EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made as of this
15th day of July 1998, by and among The Producers Entertainment Group Ltd., a
Delaware corporation (the "COMPANY"), and Xxx Xxxxxxx and Xxxxx Xxxxxxx (each of
whom is herein referred to as a "STOCKHOLDER" and collectively as the
"STOCKHOLDERS").
RECITALS
WHEREAS, the Company and each of the Stockholders are parties to an
Agreement of Merger dated July 15th, 1998 (the "MERGER AGREEMENT"), whereby such
Stockholders received from the Company shares of the Company's Common Stock;
WHEREAS, SECTION 9.7 of the Merger Agreement provides that the Stockholders
have certain rights to include shares of the Company's Common Stock held by them
in a registered public offering of the Company's Common Stock (as defined in
SECTION 1(c)); and
NOW, THEREFORE, the parties hereby agree as follows:
I. REGISTRATION RIGHTS
Section 1.1 DEFINITIONS. For purposes of this SECTION 1:
(a) The term "ACT" means the Securities Act of 1933, as amended.
(b) The term "AFFILIATE" means a person or entity that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, a specified person or entity.
(c) The term "COMMON STOCK" means the Company's Common Stock authorized
for issuance under its Articles of Incorporation.
(d) The term "1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(e) The term "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "REGISTRABLE SECURITIES" means shares of Common Stock issued
and delivered, or required to be delivered, to the Stockholders pursuant to the
Merger Agreement.
(g) The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange Commission.
Section 1.2 DEMAND REGISTRATION. If a court of competent jurisdiction shall
determine that one or both of the Stockholders was terminated without cause and
in violation of such Stockholder's employment agreement with TPEG Merger
Company, then following receipt of a certified copy of any such judgment (and
following the expiration of any period of appeal, if any appeal is available)
the Company shall file as soon as practicable, and in any event within sixty
(60) days of the receipt of such notice, the registration under the Act of all
Registrable Securities which the Stockholders then own or that are required to
be delivered to the Stockholders.
Section 1.3 COMPANY REGISTRATION. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Stockholders) any of its
Common Stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities, a registration in connection with a BONA FIDE business
acquisition of or by the Company, or a registration in which the only Common
Stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered) or if any shareholder other than the
Stockholders causes the Company to register any of its Common Stock under the
Act, the Company shall, at such time, promptly give each Stockholder written
notice of such registration. Upon the written request of each Stockholder given
within twenty (20) days after mailing of such notice by the Company in
accordance with SECTION 3.5, the Company shall, subject to the provisions of
SECTION 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Stockholder has requested to be registered.
Section 1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this SECTION
1 to register any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the Stockholders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Stockholders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
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(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Stockholders; 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.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Stockholder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Stockholder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such 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 the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.
(i) Furnish, at the request of any Stockholder requesting registration of
Registrable Securities pursuant to this SECTION 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this SECTION 1, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (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, if any, and to the Stockholders
requesting registration of Registrable Securities 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, if any, and to the Stockholders requesting registration of
Registrable Securities.
Section 1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this SECTION 1 with
respect to the Registrable Securities of any selling Stockholder that such
Stockholder shall furnish to the Company such information regarding himself, the
Registrable Securities held by him, and the intended method of disposition of
such securities as the Company may reasonably request in writing and as shall be
required to effect the registration of such Stockholder's Registrable
Securities.
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Section 1.6 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to registrations pursuant
to SECTIONS 1.2 and 1.3 for each Stockholder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportion able thereto, but excluding any underwriting discounts and
commissions relating to Registrable Securities.
Section 1.7 DELAY OF REGISTRATION. No Stockholder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this SECTION 1 filed with and declared
effective by the SEC.
Section 1.8 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under SECTION 1.3 to include any of the Stockholders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering.
Section 1.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this SECTION 1:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Stockholder, any underwriter (as defined in the Act) for such
Stockholder and each person, if any, who controls such Stockholder or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, or the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions 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 such 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 not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Stockholder, underwriter
or controlling person, any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this SECTION 1.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the
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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 such Stockholder, underwriter or controlling person. Notwithstanding the
foregoing, the Company shall not be required to indemnify any Stockholder
pursuant to this SECTION 1.9(a) against any loss, claim, damage, liability,
or action arising from any untrue or misleading statement or omission
contained in any preliminary prospectus, if such deficiency is corrected in
the final prospectus and the Company made timely delivery of the final
prospectus to all purchasers of shares of the Company's capital stock
pursuant to the public offering of such shares.
(b) To the extent permitted by law, each selling Stockholder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Stockholder selling securities in such registration statement and any
controlling person of any such underwriter or other Stockholder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, or the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) 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
Stockholder expressly for use in connection with such registration; and each
such Stockholder will pay, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this SECTION 1.9(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this SECTION 1.9(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Stockholder (which consent shall not be unreasonably
withheld); provided, that, in no event shall any indemnity under this
SECTION 1.9(b) exceed the gross proceeds from the offering received by such
Stockholder. Notwithstanding the foregoing, no Stockholder shall be required to
indemnify the Company, its directors, its officers or any controlling person
pursuant to this SECTION 1.9(b) against any loss, claim, damage, or liability
arising from any untrue or misleading statement or omission contained in any
preliminary prospectus if such deficiency is corrected in the final prospectus
and the Company made timely delivery of the final prospectus to all purchasers
of shares of the Company's capital stock pursuant to the public offering of such
shares.
