CLIENT SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 7th day of June 2000, between
CONTINENTAL CAPITAL & EQUITY CORPORATION, located at 195 Wekiva Springs Road,
Suite 200, Longwood, FL 32779, (hereinafter referred to as "CCEC") and NEW
VISUAL ENTERTAINMENT, INC., located at 5920 Friars Road, Suite 104, San Diego,
California 92108 (hereinafter referred to as the "Company").
WITNESSETH:
WHEREAS, CCEC is a financial relations and direct marketing advertising
firm specializing in the dissemination of information about publicly traded
companies, and
WHEREAS, the Company is publicly held with its common stock trading on
the Over- the-counter bulletin board, and
WHEREAS, the Company desires to publicize itself with the intention of
making its name and business better known to shareholders, investors, brokerage
houses, institutional investors, analysts and other industry professionals, and
WHEREAS, CCEC is willing to accept the Company as a client.
NOW THEREFORE, in consideration of the mutual covenants herein contained, it is
agreed:
1. ENGAGEMENT: The Company hereby engages CCEC to publicize the Company to
brokers, prospective investors, institutional investors, analysts, other
industry professionals and shareholders as described in Section 2 of this
Agreement, and subject to the further provisions of this Agreement. CCEC hereby
accepts the Company as a client and agrees to publicize it as described in
Section 2 of this Agreement, but subject to the further provisions of this
Agreement.
2. MARKETING PROGRAM: Consists of the following components:
(A) CCEC will review and analyze various aspects of the Company's goals
and make recommendations on feasibility and achievement of desired goals.
(B) Upon CCEC's receipt of payment of shares and/or receipt of
Company's cash payment, as detailed in Section 4(A), CCEC will review all of the
general information and recent filings from the Company and produce at least a
50,000 piece and up to a 100,000 piece direct mail package to include an 11" X
17" self mailer and an ample number of corporate profiles so as to allow for one
profile for each respondent to the original mailing, all items to be approved by
the Company prior to circulation. Response devices engaged to capture
respondents from the direct mail piece shall include a Postage-Paid Business
Reply Card, a 24-hour, toll-free call-in number exclusively featuring the
Company, and an online response card posted to CCEC's website in conjunction
with the electronic version of the direct mail piece featured on
www.insidewallstreet.com and mass e-mailed to Inside Wall Street e-mail
subscribers.
(C) CCEC will provide exposure to its network of firms and brokers that
may be interested in participating with the Company and schedule and conduct the
necessary due diligence and obtain the required approvals necessary for those
firms to participate. CCEC will also interview and make determinations on any
firms or brokers referred by the Company with regard to their participation.
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(D) At the Company's request, CCEC will be available to the Company to
field any calls from firms and brokers inquiring about the Company.
(E) CCEC will use its best efforts to obtain the Company exposure on
radio programming, in independent financial newsletters, and through on-line fax
and Internet broadcast services.
(F) CCEC will promote the Company on the Worldwide Internet via CCEC's
home web site (www.insidewallstreet.com). Further CCEC shall create banner ads
for placement on financial web sites with hyperlinks back to the Company's
feature page on CCEC's home web site. The banner ads shall run for two (2)
months.
(G) At the Company's request, CCEC shall write, produce and assist the
Company in releasing all press announcements. The Company shall be solely
responsible for paying all fees associated with the actual release(s) through
BusinessWire, P.R. Newswire, or any other comparable news dissemination source.
(H) CCEC will create, build and continually update and enhance a fax
database of all brokers, investors, analysts and media contacts who have
expressed an interest in receiving ongoing information on the Company. CCEC will
assist the Company in setting up an account with a fax broadcasting agency to
manage the actual broadcasting in the event Company does not have this
capability in-house. Further, CCEC will, at its election and expense, mass-fax
broadcast select releases to its network of U.S. stockbrokers, analysts and
institutional investors.
(I) CCEC will obtain express written approval from the Company on all
material produced by CCEC prior to disseminating the information to the public.
3. TIME OF PERFORMANCE: Services to be performed under this Agreement shall
commence upon execution of this Agreement and shall continue for a period of six
(6) months.
4. COMPENSATION AND EXPENSES: In consideration of the services to be performed
by CCEC, the Company agrees to pay compensation to CCEC as follows:
(A) Fifty thousand dollars ($50,000.00), payable as follows:
* $25,000.00 due upon the execution of this Agreement, plus
* $25,000.00 due upon the approval of the press-ready proof
of the Inside Wall Street direct mail piece.
(B) CCEC shall also be issued a certificate representing two hundred
thousand (200,000) "pre-reverse split" shares of the Company's common stock,
which certificate shall be issued within three business days after the execution
of this Agreement by CCEC. CCEC acknowledges that the Company intends to effect
a 1-for-4 reverse stock split and that such certificate will thereafter
represent fifty thousand (50,000) "post-reverse split" shares of the Company's
common stock. CCEC and the Company shall enter into a registration rights
agreement in substantially the form of Exhibit A hereto, with respect to the
registration of such shares.
(C) Within three business days after the Company effects its 1-for-4
reverse stock split, CCEC shall be issued a Warrant, the form of which is
attached hereto as Exhibit B, entitling it to purchase, in the aggregate, up to
200,000 shares of the Company's "post-reverse split" common stock (the "Warrant
Shares"). The Warrant shall be divided into four tranches of fifty thousand
(50,000) shares each, with each tranche to have the following exercise prices:
Tranche I - $7.00 per share; Tranche 2 - $8.50 per share; Tranche 3 - $10.00 per
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share; and Tranche 4 - $11.50 per share. Upon issuance of the Warrant, CCEC and
the Company shall enter into a registration rights agreement in substantially
the form of Exhibit C hereto, with respect to the registration of the Warrants
Shares.
5. REPRESENTATIONS AND WARRANTIES:
(i) The Company represents and warrants to CCEC, each such representation and
warranty being deemed to be material that:
(A) The Company will cooperate fully and timely with CCEC to enable
CCEC to perform its obligations under this Agreement.
