Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of January 31,
1997, by and between Intersound, Inc., a Minnesota corporation ("Intersound")
and PLATINUM ENTERTAINMENT, INC., a Delaware corporation (the "Company").
WHEREAS, concurrent with the execution hereof, River North Studios, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company ("RNS"), is
acquiring substantially all of the assets and business of Intersound pursuant to
that certain Asset Purchase Agreement, dated November 13, 1996, by and between
RNS and Intersound, as amended on January 31, 1997 (the "Purchase Agreement");
WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, Intersound is receiving $5,000,000 in the form of a convertible
promissory note issued by the Company (the "Convertible Note") which are
convertible into shares of common stock, $.001 par value per share, of the
Company (the "Common Stock"); and
WHEREAS, in order to induce Intersound to consummate the transactions
contemplated by the Purchase Agreement, the Company has agreed to grant it with
certain registration rights of the Common Stock, upon conversion of the
Convertible Note, on the terms and conditions set forth herein.
NOW, THEREFORE, upon the premises and the mutual promises herein contained,
and for good and valuable consideration, the receipt and adequacy of which is
acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement the following
initially capitalized terms shall have the following meanings:
PERSON: An individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, business, governmental agency or
governmental or political subdivision thereof.
REGISTRABLE SECURITIES: The Common Stock and any stock or other securities
into which such Common Stock shall have hereafter been changed, converted or
exchanged by Intersound in connection with the conversion of the Convertible
Note; PROVIDED, HOWEVER, that any such securities shall cease to be Registrable
Securities with respect to a proposed offer or sale thereof (i) when 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 the plan of distribution set forth in such
registration statement (ii) to the extent that such securities, in the opinion
of counsel to Intersound are permitted to be distributed pursuant to Rule 144 or
(iii) they shall have ceased to be outstanding.
REGISTRATION EXPENSES: As defined in Section 2.8 of this Agreement.
RULE 144: Rule 144 promulgated under the Securities Act, or any successor
rule to similar effect.
SEC: The United States Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, or any successor
statute.
TERMINATION DATE: The date which is the earlier of (i) the fifth
anniversary of the date hereof and (ii) the date Intersound no longer hold any
Registrable Securities.
2. REGISTRATION UNDER SECURITIES ACT.
2.1 DEMAND REGISTRATION.
a. REQUEST. Subject to the terms of this Agreement, Intersound may
request, in writing, registration of all or part of its Registrable Securities
by the Company under the Securities Act, specifying the number of Registrable
Securities to be registered and the intended method of disposition thereof.
Upon receipt of such written request, the Company will use all commercially
reasonable efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been requested to register by
Intersound; provided, however, Intersound shall not be entitled to have its
Registrable Securities registered pursuant to this Section 2.1(a) if it has
previously had the opportunity to exercise its right to incidental registration
under Section 2.2, in which case all rights under this Section 2.1(a) shall be
deemed terminated and of no further force and effect.
b. REGISTRATION OF OTHER SECURITIES. Whenever the Company shall
effect a registration pursuant to this Section 2.1, securities other than
Registrable Securities may be included among the securities covered by such
registration without restriction, subject to the terms of Section 2.1(f) below.
c. REGISTRATION STATEMENT FORM. Registrations under this Section
2.1 shall be on such appropriate registration form of the SEC (i) as shall be
selected by the Company and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request for registration.
d. EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected and will
not be considered one of the two demand registrations which may be requested by
Intersound hereunder (i) unless a registration statement with respect thereto
has become effective, or (ii) if, after it has become effective, it does not
remain effective and available to Intersound for resale for a period of at least
45 days (unless the Registrable Securities registered thereunder have been sold
or disposed of prior to the expiration of such 45 day period) or such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason and
has not thereafter become effective.
