EXHIBIT 10.2
CONSULTANT AGREEMENT
This CONSULTANT AGREEMENT ("Agreement") is made as of this ____ day of
July, 2003, by and among Peak Entertainment Holdings, Inc. ("Peak"), a Nevada
corporation with an address at Xxxxxxx Xxxx, Xxxxxxx Hill, Bakewell, Derbyshire
DE45 1DL, United Kingdom, POW! Entertainment LLC ("POW"), a Delaware limited
liability company with an address at 0000 Xxxxxxxx Xxxxxx, #0000, Xxxxx Xxxxxx,
XX 00000, and Xxxx Xxx ("Xxx"), an individual with an address at 0000 Xxxxxx
Xxx, Xxx Xxxxxxx, XX 00000.
INTRODUCTION. Peak is a multimedia company based in the United Kingdom
specializing in children's entertainment. POW is a production company formed by
Xxx. Xxx is the co-creator of comic book characters such as Spiderman, The
Incredible Hulk and X-Men, and the CEO of POW. As a result of Xxx'x evidenced
talent, Peak would like to engage Xxx as a creative consultant, and POW and Xxx
would like to agree to Xxx acting as a creative consultant to Peak, pursuant to
the terms of this Agreement.
1. CONSULTANT. As of the date hereof, Peak hereby engages Xxx as a
"Creative Consultant". As Creative Consultant, Xxx will: (a) advise Peak on
creative ideas developed by Peak for establishing publishing and entertainment
intellectual property; (b) attend occasional meetings with the founders of Peak,
Wilf Shorrocks and Xxxxx Xxxxxxxxx, either in Los Angeles or by videophone or
similar technology, as reasonably requested by Peak and at the sole expense of
Peak; (c) attend at least one (1) meeting by way of a press lunch or cocktail
party in Hollywood, at the sole expense of Peak, to announce the relationship
established by this Agreement; (d) generally be available by telephone from time
to time to advise and discuss new concepts and projects in development by Peak;
and (e) introduce to Peak writers, artists and publishing houses to enable Peak
to develop its projects for publishing, film and/or television. If Xxx consults
with Peak regarding any concept that Xxx brings to Peak, Peak agrees to approach
DIC Entertainment Corporation ("DIC") with such concept before approaching any
other third party.
2. WARRANTS. In consideration for Xxx acting as Creative Consultant to
Peak, Peak hereby agrees to issue to Xxx warrants (the "Warrants") to purchase
seven hundred fifty thousand (750,000) shares of common stock of Peak at an
exercise price of $0.35 per share during a period of five (5) years from the
date of grant, as more fully set forth in the warrant agreement attached hereto
as Exhibit A (the "Warrant Agreement"). The Warrants shall vest as follows: (a)
one-half, or the ability to purchase 375,000 shares, upon the signing by the
parties of this Agreement; and (b) the remaining one-half, or the ability to
purchase another 375,000 shares, one (1) year from the date of this Agreement,
and in total the shares issuable pursuant to the Warrants shall constitute
approximately 3.4% of the ownership interest in Peak on the date hereof,
assuming that the Warrants were exercised in full. Such Warrants and shares
issuable pursuant to the Warrants shall have registration rights, as more fully
set forth in the registration rights agreement attached hereto as Exhibit B (the
"Registration Rights Agreement").
3. ADDITIONAL COMPENSATION. Peak hereby agrees that in addition to the
Warrants that will be granted to Xxx as consideration for Xxx'x creative
consulting services, if Peak wishes Xxx to consult on an idea, concept or
project after it has gone into "development", POW shall be paid for Xxx'x time
once development has started at Xxx'x then current hourly consulting fee.
Furthermore, if Peak wishes Xxx to consult upon an idea, concept or project
developed by Peak after it goes into "production", POW will be paid producer's
fees at Xxx'x then current producer's fee.
4. FUTURE RELATIONSHIPS. POW and Xxx hereby agree to consider Peak as a
candidate for developing Xxx'x new projects into entertainment entities. This
Agreement does not in any way obligate POW or Xxx at any time to grant to Peak
such development rights, and such decision to grant Peak development rights
shall be at POW and Xxx'x sole discretion.
