EXHIBIT 4(ag)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of September 18,
1998 is made by and among DIGITAL LAVA INC., a Delaware corporation (the
"Company"), United Resources Partners (the "Holder").
RECITALS
In connection with the issuance of certain of the Company's securities
pursuant to a Warrant Agreement between the Company and the Holder dated as of
the date hereof, which agreement among other things provides for the issuance to
the Holder of certain warrants (the "Warrants") to purchase shares of the
Company's common stock ("Common Stock"), the Company has agreed to grant to the
Holder certain registration rights under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Securities Act")
with respect to the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares"). This Agreement sets forth the terms and
conditions of such undertaking.
AGREEMENTS
The Company and the Holder covenant and agree as follows:
1. Definitions. For purposes of this Agreement:
(a) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act or any successor rule providing
for offering securities on a continuous basis ("Rule 415"), and the declaration
or ordering of the effectiveness of such registration statement or document by
the Securities and Exchange Commission (the "SEC");
(b) The term "Registrable Securities" means (i) the Warrant Shares and (ii)
any shares of Common Stock issued as (or issuable upon the conversion or
exercise of any convertible security, warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of such Warrant Shares, excluding in all cases, however, any
Registrable Securities sold by a Holder in a transaction in which its
registration rights under this Agreement are not assigned.
2. Registration Rights.
2.1 Demand Registration. Subject to the limitations set forth in Section
2.1(b) below, the Company shall, upon the written request of Holders holding a
majority of the sum of (x) the outstanding Registrable Securities and (y) the
then outstanding and unexercised
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Warrants, use its best efforts to cause the Registrable Securities specified in
such request to be registered under the Securities Act (a "Demand
Registration"). In the event that the Company shall receive a written request
under this Section 2.1, the Company shall give prompt written notice thereof to
any Holder which did not join in such written request. If requested in writing
by any of such other Holders within fifteen days after the Company gives the
notice described in the preceding sentence, the Company shall include among the
Registrable Securities that endeavors to register under this Section 2.1 such
Registrable Securities as shall be specified in the request of such other
Holders.
(a) Notice of Demand Registration. Each request delivered pursuant to
Section 2.1 shall: (i) specify the amount of Registrable Securities intended to
be offered and sold by each of the Holders joining in the request; (ii) express
the present intent to offer such Registrable Securities for distribution; (iii)
describe the nature or method of the proposed offer and sale of the Registrable
Securities; and (iv) contain the undertaking of the Holders to provide all such
information and materials and take all such action as may be required in order
to permit the Company to comply with all applicable requirements of the
Securities Act, the SEC and state securities and "blue sky" laws, and to obtain
acceleration of the effective date of the Registration Statement (as defined
below).
(b) Limitations on Demand Registrations. Notwithstanding anything herein to
the contrary, the obligations of the Company to cause any Registrable Securities
to be registered pursuant to Section 2.1 are subject to each of the following
limitations, conditions and qualifications:
(i) The Holders may only request that the Company make any Demand
Registration subsequent to the earlier of 180 days following the effective date
of the registration statement for the initial public offering of the Company's
securities.
(ii) Any request for Demand Registration made by the Sellers pursuant to
Section 2.1, to be effective, shall request the registration of the offering and
sale or other distribution by the Holders of not less than one-half of the
Registrable Securities.
(iii) In the event the Holders request Demand Registration pursuant to
Section 2.1 and the related offering is to be underwritten, the managing
underwriter shall be a nationally recognized investment banking firm approved by
the Company in the reasonable exercise of its discretion.
(iv) The Company shall be required to effect only two Demand Registrations
pursuant to Section 2.1; provided, however, that a registration shall not count
as a Demand Registration unless 90% of the Registrable Securities requested to
be included in such registration are sold pursuant to such registration
statement.
2.2 Piggyback Registration. Subject to the limitations set forth in Section
2.2(b), at any time that the Company for its account or the account of others
shall propose the registration under the Securities Act of an offering of any of
its securities on a registration form
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which can be used for registration of the Registrable Securities, the Company
shall give written notice as promptly as possible of such proposed registration
to the Holders, and shall include in the offering such amount of Registrable
Securities as the Holders shall request to be included by written notice to the
Company received within fifteen days after receipt of the Company's notice, upon
the same terms (including the method of distribution) as the securities being
sold by the Company pursuant to any such offering (a "Piggyback Registration").
(a) Notice of Piggyback Registration. Each request delivered pursuant to
Section 2.2 shall: (i) specify the amount of Registrable Securities intended to
be offered and sold by each of the Holders; and (ii) contain the undertaking of
the Holders to provide all such information and materials and take all such
action as may be required in order to permit the Company to comply with all
applicable requirements of the Securities Act, the SEC and state securities and
"blue sky" laws and to obtain acceleration of the effective date of the
Registration Statement.
