgated by the SEC pursuant to the Securities Act;
(c) all of such Holder's securities subject to this Agreement can
be sold pursuant to Rule 144(k) (without volume limitation) promulgated by the
SEC pursuant to the Securities Act; or
(d) five years from the issuance of the Registrable Securities.
Section 8. Indemnification.
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(a) Indemnification by Holder. The Holder shall indemnify and hold
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harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review)
arising solely out of or based solely upon any untrue statement of a material
fact contained in the Registration Statement, any prospectus, or any form of
prospectus, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein 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 so furnished in writing by
the Holder to the Company specifically for inclusion in the Registration
Statement or such prospectus or to the extent that such information relates to
the Holder or the Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by the Holder
expressly for use in the Registration Statement, such prospectus or such form of
prospectus.
(b) Indemnification by Company. The Company shall indemnify and
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hold harmless the Holder, its directors, officers, agents and employees, each
person who controls the Holder (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling persons, to the fullest extent permitted
by applicable law, from and against all losses arising solely out of or based
solely upon any untrue statement of a material fact contained in the
Registration Statement, or any related preliminary prospectus, final prospectus,
offering circular, notification or amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
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in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Registration Statement, preliminary
prospectus, final prospectus, offering circular, notification or amendment or
supplement thereto in reliance upon, and in conformity with, written information
furnished to the Company by the Holder, specifically for use in the preparation
thereof or to the extent that such information relates to the Holder's method of
distribution of the Registrable Securities and was reviewed and expressly
reviewed by the Holder. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
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(c) Conduct of Indemnification Proceedings.
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(i) If any Proceeding shall be brought or asserted against any
person and/or entity entitled to indemnity hereunder (an "Indemnified
Party"), such Indemnified Party promptly shall notify the Person from whom
indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
(ii) An Indemnified Party shall have the right to employ
separate counsel in any such Proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (A) the Indemnifying Party has
agreed in writing to pay such fees and expenses; or (B) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding
and to employ counsel reasonably satisfactory to such Indemnified Party in
any such Proceeding; or (C) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any
Indemnified Xxxxx is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such Proceeding.
(iii) All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that
an Indemnified Party is not entitled to indemnification hereunder,
provided, that the Indemnified Party must reimburse all such fees and
expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).
Section 9. Contribution. If a claim for indemnification under Section 8
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is unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses shall
be deemed to include, subject to the limitations set forth in Section 8, any
reasonable attorneys, or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
Section 8 was available
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to such party in accordance with its terms. 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.
Section 10. Notices. All notices, demands, requests, consents, approvals,
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and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is to
be received), or the first Business Day following such delivery (if delivered
other than on a Business Day during normal business hours where such notice is
to be received), (b) on the second Business Day following the date of mailing by
reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur, or (c) five
calendar days after sent by regular mail. The addresses for such communications
shall be:
If to the Company:
ImaginOn, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 0
Xxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, President and CEO
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Friedlob Xxxxxxxxx Xxxxxx
Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor:
Gage LLC
c/o Citco Trustees Cayman Limited
Commercial Centre
PO Box 31106SMB
Grand Cayman, Cayman Islands
British West Indies
Attention: Xxxxxxx Xxx
Facsimile: 000 000-0000
Telephone: 000 000-0000
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with a copy to:
The Xxxxxxxxx Law Group, P.C.
00 Xxxxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Either party hereto may from time to time change its address or facsimile
number for notices under this Section by giving at least ten calendar days'
prior written notice of such changed address or facsimile number to the other
party hereto.
Section 11. Counterparts. This Agreement may be executed in
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12. Headings. The headings in this Agreement are for reference
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purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 13. Choice of Law; Venue; Jurisdiction. This Agreement will be
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construed and enforced in accordance with and governed by the laws of the State
of New York, except for matters arising under the Securities Act, without
reference to principles of conflicts of law. Each of the parties consents to the
exclusive jurisdiction of the U.S. District Court sitting in the Southern
District of the State of New York sitting in Manhattan in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
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conveniens, to the bringing of any such proceeding in such jurisdictions. Each
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party hereby agrees that if another party to this Agreement obtains a judgment
against it in such a proceeding, the party which obtained such judgment may
enforce same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was obtained, and each
party hereby waives any defenses available to it under local law and agrees to
the enforcement of such a judgment. Each party to this Agreement irrevocably
consents to the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such party
at its address set forth herein. Nothing herein shall affect the right of any
party to serve process in any other manner permitted by law. Each party waives
its right to a trial by jury.
Section 14. Severability. If any provision of this Agreement shall for
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any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereof and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
Section 15. Counterparts; Facsimile; Amendments. This Agreement may be
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executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by the Company on the one hand, and the Holder, on the other hand.
[Remainder of page intentionally left blank]
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed, on the day and year first above written.
IMAGINON, INC.
By:____________________________
Xxxxx X. Xxxxxxxx
President and CEO
GAGE LLC
By:______________________
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