5. USE OF "XXXX XXX" NAME. Subject to Xxx'x and POW's express written
consent and sole discretion, Peak may use Xxx'x name in connection with approved
Peak entertainment and publishing projects. In addition, Peak is permitted to
describe this Agreement in documents it is required to file with the Securities
and Exchange Commission and may this Agreement as an exhibit thereto.
Notwithstanding the foregoing, Xxx and POW own all intellectual property rights
associated with the "Xxxx Xxx" name.
6. OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS. Any and all ideas, concepts
and projects developed by Peak and presented to Xxx shall remain the
intellectual property of Peak. Any and all ideas, concepts and projects
developed by Xxx or POW independent of Xxx'x duties as Creative Consultant to
Peak shall remain the intellectual property of Xxx or POW.
7. INDEPENDENT CONTRACTOR. Under this Agreement, Xxx is an independent
contractor for, not an employee of, Peak. As such, Xxx may engage in any other
activities or employment outside of his relationship with Peak. Peak
acknowledges Xxx'x relationship and agreement with DIC and that there is no
conflict of interest between this Agreement and Xxx'x agreement with DIC.
8. INCIDENTALS. Peak shall reimburse Xxx for any and all reasonable
out-of-pocket expenses incurred in fulfilling his role as Creative Consultant.
Such expenses shall include, without limitation, travel and hotel expenses and
long-distance telephone calls.
9. TERM OF AGREEMENT. This Agreement shall be for a term of three (3) years
from the date of this Agreement, provided however, that upon the mutual consent
of both POW and Peak, it shall continue in effect thereafter unless terminated
by either party upon sixty (60) days written notice.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to
choice-of-law provisions. If any term or provision of this Agreement shall be
found to be unenforceable under the laws of the State of California, then,
notwithstanding such partial invalidity, the remainder of this Agreement shall
remain in full force and effect, and such invalid term shall be deemed stricken.
11. ENTIRE AGREEMENT. This Agreement, including the Introduction,
constitutes the entire agreement between the parties hereto. All prior
agreements, understandings and representations are hereby superseded. This
Agreement may only be amended in writing signed by the parties hereto.
12. COUNTERPARTS. This Agreement may be executed in counterparts and by
facsimile, each of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
13. CAPTIONS AND INTERPRETATIONS. Sections titles or captions contained
herein are inserted as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or any provision
hereof. No provision in this Agreement is to be interpreted for or against any
party hereto because that party or its legal representative drafted such
provision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
effective as of the date first set forth above.
Peak Entertainment Holdings, Inc. POW! Entertainment LLC
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Gill Champion
------------------------------- ----------------------
President
Xxxx Xxx
/s/ Xxxx Xxx
---------------------------
Exhibit A
Form of Warrant Agreement
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED
UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II)
THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
PEAK ENTERTAINMENT HOLDINGS, INC.
COMMON STOCK PURCHASE WARRANT
750,000 shares
Original Issue Date: July , 2003
THIS CERTIFIES THAT, FOR VALUE RECEIVED, POW! Entertainment, LLC or its
registered assigns ("Holder") is entitled to purchase, on the terms and
conditions hereinafter set forth, at any time or from time to time from the date
hereof until 5:00 p.m., Eastern Time, on the fifth anniversary of the Original
Issue Date set forth above, or if such date is not a day on which the Company
(as hereinafter defined) is open for business, then the next succeeding day on
which the Company is open for business (such date is the "Expiration Date"), but
not thereafter, to purchase up to Seven Hundred and Fifty Thousand (750,000)
shares of the Common Stock, $.001 par value (the "Common Stock"), of Peak
Entertainment Holdings, Inc., a Nevada corporation (the "Company"), at $0.35 per
share (the "Exercise Price"), such number of shares and Exercise Price being
subject to adjustment upon the occurrence of the contingencies set forth in this
Warrant. Notwithstanding the foregoing, the Holder shall not be entitled to
exercise this Warrant for more than Three Hundred and Fifty Thousand (350,000)
shares of Common Stock until the first anniversary of the Original Issue Date.