(B) The execution and performance of this Agreement by the Company has
been duly authorized by the Board of Directors of the Company in accordance with
applicable law, and, to the extent required, by the requisite number of
shareholders of the Company;
(C) The performance by the Company of this Agreement will not violate
any applicable court decree, law or regulation, nor will it violate any
provisions of the organizational documents of the Company or any contractual
obligation by which the Company may be bound.
(D) The Company will promptly deliver to CCEC a complete due diligence
package to include latest 10K, latest 10Q, last six (6) months of press releases
and all other relevant materials, including but not limited to corporate
reports, brochures, etc.
(E) The Company will promptly deliver to CCEC a list of names and
addresses of all shareholders of the Company of which it is aware.
(F) The Company will promptly deliver to CCEC a list of brokers and
market makers of the Company's securities which have been following the Company.
(G) Because CCEC will rely on such information to be supplied it by the
Company, all such information shall be true, accurate, complete and not
misleading, in all respects.
(H) The Company will act diligently and promptly in reviewing materials
submitted to it by CCEC to enhance timely distribution of the materials and will
inform CCEC of any inaccuracies contained therein prior to the projected
publication date.
(ii) CCEC represents and warrants to the Company, each such representation and
warranty being deemed to be material, that:
(A) The execution and performance of this Agreement by CCEC has been
duly authorized by CCEC, in accordance with applicable law, and the performance
by CCEC will not violate any applicable court decree, law or regulation, nor
will it violate any provisions of the organizational documents of CCEC or any
contractual obligation by which CCEC may be bound.
(B) Notwithstanding the information made known to the Company regarding
CCEC's selling shareholder, founder and outgoing President John R. Manion, since
January 1, 1997, and as of the date hereof, there is no suit, claim, action,
proceeding, administrative hearing or investigation pending or, to the knowledge
of CCEC, threatened, against CCEC or any of its officers, directors of
affiliates before any court, agency or other governmental entity regarding any
actual or alleged violation of the securities laws or regulations of the United
States or any State thereof (a "Securities Action"). Notwithstanding the
information made known to the Company regarding CCEC's selling shareholder,
founder and outgoing President John R. Manion, since January 1, 1997 and as of
the date hereof, neither CCEC nor any of its officers, directors or affiliates
have been subject to any outstanding order, writ, judgement, injunction, decree
or arbitration order or award as a result of any Securities Action.
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(C) CCEC is an "accredited investor" within the meaning of Rule
501(a)(3) Linder the Securities Act of 1933, as amended (the "Securities Act"),
and the Restricted Shares and the Warrant Shares are and will be acquired for
CCEC's own account and not with a view toward, or for sale in connection with,
any distribution thereof except in compliance with applicable United States
federal and state securities law.
(D) CCEC understanding that the Restricted Shares and the Warrant
Shares have not been registered under the Securities Act and may not be
transferred or sold except as permitted under the Securities Act and applicable
state securities laws, pursuant to either an effective registration statement or
an exemption therefrom, and that the Restricted Shares and any Warrant Shares
issued will contain a legend to that effect.
6. DISCLAIMER BY CCEC: CCEC WILL BE THE PREPARER OF CERTAIN PROMOTIONAL
MATERIALS. CCEC MAKES NO REPRESENTATION THAT (A) ITS SERVICE WILL RESULT IN ANY
ENHANCEMENT TO THE COMPANY (B) THE PRICE OF THE COMPANY'S PUBLICLY TRADED
SECURITIES WILL INCREASE, (C) ANY PERSON WILL PURCHASE SECURITIES IN THE
COMPANY, OR (D) ANY INVESTOR WILL LEND MONEY TO OR INVEST IN OR WITH THE
COMPANY.
7. EARLY TERMINATION: If the Company fails to make timely payment of the
compensation set forth in Section 4 of this Agreement, or if the Company commits
a material breach of its representations and warranties under Section 5 of this
Agreement that is not cured within 30 days after the Company receives written
notice of the breach from CCEC, then CCEC shall have the right, for 30 days
after failure or uncured breach, to terminate any further performance under this
Agreement. In such event, provided that CCEC has not breached its obligations
hereunder, all compensation shall become immediately due and payable and/or
deliverable, and CCEC shall be entitled to receive and retain the same as
liquidated damages, and not as a penalty, in lieu of all other remedies, the
parties acknowledging and agreeing that it would be too difficult currently to
determine the exact extent of CCEC's damage, but that the receipt and retention
of such compensation is reasonable present estimate of such damage.
8. LIMITATION OF LIABILITY: If CCEC fails to perform its services hereunder, its
entire liability to the Company shall not exceed the lessor of (a) the amount of
cash compensation CCEC has received from the Company under Section 4 of this
Agreement or (b) the actual damage to the Company as a result of such
non-performance. If the Company breaches this Agreement, its sole liability to
CCEC shall not exceed the obligation to pay the compensation set forth in
Section 4 of this Agreement. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM BY
ANY PERSON OR ENTITY ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT,
UNLESS (i) IN THE CASE OF THE COMPANY, SUCH DAMAGES RESULT FROM THE COMPANY'S
INTENTIONAL MISCONDUCT, OR (ii) IN THE CASE OF CCEC, SUCH DAMAGES RESULT FROM
CCEC'S INTENTIONAL MISCONDUCT (WHICH SHALL NOT INCLUDE THE DISTRIBUTION OF
MATERIAL AUTHORIZED IN WRITING BY THE COMPANY) OR FROM THE USE, BY CCEC, OF
INFORMATION NOT AUTHORIZED BY THE COMPANY.
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9. OWNERSHIP OF MATERIALS: All right, title, and interest in and to materials
produced by CCEC in connection with its performance of services hereunder shall
be deemed works made for hire and shall be the property of the Company upon
payment to CCEC of the compensation to be paid pursuant to Section 4 hereof.
Notwithstanding the foregoing, the Company shall have the right, title and
interest in any CCEC trademark, trade name, domain name or service mark, and
shall have no right to use the same after the termination of this Agreement
without the prior written consent of CCEC. The parties agree to execute any
further documentation necessary to effect the purposes of this section.
