EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") dated as of March
26, 2004, by and between Xxxx Xxxxx Productions Holding, Inc., a Nevada
corporation with its principal place of business at 0000 Xxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxx, XX 00000 (the "Company"), and Armadillo Investments, Plc., a company
incorporated in England and Wales, with its principal place of business at 00
Xxxxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX (the "Purchaser").
Simultaneously with the execution and delivery of this Agreement, the
Purchaser and the Company have entered into a Convertible Preferred Stock
Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"),
which Purchase Agreement is incorporated herein by reference, and pursuant to
which the Purchaser has agreed to purchase Series B Preferred Stock (the
"Shares"), that is convertible into Common Stock, par value $___ per share of
the Company (the "Underlying Shares"), and has an option to acquire Common
Stock, par value $___ of the Company (the "Option Shares"), all as more
particularly provided therein.
The Company and the Holder hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings given to such terms in the Purchase Agreement. As used
in this Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition only, the term "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York are authorized or required by law or other government actions to close
between the hours of 9:30 a.m. and 5:00 p.m. New York Time.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $____ per
share.
"Event" shall have the meaning set forth in Section 7 hereof.
"Event Date" shall have the meaning set forth in Section 7 hereof.
1
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Holders" means the Purchaser and any other holder or holders,
as the case may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section 6(c)
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 6(c)
hereof.
"Inspectors" shall have the meaning set forth in Section 5(a)(viii)
hereof.
"Losses" shall have the meaning set forth in Section 6(a) hereof.
"New York Courts" shall have the meaning set forth in Section 10(e)
hereof.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Registrable Securities" means the Underlying Shares and the Option
Shares, and any other shares of Common Stock issued as (or issuable upon the
conversion or exercise of any 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, the Shares, the Underlying Shares and the Option Shares,
excluding in all cases, however, any Registrable Securities sold by a Person in
a transaction in which the seller's rights under this Agreement are not
assigned.
"Registration" shall have the meaning set forth in Section 3(a) hereof.
"Registration Expenses" means all expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits
2
incident to or required by any such registration, but shall not include Selling
Expenses, fees and disbursements of counsel for the Holders and the compensation
of regular employees of the Company, which shall be paid in any event by the
Company.
"Registration Statement" means each registration statement, contemplated
by Section 3(a) hereof, including the prospectus, amendments and supplements to
such registration statement or prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Rule 144A" means Rule 144A promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule..
"Rule 415" shall mean Rule 415 as promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means the underwriting or sales discounts and
commissions charged with respect to the sale of Registrable Securities.
"Selling Holders" means each Holder any of whose Registrable Securities
are being registered pursuant to a Registration Statement.
"Underwritten Registration" or "Underwritten Offering" means a
registration in connection with which securities of the Company are sold to an
underwriter for sale to the public pursuant to an effective registration
statement.
2. Restrictions on Transfer.
(a) Each Holder agrees not to offer, sell, transfer, pledge, assign,
hypothecate or otherwise dispose of all or any portion of its Registrable
Securities unless
3
and until the transferee has agreed in writing for the benefit of the Company to
be bound by the terms of this Agreement and;
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) Such Holder shall have (A) notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (B) furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act.
(b) Each certificate representing Registrable Securities shall bear
the following legend:
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR APPLICABLE STATE "BLUE SKY" OR SECURITIES LAWS ("STATE LAWS"),
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL (i)
REGISTERED UNDER THE ACT AND APPLICABLE STATE LAWS OR (ii) THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Holder thereof if the Holder shall have
obtained an opinion of counsel at such Holder's expense (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the effect that
the securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend;
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
3. "Piggy-back" Registrations.
