REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into as of
the 20th day of September, 1999 by and among SKYMALL, INC., a Nevada corporation
with its principal office located at 0000 Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000 and its subsidiaries (collectively as the "Company") and XXXXX XXXXXXXX,
XXXXXX XXXXXX, FLAMINGO PARTNERSHIP, KLC NACT Unitrust, XXXX XXXXXX and XXXXX X.
XXXXX (referred to herein collectively as the "Shareholders").
WHEREAS:
A. In connection with the Stock Acquisition Agreement by and among the
parties hereto of even date herewith (the "Acquisition Agreement"), the Company
has agreed, upon the terms and subject to the conditions of the Acquisition
Agreement, to issue to the Shareholders an aggregate of 280,555 shares of the
Company's Common Stock, par value $.001 per share (the "Common Shares") as
consideration for the purchase of the assets of Disc Publishing, Inc., a Utah
corporation ("DPI") from the Shareholders.
B. Pursuant to the terms of the Acquisition 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 "1933 Act"), and applicable state securities laws.
C. The Company and the Shareholders desire to enter into this Registration
Rights Agreement to facilitate the issuance of the Common 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 each of the
Shareholders hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
(a) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous or delayed basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement(s) by the United States
Securities and Exchange Commission (the "SEC").
(b) The term "Registrable Securities" means (i) the Common Shares and
(ii) any capital stock of the Company issued as (or issuable upon the conversion
or exercise of any warrant, right or other security which is issued as) a result
of any stock split, stock dividend or other distribution, recapitalization,
exchange or similar event or with respect to, in exchange for or in replacement
of, the Common Shares, excluding in all cases, however, any Registrable
Securities that are at the time of registration, transferable by the holder
thereof in a single brokerage transaction under the provisions and within the
volume limitations of Rule 144 promulgated under the Act or any successor to
such Rule.
(c) The term "Form S-3" means such form under the 1933 Act as in
effect on the date hereof or any registration form under the 1933 Act
subsequently adopted by the Securities and Exchange Commission (the "SEC") that
similarly permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(d) "Registration Statement" means a Form S-3 Registration Statement
or Registration Statements of the Company filed under the 1933 Act covering the
Registrable Securities.
2. REGISTRATION. The Company shall prepare, and, as soon as practicable
after the Closing Date (as defined in the Acquisition Agreement) file with the
SEC a Registration Statement or Registration Statements (as necessary) on Form
S-3 covering the resale of all of the Registrable Securities. The Company shall
use its best efforts to cause such Registration Statement to be declared
effective as soon as practicable following the filing of the Registration
Statement. To the extent the Registration Statement is not declared effective
within twelve (12) months from the Closing Date, the Company will assist the
Shareholders in selling the Common Shares pursuant to Rule 144.
3. COMPANY OBLIGATIONS. The Company will use its best efforts to effect
the registration of the Registrable Securities in accordance with the intended
method of disposition thereof and, pursuant thereto, the Company shall have the
following obligations:
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(a) The Company shall keep each Registration Statement effective
pursuant to Rule 415 at all times until the earlier of (i) the date as of which
the Shareholders may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto) or (ii) the date on which the
Shareholders shall have sold all the Registrable Securities covered by such
Registration Statement (the "Registration Period"), 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. The term "best efforts" as used in this Agreement shall mean, among
other things, that the Company shall submit to the SEC, within five (5) business
days after the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff has no further
comments on the Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 72 hours after the submission of such request.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the Shareholders as
set forth in such Registration Statement. In the case of amendments and
supplements to a Registration Statement which are required to be filed pursuant
to this Agreement by reason of the Company filing a report on Form 10-K, Form
10-Q or Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the "1934 Act"), the Company shall have incorporated such
report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the Company to amend
or supplement the Registration Statement.
(c) Furnish to each Shareholder copies of a prospectus, in conformity
with the requirements of the 1933 Act, and such other documents as the
Shareholders may reasonably request in order to facilitate the disposition of
all securities covered by such Registration Statement.
(d) Use reasonable efforts to register and qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by a Shareholder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to (i) make any change in the Company's Articles of
Incorporation or Bylaws, (ii) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify, (iii) subject itself to general
taxation in any such jurisdiction, or (iv) file a general consent to service of
process in any such jurisdiction.
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(e) Notify the Shareholders, during the time when a prospectus
relating thereto covered by such Registration Statement is required to be
delivered under the 1933 Act, of the happening of any event as a result of which
the prospectus included in such 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
not misleading in the light of the circumstances then existing.
(f) Use its best efforts to list the Registrable Securities with any
securities exchange or other securities trading medium on which the Common Stock
of the Company is then listed.
5. OBLIGATIONS OF SHAREHOLDERS. 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 Shareholder
that:
(a) Each Shareholder by such Shareholder'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 any
Registration Statement hereunder, unless such Shareholder has notified the
Company in writing of such Shareholder's election to exclude all of such
Shareholder's Registrable Securities from such Registration Statement.
(b) Each Shareholder shall furnish to the Company such information
regarding the Shareholder, the Registrable Securities held by such Shareholder
and the intended method of disposition of the Registrable Securities held by
such Shareholder as shall be reasonably required to effect the registration of
such Registrable Securities and each Shareholder shall execute such documents in
connection with such registration as the Company may reasonably request.
6. EXPENSES OF REGISTRATION. In connection with any registration pursuant
to this Agreement, the Company shall be responsible for the payment of all
expenses of the registration, with the exception of underwriting discounts and
commissions, if any, which shall be paid by the Shareholders in proportion to
the aggregate value of the securities offered for sale by each of them. The
expenses to be paid by the Company shall include, without limitation, all
registration, filing and qualification fees, listing fees and fees of transfer
agent and registrar, printing and accounting fees, the fees and disbursements of
counsel for the Company.
7. INDEMNIFICATION. Upon the registration of the Registrable Securities
pursuant to the 1933 Act:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Shareholders and any underwriter (as defined in the 0000 Xxx)
against any losses, claims, damages or liabilities (joint or several)
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(collectively, "Losses") to which they or any of them may become subject under
the 1933 Act, the 1934 Act or other federal or state law, insofar as such Losses
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any statement or alleged statement
of a material fact contained in such Registration Statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto, untrue or alleged to be untrue in light of the
circumstances under which they were made, (ii) the omission or alleged omission
to state therein 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, or (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law.
The Company will reimburse the Shareholders for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
Losses; provided, however, that the indemnity agreement contained in this
Section 7(a) shall not apply to amounts paid in settlement of any such Losses if
such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable in any such
case for any such Losses to the extent the Losses arise out of or are based upon
a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by,
or on behalf of, the Shareholders.
(b) To the extent permitted by law, the Shareholders will indemnify
and hold harmless the Company, its officers, directors, agents and employees,
each person, if any, who controls the Company within the meaning of the 1933
Act, and any underwriter (as defined in the 1933 Act), against any Losses to
which the Company, such officer, director, agent, employee, controlling person
or underwriter may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such Losses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by, or on behalf of, the Shareholders expressly for use in connection
with such registration; and the Shareholders will reimburse any legal or other
expenses reasonably incurred by the Company, its officers, directors, agents,
employees, controlling person and underwriters in connection with investigating
or defending any such Losses; provided, however, that (i) the indemnity
agreement contained in this Section 7(b) shall not apply to amounts paid in
settlement of any such Losses if such settlement is effected without the consent
of the Shareholders, which consent shall not be unreasonably withheld, and (ii)
the obligations of the Shareholders hereunder shall be limited to an amount
equal to the gross proceeds, before expenses and commissions, received by the
Shareholders from the sale of the Registrable Securities as contemplated herein.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 7, 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 notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
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have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if, in the opinion of counsel for the indemnifying
party, representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable period of time of the commencement of any
such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7 to the extent prejudicial to its ability
to defend such action, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 7.
(d) In order to provide for just and equitable contributions to joint
liability under the Act in any case in which either (i) the Shareholders
exercising rights under this Agreement makes a claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the 1933 Act may be required on the part of the Shareholders in
circumstances for which indemnification is provided under this Section 7; then,
in each such case, the Company and the Shareholders will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that each Shareholder is
responsible for the portion represented by the percentage that the public
offering price of the Shareholder's Registrable Securities offered by and sold
under the Registration Statement bears to the public offering price of all
securities offered by and sold under such Registration Statement, and the
Company and other selling Shareholders are responsible for the remaining
portion, provided, however, that, in any such case (A) the Shareholders will not
be required to contribute any amount in excess of the public offering price of
all such Registrable Securities offered and sold by the Shareholders pursuant to
such Registration Statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentations.
(e) The obligations of the Company and the Shareholders under this
Section 7 shall survive the completion of any offering of Registrable Securities
in a Registration Statement under this Agreement, and otherwise.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
Shareholders the benefits of SEC Rule 144 promulgated under the Act and any
other rule or regulation of the SEC that may at any time permit the Shareholders
to sell securities of the Company to the public without registration, the
Company agrees to use reasonable efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
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(b) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) Furnish to the Shareholders forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements of
the 1934 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 in availing the
Shareholders of any rule or regulation of the SEC that permits the selling of
any such securities without registration.
9. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Agreement shall terminate on the earlier of (i) the date on
which the Shareholders are entitled to transfer all of the Registrable
Securities in a single transaction under Rule 144 or (ii) the second anniversary
of this Agreement.
10. NOTICES. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, postage prepaid, registered or certified with
return receipt requested and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties given in the foregoing manner.
11. MISCELLANEOUS.
(a) This Agreement and the Acquisition Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Acquisition Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
(b) Any term of this Agreement may be amended and the observance of
any term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Shareholders.
(c) This Agreement shall be governed by and construed under the laws
of the State of Arizona as applied to agreements among Arizona residents entered
into and to be performed entirely within the State of Arizona.
(d) If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement, and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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(d) 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.
(e) This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
(f) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(g) This Agreement may be executed in identical 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 facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
(h) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPANY:
SKYMALL, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxxxx X. Xxxxxxxx
Attest: Executive Vice President
of Business Development
/s/ Xxxxxx X. Xxxxxxxx Address: 0000 X. Xxxx Xxxxxx
-------------------------------- Phoenix, Arizona 85034
Xxxxxx X. Xxxxxxxx Phone: 000-000-0000
Assistant Secretary Fax: 000-000-0000
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SHAREHOLDERS:
/s/ Xxxxxx Xxxxxx
-----------------------------------
XXXXXX XXXXXX
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
/s/ Xxxxx Xxxxxxxx
-----------------------------------
XXXXX XXXXXXXX
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
FLAMINGO PARTNERSHIP
By: /s/ X. Xxxxx
------------------------------
Title: Partner
---------------------------
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
/s/ Xxxx Xxxx, Trustee
-----------------------------------
KCL NACT Unitrust
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
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SHAREHOLDERS (Cont'd):
/s/ Xxxx Xxxxxx
-----------------------------------
XXXX XXXXXX
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
/s/ Xxxxx X. Xxxxx
-----------------------------------
XXXXX X. XXXXX
Address: __________________________
__________________________
Phone: __________________________
Fax: __________________________
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