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Exhibit 4.4
ANNEX IV
TO
SECURITIES PURCHASE
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July 2 ,
1998 (this "Agreement"), is made by and between AMERICAN CHAMPION
ENTERTAINMENT, INC., a Delaware corporation (the "Company"), and each
entity named on a signature page hereto (each, an "Initial Investor")
(each agreement with an Initial Investor being deemed a separate and
independent agreement between the Company and such Initial Investor,
except that each Initial Investor acknowledges and consents to the rights
granted to each other Initial Investor under such agreement).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of July 2 , 1998, between the
Initial Investor and the Company (the "Securities Purchase Agreement";
terms not otherwise defined herein shall have the meanings ascribed to
them in the Securities Purchase Agreement), the Company has agreed to
issue and sell to the Initial Investor one or more 7% Convertible
Debentures of the Company, in an aggregate principal amount not exceeding
$1,800,000 (the "Debentures"), together with the Warrants issued to the
Initial Investors; and
WHEREAS, the Debentures are convertible into shares of Common
Stock (the "Conversion Shares") upon the terms and subject to the
conditions contained in the Debentures and the Warrants may be exercised
for the purchase of shares of Common Stock (the "Warrant Shares") upon
the terms and conditions of the Warrants; and
WHEREAS, to induce the Initial Investor to execute and deliver
the Securities Purchase Agreement, 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"), with respect to the Conversion
Shares and the Warrant Shares;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Initial Investor hereby agree as
follows:
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1. Definitions.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of
this Agreement in accordance with Section 9 hereof.
(ii) "Potential Material Event" means any of the following:
(a) the possession by the Company of material information not ripe for
disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company that
disclosure of such information in the registration statement would be
detrimental to the business and affairs of the Company; or (b) any
material engagement or activity by the Company which would, in the good
faith determination of the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the registration statement would be
materially misleading absent the inclusion of such information.
(iii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United
States Securities and Exchange Commission (the "SEC").
(iv) "Registrable Securities" means the Conversion Shares and
the Warrant Shares.
(v) "Registration Statement" means a registration statement
of the Company under the Securities Act covering the Registrable
Securities.
(b) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and
file with the SEC, no later than August 1, 1998 either a Registration
Statement on Form S-3 or an amendment to an existing Registration
Statement, in either event registering for resale by the Investor a
sufficient number of shares of Common Stock for the Initial Investors to
sell the Registrable Securities (or such lesser number as may be required
by the SEC, but in no event less than two hundred percent (200%) of the
aggregate number of shares (i) into which the Initial Debentures and the
Additional Debentures would be convertible at the time of filing of such
Registration Statement (assuming for such purposes that the maximum
Additional Debentures had been issued at such date and that all Debentures
had been eligible to be converted, and had been converted, into Conversion
Shares in accordance with their terms, whether or not such issuance,
eligibility or conversion had in fact occurred as of such date) and (ii)
which would be issued upon exercise of all of the Warrants at the time of
filing of the amendment to Form S-3 (assuming for such purposes that the
Warrants issued in connection with the purchase and sale of the maximum
amount of Debentures had been issued and that all Warrants had been
eligible to be exercised for the maximum number of shares contemplated
thereby and had been exercised in accordance with their terms, whether or
not such issuance, eligibility or exercise had in fact occurred as of such
date). The Registration Statement (i) shall include only the Registrable
Securities and (ii) shall also state that, in accordance with Rules 416
and 457 under the Securities Act, it also covers such indeterminate number
of additional shares of Common Stock as may become issuable upon
conversion of the Debentures and the exercise of the Warrants resulting
from adjustment in the Conversion Price or the Warrant exercise price, as
the case may be, or to prevent dilution resulting from stock splits, or
stock dividends. The Company will use its reasonable best efforts to
cause such Registration Statement to be declared effective no later than
the earlier of (x) five (5) days after notice by the SEC that it may be
declared effective or (y) one hundred twenty (120) days after the Initial
Closing Date. If at any time the number of shares of Common Stock into
which the Debentures may be converted and which would be issued upon
exercise of the Warrants exceeds the aggregate number of shares of Common
Stock then registered, the Company shall either (i) amend the Registration
Statement filed by the Company pursuant to the preceding provisions of
this Section 2, if such Registration Statement has not been declared
effective by the SEC at that time, to register all shares of Common Stock
into which the Debentures may currently or in the future be converted and
which would be issued currently or in the future upon exercise of the
Warrants, or (ii) if such Registration Statement has been declared
effective by the SEC at that time, file with the SEC an additional
Registration Statement on Form S-3 to register the shares of Common Stock
into which the Debentures may currently or in the future be converted and
which would be issued currently or in the future upon exercise of the
Warrants that exceed the aggregate number of shares of Common Stock
already registered.