10. CONFIDENTIALITY: Until such time as the same may become publicly known, CCEC
agrees that any information of a confidential nature will be used by CCEC solely
in connection with its performances hereunder and will not be revealed or
disclosed to any person or entity, except in the performance of this Agreement,
and upon completion of its services and upon written request of the Company all
materials and original documentation provided by the Company will be returned to
it. CCEC will, however, require Confidentiality Agreements from its own
employees and from contractors CCEC reasonably believes will come in contact
with confidential material.
11. NOTICES: All notices hereunder shall be in writing and addressed to the
party at the address herein set forth and shall be given by personal delivery,
by certified mail, express mail or by national overnight courier services.
Notices will be deemed given upon the earlier of actual receipt or three (3)
business days after being mailed or delivered to such courier service. Any
notices to be given hereunder will be effective if executed by and sent by the
attorneys for the parties giving such notice, and in connection therewith the
parties and their respective counsel agree that in giving such notice such
counsel may communicate directly in writing with such parties to the extent
necessary to give such notice.
12. SEPARABILITY: If one or more of the provisions of this Agreement shall be
held invalid, illegal, or unenforceable in any respect, such provision, to the
extent invalid, illegal, or unenforceable, and provided that such provision is
not essential to the transaction provided for by this Agreement, shall not
affect any other provision hereof, and the Agreement shall be construed as if
such provision had never been contained herein.
13. ARBITRATION: Any controversy or claim arising out of or relating to the
Client Service Agreement, or the breach thereof, shall be settled by arbitration
in accordance with the commercial arbitration rules of the American Arbitration
Association, and judgement upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
14. MISCELLANEOUS:
(A) GOVERNING LAW: This Agreement shall be governed by and interpreted
under the laws of the State of Florida where CCEC has been organized and this
Agreement has been accepted by CCEC. Venue for all litigation shall be Seminole
County, Florida.
(B) CURRENCY: In all instances, references to dollars shall be deemed
to be United States Dollars.
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(C) MULTIPLE/FAXED COUNTERPARTS: This Agreement may be executed in
multiple counterparts, and by fax transmission, each of which shall be deemed an
original.
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Executed as a sealed instrument as of the last day and year shown hereunder.
CONFIRMED AND AGREED ON THE 7TH DAY OF JUNE 2000.
CONTINENTAL CAPITAL & EQUITY CORPORATION
By: /s/ John R. Manion /s/ Dodi B. Handy
----------------------------------- ----------------------------------
CCEC Representative CCEC Officer
/s/ John R. Manion /s/ Dodi B. Handy
----------------------------------- ----------------------------------
Print Name Print Name
/s/ Henry Harrison /s/ Henry Harrison
----------------------------------- ----------------------------------
Witness Witness
/s/ Henry Harrison /s/ Henry Harrison
----------------------------------- ----------------------------------
Print Name Print Name
CONFIRMED AND AGREED ON THE 7TH DAY OF JUNE 2000.
NEW VISUAL ENTERTAINMENT, INC.
By: /s/ Ray Willenberg, Jr. /s/ John Howell
----------------------------------- ----------------------------------
Duly Authorized Witness
/s/ Ray Willenberg, Jr. /s/ John Howell
----------------------------------- ----------------------------------
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Exhibit A to Client Service Agreement
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
FOR RESTRICTED SHARES
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of June __, 2000,
among NEW VISUAL ENTERTAINMENT, INC., a Utah corporation (the "Company"), and
CONTINENTAL CAPITAL & EQUITY CORPORATION (the "Holder").
RECITALS:
1. The Holder is the holder of 200,000 unregistered shares (the
"Restricted Shares") of the Company's common stock, par value $0.001 per share
(the "Common Stock").
2. For good and valuable consideration, the receipt of which is hereby
acknowledged, the Company is willing to grant the registration rights set forth
in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
AFFILIATE: the meaning set forth in Rule 12b-2 under the Exchange Act.
EFFECTIVENESS PERIOD: as defined in Section 5.1(b).
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
INCIDENTAL REGISTRATION: as defined in Section 3.1.
PIGGY-BACK REQUEST: as defined in Section 3.1.
PROSPECTUS: the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all materials incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
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REGISTRABLE SECURITIES: the Restricted Shares and any other securities
issued or issuable with respect to the Restricted Shares by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
PROVIDED THAT any particular shares of such Registrable 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) such shares shall have become eligible to be sold
to the public by the Holder pursuant to Rule 144 under the Securities Act, or
(iii) subsequent disposition of such shares shall not require registration or
qualification of them under the Securities Act or of any similar state law then
in force.
REGISTRATION: a registration of securities (including Registrable
Securities) under the Securities Act.
REGISTRATION EXPENSES: any and all expenses incident to performance of
or compliance with this Agreement by the Company and its subsidiaries,
including, without limitation (i) all SEC, stock exchange, NASDAQ and other
registration, listing and filing fees (other than fees and expenses incurred in
connection with compliance with state securities or blue sky laws); (ii) all
fees and expenses incurred in connection with compliance with the rules for
trading securities on the NASDAQ or on any stock exchange on which the Common
Stock is traded (including reasonable fees and disbursements of counsel to the
underwriters in connection with such compliance and the preparation of a Blue
Sky Memorandum and legal investment survey), (iii) all expenses of printing,
distributing, mailing and delivering, any Registration Statement, any
Prospectus, any underwriting agreements, transmittal letters, securities sales
agreements, securities certificates and other documents relating to the
performance of or compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any "cold comfort" letters
required by or incident to such performance and compliance, (v) the fees and
expenses of any trustee, transfer agent, registrar, escrow agent or custodian,
(vi) the expenses customarily borne by the issuer incurred in connection with
making road show presentations, if any, to facilitate the distribution and sale
of Registrable Securities, and (vii) all internal expenses of the Company
(including all salaries and expenses of officers and employees performing legal
or accounting duties).
REGISTRATION STATEMENT: any registration statement of the Company that
covers any Registrable Securities filed or to be filed pursuant to this
Agreement in connection with a Registration of Registrable Securities pursuant
to Section 3, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
RULE 144: Rule 144 (or any successor provision) under the Securities
Act.
SEC: the Securities and Exchange Commission.
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SECURITIES ACT: the Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: a Registration in
which securities of the Company (including Registrable Securities) are sold to
an underwriter for reoffering to the public.
