EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March
21 2005, is by and between MEDIABAY, INC., a Florida corporation (the
"COMPANY"), and Xxxxxxx, Xxxxx & Co. (the "INVESTOR").
A. The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement, dated as of March 21, 2005 (the
"SECURITIES PURCHASE AGREEMENT"), (i) to issue and sell to the Investor and
other investors named therein (the "OTHER INVESTORS") shares of Series D
Convertible Preferred Stock (the "PREFERRED STOCK"), an Investor Warrant and a
Preferred Warrant. Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Securities Purchase Agreement.
B. The shares of Preferred Stock are convertible into shares (the
"CONVERSION SHARES") of the Company's common stock, no par value (the "COMMON
STOCK"). The Investor Warrant is exercisable to purchase shares of Common Stock
(the "WARRANT SHARES"). The Preferred Warrant is exercisable into shares of
Preferred Stock (the "ADDITIONAL PREFERRED STOCK") and an Investor Warrant (the
"ADDITIONAL WARRANT").
C. In order to induce the Investor to enter into the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and under
applicable state securities laws.
D. The Company, the Investor and the Other Investors entered into a
registration rights agreement, dated March 21, 2005 (the "FIRST REGISTRATION
RIGHTS AGREEMENT"), which provides Investor with certain registration rights
under the Securities Act and under applicable state securities laws in addition
to the registration rights provided herein.
In consideration of the Investor entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings specified:
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which the Commission or commercial banks located in New York City
are authorized or permitted by law to close.
"COMMISSION" means the Securities and Exchange Commission.
"EFFECTIVE DATE" means the date on which the Registration Statement
is declared effective by the Commission.
"FILING DEADLINE" means the date which is forty-five (45) days after
(i) the date on which the Company meets the eligibility requirements for a
primary offering on Form S-3 as provided in General Instruction I.B.1 of
Form S-3 or (ii) the date the Investor delivers a Demand Notice pursuant
to Section 2(b), as the case may be. Notwithstanding the foregoing, in the
event the Registration Statement on Form S-3 filed pursuant to Section
2(a) of the First Registration Rights Agreement relating to Registrable
Securities held by the Other Investors has not been declared effective by
the Commission prior to the Filing Deadline set forth above, such Filing
Deadline shall be extended to the date which is fifteen (15) days after
such effective date.
"HOLDER" means any person owning or having the right to acquire,
through conversion of the Preferred Stock or exercise of the Investor
Warrant or otherwise, Registrable Securities, including initially the
Investor and thereafter any permitted assignee thereof.
"PER SHARE DEFAULT PAYMENT AMOUNT" means $0.0055. The Per Share
Default Payment Amount shall be proportionately adjusted in the event of a
stock split, reverse stock split or similar event.
"REGISTRABLE SECURITIES" means the Conversion Shares, the Warrant
Shares and any other shares of Common Stock issuable pursuant to the terms
of the Preferred Stock, the Additional Preferred Stock, the Investor
Warrant or the Additional Warrant, and any shares of capital stock issued
or issuable from time to time (with any adjustments) in replacement of, in
exchange for, as a distribution on, or otherwise in respect of such
Conversion Shares or the Warrant Shares; provided, however, that any such
shares shall cease to be Registrable Securities at such time as they may
be sold by the Holder without registration under Rule 144(k) without
limitation as to volume.
"REGISTRATION DEADLINE" means (i) with respect to a Registration
Statement on Form S-3 filed pursuant to Section 2(a), the forty-fifth
(45th) calendar day following the Filing Deadline; provided, however, that
if the staff of the Commission undertakes a full review (or a full
accounting review) of the Registration Statement, then in such case the
Registration Deadline shall be the ninetieth (90th) calendar day following
the Filing Deadline and (ii) with respect to a Registration Statement on
Form S-1 filed pursuant to Section 2(b), the ninetieth (90th) calendar day
following the Filing Deadline; provided, however, that if the staff of the
Commission undertakes a full review (or a full accounting review) of the
Registration Statement, then in such case the Registration Deadline shall
be the one hundred twentieth (120th) calendar day following the Filing
Deadline.
