EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 20, 2006, by and among Zone 4 Play, Inc., a Nevada corporation
(the "Company"), and each of the purchasers signatory hereto (each such
purchaser, a "Purchaser" and collectively, the "Purchasers").
This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date hereof, by and among the Company and the Purchasers (the
"Purchase Agreement").
The Company and the Purchasers intending to be legally bound, hereby agree
as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"ADVICE" shall have the meaning set forth in Section 6(c).
"EFFECTIVENESS DATE" means, with respect to the Registration
Statements required to be filed hereunder, the earlier of (a) the day one
hundred twenty (120) calendar days following the date of the Purchase
Agreement and (b) the fifth Trading Day following the date, on which the
Company is notified by the Commission that such Registration Statement will
not be reviewed or is no longer subject to further review and comments;
PROVIDED, HOWEVER, that if a Holder fails to comply with the provisions of
Section 3(k), then, as to such Holder only, the Effectiveness Date with
respect to such Holder's Registrable Securities only shall be extended
until ninety (90) days following the date of receipt by the Company of such
required information.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in Section
2(a).
"EVENT" shall have the meaning set forth in Section 2(b).
"EVENT DATE" shall have the meaning set forth in Section 2(b).
"FILING DATE" means, with respect to the Registration Statements
required to be filed hereunder, the day forty five (45) calendar days
following the date of the Purchase Agreement.
"HOLDER" or "HOLDERS" means the holder or holders, as the case may be,
from time to time of Registrable Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding,
such as a deposition).
"PROSPECTUS" means the prospectus included in the applicable
Registration Statement (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration
Statement, and all other amendments and supplements to such Prospectus,
including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
"REGISTRABLE SECURITIES" means all Shares and Warrant Shares issued or
to be issued to the Purchasers with respect to the Common Stock purchased
pursuant to the Purchase Agreement or which may be issuable upon any
adjustment pursuant to any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing.
"REGISTRATION STATEMENT" means a registration statement required to be
filed hereunder, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"RULE 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
"RULE 424" means Rule 424 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.
2. REGISTRATION.
a. On or prior to the applicable Filing Date, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of all of the Registrable Securities not yet registered that are
held by Holders that have complied with the provisions of Section 3(k)
prior to such date for an offering to be made on a continuous basis
pursuant to Rule 415. Such Registration Statement required hereunder shall
be on Form SB-2 or Form S-3 (except if the Company is not then eligible to
register for resale the Registrable Securities on Form SB-2 or Form S-3, in
which case such Registration Statement shall be on another appropriate form
herewith). Subject to the terms of this Agreement, the Company shall use
its best efforts to cause such Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof, but in any event not later than the applicable Effectiveness Date,
and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the date when all
Registrable Securities covered by such Registration Statement have been
sold or may be sold during any three month period within the volume
restrictions pursuant to Rule 144as determined by the counsel to the
Company, to the extent that a Holder still holds Registrable Securities
(the "EFFECTIVENESS PERIOD"). Each Holder acknowledges and agrees that the
Company shall be permitted to exclude such Holder's Registrable Securities
from a Registration Statement if such Holder fails to timely comply with
the Company's request for information pursuant to Section 3(k); provided if
such Holder provides such information prior to the filing of such
Registration Statement the Company shall use commercially reasonable
efforts to include such Registrable Securities on such Registration
Statement; provided further that this provision does not otherwise waive
the Company's obligation to register such Registrable Securities pursuant
to the terms hereunder upon such Holder providing the Company with the
required information.
