Exhibit 10.15
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August
____, 2004, is made by and among iMEDIA INTERNATIONAL,INC., a corporation
organized under the laws of Delaware (the "Company"), and the undersigned
(together with their affiliates, the "Initial Investors").
BACKGROUND
A. In connection with that certain Securities Purchase Agreement of even
date herewith by and among the Company and the Initial Investors (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors convertible bridge notes issued in respect thereof, the "Notes") that
are convertible into shares of the Company's common stock, $0.001 par value per
share (the "Common Stock") and non-redeemable warrants (the "Warrants") to
purchase shares of the Company's Common Stock, $0.001 par value per share. The
shares of Common Stock issuable upon conversion or redemption of or otherwise
pursuant to the Notes and Warrants are referred to herein as the "Conversion
Shares."
B. To induce the Initial Investors to execute and deliver the Securities
Purchase Agreement, and to consummate the transactions contemplated thereby, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "Securities Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investors, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investors and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.
(ii) "register," "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "Registrable Securities" means (a) the Conversion Shares and
(b) any shares of capital stock issued or issuable, from time to time, as a
distribution on or in exchange for or otherwise with respect to any of the
foregoing (including the Notes and Warrants), whether as default payments, on
account of anti-dilution or other adjustments or otherwise. (iv) "Registration
Statement" means a registration statement of the Company under the Securities
Act.
(b) Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement.
2. REGISTRATION.
(a) Piggyback Registration. If at any time after the date hereof, Company
proposes to prepare file with the SEC a Registration Statement with respect to
any of its securities, Company shall, at that time (a "Required Filing Date")
file with the SEC on Form SB-2 (or, if Form SB-2 is not then available, on such
form of Registration Statement as is then available to effect a registration of
all of the Registrable Securities, subject to the consent of the Initial
Investors) covering the resale of 120% of the Registrable Securities, giving the
Initial Investors at least thirty (30) days prior written notice of its
intention. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes and Warrants to prevent dilution resulting from
stock splits, stock dividends or similar transactions. The Registrable
Securities included on the Registration Statement shall be allocated among the
Investors as set forth in Section 11(k) hereof. The Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Initial Investors and their counsel prior to its filing or other submission.
(b) Demand Registration. If Company has not filed a Registration Statement
under the Securities Act within one (1) year after the Closing Date, Company
shall, upon sixty (60) days' prior written notice requesting registration under
the Securities Act of the Registrable Securities from Holders of fifty percent
(50%) or more of the aggregate principal amount of the Notes, at that time (also
a Required Filing Date) file with the SEC, on Form SB-2 (or, if Form SB-2 is not
then available, on such form of Registration Statement as is then available to
effect a registration of all of the Registrable Securities, subject to the
consent of the Initial Investors) covering the resale of 120% of the Registrable
Securities. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes and Warrants to prevent dilution resulting from
stock splits, stock dividends or similar transactions. The Registrable
Securities included on the Registration Statement shall be allocated among the
Investors as set forth in Section 11(k) hereof. The Registration Statement (and
each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Initial Investors and their counsel prior to its filing or other submission.
