REGISTRATION RIGHTS AGREEMENT
THIS
REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of the
___
day of _________, 2005, by and among: AFFINITY MEDIA INTERNATIONAL CORP.,
a
Delaware corporation (the "Company"); and the undersigned parties listed
under
Investors on the signature page hereto (each, an "Investor" and collectively,
the "Investors").
WHEREAS,
the Investors currently hold all of the issued and outstanding securities
of the
Company;
WHEREAS,
the Investors and the Company desire to enter into this Agreement to provide
the
Investors with certain rights relating to the registration of shares of Common
Stock held by them;
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1.
DEFINITIONS. The following capitalized terms used herein have the following
meanings:
"Agreement"
means this Agreement, as amended, restated, supplemented, or otherwise modified
from time to time.
"Commission"
means the Securities and Exchange Commission, or any other federal agency
then
administering the Securities Act or the Exchange Act.
"Common
Stock" means the common stock, par value $0.0001 per share, of the
Company.
"Company"
is defined in the preamble to this Agreement.
"Demand
Registration" is defined in Section 2.1.1.
"Demanding
Holder" is defined in Section 2.1.1.
"Exchange
Act" means the Securities Exchange Act of 1934, as amended, and the rules
and
regulations of the Commission promulgated thereunder, all as the same shall
be
in effect at the time.
"Form
S-3" is defined in Section 2.3.
"Indemnified
Party" is defined in Section 4.3.
"Indemnifying
Party" is defined in Section 4.3.
"Investor"
is defined in the preamble to this Agreement.
"Investor
Indemnified Party" is defined in Section 4.1.
"Maximum
Number of Shares" is defined in Section 2.1.4.
"Notices"
is defined in Section 6.3.
"Piggy-Back
Registration" is defined in Section 2.2.1.
"Register,"
"registered" and "registration" mean a registration effected by preparing
and
filing a registration statement or similar document in compliance with the
requirements of the Securities Act, and the applicable rules and regulations
promulgated thereunder, and such registration statement becoming
effective.
"Registrable
Securities" mean all of the shares of Common Stock owned or held by Investors.
Registrable Securities include any warrants, shares of capital stock or other
securities of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of such shares of Common
Stock.
As to any particular Registrable Securities, such securities shall cease
to be
Registrable Securities when: (a) a Registration Statement with respect to
the
sale of such securities shall have become effective under the Securities
Act and
such securities shall have been sold, transferred, disposed of or exchanged
in
accordance with such Registration Statement; (b) such securities shall have
been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under
the
Securities Act; (c) such securities shall have ceased to be outstanding,
or (d)
the Securities and Exchange Commission makes a definitive determination to
the
Company that the Registrable Securities are salable under Rule
144(k).
"Registration
Statement" means a registration statement filed by the Company with the
Commission in compliance with the Securities Act and the rules and regulations
promulgated thereunder for a public offering and sale of Common Stock (other
than a registration statement on Form S-4 or Form S-8, or their successors,
or
any registration statement covering only securities proposed to be issued
in
exchange for securities or assets of another entity).
"Release
Date" means the date on which shares of Common Stock are disbursed from escrow
pursuant to that certain Stock Escrow Agreement dated as of _______________,
2005 by and among the parties hereto and American Stock Transfer & Trust
Company.
"Securities
Act" means the Securities Act of 1933, as amended, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect
at
the time.
"Underwriter"
means a securities dealer who purchases any Registrable Securities as principal
in an underwritten offering and not as part of such dealer's market-making
activities.
2.
REGISTRATION RIGHTS.
2.1
Demand Registration.
2.1.1.
Request for Registration. At any time and from time to time on or after the
Release Date, the holders of a majority-in-interest of the Registrable
Securities held by the Investors or the transferees of the Investors, may
make a
written demand for registration under the Securities Act of all or part of
their
Registrable Securities (a "Demand Registration"). Any demand for a Demand
Registration shall specify the number of shares of Registrable Securities
proposed to be sold and the intended method(s) of distribution thereof. The
Company will notify all holders of Registrable Securities of the demand,
and
each holder of Registrable Securities who wishes to include all or a portion
of
such holder's Registrable Securities in the Demand Registration (each such
holder including shares of Registrable Securities in such registration, a
"Demanding Holder") shall so notify the Company within fifteen (15) days
after
the receipt by the holder of the notice from the Company. Upon any such request,
the Demanding Holders shall be entitled to have their Registrable Securities
included in the Demand Registration, subject to Section 2.1.4 and the provisos
set forth in Section 3.1.1. The Company shall not be obligated to effect
more
than an aggregate of two (2) Demand Registrations under this Section 2.1.1
in
respect of Registrable Securities.
