Exhibit 7
HHI REGISTRATION RIGHTS AGREEMENT
AGREEMENT is made and entered into this 22nd day of July, 1997, by and
among Children's Broadcasting Corporation, a Minnesota corporation ("CBC"),
and Harmony Holdings, Inc., a Delaware corporation ("Harmony").
In consideration of CBC's negotiation regarding a dismissal with
prejudice of the action entitled UNIMEDIA, S.A. V. HARMONY HOLDINGS, INC. AND
XXXXXX XXXXXXXX (CASE NO. 96-7109 JGD (RN BX)) venued in the United States
District Court for the Central District of California (hereinafter the
"Pending Litigation"), Harmony agrees for the benefit of the holders of
record from time to time (the "Holders") of the Securities (as defined
herein), including CBC, as follows:
(a) PROVISIONS FOR REGISTRATION. CBC shall have the following rights
regarding registration of the Shares and such other shares of Common Stock of
Harmony which may be acquired by CBC from Unimedia, Xxxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxx, or Harmony, including, but not limited to, shares of Common Stock
underlying derivative securities of Harmony, (collectively, the "Securities").
1.1 REQUIRED REGISTRATION. At any time and upon request of the
Holders of at least 100,000 shares of the Securities not theretofore
registered under the Securities Act of 1993, as amended (the "Securities
Act"), Harmony shall prepare and file a registration statement under the
Securities Act covering resale of the Securities which are the subject
of such requests and use its reasonable best efforts to cause such
registration statement to become effective. In addition, upon the
receipt of the aforementioned request, Harmony shall promptly give
written notice to all other Holders that such registration statement is
to be filed. Harmony shall include in such registration statement such
Securities for which it has received written requests to register by
such other Holders within fifteen (15) days after Harmony's written
notice to such persons. Harmony shall be obligated to prepare, file and
cause to become effective only one registration statement pursuant to
this Section 1.1. In the event that the Holders of a majority of the
Securities for which registration has been requested pursuant to this
Section 1.1 determine for any reason not to proceed with a registration
at any time before the registration statement has been declared
effective by the Securities and Exchange Commission (the "Commission"),
and such Holders thereafter request Harmony to withdraw such
registration statement, the Holders of such Securities agree to bear
their own expenses incurred in connection therewith and to reimburse
Harmony for the expenses incurred by it attributable to such
registration statement, then, and in such event, the Holders of such
Securities shall not be deemed to have exercised their right to require
Harmony to register Securities pursuant to this Section 1.1.
(Page 129 of 136 Pages)
1.2 INCIDENTAL REGISTRATION. Each time Harmony shall determine to
proceed with the actual preparation and filing of a registration
statement under the Securities Act in connection with the proposed offer
and sale for money of any of its Common Stock by it or any of its
security holders, Harmony will give written notice of its determination
to all Holders of the Securities. Upon the written request of a Holder
of any Securities given within fifteen (15) days after receipt of any
such notice from Harmony, Harmony will, except as herein provided, cause
all such Securities, the Holders of which have so requested registration
thereof, to be included in such registration statement, all to the
extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Securities to be so registered;
provided, however, that (i) nothing herein shall prevent Harmony from,
at any time, abandoning or delaying any such registration initiated by
it; and (ii) if Harmony determines not to proceed with a registration
after the registration statement has been filed with the Commission and
Harmony's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by
Harmony, Harmony shall promptly complete the registration for the
benefit of those Holders who wish to proceed with a public offering of
their Securities and who bear all expenses in excess of $20,000 incurred
by Harmony as the result of such registration after Harmony has decided
not to proceed. If any registration pursuant to this Section 1.2 shall
be underwritten in whole or in part, Harmony may require that the
Securities requested for inclusion pursuant to this Section 1.2 be
included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. If in the
good faith judgment of the managing underwriter of such public offering
the inclusion of all of the Securities originally covered by a request
for registration would reduce the number of shares to be offered by
Harmony or interfere with the successful marketing of the shares offered
by Harmony, the number of Securities otherwise to be included in the
underwritten public offering may be ratably reduced among the Holders
thereof requesting such registration to a number that the managing
underwriter believes will not adversely affect the sale of shares by
Harmony or the managing underwriter may exclude all of such Securities
from the underwritten public offering. Those Securities which are thus
excluded from the underwritten public offering shall be withheld from
the market by the Holders thereof for a period, not to exceed ninety
(90) days, which the managing underwriter reasonably determines is
necessary in order to effect the underwritten public offering.