(c) Promptly after receipt by an indemnified party under this SECTION 1.9
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 1.9, deliver to the indemnifying party
a written notice of the 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
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other indemnified parties
which may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the
indemnifying party if the indemnified party, acting reasonably, determines that
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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 party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this SECTION 1.9, 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 otherwise than under this SECTION
1.9.
(d) If the indemnification provided for in this SECTION 1.9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement, which
shall be customary for registration of the type then proposed, shall control.
(f) The obligations of the Company and Stockholders under this SECTION 1.9
shall survive the completion of any offering of Registrable Securities in a
registration statement under this SECTION 1, and otherwise.
Section 1.10 TERMINATION OF REGISTRATION RIGHTS. No Stockholder shall be
entitled to exercise any right provided for in this SECTION 1 after eighty four
(84) months following the date of this Agreement.
Section 1.11 ADDITIONAL COVENANTS OF THE COMPANY. During the twenty-four
(24)-month period following the date of this Agreement, the Company shall (i)
comply with the public information requirements of Rule 144 of the Act in order
to afford the Stockholders the benefits therefor in connection with the resale
of the Registrable Securities, (ii) comply with the reporting requirements under
the 1934 Act and with listing requirements of the NASDAQ National Market, (iii)
timely file all reports required under the 1934 Act and the rules of NASDAQ
SmallCap Market and (iv) keep any registration statement covering Registrable
Securities, and any state securities law filings and registrations relating
thereto, effective for the period of distribution of such Registrable
Securities.
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Section 1.12 ADDITIONAL LIMITATIONS ON DISPOSITION OF THE REGISTRABLE
SECURITIES. Notwithstanding any provision herein to the contrary: (a) from the
date of this Agreement through June 30, 1999, neither of the Stockholders may
sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of
(hereinafter solely referred to as "Sell") any of the Registrable Securities;
(b) for the period commencing July 1, 1999 and ending on June 30, 2000, the
Stockholders may Sell not more than one-third (1/3) of the aggregate number of
Registrable Securities issued to the Stockholders, as a group; (c) for the
period commencing July 1, 2000 and ending on June 30, 2001, the Stockholders may
Sell not more than an additional one-third (1/3) of the aggregate number of
Registrable Securities issued to the Stockholders, as a group; and (d)
subsequent to June 30, 2001, the Stockholders may Sell any then unsold
Registrable Securities issued to either of them.
II. COVENANTS OF STOCKHOLDERS
Section 2.1 COVENANTS OF STOCKHOLDERS. The Stockholders, and their duly
appointed representatives, shall obtain and provide to the Company, promptly
upon request, any and all information reasonably required by the Company to
comply with state and federal securities laws and other requirements, including
but not limited to, beneficial ownership information and all shall cooperate
with any state or federal licensing agency in any investigation by such
agencies.
III. MISCELLANEOUS
Section 3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
Section 3.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
Section 3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 3.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Section 3.5 NOTICES. All notices, requests, demands and other communications
which a party is required to or may desire to give any other party in connection
with this Agreement shall be in writing, and shall be personally delivered,
delivered by facsimile transmission, or delivered by United States registered or
certified mail, postage prepaid with return receipt requested, addressed as
follows:
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If to the Company: The Producers Entertainment Group Ltd.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx 0
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxx
Fax No. 213/000-0000
With a copy to: Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: C. N. Xxxxx Xxxxxxx III
Fax No. 310/000-0000
If to the Stockholders: At the addresses on the signature pages of
this Agreement
With a copy to: Wolf, Xxxxxx & Xxxxxxx
00000 Xxxx Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Fax No. 310/000-0000
If notice is given by personal delivery in accordance with the provisions of
this SECTION 3.5, said notice shall conclusively be deemed given at the time of
delivery. If notice is given by confirmed facsimile transmission in accordance
with the provisions of this SECTION 3.5, said notice shall conclusively be
deemed given at the time of the transmission. If notice is given by mail in
accordance with the provisions of this section, said notice shall conclusively
be deemed given 48 hours after deposit thereof in the United States mail. The
addressees or addresses set forth above may be changed from time to time by a
notice sent to the other parties.
Section 3.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
Section 3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
Stockholder of any Registrable Securities then outstanding, each future
Stockholder of all such Registrable Securities, and the Company.
Section 3.8 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and
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the balance of the Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.
Section 3.9 AGGREGATION OF STOCK. All shares of Registrable Securities held
or acquired by a Stockholder's Affiliate shall be aggregated together for the
purpose of determining the availability of such Stockholder's rights under this
Agreement.
Section 3.10 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
This Agreement supersedes any registration rights granted to the Stockholders
including, without limitation, any registration rights granted under any of the
Purchase Agreements. Each party to this Agreement acknowledges and represents
that no representations, warranties, covenants, conditions, inducements,
promises or agreements, oral or otherwise, other than as set forth herein, have
been made by any party hereto, or anyone acting on behalf of any party.
Section 3.11 FACSIMILE SIGNATURES. This Agreement may be executed manually or
by facsimile signatures, all of which signatures shall have the same force and
effect. Any party executing this Agreement by facsimile shall as soon as
practicable thereafter deliver to counsel for the other parties a manually
signed copy of this Agreement.
[Signature Page for Registration Rights Agreement Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
THE COMPANY: THE PRODUCERS ENTERTAINMENT GROUP LTD.,
a Delaware corporation
/s/ XXXXX XXXXX
------------------------------------------
By: Xxxxx Xxxxx
Its: Chief Executive Officer
STOCKHOLDERS: XXX XXXXXXX
/s/ XXX XXXXXXX
------------------------------------------
XXXXX XXXXXXX
/s/ XXXXX XXXXXXX
------------------------------------------
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