(a) If the Company decides to register any of its Common Stock or
securities convertible into or exchangeable for Common Stock under the
Securities Act (a "Registration") on a form that is suitable for an offering of
shares of Common Stock by the Company or by third parties and that is not a
registration solely to implement an
4
employee benefit plan on form S-8, a registration statement on Form S-4 (or
successor form) or a transaction to which Rule 145 or any other similar rule of
the Commission is applicable (such form, a "Registration Statement"), the
Company shall give written notice to the Holders of its intention to effect such
a Registration. Subject to Section 3(b) below, the Company shall use all
reasonable efforts to effect Registration under the Securities Act of all
Registrable Securities that the Holders request be included in such Registration
by a written notice delivered to the Company within thirty (30) days after the
notice given by the Company. Each of the Holders agrees that any Registrable
Securities which such Holder requests to be included in a Registration pursuant
to this Section 3 shall be included by the Company on the same form of
Registration Statement as selected for the Registration;
(b) If a Registration involves an underwritten offering, the Company
shall not be required to register securities in excess of the amount that the
principal underwriter reasonably and in good faith recommends in writing for
inclusion in such offering (a "Cutback"), a copy of which recommendation, and
supporting reasoning, shall be delivered to each Holder. If such a Cutback
occurs, the number of shares that are entitled to be included in the
Registration and underwriting shall be allocated in the following manner: (i)
first, to the Company for any securities it proposes to sell for its own
account, (ii) second, to any Person with demand registration rights requiring
such registration, and (iii) third, to the Holders and other holders of Company
securities with piggy-back registration rights requesting inclusion in the
Registration, pro rata among the respective holders thereof on the basis of the
number of shares for which each such requesting holder has requested
registration;
(c) If the Registration of which the Company gives notice is for an
underwritten public offering, the Company shall so advise the Holders as a part
of the written notice given pursuant to Section 3(a). In such event, the right
of any Holder to have its Registrable Securities included in the Registration
pursuant to this Section 3 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 Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and its other security holders with registration rights to participate
therein distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriters or the managing underwriter selected by the Company;
(d) If the Company elects to terminate any Registration after
a Registration Statement for such Registration shall have been filed, the
Company will have no obligation to register the Registrable Securities that the
Holders sought to have included in such Registration. The Company shall bear all
Registration Expenses of the Holders in connection with any Registration.
5
4. Representations and Warranties.
(a) The Company hereby makes the following representations and
warranties to the Purchaser:
(i) The Company has the requisite corporate power and
authority to enter into, execute and deliver this Agreement, and to consummate
the transactions contemplated hereby and to carry out its obligations hereunder.
The execution and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or by other equitable principles of general application;
(ii) The Shares are validly issued, fully paid and
non-assessable. The Underlying Shares and the Option Shares have been duly
authorized for issuance, offer and sale, and when issued and delivered, in
accordance with the Purchase Agreement, shall be validly issued, fully paid and
non-assessable;
(iii) The Company has and at all times while Shares remain
outstanding and the Option Shares remain unissued, has and will continue to
maintain an adequate reserve of shares of Common Stock to enable it to perform
its obligations under this Agreement and the Purchase Agreement;
(iv) The execution, delivery and performance of this
Agreement, and the consummation by the Company of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of its or
any Subsidiary's articles of incorporation, resolutions or bylaws or (ii)
require the consent of any third party, conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except in the case of
each of clauses (ii) and (iii), such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect (as defined in
the Purchase Agreement);
(v) Neither the Company nor any Subsidiary is required to
obtain any consent, permit, waiver, authorization or order of, or make any
filing or
6
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Agreement;
(vi) Neither the Company nor any Subsidiary (i) is in default
under or in violation of any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, except such conflicts or defaults as do not have a Material
Adverse Effect, (ii) is in violation of any order of any court, arbitrator or
governmental body, except for such violations as do not have a Material Adverse
Effect, or (iii) is in violation of any statute, rule or regulation of any
governmental authority which could (individually or in the aggregate) (x)
adversely affect the legality, validity or enforceability of this Agreement, (y)
have a Material Adverse Effect or (z) adversely impair the Company's ability or
obligation to perform fully on a timely basis its obligations under this
Agreement;
(b) The Purchaser hereby represents and warrants to the Company as
follows:
(i) Such Purchaser is a corporation duly incorporated and
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) Such Purchaser has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated hereby
and otherwise to carry out its obligations hereunder. The execution and delivery
of this Agreement have been duly authorized by all necessary corporate action on
the part of such Purchaser. This Agreement has been duly executed and delivered
by such Purchaser or on its behalf and constitutes the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms; except as such enforceability may be limited by applicable bankruptcy,
insolvency, liquidation, fraudulent transfer, reorganization, moratorium laws
and remedies or by other equitable principles of general application or similar
laws relating to or affecting generally the enforcement of creditors' rights.
(iii) Purchaser is acquiring the Shares and the Option Shares
for its own account for investment purposes only and without a view toward the
resale or distribution thereof, without prejudice, however, to the Purchaser's
right, subject to the provisions of this Agreement, at all times to sell or
otherwise dispose of all or any part of such Shares or Option Shares in
compliance with applicable federal and state securities laws.
