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EXHIBIT 10.13
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is dated as of February 27, 1998 by
and among Pacific Rim Entertainment, Inc., a Delaware corporation (the
"Company") and The Trust of Xxxxxx X. and Xxxx X. Xxxxxxx, Xxxx Xxxx, Xxxxxxx
Xxxxx and Xxxxxx Xxxxx (collectively the "Holders"), the sole shareholders of
Solsource Computers, Inc., a California corporation ("Acquiree").
W I T N E S S E T H:
WHEREAS, the Company and Holders are parties to an Agreement and Plan
of Merger dated as of February 27, 1998 (the "Merger Agreement") pursuant to
which Acquiree has elected to effectuate a merger with a newly formed subsidiary
of the Company (the "Merger");
WHEREAS, pursuant to the Merger, the Holders are to receive certain
shares of the Company's $.01 par value common stock (the "Common Stock");
WHEREAS, the parties hereto desire to set forth their agreement
concerning the registration under the Securities Act of 1933, as amended, of the
Common Stock issued to the Holders in connection with the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
(a) "Closing" shall mean that date upon which a closing
of the Merger occurs.
(b) "Company" shall mean Pacific Rim Entertainment, Inc.
(c) "Exchange Act" shall mean the Securities Exchange Act
of 1934.
(d) "Holders" shall mean The Trust of Xxxxxx X. and Xxxx
X. Xxxxxxx, Xxxx Xxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxx, the former shareholders
of Solsource Computers, Inc. who have received, and may receive subsequent to
the date hereof, shares of the Company's Common Stock pursuant to the Merger.
(e) "Merger" shall mean the Merger of Solsource
Acquisition Corp., a newly formed, wholly owned subsidiary of the Company, into
Acquiree pursuant to the terms of the Merger Agreement entered into on February
__, 1998.
(f) "Person" means an individual, a partnership (general
or limited), corporation, limited liability company, joint venture, business
trust, cooperative, association or other form of business organization, whether
or not regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
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quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
(g) "Registration Statement" shall mean the Registration
Statement of the Company filed with the SEC pursuant to the provisions of
Section 2 of this Agreement which covers the resale of the Restricted Stock on
an appropriate form then permitted by the SEC to be used for such registration
and the sales contemplated to be made thereby under the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such Registration Statement, including any pre- and post-effective amendments
thereto, in each case including the prospectus contained therein, all exhibits
thereto and all materials incorporated by reference therein.
(h) "Restricted Stock" shall mean all or any shares of
Common Stock or other equity securities of the Company that may be issued to the
Holders pursuant to subparagraphs 1.3(a)(ii) and 1.3(a)(iii) of the Merger
Agreement, and any additional shares of Common Stock or other equity securities
of the Company issued or issuable after the date hereof in respect of any such
securities (or other equity securities issued in respect thereof) by way of a
stock dividend or stock split, in connection with a combination, exchange,
reorganization, recapitalization or reclassification of Company securities, or
pursuant to a merger, division, consolidation or other similar business
transaction or combination involving the Company; provided that: as to any
particular shares of restricted stock, such securities shall cease to constitute
restricted stock (i) when 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 disposed of thereunder, or (ii) when and to the
extent such securities are permitted to be distributed pursuant to Rule 144 (or
any successor provision to such Rule) under the Securities Act or are otherwise
freely transferable to the public without further registration under the
Securities Act.
(i) "Securities Act" shall mean the Securities Act of
1933, as amended, or any similar or successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
any relevant time.
(j) "SEC" shall mean the United States Securities and
Exchange Commission.
(k) "Trading Day" shall mean any day on which the New
York Stock Exchange is open for trading.
Capitalized terms used in this Registration Rights Agreement and not
otherwise defined herein shall have the same meaning ascribed thereto in the
Merger Agreement.
2. Shelf Registration.
(a) The Company shall use it best efforts to prepare and
file, not later than the sixtieth (60th) day following the first anniversary of
the Closing of the Merger, a Registration Statement with the SEC and use its
best efforts to, as promptly as possible have such Registration Statement
declared effective for the purpose of facilitating the public resale of fifty
percent (50%) of the Restricted Stock; provided, however, if there are no shares
of Restricted
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Stock issued pursuant to subparagraph 1.3(a)(iii) of the Merger Agreement, then
all shares of Restricted Stock shall only have such registration rights as are
identified at subparagraph 2(b) below.
(b) The Company shall use its best efforts to prepare and
file, not later than the sixtieth (60th) day after the second anniversary of the
Closing of the Merger, a Registration Statement with the SEC and use its best
efforts to, as promptly as possible, have such Registration Statement declared
effective for the purpose of facilitating the public resale of the remaining
Restricted Stock, which was not otherwise registered pursuant to subparagraph
2(a) above.
