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EXHIBIT 10.65
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of June 30, 1999, by and between
The Xxxxxx Entertainment Company, a California corporation (the "Company"), and
Xxxx Xxxx (the "Shareholder").
W I T N E S S E T H
WHEREAS, pursuant to the Note dated as of June 30, 1999, made by the
Company in favor of the Shareholder (the "Note"), upon satisfaction of the
conditions set forth in Section 6 of the Note, the Note will be converted into
20,488 shares of the Company's Series A Preferred Stock ("Series A Preferred
Stock") and Warrants (the "Warrants") to purchase 144,618 shares of the
Company's Common Stock, no par value (the "Common Stock");
WHEREAS, the Series A Preferred Stock and Warrants will, subject to the
respective terms thereof, be convertible into shares of Common Stock; and
WHEREAS, it is a condition to the Note and the transactions contemplated
thereby that the Shareholder 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
I.1 Defined Terms. Capitalized terms used herein but not otherwise
defined shall have the meaning given to such terms in the Note.
"Closing" shall mean the issuance of the Note.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder as the same may be
amended from time to time.
"Person" shall mean any individual, partnership, joint venture,
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.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all rules and
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regulations promulgated thereunder as the same may be amended from time to time.
"Selling Securityholder" shall have the meaning given such term in
Section 3.4.
"Shareholder Common Stock" shall mean the shares of Common Stock
issuable to the Shareholder, holders of the Company's outstanding Series A
Preferred Stock, the Warrants and warrants issued pursuant to that certain
Warrant Agreement dated as of April 26, 1999 among the Company, Xxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxx, The Xxxxxxx-Xxxxx Company, a California corporation,
Xx Xxxxxxx and Xxx Xxxxxxx (the "April Warrants") upon conversion of Series A
Preferred Stock and upon exercise of the Warrants and the April Warrants.
ARTICLE II
TRANSFERS OF SHARES
II.1 Shareholder Common Stock Unregistered. The Shareholder acknowledges
and represents that he has been advised by the Company that, with respect to the
Shareholder Common Stock issuable to or issued to the Shareholder:
(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 (and is able to bear) the economic risk of the investment
in the Shareholder Common Stock, subject to the terms and conditions of the
Purchase Agreement 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 thereunder ("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 in Section
5(b)(iii) of the Note 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.
II.2 Rule 144 Reporting. The Company agrees that to the extent
reasonably necessary to permit the Shareholder to sell shares of the Shareholder
Common Stock in accordance with
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and in reliance on Rule 144, and for so long as such shares are owned by the
Shareholder and such shares are not registered for resale under the Securities
Act, the Company will use its reasonable best efforts to:
(a) Make and keep public information available within the meaning
of Rule 144 under the Securities Act, at all times from and after the date of
the Closing (the "Closing 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 the Shareholder owns any Shareholder Common Stock
issued to the Shareholder pursuant to the Note and the transactions contemplated
thereby, inform such person upon request as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act, and
provide a copy of the most recent annual or quarterly report of the Company and
such other reports and documents filed with the SEC and available to the public
as may reasonably be requested in availing the 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 2.2 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 in which case the
provisions of this Section 2.2 insofar as they relate to obligations to make
filings under the Exchange Act that would no longer be required as a result of
such delisting shall be of no further force or effect. 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
III.1 Demand Registration. If at any time commencing 18 months from
April 26, 1999, the Company shall receive from holders of more than 50% of the
Shareholder Common Stock that has not been registered pursuant to Article III of
this Agreement and Article III of that certain Registration Rights Agreement
dated as of April 26, 1999 by and among the Company, The Xxxxxxx-Xxxxx Company,
Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx and Xxx Xxxxxxx (the "April Registration
Rights Agreement"), 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 holders of Shareholder Common Stock; and
(b) file a registration statement on Form S-3 or any successor
form with the SEC within 45 days after the initiating shareholders' request and
use its best efforts to effect the registration for resale of the Shareholder
Common Stock (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualifications under applicable blue
sky or other state securities laws and appropriate compliance with applicable
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regulations issued under the Securities Act) as would permit the sale and
distribution by the Shareholder of such shares of Shareholder Common Stock under
applicable law, 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;
(ii) If, at such time as a request for registration
pursuant to this Section 3.1 is pending, the Company has already effected two
such registrations pursuant to this Section 3.1, and each such registration has
been declared or ordered effective;
(iii) With respect to any of the Shareholder Common Stock
which has been transferred to any holder other than the Shareholder or a
"Shareholder" as defined in the April Registration Rights Agreement, or a family
member of any such shareholder or a trust for the benefit of any such
shareholder or family member; or
(iv) 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).