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b. If: (i) a Registration Statement is not filed on or prior to the
applicable Filing Date (For the avoidance of doubt, if the Company files a
Registration Statement without affording the Holder or Holders referenced
in such Registration Statement the opportunity to review and comment on the
same as required by Section 3(a), the Company shall not be deemed to have
satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 461
promulgated under the Securities Act, within no more than five (5) Trading
Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will
not be "reviewed," or is not subject to further review, or (iii) prior to
the date when a Registration Statement is first declared effective by the
Commission, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect
of such Registration Statement within thirty (30) calendar days after the
receipt of comments by or notice from the Commission that such amendment is
required in order for such Registration Statement to be declared effective,
or (iv) a Registration Statement filed or required to be filed hereunder is
not declared effective by the Commission on or before the applicable
Effectiveness Date, or (v) after a Registration Statement is first declared
effective by the Commission, it ceases for any reason to remain
continuously effective as to all Shares or Warrant Shares for which it is
required to be effective, or the Holders are not permitted by the Company
to utilize a Prospectus therein to resell such Shares or Warrant Shares,
for in any such case fifteen (15) consecutive Trading Days but no more than
an aggregate of twenty-five (25) Trading Days during any twelve (12) month
period (which need not be consecutive Trading Days) provided that any days
during which a Registration Statement ceases to be effective due to the
filing of a post-effective amendment, supplement or incorporated document
thereto by the Company at the request of the Holders in order to amend or
supplement the plan of distribution contained in the Prospectus shall not
be counted towards such fifteen (15) or twenty-five (25) Trading Day
periods provided the Company uses commercially reasonable efforts to cause
such post-effective amendment to be declared effective (any such failure or
breach being referred to as an "EVENT," and for purposes of clause (i) or
(iv) the date on which such Event occurs, or for purposes of clause (ii)
the date on which such five (5) Trading Day period is exceeded, or for
purposes of clause (iii) the date which such thirty (30) calendar days is
exceeded, or for purposes of clause (v) the date on which such fifteen (15)
or twenty-five (25) Trading Day period, as applicable, is exceeded being
referred to as "EVENT DATE"), then in addition to any other rights the
Holders may have hereunder or under applicable law: (x) on each such Event
Date the Company shall pay to each Holder an amount in cash, as partial
liquidated damages and not as a penalty, equal to 1% of the aggregate
purchase price paid by such Holder pursuant to the Purchase Agreement for
any Shares then held by such Holder, it being understood that (i) the
payment by the Company shall be made following the materialization of the
Event Date, e.g., if liquidated damages are to be paid pursuant to clause
(iv) above, then the liquidated damages shall be computed and paid
immediately following the declaration by the Commission of effectiveness,
and (ii) the maximum aggregate payment for liquidated damages hereunder
shall not exceed fifteen percent (15.0%) of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for any Shares or
Warrant Shares then held by such Holder. If the Company fails to pay any
liquidated damages pursuant to this Section 2(b) in full within seven (7)
business days after the date payable, the Company will pay interest thereon
at a rate of 6% per annum (or such lesser maximum amount that is permitted
to be paid by applicable law) to the Holder, accruing daily from the date
such liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The liquidated damages pursuant to the terms
hereof shall apply on a daily pro-rata basis for any portion of a month
prior to the cure of an Event. Notwithstanding anything herein to the
contrary, the Company agrees and acknowledges that any extensions to the
Filing Date or Effectiveness Date on account of a Holder failing to timely
comply with Section 3(k) relate solely to that Holder and in no way effect
the Filing Date and Effectiveness Date under this Agreement as they relate
to any other Holder.
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3. REGISTRATION PROCEDURES
In connection with the Company's registration obligations hereunder, the
Company shall:
a. Not less than five (5) Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto, the Company shall, (i) furnish to the Holders owning
Registrable Securities registered under such Registration Statement copies
of all such documents proposed to be filed (including documents
incorporated or deemed incorporated by reference to the extent requested by
such Person) which documents will be subject to the review of such Holders,
and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries, subject to any
applicable confidentiality obligations and duties not to selectively
disclose material non-public information, as shall be necessary, in the
reasonable opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall
not file any such Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities registered thereunder shall reasonably object in
good faith, provided that the Company is notified of such objection in
writing no later than five (5) Trading Days after such Holders have been so
furnished copies of such documents.
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b. (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and a Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement continuously effective as to the applicable Registrable
Securities for the applicable Effectiveness Period and prepare and file
with the Commission such additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable
Securities; (ii) subject to Section 4.1(c) of the Purchase Agreement, cause
the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably possible to
any comments received from the Commission with respect to such Registration
Statement or any amendment thereto and, as promptly as reasonably possible,
upon request, subject to any applicable confidentiality obligations and
duties not to selectively disclose material non-public information, provide
the Holders true and complete copies of all correspondence from and to the
Commission relating to such Registration Statement; and (iv) comply in all
material respects during the applicable Effectiveness Period with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by such Registration
Statement during the applicable period in accordance with the Holders'
intended methods of disposition set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.
