REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
May 2, 1997, is entered into by and among NETTER DIGITAL ENTERTAINMENT, INC.,
a Delaware corporation ("NDEI") , and ▇▇▇▇, FORWARD, ▇▇▇▇▇▇▇▇ & SCRIPPS
("▇▇▇▇, Forward").
RECITALS
This Agreement is made with reference to the following recital of
essential facts:
▇. ▇▇▇▇, Forward previously served as attorneys for NDEI.
▇. ▇▇▇▇, Forward claims that NDEI has failed to pay in full the fees
and costs incurred in the course of ▇▇▇▇, Forward's representation of NDEI.
C. The parties desire to resolve all disputes connected to or arising
out of their former attorney-client relationship.
D. As full consideration of any and all outstanding fees and costs,
and pursuant to that certain Settlement Agreement and Mutual Release, dated
as of May 2, 1997, by and between NDEI and ▇▇▇▇, Forward (the "Settlement
Agreement"), NDEI has agreed to pay to ▇▇▇▇, Forward $103,632.08 in cash plus
10,000 shares (the "▇▇▇▇, Forward Shares") of the $0.01 par value common stock
of the Company (the "Common Stock") . The ▇▇▇▇, Forward Shares shall
hereinafter be referred to as the "Registrable Stock."
E. Concurrently with the payment described in Paragraph "D", ▇▇▇▇,
Forward agrees to submit to NDEI for cancellation warrants previously issued
to ▇▇▇▇, Forward with regard to ten thousand (10,000) shares of NDEI common
stock.
F. As set forth in the Settlement Agreement, the satisfaction of the
obligation owed to ▇▇▇▇, Forward is subject among other things, to the
execution, delivery, and performance of this Agreement;
NOW, THEREFORE, in consideration of the respective covenants and
obligations of the parties set forth herein and in the Settlement Agreement
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
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1. Rights.
1.1 Piggyback Registration Rights. If at any time while ▇▇▇▇,
Forward is still the owner of Registrable Stock, NDEI shall determine to
register any of its securities under the Securities Act of 1933, as amended,
(the "Securities Act"), for its own account or the account of any of its
shareholders (other than a registration relating to employee stock option or
purchase plans, or a registration on Form S-4 relating to a Rule 145
transaction, or a registration on any form other than Forms ▇-▇, ▇-▇, ▇-▇,
▇▇-▇ or SB-2, or their successor forms) NDEI will: (i) promptly give to
▇▇▇▇, Forward written notice thereof; and (ii) include in such registration
(and any related qualification under state securities or Blue Sky laws or
other compliance), and in any underwriting involved therein, all of the
Registrable Stock of ▇▇▇▇, Forward, if requested in writing by ▇▇▇▇, Forward
within fifteen (15) days of receipt of such written notice from NDEI.
1.2 Underwriter. If the registration of which NDEI gives notice
pursuant to Section 1.1 is for a registered public offering involving an
underwriting, NDEI shall so advise ▇▇▇▇, Forward as a part of the written
notice. In such event, the right of ▇▇▇▇, Forward to registration pursuant
to Section 1 shall be conditioned upon ▇▇▇▇, Forward's participation in such
underwriting and the inclusion of ▇▇▇▇, Forward's Registrable Stock in the
underwriting to the extent provided herein and the payment by ▇▇▇▇, Forward
of a pro rata portion of the fees incurred in connection with the
registration, as provided in Section 3 below.
If ▇▇▇▇, Forward proposes to distribute its securities through
such underwriting, it shall (together with NDEI and any other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by NDEI. Notwithstanding any other provision
of this Section 1, the underwriter may limit the number of shares of
Registrable Stock to be included in the registration and underwriting, or may
exclude Registrable Stock entirely from such registration and underwriting.
NDEI shall advise ▇▇▇▇, Forward and any other shareholders of securities which
would otherwise be registered and underwritten pursuant hereto, and the
number of shares of ▇▇▇▇, Forward's Registrable Stock and the other
shareholders' securities that may be included in the registration and
underwriting shall be allocated among ▇▇▇▇, Forward and any other shareholders
requesting registration in proportion, as nearly as practicable, to the amount
of Registrable Stock and other securities held by each of ▇▇▇▇, Forward and
any other shareholders as of the date of the notice pursuant to Section 1.1.
