Exhibit 4.12
Attachment (vii)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _______, 2003, by and between
Dwango North America, Inc., a Texas corporation (the "Company"), and
HCFP/▇▇▇▇▇▇▇ Securities, LLC ("▇▇▇▇▇▇▇"), RG Securities LLC ("RG" and together
with ▇▇▇▇▇▇▇, the "Agents"), and the investors listed on Schedule A hereto (the
"Investors"). The Agents and the Investors shall be collectively referred to
herein as the Rightsholders.
WHEREAS, this Agreement has been entered into in connection with the
Company's private offering (the "Offering") of Senior Subordinated Convertible
Promissory Notes (the "Notes") and Warrants ("Warrants") to purchase shares of
common stock, par value $.001 per share ("Common Stock"), pursuant to a
Confidential Term Sheet dated May 21, 2003; and
WHEREAS, to induce the Agents to act as the Placement Agents for the
Offering, and for the Investors to invest in the Offering, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "Securities Act"), and applicable state securities
laws.
NOW, THEREFORE, it is agreed as follows:
1. Registerable Securities. The term "Registerable Securities" shall mean
(i) any of the shares of Common Stock underlying the Warrants or Notes sold in
the Offering, (ii) the shares of Common Stock underlying the warrants issued to
the Agents or their designees as compensation in connection with the Offering,
and (iii) any Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of,
such shares. For the purposes of this Agreement, securities will cease to be
Registerable Securities when (A) such Registerable Securities are distributed to
the public pursuant to the Securities Act, or pursuant to an exemption from the
registration requirements of the Securities Act, including, but not limited to,
Rules 144 and 144A promulgated under the Securities Act, (B) such Registerable
Securities are eligible for immediate resale pursuant to Rule 144(k) promulgated
under the Securities Act, (C) such Registerable Securities are registered
pursuant to an effective registration statement, or (D) such Registerable
Securities have been otherwise transferred and the Company, in accordance with
applicable laws and regulations, has delivered new certificates or other
evidences of ownership for such securities which are not subject to any stop
transfer order or other restriction on transfer and such Registerable Securities
may be publicly resold (without volume or method of sale restrictions) without
registration under the Securities Act.
2. Registration Rights.
(a) The Company shall file a registration statement to register the
Registerable
Securities, or the resale thereof, within four months after the Common Stock of
the Company, or the common stock into which the Common Stock of the Company is
converted or exchanged, becomes publicly tradeable, and will use its reasonable
commercial efforts to cause such registration statement to become effective as
soon as practicable thereafter.
(b) If, at any time commencing after the closing of the Offering (the
"Closing Date") and on or prior to seven years from the Closing Date, the
Company proposes to file a registration statement under the Securities Act with
respect to an offering by the Company or any selling stockholders of any of its
equity securities (other than a registration statement on Form S-4 or Form S-8,
or any successor form or a registration statement filed solely in connection
with an exchange offer, a business combination transaction or an offering of
securities solely to the existing stockholders or employees of the Company),
then the Company shall in each case give written notice (the "Notice") of such
proposed filing to the Rightsholders at least twenty (20) days before the
anticipated filing date of such registration statement, which Notice shall offer
the Rightsholders the opportunity to include in such registration statement such
amount of Registerable Securities as they may request. Each of the Rightsholders
electing to have his Registerable Securities registered pursuant to this Section
2(a) shall advise the Company of such election in writing within ten (10) days
after the date of receipt of the Notice, specifying the amount of Registerable
Securities for which registration is requested (the "Election"). The Company
shall include in any such registration statement all Registerable Securities so
requested to be included; provided that the Company has received the Election
and subject to limitations set forth in Section 2(c) below; and, provided,
further, nothing herein shall prevent the Company from, at any time before the
effectiveness of such registration statement, abandoning or delaying any
registration pursuant to this Section 2(b).
(c) Notwithstanding the foregoing, if the underwriter(s) of any
offering of the Company referred to in Section 2(b) hereof shall be of the good
faith opinion that the total amount or kind of securities held by the
Rightsholders and any other persons or entities entitled to be included in such
offering would adversely affect the success of such offering, then the amount of
securities to be offered for the accounts of Rightsholders and the other selling
securityholders included in the Registration Statement shall be reduced pro rata
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount recommended by the underwriter(s) thereof,
whereupon the Company shall only be obligated to register such limited portion
(which may be none) of the Registerable Securities with respect to which such
Rightsholders have provided an Election. In no event shall the Company be
required pursuant to this Section 2(c) to reduce the amount of securities
proposed to be registered by it for its own account.
3. Registration Expenses.
(a) Except as provided in Section 3(b), the Company shall pay all of
the expenses incurred in connection with a registration (whether or not
abandoned or delayed) under this Registration Rights Agreement, including, but
not limited to, (i) all registration and filing fees, (ii) "Blue Sky" fees and
expenses, (iii) all printing, duplicating, and delivery expenses, (iv) fees and
disbursements of counsel for the Company and of independent certified public
accountants of the Company, (v) all fees and expenses incurred in connection
with the listing of the Registerable Securities on any securities exchange, (vi)
internal expenses of the Company
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(e.g. salaries and expenses of its officers and employees), and (vii) the
expenses of any audit.