(c) Payments by the Company. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to this Section 2
to become effective as soon as practicable, but in no event later than the
ninetieth (90th) day following a Required Filing Date. At the time of
effectiveness, the Company shall ensure that such Registration Statement covers
at least 120% of the Registrable Securities issuable upon full conversion of the
Notes and Warrants (without giving effect to any limitations on conversion
contained in the Notes or Warrants), including, if necessary, by filing an
amendment prior to the effective date of the Registration Statement to increase
the number of Registrable Securities covered thereby. If (i) (A) the
Registration Statement required to be filed pursuant to this Section 2 is not
filed with the SEC prior to a Required Filing Date or declared effective by the
SEC on or before the ninetieth (90th) day following a Required Filing Date (the
"Registration Deadline") or (B) any Registration Statement required to be filed
pursuant to Section 3(b) hereof is not declared effective by the SEC on or
before the sixtieth (60th) day following the applicable Registration
Trigger Date (as defined in Section 3(b) below), or (ii) if, after any such
Registration Statement has been declared effective by the SEC, sales of any of
the Registrable Securities required to be covered by such Registration Statement
(including any Registrable Securities required to be registered pursuant to
Section 3(b) hereof) cannot be made pursuant to such Registration Statement (by
reason of a stop order or the Company's failure to update the Registration
Statement or for any other reason outside the control of the Investors) or (iii)
the Common Stock is not listed or included for quotation in the Pink Sheets (the
"Pink Sheets") on the OTC Bulletin Board (the "Bulletin Board"), Nasdaq SmallCap
Market (the "SmallCap Market"), the Nasdaq National Market (the "National
Market"), the New York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX") at any time after the Registration Deadline hereunder,
then the Company will make payments to each Investor in such amounts and at such
times as shall be determined pursuant to this Section 2(c) as partial relief for
the damages to the Investors by reason of any such delay in or reduction of
their ability to sell the Registrable Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity). The Company
shall pay to each Investor an amount equal to the product of (i) the aggregate
principal balance of the Notes then outstanding (including, for this purpose,
the principal balance of any Notes that have been converted into Conversion
Shares then held by such Investor as if such Notes had not been so converted),
multiplied by (ii) (A) one and one-half percent (1.5%), for each thirty (30) day
period (or portion thereof) up to the one hundred twentieth (120th) day, and (B)
two percent (2%), for each thirty (30) day period (or portion thereof) from and
after the one hundred twentieth (120th) day, (w) after a Required Filing Date
and prior to the date the Registration Statement is filed with the SEC pursuant
to Section 2(a) or 2(b), (x) after the Registration Deadline and prior to the
date the Registration Statement filed pursuant to Section 2(a) or (b) is
declared effective by the SEC, (y) after the sixtieth (60th) day following a
Registration Trigger Date and prior to the date the Registration Statement filed
pursuant to Section 3(b) hereof is declared effective by the SEC, and (z) during
which sales of any Registrable Securities cannot be made pursuant to any such
Registration Statement after the Registration Statement has been declared
effective or the Common Stock is not listed or included for quotation in the
Pink Sheets or on the Bulletin Board, SmallCap Market, the National Market, NYSE
or AMEX; provided, however, that, for purpose of calculating the payment amount
owed to any given Investor, there shall be excluded from each such period any
delays which are solely attributable to changes required by such Investor in the
Registration Statement with respect to information relating to such Investor,
including, without limitation, changes to the plan of distribution (other than
any corrections of Company mistakes with respect to information previously
provided by such Investor). All such amounts required to be paid hereunder shall
be paid in cash within five (5) days after the end of each period that gives
rise to such obligation, provided that, if any such period extends for more than
thirty (30) days, interim payments shall be made for each such thirty (30 day
period.
(d) Eligibility for Form SB-2. The Company represents and warrants that it
meets the requirements for the use of Form SB-2 for registration of the sale by
the Initial Investors and any other Investor of the Registrable Securities and
the Company shall file all reports and statements required to be filed by the
Company with the SEC in a timely manner so as to thereafter maintain such
eligibility for the use of Form SB-2.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) The Company shall respond promptly to any and all comments made by
the staff of the SEC to any Registration Statement required to be filed
hereunder, and shall submit to the SEC, before the close of business on the
business day immediately following the business day on which the Company learns
(either by telephone or in writing) that no review of such Registration
Statement will be made by the SEC or that the staff of the SEC has no further
comments on such Registration Statement, as the case may be, a request for
acceleration of the effectiveness of such Registration Statement to a time and
date as soon as practicable. The Company shall keep such Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier of
(i) the date on which all of the Registrable Securities have been sold and (ii)
the date on which all of the Registrable Securities may be immediately sold to
the public without registration or restriction pursuant to Rule 144(k) under the
Securities Act or any successor provision (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) (A) shall comply in all material respects with the requirements of the
Securities Act and the rules and regulations of the SEC promulgated thereunder
and (B) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading. The financial statements of the Company
included in any such Registration Statement or incorporated by reference therein
(x) shall comply as to form in all material respects with the applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto, (y) shall be prepared in accordance with U.S.
generally accepted accounting principles, consistently applied during the
periods involved (except as may be otherwise indicated in such financial
statements or the notes thereto or, in the case of unaudited interim statements,
to the extent they may not include footnotes or may be condensed on summary
statements) and (z) fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
immaterial year-end adjustments).