If ▇▇▇▇, Forward or any shareholder disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice of NDEI
and the underwriter. Any of ▇▇▇▇,Forward's Registrable Stock, or any
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shareholders' securities, excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
1.3 Rule 144 Reporting. With a view to making available to ▇▇▇▇,
Forward the benefits of certain rules and regulations of the SEC which may
permit the sale of the shares of Registrable Stock to the public without
registration, NDEI agrees that, at all times after April 26, 1998, it will use
its best efforts to: (1) keep available adequate current public information,
as those terms are understood and defined in SEC Rule 144; (ii) to file with
the SEC in a timely manner all reports and other documents required of NDEI
under the Securities Act and the Securities Exchange Act of 1934 as amended
(the "Exchange Act") ; and (iii) so long as a ▇▇▇▇, Forward owns any
Registrable Stock, to furnish to ▇▇▇▇, Forward forthwith upon request a
written statement by NDEI as to its compliance with the reporting requirements
of said Rule 144, and of the Securities Act and the Exchange Act, a copy of
the most recent annual or quarterly report of NDEI and such other reports and
documents so filed by NDEI as such ▇▇▇▇, Forward may reasonably request in
complying with any rule or regulation of the SEC allowing such ▇▇▇▇, Forward
to sell any such securities without registration.
2. Obligations of ▇▇▇▇, Forward. Following the filing of the
Registration Statement and during any period that the Registration Statement
is effective, ▇▇▇▇, Forward shall:
2.1 not effect any stabilization transactions or engage in any
stabilization activity in connection with NDEI's common shares in
contravention of Rule lOb-7 under the Exchange Act;
2.2 furnish each broker through whom ▇▇▇▇, Forward offers
Registrable Stock such number of copies of the Prospectus as the broker may
require and otherwise comply with prospectus delivery requirements under the
Securities Act;
2.3 report to NDEI each month all sales, pledges and other
dispositions of Registrable Stock made by ▇▇▇▇, Forward;
2.4 not to bid for or purchase (and not permit any Affiliated
Purchaser, as defined in Rule lOb-6 under the Exchange Act, to bid for or
purchase) any account in which ▇▇▇▇, Forward has a beneficial interest, or
attempt to induce any other person to purchase any NDEI common shares in
contravention of Rule lOb-6 under the Exchange Act;
2.5 furnish such information concerning ▇▇▇▇, Forward as NDEI may
from time to time reasonably request;
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2.6 not sell under the Registration Statement during any period
after NDEI has provided notice to ▇▇▇▇, Forward pursuant to Section 1.6.4
above and until NDEI provides to ▇▇▇▇, Forward notice that the Registration
Statement no longer fails to state a material fact required to be stated
therein, misstates a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements made not misleading;
and
2.7 not sell Registrable Stock during any period beginning seven
(7) days before the anticipated effective date of any registration statement
(other than a registration statement on Form S-3 or S-4 or any successor
forms) registering the sale of equity securities for NDEI's account (as NDEI
advises) and ending ninety (90) days thereafter without NDEI's consent
(provided that this restriction shall not apply with respect to more than one
such registration statement during any calendar year).
3. Expenses.
In connection with any Registration Statement filed in connection
with a registration subject to Section 1.1, ▇▇▇▇, Forward and NDEI each shall
pay its pro rata portion of the fees incurred in connection with such
Registration Statement. For purposes of this Section 3.1, the terms "fees"
means all underwriting, filing and all audit, accounting, and legal fees
attributable to the offering. In addition, ▇▇▇▇, Forward shall be
responsible for the payment of its fees and disbursements of counsel to ▇▇▇▇,
Forward in connection with the preparation of such Registration Statement and
the Prospectus, if any, and fees paid to brokers in connection with the sale
of any of the Registrable Stock pursuant to Section 1.1. For purposes of this
Section 3, ▇▇▇▇, Forward's pro rata portion shall be based on the number of
shares of ▇▇▇▇, Forward included in the offering compared to the total number
of shares included in the offering.
