REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of January
15, 1997, is between SPICE ENTERTAINMENT COMPANIES, INC., a Delaware
corporation (the "Company"), and XXXXXXXXX L.L.C. (the "Initial Holder").
This Agreement is made in connection with a Loan and Security Agreement
of even date herewith (the "Loan Agreement") between the Company and the
Initial Holder. In order to induce Initial Holder to enter into the Loan
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement
The parties hereby agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Common Stock: The Common Stock, par value $.01 per share, of
the Company.
Company: See preamble.
Demand Registration: See Section 2(a).
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Holder: The Initial Holder or such other Person to whom the
Initial Holder (or any subsequent Holder) shall have assigned or transferred
such Holder's Registrable Securities in accordance with this Agreement. A Person
is deemed to be a Holder whenever such Person owns Registrable Securities or
rights to acquire such Registrable Securities, whether or not such acquisition
has actually been effected and disregarding any legal restrictions upon the
exercise of such right.
Initiating Holders: See Section 2(a).
Loan Agreement: See preamble.
Net Proceeds: Offering price less any underwriting discounts
and commissions.
Offered Securities: The amount of Registrable Securities
proposed to be sold in connection with any Demand Registration.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Piggyback Registration: See Section 3(a).
Preferred Stock: The Convertible Preferred Stock Series 1997-A
of the Company, having the rights and preferences set forth in the Certificate
of Designation of Preferences and Rights, filed with the Secretary of State of
the State of Delaware on January __, 1997.
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.
Registrable Securities: All shares of Common Stock (including,
without limitation, any such shares into which the Preferred Stock may from time
to time be converted), until such time as (a) they have been effectively
registered under the Securities Act, (b) they are distributed to the public
pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act or (c) they have otherwise been transferred and a new certificate
or other evidence of ownership for them not bearing a legend that such shares
have not been registered under the Securities Act and not subject to any stop
transfer order has been delivered by or on behalf of the Company and no other
restriction on transfer exists.
Registration Expenses: See Section 7.
Registration Statement: Any registration statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from
time to time.
Underwriters' Maximum Number: For any Demand Registration,
Piggyback Registration or other underwritten registration, that number of shares
of securities to which such registration should, in the opinion of the managing
underwriter or underwriters of such registration in light of market factors, be
limited.
Underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. Demand Registration.
(a) Right to Demand Registration.
(i) Subject to the limitations
contained in this Section 2(a)(i), the Holders, at any time and from time
to time, may make a written request for registration with the SEC (a
"Demand Registration") under and in accordance with the provisions of the
Securities Act of all or part of its Registrable Securities and the
Company shall effect such registration; provided, however, that the Company
need not effect a Demand Registration if the Company has effected three (3)
Demand Registrations pursuant to this Section 2(a)(i). If requested by the
Holders demanding registration (the "Initiating Holders"), any Demand
Registration shall be an underwritten offering.
(ii) Within ten days after receipt of any request by a
Holder under this Section 2(a), the Company will give written notice of such
registration request to all other Holders and, subject to Section 2(b),
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein by
certified mail, return receipt requested, from the Holders thereof within
fifteen days after giving of notice by the Company.
(b) Priority on Underwritten Demand Registration. If any of
the Registrable Securities registered pursuant to a Demand Registration are
to be sold in one or more firm commitment underwritten offerings and the
managing underwriters advise in writing the Company and the Holders of such
Registrable Securities of an Underwriters Maximum Number: (i) the Company will
be obligated and required to include in such registration the Registrable
Securities requested to be included in such registration by the Initiating
Holders and the Registrable Securities which shall have been requested to be
included in such registration by Holders other than the Initiating Holders,
pro rata among the Initiating Holder and such other Holders on the basis of
the number of such Registrable Securities requested to be included therein by
the Initiating Holder and such other Holders; (ii) if the Underwriters' Maximum
Number exceeds the sum of the number of Registrable Securities the Company
is required to include in such Demand Registration pursuant to clause (i) of
this sentence, then the Company will be entitled to include in such
registration that number of securities which shall have been requested by the
Company to be included in such registration for the account of the Company and
which shall not be greater than such excess; and (iii) if the Underwriters'
Maximum Number exceeds the sum of the number of Registrable Securities which
the Company shall be required to include in such Demand Registration and
the number of securities which the Company proposes to offer and sell for its
own account in such registration, then the Company may include in such
registration that number of other securities which persons (other than the
Holders as such) shall have requested be included in such registration and
which shall not be greater than such excess. Neither the Company nor any of
its securityholders (other than Holders of Registrable Securities) shall be
entitled to include any securities in any underwritten Demand Registration
unless the Company or such securityholders (as the case may be) shall have
agreed in writing to sell such securities on the same terms and conditions
as shall apply to the Registrable Securities to be included in such Demand
Registration.