"REGISTRATION PERIOD" has the meaning set forth in paragraph 2(c)
below.
"REGISTRATION STATEMENT" means a registration statement or
statements prepared in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act ("RULE 415") or any successor rule
providing for the offering of securities on a continuous or delayed basis.
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2. REGISTRATION.
(a) Form S-3 Registration Statement. In the event the Company meets the
eligibility requirements for a primary offering on Form S-3 as provided in
General Instruction I.B.1 of Form S-3, the Company shall prepare and file with
the Commission, on or before the Filing Deadline, a Registration Statement on
Form S-3 pursuant to Rule 415 under the Securities Act covering the resale of a
number of shares of Registrable Securities equal to one hundred twenty-five
percent (125%) of the aggregate number of shares of Common Stock issuable on the
Closing Date pursuant to (i) the conversion of the Preferred Stock and the
Additional Preferred Stock and (ii) the exercise of the Investor Warrant and the
Additional Warrant (such number to be determined using the Conversion Price or
Exercise Price, as applicable, in effect on such date and without regard to any
restriction on the ability of the Holder to convert such Holder's Preferred
Stock or Additional Preferred Stock or exercise such Holder's Investor Warrant
or Additional Warrant as of such date). Such Registration Statement shall state,
to the extent permitted by Rule 416 under the Securities Act, that it also
covers such indeterminate number of additional shares of Common Stock as may
become issuable upon the conversion of the Preferred Stock or Additional
Preferred Stock and exercise of the Investor Warrant or Additional Warrant in
order to (x) satisfy the Company's obligation to pay dividends on the Preferred
Stock, (y) prevent dilution resulting from stock splits, stock dividends or
similar events and (z) effect required anti-dilution adjustments pursuant to the
terms of the Articles of Amendment, Investor Warrant and Additional Warrant.
(b) Demand Registration.
(i) Commencing one hundred and eighty (180) days after the Closing
Date, the Holder may, by written notice (a "DEMAND NOTICE"), require that the
Company prepare and file with the Commission, on or before the Filing Deadline,
a Registration Statement on Form S-1 to register under the Securities Act all or
any portion of the Holder's Registrable Securities in the manner specified in
the Demand Notice.
(ii) The Company shall use its best efforts to register under the
Securities Act, in accordance with the method of disposition specified in the
Demand Notice, which shall not be an underwritten offering unless agreed to in
writing by the Company upon receipt of such Demand Notice, the number of
Registrable Securities specified in the Demand Notice. The Company shall be
obligated to register Registrable Securities pursuant to Section 2(a)(i) on one
occasion only; provided that such obligation shall be deemed satisfied only when
a Registration Statement covering all Registrable Securities specified in the
Demand Notice received as aforesaid, for sale in accordance with the method of
disposition specified in the Demand Notice, shall have become effective and
remained effective for the period provided in Section 2(c).
(c) Effectiveness. The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as practicable following the
filing thereof, but in no event later than the Registration Deadline. The
Company shall respond promptly to any and all comments made by the staff of the
Commission on the Registration Statement, and shall submit to the Commission,
within three (3) Business Days after the Company learns that no review of the
Registration Statement will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the Registration Statement
(or, if the Company would be required to include financial statements more
current than those included in its filing with the Commission, three (3)
Business Days after the date on which the Company is required to file an annual
report on Form 10-K (or Form 10-KSB) or quarterly report on form 10-Q (or Form
10-QSB), as the case may be, including such updated financial statements, after
permitted extension if a Form 12b-25 is timely filed), as the case may be, a
request for acceleration of the effectiveness of the Registration Statement to a
time and date not later than two (2) Business Days after the submission of such
request. The Company will maintain the effectiveness of the Registration
Statement until the earlier to occur of (i) the date on which all of the
Registrable Securities eligible for resale thereunder have been publicly sold
pursuant to either the Registration Statement or Rule 144, (ii) the date on
which all of the Registrable Securities remaining to be sold under the
Registration Statement (in the reasonable opinion of counsel to the Company) may
be immediately sold to the public under Rule 144(k) under the Securities Act or
any successor provision ("RULE 144(K)") and (iii) in the case of a Registration
Statement on Form S-1, the date which is ninety (90) days after the Effective
Date (the period beginning on the Closing Date and ending on the earlier to
occur of (i), (ii) or (iii) above being referred to herein as the "REGISTRATION
PERIOD").