SECTION 2. [RESERVED]
SECTION 3. INCIDENTAL REGISTRATION RIGHTS.
3.1 REQUESTS FOR INCIDENTAL REGISTRATION. If the Company proposes to
register any of its equity securities (other than pursuant to a Registration on
Form S-4 or S-8 or any successor form) and the Registration form to be used may
be used for Registration of the Registrable Securities, it will give prompt
written notice to the Holder of its intention to effect such Registration (the
"Incidental Registration"). Within ten business days of receiving such written
notice of an Incidental Registration, the Holder may make a written request (the
"Piggy-Back Request") that the Company include in the proposed Incidental
Registration all, or a portion, of the Registrable Securities owned by the
Holder (which Piggy-Back Request shall set forth the Registrable Securities
intended to be disposed of by the Holder and the intended method of disposition
thereof).
3.2 OBLIGATION TO EFFECT INCIDENTAL REGISTRATION. (a) The Company will
use its best efforts to include in any Incidental Registration all Registrable
Securities which the Company has been requested to register pursuant to any
timely Piggy-Back Request to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered.
(b) Notwithstanding the preceding Sections 3.1 and 3.2(a):
(i) the Company shall not be obligated pursuant to this
Section 3 to effect a Registration of Registrable Securities requested
pursuant to a timely Piggy-Back Request if the Company discontinues the
related Incidental Registration at any time prior to the effective date
of any Registration Statement filed in connection therewith; and
(ii) if a Registration pursuant to this Section 3 involves an
underwritten offering, and the managing underwriter (or, in the case of
an offering that is not underwritten, an investment banker) shall
advise the Company that, in its opinion, the number of securities
requested and otherwise proposed to be included in such Registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include
in such Registration to the extent of the number which the Company is
so advised can be sold in such offering, FIRST, the securities the
Company proposes to sell for its own account in such Registration and
SECOND, the Registrable Securities of the Holder requesting to be
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included in such Registration and all other securities requested to be
included in such Registration on a PRO RATA basis.
SECTION 4. UNDERWRITERS.
4.1 UNDERWRITTEN OFFERS. The provisions of this Section 4 do not
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 3 and 5, to any
Registration which is an underwritten offering.
4.2 SELECTION OF UNDERWRITERS. If a Registration of Registrable
Securities is being effected pursuant to Section 3 and such securities are to be
distributed by or through one or more underwriters, the Company shall have the
right to select one or more underwriters to administer the offering.
4.3 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Holder may not
participate in any underwritten Registrations hereunder unless the Holder agrees
to sell the Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Company.
4.4 HOLDBACK AGREEMENT OF THE HOLDER. If and whenever the Company
proposes to register any of its equity securities under the Securities Act for
its own account (other than on Form S-4 or S-8 or any successor form) or is
required to use reasonable efforts to effect the Registration of any Registrable
Securities under the Securities Act pursuant to Section 3, the Holder agrees not
to effect any public sale or distribution, including any sale pursuant to Rule
144, of any Registrable Securities, of any other equity securities of the
Company, or any securities convertible into or exchangeable for any equity
securities of the Company, within 15 days prior to and 90 days (unless advised
in writing by the managing underwriter that a longer period, not to exceed 180
days, is required) after the effective date of the Registration Statement
relating to such Registration, except as part of such Registration or with the
prior written consent of the Company and the managing underwriter, if any.
SECTION 5. REGISTRATION PROCEDURES.
5.1 OBLIGATIONS OF THE COMPANY. If and whenever the Company is required
pursuant to Section 3 to effect a Registration of Registrable Securities, the
Company shall, subject to the provisions of Section 3:
(a) prepare and file with the SEC a Registration Statement covering
such Registrable Securities and use commercially reasonable efforts to cause
such Registration Statement to become effective and remain effective as provided
herein;
(b) use commercially reasonable efforts to prepare and file with the
SEC such amendments and supplements to such Registration Statement as may be
necessary to keep such Registration Statement and Prospectus used in connection
therewith effective at least until the earlier of (i) 90 days after the
effective date of such Registration Statement, and (ii) the completion of the
distribution by the Holder of all of the Registrable Securities covered by such
Registration Statement (the "Effectiveness Period");
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(c) use commercially reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such states within the United States as the
Company determines, PROVIDED that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
state wherein it is not so qualified, subject itself to taxation in any state
wherein it is not so subject, or take any action which would subject it to
general service of process in any state wherein it is not so subject; and
(d) (i) notify the Holder of Registrable Securities covered by such
Registration Statement if, to its knowledge, such Registration Statement, at the
time it or any amendment thereto became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and, as
promptly as practicable, prepare and file with the SEC a post-effective
amendment to such Registration Statement and use commercially reasonable efforts
to cause such post-effective amendment to become effective such that such
Registration Statement, as so amended, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) notify the
Holder of Registrable Securities covered by such Registration Statement, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, if, to its knowledge, 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, in light of the circumstances under
which they were made, not misleading, and, as promptly as practicable, prepare
and furnish to such Holder a reasonable number of copies of a supplement to or
an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such 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, in
light of the circumstances under which they were made, not misleading.
The Holder agrees that upon receipt of any notice from the Company
pursuant to Section 5.1(d), the Holder will promptly discontinue the Holder's
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until the Holder shall have received notice
from the Company that such Registration Statement has been amended and/or copies
of the supplemented or amended Prospectus contemplated by Section 5.1(d) have
been furnished. If so directed by the Company, the Holder of Registrable
Securities will deliver to the Company all copies, other than permanent file
copies, in the Holder's possession of the Prospectus covering such Registrable
Securities at the time of receipt of such notice.
5.2 SELLER INFORMATION. The Company may require the Holder of any
Registrable Securities as to which any Registration is being effected to furnish
to the Company such information regarding such Holder and the distribution of
such Registrable Securities as the Company may from time to time reasonably
request and as shall be required by law in connection therewith. The Holder
agrees to furnish promptly to the Company all information required to be
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disclosed in order to make the information previously furnished to the Company
by such Holder not materially false or misleading.
SECTION 6. REGISTRATION EXPENSES.