(c) Selection of Underwriters. In the event of an
underwritten offering pursuant to Section 2(a), the Initiating Holders shall
be entitled to select the managing underwriters and any additional investment
bankers and managers to be used in connection with the offering; provided,
however, that any Person so selected shall be of nationally recognized
standing and otherwise reasonably satisfactory to the Company.
3. Piggyback Registration.
(a) Right to Include Registrable
Securities. If the Company at any time or from time to time proposes to
register shares of its Common Stock under the Securities Act (other than in a
registration on Form S-4 or S-8 or any successor form to such forms or in
connection with an exchange offer or an offering of securities solely to the
existing stockholders or employees of the Company), whether or not for sale
for its own account, the Company shall deliver prompt written notice to all
Holders of Registrable Securities of its intention to undertake such
registration and of such Holders' rights under this Section 3 as hereinafter
provided. The Company shall use its best efforts to effect the
registration under the Securities Act of all Registrable Securities with respect
to which the Company receives a request for registration from the Holders
thereof by written notice to the Company within twenty days after the date of
the Company's notice to Holders of its intended registration (which notice by
Holders shall specify the amount of Registrable Securities to be registered and
the intended method of disposition thereof), to the extent necessary to permit
the disposition in accordance with the intended methods thereof of all such
Registrable Securities by including such Registrable Securities in the
registration statement pursuant to which the Company proposes to register the
shares of Common Stock (a "Piggyback Registration"); provided, however, that if
such registration involves an underwritten offering, all Holders requesting
inclusion in the registration shall be required to sell their Registrable
Securities to the underwriters selected by the Company at the same price and on
the same terms of underwriting applicable to the Company and any other persons
selling shares of Common Stock, so long as such terms are not inconsistent with
the terms of this Agreement, including, without limitation, the terms of the
Agreement regarding the indemnification and contribution obligations of the
Holders. Notwithstanding the foregoing, if, at any time after giving written
notice of its intention to register Common Stock and prior to the effectiveness
of the registration statement filed in connection with such registration, the
Company determines for any reason either not to effect such registration or to
delay such registration, the Company may, at its election, by the delivery of
written notice to each Holder, (i) in the case of a determination not to effect
registration, relieve itself of its obligation to register the Registrable
Securities in connection with such registration, or (ii) in the case of a
determination to delay the registration, delay the registration of such
Registrable Securities for a reasonable period of time. The Holders requesting
inclusion in a registration pursuant to this Section 3 may, at any time prior to
the effective date of the registration statement relating to such registration,
revoke such request by delivering written notice to the Company revoking such
requested inclusion (which notice shall be effective only upon receipt by the
Company notwithstanding the provisions of Section 11(d)).
(b) Priority in Piggyback Registration. If any of the
Registrable Securities registered pursuant to any Piggyback Registration are
to be sold in one or more firm commitment underwritten offerings and the
managing underwriters advise in writing the Company and the Holders of such
Registrable Securities of an Underwriters' Maximum Number, or, in the case of
a Piggyback Registration not being underwritten, the Company shall reasonably
determine (and notify the Holders of Registrable Securities of such
determination), after consultation with an investment banker of nationally
recognized standing, that the number of shares of Common Stock (including
Registrable Securities) proposed to be sold in such offering is sufficiently
large to materially and adversely affect the success of such offering, the
Company shall include in such registration only such number of shares of
Common Stock (including Registrable Securities) which in the opinion of such
underwriters or the Company, as the case may be, can be sold without
any such material adverse effect, selected in the following order of priority:
(i) first, (A) if the applicable offering is initiated by the Company, all
of the shares of Common Stock that the Company proposes to sell for its own
account, if any, or (B) if the applicable offering is initiated by any
holder(s) of Common Stock pursuant to registration rights granted by the
Company, all of the shares of Common Stock that such holder(s) propose to sell
and (ii) second, with regard to any other Common Stock (including, without
limitation, Registrable Securities) requested to be included in such
registration by holders thereof (including, without limitation, the Holders)
that have requested their Common Stock to be included therein, or in their sole
and absolute discretion, such of such shares as the managing underwriters shall
deem advisable, allocated pro rata among such holders based on the number of
shares of such Common Stock that each such holder shall have requested to be
included therein.