5. Procedures for Registration.
(a) Whenever the Company is required to register Registrable
Securities under this Agreement, it agrees to do the following at its sole cost
and expense:
7
(i) advise the underwriter(s), if any, and the Selling Holders
promptly and, if requested by such Persons, to confirm such advice in writing:
(A) when the prospectus, or any prospectus supplement or post-effective
amendment has been filed, and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become effective; (B) of any
request by the Commission for amendments to the Registration Statement or
amendments or supplements to the prospectus or for additional information
relating thereto; (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Securities
Act or of the suspension by any state securities commission of the qualification
of the Registrable Securities for qualification, offering or sale in any
jurisdiction, or the initiation of any Proceeding for any of the preceding
purposes; and (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration Statement,
the prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of any
additions to or changes in the Registration Statement or the prospectus in order
to make the statements therein not misleading. If, at any time, the Commission
issues any stop order suspending the effectiveness of the Registration Statement
or any state securities commission or other regulatory authority issues an order
suspending the qualification or exemption from qualification of any Registrable
Securities under state securities or Blue Sky laws, the Company shall use its
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(ii) if requested by any Selling Holder or the underwriter(s),
if any, incorporate in the Registration Statement or prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
Selling Holder and the underwriter(s), if any, may reasonably request to have
included therein, with respect to the number of Registrable Securities, if any,
being sold to such underwriter(s), the purchase price being paid therefor and
any other terms of the offering of the Registrable Securities to be sold in such
offering, and the Company shall make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment;
(iii) furnish to the Selling Holders and each of the
underwriter(s), if any, without charge, before filing with the Commission, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including the prospectus and all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(iv) consult with the Selling Holders and the underwriter(s),
if any, prior to the filing of such Registration Statement or prospectus;
(v) deliver to each of the Selling Holders and underwriter(s),
if any, without charge, as many copies of the prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably
8
request, the Company hereby consenting to the use of the prospectus and any
amendment or supplement thereto by each of the Selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of any
Registrable Securities covered by the prospectus or any amendment or supplement
thereto;
(vi) use its best efforts, prior to any public offering of
Registrable Securities, to register or qualify the Registrable Securities under
the securities or blue sky laws of such jurisdictions as the Holder or
underwriter(s), if any, may reasonably request and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required to register or qualify as a
foreign corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(vii) cooperate with the Selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities covered by a Registration
Statement and not bearing any restrictive legends, except as required by law,
and enable such Registrable Securities to be in such denominations and
registered in such names as the Holders may request prior to any sale of
Registrable Securities made by the underwriter(s), if any;
(viii) in connection with the preparation and filing of each
Registration Statement under the Securities Act pursuant to this Agreement, the
Company shall give Selling Holders, their underwriters, if any, and one counsel
or firm of counsel and one accountant or firm of accountants representing all
Selling Holders the opportunity to participate in the preparation of such
Registration Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto.
(ix) make available for inspection by the Selling Holders, any
underwriter participating in any disposition pursuant to a Registration
Statement, and any attorney, accountant or other agent retained by any Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such Inspector in connection with such Registration Statement;
(x) notify each seller of Registrable Securities covered by a
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes and 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 or incomplete in the light of
9
the circumstances then existing, and, at the request of any such seller, prepare
and furnish to such seller a reasonable number of copies of a supplement to be
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of any Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in the light of the circumstances then existing;
(xi) keep such registration effective for a period of one
hundred eighty (180) days or until the Selling Holders have completed the
distribution described in any Registration Statement relating thereto, whichever
first occurs; provided, however, that (A) such 180-day period shall be extended
for a period of time equal to the longer of (1) the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of securities of the Company and (2) the period ending on the date
on which Rule 144(k) first becomes available for transfers of Registrable
Securities and (B) in the case of any Registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, such
180-day period shall be extended, if necessary, to keep the Registration
Statement effective until all such Registrable Securities are sold, however in
no event longer than one year from the Effective Date of the Registration
Statement and provided that Rule 415 permits an offering on a continuous or
delayed basis;
(xii) cause all such Registrable Securities registered
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(xiii) provide a transfer agent and registrar for all
Registrable Securities registered pursuant to a Registration Statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such Registration Statement;
(xiv) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(xv) at such time as a Registration Statement covering a
resale of any Registrable Securities has been declared effective by the
Commission, cause its counsel to deliver to the transfer agent for the Common
Stock an opinion, subject to the making by Selling Holders of such
representations and warranties to Company counsel as it may reasonably require,
certifying that such Registrable Securities may be sold by the Selling Holders
pursuant to such Registration Statement with the purchasers thereof receiving
share certificates without restrictive legend, which opinion shall remain
effective so long as such Registration Statement remains in full force and
effect;
10
(b) Each Selling Holder shall, upon receipt of notice from the
Company of the occurrence of any event of the kind described in Section 4(a)(x),
forthwith discontinue disposition of Registrable Securities following the
effective date of a Registration Statement covering Registrable Securities until
such Holder's receipt of copies of the prospectus supplement and/or
post-effective amendment or until it is advised in writing by the Company that
the use of the applicable prospectus may be resumed and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such prospectus or Registration
Statement.