The Company shall pay all Registration Expenses arising from or
incidental to the performance of, or compliance with, this Agreement, PROVIDED
that the Holder requesting such Registration shall bear any transfer taxes
applicable to its Registrable Securities registered thereunder, customary (both
as to type and amount) commissions, discounts or other compensation payable to
the underwriters (including fees and expenses of underwriters' counsel), selling
brokers, managers or other similar persons engaged in the distribution of any of
the Registrable Securities, and the fees and expenses of the Holder's own
counsel.
SECTION 7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE HOLDER OF REGISTRABLE SECURITIES. The
Company may require, as a condition to including any Registrable Securities in
any Registration Statement filed pursuant to this Agreement that the Company
shall have received an undertaking satisfactory to it from the Holder to
indemnify, defend and hold harmless, the Company, its directors and officers and
each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company from and against
any and all losses, claims, damages and liabilities, joint or several, to which
any of the foregoing may become subject, under the Securities Act or otherwise,
based upon or arising out of any untrue statement or alleged untrue statement of
a material fact in a Registration Statement, any preliminary prospectus, final
Prospectus or summary Prospectus, or any amendment or supplement thereto, or
omission or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use in the preparation of such Registration
Statement, preliminary prospectus, final Prospectus, summary 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
Registrable Securities by such Holder.
7.2 INDEMNIFICATION PAYMENTS. Any indemnification required to be made
by an indemnifying party pursuant to this Section 7 shall be made by periodic
payments to the indemnified party during the course of the action or proceeding,
as and when bills are received by such indemnifying party with respect to an
indemnifiable loss, claim, damage, liability or expense incurred by such
indemnified party.
7.3 OTHER REMEDIES. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
6
<PAGE>
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each such party) and the statements or omissions or alleged statements or
omissions which resulted in such loss, claim, damage, liability, action,
proceeding or expense, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statements or omissions. 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. No party shall be liable for
contribution under this Section 7.3 except to the extent and under such
circumstances as such party would have been liable to indemnify under this
Section 7 if such indemnification were enforceable under applicable law.
SECTION 8. MISCELLANEOUS.
8.1 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
8.2 NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the Holder of such
Registrable Securities for purposes of any request or other action by the Holder
pursuant to this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
8.3 TERM. This Agreement shall be effective as of the date hereof and
shall continue in effect thereafter until the earlier of (a) its termination by
the consent of the parties hereto or their respective successors in interest and
(b) the date on which no Registrable Securities remain outstanding, and (c) the
date on which the Holder may resell all of the Registrable Securities under Rule
144.
8.4 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram:
(i) If to the Holder, at:
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<PAGE>
Continental Capital & Equity Corporation
195 Wekiva Springs Road, Suite 200
Longwood, Florida, 32779
(ii) If to the Company, at:
New Visual Entertainment, Inc.
5920 Friars Road, Suite 104
San Diego, California 92108
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.
8.5 AMENDMENTS; WAIVERS; ETC. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity.
8.6 SEVERABILITY. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
8.8 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall not be
assignable or otherwise transferable by the Holder without the prior written
consent of the Company. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
8
<PAGE>
8.9 NO THIRD PARTY BENEFICIARIES. Except as provided in Section 8 with
respect to indemnification of certain third parties hereunder, nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns.
8.10 HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
8.12 CONFIDENTIALITY. The Holder shall treat as confidential and shall
not use confidential information of the Company acquired from the Company
pursuant to this Agreement except in accordance with the terms and provisions of
this Agreement and the Holder's rights and obligations hereunder, and will not
disclose the same or any part thereof to any third party without the prior
written approval of the Company; provided, however, that nothing contained
herein shall in any way restrict or impair the Holder's right to use, disclose,
or otherwise deal with any information of the Company which:
(i) at the time of the disclosure is generally available to
the public or thereafter becomes generally available to the public by
publication or otherwise through no act of the Holder;
(ii) was in the Holder's possession prior to the time of
disclosure hereunder and was not acquired directly or indirectly from
the Company;
(iii) is independently made available to the Holder as a
matter of right by a third party, or
(iv) was developed independent of the confidential information
obtained from the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NEW VISUAL ENTERTAINMENT, INC.
By:
----------------------------------------------------
Name:
--------------------------------------------------
Title:
-------------------------------------------------
CONTINENTAL CAPITAL & EQUITY CORPORATION
By:
----------------------------------------------------
Name:
--------------------------------------------------
Title:
-------------------------------------------------
9
<PAGE>
Exhibit B to Client Service Agreement
EXHIBIT B
FORM OF WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
EXCHANGED OR TRANSFERRED IN ANY MANNER IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
COMPANY THAT NO SUCH REGISTRATION IS REQUIRED.
WARRANT CERTIFICATE
NEW VISUAL ENTERTAINMENT, INC.
No. WR- _____ 200,000 Warrants
Date: June __, 2000
THIS CERTIFIES THAT, for value received, CONTINENTAL CAPITAL & EQUITY
CORPORATION., or its registered assigns, is entitled to purchase from NEW VISUAL
ENTERTAINMENT, INC., a Utah corporation (the "Company"), at any time or from
time to time during the period specified in Paragraph 2, TWO HUNDRED THOUSAND
(200,000) fully paid and nonassessable shares of the Company's Common Stock, par
value $0.001 per share (the "Common Stock"), at the various exercises prices as
set forth in this Agreement. The term "Warrant Shares," as used herein, refers
to the shares of Common Stock purchasable hereunder. The Warrant Shares and the
Exercise Price are subject to adjustment as provided in Paragraph 4.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
The Warrant Shares are divided into four equal tranches of fifty thousand
(50,000) shares with the following exercise prices for each tranche (the
"Exercise Prices"): Tranche One - $7.00 per share; Tranche Two - $8.50 per
share; Tranche Three - $10.00 per share; and Tranche Four - $11.50 per share.
Subject to the provisions of this Warrant Certificate, this Warrant may be
exercised by the holder of this Warrant and/or any permitted transferee
specified in Section 7 below (the "holder"), in whole or in part, by the
surrender of this Warrant together with a completed exercise agreement in the
form attached to this Warrant Certificate (the "Exercise Agreement"), to the
Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder), and upon payment of the Exercise Price.