4. Hold-Back Agreements.
(a) Restrictions on Public Sale by
Holder of Registrable Securities. Each Holder whose Registrable Securities
are eligible for inclusion in a Registration Statement filed pursuant to
Section 2 or 3 agrees, if requested by the managing underwriter or underwriters
in an underwritten offering of any Registrable Securities, not to effect
any public sale or distribution of Registrable Securities, including a sale
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act (except as part of such underwritten registration), during
the 14-day period prior to, and during the 180-day period (or such shorter
period as may be agreed to by the parties hereto) beginning on, the
effective date of such Registration Statement, to the extent timely notified in
writing by the Company or the managing underwriter or underwriters.
The foregoing provisions shall not apply to any Holder if
such Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such Holder
shall undertake, in its request to participate in any such underwritten
offering, not to effect any public sale or distribution of Registrable
Securities (except as part of such underwritten registration) during such
period unless it has provided 45 days' prior written notice of such sale or
distribution to the managing underwriter or underwriter.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or distribution of any
of its Common Stock for its own account during the 14-day period prior to,
and during the 90-day period beginning on, the effective date of a Registration
Statement filed pursuant to Section 2 or 3 (except as part of such underwritten
registration or pursuant to registrations on Form S-4 or S-8 or any successor
form to such forms or in connection with an exchange offer or an offering of
securities solely to the existing stockholders or employees of the Company),
and (ii) use reasonable efforts to cause each holder of Common Stock purchased
from the Company at any time after the date of this Agreement (other than
in a registered public offering) to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration, if permitted).
5. Registration Procedures.
Subject to Section 6 and provided that nothing contained
herein shall prohibit the Company from abandoning a registration in which the
Holders have requested to participate pursuant to Section 3, once the Company
incurs registration obligations under Section 2 or 3, the Company will use its
best efforts to effect such registrations to permit the sale of such Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC a Registration
Statement relating to such registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Registrable
Securities by the Holders thereof in accordance with the intended method or
methods of distribution thereof, and use its best efforts to cause such
Registration Statement to become effective; provided, however, that before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, including documents incorporated by reference after the initial
filing of any Registration Statement, the Company will furnish to the
Holders of the Registrable Securities covered by such Registration
Statement, their counsel and the underwriters, if any, copies of all such
documents proposed to be filed sufficiently in advance of filing to
provide them with a reasonable opportunity to review such documents and
comment thereon;
(b) prepare and file with the SEC such amendments and
post-effective amendments to a Registration Statement as may be necessary to
keep such Registration Statement effective for a period of not less than 6
months (or such shorter period which shall terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn,
but not prior to the expiration of the 90-day period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if applicable); cause
the related Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of
all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement or supplement to such
Prospectus;
(c) notify each Holder of Registrable Securities
included in the Registration Statement, their counsel and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such notice in writing, (1) 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, (2) of any request by the SEC for amendments or supplements
to a Registration Statement or related Prospectus or for additional
information, (3) 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, (4) if at any time the representations and warranties of the
Company contained in agreements contemplated by Section 5(n) cease to be
true and correct, (5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, (6) of the happening of any event as a
result of which the Prospectus included in the Registration Statement (as
then in effect) contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus or any preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate or
that there exist circumstances not yet disclosed to the public which
make further sales under such Registration Statement inadvisable pending such
disclosure and post-effective amendment;
(d) upon the occurrence of any event contemplated by Section
5(c)(2)-(7), prepare a supplement or post-effective amendment to the
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 Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(e) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration Statement,
or the lifting of any suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
moment;
(f) if reasonably requested by a managing underwriter or any
Holder of Registrable Securities, immediately incorporate in a Prospectus
supplement or post-effective amendment such information concerning such Holder
of Registrable Securities, the managing underwriter or underwriters or the
intended method of distribution as the managing underwriter or underwriters
or the Holder of Registrable Securities reasonably requests to be included
therein and as is appropriate in the reasonable judgment of the Company,
including, without limitation, information with respect to the number of
shares of the Registrable Securities being sold to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the underwritten (or
best efforts underwritten) offering of the Registrable Securities to be
sold in such offering; make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration
Statement if requested by a managing underwriter of such Registrable Securities;
(g) furnish to each Holder of Registrable Securities included