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(b) Payments by the Company.
(i) If the Registration Statement covering the
Registrable Securities is not filed in proper form with the SEC no later
than August 1, 1998 (the "Required Filing Date"), the Company will make
payment to the Initial Investor in such amounts and at such times as shall
be determined pursuant to this Section 2(b).
(ii) If the Registration Statement covering the
Registrable Securities is not effective (a) within the earlier of (1) five
(5) days after notice by the SEC that it may be declared effective or (2)
one hundred twenty (120) days following the Initial Closing Date (the
"Required Effective Date"), or (b) after a Suspension Period (as defined
below), then the Company will make payments to the Initial Investor in
such amounts and at such times as shall be determined pursuant to this
Section 2(b).
(iii) The amount (the "Periodic Amount") to be paid by
the Company to the Initial Investor shall be determined as of each
Computation Date (as defined below) and such amount shall be equal to (A)
two and one-half percent (2.5%) of the purchase price paid by the Initial
Investor (the "Purchase Price") for all Debentures purchased pursuant to
the Securities Purchase Agreement for the period from the date following
the Required Filing Date or the Required Effective Date, as the case may
be, to the first relevant Computation Date, and (B) two and one-half
percent (2.5%) to each Computation Date thereafter. By way of
illustration and not in limitation of the foregoing, if the Registration
Statement is timely filed but is not declared effective until one hundred
ninety-five (195) days after the Closing Date, the Periodic Amount will
aggregate seven and one-half percent (7.5%) of the Purchase Price of the
Debentures (2.5% for days 121-150, plus 2.5% for days 151-180 and 2.5% for
days 181-195).
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(iv) Each Periodic Amount will be payable by the
Company in cash or other immediately available funds to the Investor on
the day after the Required Filing Date or the Required Effective Date, as
the case may be, and each thirtieth day thereafter, without requiring
demand therefor by the Investor.
(v) The parties acknowledge that the damages which may
be incurred by the Investor if the Registration Statement is not filed by
the Required Filing Date or if the Registration Statement has not been
declared effective by the Required Effective Date may be difficult to
ascertain. The parties agree that the Periodic Amount represent a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of such damages.
(vi) Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this provision shall not be payable to the
extent any delay in the effectiveness of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by the Initial
Investor or its counsel, or in the event all of the Registrable Securities
may be sold pursuant to Rule 144 or another available exemption under the
Act.
(vii) "Computation Date" means (i) the date which is the
earlier of (A) thirty (30) days after the Required Filing Date and the
Required Effective Date, as the case may be, or (B) the date after the
Required Filing Date or the Required Effective Date on which the
Registration Statement is filed (with respect to payments due as
contemplated by Section 2(b)(i) hereof) or declared effective (with
respect to payments due as contemplated by Section 2(b)(ii) hereof), as
the case may be, and (ii) each date which is the earlier of (A) thirty
(30) days after the previous Computation Date or (B) the date after the
previous Computation Date on which the Registration Statement is filed
(with respect to payments due as contemplated by Section 2(b)(i) hereof)
or declared effective (with respect to payments due as contemplated by
Section 2(b)(ii) hereof), as the case may be.
3. Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall do each of
the following:
(a) Prepare promptly, and file with the SEC by the Required
Filing Date, a Registration Statement with respect to not less than the
number of Registrable Securities provided in Section 2(a) above, and
thereafter use its reasonable best efforts to cause such Registration
Statement relating to Registrable Securities to become effective by the
Required Effective Date and keep the Registration Statement effective at
all times until the earliest (the "Registration Period") of (i) the date
that is two (2) years after the Initial Closing Date, (ii) the date when
the Investors may sell all Registrable Securities under Rule 144 or (iii)
the date the Investors no longer own any of the Registrable Securities,
which Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading;
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(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement
and the prospectus used in connection with the Registration Statement as
may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during the Registration Period,
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) The Company shall permit a single firm of counsel
designated by the Initial Investors to review the Registration Statement
and all amendments and supplements thereto a reasonable period of time
(but not less than three (3) business days) prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.