At the option of the holder, the Exercise Price may be paid to the Company in
cash, by certified or official bank check or by wire transfer for the account of
the Company. The Warrant Shares so purchased shall be deemed to be issued to the
holder or such holder's designee, as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered,
the completed Exercise Agreement shall have been delivered, and payment shall
<PAGE>
have been made for such shares as set forth above. Certificates for the Warrant
Shares so purchased shall be delivered to the holder within a reasonable time,
not to exceed three business days after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may
be requested by the holder and shall be registered in the name of the holder or
such other name as shall be designated by such holder.
2. PERIOD OF EXERCISE. This Warrant may be exercised, at the option of
the holder, in whole or in part, at any time from the date of the execution of
this Warrant and (b) ending at 5:00 p.m., Eastern time, on the third anniversary
of the date of this Warrant (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient number
of shares of Common Stock to provide for the exercise of this Warrant.
(c) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation or
acquisition of all or substantially all of the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded up to the nearest cent.
(a) SUBDIVISION OR COMBINATION OF COMMON STOCK. During the
Exercise Period, if the Company subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or
otherwise) any shares of Common Stock into a greater number of shares,
then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. During the Exercise Period, if the Company
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) any shares of Common Stock into a
smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
(b) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Paragraph 4, the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be adjusted by multiplying a number equal to the Exercise Price
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<PAGE>
in effect immediately prior to such adjustment by the number of shares
of Common Stock issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
(c) CONSOLIDATION, MERGER OR SALE. During the Exercise Period,
in case of any consolidation of the Company with, or merger of the
Company into any other corporation, or in case of any sale or
conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the
Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of
this Warrant in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares
of stock, securities or assets as may be issued or payable with respect
to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had
such consolidation, merger or sale or conveyance taken place. In any
such case, the Company will make appropriate provision to insure that
the provisions of this Paragraph 4 will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities
thereafter deliverable upon the exercise of this Warrant.
(d) NOTICE OF ADJUSTMENT. Upon the occurrence of any event
that requires any adjustment of the Exercise Price, then, and in each
such case, the Company shall give notice thereof to the holder, which
notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based. Such calculation shall be certified by
independent public accountants then engaged by the Company.
(e) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the
Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.
(f) NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company
shall pay a cash adjustment in respect of any fractional shares which
would otherwise be issuable in an amount equal to the same fraction of
the Market Price (as defined herein) of a share of Common Stock on the
date of such exercise.
(g) OTHER NOTICES. In case:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make
any other distribution (including dividends or distributions
payable in cash out of retained earnings) to the holders of
the Common Stock;
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<PAGE>
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares
of stock of any class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or
consolidation or merger of the Company with or into or sale of
all or substantially all its assets to, another corporation or
entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder (a)
notice of the date on which the books of the Company shall close or a
record shall be taken for determining the holders of Common Stock
entitled to receive any such dividend, distribution, or subscription
rights or for determining the legal holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up and
(b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up,
notice of the date (or, if not then known, a reasonable approximation
thereof by the Company) when the same shall take place. Such notice
shall also specify the date on which the holders of Common Stock shall
be entitled to receive such dividend, distribution, or subscription
rights or to exchange their Common Stock for stock or other securities
or property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up,
as the case may be. Such notice shall be given at least 30 days prior
to the record date or the date on which the Company's books are closed
in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
(h) CERTAIN DEFINITIONS:
(i) "Market Price" as of any date, means (a) the
average of the last reported sale prices on the principal
trading market for the Common Stock for the five trading days
immediately preceding the date of any such determination, or
(b) if market value cannot be calculated as of such date on
the foregoing basis, Market Price shall be the fair market
value as reasonably determined in good faith by the Board of
Directors of the Company. The manner of determining the Market
Price of the Common Stock sets forth in the foregoing
definition shall apply with respect to any other security in
respect of which a determination as to market value must be
made hereunder.
(ii) "Common Stock" for the purposes of this
Paragraph 4, includes the Common Stock, par value $0.001 per
share, or shares resulting from any subdivision or combination
of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, or sale of the character
referred to in Paragraph 4(c), the stock or other securities
or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder or such
4
<PAGE>
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder to any voting rights or other rights as a shareholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the holder, shall give rise to any liability of such
holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
7. TRANSFER AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment
in the form attached hereto, at the office of the Company referred to
in Paragraph 7(d) below, PROVIDED, HOWEVER, that any transfer or
assignment shall be subject to the conditions set forth in Paragraph
7(e). Until due presentment for registration of transfer on the books
of the Company, the Company may treat the registered holder as the
owner and holder of this Warrant for all purposes, and the Company
shall not be affected by any notice to the contrary.
(b) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant and, in the case of any such loss, theft,
or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
(c) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer or replacement as provided
in this Paragraph 7, this Warrant shall be promptly canceled by the
Company. The Company shall pay all taxes (other than securities
transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the Holder) in connection with the preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.
(d) REGISTER. The Company shall maintain, at its principal
executive offices (or such other office of the Company as it may
designate by notice to the holder), a register for this Warrant, in
which the Company shall record the name and address of the person in
whose name this Warrant has been issued, as well as the name and
address of each transferee and each prior owner of this Warrant.
(e) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or in the case of
any exercise, the Warrant Shares issuable hereunder) shall not be
registered under the Securities Act and under applicable state
securities or blue sky laws, the Company may require, as a condition of
5
<PAGE>
allowing such exercise, transfer, or exchange (i) that the holder or
transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel, which opinion and counsel are reasonably
acceptable to the Company, to the effect that such exercise, transfer
or exchange may be made without registration under said Act and under
applicable state securities or blue sky laws, and (ii) that the holder
or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company. The first holder of
this Warrant, by taking and holding the same, represents to the Company
that such holder is acquiring this Warrant for investment and not with
a view to the distribution thereof.
8. NOTICES. All notices, requests and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed to the office of the Company at 5920 Friars Road, Suite
104, San Diego, California 92108 Attention: President, or at such other address
as shall have been furnished to the holder of this Warrant by notice from the
Company. Any such notice, request or other communication may be sent by
facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 8 or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
9. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.
10. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision it may only be
amended by an instrument signed by the Company and the holder.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any
of the provisions of this Warrant.
(c) SEVERABILITY AND SAVINGS CLAUSE. If any one or more of the
provisions contained in this Agreement is for any reason (i) objected
to, contested or challenged by any court, government authority, agency,
6
<PAGE>
department, commission or instrumentality of the United States or any
state or political subdivision thereof, or any securities industry
self-regulatory organization (collectively, "Governmental Authority"),
or (ii) held to be invalid, illegal or unenforceable in any respect,
the Company and the holder agree to negotiate in good faith to modify
such objected to, contested, challenged, invalid, illegal or
unenforceable provision. It is the intention of Company and the holder
that there shall be substituted for such objected to, contested,
challenged, invalid, illegal or unenforceable provision a provision as
similar to such provision as may be possible and yet be acceptable to
any objecting Governmental Authority and be valid, legal and
enforceable. Further, should any provisions of this Agreement ever be
reformed or rewritten by a judicial body, those provisions as rewritten
will be binding, but only in that jurisdiction, on the holder and the
Company as if contained in the original Agreement. The invalidity,
illegality or unenforceability of any one or more provisions of this
Warrant will not affect the validity and enforceability of any other
provisions of this Warrant.
WITNESS the signature of a proper officer of the Company as of the date
first above written.
NEW VISUAL ENTERTAINMENT, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ATTEST:
-----------------------------
Secretary
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<PAGE>
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfers unto
--------------------------------------------------------------------------------
(Please print name, address and taxpayer identification number or social
security number of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
--------------------------------------------------------------------------------
attorney, to transfer the accompanying Warrant Certificate on the books of the
Company, with full power of substitution. The transferee's tax identification or
social security number is _____________________.
Dated: , .
--------------------- -------
[HOLDER]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
8
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO EXERCISE THE WARRANT CERTIFICATE)
To: :
---------------------------------
The undersigned hereby irrevocably elects to exercise ______ of the Warrants
designated as being in Tranche _____ and represented by the accompanying Warrant
Certificate to purchase the shares of Common Stock issuable upon the exercise of
such Warrants and requests that certificates for such shares be issued in the
name of:
--------------------------------------------------------------------------------
(Please print name and address.)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number.)
The undersigned represents that it is acquiring the shares of Common Stock for
its own account and not with a view to distribution, and it will not sell these
shares unless they have been registered under the Securities Act of 1933 or an
exemption from such registration requirement is available.
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address.)
--------------------------------------------------------------------------------
(Please insert social security or other identifying number.)
Dated: , .
--------------------- -------
[HOLDER]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
9
<PAGE>
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.
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Exhibit C to Client Service Agreement
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
FOR WARRANT SHARES
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of June __, 2000,
among NEW VISUAL ENTERTAINMENT, INC., a Utah corporation (the "Company"), and
CONTINENTAL CAPITAL & EQUITY CORPORATION (the "Holder").
RECITALS:
1. The Holder is the holder of Warrants (collectively, the "Warrants")
to purchase an aggregate of 200,000 shares (the "Warrant Shares") of the
Company's common stock, par value $0.001 per share (the "Common Stock").
2. For good and valuable consideration, the receipt of which is hereby
acknowledged, the Company is willing to grant the registration rights set forth
in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
AFFILIATE: the meaning set forth in Rule 12b-2 under the Exchange Act.
EFFECTIVENESS PERIOD: as defined in Section 5.1(b).
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
FORM S-3: a Registration Statement effected on Form S-3 pursuant to the
Securities Act.
INCIDENTAL REGISTRATION: as defined in Section 3.1.
PIGGY-BACK REQUEST: as defined in Section 3.1.
PROSPECTUS: the prospectus included in any Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
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Prospectus, including post-effective amendments, and all materials incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
REGISTRABLE SECURITIES: the Warrant Shares and any other securities
issued or issuable with respect to the Warrant Shares by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise, PROVIDED THAT any
particular shares of such Registrable 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) such shares shall have become eligible to be sold to the public
by the Holder pursuant to Rule 144 under the Securities Act, (iii) subsequent
disposition of such shares shall not require registration or qualification of
them under the Securities Act or of any similar state law then in force; (iv)
the Warrants shall have not been exercised as of the expiration date specified
in the respective Warrant, or (v) such shares shall have ceased to be
outstanding.
REGISTRATION: a registration of securities (including Registrable
Securities) under the Securities Act.
REGISTRATION EXPENSES: any and all expenses incident to performance of
or compliance with this Agreement by the Company and its subsidiaries,
including, without limitation (i) all SEC, stock exchange, NASDAQ and other
registration, listing and filing fees (other than fees and expenses incurred in
connection with compliance with state securities or blue sky laws); (ii) all
fees and expenses incurred in connection with compliance with the rules for
trading securities on the NASDAQ or on any stock exchange on which the Common
Stock is traded (including reasonable fees and disbursements of counsel to the
underwriters in connection with such compliance and the preparation of a Blue
Sky Memorandum and legal investment survey), (iii) all expenses of printing,
distributing, mailing and delivering, any Registration Statement, any
Prospectus, any underwriting agreements, transmittal letters, securities sales
agreements, securities certificates and other documents relating to the
performance of or compliance with this Agreement, (iv) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses of any "cold comfort" letters
required by or incident to such performance and compliance, (v) the fees and
expenses of any trustee, transfer agent, registrar, escrow agent or custodian,
(vi) the expenses customarily borne by the issuer incurred in connection with
making road show presentations, if any, to facilitate the distribution and sale
of Registrable Securities, and (vii) all internal expenses of the Company
(including all salaries and expenses of officers and employees performing legal
or accounting duties).
REGISTRATION REQUEST: shall have the meaning set forth in Section 2.
REGISTRATION STATEMENT: any registration statement of the Company that
covers any Registrable Securities filed or to be filed pursuant to this
Agreement in connection with a Registration of Registrable Securities pursuant
to Section 3, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits, and
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all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
RULE 144: Rule 144 (or any successor provision) under the Securities
Act.