c. Notify the Holders of Registrable Securities to be sold as promptly
as reasonably possible (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether
there will be a "review" of a Registration Statement and whenever the
Commission comments in writing on a Registration Statement (the Company
shall upon request, subject to any applicable confidentiality obligations
and duties not to selectively disclose material non-public information,
provide true and complete copies thereof and all written responses thereto
to each of the Holders); and (C) with respect to a Registration Statement
or any post-effective amendment, when the same has become effective; (ii)
of any request by the Commission or any other Federal or state governmental
authority during the period of effectiveness of a Registration Statement
for amendments or supplements to such Registration Statement or Prospectus
or for additional information; (iii) of the issuance by the Commission or
any other federal or state governmental authority of any stop order
suspending the effectiveness of a Registration Statement covering any or
all of such Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event of which the Company has
knowledge as a result of which a Prospectus, as then in effect, contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
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d. Use commercially reasonable efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as promptly as reasonably
practicable.
e. Furnish to each Holder, without charge, at least one (1) conformed
copy of each Registration Statement registering Registrable Securities held
by such Holder and each amendment thereto, including financial statements
and schedules, all documents incorporated or deemed to be incorporated
therein by reference to the extent requested in writing by such Person, and
all exhibits to the extent requested by such Person in writing (including
those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission.
f. Promptly deliver to each Holder, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request in
connection with resales by the Holder of Registrable Securities. Subject to
the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto, except after the giving of any notice pursuant to Section 3(c).
g. Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with
the selling Holders in connection with the registration or qualification
(or exemption from the Registration or qualification) of such Registrable
Securities for the resale by the Holder under the securities or Blue Sky
laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things reasonably necessary to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the applicable Registration Statement; PROVIDED, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or
file a general consent to service of process in any such jurisdiction.
h. If requested in writing by the Holders, cooperate with the Holders
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee
pursuant to the applicable Registration Statement, which certificates shall
be free, to the extent permitted by the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.
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i. Upon the occurrence of any event contemplated by Section 3(c)(v),
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the applicable Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither such
Registration Statement nor the Prospectus included therein will contain an
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 under which they were made, not misleading.
If the Company notifies the Holders in accordance with clauses (ii) through
(v) of Section 3(c) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holders shall
suspend use of such Prospectus. The Company will use its commercially
reasonable efforts to ensure that the use of a Prospectus may be resumed as
promptly as is practicable. The Company shall be entitled to exercise its
right under this Section 3(i) to suspend the availability of a Registration
Statement and the applicable Prospectus, subject to the payment of
liquidated damages pursuant to Section 2(b), for a period not to exceed
sixty (60) Trading Days (which need not be consecutive days) in any twelve
(12) month period.
j. Comply in all material respects with all applicable rules and
regulations of the Commission.
k. The Company may require each Holder, upon three (3) Trading Days'
notice, to furnish to the Company a certified statement as to, among other
things, the number of shares of Common Stock beneficially owned by such
Holder and the person(s) that has voting and dispositive control over such
Shares. It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Agreement with respect to the
Registrable Securities of any Holder that such Holder shall furnish to the
Company the Selling Stockholder Questionnaire attached hereto as ANNEX A.
4. REGISTRATION EXPENSES. Except as otherwise provided for herein, or in
Section 4.1(c) of the Purchase Agreement, all fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in a Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) reasonable fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions or,
except to the extent provided for in the Transaction Documents, any legal fees
or other costs of the Holders.
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5. INDEMNIFICATION
a. INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder,
the officers and directors of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers and directors of each such
controlling Person, to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys' fees and expenses)
and expenses (collectively, "LOSSES"), as incurred, arising out of or
relating to any untrue statement of a material fact contained in a
Registration Statement (at the time of its effectiveness), any Prospectus
or any form of prospectus or in any amendment or supplement thereto or in
any preliminary prospectus (each as of its date), or arising out of or
relating to any omission of 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, except to the extent, but only
to the extent, that (i) such untrue statements or omissions are based
solely upon information regarding such Holder furnished in writing to the
Company by or on behalf of such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed
and expressly approved in writing by such Holder expressly for use in such
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (ii) in the case of an occurrence of
an event of the type specified in Section 3(c)(ii)-(v), the use by such
Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that such Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d).
b. INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors and
officers, each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors and officers of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as
incurred , to the extent arising out of or based solely upon: (x) such
Holder's failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue statement of a material fact contained in
a Registration Statement, any Prospectus, or any form of prospectus, or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished in
writing by or on behalf of such Holder to the Company specifically for
inclusion in such Registration Statement or such Prospectus , amendment,
supplement or document incorporated by reference therein or (ii) to the
extent that (1) such untrue statements or omissions are based solely upon
information regarding such Holder furnished in writing to the Company by or
on behalf of such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in such Registration
Statement, such Prospectus or such form of Prospectus or in any amendment
or supplement thereto or document incorporated by reference therein or (2)
in the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that such Prospectus
is outdated or defective and prior to the receipt by such Holder of the
Advice contemplated in Section 6(c).
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c. CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that such failure shall have materially prejudiced
the Indemnifying Party's ability to defend such action.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall reasonably believe that a material
conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense thereof and the reasonable fees and expenses of one (1) separate
counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding affected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,
unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.
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d. CONTRIBUTION. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of each of the Indemnifying Party
and the Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue statement of a
material fact omission of a material fact, has been taken or made by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be
deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys' or other reasonable fees or expenses incurred by
such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification
provided for in this Section was available to such party in accordance with
its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in
excess of the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities which are the subject to the
Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission, except in the case of fraud by such
Holder.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.
6. MISCELLANEOUS
a. REMEDIES. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would
not provide adequate compensation for any losses incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be
adequate.
b. COMPLIANCE. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to a Registration Statement.
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c. DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(c), such
Holder will forthwith discontinue disposition of such Registrable
Securities under any Registration Statement until such Holder's receipt of
the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "ADVICE") by the Company
that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company will use its commercially
reasonable efforts to ensure that the use of such Prospectus may be resumed
as promptly as it practicable. The Company agrees and acknowledges that any
periods during which the Holder is required to discontinue the disposition
of the Registrable Securities hereunder shall be subject to the provisions
of Section 2(b).
d. PIGGY-BACK REGISTRATIONS. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file
with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of
its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with the
stock option or other employee benefit plans, then the Company shall send
to each Holder a written notice of such determination and, if within
fifteen (15) days after the date of such notice, any such Holder shall so
request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Holder
requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.
e. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and each Holder of the then outstanding Registrable Securities.
f. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be made in accordance
with the provisions of the Purchase Agreement.
g. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Each Holder may
assign their respective rights hereunder in the manner and to the Persons
as permitted under the Purchase Agreement.
11
h. EXECUTION AND COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together shall constitute one and
the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
i. GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined with
the provisions of the Purchase Agreement.
j. CUMULATIVE REMEDIES. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
k. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
l. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
m. INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. Except as
otherwise provided for herein, the obligations of each Holder hereunder are
several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in
any other agreement or document delivered at any closing, and no action
taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Holders are in
any way acting in concert with respect to such obligations or the
transactions contemplated by this Agreement. Each Holder shall be entitled
to protect and enforce its rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for any other
Holder to be joined as an additional party in any proceeding for such
purpose.
n. NOTICE OF DISPOSITION OF REGISTRABLE SECURITIES. Upon the request
of the Company, each Holder shall promptly provide the Company written
notice at such time as it no longer holds, directly or indirectly, any
Registrable Securities.
o. FEES AND EXPENSES. Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.
12
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
ZONE4PLAY, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE OF HOLDERS FOLLOWS]
[PURCHASER'S SIGNATURE PAGE TO RRA]
Name of Investing Entity: ._____________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: ________
Name of Authorized Signatory: _________________
Title of Authorized Signatory: _______________
/s/ Lilly Gold
-----------------------
/s/ Xxxx Xxxxxx
-----------------------
/s/ Xxx Xxxxxxx
-----------------------
/s/ Xxxx X. Xxxxxxxxx
-----------------------
Madison Value
Ventures XX XX
/s/ Xxxxx Xxxx
-----------------------
By: Xxxxx Xxxx
Title: Managing Partner
Walham Investments
Group Inc.