4. Indemnification.
4.1 Indemnity by NDEI. NDEI shall
4.1.1 indemnify and hold harmless ▇▇▇▇, Forward and its
directors and officers, if any, each person who participates in the
offer of such Registrable Stock, including underwriters (as defined
in the Securities Act) and each person, if any, who controls ▇▇▇▇,
Forward or participating person (as defined in the Securities Act)
(collectively, the "Shareholder Indemnitees") against any losses,
claims, damages or liabilities ("Losses"), to which such Shareholder
Indemnitees may become subject, under the Securities Act or
otherwise, insofar as such Losses (or actions in respect thereof)
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arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement or Prospectus, as amended or supplemented if NDEI has
furnished any supplements or amendments thereto, or any other
document filed or delivered in connection therewith under a state
securities or blue sky law (collectively, "Registration Documents")
or insofar as any Losses (or actions in respect thereof) arise out
of or are based upon (i) the omission or alleged omission to state
in any Registration Document as amended or supplemented if NDEI has
furnished any supplements or amendments thereto, a material fact
required to be stated therein or necessary to make the statements
made therein (in the case of a prospectus, in the light of the
circumstances under which they were made), not misleading, or
(ii) any violation of any securities law by NDEI, its officers or
employees in connection with the Registration Documents, and
4.1.2 reimburse each Shareholder Indemnitee for all legal or
other expenses reasonably incurred by it in connection with
investigating or defending any Loss, including any amounts paid in
settlement of any litigation, commenced or threatened, if such
settlement is effected with the prior written consent of NDEI,
which shall not be unreasonably withheld or delayed; provided,
however, that NDEI shall not be liable for any Losses arising out
of or based upon any untrue statement or omission made in any
Registration Document in reliance upon and in conformity with
written information furnished to NDEI by or on behalf of ▇▇▇▇,
Forward for use in the preparation of the Registration Document;
and provided, further, that NDEI shall not be liable to a
particular Shareholder Indemnitee under the indemnity agreement in
this Section 4.1 with respect to the Prospectus, as amended or
supplemented, to the extent that the Loss arises from the sale of
any shares of Registrable Stock by such Shareholder Indemnitee to
the person asserting Loss and to which there was not sent or given,
within the time required by the Securities Act, a copy of the
Prospectus as then amended or supplemented, if NDEI has previously
and timely furnished copies thereof to such indemnified party and
such Prospectus as then amended or supplemented has corrected the
misstatement or omission at issue.
4.2 Indemnity by ▇▇▇▇, Forward. ▇▇▇▇, Forward shall,
4.2.1 indemnify and hold harmless NDEI, any officer, director,
employee or agent of NDEI, and each other person, if any, who
controls NDEI within the meaning of Section 15 of the Securities
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Act (collectively, the "NDEI Indemnitees") against any Losses to
which each such NDEI Indemnitees may become subject under the
Securities Act or otherwise, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained
in any Registration Document, or arise out of or are based upon the
omission or alleged omission to state in any Registration Document
a material fact required to be stated therein or necessary to make
the statements made therein (in the case of a prospectus, in the
light of the circumstances under which they were made,) not
misleading, or (ii) any violation of any securities law by or on
behalf of ▇▇▇▇, Forward in connection with the sale or transfer of
any shares included in the Registration Statement, and
4.2.2 reimburse each NDEI Indemnitee for all legal or other
expenses reasonably incurred by it in connection with investigating
or defending any such Losses or action, including any amounts paid
in settlement of any litigation, commenced or threatened, if such
settlement is effected with the prior written consent of ▇▇▇▇,
Forward; Provided, however, that such indemnification or
reimbursement shall be payable only if, and to the extent that, any
Losses arise out of or are based upon an untrue statement or omission
made in any Registration Document in reliance upon and in conformity
with written information furnished to NDEI by ▇▇▇▇, Forward for use
in the preparation thereof.
