REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into
as of the 18th day of June, 1997, by and between The Xxxx-XX Corporation, a
Delaware corporation ("Company"); Hollywood Digital Limited Partnership, a
Delaware limited partnership ("Partnership"); and Hollywood Digital Inc., a
Delaware corporation; HDZ Digital Limited Partnership, a Delaware limited
partnership; The Palladion Limited Partnership, a Massachusetts limited
partnership; Phemus Corporation, a Massachusetts corporation ("Phemus"); Xxxx
Xxxxxxx; Xxxxxxx Xxxxx; Xxxxx Xxxxxxxx; and Xxxxxxx Xxxxxxx (collectively, the
"Partners"), with reference to the following facts:
A. Pursuant to that certain Agreement for the Purchase and Sale of Assets
of even date herewith (the "Purchase Agreement"), Company is issuing to the
Partnership two Convertible Subordinated Notes (the "Notes"), convertible into
the Class A Common Stock of the Company (the "Common Stock").
B. The Notes may be divided and transferred by the Partnership to the
Partners as a Partnership distribution.
C. The Company has agreed to grant to the Partnership and, to the extent
they are transferees of the Notes and/or the Common Stock, the Partners, certain
registration rights as set forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements,
covenants and other provisions contained herein and in the Purchase Agreement,
the parties agree as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following respective meanings:
1.1. CONVERSION SHARES. The Common Stock into which the Notes are
convertible.
1.2. EXCHANGE ACT. The Securities Exchange Act of 1934, as amended,
or any similar federal statute then in effect, and a
1
reference to a particular section thereof shall be deemed to include a reference
to the comparable section, if any, of any such similar federal statute.
1.3. HOLDER. The Partnership or any of the Partners which is a
holder of the Notes or Registrable Securities.
1.4. PERSON. An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof.
1.5. REGISTRABLE SECURITIES. Any shares of Common Stock which are
issued or will be issued upon conversion of a Note. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force, or (iv)
they shall have ceased to be outstanding.
1.6. REGISTRATION EXPENSES. Any and all expenses incident to
performance of or compliance with this Agreement, including without limitation,
(i) all SEC and stock exchange or National Association of Securities Dealers
registration and filing fees, (ii) all fees and expenses of complying with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
(iv) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance, but excluding underwriting discounts and commissions and transfer
taxes, if any.
2
1.7. SECURITIES ACT. The Securities Act of 1933, as amended, or any
similar federal statute then in effect, and a reference to a particular section
thereof shall be deemed to include a reference to the comparable section, if
any, of any such similar federal statute.
1.8. SEC. The Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
Section 2. INCIDENTAL REGISTRATION.
2.1. RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time proposes to register any Common Stock on any form for the general
registration of securities under the Securities Act (other than a registration
form relating to (i) a registration of a stock option, stock purchase or
compensation or incentive plan or of stock issued or issuable pursuant to any
such plan, or a dividend investment plan, (ii) a registration of stock proposed
to be issued in exchange for securities or assets of, or in connection with a
merger or consolidation with, another corporation, or (iii) a registration of
stock proposed to be issued in exchange for other securities of the Company),
then the Company will at such time give prompt written notice to all Holders of
Notes and Registrable Securities of its intention to do so and of such Holders'
rights under this Section 2. Upon the written request of such Holders made
within twenty (20) days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Holder and the intended method of disposition thereof), the Company will use its
best efforts to cause the Registrable Securities which the Company has been so
requested to register by the Holders thereof to be registered under the
Securities Act; provided, that (i) if, at any time after giving written notice
of its intention to register any securities but prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may at its election, give written notice of such determination to each
Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration, and (ii) if such
registration involves an underwritten offering, all Holders requesting to be
included in such registration must sell their Registrable Securities to the
underwriters of such offering on
3
the same terms and conditions as apply to the Company or the Holder for whose
account securities are to be sold, as the case may be. If a registration
requested pursuant to this Section 2.1 involves an underwritten public offering,
any Holder requesting to be included in such registration may elect in writing,
not later than three (3) days prior to the effectiveness of the registration
statement filed in connection with such registration, not to register such
securities in connection with such registration. The Company will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.