(b) Limitations on Incidental Registrations. Notwithstanding anything
contained herein to the contrary, the obligations of the Company to cause
Registrable Securities to be registered pursuant to Section 2.2 are subject to
each of the following limitations, conditions and qualifications:
(i) The Company shall not be required to give notice or include Registrable
Securities in any registration pursuant to Section 2.2 if the proposed
registration is primarily: (A) a registration of a stock option, thrift,
employee benefit or compensation plan or of securities issued or issuable
pursuant to any such plan; (B) a registration of securities proposed to be
issued in connection with a dividend reinvestment and stock purchase plan or
customer stock purchase plan; (C) a registration of securities proposed to be
issued in exchange for securities or assets of, or in connection with a merger
or consolidation with, another corporation or other entity; or (D) a
registration of securities which is solely a combination of any of the above.
(ii) If the Company is advised in writing by the managing underwriter (or
its investment banking firm if the offering is not underwritten) that the
inclusion of Registrable Securities may, in the opinion of such underwriter or
investment banking firm, as the case may be, interfere with the orderly sale and
distribution of the securities proposed to be offered by the Company or
adversely affect the price at which such securities may be sold, the number of
shares of Registrable Securities to be included in the offering shall be reduced
or eliminated to the extent necessary as shall be reasonably determined by such
underwriter or investment banker, as the case may be, in good faith.
(iii) In the event the Holders request registration pursuant to Section 2.2
and the related offering is to be underwritten, the Holders will enter into an
underwriting agreement containing representations, warranties and agreements
consistent with those customarily made by an issuer and a selling shareholder in
underwriting agreements with respect to secondary distributions.
(iv) The Company may, in its sole discretion, without the consent of the
Holders and without liability to any Holder for such action, withdraw such
registration statement and
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abandon the proposed offering in which the Holder had requested to participate
at any time.
(v) The Holders of Registrable Securities may exercise Piggyback
Registrations pursuant to Section 2.2 so long as such Holders continue to hold
Registrable Securities.
3. Obligations of the Company. When required under the Agreement to effect
the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Registration Statements. Prepare and file with the SEC a registration
statement or statements or similar documents (the "Registration Statement") with
respect to all Registrable Securities, other than any Registrable Securities
excluded by Holders pursuant to Sections 2.1 and 2.2, and use its best efforts
to cause the Registration Statement to become effective and maintain the
effectiveness of the Registration Statement until the earlier of (i) the date
all such registered Registrable Securities are sold and any prospectus delivery
requirements under the Securities Act shall have lapsed, and (ii) six months.
(b) Amendments. Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by the Registration Statement.
(c) Prospectuses. Furnish promptly to each Holders such numbers of copies
of a prospectus, including a preliminary prospectus, and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as the Holders may reasonably request in order to
facilitate the disposition of Registrable Securities.
(d) Blue Sky. Use its best efforts to register and qualify the securities
covered by the Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders, and
to prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements and to take such other actions
necessary or advisable to maintain such registration and qualifications in
effect, and to take all other actions necessary or advisable to enable the
disposition of such securities in such jurisdictions, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions or to provide any undertaking or make any change in
its charter or bylaws which the Board of Directors determines to be contrary to
the best interest of the Company and its stockholders.
(e) Underwriting Arrangements. Enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering. The Holders shall also enter into and
perform their customary obligations under any such agreement including, without
limitation, customary indemnification and contribution
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obligations.
(f) Notification of Changes. Notify the Holders, at any time when a
prospectus relating to Registrable Securities covered by the Registration
Statement is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing. The Company shall promptly amend or supplement the Registration
Statement to correct any such untrue statement or omission.
(g) Notification of Stop Orders. Notify the Holders of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest possible
time.
(h) Review by Counsel. Permit a single firm of counsel designated as
selling stockholders' counsel by the holders of a majority in interest of the
Registrable Securities to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time prior to their filing, and
shall not file any document in a form to which counsel reasonably objects.
(i) Opinions. At the request of the Holders, use its best efforts to
furnish on the date that Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Agreement (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters.
(j) Due Diligence. Make available for inspection by the Holders, any
underwriters participating in the offering pursuant to the registration and the
counsel, accountants or other agents retained by the Holders or any such
underwriter, all pertinent financial and other records, 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 or any
such underwriters in connection with the registration.
(k) Listing. If the class of the Company's securities is then listed on a
national securities exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange. If the Company's securities are not
then listed on a national securities exchange, use its best efforts to
facilitate the reporting of the Registrable Securities on NASDAQ.
(l) Further Actions. Take all other reasonable actions necessary to
expedite and
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facilitate disposition by the Holders of the Registrable Securities pursuant to
the Registration Statement.
4. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.