Each share of Common Stock as to which this Warrant is exercisable is a "Warrant
Share" and all such shares are collectively referred to as the "Warrant Shares."
Section 1. Exercise of Warrant; Conversion of Warrant.
(a) This Warrant may, at the option of Holder, be exercised in whole or in
part from time to time by delivery to the Company at its principal office,
Attention: President, on or before 5:00 p.m., Eastern Time, on the Expiration
Date, (i) a written notice of such Holder's election to exercise this Warrant
(the "Exercise Notice"), which notice may be in the form of the Notice of
Exercise attached hereto, properly executed and completed by Holder or an
authorized officer thereof, (ii) a check payable to the order of the Company, in
an amount equal to the product of the Exercise Price multiplied by the number of
Warrant Shares specified in the Exercise Notice, and (iii) this Warrant (the
items specified in (i), (ii), and (iii) are collectively the "Exercise
Materials").
(b) As promptly as practicable, and in any event within five (5) business
days after its receipt of the Exercise Materials, Company shall execute or cause
to be executed and delivered to Holder a certificate or certificates
representing the number of Warrant Shares specified in the Exercise Notice,
together with cash in lieu of any fraction of a share, and if this Warrant is
partially exercised, a new warrant on the same terms as that set forth hereto
for the unexercised balance of the Warrant Shares. The stock certificate or
certificates shall be registered in the name of Holder or such other name or
names as shall be designated in the Exercise Notice. The date on which the
Warrant shall be deemed to have been exercised (the "Effective Date"), and the
date the person in whose name any certificate evidencing the Common Stock issued
upon the exercise hereof is issued shall be deemed to have become the holder of
record of such shares, shall be the date the Company receives the Exercise
Materials, irrespective of the date of delivery of a certificate or certificates
evidencing the Common Stock issued upon the exercise or conversion hereof,
provided, however, that if the Exercise Materials are received by the Company on
a date on which the stock transfer books of the Company are closed, the
Effective Date shall be the next succeeding date on which the stock transfer
books are open. All shares of Common Stock issued upon the exercise or
conversion of this Warrant will, upon issuance, be fully paid and nonassessable
and free from all taxes, liens, and charges with respect thereto.
Section 2. Adjustments to Warrant Shares. The number of Warrant Shares
issuable upon the exercise hereof shall be subject to adjustment as follows:
(a) In the event the Company is a party to a consolidation, share exchange,
or merger, or the sale of all or substantially all of the assets of the Company
to, any person, or in the case of any consolidation or merger of another
corporation into the Company in which the Company is the surviving corporation,
and in which there is a reclassification or change of the shares of Common Stock
of the Company, this Warrant shall after such consolidation, share exchange,
merger, or sale be exercisable for the kind and number of securities or amount
and kind of property of the Company or the corporation or other entity resulting
from such share exchange, merger, or consolidation, or to which such sale shall
be made, as the case may be (the "Successor Company"), to which a holder of the
number of shares of Common Stock deliverable upon the exercise (immediately
prior to the time of such consolidation, share exchange, merger, or sale) of
this Warrant would have been entitled upon such consolidation, share exchange,
merger, or sale; and in any such case appropriate adjustments shall be made in
the application of the provisions set forth herein with respect to the rights
and interests of Holder, such that the provisions set forth herein shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to the number and kind of securities or the type and amount of
property thereafter deliverable upon the exercise of this Warrant. The above
provisions shall similarly apply to successive consolidations, share exchanges,
mergers, and sales. Any adjustment required by this Section 2 (a) because of a
consolidation, share exchange, merger, or sale shall be set forth in an
undertaking delivered to Holder and executed by the Successor Company which
provides that Holder shall have the right to exercise this Warrant for the kind
and number of securities or amount and kind of property of the Successor Company
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Warrant would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
provide for future adjustments to the number of Warrant Shares and the Exercise
Price in accordance with the provisions set forth in Section 2 hereof.