(b) The Company shall (i) prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to any Registration
Statement required to be filed hereunder and the prospectus used in connection
with any such Registration Statement as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and (ii) during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by any such Registration Statement until such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the event the number of shares available under a
Registration Statement filed pursuant to this Agreement is, for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"Registration Trigger Date"), insufficient to cover 120% of the Registrable
Securities then issued or issuable (without giving effect to any limitations on
conversion the Notes), the Company shall provide each Investor written notice of
such Registration Trigger Date within three business days thereafter and shall
amend the Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover 120% of
the Registrable Securities then issued or issuable (without giving effect to any
limitations on conversion contained in the Notes) as of the Registration Trigger
Date, in each case, as soon as practicable, but in any event within 15 days
after the Registration Trigger Date. The Company shall cause such amendment(s)
and/or new Registration Statement(s) to become effective as soon as practicable
following the filing thereof.
(c) The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and such Investor's legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC or received by the Company, as applicable, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and, in the case of the
Registration Statement required to be filed pursuant to Section 2, each letter
written by or on behalf of the Company to the SEC or the staff of the SEC
(including, without limitation, any request to accelerate the effectiveness of
the Registration Statement or amendment thereto), and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
the Registration Statement (other than any portion thereof that contains
information for which the Company has sought confidential treatment), (ii) on
the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, all amendments and supplements thereto and all such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.
(d) The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by any Registration Statement under such other
securities or "blue sky" laws of such jurisdictions in the United States as each
Investor who holds Registrable Securities being offered reasonably requests,
(ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction,
(C) file a general consent to service of process in any such jurisdiction, (D)
provide any undertakings that cause the Company undue expense or burden, or (E)
make any change in its Certificate of Incorporation, Bylaws or other
organizational documents, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders.
(e) As promptly as practicable after becoming aware of such event, the
Company shall (i) notify each Investor by telephone and facsimile of the
happening of any event, as a result of which the prospectus included in any
Registration Statement that includes Registrable Securities, 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, and (ii) promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
(f) The Company shall use its best efforts (i) to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement that includes Registrable Securities, and, if such an order is issued,
to obtain the withdrawal of such order at the earliest practicable moment
(including in each case by amending or supplementing such Registration
Statement), and (ii) to notify each Investor who holds Registrable Securities
being sold (or, in the event of an underwritten offering, the managing
underwriters) of the issuance of such order and the resolution thereof (and if
such Registration Statement is supplemented or amended, deliver such number of
copies of such supplement or amendment to each Investor as such Investor may
reasonably request).
(g) The Company shall permit a single firm of counsel designated by the
Initial Investors to review any Registration Statement required to be filed
hereunder and all amendments and supplements thereto a reasonable period of time
prior to its filing with the SEC, and not file any document in a form to which
such counsel reasonably objects.
(h) The Company shall make generally available to its security holders as
soon as practicable, but in no event later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement. The Company will be
deemed to have complied with its obligations under this Section 3(h) upon the
Company's filing, on an appropriate form, the appropriate report of the Company
as required by the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Exchange Act").
(i) The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement that includes such
Investor's Registrable Securities, (iii) the release of such information is
ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction, (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement, or (v) such Investor consents to the form and content of any
such disclosure. The Company shall, upon learning that disclosure of any
information concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to
such Investor prior to making such disclosure, and cooperate with the Investor,
at the Investor's expense, in taking appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
(j) The Company shall use its best efforts to promptly cause all of the
Registrable Securities covered by any Registration Statement to be listed or
designated for quotation in the Pink Sheets or on the Bulletin Board, SmallCap
Market, the National Market, the NYSE, the AMEX or any other national securities
exchange or automated quotation system and on each additional national
securities exchange or automated quotation system on which securities of the
same class or series issued by the Company are then listed or quoted, if any, if
the listing or quotation of such Registrable Securities is then permitted under
the rules of such exchange or automated quotation system, and in any event,
without limiting the generality of the foregoing, to arrange for or maintain at
least two market makers to register with the National Association of Securities
Dealers, Inc. (the "NASD") as such with respect to the Registrable Securities.
