EXHIBIT 10.3
TECHNOLOGY HORIZONS CORP.
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REGISTRATION RIGHTS AGREEMENT
September 4, 1998
To: ▇▇▇▇▇ Music & Entertainment Corp.
Reference is made to the Assignment Agreement between you and
Technology Horizons Corp. (the "Company") dated September 4, 1998 (the
"Assignment Agreement"). Pursuant to the Assignment Agreement, you (the
"Holder"), will receive between 1,538,182 and 1,683,637 shares of Common Stock
of the Company ("Common Stock), as set forth in the Assignment Agreement, This
letter sets forth the agreement of the Company to register the shares of Common
Stock (collectively, the "Registrable Securities") under the Securities Act (as
defined below) and your agreement with respect to several matters as set forth
below if you register the Registrable Securities.
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"COMMISSION " means the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act (as defined
below).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"REGISTRATION EXPENSES" means, for purposes of Section 5 below, all
expenses incurred by the Company in complying with this Agreement, including,
without limitation, all registration and filing fees, exchange listing fees,
printing expenses, fees and disbursements of counsel for the Company, state
securities or Blue Sky fees and expenses for the State of New York, and the
expense of any special audits incident to or required by any such registration,
but excluding underwriting discounts, selling commissions and the fees and
expenses of the Holder's own counsel.
"REGISTRABLE SECURITIES" means: (i) subject to the provisions of this
Agreement, 20% of the Shares of Common Stock issued to the Holder pursuant to
the Assignment Agreement; and (ii) any other securities of the Company issued in
respect of the foregoing (because of stock splits. stock dividends,
reclassification, recapitalizations, or similar events).
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement covering only securities proposed
to be issued in exchange for securities or assets of another corporation).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may from time to time, be in effect.
2. SECURITIES NOT REGISTERED.
The Holder agrees that, unless the Registrable Securities are
registered, the Holder will not dispose of the Registrable Securities or any
interest therein, unless and until the Registrable Securities have been validly
registered under the Securities Act or the Company has determined that the
intended disposition does not violate the Securities Act or the rules and
regulations of the Commission thereunder (the Company may reasonably rely on an
opinion of its counsel in making such determination).
3. PIGGYBACK REGISTRATION
3.1 (a) Subsequent to nine (9) months after the date hereof, if, at any
time, the Company proposes or is required to register shares of Common Stock of
the Company held by a majority of the holders (on the date hereof) of Common
Stock of the Company, under the Securities Act on a registration statement on
Form S-1, Form S-2 or Form S-3 (or an equivalent general registration form then
in effect), the Company shall give prompt written notice of its intention to do
so to each of the Holders of record of Registrable Securities. Upon the written
request of any Holder, made within 15 days following the receipt of any such
written notice (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder and the intended method of
distribution thereof), the Company shall
use its best efforts to cause all such Registrable Securities, the Holders of
which have so requested the registration thereof, to be registered under the
Securities Act (with the securities which the Company at the time proposes to
register) to permit the sale or other disposition by the Holders (in accordance
with the intended method of distribution thereof) of the Registrable Securities
to be so registered. The Holder shall furnish the Company with appropriate
information (relating to the intentions of the Holder), in connection therewith
as the Company shall reasonably request in writing. The Company shall use its
best efforts to keep the registration statement current for a period of six
months or until all Registrable Securities registered thereunder have been sold,
which ever is sooner.
(b) If, at any time after giving written notice of its
intention to register any equity securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such equity securities, the Company may, at its election, give written notice
of such determination to all Holders of record of Registrable Securities and (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, and (ii) in the case of a determination to delay such
registration of its equity securities, shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay in
registering such other equity securities of the majority of Holders of Common
Stock of the Company.
3.2 The Holder's rights under Section 3.1 shall be subject of the
limitation that, in the event that the Company files a Registration Statement
for an underwritten public offering the registration of the Registrable
Securities shall be upon the condition that:
(a) if requested by the managing underwriter as a condition of
the offering, they be sold through the underwriters on the same terms and
conditions as are applicable to the Company or all other selling stockholders of
the Company; or
(b) if such condition is imposed by the managing underwriter,
and the Holder does not wish to sell the Registrable Securities upon such terms
and conditions, the Holder will agree not to transfer or otherwise dispose of
any Registrable Securities for a period of time from the effective date of the
Registration Statement (not to exceed one hundred eighty (180) days) specified
by the managing underwriter.
3.3. If a registration of the Company's shares involves an offering by or
through underwriters, the Company, except as otherwise provided herein, shall
not be required to include Registrable Securities therein if and to the extent
the underwriter managing the offering reasonably believes in good faith and
advises the Company in writing that such inclusion would materially and
adversely affect such offering; provided that any such reduction or elimination
shall be PRO RATA to all other selling stockholders participating in Such
offering, in proportion to the respective number of shares they have requested
to be registered.
3.4. In the event the Company receives private financing in an amount
exceeding $1,000,000 and as a condition of such financing officers, directors
and greater than 5% shareholders are required to agree not to sell, assign, or
otherwise transfer any shares (a "lock-up Agreement"), the Holder agrees to
enter into a lock-up agreement on the same terms as such other holders.
3.5. The registration rights granted hereunder shall expire on earlier
of one (1) year from the date the Company has a class of equity securities
registered under Section 12(b) or 12(g) of the Exchange Act or June, 20, 2000.