(c) Each Holder covenants and agrees that (i) it will not offer or
sell any Registrable Securities being registered pursuant to any Registration
Statement until such Holder shall have received copies of the related prospectus
and notice from the Company that such Registration Statement has become
effective and (ii) such Holder and its officers, directors and Affiliates, if
any, will comply with the prospectus delivery requirements of the Securities Act
as applicable to them in connection with sales of Registrable Securities
pursuant to any Registration Statement.
6. Indemnification.
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to time,
indemnify and hold harmless each Holder, the officers, directors, agents
(including any underwriters retained by the Holders in connection with the offer
or sale of Registrable Securities), brokers, investment advisors and employees
of each of them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, from
and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in such Registration
Statement, any prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or amendment or supplement thereto, in light of
the circumstances under which they were made) not misleading, except solely to
the extent that (I) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by or on
behalf of such Holder expressly for use therein, which information was relied on
by the Company for use therein or (ii) such information relates to such Holder
or such Holder's proposed method of distribution of Registrable Securities and
was furnished in writing to the Company by or on behalf of such Holder expressly
for use therein. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement.
11
(b) Indemnification by Holders. In connection with each Registration
Statement, each Selling Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with such
Registration Statement or the related prospectus and agrees, severally and not
jointly, to indemnify and hold harmless the Company, their directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review) arising solely out of or based solely upon any untrue
statement of a material fact contained in such Registration Statement, such
prospectus, or any form of prospectus, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading solely to the extent that (I) such
untrue statement or omission is contained in any information furnished in
writing by such Holder to the Company specifically for inclusion in such
Registration Statement or such prospectus and such information was relied upon
by the Company for use in such Registration Statement, such prospectus or such
form of prospectus, or (ii) such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
furnished in writing by or on behalf of such Holder to the Company specifically
for inclusion in such Registration Statement or such prospectus and such
information was relied upon by the Company for use in such Registration
Statement, such prospectus or such form of prospectus; provided, however, that
anything contained herein to the contrary notwithstanding, no Holder shall be
liable for any claims hereunder in an amount in excess of the net proceeds
received by such Holder from the sale of its Registrable Securities pursuant to
a Registration Statement. In addition, the foregoing shall not inure to the
benefit of any Holder if a copy of such prospectus (as then amended or
supplemented) was furnished by the Company to such Holder and was not sent or
given by or on behalf of such Holder to such Holder's purchaser of Registrable
Securities if required by law to have been so delivered.
(c) Conduct of Indemnification Proceedings. If any Proceeding is
brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it is finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or further
review) that such failure shall have proximately and materially adversely
prejudiced the Indemnifying Party.
12
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (I) the Indemnifying Party has agreed to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed to assume promptly
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense of
the claim against the Indemnified Party but shall retain the right to control
the overall Proceedings out of which the claim arose, and counsel employed by
the Indemnified Party shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party to which the
Indemnified Party is entitled hereunder (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend
such Proceeding in a manner not inconsistent with this Section) shall be paid to
the Indemnified Party, as incurred, within ten (10) Business Days after the
Indemnified Party gives written notice thereof to the Indemnifying Party.
(d) Contribution. If a claim for indemnification under Section 6(a)
or 6(b) of this Agreement is unavailable to an Indemnified Party or is
insufficient to hold such Indemnified Party harmless for any Losses in respect
of which this Section would apply by its terms (other than by reason of
exceptions provided in this Section), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other from
the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above in this paragraph is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in such clause (i) but also the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission
13
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6(c) hereof, any attorneys' or other
fees or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of its Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Holder or any Person
controlling Holder, the Company, its directors or officers or any Person
controlling the Company.