2.1.2.
Effective Registration. A registration will not count as a Demand Registration
until the Registration Statement filed with the Commission with respect to
such
Demand Registration has been declared effective and the Company has complied
with all of its obligations under this Agreement with respect thereto; provided,
however, that if, after such Registration Statement has been declared effective,
the offering of Registrable Securities pursuant to a Demand Registration
is
interfered with by any stop order or injunction of the Commission or any
other
governmental agency or court, the Registration Statement with respect to
such
Demand Registration will be deemed not to have been declared effective, unless
and until, (i) such stop order or injunction is removed, rescinded or otherwise
terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter
elect to continue the offering; provided, further, that the Company shall
not be
obligated to file a second Registration Statement until a Registration Statement
that has been filed is counted as a Demand Registration or is
terminated.
2.1.3.
Underwritten Offering. If a majority-in-interest of the Demanding Holders
so
elect and such holders so advise the Company as part of their written demand
for
a Demand Registration, the offering of such Registrable Securities pursuant
to
such Demand Registration may be in the form of an underwritten offering.
In such
event, the right of any holder to include its Registrable Securities in such
registration shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in
the
underwriting to the extent provided herein. All
Demanding
Holders proposing to distribute their securities through such underwriting
shall
enter into an underwriting agreement in customary form with the Underwriter
or
Underwriters selected for such underwriting by a majority-in-interest of
the
holders initiating the Demand Registration.
2.1.4.
Reduction of Offering. If the managing Underwriter or Underwriters for a
Demand
Registration that is to be an underwritten offering advises the Company and
the
Demanding Holders in writing that the dollar amount or number of shares of
Registrable Securities which the Demanding Holders desire to sell, taken
together with all other shares of Common Stock or other securities which
the
Company desires to sell and the shares of Common Stock, if any, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights held by other shareholders of the Company who desire
to
sell, exceeds the maximum dollar amount or maximum number of shares that
can be
sold in such offering without adversely affecting the proposed offering price,
the timing, the distribution method, or the probability of success of such
offering (such maximum dollar amount or maximum number of shares, as applicable,
the "Maximum Number of Shares"), then the Company shall include in such
registration: (i) first, the Registrable Securities as to which Demand
Registration has been requested by the Demanding Holders (pro rata in accordance
with the number of shares of Registrable Securities which such Demanding
Holder
has requested be included in such registration, regardless of the number
of
shares of Registrable Securities held by each Demanding Holder) that can
be sold
without exceeding the Maximum Number of Shares; (ii) second, to the extent
that
the Maximum Number of Shares has not been reached under the foregoing clause
(i), the shares of Common Stock or other securities that the Company desires
to
sell that can be sold without exceeding the Maximum Number of Shares; (iii)
third, to the extent that the Maximum Number of Shares has not been reached
under the foregoing clauses (i) and (ii), the shares of Common Stock for
the
account of other persons that the Company is obligated to register pursuant
to
written contractual arrangements with such persons and that can be sold without
exceeding the Maximum Number of Shares; and (v) fourth, to the extent that
the
Maximum Number of Shares have not been reached under the foregoing clauses
(i),
(ii), and (iii), the shares of Common Stock that other shareholders desire
to
sell that can be sold without exceeding the Maximum Number of
Shares.
2.1.5.
Withdrawal. If a majority-in-interest of the Demanding Holders disapprove
of the
terms of any underwriting or are not entitled to include all of their
Registrable Securities in any offering, such majority-in-interest of the
Demanding Holders may elect to withdraw from such offering by giving written
notice to the Company and the Underwriter or Underwriters of their request
to
withdraw prior to the effectiveness of the Registration Statement filed with
the
Commission with respect to such Demand Registration. If the majority-in-interest
of the Demanding Holders withdraws from a proposed offering relating to a
Demand
Registration, then such registration shall not count as a Demand Registration
provided for in Section 2.1.1.