(b) In the event the Company should at any time, or from time to time after
the Original Issue Date, fix a record date for the effectuation of a stock split
or subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock, or securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon exercise or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split, or subdivision if no record date is fixed), the number of
Warrant Shares issuable upon the exercise hereof shall be proportionately
increased and the Exercise Price shall be appropriately decreased by the same
proportion as the increase in the number of outstanding Common Stock Equivalents
of the Company resulting from the dividend, distribution, split, or subdivision.
Notwithstanding the preceding sentence, no adjustment shall be made to decrease
the Exercise Price below $.0001 per Share.
(c) In the event the Company should at any time or from time to time after
the Original Issue Date, fix a record date for the effectuation of a reverse
stock split, or a transaction having a similar effect on the number of
outstanding shares of Common Stock of the Company, then, as of such record date
(or the date of such reverse stock split or similar transaction if no record
date is fixed), the number of Warrant Shares issuable upon the exercise hereof
shall be proportionately decreased and the Exercise Price shall be appropriately
increased by the same proportion as the decrease of the number of outstanding
Common Stock Equivalents resulting from the reverse stock split or similar
transaction.
(d) In the event the Company should at any time or from time to time after
the Original Issue Date, fix a record date for a reclassification of its Common
Stock, then, as of such record date (or the date of the reclassification if no
record date is set), this Warrant shall thereafter be convertible into such
number and kind of securities as would have been issuable as the result of such
reclassification to a holder of a number of shares of Common Stock equal to the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such reclassification, and the Exercise Price shall be unchanged.
(e) The Company will not, by amendment of its Certificate of Incorporation
or By-laws or through reorganization, consolidation, merger, dissolution, issue,
or sale of securities, sale of assets or any other voluntary action, void or
seek to avoid the observance or performance of any of the terms of the Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate in
order to protect the rights of Holder against dilution or other impairment.
Without limiting the generality of the foregoing, the Company (x) will not
create a par value of any share of stock receivable upon the exercise of the
Warrant above the amount payable therefor upon such exercise, and (y) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable shares upon the exercise
of the Warrant.
(f) When any adjustment is required to be made in the number or kind of
shares purchasable upon exercise of the Warrant, or in the Exercise Price, the
Company shall promptly notify Holder in writing of such event and of the number
of shares of Common Stock or other securities or property thereafter purchasable
upon exercise of the Warrants and of the Exercise Price, together with the
computation resulting in such adjustment.
(g) The Company represents, covenants and agrees that all Warrant Shares
which may be issued will, upon issuance, be validly issued, fully paid, and
non-assessable. The Company further represents, covenants and agrees that the
Company will at all times have authorized and reserved, free from preemptive
rights, a sufficient number of shares of its Common Stock to provide for the
exercise of the Warrant in full.
Section 3. No Stockholder Rights. This Warrant shall not entitle Holder
hereof to any voting rights or other rights as a stockholder of the Company,
until the Warrant Shares are issued, at which time such shares shall entitle the
holder thereof to the same voting rights accorded holders of the company's
Common Stock.
Section 4. Transfer of Securities.
(a) This Warrant and the Warrant Shares and any shares of capital stock
received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon, or otherwise, shall not be
transferable except upon compliance with the provisions of the Securities Act of
1933, as amended (the "Securities Act") and applicable state securities laws
with respect to the transfer of such securities. The Holder, by acceptance of
this Warrant, agrees to be bound by the provisions of Section 4 hereof and to
indemnify and hold harmless the Company against any loss or liability arising
from the disposition of this Warrant or the Warrant Shares issuable upon
exercise hereof or any interest in either thereof in violation of the provisions
of this Warrant. Notwithstanding the foregoing, it is acknowledged that Holder
may transfer the Warrants to its members, provided that prior to doing so, it
will provide the Company with a legal opinion that such transfer is a private
placement. (b) Each certificate for the Warrant Shares and any shares of capital
stock received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER
SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL
HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER."
Section 5. Miscellaneous.
(a) The terms of this Warrant shall be binding upon and shall inure to the
benefit of any successors or permitted assigns of the Company and Holder.
(b) Except as otherwise provided herein, this Warrant and all rights
hereunder are transferable by the registered holder hereof in person or by duly
authorized attorney on the books of the Company upon surrender of this Warrant,
properly endorsed, to the Company. The Company may deem and treat the registered
holder of this Warrant at any time as the absolute owner hereof for all purposes
and shall not be affected by any notice to the contrary.
(c) Notwithstanding any provision herein to the contrary, Holder may not
exercise, sell, transfer, or otherwise assign this Warrant unless the Company is
provided with an opinion of counsel satisfactory in form and substance to the
Company, to the effect that such exercise, sale, transfer, or assignment would
not violate the Securities Act or applicable state securities laws.
(d) This Warrant may be divided into separate warrants covering one share
of Common Stock or any whole multiple thereof, for the total number of shares of
Common Stock then subject to this Warrant at any time, or from time to time,
upon the request of the registered holder of this Warrant and the surrender of
the same to the Company for such purpose. Such subdivided Warrants shall be
issued promptly by the Company following any such request and shall be of the
same form and tenor as this Warrant, except for any requested change in the name
of the registered holder stated herein.
(e) Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered (a) upon receipt, when delivered
personally, (b) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested, (c) three (3) days after being
sent by U.S. certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same.
If to Holder, to the registered address of Holder appearing on the books of
the Company. If to the Company at [provide US address] Each party shall provide
five (5) days prior written notice to the other party of any change in address,
which change shall not be effective until actual receipt thereof
(f) The corporate laws of the State of Nevada shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in the City of New York, New York, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Warrant shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Warrant in that jurisdiction or the validity or enforceability
of any provision of this Warrant in any other jurisdiction.
[Signatures on the following page]
SIGNATURE PAGE
TO
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the Company, has caused this Warrant to be executed in
its name by its duly authorized officers under seal, and to be dated as of the
date first above written.
PEAK ENTERTAINMENT HOLDINGS, INC.
By:
------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President
ASSIGNMENT
(To be Executed by the Registered Holder to effect a Transfer
of the foregoing Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers
unto
___________________________________________________________________________
the foregoing Warrant and the rights represented thereto to purchase shares of
Common Stock of Peak Entertainment Holdings, Inc. in accordance with terms and
conditions thereof, and does hereby irrevocably constitute and appoint
________________ Attorney to transfer the said Warrant on the books of the
Company, with full power of substitution.
Holder:
_______________________________
_______________________________
Address
Dated: __________________, 20__
In the presence of:
_______________________________
EXERCISE OR CONVERSION NOTICE
[To be signed only upon exercise of Warrant]
To: Peak Entertainment Holdings, Inc.
The undersigned Holder of the attached Warrant hereby irrevocably elects to
exercise the Warrant for, and to purchase thereunder, _____ shares of Common
Stock of Peak Entertainment Holdings, Inc., issuable upon exercise of said
Warrant and hereby surrenders said Warrant.
The undersigned herewith requests that the certificates for such shares be
issued in the name of, and delivered to the undersigned, whose address is
________________________________.
If electronic book entry transfer, complete the following:
Account Number:____________________________
Transaction Code Number:___________________
Dated: ___________________
Holder:
____________________________
____________________________
By:_________________________
Name:
Title:
NOTICE
The signature above must correspond to the name as written upon the face of
the within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
Exhibit B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement"), by and between Peak
Entertainment Holdings, Inc., a Nevada corporation (the "Company"), and POW!
Entertainment LLC (the "Holder").