4.3 Procedure for Indemnification. Promptly after receipt by an
indemnified party, under Section 4.1 or 4.2, of notice of the commencement of
any action, the indemnified party shall notify the indemnifying party in
writing of the commencement thereof, if a claim in respect thereof is to be
made against an indemnifying party under any of these Sections; but the
omission of such notice shall not relieve the indemnifying party from
liability which it may have to the indemnified party under this Section 4,
except to the extent that the indemnifying party is actually prejudiced by
such failure to give notice, and shall not relieve the indemnifying party from
any liability which it may have to any indemnified party otherwise than under
this Section 4. In case any action is brought against the indemnified party,
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and to the extent
that it chooses, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party, and after notice from the indemnifying
party shall not be liable for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof;
Provided, however, that if the indemnifying party fails to take reasonable
steps necessary to defend diligently the claim within twenty (20) days after
receiving notice from the indemnified party that the indemnified party
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believes the indemnifying party has failed to take such reasonable steps, or
4.3.1 if the indemnified party who is a defendant in any action
or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there are legal defenses
available to the indemnified party which are not available to the
indemnifying party, or
4.3.2 if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional
conduct, then the indemnified party shall have the right to assume
or continue its own defense as set forth above. In no event shall
the indemnifying party be responsible for more than one firm or
counsel for all indemnified parties unless it is inappropriate under
applicable standards of professional conduct for one firm or counsel
to represent all indemnified parties.
4.4 Non-Exclusive Indemnity. Any indemnity agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party.
4.5 Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities
or expenses.
4.5.1 in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified party
on the other (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 indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission), or
4.5.2 if the allocation provided by Section 4.5.1 above is not
permitted by applicable law or provides a lesser sum to the indemnified
party than the amount hereinafter calculated, in such proportion as is
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appropriate to reflect not only the relative fault of the indemnifying
party and the indemnified party, but also the relative benefits received
by the indemnifying party on the one hand (taking into consideration the
fact that the provision of the registration rights hereunder served as
an inducement to ▇▇▇▇, Forward to enter into the Settlement Agreement)
and the indemnified party on the other, as well as any other relevant
equitable considerations. 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.
5. Miscellaneous.
5.1 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of California without giving effect to
the choice of law principles thereof.
5.2 Entire Agreement; Amendment Waiver. This Agreement:
5.2.1 contains the entire agreement among the parties hereto with
respect to the subject matter hereof,
5.2.2 supersedes all prior written agreements and negotiations and
oral understandings, if any, with respect thereto, and may not be amended
or supplemented except by an instrument or counterparts thereof in writing
signed by NDEI and each of ▇▇▇▇, Forward. No waiver of any term or
provision of this Agreement shall be effective unless in writing signed
by the party to be charged. The waiver by any party of a breach of any
term or provision of this Agreement shall not be construed as a waiver
of any subsequent breach.
5.3 Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns; provided, however, that no party hereto may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto.
5.4 Invalidity of Provision. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
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the validity or enforceability of this Agreement including that provision, in
any other jurisdiction.
5.5 Notices. All notices, requests, consents and other communications
to any party hereunder shall be in writing and shall be given either by
personal service, certified mail, return receipt requested, overnight courier
or telecopy, addressed as follows:
if to NDEI, to:
NETTER DIGITAL ENTERTAINMENT, INC.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
if to ▇▇▇▇, Forward, to:
▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
or to such other address as any party may hereafter specify to the other
parties hereto by notice sent in accordance with this Section 5.5. Each such
notice, request or other communication shall be effective when delivered at
the address specified in this Section 5.5.
5.6 Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience of reference only and shall not control
or affect the meaning or construction of any provision hereof. This Agreement
may be executed in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto as of the date first above written.
NETTER DIGITAL ENTERTAINMENT, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________
Typed Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇, FORWARD, ▇▇▇▇▇▇▇▇ & SCRIPPS LLP
By:/s/ R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
___________________________________
Typed Name: R. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Partner
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