2.2
Piggy-Back Registration.
2.2.1.
Piggy-Back Rights. If at any time on or after the Release Date the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering of equity securities, or securities or other obligations
exercisable or exchangeable for, or convertible into, equity securities,
by the
Company for its own account or for shareholders of the Company for their
account
(or by the Company and by shareholders of the Company including, without
limitation, pursuant to Section 2.1), other than a Registration Statement
(i)
filed in connection with any employee stock option or other benefit plan,
or
(ii) for a dividend reinvestment plan, then the Company shall (x) give written
notice of such proposed filing to the holders of Registrable Securities as
soon
as practicable but in no event less than ten (10) days before the anticipated
filing date, which notice shall describe the amount and type of securities
to be
included in such offering, the intended method(s) of distribution, and the
name
of the proposed managing Underwriter or Underwriters, if any, of the offering,
and (y) offer to the holders of Registrable Securities in such notice the
opportunity to register the sale of such number of shares of Registrable
Securities as such holders may request in writing within fifteen (15) days
following receipt of such notice (a "Piggy-Back Registration"). The Company
shall cause such Registrable Securities to be included in such registration
and
shall use its best efforts to cause the managing Underwriter or Underwriters
of
a proposed underwritten offering to permit the Registrable Securities requested
to be included in a Piggy-Back Registration to be included on the same terms
and
conditions as any similar securities of the Company and to permit the sale
or
other disposition of such Registrable Securities in accordance with the intended
method(s) of distribution thereof. All holders of Registrable Securities
proposing to distribute their securities through a Piggy-Back Registration
that
involves an Underwriter or Underwriters shall enter into an underwriting
agreement in customary form with the Underwriter or Underwriters selected
for
such Piggy-Back Registration.
2.2.2.
Reduction of Offering. If the managing Underwriter or Underwriters for a
Piggy-Back Registration that is to be an underwritten offering advises the
Company and the holders of Registrable Securities in writing that the dollar
amount or number of shares of Common Stock which the Company desires to sell,
taken together with shares of Common Stock, if any, as to which registration
has
been demanded pursuant to written contractual arrangements with persons other
than the holders of Registrable Securities hereunder, the Registrable Securities
as to which registration has been requested under this Section 2.2, and the
shares of Common Stock, if any, as to which registration has been requested
pursuant to the written contractual piggy-back registration rights of other
shareholders of the Company, exceeds the Maximum Number of Shares, then the
Company shall include in any such registration:
(i)
If
the registration is undertaken for the Company's account: (A) first, the
shares
of Common Stock or other securities that the Company desires to sell that
can be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock,if any, including the Registrable
Securities, as to which registration has been requested pursuant to written
contractual piggy-back registration rights of security holders (pro rata
in
accordance with the number of shares of Common Stock which each such person
has
actually requested to be included in such registration, regardless of the
number
of shares of Common Stock with respect to which such persons have the right
to
request such inclusion) that can be sold without exceeding the Maximum Number
of
Shares; and
(ii)
If
the registration is a "demand" registration undertaken at the demand of persons
other than the holders of Registrable Securities pursuant to written contractual
arrangements with such persons, (A) first, the shares of Common Stock for
the
account of the demanding persons that can be sold without exceeding the Maximum
Number of Shares; (B) second, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clause (A), the shares of Common
Stock
or other securities that the Company desires to sell that can be sold without
exceeding the Maximum Number of Shares; and (C) third, to the extent that
the
Maximum Number of Shares has not been reached under the foregoing clauses
(A)
and (B), the Registrable Securities as to which registration has been requested
under this Section 2.2 (pro rata in accordance with the number of shares
of
Registrable Securities held by each such holder); and (D) fourth, to the
extent
that the Maximum Number of Shares has not been reached under the foregoing
clauses (A), (B) and (C), the shares of Common Stock, if any, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights which other shareholders desire to sell that can be sold
without exceeding the Maximum Number of Shares.
2.2.3.
Withdrawal. Any holder of Registrable Securities may elect to withdraw such
holder's request for inclusion of Registrable Securities in any Piggy-Back
Registration by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement. The Company may
also
elect to withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back
Registration
as provided in Section 3.3.