(c) Notwithstanding anything to the contrary contained
herein, the Company's obligation in subparagraphs 2(a) and 2(b) above shall
extend only to the inclusion of the Restricted Stock in a Registration Statement
filed under the Securities Act. The Company shall have no obligation to assure
the terms and conditions of distribution, to obtain a commitment from an
underwriter relative to the sale of the Restricted Stock or to otherwise assume
any responsibility for the manner, price or terms of the distribution of the
Restricted Stock. Furthermore, the Company shall not be restricted in any manner
from including within the Registration Statement the distribution, issuance or
resale of any of its or any other securities.
(d) Each Holder of Restricted Stock shall not effect any
public sale or distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the ninety (90) days prior to the
commencement of any primary offering to be undertaken by the Company of shares
of its own common stock (the "Primary Offering"), which may also include other
securities, and ending 180 days after completion of any such Primary Offering,
unless the Company, in the case of a non-underwritten offering, or the managing
underwriter, in the case of an underwritten Primary Offering, otherwise agree.
(e) Except with respect to the shares of Common Stock
permitted to be sold by the Holders pursuant to subparagraphs 2(a) and 2(b)
above, the remainder of the shares of the Company's Common Stock acquired (or to
be acquired) by the Holders pursuant to the Merger may not, without the written
consent of the Company, be subject to any transfer, disposition, sale or
encumbrance for a period of twenty-four (24) months from the Closing of the
Merger.
3. Registration Procedures. Whenever it is obligated to register
any Restricted Stock pursuant to this Agreement, the Company shall:
(a) prepare and file with the Commission a Registration
Statement with respect to the Restricted Stock in the manner set forth at
Paragraph 2 hereof and use its best efforts to cause such Registration Statement
to become effective as promptly as possible and to remain effective for that
period identified in subparagraph 3(g) hereafter;
(b) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective for the period specified in subparagraph
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3(g) below and to comply with the provisions of the Securities Act with respect
to the disposition of all Restricted Stock covered by such Registration
Statement in accordance with the Holders' intended method of disposition set
forth in such Registration Statement for such period;
(c) furnish to the Holders and to each underwriter, if
any, such number of copies of the Registration Statement and the prospectus
included therein (including each preliminary prospectus), as such persons may
reasonably request in order to facilitate the public sale or other disposition
of the Restricted Stock covered by such Registration Statement;
(d) use its best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the securities or
blue sky laws of such jurisdictions as the Holders, or, in the case of an
underwritten public offering, the managing underwriter shall reasonably request;
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) immediately notify the Holders under such
Registration Statement and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required or necessary to be
stated therein in order to make the statements contained therein not misleading
in light of the circumstances under which they were made;
(f) make available for inspection by the Holders, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
Holders or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by the
Holders, underwriter, attorney, accountant or agent in connection with such
Registration Statement;
(g) for purposes of subparagraphs 3(a) and 3(b) above,
the period of distribution of Restricted Stock shall be deemed to extend until
the earlier of: (A) in an underwritten public offering of all of the Restricted
Stock, the period in which each underwriter has completed the distribution of
all securities purchased by it; (B) in any other registration, the period in
which all shares of Restricted Stock covered thereby shall have been sold; and
(C) a period of two (2) years from the effective date of the first Registration
Statement filed by the Company with the SEC pursuant to this Agreement.
(h) if the Common Stock of the Company is listed on any
securities exchange or automated quotation system, the Company shall use its
best efforts to list (with the listing application being made at the time of the
filing of such Registration Statement or as soon thereafter as is reasonably
practicable) the Restricted Stock covered by such Registration Statement on such
exchange or automated quotation system;
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(i) enter into normal and customary underwriting
arrangements or an underwriting agreement and take all other reasonable and
customary actions if the Holders sell their shares of Restricted Stock pursuant
to an underwriting (however, in no event shall the Company, in connection with
such underwriting, be required to undertake any special audit of a fiscal period
in which an audit is normally not required);
(j) notify the Holders if there are any amendments to the
Registration Statement, any requests by the SEC to supplement or amend the
Registration Statement, or of any threat by the SEC or state securities
commission to undertake a stop order with respect to sales under the
Registration Statement; and
(k) cooperate in the timely removal of any restrictive
legends from the shares of Restricted Stock in connection with the resale of
such shares covered by an effective Registration Statement.
4. Expenses.
(a) For the purposes of this Paragraph (4), the term
"Registration Expenses" shall mean: all expenses incurred by the Company in
complying with paragraph (2) of this Agreement, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, "blue sky" fees,
fees of the National Association of Securities Dealers, Inc. ("NASD"), fees and
expenses of listing shares of Restricted Stock on any securities exchange or
automated quotation system on which the Company's shares are listed and fees of
transfer agents and registrars. The term "Selling Expenses" shall mean: all
underwriting discounts and selling commissions applicable to the sale of
Restricted Stock and all accountable or non-accountable expenses paid to any
underwriter in respect of the sale of Restricted Stock.