(k) The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement required to be filed pursuant to Section 2
hereof.
(l) The Company shall cooperate with any Investor who holds Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to any Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, and registered in such names,
as such Investor or the managing underwriter or underwriters, if any, may
reasonably request. Without limiting the generality of the foregoing, within
three business days after any Registration Statement that includes Registrable
Securities is declared effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to any Investor whose Registrable Securities
are included in such Registration Statement), an opinion of such counsel in the
form attached hereto as Exhibit A.
(m) At the request of any Investor, the Company shall prepare and file
with the SEC such amendments (including post-effective amendments) and
supplements to any Registration Statement required to be filed hereunder and the
prospectus used in connection with such Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
(n) The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Exchange Act and the
rules and regulations thereunder promulgated by the SEC.)
(o) From and after the date of this Agreement, the Company shall not, and
shall not agree to, allow the holders of any securities of the Company to
include any of their securities which are not Registrable Securities in the
Registration Statement required to be filed pursuant to Section 2(a), 2(b) or
3(b) hereof without the consent of the holders of a majority in interest of the
Registrable Securities.
(p) The Company shall make available for inspection by (i) each Investor,
(ii) any underwriter participating in any disposition pursuant to any
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(A) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (B) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (C) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. Nothing herein shall be deemed to
limit any Investor's ability to sell Registrable Securities in a manner that is
otherwise consistent with applicable laws and regulations.
(q) In the case of an underwritten public offering, at the request of any
Investor, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company addressed to any such Investor and in form, scope and
substance as is customarily given in an underwritten public offering and (ii) a
letter, dated such date, from the Company's independent certified public
accountants 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 any such Investor.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, each
Investor shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
effect the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it and the intended method of disposition of the Registrable Securities
held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five trading days
prior to the first anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the information the Company requires from
each such Investor.
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement required to be filed hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from such Registration Statement.
(c) Upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e) or 3(f) with respect to any
Registration Statement including Registrable Securities, each Investor shall
immediately discontinue disposition of Registrable Securities pursuant to such
Registration Statement until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) and 3(f), as
applicable, and, if so directed by the Company, such Investor shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's possession
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Notwithstanding the foregoing or anything to the
contrary in this Agreement, but subject to compliance with applicable laws, the
Company shall cause the transfer agent for the Registrable Securities to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Notes in connection with any sale of Registrable
Securities with respect to which any such Investor has entered into a contract
for sale prior to receipt of such notice and for which any such Investor has not
yet settled.
(d) No Investor may participate in any underwritten distribution hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below, and (iv) complies with all applicable laws
in connection therewith. Notwithstanding anything in this Section 4(d) to the
contrary, this Section 4(d) is not intended to limit any Investor's
rights under Sections 2(a), 2(b) or 3(b) hereof.
5. EXPENSES OF REGISTRATION.
All expenses (other than underwriting discounts and commissions) incurred
by the Company or the Investors in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 above (including, without
limitation, all registration, listing and qualification fees, printers and
accounting fees, the fees and disbursements of counsel for the Company and up to
$10,000 of the fees and disbursements of one counsel selected by the Investors)
shall be borne by the Company. In addition, the Company shall pay each
Investor's costs and expenses (including legal fees) incurred in connection with
the enforcement of the rights of such Investor hereunder.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of each
such Investor and each person, if any, who controls each such Investor within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, an "Investor Indemnified Person"), against any joint or several
losses, claims, damages, liabilities or expenses (collectively, together with
actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "Claims") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (A) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (B) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus if used
prior to the effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (C) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act or any other law (including, without
limitation, any state securities law), rule or regulation relating to the offer
or sale of the Registrable Securities (the matters in the foregoing clauses (A)
through (C), collectively, "Violations"). Subject to the restrictions set forth
in Section 6(c) with respect to the number of legal counsel, the Company shall
reimburse each Investor and each other Investor Indemnified Person, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Investor Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (y) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (z) with respect
to any preliminary prospectus, shall not inure to the benefit of any Investor
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Investor Indemnified Person was promptly advised in writing not to use the
incorrect prospectus prior to the use giving rise to a Violation and such
Investor Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Investor Indemnified Person and shall survive the
transfer of the Registrable Securities by the Investors pursuant to Section 9
hereof.