2.3
Registrations on Form S-3. The holders of Registrable Securities may at any
time
and from time to time, request in writing that the Company register the resale
of any or all of such Registrable Securities on Form S-3 or any similar
short-form registration which may be available at such time ("Form S-3");
provided, however, that the Company shall not be obligated to effect such
request through an underwritten offering. Upon receipt of such written request,
the Company will promptly give written notice of the proposed registration
to
all other holders of Registrable Securities, and, as soon as practicable
thereafter, effect the registration of all or such portion of such holder's
or
holders' Registrable Securities as are specified in such request, together
with
all or such portion of the Registrable Securities of any other holder or
holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any
such
registration pursuant to this Section 2.3: (i) if Form S-3 is not
available
for such offering; or (ii) if the holders of the Registrable Securities,
together with the holders of any other securities of the Company entitled
to
inclusion in such registration, propose to sell Registrable Securities and
such
other securities (if any) at any aggregate price to the public of less than
$500,000. Registrations effected pursuant to this Section 2.3 shall not be
counted as Demand Registrations effected pursuant to Section 2.1.
3.
REGISTRATION PROCEDURES.
3.1
Filings; Information. Whenever the Company is required to effect the
registration of any Registrable Securities pursuant to Section 2, the Company
shall use its best efforts to effect the registration and sale of such
Registrable Securities in accordance with the intended method(s) of distribution
thereof as expeditiously as practicable, and in connection with any such
request:
3.1.1.
Filing Registration Statement. The Company shall, as expeditiously as possible
and in any event within sixty (60) days after receipt of a request for a
Demand
Registration pursuant to Section 2.1, prepare and file with the Commission
a
Registration Statement on any form for which the Company then qualifies or
which
counsel for the Company shall deem appropriate and which form shall be available
for the sale of all Registrable Securities to be registered thereunder in
accordance with the intended method(s) of distribution thereof, and shall
use
its best efforts to cause such Registration Statement to become and remain
effective for the period required by Section 3.1.3; provided, however, that
the
Company shall have the right to defer any Demand Registration for up to thirty
(30) days, and any Piggy-Back Registration for such period as may be applicable
to deferment of any demand registration to which such Piggy-Back Registration
relates, in each case if the Company shall furnish to the holders a certificate
signed by the Chief Executive Officer of the Company stating that, in the
good
faith judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its shareholders for such Registration Statement
to be effected at such time; provided further, however, that the Company
shall
not have the right to exercise the right set forth in the immediately preceding
proviso more than once in any 365-day period in respect of a Demand Registration
hereunder.
3.1.2.
Copies. The Company shall, prior to filing a Registration Statement or
prospectus, or any amendment or supplement thereto, furnish without charge
to
the holders of Registrable Securities included in such registration, and
such
holders' legal counsel, copies of such Registration Statement as proposed
to be
filed, each amendment and supplement to such Registration Statement (in each
case including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such Registration Statement (including
each
preliminary prospectus), and such other documents as the holders of Registrable
Securities included in such registration or legal counsel for any such holders
may request in order to facilitate the disposition of the Registrable Securities
owned by such holders.
3.1.3.
Amendments and Supplements. The Company shall prepare and file with the
Commission such amendments, including post-effective amendments, and supplements
to such Registration Statement and the prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective and in
compliance with the provisions of the Securities Act until all Registrable
Securities and other securities covered by such Registration Statement have
been
disposed of in accordance with the intended method(s) of distribution set
forth
in such Registration Statement (which period shall not exceed the sum of
one
hundred eighty (180) days plus any period during which any such disposition
is
interfered with by any stop order or injunction of the Commission or any
governmental agency or court) or such securities have been
withdrawn.
3.1.4.