5. Expenses of Registration. All expenses other than the underwriting
discounts and commissions incurred in connection with registration, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing, filing and qualification fees, printing and accounting
fees, the fees and disbursements of counsel for the Company (but excluding the
fees and disbursements of any counsel for the Holders) shall be borne by the
Company. If the Company shall fail to comply with the provisions of Sections 2
and 3 hereof, the Company shall, in addition to any equitable or other relief
available to such Holders, extend the Exercise Period by such number of days as
shall equal the delay caused by the Company's failure, and the Company shall be
liable for any damages incurred by such Holders.
6. Indemnification. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:
(a) By Company. To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the directors, if any, of such Holder, the
officers, if any, of such Holder who sign the Registration Statement, each
person, if any, who controls such Holder, any underwriter (as defined in the
Securities Act) for the Holders and each person, if any, who controls any such
underwriter within the meaning of the Securities Act or the Securities Act of
1934, as amended (the "1934 Act"), against any losses, claims, damages, expenses
or liabilities (joint or several) to which any of them may become subject under
the Securities Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein, in light of the
circumstance in which they are made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act, any state securities law; and the Company will reimburse the
Holders and each such underwriter or controlling person, promptly as such
expenses are incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability action or proceeding; provided, however, that the indemnity agreement
contained in this Section 6(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action
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if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Holders or any such underwriter or controlling
person, as the case may be. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holders or any such
underwriter or controlling person and shall survive the transfer of the
Registrable Securities by Holders.
(b) By Holders. To the extent permitted by law, each Holder, severally and
not jointly, will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, each
person, if any, who controls the Company within the meaning of the Registration
Statement, each person, if any, who controls the Company within the meaning of
the Securities Act or the 1934 Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
any of them may become subject, under the Securities Act, the 1934 Act or other
federal state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration, and such Holder
will reimburse any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage
liability or action; provided, however, that the indemnity agreement contained
in this subsection 6(b) shall not apply to amounts paid in settlement of such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder, which consent shall not be unreasonably withheld;
and provided further, that the Holder shall be liable under this paragraph for
only that amount of losses, claims, damages and liabilities as does not exceed
the proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such registration.
(c) Procedure for Indemnification. Promptly after receipt by an indemnified
party under this Section 6 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if, in the reasonable opinion of counsel
for the indemnifying party, representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying
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party within a reasonable time of the commencement of any such action shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 6 only to the extent prejudicial to its ability to defend such
action, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
other than under this Section 6. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, promptly as such expense, loss, damage or
liability is incurred.
(d) Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it otherwise would be
liable under this Section 6 to the extent permitted by law, provided that (i) no
contribution shall be made under the circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in this
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
7. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of SEC Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit the Holders to sell securities of the Company to the public without
registration, the Company agrees, following the initial public offer of the
Company's securities, to:
(i) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934
Act; and
(iii) furnish to each Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (A) a written statement by
the Company that it has complied with the reporting requirements of SEC
Rule 144, the Securities Act and the 1934 Act, (B) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (C) such other information as may be
reasonably requested in availing the Holders of any rule or regulation of
the SEC which permits the selling of any securities without registration.
8. Assignment of Registration Rights. The rights to have the Company
register Registrable Securities pursuant to this Agreement may be assigned by
the Holders to transferees or assignees of such securities provided the Company
is, within a reasonable time after such transfer, furnished with written notice
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; provided, further,
that such assignment shall be effective only if immediately following such
transfer the further
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disposition of such securities by the transferee or assignee is restricted under
the Securities Act. The term "Holders" as used in this Agreement shall include
permitted assignees.
9. Timing of Exercise. Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
Holders may seek registration until the last practicable moment.
10. Miscellaneous.
(a) Notices. Notices required or permitted to be given hereunder shall be
in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed (i) if
to the Company, at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000,
(with a copy to: Xxxxxxxxxx Xxxxxxxxx Xxxxxx & Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000; Attention: Xxxx X. Xxxxxxxxx, Esq.) and (ii) if
to a Holder at the address set forth in Schedule I, or at such other address as
each such party furnishes by notice given in accordance with this Section 9(a).
(b) Waiver. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
will not operate as a waiver thereof. No waiver will be effective unless and
until it is in writing and signed by the party giving the waiver.
(c) Governing Law. This Agreement shall be enforced, governed and construed
in all respects in accordance with the laws of the State of New York, as such
laws are applied by New York courts to agreements entered into and to be
performed in New York by and between residents of New York. In the event that
any provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute of rule of law. Any provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability
of any other provision hereof.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a written agreement executed by the Company and the holders of a
majority in interest of the sum of (x) the Registrable Securities and (y) the
then outstanding and unexercised Warrants.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
DIGITAL LAVA INC.
By: ____________________________________
Authorized Officer
UNITED RESOURCES PARTNERS
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
Address: 00 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Social Security/Tax I.D. No.: ___________
NO. OF UNITS OF SUBSCRIPTION: __
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