1.3 REGISTRATION PROCEDURES. Whenever Harmony is required by the
provisions of Section 1.1 or Section 1.2 to effect the registration of any
Securities under the Securities Act, Harmony will:
(i) prepare and file with the Commission a registration
statement with respect to such Securities, and use its best efforts
to cause such registration statement to become and remain effective
for such
(Page 130 of 136 Pages)
period as may be reasonably necessary to effect the sale
of such Securities, not to exceed six (6) months;
(ii) prepare and file with the Commission such amendments to
such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably necessary to
effect the sale of such Securities, not to exceed six (6) months;
(iii) furnish to the Holders participating in such registration
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as
such Holders may reasonably request in order to facilitate the public
offering of such Securities;
(iv) use its reasonable best efforts to register or qualify
the Securities covered by such registration statement under such state
securities or blue sky laws of up to six (6) jurisdictions as the
Holders participating in such registration may reasonably request
within twenty (20) days following the original filing of such
registration statement, except that Harmony shall not for any purpose
be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(v) notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been
filed;
(vi) notify the Holders participating in such registration
promptly of any request by the Commission for the amending or
supplementing of such registration statement or prospectus or for
additional information;
(vii) prepare and file with the Commission, promptly upon the
request of any Holder participating in such registration, any
amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for such holder (and concurred in by
counsel for Harmony), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution
of the Securities;
(viii) prepare and promptly file with the Commission and
promptly notify the Holders participating in such registration of
the filing of such amendments or supplements to such registration
statement or
(Page 131 of 136 Pages)
prospectus as may be necessary to correct any statements or omissions
if, at the time when a prospectus relating to the Securities is
required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they
were made, not misleading;
(ix) advise the Holders participating in such registration,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the Commission suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its
best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued; and
(x) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of the Holders
participating in such registration shall have reasonably objected on
the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or the
rules and regulations thereunder, after having been furnished with a
copy thereof at least five (5) business days prior to the filing
thereof, unless in the opinion of counsel for Harmony the filing of
such amendment or supplement is reasonably necessary to protect
Harmony from any liabilities under any applicable federal or state law
and such filing will not violate applicable law.
1.4 EXPENSES. With respect to any registration requested pursuant to
Section 1.1 (except as otherwise provided in such section with respect to
registrations voluntarily terminated at the request of the requesting
holders) and with respect to each inclusion of Securities in a registration
statement pursuant to Section 1.2 (except as otherwise provided in Section
1.2 with respect to registrations terminated by Harmony), Harmony shall
bear the following fees, costs and expenses: all registration, filing and
fees imposed by the National Association of Securities Dealers, printing
expenses, fees and disbursements of counsel and accountants for Harmony,
fees and disbursements of counsel for the underwriter or underwriters of
such securities (if Harmony or the Holders participating in such
registration are required to bear such fees and disbursements), all
internal Harmony expenses, the premiums and other costs of policies of
insurance against liability arising out of the public offering, and all
legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to
be offered are to be registered or qualified. Fees and disbursements of
counsel and
(Page 132 of 136 Pages)
accountants for the Holders participating in such registration,
underwriting discounts and commissions and transfer taxes for the Holders
participating in such registration and any other expenses incurred by the
Holders participating in such registration not expressly included above
shall be borne by such Holders.
1.5 COPIES OF PROSPECTUS; AMENDMENTS OF PROSPECTUS. Harmony will
furnish the Holders participating in such registration with a reasonable
number of copies of any prospectus and a reasonable number of copies of any
registration statement and will amend or supplement the same as required
during the nine (9) month period following the effective date of the
registration statement; provided, that the expenses of any amendment or
supplement made or filed more than six (6) months after the effective date
of the registration statement, at the request of the Holders participating
in such registration, shall be borne by such Holders.
1.6 CONDITIONS OF HARMONY'S OBLIGATIONS. It shall be a condition of
Harmony's obligation to register the Securities hereunder that CBC agrees
to cooperate with Harmony in the preparation and filing of any such
registration statement, or in its efforts to establish that the proposed
sale is exempt under the Securities Act, as to any proposed distribution.
It shall also be a condition of Harmony's obligations under this Agreement
that, in the case of the filing of any registration statement, and to the
extent permissible under the Securities Act, and controlling precedent
thereunder, Harmony and CBC provide cross-indemnification agreements to
each other in customary scope covering the accuracy and completeness of the
information furnished by each.
(b) INDEMNIFICATION AND CONTRIBUTION.