(d) Furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel identified to
the Company, (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one (1) copy
of the Registration Statement, each preliminary prospectus and prospectus,
and each amendment or supplement thereto, and (ii) such number of copies
of a prospectus, and all amendments and supplements thereto and such other
documents, as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(e) As promptly as practicable after becoming aware thereof,
notify each Investor of the happening of any event of which the Company
has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission, and deliver a number of copies of such supplement
or amendment to each Investor as such Investor may reasonably request;
(f) As promptly as practicable after becoming aware thereof,
notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of a Notice of Effectiveness or any notice of
effectiveness or any stop order or other suspension of the effectiveness
of the Registration Statement at the earliest possible time;
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(g) Notwithstanding the foregoing, if at any time or from
time to time after the date of effectiveness of the Registration
Statement, the Company notifies the Investors in writing of the existence
of a Potential Material Event, the Investors shall not offer or sell any
Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of
notice with respect to a Potential Material Event until such Investor
receives written notice from the Company that such Potential Material
Event either has been disclosed to the public or no longer constitutes a
Potential Material Event; provided, however, that the Company may not so
suspend the right to such holders of Registrable Securities for more than
two twenty (20) day periods in the aggregate during any 12-month period
("Suspension Period") with at least a ten (10) business day interval
between such periods, during the periods the Registration Statement is
required to be in effect;
(h) Use its reasonable efforts to secure and maintain
designation of all the Registrable Securities covered by the Registration
Statement on the "Small Capitalization Market" of the National Association
of Securities Dealers Automated Quotations System ("NASDAQ") within the
meaning of Rule 11Aa2-1 of the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the quotation of the
Registrable Securities on The NASDAQ SmallCap Market; or if, despite the
Company's reasonable efforts to satisfy the preceding clause, the Company
is unsuccessful in doing so, to secure NASDAQ/OTC Bulletin Board
authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two
market makers to register with the National Association of Securities
Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities;
(i) Provide a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective
date of the Registration Statement;
(j) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery
of certificates for the Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts as the case
may be, as the Investors may reasonably request, and, within three (3)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel selected by the Company to deliver, to the
transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel; and
(k) Take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.
4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
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(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with
respect to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of
disposition of the Registrable Securities held by it, as shall be
reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least ten (10)
days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the
Company requires from each such Investor (the "Requested Information") if
such Investor elects to have any of such Investor's Registrable Securities
included in the Registration Statement. If at least five (5) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of
the Registration Statement hereunder, unless such Investor has notified
the Company in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 3(e) or 3(f), above, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Investor's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(e) or 3(f) and, if so directed by the Company,
such Investor shall deliver to the Company (at the expense of the Company)
or destroy (and deliver to the Company a certificate of destruction) all
copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
(d) Each Investor agrees to comply with the provisions of
Section 3(g) above.
5. Expenses of Registration. All reasonable expenses
(other than underwriting discounts and commissions of the Investor)
incurred in connection with registrations, filings or qualifications
pursuant to Section 3, but including, without limitation, all
registration, listing, and qualifications fees, printers and accounting
fees, the fees and disbursements of counsel for the Company and a fee for
a single counsel for the Investor not exceeding $3,500, shall be borne by
the Company.
6. Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such Registrable
Securities, the directors, if any, of such Investor, the officers, if any,
of such Investor, each person, if any, who controls any Investor within
the meaning of the Securities Act or the Exchange Act (each, an
"Indemnified Person" or "Indemnified Party"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-
effective amendment thereof, or any prospectus included therein: (i) any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any post-effective amendment thereof or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein
any material fact necessary to make the statements made therein, in light
of the circumstances under which the statements therein were made, not
misleading or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any state securities law or any rule
or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to clause (b) of this Section
6, the Company shall reimburse the Investors, promptly as such expenses
are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary
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contained herein, the indemnification agreement contained in this Section
6(a) shall not (I) apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Indemnified
Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) be available to the extent such
Claim is based on a failure of the Investor to deliver or cause to be
delivered the prospectus or the amendment or supplement thereto made
available by the Company; (III) be available to the extent such Claim is
based on the delivery of a prospectus by the Investor after receiving
notice from the Company under Section 3(e), (f) or (g) hereof (other than
a notice regarding the effectiveness of the Registration Statement or any
amendment or supplement thereto), or (IV) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Each Investor will indemnify the Company and its officers,
directors and agents (each, an "Indemnified Person" or "Indemnified
Party") against any claims arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in
writing to the Company, by or on behalf of such Investor, expressly for
use in connection with the preparation of the Registration Statement or
any amendment or supplement thereto, subject to such limitations and
conditions as are applicable to the Indemnification provided by the
Company to this Section 6. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of
any action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense
thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be. In
case any such action is brought against any Indemnified Person or
Indemnified Party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate in, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the
indemnifying party to such Indemnified Person or Indemnified Party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such Indemnified Person or Indemnified Party under this
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Section 6 for any legal or other reasonable out-of-pocket expenses
subsequently incurred by such Indemnified Person or Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action
of its final conclusion. The Indemnified Person or Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and reasonable out-of-
pocket expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the Indemnified Person
or Indemnified Party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to
the Indemnified Person or Indemnified Party under this Section 6, except
to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability
is incurred and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent
permitted by law; provided, however, that (a) no contribution shall be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in Section 6; (b) no
seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation; and (c) except where the
seller has committed fraud (other than a fraud by reason of the
information included or omitted from the Registration Statement as to
which the Company has not given notice as contemplated under Section 3
hereof) or intentional misconduct, contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable
Securities.