Notification. After the filing of a Registration Statement, the Company shall
promptly, and in no event more than ten (10) business days after such filing,
notify the holders of Registrable Securities included in such Registration
Statement of such filing, and shall further notify such holders promptly
and
confirm such advice in writing in all events within ten (10) business days
of
the occurrence of any of the following: (i) when such Registration Statement
becomes effective; (ii) when any post-effective amendment to such Registration
Statement becomes effective; (iii) the issuance or threatened issuance by
the
Commission of any stop order (and the Company shall take all actions required
to
prevent the entry of such stop order or to remove it if entered); and (iv)
any
request by the Commission for any amendment or supplement to such Registration
Statement or any prospectus relating thereto or for additional information
or of
the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of the securities covered by such Registration Statement, such prospectus
will
not contain an 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 promptly make available to the holders of Registrable
Securities included in such Registration Statement any such supplement or
amendment; except that before filing with the Commission a Registration
Statement or prospectus or any amendment or supplement thereto, including
documents incorporated by reference, the Company shall furnish to the holders
of
Registrable Securities included in such Registration Statement and to the
legal
counsel for any such holders, copies of all such documents proposed to be
filed
sufficiently in advance of filing to provide such holders and legal counsel
with
a reasonable opportunity to review such documents and comment thereon, and
the
Company shall not file any Registration Statement or prospectus or amendment
or
supplement thereto, including documents incorporated by reference, to which
such
holders or theirlegal counsel shall object.
3.1.5.
State Securities Laws Compliance. The Company shall use its best efforts
to (i)
register or qualify the Registrable Securities covered by the Registration
Statement under such securities or "blue sky" laws of such jurisdictions
in the
United States as the holders of Registrable Securities included in such
Registration Statement (in light of their intended plan of distribution)
may
request and (ii) take such action necessary to cause such Registrable Securities
covered by the Registration Statement to be registered with or approved by
such
other Governmental Authorities as may be necessary by virtue of the business
and
operations of the Company and do any and all other acts and things that may
be
necessary or advisable to enable the holders of Registrable Securities included
in such Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however, that the Company shall
not
be required to qualify generally to do business in any jurisdiction where
it
would not otherwise be required to qualify but for this paragraph (e) or
subject
itself to taxation in any such jurisdiction.
3.1.6.
Agreements for Disposition. The Company shall enter into customary agreements
(including, if applicable, an underwriting agreement in customary form) and
take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities. The representations, warranties
and covenants of the Company in any underwriting agreement which are made
to or
for the benefit of any Underwriters, to the extent applicable, shall also
be
made to and for the benefit of the holders of Registrable Securities included
in
such registration statement. No holder of Registrable Securities included
in
such registration statement shall be required to make any representations
or
warranties in the underwriting agreement except, if applicable, with respect
to
such holder's organization, good standing, authority, title to Registrable
Securities, lack of conflict of such sale with such holder's material agreements
and organizational documents, and with respect to written information relating
to such holder that such holder has furnished in writing expressly for inclusion
in such Registration Statement.
3.1.7.
Cooperation. The principal executive officer of the Company, the principal
financial officer of the Company, the principal accounting officer of the
Company and all other officers and members of the management of the Company
shall cooperate fully in any offering of Registrable Securities hereunder,
which
cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.
3.1.8.
Records. The Company shall make available for inspection by the holders of
Registrable Securities included in such Registration Statement, any Underwriter
participating in any disposition pursuant to such registration statement
and any
attorney, accountant or other professional retained by any holder of Registrable
Securities included in such Registration Statement or any Underwriter, all
financial and other records, pertinent corporate documents and properties
of the
Company, as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees
to
supply all information requested by any of them in connection with such
Registration Statement.
3.1.9.
Opinions and Comfort Letters. The Company shall furnish to each holder of
Registrable Securities included in any Registration Statement a signed
counterpart, addressed to such holder, of (i) any opinion of counsel to the
Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In
the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an opinion
of counsel to the Company to the effect that the Registration Statement
containing such prospectus has been declared effective and that no stop order
is
in effect.
3.1.10.
Earnings Statement. The Company shall comply with all applicable rules and
regulations of the Commission and the Securities Act, and make available
to its
shareholders, as soon as practicable, an earnings statement covering a period
of
twelve (12) months, beginning within three (3) months after the effective
date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
3.1.11.
Listing. The Company shall use its best efforts to cause all Registrable
Securities included in any registration to be listed on such exchanges or
otherwise designated for trading in the same manner as similar securities
issued
by the Company are then listed or designated or, if no such similar securities
are then listed or designated, in a manner satisfactory to the holders of
a
majority of the Registrable Securities included in such
registration.