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(d) Registration Default. If (i) the Registration Statement is not
filed on or before the Filing Deadline or declared effective by the Commission
on or before the Registration Deadline, (ii) after the Registration Statement
has been declared effective by the Commission, sales of Registrable Securities
cannot be made by a Holder under the Registration Statement for any reason not
within the exclusive control of such Holder (other than such Registrable
Securities as are then freely saleable pursuant to Rule 144(k)); provided, that
the failure of the Registration Statement on Form S-3 filed pursuant to Section
2(a) to remain effective after the two (2) year anniversary of its initial
effective date thereof if at such time all of the Conversion Shares issued or
issuable upon conversion of the Preferred Shares are freely saleable pursuant to
Rule 144(k), shall not be a deemed to be a Registration Default hereunder, (iii)
the Common Stock ceases to be listed on the Nasdaq National Market, the Nasdaq
SmallCap Market or the New York Stock Exchange, (iv) the Company fails to submit
a request for acceleration within the time frames required hereby, or (v) an
amendment or supplement to the Registration Statement, or a new registration
statement, required to be filed pursuant to the terms of paragraph 3(k) below is
not filed on or before the date required by such paragraph (each of the
foregoing clauses (i), (ii), (iii), (iv) and (v) being referred to herein as a
"REGISTRATION DEFAULT"), the Company shall make a cash payment to each Holder,
for each thirty (30) day period or part thereof in which a Registration Default
exists, equal to the product of (A) the Per Share Default Payment Amount times
(B) the sum of (I) the number of Conversion Shares into which the Preferred
Shares then held by such Holder are convertible at the Conversion Price then in
effect plus (II) the number of Warrant Shares for which the Investor Warrant
then held by such Holder are exercisable at the Exercise Price then in effect,
in each case without regard to any limitation on such conversion or exercise
contained in the Articles of Amendment, the Investor Warrant or any other
Transaction Documents. Each such payment shall be made within five (5) Business
Days following the last day of each calendar month in which a Registration
Default existed. Any such payment shall be in addition to any other remedies
available to each Holder at law or in equity, whether pursuant to the terms
hereof, the Securities Purchase Agreement, the Articles of Amendment, or
otherwise. Notwithstanding the foregoing, a Registration Default under clauses
(ii), (iii) or (v) shall not be deemed to be a Fundamental Change (under and as
defined in the Articles of Amendment) giving rise to a Mandatory Redemption
right under the Articles of Amendment provided the Company has used its best
efforts to prevent the occurrence of such Registration Default and continues
after the occurrence thereof to use its best efforts to cure such Registration
Default.
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(e) Allocation of Conversion Shares and Warrant Shares. The initial
number of Conversion Shares and Warrant Shares included in any Registration
Statement and each increase in the number thereof included therein shall be
allocated pro rata among the Holders based on the aggregate number of
Registrable Securities issuable to each Holder at the time the Registration
Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the Commission (such number to be determined
using the Conversion Price or Exercise Price, as applicable, in effect at such
time and without regard to any restriction on the ability of a Holder to convert
such Holder's Preferred Stock or exercise such Holder's Investor Warrant as of
such date). In the event that a Holder sells or otherwise transfers any of such
Holder's Registrable Securities, each transferee shall be allocated the portion
of the then remaining number of Registrable Securities included in such
Registration Statement allocable to the transferor.