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8. Reports under Exchange Act. With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the
public without registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by
the Company that it has complied with the reporting requirements of Rule
144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company and (iii) such other information as
may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to
have the Company register Registrable Securities pursuant to this
Agreement shall be automatically assigned by the Investors to any
transferee of the Registrable Securities (or all or any portion of any
Debenture of the Company which is convertible into such securities) only
if: (a) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company
is, within a reasonable time after such transfer or assignment, furnished
with written notice of (i) the name and address of such transferee or
assignee and (ii) the securities with respect to which such registration
rights are being transferred or assigned, (c) immediately following such
transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and
applicable state securities laws, (d) at or before the time the Company
received the written notice contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to be bound
by all of the provisions contained herein, and (e) the transferee, at the
time of the transfer, held not less than either (i) $100,000 in principal
amount of the Debentures or such number of Registrable Securities issued
on conversion of such amount of Debentures or any combination thereof or
(ii) Warrants to purchase 2,750 Warrant Shares or such number of Warrant
Shares or any combination thereof. . In the event of any delay in filing
or effectiveness of the Registration Statement as a result of such
assignment, the Company shall not be liable for any damages or the
payments set forth in Section 2(b)(ii) hereof arising from such delay.
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
who hold an eighty (80%) percent interest of the Registrable Securities.
Any amendment or waiver effected in accordance with this Section 10 shall
be binding upon each Investor and the Company.
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11. Miscellaneous.
(a) A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to
the same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of
such Registrable Securities and shall be indemnified and held harmless by
such registered owner for doing so.
(b) Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered (by hand, by courier, by telephone line facsimile
transmission, receipt confirmed, or other means) or sent by certified
mail, return receipt requested, properly addressed and with proper postage
pre-paid (i) if to the Company, AMERICAN CHAMPION ENTERTAINMENT, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, President, Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇; with a copy to ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇▇ ▇. Low, Esq., Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇; (ii)
if to the Initial Investor, at the address set forth under its name in the
Securities Purchase Agreement, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇ & Prager, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇; and (iii) if to any other Investor, at
such address as such Investor shall have provided in writing to the
Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 11(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by registered or
certified mail, four (4) calendar days after deposit with the United
States Postal Service.
(c) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware for contracts to be
wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Each of the parties consents to
the jurisdiction of the federal courts whose districts encompass any part
of the City of New York or the state courts of the State of New York
sitting in the City of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by
law, any objection, including any objection based on forum non coveniens,
to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Buyer for
any reasonable legal fees and disbursements incurred by the Buyer in
enforcement of or protection of any of its rights under this Agreement.
(e) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in any other
jurisdiction.
12
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto.
(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may
require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
thereof.
(i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
telephone line facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
(j) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3(a) hereof, or any delay in such
performance could result in loss to the Investors, and the Company agrees
that, in addition to any other liability the Company may have by reason of
such failure or delay, the Company shall be liable for all direct damages
caused by any such failure or delay, unless the same is the result of
force majeure. Neither party shall be liable for consequential damages.
(k) This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof. There are
no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as
of the day and year first above written.
COMPANY:
AMERICAN CHAMPION ENTERTAINMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
INITIAL INVESTOR:
The Endeavor Capital Fund S.A
[Print Name]
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
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A second "Registration Rights Agreement" was executed:
Initial Investor: AMRO International S.A.