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e. NUMBER OF DEMAND REGISTRATIONS; OTHER LIMITATIONS. Intersound's
rights under Section 2.1 shall have the following limitations:
(i) Notwithstanding anything in this Agreement to the contrary,
the Company shall not be required to effect more than one demand
registrations pursuant to Section 2.1 of this Agreement, without regard to
any subsequent transfer of any Registrable Securities by Intersound;
(ii) The Company shall not be required to effect any demand
registration under this Section 2.1 prior to the first anniversary of the
date hereof;
(iii) The Company shall not be required to effect any demand
registration under this Section 2.1 after the Termination Date; and
(iv) The provisions set forth in Section 2.6.
f. INCIDENTAL COMPANY REGISTRATION. If Intersound makes a request
for a registration pursuant to Section 2.1(a), the Company may determine to
include securities of the same class sought to be registered by Intersound for
sale for the Company's own account or the account of other shareholders of the
Company by giving written notice thereof to Intersound. If the registration
referred to in Section 2.1(a) is to be an underwritten registration and the
managing underwriter(s) advise the Company (or the other shareholders
participating therein) in writing that in their good faith opinion such offering
would be adversely affected by the inclusion therein of the total number of
Registrable Securities requested to be included therein by Intersound, the
Company shall include in such registration: (1) first, all securities the
Company proposes to sell for its own account ("Company Securities"), (2) second,
up to the full number of securities proposed to be registered for the account of
the shareholders (other than Intersound) on behalf of whom registration may have
initially been requested and who are entitled to a priority in such case, and
(3) the securities requested to be registered by Intersound and any other
shareholders entitled to participate in the registration, drawn from them pro
rata based on the number each has requested to be included in such registration;
provided, however, (A) if less than all of the Registrable Securities desired by
Intersound to be registered are included in the undewritten registration, such
registration shall not be considered the one demand right provided to Intersound
pursuant to this Section 2.1 and (B) if greater than 50% of the Registrable
Securities desired by Intersound to be registered are included in the
undewritten registration, such registration shall be considered one of the five
incidental registration rights provided to Intersound pursuant to Section 2.2
below.
2.2 INCIDENTAL REGISTRATION RIGHTS.
a. RIGHT TO INCLUDE THE REGISTRABLE SECURITIES. If the Company, at
any time before the Termination Date, proposes to register securities under the
Securities Act by registration on Forms X-0, X-0 or S-3 or any successor or
similar form(s) (except registrations on such Forms S-4 or S-8 and any successor
or similar forms) whether for sale for its own account or pursuant to another
demand for registration granted any other party, it will give prompt written
notice each such time to Intersound of its intention to do so and of
Intersound's rights under this Section 2.2. Upon the written request of
Intersound (specifying the Registrable Securities intended to be disposed of and
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the intended method of disposition thereof), made within 15 business days after
the receipt of any such notice (10 business days if the Company gives telephonic
notice to Intersound with written confirmation to follow promptly thereafter,
stating that (i) such registration will be on Form S-3 and (ii) such shorter
period of time is required because of a planned filing date) (which request
shall specify the Registrable Securities to be disposed of by Intersound), the
Company will include in its proposed registration the Registrable Securities
specified in any such request, subject to the priorities set forth in Section
2.2(b) below. If the Company thereafter determines for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to Intersound and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of the obligation to register such Registrable Securities in connection with
such registration (but not from any obligation of the Company to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights (if any) of Intersound to request that such registration be effected
as a registration under Section 2.1, and (ii) in the case of a determination to
delay registration, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registration of such other
securities.
b. PRIORITY IN INCIDENTAL REGISTRATION RIGHTS IN CONNECTION WITH
REGISTRATIONS FOR COMPANY ACCOUNT. If the registration referred to in Section
2.2(a) is to be an underwritten registration and the managing underwriter(s)
advise the Company (or the other shareholders participating therein) in writing
that in their good faith opinion such offering would be adversely affected by
the inclusion therein of the total number of Registrable Securities requested to
be included therein by Intersound, the Company shall include in such
registration: (1) first, all securities the Company proposes to sell for its own
account ("Company Securities"), (2) second, up to the full number of securities
proposed to be registered for the account of the shareholders (other than
Intersound) on behalf of whom registration may have initially been requested and
who are entitled to a priority in such case, and (3) the securities requested to
be registered by Intersound and any other shareholders entitled to participate
in the registration, drawn from them pro rata based on the number each has
requested to be included in such registration.
c. LIMITATIONS; EXCEPTIONS. The Company shall not be required to
effect any registration of Registrable Securities under this Section 2.2
incidental to the registration of any of its securities in connection with
mergers, acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or stock option or other employee benefit plans.