(b) In connection with any Registration Statement in which an Investor is
participating, (i) each such Investor shall, severally and not jointly,
indemnify and hold harmless, to the same extent and in the same manner set forth
in Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, its employees and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers or
any person who controls such stockholder within the meaning of the Securities
Act or the Exchange Act (each, a "Company Indemnified Person"), against any
Claims to which any of them may become subject insofar as such Claims arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement; and (ii) subject to the
restrictions set forth in Section 6(c), such Investor shall reimburse the
Company Indemnified Persons, promptly as such expenses are incurred and are due
and payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnification obligations contained in this Section 6(b) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld; and provided, further, that the Investor shall be liable
under this Agreement (including this Section 6(b) and Section 7) for only that
amount as does not exceed the net proceeds actually received by such Investor as
a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Company Indemnified Person and
shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9 hereof. Notwithstanding anything to the contrary contained
herein, the indemnification obligations contained in this Section 6(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Company Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented.
(c) Promptly after receipt by any party entitled to indemnification under
this Section 6 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a Claim in respect
thereof is to made against any indemnifying party under this Section 6, deliver
to the indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the indemnified party;
provided, however, that such indemnifying party shall not be entitled to assume
such defense and an indemnified party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the indemnified party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such indemnified party and any other party
represented by such counsel in such proceeding or the actual or potential
defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and any such indemnified party reasonably determines
that there may be legal defenses available to such indemnified party that are in
conflict with those available to such indemnifying party. The indemnifying party
shall pay for only one separate legal counsel for the indemnified parties, and
such legal counsel shall be selected by Investors holding a majority in interest
of the Registrable Securities included in the Registration Statement to which
the Claim relates (if the parties entitled to indemnification hereunder are
Investor Indemnified Persons) or by the Company (if the parties entitled to
indemnification hereunder are Company Indemnified Persons). The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section 6, except to the extent
that the indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and
payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party shall make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the indemnified
party, on the other hand, with respect to the Violation giving rise to the
applicable Claim; provided, however, that (a) no contribution shall be made
under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6, (b) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation,
and (c) contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to:
(a) file with the SEC in a timely manner and make and keep available all
reports and other documents required of the Company under the Securities Act and
the Exchange Act so long as the Company remains subject to such requirements and
the filing and availability of such reports and other documents is required for
the applicable provisions of Rule 144; and
(b) furnish to each Investor so long as such Investor holds Notes or
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit such Investor to sell such securities under Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Notes or Registrable Securities if: (a) the Investor agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company after such assignment, (b) the
Company is furnished with written notice of (i) the name and address of such
transferee or assignee, and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) the transferee or assignee agrees in writing for the
benefit of the Company to be bound by all of the provisions contained herein,
and (e) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement and the Notes. In addition,
and notwithstanding anything to the contrary contained in this Agreement, the
Securities Purchase Agreement, the Notes, or the Securities (as defined in the
Securities Purchase Agreement) may be pledged, and all rights of the Investor
under this Agreement or any other agreement or document related to the
transactions contemplated hereby may be assigned, without further consent of the
Company, to a bona fide pledgee in connection with an Investor's margin or
brokerage account.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of the Initial
Investors (to the extent such Initial Investor or its affiliates still owns
Notes or Registrable Securities) and the Investor(s) who hold a majority in
interest of the Registrable Securities or, in the case of a waiver, with the
written consent of the party charged with the enforcement of any such provision;
provided, however, that (a) no amendment hereto which restricts the ability of
an Investor to elect not to participate in an underwritten offering shall be
effective against any Investor which does not consent in writing to such
amendment; (b) no consideration shall be paid to an Investor by the Company in
connection with an amendment hereto unless each Investor similarly affected by
such amendment receives a pro rata amount of consideration from the Company; and
(c) unless an Investor otherwise agrees, each amendment hereto must similarly
affect each Investor. Any amendment or waiver effected in accordance with this
Section 10 shall be binding upon each Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.