in such Registration Statement and each managing underwriter, if any, without
charge, one manually-signed copy of the Registration Statement and any post-
effective amendments thereto, including financial statements and schedules,
and, upon request, all documents incorporated therein by reference and all
exhibits (including those incorporated by reference);
(h) deliver to each Holder of Registrable Securities included
in such Registration Statement, their counsel and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each preliminary prospectus) and any amendment or supplement thereto as such
Persons may reasonably request; the Company consents to the use of such
Prospectus or any amendment or supplement thereto by each Holder of
Registrable Securities included in the Registration Statement and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or
supplement thereto;
(i) prior to any public offering of Registrable
Securities, use its best efforts to register or qualify, or cooperate with
the Holders of Registrable Securities included in the Registration Statement,
the underwriters, if any, and their respective counsel in connection with
the registration or qualification of, such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as
any Holder or underwriter reasonably requests in writing; use its best
efforts to keep each such registration or qualification effective, including
through new filings or amendments or renewals, during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided, however, that the Company will not be
required to qualify to do business or take any action that would subject
it to taxation or general service of process in any jurisdiction where it is
not then so qualified or subject;
(j) cooperate with the Holders of Registrable Securities
included in the Registration Statement and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be sold under the Registration Statement; and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriter or underwriters, if any, or such Holders may
request at least two business days prior to any sale of Registrable Securities;
(k) use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the underwriter
or underwriters, if any, to consummate the disposition of such Registrable
Securities;
(l) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be listed, by the date of the first
sale of Registrable Securities pursuant to such Registration Statement,
on each securities exchange on which the Common Stock is then listed or proposed
to be listed, if any;
(m) provide a transfer agent and registrar for the
Registrable Securities not later than the effective date of such Registration
Statement;
(n) enter into such agreements and take all such other
reasonable actions in connection therewith in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection,
in the case of an underwritten offering, (l) enter into an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings and use its best efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriter
or underwriters) addressed to each selling Holder and the underwriters,
if any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other related matters as may be reasonably
requested by such Holders and underwriters, (2) use its best efforts to obtain
a "cold comfort" letter and updates thereof from the Company's independent
certified public accountants addressed to each Holder of Registrable Securities
included in the Registration Statement and the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters given by accountants in connection with
underwritten offerings, (3) the underwriting agreement shall set forth in full
the indemnification and contribution provisions and procedures of Section 8
with respect to all parties to be indemnified pursuant to said Section, and (4)
the Company shall deliver such documents and certificates as may be reasonably
requested by the managing underwriter or underwriters, if any, to evidence
compliance with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company. The above shall be
done at each closing under such underwriting or similar agreement or as and to
the extent required thereunder;
(o) make available for inspection by a representative of the
Holders of Registrable Securities included in the Registration Statement,
any underwriter participating in any disposition pursuant to such Registration
Statement and any lawyer or accountant retained by such selling Holders or
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company as they may reasonably request, and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, underwriter, lawyer or
accountant in connection with such Registration Statement; provided, however,
that any records, information or documents that are furnished by the Company
and that are non-public shall be used only in connection with such registration
and shall be kept confidential by such Persons except to the extent
disclosure of such records, information or documents is required by law; and
(p) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
securityholders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 90 days after the end of any
12-month period (1) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm or best efforts
underwritten offering and (2) beginning with the first day of the Company's
first fiscal quarter next succeeding each sale of Registrable Securities after
the effective date of a Registration Statement, which statements shall cover
said 12-month periods.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish promptly to the
Company such information regarding the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5(c)(2)-(7), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus contemplated by Section
5(d), or until it is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any additional
or supplemental filings which are incorporated by reference in such Prospectus,
and, if so directed by the Company, such Holder will, or will request the
managing underwriter or underwriters, if any, to, deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time period mentioned in Section 5(b) during which a
Registration Statement is required to be kept effective shall be extended by the
number of days during the time period from and including the date of the giving
of such notice pursuant to Section 5(c) to and including the date when each
seller of Registrable Securities covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 5(d).