(f) No Indemnifying Party shall, without the prior written consent
of the Indemnified Party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(g) The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
7. Rule 144. The Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act in a timely manner and, if at any
time the Company is not required to file such reports, it will, upon the request
of any Holder, make publicly available other information for as long as
necessary to permit sales of its securities pursuant to Rule 144. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the
14
Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of any Holder, the Company shall deliver to such Holder a
written certification of a duly authorized officer as to whether it has complied
with such requirements.
8. Rule 144A. The Company agrees that, upon the request of a Holder or any
prospective purchaser of Registrable Securities designated by a Holder, the
Company shall promptly provide (but in any case within fifteen (15) days of a
request) to such Holder or potential purchaser, the following information:
(a) a brief statement of the nature of the business of the Company
and any subsidiaries and the products and services each of them offers;
(b) the most recent consolidated balance sheets and profit and
losses and retained earnings statements, and similar financial statements of the
Company for the two (2) most recent fiscal years (such financial information
shall be audited, to the extent reasonably available); and
(c) such other information about the Company, any subsidiaries, and
their business, financial condition and results of operations as such Holder or
purchaser of such Registrable Securities shall request in order to comply with
Rule 144A, as amended, and in connection therewith the anti-fraud provisions of
the federal and state securities laws.
The Company hereby represents and warrants to the Holders and any
prospective purchaser of Registrable Securities from a Holder that the
information provided by the Company pursuant to this Section 8 will, as of the
dates of such information, not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
9. Consent to be Bound; Assignability of Registration Rights. Each
subsequent holder of Registrable Securities must consent in writing to be bound
by the terms and conditions of this Agreement in order to acquire the rights
granted pursuant to this Agreement. Subject to the foregoing sentence, the
registration rights set forth in this Agreement are assignable to each assignee
of Registrable Securities conveyed in accordance herewith who agrees in writing
to be bound by the terms and conditions of this Agreement.
10. Miscellaneous.
(a) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless made in a writing signed by the Company and
all of the Persons who are then Holders of Registrable Securities;
(b) The Company and the Holders agree that the rights created by
this Agreement are unique, and that the loss of any such right is not
susceptible to monetary
15
quantification. Consequently, the parties agree that an action for specific
performance (including for temporary and/or permanent injunctive relief) of the
obligations created by this Agreement is a proper remedy for the breach of the
provisions of this Agreement, without the necessity of proving actual damages.
If the parties hereto are forced to institute legal proceedings to enforce their
rights in accordance with the provisions of this Agreement, the prevailing party
shall be entitled to recover its reasonable expenses, including attorneys' fees,
in connection with any such action;
(c) Except as otherwise specifically provided herein, all notices,
requests, demands and other communications provided for hereunder shall be in
writing and shall be deemed duly given to the Person for whom intended (i) upon
receipt when personally delivered, (ii) one (1) day after being sent by a
nationally recognized overnight courier for next day delivery or telecopy
providing confirmation or receipt of delivery, or (iii) three (3) days after
being sent by certified or registered mail, postage and certified or registered
mail fees prepaid, return receipt requested, if sent to such Person at the
address for such Person indicated below or to such other address as may be
designated by such Person in writing sent by such Person in the manner required
by this Section:
If to the Company: Xxxx Xxxxx Productions Holding, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx, XX 00000
Attn: ____________
Tel: (000) 000-0000
Fax: (000) 000-0000
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Holders: To the address of each such Holder as it
appears in the stock transfer records of the
Company
With copies to: Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
(d) This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and, all of
which taken
16
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof;
(e) This Agreement shall be governed by and construed in accordance
with the laws of the state of New York without regard to principles thereof
relating to the conflict of laws. Each of the Company and each Holder hereby
irrevocably submits to the jurisdiction of any New York state court or any
federal court sitting in the city and county of New York (collectively, the "New
York Courts") in respect of any Proceeding arising out of or relating to this
Agreement and irrevocably accepts for itself and in respect of its property,
generally and unconditionally, jurisdiction of the New York Courts. Each of the
Company and each Holder irrevocably waives, to the fullest extent it may
effectively do so under applicable law, any objection that it may now or
hereafter have to the laying of the venue of any such Proceeding brought in any
New York Court and any claim that any such Proceeding brought in any New York
Court has been brought in an inconvenient forum;
(f) The remedies provided herein are cumulative and not exclusive of
one another or of any remedies provided by law;
(g) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
[Signatures on following page]
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Company:
XXXX XXXXX PRODUCTIONS HOLDING, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chief Executive Officer
Purchaser:
DUNGARVON ASSOCIATES, INC. ON
BEHALF OF ARMADILLO
INVESTMENTS, PLC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
18