4. REGISTRATION PROCEDURES.
If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any of the
Registrable Securities under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Securities and use its best efforts to cause that Registration
Statement to become and remain effective;
(b) as expeditiously as possible, prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for a period of not less than nine months from
the effective date;
(c) as expeditiously as possible, furnish to the Holder such reasonable
numbers of copies of the prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as the Holder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by the Holder; and
(d) as expeditiously as possible, use its best efforts to register or
qualify the Registrable Securities covered by the Registration Statement under
the securities or Blue Sky laws of New York, and do any and all other acts and
things that may be necessary or desirable to enable the Holders to consummate
the public sale or other disposition in such states of the Registrable
Securities owned by the Holder; PROVIDE , however, that the Company shall not be
required in connection with this Section 4(d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Holder and, after having done so, the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the Holder
and, if requested, the Holder shall immediately cease making offers of
Registrable Securities and return all prospectuses to the Company. The Company
shall promptly provide the Holder with revised prospectuses and, following
receipt of the revised prospectuses, the Holder shall be free to resume making
offers of the Registrable Securities.
5. ALLOCATION OF EXPENSES.
The Company will pay all Registration Expenses of all Registration
Statements under this Agreement.
6. INDEMNIFICATION.
In the event of any registration of any of the Registrable Securities
under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Securities, each
underwriter of such Registrable Securities, and each other person, if any,
who controls such seller or underwriter within the meaning of the Securities
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which such seller, underwriter or controlling person may
become subject under the Securities Act, the Exchange Act, state securities
or Blue Sky laws or otherwise, in so far as much losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or
any amendment or supplement to such Registration Statement, or arise out of
or are based upon the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Securities
under the Securities Act pursuant to this Agreement, each seller of Registrable
Securities, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors, and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriters or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller, specifically for use in connection with the preparation
of such Registration Statement, prospectus, amendment or supplement: PROVIDED,
HOWEVER, that the obligations of such seller hereunder shall be limited to an
amount equal to the proceeds to each seller of Registrable Securities sold as
contemplated herein.
Each party entitled to Indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim 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 be
unreasonably withheld); and, PROVIDE , further, ~that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement. The Indemnified
Party may participate in such defense at such party's expense; PROVIDED,
HOWEVER, that the Indemnifying Party shall pay such expense if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would
be inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shallconsent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
7. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN, OFFERING.
In the event that Registrable Securities are sold pursuant to a
Registration Statement in an underwritten offering pursuant to Section 2 or 3,
the Company agrees to enter into an underwriting agreement containing customary
representations and warranties with respect to the business and operations of an
issuer of the securities being registered and customary covenants and agreements
to be performed by such issuer, including, without limitation, customary
provisions with respect to indemnification by the Company of the underwriters of
such offering.
8. INFORMATION BY THE HOLDER
The Holder shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder 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.
9. SELECTION OF UNDERWRITER.
In the case of any registration effected pursuant to this agreement,
the Company shall have the exclusive right to designate the managing underwriter
in any underwritten offering.
10. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon. and inure to
the benefit of, the respective successors, assigns, heirs, executors and
administrators of the parties hereto.
11. FURTHER ASSURANCES.
From and after the date hereof, all persons subject to or bound by this
Agreement shall from time to time, at the request of any such other person and
without further consideration, do, execute and deliver, or cause to be done,
executed and delivered, all such further acts, things and instruments as may
reasonably be requested or required more effectively to evidence and give effect
to the provisions, intent and purposes of this Agreement (including, without
limitation, certificates to the effect that this Agreement continues operative
and as to any defaults hereunder or modifications hereof).
12. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and shall be either (1) delivered by hand, (2) sent by reputable
overnight courier by next day, priority, or (3) sent by registered or certified
mail, return receipt requested, postage prepaid.
If to the Holder: ▇▇▇▇▇ Music & Entertainment Corp.
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Attn: President
If to the Company: Technology Horizons Corp.
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Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy in each
case to: ▇▇▇▇▇▇▇▇, Mencher, Klosowski, ▇▇▇▇▇▇▇
& Scope, P.C.
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All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (1) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above, (2)
if sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (3) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
made.
13. CERTAIN OTHER AGREEMENTS.
In the event Registrable Securities are included in a Registration
Statement, you agree:
(a) to offer the Registrable Securities only in the manner set
forth on the cover page of the Prospectus included in the Registration
Statement;
(b) not to effect any transaction for the purpose of stabilizing
the price of the Registrable Securities offered or any securities into which
the Registrable Securities are convertible;
(c) to supply to any broker to whom you offer registered
securities a copy of the Prospectus;
(d) to promptly report all sales made to the Company; and
(e) to comply with the provisions of Rule I Ob-6 under the Exchange
Act.
14. APPLICABLE LAW.
This Agreement shall be governed and construed under the laws of the
State of Delaware, without regard to any choice or conflicts of law principles
thereof.
15. PRIORITY.
The registration of the Registrable Securities pursuant to this
Agreement will occur prior to or pari passu with, and not subsequent to, the
registration of any shares of Common Stock presently held by any holder of 5% or
more of the stock of the Company.
Please acknowledge your consent to the terms of this Agreement by
signing and returning a copy of this Agreement to the Company.
TECHNOLOGY HORIZONS CORP.
By: _______________________________
Accepted and agreed this 4th
day of September, 1998
By: _______________________________
Holder/Purchaser
President, ▇▇▇▇▇ Music and Entertainment Corp.