(f) Registration of Other Securities. During the period beginning on
the date hereof and ending on the Effective Date, the Company shall, except as
described in Schedule 3.12 to the Securities Purchase Agreement, refrain from
filing any registration statement (other than (i) a Registration Statement filed
hereunder, (ii) a registration statement on Form S-8 with respect to stock
option plans and agreements and stock plans currently in effect and disclosed in
the Securities Purchase Agreement or the schedules thereto or (iii) a
Registration Statement filed pursuant to the First Registration Rights
Agreement). Other than as specified on such Schedule 3.12, in no event shall the
Company include any securities other than the Registrable Securities on any
Registration Statement filed by the Company on behalf of the Holders pursuant to
the terms of this Section 2.
3. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including without
limitation those pursuant to Section 2 above, the Company shall, with respect to
the Registration Statement:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such Holder
or such Holder's intended method of distribution;
(b) promptly following the Closing, secure the listing of all
Registrable Securities on the Nasdaq National Market System or the Nasdaq
SmallCap Market (if that is the Principal Market) and provide each Holder with
reasonable evidence thereof;
(c) furnish to each Holder such number of copies of the prospectus
included in the Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the disposition of
such Holder's Registrable Securities;
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(d) use commercially reasonable efforts to register or qualify the
Registrable Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably requested from
time to time by a Holder, and do any and all other acts or things which may be
necessary or advisable to enable such Holder to consummate the public sale and
re-sale or other disposition of the Registrable Securities in such
jurisdictions; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction or to subject
itself to taxation in any such jurisdiction;
(e) in the event of an underwritten public offering of the
Registrable Securities, enter into (together with all Holders proposing to
distribute Registrable Securities through such underwriting) and perform its
obligations under an underwriting agreement, in usual and customary form
reasonably acceptable to the Company, with the managing underwriter of such
offering;
(f) notify each Holder immediately after becoming aware of the
occurrence of any event (but shall not, without the prior written consent of
such Holder, disclose to such Holder any facts or circumstances constituting
material non-public information) as a result of which the prospectus included in
the Registration Statement, as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and as promptly as practicable prepare and file
with the Commission and furnish to each Holder a reasonable number of copies of
a supplement or an amendment to such prospectus as may be necessary so that such
prospectus does not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(g) use all commercially reasonable efforts to prevent the issuance
of any stop order or other order suspending the effectiveness of the
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof at the earliest possible time and to notify each Holder of the issuance
of such order and the resolution thereof;
(h) furnish to each Holder, on the date that the Registration
Statement, or any successor registration statement, becomes effective, a letter,
dated such date, of outside counsel representing the Company (and reasonably
acceptable to such Holder) addressed to such Holder, confirming such
effectiveness and, to the knowledge of such counsel, the absence of any stop
order;
(i) provide to each Holder and its representatives the reasonable
opportunity to conduct a reasonable inquiry of the Company's financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Holder may
reasonably request in order to fulfill any due diligence obligation on its part,
subject, however, to the execution and delivery to the Company by such Holder of
a customary non-disclosure agreement and provided that the Company shall not
disclose any material non-public information to such Holder absent such Holder's
written request therefor;
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(j) permit counsel for each Holder, at such Holder's expense, to
review the Registration Statement and all amendments and supplements thereto,
and any comments made by the staff of the Commission concerning such Holder
and/or the transactions contemplated by the Transaction Documents and the
Company's responses thereto, within a reasonable period of time prior to the
filing thereof with the Commission (or, in the case of comments made by the
staff of the Commission, within a reasonable period of time following the
receipt thereof by the Company);