III.2 Right to Include Securities. If at any time during the period
commencing 18 months from April 26, 1999 all of the shares of Shareholder Common
Stock are not then registered for resale under the Securities Act, and the
Company proposes to register any shares of its Common Stock under the Securities
Act on Forms X-0, X-0 or S-3 or any successor or similar forms (except for
registrations on such forms solely for registration of Common Stock in
connection with any warrant, option, employee benefit or dividend reinvestment
plan), 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
Shareholder. In such event, upon the written request (which request shall
specify the total number of shares of Shareholder Common Stock intended to be
disposed of by the Shareholder) of the 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 in the manner
initially proposed by the Company of all Shareholder Common Stock held by the
Shareholder which the Company has been so requested to register for sale. 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
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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.
III.3 Priority in Incidental Registration. In a registration pursuant to
Section 3.2 hereof, if the managing underwriter of any such underwritten
offering to which Section 3.2 pertains 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 can be
included in such offering without so adversely affecting it. With respect to a
registration that is the subject of Section 3.2 hereof, shares of Common Stock
proposed by the Company to be registered for issuance by the Company or for sale
by third parties exercising "demand" registration rights shall have the first
priority and all other shares of Common Stock to be registered, including any
and all shares of Shareholder Common Stock shall be given second priority
without preference among the relevant holders. If less than all of the shares of
Shareholder Common Stock duly requested to be included in such registration are
to be registered therein, such shares of Shareholder Common Stock shall be
included in the registration pro rata based on the total number of such shares
sought to be registered other than for issuance by the Company or sale by third
parties exercising "demand" registration rights in accordance with the preceding
sentence.
III.4 Registration Procedures. In connection with the Company's
obligations to register the Shareholder Common Stock for resale pursuant to this
Article III, the Company will use its reasonable best efforts to effect such
registration in accordance herewith 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 its reasonable best 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 (the "Effective Date") or (y) the
termination of the offering being made as set forth 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 as set forth
above 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 ("Selling Securityholder") or any underwriter is required under the
Securities Act to deliver a prospectus in accordance with the intended methods
of disposition by the Selling Securityholders set forth in such registration
statement or supplement to such prospectus;
(c) furnish to the managing underwriter, if any, and to the
Shareholder, at least one executed original of the registration statement and to
each of the Selling Securityholders such number of conformed copies of such
registration statement and of each such amendment and
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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 its reasonable best efforts (i) to register or qualify,
to the extent necessary, all shares of 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
Common Stock, provided that the Company will not be required to qualify
generally to do business or as a dealer 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 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 reasonable best efforts to furnish to the Selling
Securityholders a
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signed counterpart, addressed to the Selling Securityholders and the
underwriters, if any, of an opinion of counsel for the Company as to the
effectiveness of the registration statement registering the resale of the
Shareholder Common Stock under the Securities Act.
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC in connection with a registration pursuant
hereto;
(j) cooperate with the 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) cause all shares of 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 of Common Stock covered by the registration
statement and entitled hereunder to be so listed; and
(l) 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).
The Company may require each Selling Securityholder to furnish to the
Company such information and documents 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 Selling Securityholders agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3.4(e)(ii), (iii), (iv), (v) or (vi) hereof, it will forthwith
discontinue disposition pursuant to such registration statement of any shares of
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 3.4(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 Selling
Securityholders 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
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Company or the underwriters may reasonably request.
III.5 Incidental Underwritten Offerings. If the Company at any time
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, if the managing underwriter shall
elect in writing to include the shares of Shareholder Common Stock sought to be
included in such registration, the Selling Securityholders who hold 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 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.
III.6 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Selling Securityholders,
the underwriters, if any, and their respective counsel and accountants the
opportunity (but such Persons shall not have the obligation except as set forth
herein) to participate (in the case of a registration pursuant to Section 3.2
hereof such participation shall be at their expense) 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.
III.7 Limitations, Conditions and Qualifications to Obligations under
Registration Covenants. The obligations of the Company to use its reasonable
efforts to cause the 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) 30 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 3.4(a)) if the Board of Directors of the
Company determines in good faith that (i) there is a material undisclosed
development in the
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business or affairs of the Company (including any pending or proposed financing,
recapitalization, acquisition or disposition), the disclosure of which at such
time would 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 practicable, 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 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 the Shareholder 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
state securities regulations and to obtain any acceleration of the effective
date of such registration statement or maintain the effectiveness or currency
thereof.
(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.
(d) If requested by an underwriter in an underwritten offering,
the Shareholder agrees not to effect any public sale or distribution, including
any sale pursuant to Rule 144 under the Securities Act, of any Common Stock
(other than in accordance with Sections 3.1 or 3.2) within 30 days before or 60
days after the effective date of a registration statement filed pursuant to
Sections 3.1 or 3.2.
III.8 Expenses. The Company will pay its own actual expenses (including
legal fees) incurred in connection with each demand and incidental registration
of Shareholder Common Stock pursuant to Sections 3.1 or 3.2 of 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, and, in the case of a demand
registration pursuant to Section 3.1 of this Agreement, all reasonable costs,
expenses and fees of one legal counsel for the Selling Securityholders (which
legal counsel shall be chosen by the majority-in-interest of the Selling
Securityholders in their discretion), but each Selling Securityholder shall pay
its own underwriters' expenses (such as but not limited to 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
(except as set forth above). The Company shall pay its internal expenses
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(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.
