WARRANT HOLDER RIGHTS AGREEMENT
This Warrant Holder Rights Agreement ("Agreement") is made as of the 25th
Of June, 2001 by and between Cinema Ride, Inc. and Finova Capital
Corporation ("Holder").
The parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMPANY'S COMMON STOCK" or "COMMON STOCK" shall mean the Common Stock, par
value $0.01 per share, of the Company.
A "CONTROLLING PERSON" of a particular entity shall mean a person that
controls such entity within the meaning of Section 14 of the Securities
Act.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"HOLDER" shall mean Holder and any other person holding Registrable
Securities to whom the rights under the Agreement have been transferred in
accordance with Section 9 hereof.
"PUBLIC OFFERING" means an underwritten public offering of the Company
pursuant to an effective registration statement under the Securities Act.
"REGISTRABLE SECURITIES" shall mean (i) the Shares; (ii) any Common Stock
of the Company issued or issuable in respect of the Shares upon any stock
split, stock dividend, recapitalization, or similar event, or any Common
Stock otherwise issued or issuable with respect to the Shares; and (iii)
any other shares of Common Stock held by any Holder.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as otherwise stated
below, incurred by the Company including, without limitation all
registration, qualification and filing fees, printing expenses, escrow
fees, messenger and delivery expenses, fees and disbursements of counsel,
accountants, investment bankers and other person retained by the Company,
blue sky fees and expenses, and the expenses of any special audits incident
to or required by any such registration (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company).
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"RESTRICTED SECURITIES" shall mean the Warrants, the Shares and any other
securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities
registered by the Holders.
"SHARES" shall mean the shares of the Company's Common Stock issuable to a
Holder pursuant to the exercise by such Holder of the Warrants.
"WARRANTS" shall mean the warrants issued to Holder to purchase 50,000
Shares (subject to adjustment).
2. RESTRICTIONS UPON TRANSFER.
Each certificate representing Restricted Securities shall be stamped or
otherwise imprinted with a legend in the form provided in Exhibit A
attached hereto (in addition to any legend required under applicable state
securities laws). Holder hereby consents to the Company making a notation
on its records and giving instructions to any transfer agent of the
Company's Common Stock in order to implement the restrictions on transfer
established in this Agreement.
3. COMPANY REGISTRATION.
3.1 NOTICE OF REGISTRATION. If at any time or from time to time the
Company shall determine to register any of its Common Stock, either for its
own account or the account of security holders, other than (i) a
registration on Form S-8 or otherwise relating solely to employee benefit
plans, (ii) a registration on Form S-4, or (iii) a registration on any
other form which does not permit secondary sales, the Company will:
(a) promptly give to each Holder written notice thereof; and
(b) except as set forth in Section 3.2 below, include in such
registration and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all Registrable
Securities as are specified in a written request or requests, actually
received by the Company within 15 days after receipt of such written
notice from the Company, by any Holder.
3.2 Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company
shall so advise the Holders as a part of the written notice given pursuant
to Section 3.1(a). In such event the right of any Holder to registration
pursuant to Section 3.1 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holder's proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company. The foregoing shall
include, without limitation, such powers of attorney and escrow agreements
as the underwriters may require. Notwithstanding any other provision of
Section 3.1, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the Registrable Securities to be included in
such registration. If any Holder disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter.
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3.3 Company Termination of Registration. The Company reserves the right
to terminate any such registration at anytime and for any reason without
liability to any Holder.
3.4 Expenses. All Selling Expenses relating to securities
registered on behalf of the Holders in connection with a registration
pursuant to this Agreement shall be borne by the Holder of such securities
pro rata on the basis of the number of shares so registered and all
Registration Expenses shall be borne by the Company.
4. Delay of Registration. No Holder shall have any right to
obtain or seek an injunction, restraining or otherwise delaying any
registration as the result of any controversy that might arise under this
Agreement.
5. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Agreement, the Company will keep each Holder advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. The Company will:
5.1 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 effective.
5.2 Furnish to the Holders participating in such registration and to the
underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final
prospectus and such other document as such Holders and underwriters may
reasonably request in order to facilitate the public offering of such
securities.