(b) Except as otherwise provided herein, the Company will
pay all Registration Expenses in connection with the Registration Statement
filed pursuant to paragraph (2) of this Agreement. All Selling Expenses in
connection with any Registration Statement filed pursuant to paragraph (2) of
this Agreement shall be borne by the participating Holders in proportion to the
number of shares sold by each, or by such persons other than the Company (except
to the extent the Company may be a seller) as they may agree.
5. Obligations of Holders.
(a) In connection with each registration hereunder, each
selling Holder will furnish to the Company in writing such information with
respect to such seller and the securities held by such seller, and the proposed
distribution by him or them as shall be reasonably requested by the Company in
order to assure compliance with federal and applicable state securities laws, as
a condition precedent to including such seller's Restricted Stock in the
Registration Statement. Each selling Holder also shall agree to promptly notify
the Company of any changes in such information included in the Registration
Statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact
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required or necessary to be stated therein in order to make the statements
contained therein not misleading in light of the circumstances then existing.
(b) In connection with each registration pursuant to this
Agreement, the Holders whose shares are included therein will not effect sales
thereof until notified by the Company of the effectiveness of the Registration
Statement, and thereafter will suspend such sales after receipt of telegraphic
or written notice from the Company to suspend sales to permit the Company to
correct or update a Registration Statement or prospectus. At the end of any
period during which the Company is obligated to keep a Registration Statement
current, the Holders included in said Registration Statement shall discontinue
sales of shares pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the shares covered
by such Registration Statement which remain unsold, and such Holders shall
notify the Company of the number of shares registered which remain unsold
immediately upon receipt of such notice from the Company.
6. Information Blackout.
At any time when a Registration Statement effected pursuant to
Paragraph 2 relating to Restricted Stock is effective, upon written notice from
the Company to the Holders that the Company has determined in good faith that
sale of Restricted Stock pursuant to the Registration Statement would require
disclosure of non-public material information, the Holders shall suspend sales
of Restricted Stock pursuant to such Registration Statement until such time as
the Company notifies the Holders that such material information has been
disclosed to the public or has ceased to be material or that sales pursuant to
such Registration Statement may otherwise be resumed.
7. Indemnification.
(a) The Company agrees to indemnify, to the extent
permitted by law, each Holder of Restricted Stock, its officers and directors
and each Person who controls such Holder (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and expenses joint or
several, to which an Indemnified person may become subject under the Securities
Act or any other statute or at common law, insofar as such liability (or action
in respect thereof) arises out of or is based upon (a) any alleged untrue
statement of material fact contained in any Registration Statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or (b)
any alleged omission of 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 state securities or other blue sky laws
applicable to the Company in connection with such registration, except insofar
as the same are caused by or contained in any information furnished to the
Company by such Holder for use therein or by such Holder's failure to deliver a
copy of the Registration Statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same.
(b) In connection with any Registration Statement in
which a Holder of Restricted Stock is participating, each such Holder shall
furnish to the Company in writing such
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information and affidavits as the Company reasonably requests for use in
connection with any such Registration Statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
Registration Statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished by such Holder; provided
that the obligation to indemnify shall be individual, not joint and several, for
each Holder and shall be limited to the net amount of proceeds received by such
Holder from the sale of Restricted Stock pursuant to such Registration
Statement.
(c) Any Person entitled to indemnification hereunder
shall (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party) and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one 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.
(d) The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Miscellaneous Provisions.
(a) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
(b) Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
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(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given without the written consent of the Company and the Holders.
(d) Notices. All communications under this Agreement
shall be sufficiently given if delivered by hand or by overnight courier or
mailed by registered or certified mail, postage prepaid, addressed,
(i) if to the Company, to:
Xx. Xxxx Xxxxxxxxxx
Chief Executive Officer
Pacific Rim Entertainment, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxxx Ingersoll, P.C.
Eleven Penn Center
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(ii) if to the Holders, to the address identified
on the books and records of the Company;
with a copy to:
Xxxxxxx X. Xxxxxxxxx, Esquire
Xxxxxxxx, Xxxx, Hargreaves & Savitch LLP
000 X Xxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Telephone Number (000) 000-0000
Telecopy Number (000-000-0000
or, at such other address as any of the parties shall have furnished in writing
to the other parties hereto.
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(e) Successors and Assigns; Holders as Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and assigns, and the agreements of the Company
herein shall inure to the benefit of the Holders and their respective successors
and assigns.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Entire Agreement; Survival; Termination. 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. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
ATTEST: PACIFIC RIM ENTERTAINMENT, INC.
By:_____________________________ By: Xxxx Xxxxxxxxxx
___________________________
Name:
Title:
The Trust of Xxxxxx X. and Xxxx X. Xxxxxxx
Xxxx Xxxx
___________________________________
Xxxx Xxxx
Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Xxxxxx Xxxxx
___________________________________
Xxxxxx Xxxxx
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