III.9 Indemnification.
(a) Indemnification by the Company. In connection with any
registration pursuant hereto in which Shareholder Common Stock is to be disposed
of, the Company shall indemnify and hold harmless, to the fullest extent
permitted by law, the Shareholder and, when applicable, its officers, directors,
agents and employees and each Person who controls (or is controlled by or under
common control with) the Shareholder (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 as required hereunder,
except insofar as the same (i) are caused by or contained in any information
furnished in writing to the Company by or on behalf of the Shareholder expressly
for use therein or (ii) are caused by the Shareholder's failure to deliver a
copy of the current required prospectus after the Company has furnished the
Shareholder with a sufficient number of copies of such prospectus as requested
hereunder or (iii) arise in respect of any offers to sell or sales made during
any period when the Shareholder is required to discontinue sales under Section
3.4(e) or otherwise under applicable law. The Company shall also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals (if any), participating in the distribution of the Shareholder
Common Stock, 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 (and subject to the same exceptions) as provided above with respect
to the indemnification of the Shareholder and shall enter into an
indemnification agreement with such Persons containing such terms, if requested.
(b) Indemnification by the Shareholder. In connection with each
registration statement effected pursuant hereto in which Shareholder Common
Stock held by the Shareholder is to be disposed of, the Shareholder shall
indemnify and hold harmless, to the fullest 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) and the managing underwriter if any, and its directors, officers,
agents, and employees and each Person who controls such underwriter (within the
meaning of the Securities Act and Exchange Act), in each case 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 the Shareholder to the Company expressly for
inclusion in such registration statement or prospectus. In no event shall the
liability of the Shareholder hereunder be greater in amount than the dollar
amount of the
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proceeds received or to be received by the Shareholder 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
to employ counsel reasonably satisfactory to such Person or (iii) such
assumption would constitute an actual conflict of interest (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 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 (including
all applicable holders of Shareholder Common Stock) indemnified by such
indemnifying party with respect to such claim, unless 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,
claim, 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 Shareholder for such
contribution and indemnification exceed, in the aggregate, the dollar amount of
the proceeds received or to be received by the Shareholder upon the sale of
securities giving rise to such indemnification and contribution obligation.
III.10 Participation in Underwritten Registrations. The Shareholder may
not participate in any underwritten registration hereunder unless the
Shareholder (a) agrees to sell its 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
Regulation M under the Exchange Act, and (b) completes and executes all
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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
IV.1 Recapitalizations, Exchanges, Etc. Affecting Shareholder Common
Stock. The provisions of this Agreement shall apply, to the fullest 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 stock
split, combination recapitalization, reclassification, merger, consolidation or
otherwise; provided, however, that such provisions shall apply only to any class
or classes of stock which have the right, without limitation as to amount,
either to all or a share of the balance of current dividends and liquidating
dividends after payment of dividends and distributions on any shares entitled to
preference so issued or issuable upon the conversion, exchange or exercise, as
the case may be, of securities of the Company so issued.
IV.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.
IV.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.
IV.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:
The Xxxxxx Entertainment Company
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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Fax: (000) 000-0000
Attn: Secretary
(b) If to the Shareholder, at the address set forth on the
signature pages hereto.
IV.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.
IV.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.
IV.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.
IV.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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE XXXXXX ENTERTAINMENT COMPANY
By:
-------------------------------
Name:
Title:
SHAREHOLDER:
----------------------------------
Name: Xxxx Xxxx
Address:
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS....................................................................... 1
1.1 Defined Terms................................................................ 1
ARTICLE II TRANSFERS OF SHARES.............................................................. 2
2.1 Shareholder Common Stock Unregistered........................................ 2
2.2 Rule 144 Reporting........................................................... 3
ARTICLE III REGISTRATION RIGHTS............................................................. 3
3.1 Demand Registration.......................................................... 3
3.2 Right to Include Securities.................................................. 4
3.3 Priority in Incidental Registration.......................................... 5
3.4 Registration Procedures...................................................... 5
3.5 Incidental Underwritten Offerings............................................ 8
3.6 Preparation; Reasonable Investigation........................................ 8
3.7 Limitations, Conditions and Qualifications to Obligations under Registration
Covenants.................................................................... 8
3.8 Expenses..................................................................... 9
3.9 Indemnification.............................................................. 10
3.10 Participation in Underwritten Registrations.................................. 11
ARTICLE IV MISCELLANEOUS.................................................................... 12
4.1 Recapitalizations, Exchanges, Etc. Affecting Shareholder Common Stock........ 12
4.2 Binding Effect............................................................... 12
4.3 Amendment; Waiver............................................................ 12
4.4 Notices...................................................................... 12
4.5 Governing Law................................................................ 13
4.6 Counterparts................................................................. 13
4.7 Invalidity................................................................... 13
4.8 Cumulative Remedies.......................................................... 13
ii