WHEREAS, the Company and the Holder have entered into a consultant
agreement as of the date hereof (the "Consultant Agreement"), and pursuant to
such Consultant Agreement the Company has issued to the Holder a warrant to
purchase 750,000 shares of the Company's common stock (the "Warrant"); and
WHEREAS, pursuant to the terms of and in order to induce the Holder to
enter into the Consultant Agreement, the Company has agreed to enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Company hereby agrees as follows:
1. Demand Registration. Upon the written request of the Holder at any time,
the Company shall file a registration statement with the Securities and Exchange
Commission ("Commission") which seeks to register the shares of Common Stock
issuable upon exercise of the Warrants (the "Registerable Securities") under the
Securities Act of 1933 (the "1933 Act"). Notwithstanding the foregoing, the
Company shall not be required to file a registration statement prior to one year
following the date hereof.
2. Cooperation with Company. Holder will cooperate with the
Company in all respects in connection with this Agreement, including, timely
supplying all information reasonably requested by the Company and executing and
returning all documents reasonably requested in connection with the registration
and sale of the Registerable Securities.
3. Registration Procedures. If and whenever the Company is required by any
of the provisions of this Agreement to effect the registration of any of the
Registerable Securities under the 1933 Act, the Company shall (except as
otherwise provided in this Agreement), as expeditiously as reasonably possible:
a. prepare and file with the Commission a registration statement and shall
use its best efforts to cause such registration statement to become effective
and remain effective until all the Registerable Securities are sold or become
capable of being publicly sold without registration under the 1933 Act.
b. prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of all securities covered by such registration statement whenever
the Holder of such securities shall desire to sell or otherwise dispose of the
same (including prospectus supplements with respect to the sales of securities
from time to time in connection with a registration statement pursuant to Rule
415 of the Commission);
c. furnish to the Holder such numbers of copies of a summary prospectus or
other prospectus, including a preliminary prospectus or any amendment or
supplement to any prospectus, in conformity with the requirements of the 1933
Act, and such other documents, as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by the
Holder;
d. use its best efforts to list such securities on any securities exchange
on which any securities of the Company is then listed, if the listing of such
securities is then permitted under the rules of such exchange;
e. enter into and perform its obligations under an underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering;
f. notify the Holder at any 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 of which it has knowledge 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; and
g. furnish, at the request of the Holder on the date such Registerable
Securities are delivered to the underwriters for sale pursuant to such
registration or, if such Registerable Securities are not being sold through
underwriters, on the date the registration statement with respect to such
Registerable Securities becomes effective, (i) an opinion, dated such date, of
the counsel representing the Company for the purpose of such registration,
addressed to the underwriters, if any, and to the Holder making such request,
covering such legal matters with respect to the registration in respect of which
such opinion is being given as the Holder of such Registerable Securities may
reasonably request and are customarily included in such an opinion and (ii)
letters, dated, respectively, (1) the effective date of the registration
statement and (2) the date such Registerable Securities are delivered to the
underwriters, if any, for sale pursuant to such registration from a firm of
independent certified public accountants of recognized standing selected by the
Company, addressed to the underwriters, if any, and to the Holder making such
request, covering such financial, statistical and accounting matters with
respect to the registration in respect of which such letters are being given as
the Holder of such Registerable Securities may reasonably request and are
customarily included in such letters.
4. Expenses. All expenses incurred in any registration of the Holder's
Registerable Securities under this Agreement shall be paid solely by the
Company, including, without limitation, printing expenses, fees and
disbursements of counsel for the Company, expenses of any audits to which the
Company shall agree or which shall be necessary to comply with governmental
requirements in connection with any such registration, provided, however, the
Company shall not be liable for (a) any discounts or commissions to any
underwriter; (b) any stock transfer taxes incurred with respect to Registerable
Securities sold in the Offering or (c) the fees and expenses of counsel for any
Holder, provided that the Company will pay the costs and expenses of Company
counsel when the Company's counsel is representing any or all selling security
holders.