6. Indemnification.
6.1 Indemnification by Company. To the extent permitted by law, the
Company will indemnify each Holder, each of its officers, directors,
shareholders, employees, representatives and partners, and each Controlling
Person of such Holder, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each Controlling Person of any underwriter,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in any
investigation or inquiry or in any settlement of any litigation commenced
or threatened, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any 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 circumstances in which they
were made, not misleading, or any violation by the Company of the
Securities Act, the Exchange Act, or any state securities law, or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse
each such Holder, each of its officers, directors, shareholders, employees,
representatives and partners, and each such Controlling Person, each such
underwriter and each such Controlling Person of any such underwriter, for
any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action; provided, however, that the indemnity agreement
contained in this Section 6.1 shall not (i) 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 Company (which consent
shall not be unreasonably withheld); (ii) apply to any such case for any
such loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus, or amendments to
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by and such Holder, underwriter, or controlling person; or
(iii) inure to the benefit of any underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of
any person controlling such underwriter) with respect to a preliminary
prospectus or final prospectus if such underwriter (if required by the Act)
failed to send or give a copy of the most recent prospectus, if the most
recent prospectus furnished by the Company shall correct the untrue
statement or alleged untrue statement or omission or alleged omission which
is the basis of the loss, claim, damage, liability, or action for which
indemnification is sought, to such person at or prior to the written
confirmation of the sale of such Registrable Securities to such person.
This indemnity will be in addition to any liability which the Company may
otherwise have.
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6.2 Indemnification by Holders. To the extent permitted by law, each
Holder will, if Registrable Securities held by such Holder are included in
the securities as to which such registration, qualification or compliance
is being effected, indemnify the Company, each of its directors, officers,
shareholders, employees, representatives, attorneys and partners, each
Controlling Person of the Company or such underwriter, and each other
Holder, each of such other Holder's officers, directors, shareholders,
employees, representatives and partners and each Controlling Person of such
other Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in any
investigation or inquiry or in any settlement of any litigation, commenced
or threatened, arising out of based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any 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 any violation by the Company of the Securities Act, the Exchange Act or
any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law applicable to
the Company in connection with any such registration, qualification or
compliance, and each Holder will reimburse the Company, such other Holders,
such directors, officers, shareholders, employees, representatives,
attorneys, partners, such underwriters and such Controlling Person for any
legal or any other expenses actually incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement), omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document or such violation (or alleged violation) is
committed, in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use in any such registration statement,
prospectus, offering circular or other document; provided, however, that
the indemnity agreement contained in this Section 8.2 shall not (i) apply
to amounts paid in settlement of any 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); or (ii) inure to the
benefit of any underwriter from whom the person asserting any such loss,
claim damage or liability purchased the Registrable Securities which are
the subject thereof (or to the benefit of any person controlling such
underwriter) with respect to a preliminary prospectus or final prospectus
if such underwriter (if required by the Act) failed to send or give a copy
of the most recent prospectus, if the most recent prospectus furnished by
the Company shall correct the untrue statement or alleged untrue statement
or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such
person at or prior to the written confirmation of the sale of such
Registrable Securities to such person. This indemnity will be in addition
to any liability which each Holder may otherwise have.
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6.3 Defense of Claims. Each party entitled to indemnification under
Section 6.1 or 6.2 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's expense,
and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnified Party of its
obligations under the Agreement unless the failure to give such notice is
materially prejudicial to an Indemnified Party's ability to defend such
action. Notwithstanding the foregoing, however, (i) if the Indemnified
Party reasonably determines that there may be a conflict between the
position of the Indemnified Party and of the Indemnified Party in
connection with the defense of such action, suit, investigation, inquiry or
other proceeding or that there may be legal defenses available to such
Indemnified Party different from or in addition to those available to the
Indemnified Party, then counsel for the Indemnified Party shall be entitled
to conduct a defense to the extent reasonably determined by such counsel to
be necessary to protect the interest of the Indemnified Party, and (ii) in
any event, the Indemnified Party shall be entitled to have counsel chosen
by such Indemnified Party participate in, but not to conduct, the defense.
No Indemnified Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry
of any judgment or enter into any settlement that does not include as a
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim
or litigation.
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6.4 Contribution. If the indemnification provided in either Section 6.1
or Section 6.2 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 Indemnified Party
thereunder 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 Indemnified Party on the one hand, and of the Indemnified Party, on
the other hand, in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense as well as any
other relevant equitable considerations. The relative fault of the
Indemnified 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 or alleged omission to state a
material fact relates to information supplied by the Indemnified 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, provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 1.1(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Each party entitled to contribution
agrees that upon service of a summons or other initial legal process upon
such party in connection with any action instituted against such party in
respect of which contribution may be sought, such party will promptly give
written notice of such service to the party or parties from whom
contribution may be sought, but the omission to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation such party or parties may
have hereunder, or otherwise (except as specifically provided in Section
6.3 above.)
