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EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement") is entered into as of
August 1, 2000, among ▇▇▇▇ ▇▇▇ Media, Inc., a Colorado corporation with offices
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"),
and ▇▇▇▇▇▇▇ Associates, L.P., a Delaware limited partnership ("▇▇▇▇▇▇▇"), and
Westgate International, L.P., a Cayman Islands limited partnership ("Westgate"),
each with an office at c/▇ ▇▇▇▇▇▇▇ Management Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇▇▇ and Westgate shall hereinafter be
referred to individually and collectively as the "Investor").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Preferred Stock Investment Agreement,
dated on or about the date hereof, by and between the Company and the Investor
(the "Purchase Agreement"), the Company has agreed to sell and issue to the
Investor, and the Investor has agreed to purchase from the Company (1) an
aggregate of 4,000 shares, Liquidation Preference $1,000 each, of the Company's
Series B 4% Cumulative Convertible Preferred Stock (the "Preferred Shares") and
(2) warrants to purchase an aggregate of 75,000 shares (the "Common Shares") of
common stock, no par value, of the Company ("Common Stock") pursuant to the
terms of such warrants ("Warrants"), in each case subject to terms and
conditions contained in the Purchase Agreement; and
WHEREAS, the Purchase Agreement contemplates that the Preferred Shares
will be convertible into Common Shares pursuant to the terms and conditions set
forth in the Certificate of Designations for the Preferred Shares (the
"Certificate");
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Investor agree as follows:
1. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Purchase
Agreement or the Certificate. As used in this Agreement, the following terms
shall have the following respective meanings:
"Closing" and "Closing Date" shall have the meanings ascribed to such
terms in the Purchase Agreement.
"Commission" or "SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
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"Holder" and "Holders" shall include the Investor and any transferee or
transferees of the Preferred Shares, Warrants, Common Shares or Registrable
Securities which have not been sold to the public to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement and the Purchase Agreement.
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 applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" shall mean: (i) the Common Shares or other
securities issued or issuable to each Holder or its permitted transferee or
designee upon conversion of the Preferred Shares and/or upon exercise of the
Warrants; (ii) securities issued or issuable upon any stock split, stock
dividend, recapitalization or similar event with respect to such Common Shares;
and (iii) any other security issued as a dividend or other distribution with
respect to, in exchange for or in replacement of the securities referred to in
the preceding clauses.
"Registration Expenses" shall mean all expenses to be incurred by the
Company in connection with each Holder's registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of counsel to Holders
(using a single counsel selected by a majority in interest of the Holders) for a
"due diligence" examination of the Company and review of the Registration
Statement and related documents, and the expense 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).
"Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated pursuant to the
Securities Act, and as subsequently amended.
"Securities Act" or "Act" shall mean the Securities Act of 1933, as
amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for Holders not included within "Registration
Expenses".
2. Registration Requirements. The Company shall use its best efforts
to effect the registration of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the sale or distribution of all
the Registrable Securities in the manner (including manner of
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sale) and in all states reasonably requested by the Holder. Such best efforts by
the Company shall include, without limitation, the following:
(a) The Company shall, as expeditiously as possible after the
Closing Date:
i) But in any event with 35 days after the Closing Date, prepare
and file a registration statement with the Commission pursuant to Rule
415 under the Securities Act on Form S-3 under the Securities Act (or in
the event that the Company is ineligible to use such form, such other
form as the Company is eligible to use under the Securities Act)
covering resales by the Holders of the Registrable Securities
("Registration Statement"), which Registration Statement, to the extent
allowable under the Securities Act and the rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also
covers such indeterminate number of additional shares of Common Stock as
may become issuable upon conversion of the Preferred Shares and/or
exercise of the Warrants. Such Registration Statement shall be, and the
Registrable Securities shall be included in, the registration statement
being filed on the date hereof pursuant to that certain registration
rights agreement dated as of April 14, 2000 between the Company and
Augustine Fund, L.P. covering the securities issuable upon conversion of
the Company's Series A 6% Convertible Notes, among other securities (the
"Augustine Registration Statement"). The number of shares of Common
Stock included in such Registration Statement for the Holders shall be
no less than the sum of two times the number of Common Shares that are
then issuable upon conversion of the Preferred Shares and exercise of
the Warrants, provided that for purposes hereof it shall be assumed that
all the Preferred Shares and Warrants are then convertible and
exercisable (assuming full conversion or exercise, respectively, at the
applicable Conversion Price or Exercise Price (as defined in the
Warrant) without regard to restrictions or limitations contained in the
Certificate or Warrants). Nothing in the preceding sentence will limit
the Company's obligations to reserve shares of Common Stock pursuant to
Section 3.7 of the Purchase Agreement. Thereafter the Company shall
cause such Registration Statement and other filings to be declared
effective within 90 days following the Closing Date (or 120 days
following the Closing Date if such Registration Statement is subject to
full SEC review). Without limiting the foregoing, the Company will
promptly respond to all SEC comments, inquiries and requests, and shall
request acceleration of effectiveness at the earliest possible date. The
Company shall provide the Holders reasonable opportunity to review any
such Registration Statement or amendment or supplement thereto prior to
filing (provided that, with respect to the Registration Statement being
filed on the date hereof, the Company may provide less than 24 hours for
such review).
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ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with such Registration Statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of
all securities covered by such Registration Statement and notify the
Holders of the filing and effectiveness of such Registration Statement
and any amendments or supplements. In addition, in the event that the
Augustine Registration Statement as filed fails to cover resales of the
Registrable Securities, then the Company shall promptly file an
amendment to such registration statement filing in order to cover
resales of the Registrable Securities as provided herein.
iii) Furnish to each Holder such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
Registration Statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as
such Holder may reasonably require or request in order to facilitate the
disposition of Registrable Securities owned by such Holder.
iv) Register and qualify the securities covered by such
Registration Statement under the securities or "Blue Sky" laws of all
domestic jurisdictions; provided that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
v) Notify each Holder immediately of the happening of any event
(but not the substance or details of any such events unless specifically
requested by a Holder) as a result of which the prospectus (including
any supplements thereto or thereof) included in such Registration
Statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly update
and/or correct such prospectus.
vi) Notify each Holder immediately of the issuance by the
Commission or any state securities commission or agency of any stop
order suspending the effectiveness of the Registration Statement or the
threat or initiation of any proceedings for that purpose. The Company
shall use its best efforts to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time.
vii) Subject to Section 2(a)(i), permit counsel to the Holders
to review the Registration Statement and all amendments and supplements
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thereto within a reasonable period of time (but not less than 5 full
Trading Days (as defined in the Certificate)) prior to each filing, and
shall not file any document in a form to which such counsel reasonably
objects and will not request accelerated effectiveness of the
Registration Statement without prior notice to such counsel.
viii) List the Registrable Securities covered by such
Registration Statement with all securities exchange(s) and/or markets on
which the Common Stock is then listed and prepare and file any required
filings with the Principal Market or any exchange or market where the
Common Shares are traded.
ix) Take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153
(or successor thereto) under the Act.
(b) Set forth below in this Section 2(b) are (I) events that may
arise that the Investors consider will interfere with the full enjoyment of
their rights under this Agreement, the Purchase Agreement, the Warrants and the
Certificate (the "Interfering Events"), and (II) certain remedies applicable in
each of these events.
Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Investors if an Interfering Event
occurs and provide that the Investors may require that the Company repurchase
outstanding Preferred Shares and/or Warrants at a specified price if certain
Interfering Events are not timely cured.
Paragraph (v) provides, inter alia, that if default adjustments
required as the remedy in the case of certain of the Interfering Events are not
provided when due, the Company may be required by the Investors to redeem
outstanding Preferred Shares and/or Warrants at a specified price.
Paragraph (vi) provides, inter alia, that the Investors have the
right to specific performance.
The preceding paragraphs in this Section 2(b) are meant to serve
only as an introduction to this Section 2(b), are for convenience only, and are
not to be considered in applying, construing or interpreting this Section 2(b).
i) Delay in Effectiveness of Registration Statement.
(A) In the event that (1) such Registration Statement
has not been filed with the SEC by the 35th day following the
Closing Date, (2) such Registration Statement has not been
declared effective by the 90th day following the Closing Date
(or 120th day
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following the Closing Date in the event such Registration
Statement is subject to full SEC review), (3) the Company fails
to include the Registrable Securities on the Augustine
Registration Statement or (4) the Company at any time fails to
issue unlegended Registrable Securities as required by Article
VI of the Purchase Agreement, then in each case the Company
shall pay each Holder a Monthly Delay Payment (as defined below)
for each 30 day period (or portion thereof) that (a) such filing
or effectiveness (as the case may be) of the Registration
Statement is delayed, (b) the Registrable Securities are not
included in the Augustine Registration Statement, or (c) failure
to issue such unlegended Registrable Securities persists. In
addition to the foregoing, if the Registration Statement has not
been declared effective within six (6) months after the Closing
Date, then each Holder shall have the right to sell, at any time
after the sixth (6th) month following the Closing Date, any or
all of its Preferred Shares and Warrants to the Company for
consideration (the "Mandatory Repurchase Price") equal to (I)
for the Preferred Shares, the greater of (x) 120% of the
Liquidation Preference of all such Preferred Shares being sold
to the Company, or (y) the Liquidation Preference for the
Preferred Shares being sold to the Company divided by the then
applicable Conversion Price multiplied by the greater of the
last closing price of the Common Stock on (i) the date a Holder
exercises its option pursuant to this Section 2(b) to require
repurchase of Preferred Shares or (ii) the date on which the
event triggering Holder's remedies under this Section 2(b) first
occurred, in each case payable in cash, and (II) for the
Warrants, 120% of the product of (a) the difference between the
greater of clauses (i) or (ii) above and the exercise price of
the Warrants, multiplied by (b) the number of Warrants being
sold to the Company, payable in cash.
(B) As used in this Agreement, a "Monthly Delay Payment"
shall be a cash payment equal to 1% of the Liquidation
Preference of the Preferred Shares held by a Holder for the
first 30 day period (or portion thereof) that the specified
condition in this Section 2(b) has not been fulfilled or the
specified deficiency has not been remedied and 2% of such
Liquidation Preference thereafter for each subsequent 30 day
period (or portion thereof) that the specified condition in this
Section 2(b) has not been fulfilled or the specified deficiency
has not been remedied. Payment of the Monthly Delay Payments and
Mandatory Repurchase Price shall be due and payable from the
Company to such Holder within 5 days of demand therefor. Without
limiting the foregoing, if cash payment of the Mandatory
Repurchase Price is not made within such 5 day period, the
Holder may revoke and withdraw its election to cause the Company
to make such
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mandatory purchase at any time prior to its receipt of such
cash. At the option of the Holder, Monthly Delay Payments, in
lieu of receiving any such cash payment, may be added to the
Liquidation Preference of the Preferred Shares held by it.
ii) No Listing; Premium Price Redemption for Delisting of Class
of Shares.
(A) In the event that the Company fails, refuses or for
any other reason is unable to cause the Registrable Securities
covered by the Registration Statement to be listed with the
Principal Market or one of the other Approved Markets (as
defined in the Purchase Agreement) by the earlier of the
effectiveness of the Registration Statement or the 120th day
following the Closing Date, and at all times thereafter during
the registration period specified in Section 5, then the Company
shall provide to each Holder a Monthly Delay Payment, for each
30 day period or portion thereof during which such listing is
not in effect. In addition to the foregoing, following the 10th
day that such listing is not in effect, each Holder shall have
the right to sell to the Company any or all of its Preferred
Shares and/or Warrants at the Mandatory Repurchase Price. The
provisions of Section 2(b)(i)(B) shall apply to this Section
2(b)(ii)(A).
(B) In the event that Company's shares of Common Stock
are not listed on the Principal Market or any of the Approved
Markets on the earlier of the effectiveness of the Registration
Statement or the 120th day following the Closing Date, and at
all times thereafter during the registration period specified in
Section 5, then the Company shall provide to each Holder a
Monthly Delay Payment for each 30 day period or portion thereof
during which such listing is not in effect. In addition to the
foregoing, following any three (3) consecutive trading day
period in which such listing is not in effect, each Holder shall
have the right to sell to the Company any or all of its
Preferred Shares and/or Warrants at the Mandatory Repurchase
Price. The provisions of Section 2(b)(i)(B) shall apply to this
Section 2(b)(ii)(B).
iii) Blackout Periods. In the event any Holder's ability to sell
Registrable Securities under the Registration Statement is suspended for
more than (i) five (5) consecutive days or (ii) ten (10) days in the
aggregate in any calendar year ("Suspension Grace Period"), including
without limitation by reason of any suspension or stop order with
respect to the Registration Statement or the fact that an event has
occurred as a result of which the prospectus (including any supplements
thereto) included in such Registration Statement then in effect includes
an untrue
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statement of material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing (a "Blackout"),
then the Company shall provide to each Holder a Monthly Delay Payment
for each 30 day period or portion thereof from and after the expiration
of the Suspension Grace Period, on the terms set forth in Section
2(b)(i)(B) above. In addition, at any time following the expiration of
the Suspension Grace Period if the Blackout continues for more than five
(5) additional consecutive days, a Holder shall have the right to sell
to the Company its Preferred Shares and/or Warrants in whole or in part
for the Mandatory Repurchase Price on the terms set forth in Section
2(b)(i)(B) above.
iv) Redemption for Conversion/Exercise Deficiency. In the event
that the Company does not have a sufficient number of Common Shares
available to satisfy the Company's obligations to any Holder upon
receipt of a Conversion Notice (as defined in the Certificate) or
receipt of a Form of Election to Purchase (pursuant to the Warrants) or
is otherwise unable or unwilling for any reason to issue such Common
Shares (other than solely due to the failure of the Holder to comply
with the conversion or exercise requirements of the Certificate or
Warrants) (each, a "Conversion/Exercise Deficiency") in accordance with
the terms of the Certificate or Warrants for any reason after receipt of
a Conversion Notice or Notice of Exercise (as defined in the Warrants)
from any Holder, then:
(A) The Company shall provide to each Holder a Monthly
Delay Payment for each 30 day period or portion thereof
following the Conversion/Exercise Deficiency, on the terms set
forth in Section 2(b)(i)(B) above.
(B) At any time five days after the commencement of the
running of the first 30-day period described above in clause (A)
of this paragraph (iv), at the request of any Holder, the
Company promptly shall purchase from such Holder, for the
Mandatory Repurchase Price and on the terms set forth in Section
2(b)(i)(B) above, the outstanding Preferred Shares and/or
Warrants equal to such Holder's pro rata share of the
Conversion/Exercise Deficiency, provided that the Holder may
revoke such request at any time prior to receipt of the
Mandatory Repurchase Price (such mandatory repurchase right to
be in addition to and not in lieu of the Monthly Delay Payment
right set forth in the preceding clause (A)).
v) Mandatory Purchase Price for Defaults.
(A) The Company acknowledges that any failure, refusal
or inability by the Company to perform the obligations
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described in the foregoing paragraphs (i) through (iv) will
cause the Holders to suffer damages in an amount that will be
difficult to ascertain, including without limitation damages
resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the
Preferred Shares, Warrants and Registrable Securities.
Accordingly, the parties agree, after consulting with counsel,
that it is appropriate to include in this Agreement the
foregoing provisions for Monthly Delay Payments and mandatory
redemptions in order to compensate the Holders for such damages.
The parties acknowledge and agree that the Monthly Delay
Payments and mandatory redemptions set forth above represent the
parties' good faith effort to quantify such damages and, as
such, agree that the form and amount of such payments and
mandatory redemptions are reasonable and will not constitute a
penalty.
(B) In the event that the Company fails to pay any
Monthly Delay Payment within 5 business days of demand therefor,
each Holder shall have the right to sell to the Company any or
all of its Preferred Shares and/or Warrants at the Mandatory
Repurchase Price on the terms set forth in Section 2(b)(i)(B)
above.
(C) The Holder shall have the right to withdraw any
request for redemption hereunder at any time prior to its
receipt of the Mandatory Repurchase Price.
vi) Cumulative Remedies. The Monthly Delay Payments and
mandatory purchases provided for above are in addition to and not in
lieu or limitation of any other rights the Holders may have at law, in
equity or under the terms of the Certificate, the Purchase Agreement,
the Warrants and this Agreement, including without limitation the right
to monetary contract damages and specific performance. Each Holder shall
be entitled to specific performance of any and all obligations of the
Company in connection with the registration rights of the Holders
hereunder.
vii) Remedies for Registrable Securities. In any case in which a
Holder of Preferred Shares or Warrants has the right to cause the
purchase of its Preferred Shares or Warrants under this Section 2(b), it
shall also have the right to cause the purchase of the Registrable
Securities that it owns at a price equal to the Mandatory Repurchase
Price of the Preferred Shares and/or Warrants which were converted into
or exercised for Common Shares. In the case in which a Holder of
Preferred Shares or Warrants would have the right to receive Monthly
Delay Payments with respect to Preferred Shares or Warrants under this
Section 2(b), it shall also have the right to receive payments with
respect to Registrable
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Securities owned by it in an amount at the rate of the Monthly Delay
Payments that would have applied to the Preferred Shares or Warrants
converted into or exercised for Common Shares had such Preferred Shares
and/or Warrants not been so converted or exercised.
(c) If the Holder(s) intend to distribute the Registrable
Securities by means of an underwriting, the Holder(s) shall so advise the
Company. Any such underwriting may only be administered by nationally or
regionally recognized investment bankers reasonably satisfactory to the Company.
(d) The Company shall enter into such customary agreements for
secondary offerings (including a customary underwriting agreement with the
underwriter or underwriters, if any) and take all such other reasonable actions
reasonably requested by the Holders in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and whether
or not the Registrable Securities are to be sold in an underwritten offering:
i) make such representations and warranties to the Holders and
the underwriter or underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in secondary offerings;
ii) cause to be delivered to the sellers of Registrable
Securities and the underwriter or underwriters, if any, opinions of
independent counsel to the Company, on and dated as of the effective day
(or in the case of an underwritten offering, dated the date of delivery
of any Registrable Securities sold pursuant thereto) of the Registration
Statement, and within ninety (90) days following the end of each fiscal
year thereafter, which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Holders and the
underwriter(s), if any, and their counsel and covering, without
limitation, such matters as the due authorization and issuance of the
securities being registered and compliance with securities laws by the
Company in connection with the authorization, issuance and registration
thereof and other matters that are customarily given to underwriters in
underwritten secondary offerings, addressed to the Holders and each
underwriter, if any;
iii) cause to be delivered, immediately prior to the
effectiveness of the Registration Statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), and at the beginning of each fiscal
year following a year during which the Company's independent certified
public accountants shall have reviewed any of the Company's books or
records, a "comfort" letter from the Company's independent certified
public accountants addressed to the Holders and each underwriter, if
any, stating that such accountants are independent public accountants
within the meaning of the
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Securities Act and the applicable published rules and regulations
thereunder, and otherwise in customary form and covering such financial
and accounting matters as are customarily covered by letters of the
independent certified public accountants delivered in connection with
secondary offerings; such accountants shall have undertaken in each such
letter to update the same during each such fiscal year in which such
books or records are being reviewed so that each such letter shall
remain current, correct and complete throughout such fiscal year; and
each such letter and update thereof, if any, shall be reasonably
satisfactory to the Holders;
iv) if an underwriting agreement is entered into, the same shall
include customary indemnification and contribution provisions to and
from the underwriters and procedures for secondary underwritten
offerings; and
v) deliver such documents and certificates as may be reasonably
requested by the Holders of the Registrable Securities being sold or the
managing underwriter or underwriters, if any, to evidence compliance
with clause (i) above and with any customary conditions contained in the
underwriting agreement, if any.
(e) The Company shall make available for inspection by the
Holders, representative(s) of all the Holders together, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney or accountant retained by any Holder or underwriter, all financial and
other records customary for purposes of the Holders' due diligence examination
of the Company and review of any Registration Statement, all SEC Documents (as
defined in the Purchase Agreement) filed subsequent to the Closing, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such representative, underwriter, attorney or accountant in connection
with such Registration Statement, provided that such parties agree to keep such
information confidential.
(f) Subject to Section 2(b) above, the Company may suspend the
use of any prospectus used in connection with the Registration Statement only in
the event, and for such period of time as, such a suspension is required by the
rules and regulations of the Commission. The Company will use its best efforts
to cause such suspension to terminate at the earliest possible date.
(g) The Company shall file a Registration Statement with respect
to any newly authorized and/or reserved Registrable Securities consisting of
Common Shares described in clause (i) of the definition of Registrable
Securities within five (5) business days of any stockholders meeting authorizing
same and shall use its best efforts to cause such Registration Statement to
become effective within sixty (60) days of such stockholders meeting. If the
Holders become entitled, pursuant to an event described in clause (ii) and (iii)
of the definition of Registrable Securities, to receive any
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securities in respect of Registrable Securities that were already included in a
Registration Statement, subsequent to the date such Registration Statement is
declared effective, and the Company is unable under the securities laws to add
such securities to the then effective Registration Statement, the Company shall
promptly file, in accordance with the procedures set forth herein, an additional
Registration Statement with respect to such newly Registrable Securities. The
Company shall use its best efforts to (i) cause any such additional Registration
Statement, when filed, to become effective under the Securities Act, and (ii)
keep such additional Registration Statement effective during the period
described in Section 5 below and cause such Registration Statement to become
effective within 30 days of that date that the need to file the Registration
Statement arose. All of the registration rights and remedies under this
Agreement shall apply to the registration of such newly reserved shares and such
new Registrable Securities, including without limitation the provisions
providing for default payments and mandatory redemptions contained herein.
3. Expenses of Registration. All Registration Expenses in connection
with any registration, qualification or compliance with registration pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses of a
Holder shall be borne by such Holder.
4. Registration on Form S-3. The Company shall use its best efforts to
remain qualified for registration on Form S-3 or any comparable or successor
form or forms, or in the event that the Company is ineligible to use such form,
such form as the Company is eligible to use under the Securities Act.
5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company shall keep such registration
effective until the later of (a) the date on which all the Holders have
completed the sales or distribution described in the Registration Statement
relating thereto or, if earlier, until such Registrable Securities may be sold
by the Holders under Rule 144(k) (provided that the Company's transfer agent has
accepted an instruction from the Company to such effect), and (b) the fifth
(5th) anniversary of the Closing Date.
6. Indemnification.
(a) Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors, agents and partners, and each person controlling
each of the foregoing, within the meaning of Section 15 of the Securities Act
and the rules and regulations thereunder with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls, within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, any
underwriter, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or
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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 not
misleading in light of the circumstances under which they were made, or any
violation by the Company of the Securities Act or any state securities law or in
either case, any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and will reimburse each Holder,
each of its officers, directors, agents and partners, and each person
controlling each of the foregoing, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to a Holder to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or the
underwriter (if any) therefor and stated to be specifically for use therein. The
indemnity agreement contained in this Section 6(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent will
not be unreasonably withheld).
(b) Holder Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, agents and partners, and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, each other Holder (if any), and each of their officers, directors,
agents and partners, and each person controlling such other Holder(s) against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or 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 statement therein not misleading in light of the circumstances under which
they were made, and will reimburse the Company and such other Holder(s) and
their directors, officers, agents and partners, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating and 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) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities pursuant to the registration statement in
question. The indemnity agreement contained in this Section 6(b) shall not apply
to amounts paid in settlement of any such claims, losses, damages or liabilities
if
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such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under this
Section 6 (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 in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at its own expense, and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 6 except to
the extent that the Indemnifying Party is materially and adversely affected by
such failure to provide notice. No Indemnifying 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 which does
not include as an 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. Each Indemnified Party shall furnish such
non-privileged information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
7. Contribution. If the indemnification provided for in Section 6 herein
is unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such 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, claims, damages or
liabilities as between the Company on the one hand and any Holder on the other,
in such proportion as is appropriate to reflect the relative fault of the
Company and of such Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand and of any Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no event shall the obligation of any Indemnifying Party to contribute
under this Section 7 exceed the amount that such Indemnifying Party would have
been obligated to pay by way of indemnification if the indemnification provided
for under Section 6(a) or 6(b) hereof had been available under the
circumstances.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Holders or the underwriters were treated as one entity
for such purpose) or by
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any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraphs. The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraphs
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this section, no Holder or underwriter shall
be required to contribute any amount in excess of the amount by which (i) in the
case of any Holder, the net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the registration statement in question or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter 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.
8. Survival. The indemnity and contribution agreements contained in
Sections 6 and 7 and the representations and warranties of the Company referred
to in Section 2(d)(i) shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement or the Purchase Agreement or
any underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of the Company, and (iii) the consummation
of the sale or successive resales of the Registrable Securities.
9. Information by Holders. Each Holder shall furnish to the Company such
information regarding such Holder and the distribution and/or sale proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement. The intended method or methods of
disposition and/or sale (Plan of Distribution) of such securities as so provided
by such Investor shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of such Holder.
10. Replacement Certificates. The certificate(s) representing the Common
Shares held by any Investor (or then Holder) may be exchanged by such Investor
(or such Holder) at any time and from time to time for certificates with
different denominations representing an equal aggregate number of Common Shares,
as reasonably requested by such Investor (or such Holder) upon surrendering the
same. No service charge will be made for such registration or transfer or
exchange. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any certificate representing
the Preferred Shares or the Warrants, or the underlying Common Shares of any of
the foregoing, and, in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, or upon surrender and cancellation of such
certificate if
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mutilated, the Company will make and deliver a new certificate of like tenor at
no charge to the holder.
11. Transfer or Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the Investors by
the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee
or assignee of Preferred Shares, Warrants or Registrable Securities, and all
other rights granted to the Investors by the Company hereunder may be
transferred or assigned to any transferee or assignee of any Preferred Shares,
Warrants or Registrable Securities; provided in each case that the Company must
be given written notice by the such Investor at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; and provided
further that the transferee or assignee of such rights agrees in writing to be
bound by the registration provisions of this Agreement.
12. Miscellaneous.
(a) Remedies. The Company and the Investor acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(b) Jurisdiction. Each of the Company and the Investor (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court, the New York State courts and other courts of the United States sitting
in New York County, New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement and (ii) hereby waives, and agrees
not to assert in any such suit action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and the Investor consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
(c) Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing by facsimile, mail or personal
delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
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to the Company:
▇▇▇▇ ▇▇▇ Media, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
to either Investor:
c/▇ ▇▇▇▇▇▇▇ Management Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with copies to:
Kleinberg, Kaplan, ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Any party hereto may from time to time change its address for notices by giving
at least five days' written notice of such changed address to the other parties
hereto.
(d) Indemnity. Each party shall indemnify each other party against
any loss, cost or damages (including reasonable attorney's fees) incurred as a
result of such parties' breach of any representation, warranty, covenant or
agreement in this Agreement, including any enforcement of this indemnity.
(e) Waivers. No waiver by any party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter. The representations and warranties and the agreements and
covenants of the Company and each Investor contained herein shall survive the
Closing.
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(f) Execution in Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart. A facsimile signature shall be considered due execution and binding
upon such signatory with that same force and effect as if the signature were an
original.
(g) Publicity. The Company agrees that it will not disclose, and will
not include in any public announcement, the name of the Investor without its
consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement. The Company agrees
to deliver to the Investor a copy of any public announcement regarding the
matters covered by this Agreement or any agreement or document executed herewith
or any other public announcement including the name of the Investor, prior to
the publication of such announcements.
(h) Entire Agreement; Amendment. This Agreement, together with the
Purchase Agreement, the Certificate, the Warrants and the agreements and
documents contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be amended, modified or terminated except
by a written agreement signed by the Company plus the Holders of 50% of the
Preferred Shares issued under the Purchase Agreement to that date and by ▇▇▇▇▇▇▇
and Westgate (provided that ▇▇▇▇▇▇▇ and Westgate hold collectively 25% of the
outstanding Preferred Shares or underlying shares); provided that for the
purposes of this Section 12(h) the Holders of Common Shares (including ▇▇▇▇▇▇▇
and Westgate) still entitled to registration rights under this Agreement will be
deemed to still be Holders of that number of Preferred Shares which were
converted into such number of Common Shares issued upon conversion which are
still held by them.
(i) Governing Law. This Agreement and the validity and performance of
the terms hereof shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts executed and to be performed
entirely within such state, except to the extent that the law of the State of
Delaware regulates the Company's issuance of securities.
(j) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
(k) Titles. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
(l) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
[Signature Page Follows]
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In Witness Whereof, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
▇▇▇▇ ▇▇▇ MEDIA, INC.
By:
---------------------------------------
Name:
Title:
WESTGATE INTERNATIONAL, L.P.
By: ▇▇▇▇▇▇▇ International Capital Advisors Inc.,
as Attorney-in-Fact
By:
------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ASSOCIATES, L.P.
By:
---------------------------------------
Name:
Title:
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