(b) The Company shall not be required to pay underwriting
discounts, selling commissions or transfer taxes attributable to the sale of the
Registerable Securities.
4. Registration Obligations
(a) Obligations of the Company. The Company will, in connection with
any registration pursuant to Section 2 hereof:
(i) Prepare and file with the Commission a registration statement
(a "Registration Statement") with respect to such Registerable Securities in
accordance with the method or methods of distribution thereof as specified by
the Rightsholder (except if otherwise directed by the Rightsholder); provided,
however, that not less than three business days prior to the filing of such
Registration Statement or any related prospectus or any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (A) furnish to the Rightsholder and its legal
counsel, copies of all such documents proposed to be filed, and (B) at the
request of the Rightsholder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of counsel to the Rightsholder, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall prepare and file with the Commission such post-effective
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registerable Securities for a period of 120 days following the date of its
effectiveness; provided however, this provision shall not be applicable if the
Registerable Securities are eligible for resale under Rule 144.
(ii) Notify the Rightsholder and its legal counsel as promptly as
possible (A) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (B) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registerable Securities or the initiation
of any action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened (each, a "Proceeding") for that purpose; (C) of
the receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registerable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; and (D) of the occurrence of any event that makes
any statement made in the Registration Statement or prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
prospectus or other documents so that, in the case of the Registration Statement
or the prospectus, as the case may be, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company shall also
use good faith efforts to keep the Agents informed as to the status of the
Registration Statement and be responsive to inquiries by the Agents or their
counsel.
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(iii) Furnish to the Rightsholder and its legal counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(iv) Promptly deliver to the Rightsholder and its legal counsel,
without charge, as many copies of the Registration Statement, prospectus or
prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such persons may reasonably request; and the Company
hereby consents to the use of such prospectus and each amendment or supplement
thereto by the Rightsholder in connection with the offering and sale of the
Registerable Securities covered by such prospectus and any amendment or
supplement thereto.
(v) Prior to any public offering of the Registerable Securities,
use reasonable efforts to register or qualify or cooperate with the Rightsholder
and its legal counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registerable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions within the United States as the Rightsholder requests in writing,
to keep each such registration or qualification (or exemption therefrom)
effective during the period when the Registration Statement is effective and to
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registerable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(vi) Cooperate with the Rightsholder to facilitate the timely
preparation and delivery of certificates representing Registerable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free
of all restrictive legends, and to enable such Registerable Securities to be in
such denominations and registered in such names as the Rightsholder may request
at least two business days prior to any sale of Registerable Securities.
(vii) Use its best efforts to cause all Registerable Securities
relating to such Registration Statement to be listed on any securities exchange,
quotation system or market (including Nasdaq), if any, on which similar
securities issued by the Company are then listed.
(viii) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
Rightsholders earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(b) Obligations of Rightsholders. In connection with any registration
of
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Registerable Securities of a Rightsholder pursuant to Section 2 hereof:
(i) The Company may require that each Rightsholder whose
Registerable Securities are included in such Registration Statement timely
furnish to the Company such information regarding the distribution of such
Registerable Securities and such Rightsholder as the Company may from time to
time reasonably request;
(ii) Each Rightsholder, upon receipt of notice from the Company of
the occurrence of any event that makes any statement made in the Registration
Statement or prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, prospectus or other
documents so that, in the case of the Registration Statement or the prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, shall forthwith discontinue disposition of
Registerable Securities pursuant to the Registration Statement covering such
Registerable Securities until such Rightsholder is advised in writing by the
Company that the use of the applicable prospectus may be resumed or until the
Company delivers copies of supplemented or amended prospectuses.
5. Participation in Underwritten Registration. No Rightsholder may
participate in any underwritten registration hereunder unless such Rightsholder
(i) agrees to sell such Rightsholder's securities on the basis provided in any
underwriting arrangements and to comply with Regulation M under the Securities
Exchange Act of 1934, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "Exchange Act") and (ii) completes and
executes all customary questionnaires, appropriate and limited powers of
attorney, escrow agreements, indemnities, underwriting agreements, lock-up
agreements with respect to securities not being sold and such other customary
documents reasonably required under the terms of such underwriting arrangement.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, each Rightsholder and
their respective officers, directors, advisors and agents and employees and each
Person who controls (within the meaning of the Securities Act or the Exchange
Act) such Persons from and against any and all losses, claims, damages,
liabilities (or actions or proceedings in respect thereof, whether or not such
indemnified party is a party thereto) and expenses (including reasonable costs
of investigation and legal expenses), joint or several (each, a "Loss" and
collectively "Losses"), arising out of or based upon (i) any untrue or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registerable Securities were registered under the Securities
Act (including any final, preliminary or summary prospectus contained therein or
any amendment thereof or supplement thereto or any documents incorporated by
reference therein) or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in light of the
circumstances under which they were made) not misleading; provided, however,
that the Company shall not be liable to any
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indemnified party in any such case to the extent that any such Loss arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in any such Registration Statement in reliance upon and
in conformity with written information furnished to the Company by such
Rightsholder expressly for use in the preparation thereof. This indemnity shall
be in addition to any liability the Company may otherwise have. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Rightsholder or any indemnified party and shall survive the
transfer of such securities by such Rightsholder.