3.2
Obligation to Suspend Distribution. Upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3.1.4(iv),
or, in
the case of a resale registration on Form S-3 pursuant to Section 2.3 hereof,
upon any suspension by the Company, pursuant to a written xxxxxxx xxxxxxx
compliance program adopted by the Company's Board of Directors, of the ability
of all "insiders" covered by such program to transact in the Company's
securities because of the existence of material non-public information, each
holder of Registrable Securities included in any registration shall immediately
discontinue disposition of such Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such holder
receives the supplemented or amended prospectus contemplated by Section
3.1.4(iv) or the restriction on the ability of "insiders" to transact in
the
Company's securities is removed, as applicable, and, if so directed by the
Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of
such
notice.
3.3
Registration Expenses. The Company shall bear all costs and expenses incurred
in
connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back
Registration pursuant to Section 2.2, and any registration on Form S-3 effected
pursuant to Section 2.3, and all expenses incurred in performing or complying
with its other obligations under this Agreement, whether or not the Registration
Statement becomes effective, including, without limitation: (i) all registration
and filing fees; (ii) fees and expenses of compliance with securities or
"blue
sky" laws (including fees and disbursements of counsel in connection with
blue
sky qualifications of the Registrable Securities); (iii) printing expenses;
(iv)
the Company's internal expenses (including, without limitation, all salaries
and
expenses of its officers and employees); (v) the fees and expenses incurred
in
connection with the listing of the Registrable Securities as required by
Section
3.1.11; (vi) National Association of Securities Dealers, Inc. fees; (vii)
fees
and disbursements of counsel for the Company and fees and expenses for
independent certified public accountants retained by the Company (including
the
expenses or costs associated with the delivery of any opinions or comfort
letters requested pursuant to Section 3.1.9); (viii) the fees and expenses
of
any special experts retained by the Company in connection with such registration
and (ix) the fees and expenses of one legal counsel selected by the holders
of a
majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses
of
the underwriter pro rata in proportion to the respective amount of shares
each
is selling in such offering.
3.4
Information. The holders of Registrable Securities shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect
the
registration of any Registrable Securities under the Securities Act pursuant
to
Section 2 and in connection with the Company's obligation to comply with
federal
and applicable state securities laws.
4.
INDEMNIFICATION AND CONTRIBUTION.
4.1
Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Investor and each other holder of Registrable Securities, and
each
of their respective officers, employees, affiliates, directors, partners,
members, attorneys and agents, and each person, if any, who controls an Investor
and each other holder of Registrable Securities (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) (each, an "Investor
Indemnified Party"), from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based
upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of such Registrable
Securities was registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained in the Registration Statement,
or any amendment or supplement to such Registration Statement, or arising
out of
or based upon any omission (or alleged omission) to state a material fact
required to be stated therein or necessary to make the statements therein
not
misleading, or any violation by the Company of the Securities Act or any
rule or
regulation promulgated thereunder applicable to the Company and relating
to
action or inaction required of the Company in connection with any such
registration; and the Company shall promptly reimburse the Investor Indemnified
Party for any legal and any other expenses reasonably incurred by such Investor
Indemnified Party in connection with investigating and defending any such
expense, loss, judgment, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any
such
expense, loss, claim, damage or liability arises out of or is based upon
any
untrue statement or allegedly untrue statement or omission or alleged omission
made in such Registration Statement, preliminary prospectus, final prospectus,
or summary prospectus, or any such amendment or supplement, in reliance upon
and
in conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify
any
Underwriter of the Registrable Securities, their officers, affiliates,
directors, partners, members and agents and each person who controls such
Underwriter on substantially the same basis as that of the indemnification
provided above in this Section 4.1.
4.2
Indemnification by Holders of Registrable Securities. Each selling holder
of
Registrable Securities will, in the event that any registration is being
effected under the Securities Act pursuant to this Agreement of any Registrable
Securities held by such selling holder, indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any), and each
other
person, if any, who controls such selling holder or such underwriter within
the
meaning of the Securities Act, against any losses, claims, judgments, damages
or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out
of
or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale
of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary
to
make the statement therein not misleading, if the statement or omission was
made
in reliance upon and in conformity with information furnished in writing
to the
Company by such selling holder expressly for use therein, and shall reimburse
the Company, its directors and officers, and each such controlling person
for
any legal or other expenses reasonably incurred by any of them in connection
with investigation or defending any such loss, claim, damage, liability or
action. Each selling holder's indemnification obligations hereunder shall
be
several and not joint and shall be limited to the amount of any net proceeds
actually received by such selling holder.