d. NUMBER OF INCIDENTAL REGISTRATIONS; EFFECTIVE REGISTRATION
STATEMENT. Intersound may exercise its right to incidental registration under
this Section 2.2 five times during the term of this Agreement; provided,
however, each time Intersound has exercised its rights under Section 2.1(a),
such demand shall also count towards an incidental registration pursuant to this
Section 2.2(d). A registration requested pursuant to this Section 2.2 shall not
be deemed to have been effected and will not be considered one of the incidental
registrations which may be requested by Intersound (i) unless a registration
statement with respect thereto has become effective, or (ii) if, after it has
become effective, it does not remain effective and available to Intersound for
resale for a period of at least 45 days (unless the Registrable Securities
registered thereunder have been sold or disposed of prior to the expiration of
such 45-day period) or such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason and has not thereafter become effective.
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2.3 REGISTRATION PROCEDURES. Whenever Intersound has requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use all commercially reasonable efforts to effect the registration of such
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company will:
a. prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all commercially reasonable
efforts to cause such registration statement to become effective.
b. prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus(es) used in connection therewith,
which prospectus(es) are to be filed pursuant to Rule 424 under the Securities
Act, as may be necessary to keep such registration statement effective for a
period of 45 days and 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 sellers thereof set forth in such registration statement or
supplement to such prospectus;
c. furnish to Intersound, without charge, such number of copies of
such registration statement, each amendment and supplement thereto, the
prospectus(es) included in such registration statement (including each
preliminary prospectus), and such other documents (including customary legal
opinions, comfort letters and officers' certificates) as Intersound or an
underwriter may reasonably request in order to facilitate the disposition of the
Registrable Securities (the Company consents to the use of such prospectus or
any amendment or supplement thereto by Intersound and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities covered
by such prospectus or any amendment or supplement thereto); and furnish to
Intersound and each managing underwriter, without charge, at least one conformed
copy of the registration statement or statements and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
d. use all commercially reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
jurisdictions as Intersound reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to (i) keep such
registration or qualification effective during the forty-five (45) day period
such registration statement is required to be kept effective hereunder and (ii)
enable Intersound to consummate the disposition in such jurisdictions of the
Registrable Securities owned by Intersound (provided that the Company will not
be required to (1) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (2)
subject itself to taxation in any such jurisdiction or (3) consent to general
service of process in any such jurisdiction);
e. notify Intersound and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any post-
effective amendment, when the same has become effective, (ii) of any request by
the SEC for amendments or supplements to a registration statement or related
prospectus or for
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additional information, (iii) of the happening of any event as a result of which
a registration statement or the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
Intersound, the Company will prepare a supplement or amendment to such
registration statement or prospectus so that such registration statement or
prospectus will not contain any untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading, (iv) of
the receipt by the Company of any notification with respect to the suspension of
the 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 Company's reasonable determination that a post-effective
amendment to a registration statement would be appropriate;
f. cause all such Registrable Securities to be listed on each
securities exchange and inter-dealer quotation system on which similar
securities issued by the Company are then listed and pay all fees and expenses
in connection therewith;
g. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
h. take all such other actions as Intersound or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities, including, without limitation, (i) preparing and
arranging for the timely delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends unless required by
applicable law and (ii) enabling such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
i. advise Intersound promptly after it shall receive notice or
obtain knowledge thereof, of (i) the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purposes and will promptly use all
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued, or (ii) the
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purposes and will promptly use all commercially reasonable efforts to prevent
such suspension or have such suspension lifted if it should be effected;
j. if requested by the managing underwriters or Intersound,
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters and Intersound agree should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required filings of
such prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by a shareholder or any underwriter of such Registrable Securities;
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k. use all commercially reasonable efforts to cause the Registrable
Securities covered by the applicable registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities; and
l. otherwise use all commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC and make generally available to
its security holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 90 days after the end of any 12-month
period (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwriting
offering and (ii) beginning with the first day of the Company's first fiscal
quarter next succeeding each sale of Registrable Securities after the effective
date of a registration statement, which statements shall cover said 12-month
periods.
Intersound shall furnish to the Company in writing such information
relating to such Person as the Company may reasonably request in writing in
connection with the preparation of such registration statement and each such
Person agrees to notify the Company as promptly as practicable of any inaccuracy
or change in information it has previously furnished to the Company or of the
happening of any event, in either case as a result of which any prospectus
relating to such registration contains an untrue statement of a material fact
regarding such Person or the distribution of such Registrable Securities or
omits to state any material fact regarding such Person or the distribution of
such Registrable Securities required to be stated therein or necessary to make
the statement therein not misleading in light of the circumstances then
existing, and to promptly furnish to the Company any additional information
required to correct and update any previously furnished information or required
such that such prospectus shall not contain, with respect to such Person or the
distribution of such Registrable Securities, 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 light of the circumstances then
existing. Intersound agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 2.3(e) (ii),
(iii), (iv) or (v) or Section 2.3(i) hereof, such holder will forthwith
discontinue disposition of such Registrable Securities covered by such
registration statement or prospectus until such holder's receipt of the copies
of the supplemented or amended prospectus relating to such registration
statement or prospectus, or until it is advised in writing by the Company that
the use of the applicable prospectus may be resumed, and has received copies of
any additional or supplemental filings which are incorporated by reference in
such prospectus, 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 person's possession, of the prospectus covering the
Registrable Securities current at the time of receipt of such notice. In
addition, Intersound shall enter into and perform its obligations pursuant to
any underwriting agreement to be entered into with respect to a registration
that includes Registrable Securities.
2.4 UNDERWRITTEN OFFERINGS.
a. GENERAL. If any registration hereunder is underwritten, the
Company shall have the right to select the underwriter.
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b. UNDERWRITTEN OFFERINGS. If the Company at any time proposes to
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by Intersound as provided in
Section 2.2 and subject to the provisions of Section 2.2(b), use all
commercially reasonable efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by Intersound among the
securities to be distributed by underwriters. Intersound shall be party to the
underwriting agreement between the Company and such underwriters and the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of Intersound. Intersound further agrees that in the event the
Company proposes to register its securities under the Securities Act, whether
pursuant to Section 2.1 or 2.2 above or otherwise, and such securities are to be
distributed through one or more underwriters, Intersound agrees to be a party to
any lock-up or similar agreement (prohibiting the sale of such securities for a
period of time before and/or after the offering) which is entered into by the
other selling shareholders in connection with such offering, regardless of
whether or not Intersound is registering or selling its Registrable Securities
in connection with such underwritten offering; provided, however, any such lock-
up period shall not extend longer than 90 days from the date such offering is
consummated.
2.5 REASONABLE INVESTIGATION. In connection with the preparation and
filing of each registration statement under the Securities Act pursuant to this
Agreement, the Company will give Intersound and its counsel and accountants such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS. The obligations of the Company hereunder to cause the
Registrable Securities to be registered under the Securities Act are subject to
each of the following limitations, conditions and qualifications:
a. The Company shall not be obligated to file or keep effective any
registration statement pursuant to Section 2.1 hereof at any time if the Company
would be required to include financial statements audited as of any date other
than the end of its fiscal year.
b. The Company, by act of its Board of Directors, shall be entitled
to postpone for a reasonable period of time (but not exceeding 180 days) the
filing or effectiveness of any registration statement otherwise required to be
prepared and filed by it pursuant to Section 2.1 if the Board of Directors of
the Company determines, in the good faith exercise of its reasonable judgment,
that (i) the Company is in possession of material information that has not been
disclosed to the public and the Board of Directors of the Company reasonably
deems it to be advisable not to disclose such information at such time in a
registration statement or (ii) such registration and offering would interfere
with any financing, acquisition, corporate reorganization or other material
transaction involving the Company and/or its subsidiaries or affiliates, taken
as a whole, and, in any such case, the Company promptly gives Intersound written
notice of such determination, containing a general statement of the reasons for
such postponement and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, Intersound shall have
the right
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to withdraw the request for registration by giving written notice to the Company
within 30 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted for purposes of the requests
for registration to which Intersound is entitled pursuant to Section 2.1 hereof.
2.7 INDEMNIFICATION.
a. INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any Registrable Securities under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless, to the fullest extent permitted by
law, Intersound and each other Person, if any, who controls Intersound within
the meaning of the Securities Act, against any and all judgments, fines,
penalties, charges, costs, amounts paid in settlement, losses, claims, damages,
liabilities, expenses, or attorney fees, joint or several, incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("Indemnified Damages"), to which they or any of them may become
subject under the Securities Act or any other statute or common law, insofar as
any such Indemnified Damages arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such securities or any post-
effective amendment thereto or in any filing made in connection with the
qualification of the offering under blue sky or other securities laws of
jurisdictions in which the Registrable Securities are offered ("Blue Sky
Filing"), or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, if used prior to the
effective date of such registration statement (unless such statement is
corrected in the final prospectus and the Company has previously furnished
copies thereof to Intersound and the underwriters), or contained in the final
prospectus (as amended or supplemented if the Company shall have filed with the
SEC any amendment thereof or supplement thereto) if used within the period
during which the Company is required to keep the registration statement to which
such prospectus relates current, or the omission or alleged omission to state
therein (if so used) a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the indemnification agreement contained
herein shall not apply to such Indemnified Damages to a particular Person to be
indemnified hereunder arising out of, or based upon, any such untrue statement
or alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by such Person stating that it is for use
in connection with preparation of the registration statement, any preliminary
prospectus or final prospectus contained in the registration statement, any such
amendment or supplement thereto or any Blue Sky Filing.
b. INDEMNIFICATION BY INTERSOUND. The Company may require, as a
condition to including the Registrable Securities of Intersound in any
registration statement filed pursuant to Section 2.1 or 2.2, that the Company
shall have received an undertaking satisfactory to it from Intersound to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this Section 2.7) the Company, its officers and
directors and each officer of the
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Company and each other Person, if any, who controls the Company within the
meaning of the Securities Act with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information Intersound furnished to
the Company through an instrument duly executed by him specifically stating that
it is for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling Person and
shall survive the transfer of such securities by Intersound.
c. NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 2.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action, PROVIDED that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party, the
indemnifying party shall be entitled to participate in and, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. The indemnified
party shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. If the indemnifying party does not
assume such defense, the indemnified party shall keep the indemnifying party
apprised at all times as to the status of the defense; provided, however, that
the failure to keep the indemnifying party so informed shall not affect the
obligations of the indemnifying party hereunder. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its written consent, PROVIDED, HOWEVER, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the indemnified party
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made.
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d. INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 2.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.
e. CONTRIBUTION. If the indemnification provided for in this
Section 2.7 shall for any reason be held by a court to be unavailable to an
indemnified party under subparagraph (a) or (b) hereof in respect of any
Indemnified Damages, then, in lieu of the amount paid or payable under
subparagraph (a) or (b) hereof, the indemnified party and the indemnifying party
under subparagraph (a) or (b) hereof shall contribute to the aggregate
Indemnified Damages, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party (taking into
account, among other things, whether any untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material fact
related to information supplied by the indemnifying party or the indemnified
party) with respect to the statements or omissions which resulted in such
Indemnified Damages, as well as any other relevant equitable considerations. 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 was not guilty of such fraudulent misrepresentation. The obligations of
Intersound to contribute as provided in this subparagraph (e) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
f. OTHER RIGHTS; LIABILITIES. The indemnity agreements contained
herein shall be in addition to (i) any cause of action or similar right of the
indemnified party against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.
2.8 REGISTRATION EXPENSES. The Company will pay all Registration Expenses
(as defined below) in connection with the demand for registration of Registrable
Securities requested under Section 2.1. In a registration of Registrable
Securities under Section 2.2, the Company will pay all Registration Expenses,
other than (i) counsel's fees and expenses for Intersound and (ii) the fees and
expenses of any other Person retained by Intersound. "Registration Expenses"
include all expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation all registration and filing fees,
including fees with respect to filings required to be made with the National
Association of Securities Dealers, Inc., fees and expenses of compliance with
securities or blue sky laws, including, without limitation, reasonable fees and
disbursements of counsel for the underwriters, all word processing, duplicating
and printing expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel of the Company and of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance),
underwriters fees and disbursements (excluding discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Registrable Securities), fees
and expenses of other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"). Except as otherwise provided above, the
Company will also pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and
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expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, rating agency fees and the fees and
expenses of any Person, including special experts, retained by the Company.
2.9 CERTAIN RIGHTS OF STOCKHOLDERS IF NAMED IN A REGISTRATION STATEMENT.
If any statement contained in a registration statement under the Securities Act
refers to Intersound by name or otherwise as the holder of any securities of the
Company, then Intersound shall have the right to require the insertion therein
of language, in form and substance reasonably satisfactory to it and the
Company, to the effect that its holdings do not necessarily make it a
"controlling person" of the Company within the meaning of the Securities Act and
is not to be construed as a recommendation of the investment quality of the
Company's securities covered thereby.
3. RULE 144. The Company shall take all reasonable actions and file all
such information, documents and reports as shall be required to enable
Intersound to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
4. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns. The Company may not assign its
obligations hereunder. Except as set forth in Section 5(j) hereof, Intersound
may not assign its rights hereunder or otherwise provide to any third party the
benefits granted to Intersound hereunder without the prior written consent of
the Company, which consent may be granted or withheld at the Company's sole
discretion.
5. MISCELLANEOUS.
a. SEVERABILITY. If any term or provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms and provisions 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 best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
b. FURTHER ASSURANCES. Subject to the specific terms of this
Agreement, each of the parties hereto shall make, execute, acknowledge and
deliver such other instruments and documents, and take all such other actions,
as may be reasonably required in order to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
c. WAIVERS, ETC. No failure or delay on the part of either party
hereto (or the intended third party beneficiaries referred to herein) in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure therefrom shall in any event be
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effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
d. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. The
section headings contained in this Agreement are solely for the purpose of
reference, and shall not in any way affect the meaning or interpretation of this
Agreement.
e. COUNTERPARTS. For the convenience of the parties, this Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original but all of which together shall be one and the same instrument.
f. NOTICES. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served, if in writing and delivered personally, by facsimile or sent by
registered mail, postage prepaid as follows:
if to the Company, to:
Platinum Entertainment, Inc.
0000 Xxxxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telecopy No. (000) 000-0000
if to Intersound, to:
Intersound, Inc.
Xxxxxx Crest Center
00000 Xxxxx Xxxx
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxx Xxxxxxx
Telecopy No.: (000) 000-0000
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Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. York
Telecopy No.: (000) 000-0000
Notice given by facsimile shall be deemed delivered on the business day after it
is received by the recipient. Notice given by mail as set out above shall be
deemed delivered five (5) calendar days after the date the same is mailed.
g. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
h. AMENDMENTS. This Agreement may be amended only by a written
agreement signed by the Company and Intersound.
i. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.
j. TRANSFER. The parties hereto agree that, prior to any
registration of Registrable Securities, the Registrable Securities may be
assigned, at no cost, (provided such assignment complies in all respects with
all applicable laws, including, without limitation, the Securities Act of 1933,
as amended), by Intersound on the same assignment terms as those set forth in
the Convertible Note. It is the intention of the parties that upon conversion
of the Convertible Note, each holder thereof of the underlying Registrable
Securities issued upon such conversion of the Convertible Note will have all of
the rights, and be subject to all of the obligations, hereunder; PROVIDED,
HOWEVER, in no event will more than 15 Persons hold Registrable Securities
hereunder at any time. Notwithstanding the preceding sentence or anything to the
contrary contained herein, in order for any rights under Section 2.1 above to be
exercised, all holders of Registrable Securities must act as a group and,
therefore, one holder of Registrable Securities may not exercise any such rights
herein, individually, without the consent of, and joining of, ALL of the other
holders of Registrable Securities.
k. ATTORNEY'S FEES. In the event a court of competent jurisdiction
determines that one party has breached the terms of this Agreement (the
"Breaching Party"), and the other party has not breached any terms of this
Agreement (the "Non-Breaching Party"), the Breaching Party shall be liable for
paying the reasonable attorney's fees incurred by the Non-Breaching Party in
enforcing the terms of this Agreement which is the subject matter of such
breach.
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IN WITNESS WHEREOF, the Company and Intersound have caused this Agreement
to be duly executed as of the date first above written.
Platinum Entertainment, Inc.
By: /s/ Xxxxxx Xxxxxx
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Its: President
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Intersound, Inc.
By: /s/ X. Xxxxxxx
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Its: President
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