/s/ Xxxxxx Xxxxxxxxx
-----------------------
By: Occidental Trust
Corporation
represented by
Xxxxxx Xxxxxxxxx
Orinda capital
/s/ Xxx Xxxxxx
-----------------------
By: Xxx Xxxxxx
Title: General Partner
/s/ Xxxxxxxx X. Xxxxxx
-----------------------
/s/ Xxxxx xxxx
irrevocable trust
-----------------------
/s/ Xxxx Xxxxx
-----------------------
Y.G. Trusts Ltd
/s/ Xxxx Xxxxx
-----------------------
By: Xxxx Xxxxx
Title: Director
[SIGNATURE PAGES CONTINUE]
Annex A
Zone 4 Play, Inc.
Selling Security holder Notice and Questionnaire
The undersigned beneficial owner of common stock (the "Common Stock"), of Zone 4
Play, Inc. (the "Company") understands that the Company has filed or intends to
file with the Securities and Exchange Commission (the "Commission") a
Registration Statement for the registration and resale of the Registrable
Securities, in accordance with the terms of the Registration Rights Agreement,
dated as of February _, 2006 (the "Registration Rights Agreement"), among the
Company and the Purchasers named therein. A copy of the Registration Rights
Agreement is available from the Company's counsel upon request at the address
set forth below. All capitalized terms used and not otherwise defined herein
shall have the meanings ascribed thereto in the Registration Rights Agreement.
Certain legal consequences arise from being named as a Selling Security holder
in the Registration Statement and related prospectus (the "Prospectus").
Accordingly, you are advised to consult your own securities law counsel
regarding the consequences of being named as a Selling Security holder in the
Registration Statement and the Prospectus.
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1. Name.
(a) Full Legal Name of Selling Security holder:
______________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as (a) above)
through which Registrable Securities Listed in Item 3 below are held:
______________________________________________________________
(c) Full Legal Name of Natural Control Person (which means a natural
person who directly or indirectly alone or with others has power to
vote or dispose of the securities covered by the questionnaire):
______________________________________________________________
2. Address for Notices to Selling Security holder:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Telephone:_____________________________________________________________________
Fax:__________________________________________________________________________
Contact Person:_______________________________________________________________
3. Beneficial Ownership of Registrable Securities:
Type and Principal Amount of Registrable Securities beneficially owned:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
4. Broker-Dealer Status:
(a) Are you a broker-dealer?
Yes [_] No [_]
Note: If yes, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
(b) Are you an affiliate of a broker-dealer?
Yes [_] No [_]
(c) If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
Yes [_] No [_]
Note: If no, the Commission's staff has indicated that you should be
identified as an underwriter in the Registration Statement.
5. Beneficial Ownership of Other Securities of the Company Owned by the
Selling Security holder.
Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of the Company other than the
Registrable Securities listed above in Item 3.
Type and Amount of Other Securities beneficially owned by the Selling
Security holder:
_______________________________________________________________________
_______________________________________________________________________
6. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (owners of 5% of
more of the equity securities of the undersigned) has held any position or
office or has had any other relationship with the Company (or its predecessors
or affiliates) during the past three years.
State any exceptions here:
_______________________________________________________________________
_______________________________________________________________________
By signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, particularly Regulation M and the prospectus delivery requirements
under the Securities Act of 1933, as amended.
By signing below, the undersigned hereby advises the Company that it has not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the Registrable Securities.
In the event that the undersigned transfers (other than pursuant to the
Registration Statement) all or any portion of the Registrable Securities listed
in Item (3) above after the date on which such information is provided to the
Company, the undersigned agrees to notify the transferee at the time of the
transfer of its rights and obligations under this Notice and Questionnaire and
to notify the Company of such transfer.
The undersigned acknowledges and agrees that the Registration Statement shall be
available for resales of Registrable Securities only for the "Effectiveness
Period" (as such term is defined in the Registration Rights Agreement). Pursuant
to the Registration Rights Agreement, the Company may suspend the use of the
Prospectus ("Suspension") under certain circumstances.
The undersigned agrees to cease using the Prospectus immediately upon delivery
of notice from the Company indicating that a Suspension has begun.
The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof and prior to the Effective Date for the Registration Statement.
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the Prospectus. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the Prospectus.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:_________________ Beneficial Owner:__________________________
By:________________________________________
Name:
Title:
PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
Oded Har-Even, Esq.
Z.A.G/S&W LLP
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
