EXHIBIT "C"
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Registration Rights
Agreement"), entered into as of October 17, 1996 by and between LIMITED, with
offices at c/o (the "Purchaser"), and VIDEOLAN TECHNOLOGIES, INC., a Delaware
corporation with offices at 000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, X.X.X. (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to a Subscription Agreement, dated as of
the date hereof (the "Agreement"), by and between the Company and the
Purchaser, the Company has agreed to sell and the Purchaser has agreed to
purchase 500 shares of the Company's Series 1996A Convertible Preferred Stock
(the "Preferred Stock") convertible into shares of the Company's Common Stock,
$.01 par value (the "Shares");
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Purchaser's agreement to enter into the Agreement, the
Company has agreed to provide the Purchaser with certain registration rights
with respect to the Shares as set forth in this Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the
Agreement and this Registration Rights Agreement, the Company and the Purchaser
agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"Registrable Securities" shall mean the Shares issued to
Purchaser or its designee upon conversion of the Preferred Stock or upon any
stock split, stock dividend, recapitalization or similar event with respect to
such Shares; provided, however, that Registrable Securities shall cease to be
Registrable Securities when they may be sold pursuant to Rule 144 under the
Securities Act.
Registrable Securities shall not include the Preferred Stock.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with Purchaser's exercise of its
registration rights under this Agreement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements of one counsel to the Holder and the other securityholders
participating in the registration for a review of the Registration Statement
and related documents, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for Holder not included with "Registration
Expenses".
"Holder" shall include the Purchaser and any permitted
transferee of Preferred Stock, Shares or Registrable Securities which have not
been sold to the public to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 11 of this
Agreement. "Registration Statement" shall have the meaning set forth in Section
2(a) herein.
"Regulation D" shall mean Regulation D as promulgated
pursuant to the Securities Act, and as subsequently amended.
"Rule 144" shall mean 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 Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
2. Demand Registration
(a) After the Closing Date the Company shall use its best
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request in the states specified in such request.
Subject to the previous paragraph, the Company shall file (i)
a registration statement with the Commission pursuant to Rule 415 under the
Securities Act on Form S-3 under the Securities Act (or in the event that the
Company in ineligible to use such form, such other form as the Company is
eligible to use under the Securities Act) covering the Registrable Securities
so requested to be registered ("Registration Statement") ; (ii) such blue sky
filings as shall have been requested by the Holder; and (iii) any required
filings with the National Association of Securities Dealers, Inc. or exchange
where the Shares are traded, as soon as practicable, after receipt of the
request of the Holder. Thereafter the Company shall use its best efforts to
have such Registration Statement and other filings declared effective no later
than 110 days from the Closing Date, as that term is defined in the
Subscription Agreement.
(b) (i) Subject to the conditions contained in Section 2(a)
above, if the Company fails to have such Registration Statement declared
effective by the Commission within one hundred and ten (110) days from the
Closing Date, the Holder shall have, in addition to and without limiting any
other rights it may have at law, in equity or under the Preferred Stock, the
Agreement, or this Registration Rights Agreement (including the right to
specific performance), the right to receive, as liquidated damages, additional
shares of common stock of the Company as provided in subparagraph (ii) of this
section.
(ii) If after one hundred and ten (110) days from
the Closing Date, the Registration Statement has not been declared effective by
the Commission, then the Company shall issue to the Purchaser an additional
amount of common stock shares (the "Additional Shares") upon conversion of such
Holder's Preferred Stock. For each 30-day period that the Company is late in
having its Registration Statement declared effective by the Commission, the
Company shall issue a number of Additional Shares equal to 2% (which Additional
Shares shall be issued pro rata for any period of less than 30 days) of the
original principal amount of Preferred Stock held by Purchaser, which
Additional Shares shall be issued to the Purchaser upon its conversion of
Preferred Stock. The number of Additional Shares shall increase to 4% of the
original principal amount of Preferred Stock if the Registration Statement is
not declared effective after 150 days following the Closing Date per each
30-day period (which Additional Shares shall be issued pro rata for any period
of less than 30 days), and to 6% of the original principal amount of Preferred
Stock, if the Registration Statement is not declared effective after 210 days
after the Closing Date per each additional 30-day period thereafter (which
Additional Shares shall be issued pro rata for any period of less than 30
days), until the effective date of the Registration Statement.
(iii) The Company acknowledges that its failure to
register the Registrable Securities in accordance with this Registration Rights
Agreement will cause the Holder to suffer damages in an amount that will be
difficult to ascertain. Accordingly, the parties agree that it is appropriate
to include in this Registration Rights Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages
provisions set forth in paragraph 2(b)(ii) above represent the parties' good
faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a
penalty. The payment of liquidated damages shall not relieve the Company from
its obligations to register the Registrable Securities pursuant to this
Agreement.