(b) Indemnification by the Rightsholder. Each selling Rightsholder
agrees (severally and not jointly) to indemnify and hold harmless, to the full
extent permitted by law, the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act and the
Exchange Act) from and against any Losses arising out of or based upon any
untrue statement of a material fact or any omission of a material fact required
to be stated in the Registration Statement under which such Registerable
Securities were registered under the Securities Act (including any final,
preliminary or summary prospectus contained therein or any amendment thereof or
supplement thereto or any documents incorporated by reference therein), or
necessary to make the statements therein (in the case of a prospectus or
preliminary prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that such untrue
statement or omission has been contained in any information furnished in writing
by such selling Rightsholder to the Company specifically for inclusion in such
Registration Statement. This indemnity shall be in addition to any liability
such Rightsholder may otherwise have. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any indemnified party. In no event shall the liability of any selling
Rightsholder hereunder be greater in amount than the dollar amount of the
proceeds received by such Rightsholder under the sale of the Registerable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party has agreed in writing
to pay such fees or expenses, (B) the indemnifying party shall have failed to
assume the defense of such claim within a reasonable time after having received
notice of such claim from the Person entitled to indemnification hereunder and
to employ counsel reasonably satisfactory to such Person, (C) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims or (D) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party (in which case, if the Person notifies the
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indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent, but such consent may
not be unreasonably withheld; provided, that an indemnifying party shall not be
required to consent to any settlement involving the imposition of any material
obligations on such indemnifying party other than financial obligations for
which such indemnified party will be indemnified hereunder. If the indemnifying
party assumes the defense, the indemnifying party shall have the right to settle
such action without the consent of the indemnified party; provided, that the
indemnifying party shall be required to obtain such consent (which consent shall
not be unreasonably withheld) if the settlement includes any admission of
wrongdoing on the part of the indemnified party or any restriction on the
indemnified party or its officers or directors. No indemnifying party shall
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 each indemnified party of an unconditional release from all liability in
respect to such claim or litigation. The indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm at any one time from all such indemnified party
or parties.
7. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8. Entire Agreement. This Agreement and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein, constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
9. Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the State of Texas, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of Texas for such persons and waives and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction and such process.
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11. Assignment. The right to have Registerable Securities registered
pursuant to Section 2(a) and to include Registerable Securities in a
Registration Statement pursuant to Section 2(b) may be assigned.
12. Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified or supplemented
without the written consent of each of the Company and the Agents (on behalf of
themselves and the investors). Any of the Agents (on behalf of themselves and
the investors) or the Company may, by written notice to the others, (i) waive
any of the conditions to its obligations hereunder or extend the time for the
performance of any of the obligations or actions of the other, (ii) waive any
inaccuracies in the representations of the other contained in this Agreement or
in any documents delivered pursuant to this Agreement, (iii) waive compliance
with any of the covenants of the other contained in this Agreement or (iv) waive
or modify performance of any of the obligations of the other. No action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action or compliance with any representation, warranty, condition or
agreement contained herein. Waiver of the breach of any one or more provisions
of this Agreement shall not be deemed or construed to be a waiver of other
breaches or subsequent breaches of the same provisions.
13. Notices. All notices, requests, demands or other communications
provided for herein shall be in writing and shall be deemed to have been given
when personally delivered or sent by (i) registered or certified mail, return
receipt requested, (ii) nationally recognized overnight courier service or (iii)
facsimile transmission electronically confirmed addressed if to the Company, to
Dwango North America, Inc., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer, with a copy to ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇; if to ▇▇▇▇▇▇▇, to HCFP/▇▇▇▇▇▇▇ Securities, LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; if to RG, to RG Securities LLC,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
if to an Investor, to the address set forth on Schedule A hereto, or to such
other person or address as either party shall designate to the other from time
to time in writing forwarded in like manner.
14. Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
15. Further Assurances. Each party hereto covenants and agrees with all
other parties hereto to promptly execute, deliver, file and/or record such
agreements, instruments, certificates and other documents and to do and perform
such other and further acts and things as any other party hereto may reasonably
request or as may otherwise be necessary or proper to consummate and perfect the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by themselves or their duly authorized respective officers, all as of the
date first written above.
DWANGO NORTH AMERICA, INC.
By:
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Name:
Title:
HCFP/▇▇▇▇▇▇▇ SECURITIES, LLC
By:
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Name:
Title:
RG SECURITIES LLC
By:
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Name:
Title:
Investor:
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Investor:
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Investor:
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Investor:
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Schedule A
Investors
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Name and Address
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