5. Indemnification. In the event any Registerable Securities are included
in a registration statement pursuant to this Agreement:
a. Company Indemnity. Without limitation of any other indemnity provided to
the Holder, to the extent permitted by law, the Company shall indemnify and hold
harmless the Holder, any underwriter (as defined in the 0000 Xxx) for such
Holder, and each person, if any, who controls such underwriter (within the
meaning of the 1933 Act or the Securities Exchange Act of 1934 (the "Exchange
Act"), against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the 1933 Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
alleged untrue 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, (ii) the alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, (iii) any violation or alleged violation by the
Company of the 1933 Act or the Exchange Act, or (iv) any violation of any state
securities law or any rule or regulation promulgated under the 1933 Act, the
Exchange Act or any state securities law, and the Company shall reimburse each
such Holder, affiliate, officer or director or partner, underwriter or
controlling person for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Holder in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any the Holder or any
other officer, director or controlling person thereof.
x. Xxxxxx Indemnity. The Holder shall indemnify and hold harmless the
Company, its affiliates, its counsel, officers, directors and representatives,
any underwriter (as defined in the 0000 Xxx) and each person, if any, who
controls the Company or the underwriter (within the meaning of the 0000 Xxx)
against any liabilities (joint or several) to which they may become subject
under the 1933 Act, the Exchange Act or any state securities law, and the Holder
shall reimburse the Company, affiliate, officer or director or partner,
underwriter or controlling person for any legal or other expenses incurred by
them in connection with investigating or defending any loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
actions and respect thereof) arise out of or are based upon any statements or
information provided by such Holder to the Company in connection with the offer
or sale of Registerable Securities.
c. Notice; Right to Defend. Promptly after receipt by an indemnified party
under this Section 5 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 5,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in and if the
indemnifying party agrees in writing that it will be responsible for any costs,
expenses, judgments, damages and losses incurred by the indemnified party with
respect to such claim, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes that
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 time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and 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 Agreement.
d. Contribution. If the indemnification provided for in this Agreement 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, in lieu of indemnifying such indemnified
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 indemnified party on the
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 relevant fault of the indemnifying party and 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 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. Notwithstanding the foregoing, the amount any Holder
shall be obligated to contribute pursuant to the Agreement shall be limited to
an amount equal to the proceeds to such Holder of the Registerable Securities
sold pursuant to the registration statement which gives rise to such obligation
to contribute (less the aggregate amount of any damages which the Holder has
otherwise been required to pay in respect of such loss, claim, damage, liability
or action or any substantially similar loss, claim, damage, liability or action
arising from the sale of such Registerable Securities).
e. Survival of Indemnity. The indemnification provided by this Agreement
shall be a continuing right to indemnification and shall survive the
registration and sale of any Registerable Securities by any person entitled to
indemnification hereunder and the expiration or termination of this Agreement.
6. Notices.
a. All communications under this Agreement shall be in writing and shall be
mailed by first class mail, postage prepaid, or telegraphed or telexed with
confirmation of receipt or delivered by hand or by overnight delivery service,
b. If to the Company, at:
Peak Entertainment Holdings, Inc.
Xxxxxxx Xxxx, Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx, XX
Attn: Xxxxxxx Shorrcoks, President
or at such other address as it may have furnished in writing to the Holders
of Registerable Securities at the time outstanding, or
c. if to the Holder of the Registerable Securities, to the address of such
Holder as it appears in the stock ledger of the Company.
d. Any notice so addressed, when mailed by registered or certified mail
shall be deemed to be given three days after so mailed, when telegraphed or
telexed shall be deemed to be given when transmitted, or when delivered by hand
or overnight shall be deemed to be given when delivered.
7. Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the Company and the Holder.
8. Amendment and Waiver. This Agreement may be amended, and the observance
of any term of this Agreement may be waived, but only with the written consent
of the Company and the Holder. No delay on the part of any party in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any party of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy.
9. Counterparts. One or more counterparts of this Agreement may be signed
by the parties, each of which shall be an original but all of which together
shall constitute one and same instrument.
10. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York, without giving effect to
conflicts of law principles.
11. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
12. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
____ day of July, 2003.
PEAK ENTERTAINMENT HOLDINGS, INC. POW! ENTERTAINMENT LLC
By: /s/ Xxxxxxx Xxxxxxxx By: /s/ Gill Champion
---------------------- -------------------------
Xxxxxxx Xxxxxxxxx, Gill Champion, President
President