(k) in the event that, at any time, the number of shares available
under the Registration Statement is insufficient to cover one hundred five
percent (105%) of the Registrable Securities issuable under the Preferred Stock,
Additional Preferred Stock, Investor Warrant and Additional Warrant (such number
to be determined using the Conversion Price or Exercise Price, as applicable, in
effect at such time and without regard to any restriction on the ability of any
Holder to convert such Holder's Preferred Stock or exercise such Holder's
Investor Warrant) the Company shall promptly amend the Registration Statement or
file a new registration statement, in any event as soon as practicable, but not
later than the twentieth (20th) day following notice from a Holder of the
occurrence of such event, so that the Registration Statement or such new
registration statement, or both, covers no less than one hundred twenty-five
percent (125%) of the Registrable Securities issuable thereunder. The Company
shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof. Any Registration Statement filed pursuant to this paragraph 3(k) shall
state that, to the extent permitted by Rule 416 under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Stock and Additional Preferred Stock and exercise of the Investor Warrant and
Additional Warrant in order to prevent dilution resulting from stock splits,
stock dividends or similar events. Unless and until such amendment or new
Registration Statement becomes effective, each Holder shall have the rights
described in paragraph 2(d) above;
(l) hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company if at the time such information
is provided the Company is notified of the confidential nature of such
information unless (i) disclosure of such information is necessary to comply
with federal or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration
Statement that includes such Investor's Registrable Securities, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The Company shall, upon
learning that disclosure of any information concerning an Investor is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Investor prior to making such disclosure, and
cooperate with the Investor, at the Investor's expense, in taking appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information;
(m) 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; and
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(n) comply with all applicable laws related to a Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act and the rules and
regulations thereunder promulgated by the Commission).
4. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of Registrable Securities pursuant to
a Registration Statement, each Holder shall:
(a) timely furnish to the Company in writing such information
regarding itself and the intended method of disposition of such Registrable
Securities as the Company shall reasonably request in order to effect the
registration thereof;
(b) upon receipt of any notice from the Company of the happening of
any event of the kind described in paragraphs 3(f) or 3(g), immediately
discontinue any sale or other disposition of such Registrable Securities
pursuant to such Registration Statement until the filing of an amendment or
supplement as described in paragraph 3(f) or withdrawal of the stop order
referred to in paragraph 3(g), and use commercially reasonable efforts to
maintain the confidentiality of such notice and its contents;
(c) in the event of an underwritten offering of such Registrable
Securities in which such Holder participates, enter into a customary and
reasonable underwriting agreement and execute such other documents as the
Company and/or the managing underwriter for such offering may reasonably
request;
(d) to the extent required by applicable law, deliver a prospectus
to the purchaser of such Registrable Securities;
(e) in the event a Holder is deemed to be an underwriter in
connection with the offering of Registrable Securities, such Holder consents to
the inclusion of customary disclosure in the Registration Statement with respect
thereto;
(f) notify the Company when it has sold all of the Registrable
Securities held by it; and
(g) notify the Company in the event that any information supplied by
such Holder in writing for inclusion in such Registration Statement or related
prospectus is untrue or omits to state a material fact required to be stated
therein or necessary to make such information not misleading in light of the
circumstances then existing; immediately discontinue any sale or other
disposition of such Registrable Securities pursuant to such Registration
Statement until the filing of an amendment or supplement to such prospectus as
may be necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing; and use commercially reasonable efforts to assist
the Company as may be appropriate to make such amendment or supplement effective
for such purpose.
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5. INDEMNIFICATION.