For purposes of Sections 2 and 3, the Holders who have
requested registration of Registrable Securities to be acquired upon the
conversion of shares of Preferred Stock not theretofore converted shall
furnish the Company with an undertaking that they or the underwriters or
other persons to whom such shares of Preferred Stock will be transferred have
undertaken to convert such shares and to sell, transfer or otherwise dispose
of the Registrable Securities received upon conversion of such shares in
such registration.
6. Delay of Registration.
The Company may delay the filing of a registration for a
reasonable period of time, not to exceed six (6) months, for the purpose of
permitting the Company to (i) effect disclosure or consummation of any
transaction or transactions requiring confidential treatment which are being
pursued at such time, (ii) negotiate, effect or complete any financing
transaction which the Company reasonably believes might be jeopardized, delayed
or made more costly to the Company by the filing of the registration, or (iii)
prepare or obtain such certified financial statements as may be required to be
included in the Registration Statement to the extent such certified financial
statements have not been prepared or are not otherwise available at the time.
7. Registration Expenses.
(a) All expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees
and disbursements of counsel for the underwriters or selling Holders in
connection with blue sky qualifications of the Registrable Securities under
the laws of such jurisdictions as the managing underwriter or underwriters
or Holders of a majority of the shares of the Registrable Securities
being sold may designate), printing expenses, messenger, telephone and delivery
expenses, and fees and disbursements of counsel of the Company and for not more
than one counsel to the sellers of the Registrable Securities selected as
provided in paragraph (b) below and of all independent certified public
accountants of the Company (including the expenses of any special audit
and "cold comfort" letters required by or incident to such performance),
underwriters (including transfer taxes, discounts, commissions or fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities or
legal expenses of any Person other than the Company and the selling Holders),
securities acts liability insurance if the Company so desires and fees and
expenses of other Persons retained by the Company (all such expenses being
herein called "Regulation Expenses") will be borne by the Company whether or not
the Registration Statement becomes effective. The Company will, in any event,
pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
on which similar securities issued by the Company are then listed and the fees
and expenses of any Person, including special experts, retained by the Company.
(b) Notwithstanding the foregoing, in connection with each
registration hereunder, the Company will reimburse the Holders of Registrable
Securities included in the Registration Statement for the reasonable fees and
disbursements of not more than one counsel, which counsel shall be chosen by
the Holders of a majority of the Registrable Securities included in the
Registration Statement.
8. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless, to the full extent permitted by law, each Holder
of Registrable Securities registered pursuant to any registration hereunder,
its officers, directors, partners and agents and each Person who controls
such Holder or agents (within the meaning of the Securities 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 (in the case of a Prospectus or any
preliminary Prospectus, in the light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder of its
representative expressly for use therein; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission in a
Prospectus, if such untrue statement or alleged untrue statement, omission
or alleged omission is corrected in an amendment or supplement to the
Prospectus and the Holder of Registrable Securities thereafter had a duty but
failed to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of the Registrable Securities to the person
asserting such loss, claim, damage, liability or expense after the
Company had furnished such Holder with the number of copies of such amended or
supplemented Prospectus reasonably requested by such Holder. The Company will
also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the Securities Act) to the same extent as provided above with respect
to the indemnification of the Holders; provided, however, that if pursuant to an
underwritten public offering of Registrable Securities, the Company and any
underwriters enter into an underwriting or purchase agreement relating to such
offering which contains provisions relating to indemnification and contribution
between the Company and such underwriters, such provisions shall be deemed to
govern indemnification and contribution as between the Company and such
underwriters.