7. Information From Holders. The Holder or Holders of Registrable
Securities included in any registration shall, as a condition precedent to
the Company's obligation to register the securities of such Holder or
Holders, furnish to the Company such information regarding such Holder or
Holders, the Registrable Securities held by them and the distribution
proposed by such Holder or Holders as the Company may request in writing
and as shall be required in connection with any registration, qualification
or compliance referred to in this Agreement. At the request of the
Company, each Holder who is including any Registrable Securities in the
registration shall deposit in escrow with an escrow agent chosen by the
Company those Registrable Securities which such Holder proposes to sell,
accompanied by an irrevocable power of attorney authorizing the escrow
agent to, without limitation, sell such Registrable Securities to the
underwriter upon the effectiveness of the Registrable Securities.
8. Standoff Agreement. Each Holder agrees, in connection with any public
offering of the Company's Common Stock, upon request of the Company or the
underwriters managing such public offering of the Company's Common Stock,
not to sell, make any short sale of, loan, grant any option or right to
purchase, or otherwise dispose of in any public sale or distribution, any
Registrable Securities or any securities convertible into or exchangeable
or exercisable for Common Stock (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time before and after
(not to exceed 60 days before and 180 days after) the effective date of
such registration as may be requested by the underwriters; provided, that
the officers and directors of the Company who own Common Stock of the
Company also agree to such restrictions on the shares held by them.
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9. Transfer of Rights. The registration rights hereunder may be assigned
only to any party who acquires the Registrable Securities; provided,
however that no party may be assigned any of the foregoing rights unless
the Company is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in
question are being assigned; and provided further that any such assignee
shall receive such assigned rights subject to all the terms and conditions
of this Agreement.
10. Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Section 3
hereof shall terminate at such time as such Holder may sell all Registrable
Securities owned by him under Rule 144 during any 90-day period.
11. Miscellaneous.
11.1 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company has obtained the written consent
of Holders of at least 66-2/3% of the Registrable Securities.
11.2 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight
delivery.
(a) if a Holder of Registrable Securities, at the most current address
given by such Holder to the Company in accordance with the provisions of
this Section 11.2, which address initially is as follows:
Finova Capital Corporation
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: 000-000-0000
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11.2.
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(b) if to the Company, initially at:
Cinema Ride, Inc.
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11.2.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, first class postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and on the
next business day if times delivered to an air courier guaranteeing
overnight delivery.
11.3 Successors and Assigns. Subject to the provisions of Section 9 ereof,
this Agreement shall inure to the benefit of and binding upon the
successors and assigns of each of the parties, including without limitation
and without the need for an express assignment, subsequent Holders of
Registrable Securities.
11.4 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same.
11.5 Headings. The headings of this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
11.6 Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of Delaware.
11.7 Attorneys' Fees. If either the Company or any Holder shall bring an
action against the other by reason of the breach of any covenant, provision
or condition hereof, or otherwise arising out of this Agreement, the
unsuccessful party shall pay to the prevailing party its reasonable
attorneys' fees and costs in addition to any other relief to which it may
be entitled.
11.8 Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance is held
invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
11.9 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete the
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
by the Company with respect to the Registrable Securities. This Agreement
supersedes all prior agreements and understanding between the parties with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
"COMPANY"
CINEMA RIDE, INC.
By: /s/ Xxxxx Xxxxxxx
___________________________________
Its: President
"HOLDER"
FINOVA CAPITAL CORPORATION
By:___________________________________
Its:___________________________________
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Exhibit A
"The securities evidenced or constituted hereby have been acquired for
investment purposes and have not been registered under the Securities Act
of 1933, as amended. Such securities may not be sold, transferred, pledged
or hypothecated unless (i) effected in compliance with that certain
Warrant Holder Rights Agreement, dated as of June __, 2001, between the
Company and Finova Capital Corporation, and (iii) the registration
provisions of said Act and any applicable state securities or "blue sky"
laws have been complied with or the Company has received an opinion of
counsel reasonably satisfactory to the Company that such registration is
not required."