In the event that any Registrable Securities are included in a
Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT") (collectively, the "Holder Indemnified
Parties"), including in such Holder Indemnified Parties' capacity as a broker
dealer, against any losses, claims, damages, liabilities or reasonable
out-of-pocket expenses (whether joint or several) (collectively, including legal
or other expenses reasonably incurred in connection with investigating or
defending same, "LOSSES"), insofar as any such Losses arise out of or are based
upon (i) any untrue statement or 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,
or (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. Subject
to the provisions of paragraph 5(c) below, the Company will reimburse such
Holder, and each such officer, director, employee, agent, representative or
controlling person, for any legal or other out-of-pocket expenses as reasonably
incurred by any such entity or person in connection with investigating or
defending any Loss; provided, however, that the foregoing indemnity shall not
apply to amounts paid in settlement of any Loss if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be obligated to indemnify any person for any
Loss to the extent that such Loss (i) is based upon and is in conformity with
written information furnished by such person expressly for use in such
Registration Statement, (ii) is based on a failure of such person to deliver or
cause to be delivered the final prospectus contained in the Registration
Statement and made available by the Company, if such delivery is required by
applicable law, or (iii) relates to the sale of shares by such Holder after the
Company has notified such Holder that an event described in Section 3(f) has
occurred and has not yet provided the Holder with a supplemental or new
prospectus for delivery. The Company shall not enter into any settlement of a
Loss that does not provide for the unconditional release of such Holder from all
liabilities and obligations relating to such Loss.
(b) To the extent permitted by law, each Holder who is named in such
Registration Statement as a selling stockholder, acting severally and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees, agents and representatives of the Company, and each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any Losses to the extent (and only to the extent) that any
such Losses (i) are based upon and in conformity with written information
furnished by such Holder expressly for use in such Registration Statement, (ii)
are based on a failure of such Holder to deliver or cause to be delivered the
final prospectus contained in the Registration Statement and made available by
the Company, if such delivery is required by applicable law, or (iii) relate to
the sale of shares by such Holder after the Company has notified such Holder
that an event described in Section 3(f) has occurred and has not yet provided
the Holder with a supplemental or new prospectus for delivery. Subject to the
provisions of paragraph 5(c) below, such Holder will reimburse any legal or
other expenses as reasonably incurred by the Company and any such officer,
director, employee, agent, representative, or controlling person, in connection
with investigating or defending any such Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of such Holder (which
consent shall not be unreasonably withheld); and provided, further, that, in no
event shall any indemnity under this paragraph 5(b) exceed the net proceeds
resulting from the sale of the Registrable Securities sold by such Holder under
such Registration Statement.
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(c) 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 will, 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 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 reasonably incurred fees and expenses of one such counsel for
all indemnified parties to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting 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, to the extent prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 5 with respect to 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 5 or with respect to any other action unless the indemnifying
party is materially prejudiced as a result of not receiving such notice.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 5 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or such
Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and such Holder in connection with the statements
or omissions which resulted in such Losses; provided, however, that in no case
shall such Holder be responsible for any amount in excess of the net proceeds
resulting from the sale of the Registrable Securities sold by it under the
Registration Statement. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by such Holder. The Company and each Holder agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act and
each officer, director, employee, agent or representative of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or representative of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
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(e) The obligations of the Company and each Holder under this
Section 5 shall survive the conversion of the Preferred Stock and exercise of
the Investor Warrant in full, the completion of any offering or sale of
Registrable Securities pursuant to a Registration Statement under this
Agreement, or otherwise.
6. REPORTS; LEGENDS.
(a) With a view to making available to each Holder the benefits of
Rule 144 and any other similar rule or regulation of the Commission that may at
any time permit such Holder to sell securities of the Company to the public
without registration, the Company agrees (until all of the Registrable
Securities have been sold under a Registration Statement or pursuant to Rule
144) to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Company under Section 13 of the Exchange
Act; and
(iii) furnish to such Holder, so long as such Holder owns any
Registrable Securities, promptly upon written request (A) a written statement by
the Company, if true, that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (B) to the extent not
publicly available through the Commission's XXXXX database, 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 (C) such other information as may be
reasonably requested by such Holder in connection with such Holder's compliance
with any rule or regulation of the Commission which permits the selling of any
such securities without registration.
(b) Each Holder understands that the certificates representing the
Registrable Securities shall bear at issuance a restrictive legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE. FURTHER, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN THE HOLDER AND THE COMPANY.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY
OF THE COMPANY. NOTWITHSTANDING THE FOREGOING BUT SUBJECT TO COMPLIANCE WITH THE
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY BE PLEDGED OR
HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED
BY SUCH SECURITIES."