4.3
Conduct of Indemnification Proceedings. Promptly after receipt by any person
of
any notice of any loss, claim, damage or liability or any action in respect
of
which indemnity may be sought pursuant to Section 4.1 or 4.2, such person
(the
"Indemnified Party") shall, if a claim in respect thereof is to be made against
any other person for indemnification hereunder, notify such other person
(the
"Indemnifying Party") in writing of the loss, claim, judgment, damage, liability
or action; provided, however, that the failure by the Indemnified Party to
notify the Indemnifying Party shall not relieve the Indemnifying Party from
any
liability which the Indemnifying Party may have to such Indemnified Party
hereunder, except and solely to the extent the Indemnifying Party is actually
prejudiced by such failure. If the Indemnified Party is seeking indemnification
with respect to any claim or action brought against the Indemnified Party,
then
the Indemnifying Party shall be entitled to participate in such claim or
action,
and, to the extent that it wishes, jointly with all other Indemnifying Parties,
to assume control of the defense thereof with counsel satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume control of the defense of such claim or action,
the Indemnifying Party shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that in any action in which both the
Indemnified Party and the Indemnifying Party are named as defendants, the
Indemnified Party shall have the right to employ separate counsel (but no
more
than one such separate counsel) to represent the Indemnified Party and its
controlling persons who may be subject to liability arising out of any claim
in
respect of which indemnity may be sought by the Indemnified Party against
the
Indemnifying Party, with the fees and expenses of such counsel to be paid
by
such Indemnifying Party if, based upon the written opinion of counsel of
such
Indemnified Party, representation of both parties by the same counsel would
be
inappropriate due to actual or potential differing interests between them.
No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim
or
pending or threatened proceeding in respect of which the Indemnified Party
is or
could have been a party and indemnity could have been sought hereunder by
such
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such
claim
or proceeding.
4.4
Contribution.
4.4.1.
If
the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3
is
unavailable to any Indemnified Party in respect of any loss, claim, damage,
liability or action referred to herein, then each such Indemnifying Party,
in
lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid
or payable by such Indemnified Party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the Indemnified Parties and the Indemnifying Parties in connection
with
the actions or omissions which resulted in such loss, claim, damage, liability
or action, as well as any other relevant equitable considerations. The relative
fault of any Indemnified Party and any Indemnifying Party shall be determined
by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact
relates to information supplied by such Indemnified Party or such Indemnifying
Party and the parties' relative intent, knowledge, access to information
and
opportunity to correct or prevent such statement or omission.
4.4.2.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.4 were determined by pro rata allocation or by
any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding Section 4.4.1. The
amount paid or payable by an Indemnified Party as a result of any loss, claim,
damage, liability or action referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses incurred by such Indemnified Party in connection
with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no holder of Registrable Securities shall
be
required to contribute any amount in excess of the dollar amount of the net
proceeds (after payment of any underwriting fees, discounts, commissions
or
taxes) actually received by such holder from the sale of Registrable Securities
which gave rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.
UNDERWRITING AND DISTRIBUTION.
5.1
Rule
144. The Company covenants that it shall file any reports required to be
filed
by it under the Securities Act and the Exchange Act and shall take such further
action as the holders of Registrable Securities may reasonably request, all
to
the extent required from time to time to enable such holders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 under the Securities Act, as such
Rules
may be amended from time to time, or any similar Rule or regulation hereafter
adopted by the Commission.
6.
MISCELLANEOUS.
6.1
Other
Registration Rights. The Company represents and warrants that no person,
other
than a holder of the Registrable Securities or the holders of certain purchase
options to acquire certain of the Company’s securities issued to the
underwriters in connection with the Company’s initial public offering, has any
right to require the Company to register any shares of the Company's capital
stock for sale or to include shares of the Company's capital stock in any
registration filed by the Company for the sale of shares of capital stock
for
its own account or for the account of any other person.