(b) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by responsible overnight carrier or by
confirmed facsimile, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by responsible overnight carrier or confirmed facsimile, in each case
addressed to a party. The initial addresses for such communications shall be as
follows, and each party shall provide notice to the other parties of any change
in such party's address:
(i) If to the Company:
iMedia International, Inc.
0000 Xxxxxx Xxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx XxxXxxxxxx, Chairman & Chief Executive
Officer
(ii) If to any Investor, to such address as such Investor shall have
provided in writing to the Company.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed in the State of Delaware. The Company irrevocably consents to the
jurisdiction of the United States federal courts and the state courts located in
City and County of San Francisco, California in any suit or proceeding based on
or arising under this Agreement and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding in such forum. The Company further agrees that service
of process upon the Company, mailed by first class mail shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect any Investor's right to serve process in
any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(e) This Agreement and the other Transaction Documents (including any
schedules and exhibits hereto and thereto) constitute the entire agreement among
the parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement and the other
Transaction Documents supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.
(f) Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
(i) Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
(j) Unless other expressly provided herein, all consents, approvals and
other determinations to be made by the Investors pursuant to this Agreement
shall be made by the Investors holding a majority in interest of the Registrable
Securities (determined as if all Notes and Warrants then outstanding had been
converted into or exercised for Registrable Securities) held by all Investors.
(k) The initial number of Registrable Securities included on any
Registration Statement filed pursuant to Section 2(a), 2(b) or 3(b), and each
increase to the number of Registrable Securities included thereon, shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time of such establishment or increase,
as the case may be. In the event an Investor shall sell or otherwise transfer
any of such holder's Registrable Securities, each transferee shall be allocated
a pro rata portion of the number of Registrable Securities included on a
Registration Statement for such transferor. Any shares of Common Stock included
on a Registration Statement and which remain allocated to any person or entity
which does not hold any Registrable Securities shall be allocated to the
remaining Investors, pro rata based on the number of shares of Registrable
Securities then held by such Investors. For the avoidance of doubt, the number
of Registrable Securities held by any Investor shall be determined as if all
Notes then outstanding were converted into or exercised for Registrable
Securities.
(l) Each party to this Agreement has participated in the negotiation and
drafting of this Agreement. As such, the language used herein shall be deemed to
be the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction will be applied against any party to this
Agreement.
(m) For purposes of this Agreement, the term "business day" means any day
other than a Saturday or Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law, regulation or executive
order to close, and the term "trading day" means any day on which the Bulletin
Board or, if the Common Stock is not then traded on the Bulletin Board, the
principal national securities exchange, automated quotation system or other
trading market where the Common Stock is then listed, quoted or traded, is open
for trading.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
IN WITNESS WHEREOF, the undersigned Initial Investor and the Company have
caused this Agreement to be duly executed as of the date first above written.
iMEDIA INTERNATIONAL, INC.
By: /s/ Xxxxx XxxXxxxxxx
------------------------------------------
Name: Xxxxx XxxXxxxxxx
Title: Chairman & Chief Executive Officer
INITIAL INVESTOR:
MicroCapital Fund LP
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT - LP]
Exhibit A
[Date]
[Transfer Agent]
RE: iMEDIA INTERNATIONAL, INC.
Ladies and Gentlemen:
We are counsel to iMedia International, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), and we understand that [Name of
Investor] (the "Holder") has purchased from the Company convertible promissory
notes that are convertible, directly or indirectly, into shares of the Company's
common stock, no par value per share (the "Common Stock"). Pursuant to a
Registration Rights Agreement, dated as of October ___, 2003, by and among the
Company and the signatories thereto (the "Registration Rights Agreement"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "Securities Act"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on _____________ ___, ____,
the Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "Registration Statement") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder. The Registration Statement was
declared effective by the SEC on _____________, ____.
In connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered into an order declaring the
Registration Statement effective under the Securities Act at [time of
effectiveness] on [date of effectiveness], and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC.
Based on the foregoing, we are of the opinion that the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
Very truly yours,
COUNSEL FOR IMEDIA INTERNATIONAL, INC.
cc: [Name of Investor]