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Notwithstanding the foregoing, it is agreed that, at the time (A)
the resale or transfer (including without limitation a pledge) of any of the
Registrable Securities is registered pursuant to an effective Registration
Statement, (B) such Registrable Securities have been sold pursuant to Rule 144,
or (C) such Registrable Securities are eligible for resale under Rule 144(k) or
any successor provision and the Holder represents in writing that it is not an
affiliate of the Company and is eligible to use such rule for public resales of
such Registrable Securities, the Company shall issue new certificates without
such legend to the Holder upon request.
7. MISCELLANEOUS.
(a) Expenses of Registration. Except as otherwise provided in the
Securities Purchase Agreement, all reasonable expenses, other than underwriting
discounts and commissions and fees and expenses of counsel and other advisors to
each Holder, incurred in connection with the registrations, filings or
qualifications described herein, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, the
fees and disbursements of counsel for the Company, and the fees and
disbursements incurred in connection with the opinion and letter described in
paragraph 3(h) hereof, shall be borne by the Company.
(b) Amendment; Waiver. Except as expressly provided herein, neither
this Agreement nor any term hereof may be amended or waived except pursuant to a
written instrument executed by the Company and the Holders of at least
two-thirds (2/3) of the Registrable Securities into which all of the Preferred
Stock, Additional Preferred Stock, Investor Warrant and Additional Warrant then
outstanding are convertible or exercisable (without regard to any limitation on
such conversion or exercise). Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each Holder, each future Holder and
the Company. The failure of any party to exercise any right or remedy under this
Agreement or otherwise, or the delay by any party in exercising such right or
remedy, shall not operate as a waiver thereof.
(c) Notices. Any notice, demand or request required or permitted to
be given by the Company or a Holder pursuant to the terms of this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a day
that is not a Business Day, in which case such delivery will be deemed to be
made on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to a reputable overnight courier and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed as follows:
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If to the Company:
MediaBay, Inc.
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Chief Executive Officer and
Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Blank Rome LLP
The Chrysler Building
000 Xxxxxxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to a Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) Assignment. Upon the transfer of any Preferred Stock, Additional
Preferred Stock, Investor Warrant, Additional Warrant or Registrable Securities
by a Holder, the rights of such Holder hereunder with respect to such securities
so transferred shall be assigned automatically to the transferee thereof, and
such transferee shall thereupon be deemed to be a "Holder" for purposes of this
Agreement, as long as: (i) the Company is, within a reasonable period of time
following such transfer, furnished with written notice of the name and address
of such transferee, (ii) the transferee agrees in writing with the Company to be
bound by all of the provisions hereof, and (iii) such transfer is made in
accordance with the applicable requirements of the Securities Purchase
Agreement; provided, however, that the registration rights granted under this
Agreement shall not be assigned to any person or entity that receives any
Preferred Stock, Additional Preferred Stock, Investor Warrant, Additional
Warrant or Registrable Securities in a public transaction pursuant to an
effective registration statement under the Securities Act or pursuant to Rule
144.
(e) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall be
deemed one and the same instrument. This Agreement, once executed by a party,
may be delivered to any other party hereto by facsimile transmission.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.
(g) Holder of Record. A person is deemed to be a Holder whenever
such person owns or is deemed to own of record Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two or more
persons with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the record
owner of such Registrable Securities.
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(h) Entire Agreement. This Agreement, the First Registration Rights
Agreement, the Securities Purchase Agreement, the Articles of Amendment, the
Investor Warrant, the Preferred Warrant and the other Transaction Documents
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, the First Registration Rights Agreement, the Securities
Purchase Agreement, the Articles of Amendment, the Investor Warrant, the
Preferred Warrant and the other Transaction Documents supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof, including, without limitation, any
nondisclosure or similar agreement heretofore entered into between the Company
and any Investor.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date first-above written.
MEDIABAY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
XXXXXXX, XXXXX & CO.
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx
Title: Managing Director