(c) If there is more than one Holder, such Holders shall act
with respect to their rights under this Registration Rights Agreement according
to the vote of a majority-in-interest.
(d) The Company shall make available for inspection by a
representative or representatives of the Holder, and any attorney or accountant
retained by such Holder, all financial and other records customary for such
purposes, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such representative, attorney or accountant in
connection with such Registration Statement. The Holder will agree to keep all
non-public information supplied to it confidential until such information is
included in a Registration Statement which has been made publicly available.
(e) The Company shall not be obligated to keep such
Registration Statement continuously effective for a period of more than two
years from the date it is declared effective by the Commission; provided,
however, that if so requested by the holders of a majority-in-interest of the
Registrable Securities the Company shall agree to extend the period for which
the Registration Statement remains effective to the same extent that
"suspension periods" are imposed pursuant to the next paragraph, but only so
long as the then unsold Registrable Securities covered by such Registration are
too numerous to be sold under the volume limitations of Rule 144 in any
applicable three month period by any Holder.
Following the effectiveness of the Registration Statement
pursuant to this Registration Rights Agreement, the Company may, at any time,
suspend the effectiveness of such Registration Statement and sales thereunder
for up to ten (10) days, as appropriate (a "Suspension Period"), by giving
notice to each Holder (or underwriter, if any) selling thereunder, if the
Company shall have determined that the Company may be required to disclose any
material corporate development which disclosure (i) may have a material adverse
effect on the Company, (ii) may have a material adverse affect on the
transaction or matter to be disclosed, or (iii) would be detrimental to the
Company or its stockholders. Notwithstanding the foregoing, no more than two
Suspension Periods (i.e., twenty (20) days) may occur in immediate succession,
and the Company shall use its best efforts to limit the duration and number of
any suspension periods. Holder agrees (and shall require that any underwriter
agree) that, upon receipt of any notice from the Company of any Suspension
Period, Holder shall forthwith discontinue disposition of shares covered by the
Registration Statement or Prospectus until such Holder (i) is advised in
writing by the Company that the use of the applicable Prospectus may be
resumed, (ii) has received copies of a supplemental or omitted Prospectus, if
applicable, and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference in
such Prospectus.
3. Company Registration. If at any time, or from time to time
prior to the registration of the Registrable Securities, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than (i) a registration on Form S-8 or (ii) a
registration on Form S-4 relating solely to a transaction pursuant to Rule 145,
the Company will promptly give to each Holder written notice thereof and
include in such registration statement all the Registrable Securities specified
in a written request made within 30 days after mailing of written notice by the
Company.
4. Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses shall be borne by the Holder.
5. Registration on Form S-3. Although the Company shall use
its best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible to use
such form, such form as the Company is eligible to use under the Securities
Act, nothing in the Agreement or this Registration Rights Agreement is intended
to require the Company to pay dividends in order to use Form S-3.
6. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep the
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
(a) Keep such Registration Statement effective for the period
ending twenty-four (24) months after the registration has been declared
effective by the Commission or until the Holder has completed the distribution
described in the Registration Statement relating thereto, whichever first
occurs.
(b) Furnish such number of prospectuses and other documents
incident thereto as the Holder from time to time may reasonably request.
7. Indemnification.
(a) Company Indemnity. The Company will indemnify the Holder,
each of its officers, directors and partners, and each person controlling
Holder, within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder with respect to which registration, qualification or
compliance has been effected pursuant to this Agreement, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the Company of
the Securities Act or any state securities law or in either case, any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse the Holder, each of its
officers, directors and partners, and each person controlling such Holder, for
any legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission based upon written information
furnished to the Company by Holder and stated to be specifically for use
therein. The indemnity agreement contained in this Section 7(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent will not be unreasonably withheld).