2.1 INDEMNIFICATION BY HARMONY. Harmony hereby indemnifies and
agrees to hold harmless, to the full extent permitted by law, each Holder
from and against all losses, claims, damages, liabilities and expenses
(including without limitation reasonable legal fees and expenses incurred
by Holder) (collectively, the "Damages") to which Holder may become subject
under the Act or otherwise, insofar as such Damages (or proceedings in
respect thereat) arise out of or are based upon any untrue statement of
material fact contained in any registration statement (or any amendment
thereto) pursuant to which Securities were registered under the Act, or
caused by any omission to state therein a material fact necessary to make
the statements therein in light of the circumstances under which they were
made not misleading, or caused by any untrue statement of a material fact
contained in any prospectus (as amended or supplemented if Harmony shall
have furnished any amendments or supplements thereto), or caused by any
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not
misleading, except insofar as such Damages arise out of or are based upon
any
(Page 133 of 136 Pages)
such untrue statement or omission based upon information relating to
Holder furnished in writing to Harmony by Holder specifically for use
therein; PROVIDED, HOWEVER, that Harmony shall not be liable to Holder
under this Section 2.1 to the extent that any such Damages were caused by
the fact that Holder sold Securities to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the prospectus as then amended or
supplemented if, but only if, (A) Harmony has previously furnished copies
of such amended or supplemented prospectus to Holder and (B) such Damages
were caused by any untrue statement or omission contained in any earlier
prospectus which was corrected in the amended or supplemented prospectus.
2.2 INDEMNIFICATION BY THE HOLDER. Holder hereby indemnifies and
agrees to hold harmless Harmony, its stockholders, directors, officers and
each person, if any, who controls Harmony within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act to the same extent
as the foregoing indemnity from Harmony to Holder, but only with reference
to information relating to Holder furnished in writing to Harmony by Holder
specifically for use in any registration statement (or any amendment
thereto) or any prospectus (or any amendment or supplement thereto);
PROVIDED, HOWEVER, that Holder shall not be obligated to fulfill such
indemnity to the extent that such Damages result from the failure of
Harmony to promptly amend or take action to correct or supplement any such
registration statement or prospectus on the basis of corrected or
supplemental information provided by Holder to Harmony expressly for such
purpose. In no event shall the liability of Holder hereunder be greater in
amount than the amount of the proceeds received by Holder upon the sale of
the Securities giving rise to such indemnification obligation.
2.3 CONTRIBUTION. To the extent that the indemnification provided
for in Section 2.1 or Section 2.2 is unavailable to an indemnified party or
insufficient in respect of any Damages, then each indemnifying party under
such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as
a result of such Damages in such proportion as is appropriate to reflect
the relative fault of Harmony on the one hand and Holder on the other hand
in connection with the statements or omissions that resulted in such
Damages, as well as any other relevant equitable considerations. The
relative fault of Harmony on the one hand and of Holder on the other hand
shall be determined by reference to, among other things, whether the untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by Harmony or by Holder and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(Page 134 of 136 Pages)
If indemnification is available under Section 2.1 or Section 2.2, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.3. Harmony and Holder agree
that it would not be just or equitable if contribution pursuant to this
Section 2.3 were determined by pro rata allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to herein.
(c) NOTICES. Any notice or other document required or permitted to be
given or delivered to CBC shall be delivered or sent by certified mail to the
principal office of CBC at 000 Xxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000; Attention: Xxxxx X. Xxxxx, Secretary and General Counsel.
Any notice or other document required or permitted to be given or delivered
to Harmony shall be delivered or sent by certified or registered mail to the
principal office of Harmony at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000; Attention: Chairman of the Board.
(d) GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware, without
regard to conflicts of laws principles.
(e) MISCELLANEOUS. This Agreement and any provision hereof may be
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party (or any predecessor in interest thereof) against which
enforcement of the same is sought. The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction
of any of the provisions hereof.
(f) ASSIGNMENT. CBC may assign at any time and from time to time its
rights hereunder to any one or more purchasers or transferees of the
Securities; PROVIDED, HOWEVER, that such purchaser or transferee shall, as a
condition to the effectiveness of such assignment, be required to execute a
counterpart to this Agreement agreeing to be treated as CBC hereunder
whereupon such purchaser or transferee shall have the benefits of, and shall
be subject to the restrictions contained in, this Agreement.
(Page 135 of 136 Pages)
IN WITNESS WHEREOF, Harmony and CBC have caused this Agreement to be
duly executed as of the date first written above.
HARMONY HOLDINGS, INC.
By:/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
Chief Executive Officer
CHILDREN'S BROADCASTING
CORPORATION
By:/s/ Xxxxxxxxxxx X. Xxxx
-------------------------------
Xxxxxxxxxxx X. Xxxx
Chief Executive Officer
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