2.2. PRIORITY IN INCIDENTAL REGISTRATIONS. In connection with any
registration pursuant to this Section 2 involving an underwritten offering, if
the managing underwriter or underwriters advise the Company in writing that, in
its or their opinion, the number of securities requested to be included in such
registration would have a material adverse effect on such offering (including,
without limitation, a significant decrease in the price at which such securities
can be sold), then the amount of Registrable Securities to be offered for the
accounts of Holders shall be reduced pro rata as to all requesting Holders on
the basis of the relative number of shares of Registrable Securities each such
Holder has requested to be included in such registration, or such Registrable
Securities shall be excluded from such registration, to the extent necessary to
reduce the total amount of securities to be included in such offering to the
amount recommended by such managing underwriter or underwriters; provided,
however, that if securities are being registered for the account of persons or
entities other than the Company, such reduction shall not represent a greater
fraction of the number of Registrable Securities intended to be offered by
Holders than the fraction of similar reductions imposed on such other persons or
entities (but not the Company) with respect to the amount of securities they
intended to offer.
Section 3. DEMAND REGISTRATION.
3.1. GENERALLY. From and after the date which is one year after the
date upon which at least 50% of the aggregate principal amount of the Notes has
been converted into Common Stock, the Holder or Holders who hold, in the
aggregate, 50% or more of the Conversion Shares may make one (1) written request
for the registration under the Securities Act of all or part of their
Registrable Securities (a "Demand Registration") and the Company
4
shall use its best efforts to effect such Demand Registration, so long as such
request relates to Registrable Securities constituting 50% or more of the
Conversion Shares. Any request for a Demand Registration shall specify the
aggregate number of the Registrable Securities proposed to be sold and shall
also specify the intended method of disposition thereof. Within ten (10) days
after receipt of such request the Company will given written notice of such
registration request to all Holders, and the Company will include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within twenty (20) business days
after the receipt by the applicable Holder of the Company's notice. Each such
request shall also specify the aggregate number of Registrable Securities to be
registered and the intended method of disposition thereof. Unless the Holder or
Holders requesting the Demand Registration shall give written consent, no other
party, including the Company (but excluding another Holder of a Registrable
Security), shall be permitted to offer securities under any such Demand
Registration. In any registration initiated as a Demand Registration, the
Company will pay all Registration Expenses in connection therewith.
3.2. PHEMUS. In addition to the demand registration provided by
Section 3.1, from and after the date which is one year after the date upon which
its Notes have been converted into Common Stock, Phemus may make one (1) written
request for the registration under the Securities Act of all or part of its
Registrable Securities (the "Phemus Registration"), subject to the same terms
and conditions as are provided in Section 3.1 and elsewhere in this Agreement
with respect to the Demand Registration, provided that all costs and expenses of
such Phemus Registration, including the reasonable general and administrative
costs of the Company relating thereto, are paid for solely by Phemus.
Section 4. REGISTRATION PROCEDURES. If whenever the Company is required
to use its best efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will, as expeditiously as possible:
4.1. prepare and, in any event within ninety (90) days after the end
of the period within which request for registration may be given to the Company
(provided, however, if such registration involves an underwritten offering, all
Holders requesting to be
5
included in such registration must sell their Registrable Securities to the
underwriters of such offering on the same terms and conditions as apply to the
Company or the Holder for whose account the securities are to be sold, as the
case may be), file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective, provided, however, that the Company may
discontinue any registration of its securities which is being effected pursuant
to Section 2 herein at any time prior to the effective date of the registration
statement relating thereto. The Company will promptly notify each seller of
such Registrable Securities and confirm such advice in writing (i) when such
registration statement becomes effective, (ii) when any post-effective amendment
to such registration statement becomes effective and (iii) of any request by the
SEC for any amendment or supplement to such registration statement or any
prospectus relating thereto or for additional information;
4.2. prepare and file with the SEC such amendments and supplements
to such registration statement as may be necessary to keep such registration
statement effective for a period of not less than six (6) months and to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers of
Registrable Securities set forth in such registration statement. If at any time
the SEC should institute or threaten to institute any proceedings for the
purpose of issuing a stop order suspending the effectiveness of any such
registration statement, the Company will promptly notify each seller of such
Registrable Securities and will use all reasonable efforts to prevent the
issuance of any such stop order or to obtain the withdrawal thereof as soon as
possible;
4.3. furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such registration statement (including each
preliminary prospectus and summary prospectus) in conformity with the
requirements of the Securities Act, and such other documents as such seller may
reasonably request in order to facilitate the disposition of the Registrable
Securities by such seller;
6
4.4. use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such securities or blue
sky laws of any State of the United States as the managing underwriter, if any,
shall reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable each seller and underwriter, if any,
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this Section 4.4, it
would not be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such
jurisdiction;
4.5. use its best efforts to list such Registrable Securities on any
securities exchange on which the Common Stock is then listed, if such
Registrable Securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and to provide a transfer agent and
registrar for such Registrable Securities covered by such registration statement
not later than the effective date of such registration statement; and
4.6. promptly notify each seller of any such Registrable Securities
covered by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act within the
appropriate period mentioned in Section 4.2 of the Company becoming aware that
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; and at the
request of any such seller promptly prepare and furnish to such seller a
reasonable number of copies of an amended or supplemental prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not include 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 not misleading in the light of the circumstances
then existing.