6.2
Assignment; No Third Party Beneficiaries. This Agreement and the rights,
duties
and obligations of the Company hereunder may not be assigned or delegated
by the
Company in whole or in part. This Agreement and the rights, duties and
obligations of the holders of Registrable Securities hereunder may be freely
assigned or delegated by such holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities by any such
holder. This Agreement and the provisions hereof shall be binding upon and
shall
inure to the benefit of each of the parties and their respective successors
and
the permitted assigns of the Investor or holder of Registrable Securities
or of
any assignee of the Investor or holder of Registrable Securities. This Agreement
is not intended to confer any rights or benefits on any persons that are
not
party hereto other than as expressly set forth in Article 4 and this Section
6.2.
6.3
Notices. All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service
with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall
have
specified most recently by written notice. Notice shall be deemed given on
the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile; provided, that if such service or transmission is not
on a
business day or is after normal business hours, then such notice shall be
deemed
given on the next business day. Notice otherwise sent as provided herein
shall
be deemed given on the next business day following timely delivery of such
notice to a reputable air courier service with an order for next-day
delivery.
To
the
Company:
Affinity
Media International Corp.
00000
Xxxxxxxx Xxxx.
Xxx.
0000
Xxx
Xxxxxxx, XX 00000
Attn:
President
with
a
copy to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxxxxx, Esq.
To
an
Investor, to:
Silverback
Books, Inc.
00000
Xxxxxxxx Xxxx.
Xxx.
0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxx Xxxxx
with
a
copy to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxxxxx, Esq.
6.4
Severability. This Agreement shall be deemed severable, and the invalidity
or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision,
the
parties hereto intend that there shall be added as a part of this Agreement
a
provision as similar in terms to such invalid or unenforceable provision
as may
be possible and be valid and enforceable.
6.5
Counterparts. This Agreement may be executed in multiple counterparts, each
of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
6.6
Entire Agreement. This Agreement (including all agreements entered into pursuant
hereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written.
6.7
Modifications and Amendments. No amendment, modification or termination of
this
Agreement shall be binding upon any party unless executed in writing by such
party.
6.8
Titles and Headings. Titles and headings of sections of this Agreement are
for
convenience only and shall not affect the construction of any provision of
this
Agreement.
6.9
Waivers and Extensions. Any party to this Agreement may waive any right,
breach
or default which such party has the right to waive, provided that such waiver
will not be effective against the waiving party unless it is in writing,
is
signed by such party, and specifically refers to this Agreement. Waivers
may be
made in advance or after the right waived has arisen or the breach or default
waived has occurred. Any waiver may be conditional. No waiver of any breach
of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.10
Remedies Cumulative. In the event that the Company fails to observe or perform
any covenant or agreement to be observed or performed under this Agreement,
the
Investor or any other holder of Registrable Securities may proceed to protect
and enforce its rights by suit in equity or action at law, whether for specific
performance of any term contained in this Agreement or for an injunction
against
the breach of any such term or in aid of the exercise of any power granted
in
this Agreement or to enforce any other legal or equitable right, or to take
any
one or more of such actions, without being required to post a bond. None
of the
rights, powers or remedies conferred under this Agreement shall be mutually
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred by this
Agreement or now or hereafter available at law, in equity, by statute or
otherwise.
6.11
Governing Law. This Agreement shall be governed by, interpreted under, and
construed in accordance with the internal laws of the State of Delaware
applicable to agreements made and to be performed within the State of Delaware,
without giving effect to any choice-of-law provisions thereof that would
compel
the application of the substantive laws of any other jurisdiction.
6.12
Waiver of Trial by Jury. Each party hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or
other
proceeding (whether based on contract, tort or otherwise) arising out of,
connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Investor in the negotiation, administration,
performance or enforcement hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be executed and delivered by their duly authorized representatives as of
the
date first written above.
|
AFFINITY
MEDIA INTERNATIONAL CORP.
A
Delaware corporation
By:_____________________________
Name:
Xxxxxx Xxxx
Title:
President
|
INVESTORS:
__________________________
Xxxxx
Xxxxx
__________________________
Xxxxxx
Xxxx
_________________________
Xxxxx
Xxxxxxxxxx
__________________________
Xxxxxxx
Xxxxxx
__________________________
Xxxx
Xxxxx
__________________________
Xxxx
Xxxxxx