(b) Indemnification by Holders. In connection with any
registration hereunder, each Holder participating in such registration will
promptly furnish to the Company in writing such information and affidavits
with respect to such Holder as the Company reasonably requests for use in
connection with any Registration Statement or Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers and agents and each Person who controls the Company (within the
meaning of the Securities Act) against any losses claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact to be stated in
any Registration Statement or Prospectus or Preliminary Prospectus or
necessary to make the statements therein (in the case of a Prospectus, in the
light of the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information or affidavit with respect to such Holder so
furnished in writing by such Holder or its representatives to the Company
specifically for inclusion in such Registration Statement or Prospectus. In
no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in the distribution to the same extent as
provided above with respect to information so furnished in writing by such
persons or their representatives to the Company specifically for inclusion in
any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) 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 (x) the indemnifying party has agreed in
writing to pay such fees or expenses, or (y) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such Person or (z) in the reasonable judgment of any such
Person and the indemnifying party, based on advice of their respective
counsel, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim
on behalf of such Person). If such defense is not assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). No indemnifying party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If the indemnification provided for in
this Section 8 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expense referred to therein, then the indemnifying party in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action; provided, however, that in
no event shall the liability of any selling Holder hereunder be greater in
amount than the difference between the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such contribution obligation and all amounts previously contributed by such
Holder with respect to such losses, claims, damages, liabilities and expenses.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. 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.
9. Rule 144.
If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and it
will take such further action as any Holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such information and
requirements. Notwithstanding the foregoing, the Company may deregister any
class of its equity securities under Section 12 of the Exchange Act or suspend
its duty to file reports with respect to any class of its securities pursuant to
Section 15(d) of the Exchange Act if it is then permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder.
10. Underwritten Registration.
If any of the Registrable Securities covered by any Piggyback
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Company; provided, however, that any Person so selected
shall be of nationally recognized standing.
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (b) accurately completes and executes all questionnaires,
powers of attorney, indemnities, custody agreements, underwriting agreements and
other documents required under the terms of such underwriting arrangements
(provided, however, that no Person will be obligated to provide indemnification
or contribution to such underwriter on a basis different than as set forth in
Section 8).
11. Miscellaneous.
(a) Remedies. In the event of a breach by the Company
of its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreement. Except as previously
disclosed to the Initial Holder in writing, the Company has not previously
entered into any agreement with respect to its Common Stock granting any
registration rights to any Person, and will not on or after the date of this
Agreement enter into any agreement with respect to its securities which grants
demand registration rights to anyone or which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent of
Holders owning at least a majority of the shares of the Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter which relates exclusively to the
rights of Holders of Registrable Securities whose securities are being sold
pursuant to a Registration Statement and which does not directly or
indirectly affect the rights of other Holders may be given by Holders owning
a majority of the shares of the Registrable Securities being sold by such
Holders; provided, however, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence; provided further, that
in addition to satisfying the consent requirements set forth above, if any
amendment or waiver proposed hereunder would reasonably be expected to (A)
affect any Holder (an "Affected Holder") differently than any other Holder
with the result that (i) such Affected Holder's liabilities hereunder are
differentially increased; (ii) such Affected Holder's economic benefits
hereunder are differentially reduced; or (iii) any other Holder's benefits
are differentially increased, then such amendment or waiver shall be effective
only, in the case of (i) and (ii), with the consent of such Affected Holder,
and in the case of (iii), with the consent of each Affected Holder, or
(B) in the case of the Initial Holder, cause the Initial Holder to be deemed
the beneficial owner of a greater quantity of Securities of any class than is
permitted under any requirement of any governmental authority binding upon the
Initial Holder or cause the Initial Holder to be in violation of any other
requirement of any governmental authority, then such amendment or waiver shall
be effective only with the consent of the Initial Holder.
(d) Notices. All notices provided for or permitted hereunder
shall be made in writing by hand delivery, registered or certified first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:
(i) if to a Holder, at such Holder's
address on the stock transfer books
of the Company; and
(ii) if to the Company, to:
Spice Entertainment Companies, Inc.
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11(d).
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
(e) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of
the parties, including, without limitation, subsequent Holders of
Registrable Securities agreeing to be bound by all of the terms and conditions
of this Agreement.
(f) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
(g) Heading. The headings in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement,
nor shall they affect their meaning, construction or effect.
(h) Governing Law. The validity, performance construction
and effect of this Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving effect to
principles of conflicts of law.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein, with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
SPICE ENTERTAINMENT COMPANIES, INC.
By: /s/ J. Xxxxx Xxxxxxx
-------------------------------
J. Xxxxx Xxxxxxx
Chairman and Chief Executive Officer
XXXXXXXXX L.L.C.
By: /s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
Managing Director