4.7. The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish
7
the Company in writing such information and documents regarding such seller and
the distribution of such securities as may be required to be disclosed in the
registration statement in question by the rules and regulations under the
Securities Act or under any other applicable securities or blue sky laws of the
jurisdictions referred to in Section 4.4.
4.8. Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 4.6, such Holder
will forthwith discontinue disposition of Registrable Securities under such
registration statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4.6, and, if so
directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in Section 4.2 shall be extended by
the number of days during the period from and including the date of the giving
of such notice pursuant to Section 4.6 to and including the date when each
seller of Registrable Securities covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 4.6.
Notwithstanding anything to the contrary in this Section 4, the Company shall
not be required to prepare and file any registration statement (i) if, upon the
advice of counsel, such registration statement requires the disclosure of any
material item for which the Company has not made a public disclosure, or (ii)
requires the submission of any financial statement of the Company in addition to
the Company's annual audited and quarterly unaudited financial statements
required to be filed with the SEC pursuant to the Exchange Act.
Section 5. RULE 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder to the extent required from
time to time to enable the Holders to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as
8
such rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
Section 6. MISCELLANEOUS.
6.1. HOLDBACK AGREEMENT. If any registration in which a Holder is
participating shall be in connection with an underwritten public offering, such
Holder of Registrable Securities agrees not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under the Securities Act,
of any Registrable Securities, and to use such Holder's best efforts not to
effect any such public sale or distribution of any other equity security of the
Company or of any equity security, of the Company (in each case, other than as
part of such underwritten public offering) within thirty (30) days before or the
lesser of (a) one hundred eighty (180) days after the effective date of such
registration or (b) the time period during which the directors and officers of
the Company are subject to a lock-up agreement.
6.2. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of Holders (which
must include Phemus Corporation) holding or entitled to issuance of seventy-five
percent (75%) of the Registrable Securities. All Holders shall be bound by any
consent authorized by this Section 6.2.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Company"
THE XXXX-XX CORPORATION
By: _____________________________
Its: ____________________________
9
"Partnership"
HOLLYWOOD DIGITAL LIMITED PARTNERSHIP
By: HOLLYWOOD DIGITAL, INC., Its General Partner
By: __________________________
Its: _________________________
"Partners"
HOLLYWOOD DIGITAL, INC.
By: __________________________
Its: _________________________
THE PALLADION LIMITED PARTNERSHIP
By: XXXXXXX, XXXXX AND XXXX, INC.,
Its general partner
By: __________________________
Its: _________________________
10
HDZ DIGITAL LIMITED PARTNERSHIP
By: XXXXXXX, XXXXX AND XXXX LIMITED
PARTNERSHIP II
By: XXXXXXX, XXXXX AND XXXX, INC.,
Its general partner
By: _____________________
Its: ____________________
PHEMUS CORPORATION
By: __________________________
Its: _________________________
By: __________________________
Its: _________________________
______________________________
Xxxx Xxxxxxx
______________________________
Xxxxxxx Xxxxx
______________________________
Xxxxx Xxxxxxxx
______________________________
Xxxxxxx Xxxxxxx
11