(b) Holder Indemnity. The Holder will, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, and each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act and the rules and regulations thereunder, each
other Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, and will reimburse the Company and such other Holders and their
directors, officers and partners, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by Holder and stated to be specifically for use therein, and provided
that the maximum amount for which the Holder shall be liable under this
indemnity shall not exceed the net proceeds received by the Holder from the
sale of the Registrable Securities. The indemnity agreement contained in this
Section 7(b) shall not apply to amounts paid in settlement of any such claims,
losses, damages or liabilities if such settlement is effected without the
consent of Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to indemnification under
this Article (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Article
except to the extent that the Indemnifying Party is materially and adversely
affected by such failure to provide notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement 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. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
8. Contribution. If the indemnification provided for in
Section 7 herein is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein (other than by reason
of the exceptions provided therein), then each such 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, claims, damages
or liabilities (i) as between the Company and the Holder on the one hand and
the underwriters on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Holder on the one hand or
underwriters, as the case may be, on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of the
Holder or underwriters, as the case may be, on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and the Holder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and
of the Holder in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand
and the Holder or the underwriters, as the case may be, on the other shall be
deemed to be in the same proportion as the proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company from the initial sale of the Preferred Stock which can be
converted into Registrable Securities by the Company to the Holder pursuant to
the Subscription Agreement which corresponds to this Registration Rights
Agreement bear to the gain realized by such Holder or the total underwriting
discounts and commissions received by the underwriters as set forth in the
table on the cover page of the prospectus, as the case may be. The relative
fault of the Company on the one hand and of the Holder or underwriters, as the
case may be, on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company, by the Holder or by the underwriters.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such Indemnifying Party
would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 7(a) or 7(b) hereof had been
available under the circumstances.
The Company and the Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Holder or the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no Holder or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of the Holder, the net proceeds received by the Holder
from the sale of Registrable Securities or (ii) in the case of an underwriter,
the total price at which the Registrable Securities purchased by it and
distributed to the public were offered to the public exceeds, in any such case,
the amount of any damages that the Holder or underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
9. Survival. The indemnity and contribution agreements
contained in Sections 6 and 7 shall remain operative and in full force and
effect regardless of (i) any termination of the Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company and (iii) the consummation of the sale or
successive resales of the Registrable Securities.
10. Information by Holder. The Holder shall furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
11. Transfer or Assignment of Registration Rights. The
rights, granted to Purchaser by the Company under this Registration Rights
Agreement, to cause the Company to register Registrable Securities, may be
transferred or assigned to a transferee or assignee of not less than 50 shares
of Preferred Stock, provided that the Company is given written notice by Holder
at the time of or within a reasonable time after said transfer or assignment,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned, and provided further that the transferee or assignee of such
rights is not deemed by the board of directors of the Company, in its
reasonable judgment, to be a competitor of the Company; and provided further
that the transferee or assignee of such rights agrees to be bound by this
Registration Rights Agreement.
Purchaser is one of a group of holders of Registrable
Securities issued or issuable pursuant to a total aggregate amount of up to
$7.5 million of Preferred Stock purchased by Purchaser and others in a
transaction designed to qualify as an offering pursuant to Section 4(2),
Section 4(6) and Regulation D. Any action to be taken under this Registration
Rights Agreement or any term of this Registration Rights Agreement may be
amended or waived only with written action by the Company and the holders of at
least a majority-in-interest of the total of the Registrable Securities. Any
action, amendment or waiver effected in accordance with this paragraph shall be
binding upon each of the other holders of Registrable Securities at the time
then outstanding.
12. Miscellaneous.
(a) Entire Agreement. This Registration Rights Agreement
contains the entire understanding and agreement of the parties, and may not be
modified or terminated except by a written agreement signed by both parties.
(b) Notices. Any notice or other communication given or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by registered or certified
mail, return receipt requested, postage prepaid or by air courier, (a) if to
Purchaser, at its address hereinabove set forth, (b) if to the Company, at its
address hereinabove set forth, and (c) if to a holder other than Purchaser, at
the address thereof furnished by like notice to the Company, or (d) to any such
addresses at such other address or addresses as shall be so furnished to the
other parties by like notice.
(c) Gender of Terms. All terms used herein shall be deemed to
include the feminine and the neuter, and the singular and the plural, as the
context requires.
(d) Governing Law; Consent of Jurisdiction. This Registration
Rights Agreement and the validity and performance of the terms hereof shall be
governed by and construed in accordance with the laws of the State of Delaware.
The parties hereto hereby consent to, and waive any objection to the exercise
of, personal jurisdiction in the State of New York with respect to any action
or proceeding arising out of this Registration Rights Agreement.
(e) Titles. The titles used in this Registration Rights
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Registration Rights Agreement.
(f) Prospectus Delivery Requirements. Holder agrees, on
Holder's behalf, and shall require any transferee or assignee pursuant to
Section 10 above to agree, to comply with all prospectus delivery requirements
applicable to resales of the securities pursuant to the Registration Statement.
(g) Termination. The rights of Holder to require the Company
to request a Registration pursuant to this Registration Rights Agreement shall
terminate on the date which is five (5) years from the date of this
Registration Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date first above
written.
(The Purchaser)
By:
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Title:
VideoLan Technologies, Inc.
a Delaware Corporation
By:
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Title:
