EXHIBIT 4.2
Piggyback Rights
WARRANT HOLDER RIGHTS AGREEMENT
This Warrant Holder Rights Agreement ("Agreement") is made as of the
31st day of December, 1996 by and among Cinema Ride, Inc. and Finova Technology
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Finance, Inc. ("Investor").
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The parties hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the
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following terms shall have the following meanings:
"Commission" shall mean the Securities and Exchange Commission or any
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other federal agency at the time administering the Securities Act.
"Company's Common Stock" or "Common Stock" shall mean the Common
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Stock, par value $.Ol per share, of the Company.
A "Controlling Person" of a particular entity shall mean a person that
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controls such entity within the meaning of Section 15 of the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended.
"Holder" shall mean Investor and any other person holding Registrable
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Securities to whom the rights under the Agreement have been transferred in
accordance with Section 10.
"Investor" shall mean Finova Technology Finance, Inc.
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"Public Offering" means an underwritten public offering of the Company
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pursuant to an effective registration statement under the Securities Act.
"Registrable Securities" shall mean (i) the Shares; and (ii) any
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Common Stock of the Company issued or issuable in respect of the Shares upon any
stock split, stock dividend, recapitalization, or similar event, or any Common
Stock otherwise issued or issuable with respect to the Shares.
The terms "register," "registered" and "registration" shall refer to a
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registration effected by preparing and filing a registration statement in
compliance
with the Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
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stated below, incurred by the Company including, without limitation all
registration, qualification and filing fees, printing expenses, escrow fees,
messenger and delivery expenses, fees and disbursements of counsel, accountants,
investment bankers and other person retained by the Company, blue sky fees and
expenses, and the 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).
"Restricted Securities" shall mean the Warrants, the Shares and any
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other securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event.
"Securities Act" means the Securities Act of 1933, as amended.
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"Selling Expenses" shall mean all underwriting discounts, selling
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commissions and stock transfer taxes applicable to the securities registered by
the Holders.
"Shares" shall mean the shares of the Company's Common Stock issuable
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to a Holder pursuant to the exercise by such Holder of the Warrants.
"Warrants" shall mean the warrants issued to Investor to purchase
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100,000 Shares (subject to adjustment).
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Any other capitalized term used herein which is not otherwise defined
above shall have the meaning set forth in the Loan Agreement.
2. Restrictions upon Transfer.
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Each certificate representing Restricted Securities shall be stamped
or otherwise imprinted with a legend in the form provided in Exhibit A attached
hereto (in addition to any legend required under applicable state securities
laws). Investor hereby consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Company's Common Stock in
order to implement the restrictions on transfer established in this Agreement.
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3. Company Registration.
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3.1 Notice of Registration. If at any time or from
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time to time the Company shall determine to register any of its Common Stock
exclusively for cash, either for its own account or the account of security
holders, other than (i) a registration on Form S-8 or otherwise relating solely
to employee benefit plans, (ii) a registration on Form S-4, or (iii) a
registration on any other form which does not permit secondary sales, the
Company will:
(a) promptly give to each Holder written notice thereof;
and
(b) except as set forth in Section 3.2 below, include in
such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all Registrable
Securities as are specified in a written request or requests, actually received
by the Company within 15 days after receipt of such written notice from the
Company, by any Holder.
3.2 Underwriting. If the registration of which the Company
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gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3.1 (a). In such event the right of any Holder to
registration pursuant to Section 3.1 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. The foregoing shall include, without limitation, such powers of
attorney and escrow agreements as the underwriters may require. Notwithstanding
any other provision of Section 3.1, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration. If any Holder disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter.
3.3 Company Termination of Registration. The Company reserves
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the right to terminate any such registration at anytime and for any reason
without liability to any Holder.
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3.4 Expenses. All Selling Expenses relating to securities
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registered on behalf of the Holders in connection with a registration pursuant
to this Section 4 shall be borne by the Holders of such securities pro rata on
the basis of the number of shares so registered and all Registration Expenses
shall be borne by the Company.
4. Delay of Registration. No Holder shall have any right to
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obtain or seek an injunction, restraining or otherwise delaying any registration
as the result of any controversy that might arise under this Agreement.
5. Registration Procedures. In the case of each registration,
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qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. The Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become effective;
(b) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such Holders and underwriters may reasonably request
in order to facilitate the public offering of such securities.
6. Indemnification.
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6.1 Indemnification by Company. To the extent permitted by law,
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the Company will indemnify each Holder, each of its officers, directors,
shareholders, employees, representatives and partners, and each Controlling
Person of such Holder, with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, and each underwriter,
if any, and each Controlling Person of any underwriter, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereon, including
any of the foregoing incurred in any investigation or inquiry or in any
settlement of any litigation commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other document,
or any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
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make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of the Securities Act, the
Exchange Act, or any state securities law, or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers, directors, shareholders, employees, representatives and
partners, and each such Controlling Person, each such underwriter and each such
Controlling Person of any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 6.1 shall not (i) apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld); (ii) apply to any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter, or
controlling person; or (iii) inure to the benefit of any underwriter from whom
the person asserting any such loss, claim, damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of any
person controlling such underwriter) with respect to a preliminary prospectus or
final prospectus if such underwriter (if required by the Act) failed to send or
give a copy of the most recent prospectus, if the most recent prospectus
furnished by the Company shall correct the untrue statement or alleged untrue
statement or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such person
at or prior to the written confirmation of the sale of such Registrable
Securities to such person. This indemnity will be in addition to any liability
which the Company may otherwise have.
6.2 Indemnification by Holders. To the extent permitted by law,
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each Holder will, if Registrable Securities held by such Holder are included in
the securities as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors, officers,
shareholders, employees, representatives, attorneys and partners, each
underwriter, if any, of the Company's
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securities covered by such a registration statement, each Controlling Person of
the Company or such underwriter, and each other Holder, each of such other
Holder's officers, directors, shareholders, employees, representatives and
partners and each Controlling Person of such other Holder, against all claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in any investigation or inquiry or in any settlement
of any litigation, commenced or threatened, arising out of 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 statements therein not
misleading, or any violation by the Company of the Securities Act, the Exchange
Act or any state securities law, or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law applicable to the
Company in connection with any such registration, qualification or compliance,
and each Holder will reimburse the Company, such other Holders, such directors,
officers, shareholders, employees, representatives, attorneys, partners, such
underwriters and such Controlling Persons for any legal or any other expenses
actually incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement), omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document or such violation (or alleged violation) is
committed, in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use in any such registration statement, prospectus, offering
circular or other document; provided, however, that the indemnity agreement
contained in this Section 6.2 shall not (i) apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of such Holder (which consent shall not be
unreasonably withheld); or (ii) inure to the benefit of any underwriter from
whom the person asserting any such loss, claim damage or liability purchased the
Registrable Securities which are the subject thereof (or to the benefit of any
person controlling such underwriter) with respect to a preliminary prospectus or
final prospectus if such underwriter (if required by the Act) failed to send or
give a copy of the most recent prospectus, if the most recent prospectus
furnished by the Company shall correct the untrue statement or alleged untrue
statement or omission or alleged omission which is the basis of the loss, claim,
damage, liability, or action for which indemnification is sought, to such person
at or prior to the written confirmation of the sale of such
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Registrable Securities to such person. This indemnity will be in addition to
any liability which each Holder may otherwise have.
6.3 Defense of Claims. Each party entitled to indemnification
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under Sections 6.1 or 6.2 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under the Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. Notwithstanding the foregoing, however, (i) if the
Indemnified Party reasonably determines that there may be a conflict between the
positions of the Indemnifying Party and of the Indemnified Party in connection
with the defense of such action, suit, investigation, inquiry or other
proceeding or that there may be legal defenses available to such Indemnified
Party different from or in addition to those available to the Indemnifying
Party, then counsel for the Indemnified Party shall be entitled to conduct a
defense to the extent reasonably determined by such counsel to be necessary to
protect the interest of the Indemnified Party, and (ii) in any event, the
Indemnified Party shall be entitled to have counsel chosen by such Indemnified
Party participate in, but not to conduct, the defense. No 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 that does not include as a unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
6.4 Contribution. If the indemnification provided in
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either Section 6.1 or Section 6.2 is held by a court of competent jurisdiction
to be unavailable to an Indemnified Party with respect to any loss, liability,
claim, damage or expense referred to therein, then the Indemnifying Party
thereunder shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand, and of the Indemnified Party, on the
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other hand, in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, provided, however, that no person guilty of
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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. Each party entitled to
contribution agrees that upon service of a summons or other initial legal
process upon such party in connection with any action instituted against such
party in respect of which contribution may be sought, such party will promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission to notify such party or parties of
any such service shall not relieve the party from whom contribution may be
sought from any obligation such party or parties may have hereunder, or
otherwise (except as specifically provided in Section 6.3 above).
7. Information from Holders. The Holder or Holders of
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Registrable Securities included in any registration shall, as a condition
precedent to the Company's obligation to register the securities of such Holder
or Holders, fumish to the Company such information regarding such Holder or
Holders, the Registrable Securities held by them and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement. At the request of the Company, each Holder who
is including any Registrable Securities in the registration shall deposit in
escrow with an escrow agent chosen by the Company those Registrable Securities
which such Holder proposes to sell, accompanied by an irrevocable power of
attorney authorizing the escrow agent to, without limitation, sell such
Registrable Securities to the underwriter upon the effectiveness of the
registration statement.
8. Standoff Agreement. Each Holder agrees, in connection with
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any public offering of the Company's Common Stock, upon request of the Company
or the underwriters managing such public offering of the Company's Common Stock,
not to sell, make any short sale of, loan, grant any option or right to
purchase, or otherwise dispose of in any public sale
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or distribution, any Registrable Securities or any securities convertible into
or exchangeable or exercisable for Common Stock (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time before and after (not
to exceed 60 days before and 180 days after) the effective date of such
registration as may be requested by the underwriters; provided, that the
officers and directors of the Company who own Common Stock of the Company also
agree to such restrictions on the shares held by them.
9. Transfer of Rights. The registration rights hereunder may
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be assigned only to a party who acquires at least 20% of the Registrable
Securities; provided, however that no party may be assigned any of the foregoing
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rights unless the Company is given written notice by the assigning party at the
time of such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in question are
being assigned; and provided further that any such assignee shall receive such
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assigned rights subject to all the terms and conditions of this Agreement.
10. Termination of Registration Rights. The right of any
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Holder to request registration or inclusion in any registration pursuant to
Sections 3 or 4 hereof shall terminate at such time as such Holder may sell all
Registrable Securities owned by him under Rule 144 during any 90 day period.
11. Miscellaneous.
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11.1 Amendments and Waivers. The provisions of this Agreement,
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including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least 66-2/3% of the Registrable Securities.
11.2 Notices. All notices and other communications provided for
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or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or air courier guaranteeing overnight delivery:
(a) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in accordance with the provisions of
this Section 11.2, which address initially is as follows:
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FINOVA TECHNOLOGY FINANCE, INC.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
TELECOPY NO.: (▇▇▇) ▇▇▇-▇▇▇▇
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11.2.
(b) if to the Company, initially at:
CINEMA RIDE, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
TELECOPY NO.: (▇▇▇) ▇▇▇-▇▇▇▇
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 11.2.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, first class postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day if timely
delivered to an air courier guaranteeing overnight delivery.
11.3 Successors and Assigns. Subject to the provisions of
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Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties, including without
limitation and without the need for an express assignment, subsequent Holders of
Registrable Securities.
11.4 Counterparts. This Agreement may be executed in any number
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of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.5 Headings. The headings of this Agreement are for
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convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
11.6 Governing Law and Venue. This Agreement is to be governed
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by and construed in accordance with the laws of the State of California. Any
suit brought hereon shall be brought in the state or federal courts sitting in
Los Angeles, California, the parties hereto hereby waiving any claim or defense
that such forum is not convenient or
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proper. Each party hereby agrees that any such court shall have in personam
jurisdiction over it and consents to service of process in any manner authorized
by California law.
11.7 Attorneys' Fees. If either the Company or any Holder shall
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bring an action against the other by reason of the breach of any covenant,
provision or condition hereof, or otherwise arising out of this Agreement, the
unsuccessful party shall pay to the prevailing party its reasonable attorneys'
fees and costs in addition to any other relief to which it may be entitled.
11.8 Severability. In the event that any one or more of the
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provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
11.9 Entire Agreement. This Agreement is intended by the parties
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as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understanding between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
"COMPANY"
CINEMA RIDE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: President
"INVESTOR"
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Senior Vice President
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EXHIBIT A
"The securities evidenced or constituted hereby have been acquired for
investment purposes and have not been registered under the Securities Act
of 1933, as amended. Such securities may not be sold, transferred, pledged
or hypothecated unless (i) effected in compliance with that certain Warrant
Holder Rights Agreement, dated as of December 31, 1996, among the Company
and the other signatories thereto, and (ii) the registration provisions of
said Act and any applicable state securities or "blue sky" laws have been
complied with or the Company has received an opinion of counsel reasonably
satisfactory to the Company that such registration is not required."
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