S-3 REGISTRATION STATEMENT: shall have the meaning set forth in Section
2.
SEC: the Securities and Exchange Commission.
SECURITIES ACT: the Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: a Registration in
which securities of the Company (including Registrable Securities) are sold to
an underwriter for reoffering to the public.
SECTION 2. REGISTRATION UPON DEMAND. If at any time during the term of
this Agreement the Company is eligible to effect the Registration of its Common
Stock on Form S-3 for a secondary offering, the Holder may deliver one, and only
one, written request that all, or a portion, of the Registrable Securities be
registered pursuant to the terms of this Agreement (a "Registration Request").
Within 31 days after a Registration Request, the Company shall prepare and file
a Registration Statement to effect the Registration of all Registrable
Securities which the Company has been requested to register pursuant to the
Registration Request to the extent requisite to permit the public disposition of
such Registrable Securities. The Company shall use its best efforts to cause the
Registration Statement that is the subject of this Section 2 (the "S-3
Registration Statement") to be declared effective by the SEC upon the earlier to
occur of (a) 120 days after the date of the Registration Request, (ii) 90 days
following the filing of the S-3 Registration Statement, or (iii) ten business
days after receipt of a "no review" or similar letter from the SEC. As a result,
should the S-3 Registration Statement not relate to the entire number of
Registrable Securities requested by the Holder in the Registration Request, the
Company shall be required to promptly file a separate Registration Statement
(utilizing Rule 462 promulgated under the Exchange Act, where applicable)
relating to such Registrable Securities that then remain unregistered. The
provisions of this Agreement shall relate to such separate Registration
Statement as if it were an amendment to the S-3 Registration Statement.
SECTION 3. INCIDENTAL REGISTRATION RIGHTS.
3.1 REQUESTS FOR INCIDENTAL REGISTRATION. If the Company proposes to
register any of its equity securities (other than pursuant to a Registration on
Form S-4 or S-8 or any successor form) and the Registration form to be used may
be used for Registration of the Registrable Securities, it will give prompt
written notice to the Holder of its intention to effect such Registration (the
"Incidental Registration"). Within ten business days of receiving such written
notice of an Incidental Registration, the Holder may make a written request (the
"Piggy-Back Request") that the Company include in the proposed Incidental
Registration all, or a portion, of the Registrable Securities owned by the
Holder (which Piggy-Back Request shall set forth the Registrable Securities
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intended to be disposed of by the Holder and the intended method of disposition
thereof).
3.2 OBLIGATION TO EFFECT INCIDENTAL REGISTRATION. (a) The Company will
use its best efforts to include in any Incidental Registration all Registrable
Securities which the Company has been requested to register pursuant to any
timely Piggy-Back Request to the extent required to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of the Registrable
Securities so to be registered.
(b) Notwithstanding the preceding Sections 3.1 and 3.2(a):
(i) the Company shall not be obligated pursuant to this
Section 3 to effect a Registration of Registrable Securities requested
pursuant to a timely Piggy-Back Request if the Company discontinues the
related Incidental Registration at any time prior to the effective date
of any Registration Statement filed in connection therewith; and
(ii) if a Registration pursuant to this Section 3 involves an
underwritten offering, and the managing underwriter (or, in the case of
an offering that is not underwritten, an investment banker) shall
advise the Company that, in its opinion, the number of securities
requested and otherwise proposed to be included in such Registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company will include
in such Registration to the extent of the number which the Company is
so advised can be sold in such offering, FIRST, the securities the
Company proposes to sell for its own account in such Registration and
SECOND, the Registrable Securities of the Holder requesting to be
included in such Registration and all other securities requested to be
included in such Registration on a PRO RATA basis.
SECTION 4. UNDERWRITERS.
4.1 UNDERWRITTEN OFFERS. The provisions of this Section 4 do not
establish additional registration rights but instead set forth procedures
applicable, in addition to those set forth in Sections 3 and 5, to any
Registration which is an underwritten offering.
4.2 SELECTION OF UNDERWRITERS. If a Registration of Registrable
Securities is being effected pursuant to Section 3 and such securities are to be
distributed by or through one or more underwriters, the Company shall have the
right to select one or more underwriters to administer the offering.
4.3 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Holder may not
participate in any underwritten Registrations hereunder unless the Holder agrees
to sell the Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Company.
4.4 HOLDBACK AGREEMENT OF THE HOLDER. If and whenever the Company
proposes to register any of its equity securities under the Securities Act for
its own account (other than on Form S-4 or S-8 or any successor form) or is
required to use reasonable efforts to effect the Registration of any Registrable
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Securities under the Securities Act pursuant to Section 3, the Holder agrees not
to effect any public sale or distribution, including any sale pursuant to Rule
144, of any Registrable Securities, of any other equity securities of the
Company, or any securities convertible into or exchangeable for any equity
securities of the Company, within 15 days prior to and 90 days (unless advised
in writing by the managing underwriter that a longer period, not to exceed 180
days, is required) after the effective date of the Registration Statement
relating to such Registration, except as part of such Registration or with the
prior written consent of the Company and the managing underwriter, if any.
SECTION 5. REGISTRATION PROCEDURES.
5.1 OBLIGATIONS OF THE COMPANY. If and whenever the Company is required
pursuant to Section 2 or Section 3 to effect a Registration of Registrable
Securities, the Company shall, subject to the provisions of Section 2 or Section
3:
(a) prepare and file with the SEC a Registration Statement covering
such Registrable Securities and use commercially reasonable efforts to cause
such Registration Statement to become effective and remain effective as provided
herein;
(b) use commercially reasonable efforts to prepare and file with the
SEC such amendments and supplements to such Registration Statement as may be
necessary to keep such Registration Statement and Prospectus used in connection
therewith effective at least until the earlier of (i) 90 days after the
effective date of such Registration Statement, and (ii) the completion of the
distribution by the Holder of all of the Registrable Securities covered by such
Registration Statement (the "Effectiveness Period");
(c) use commercially reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such states within the United States as the
Company determines, PROVIDED that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
state wherein it is not so qualified, subject itself to taxation in any state
wherein it is not so subject, or take any action which would subject it to
general service of process in any state wherein it is not so subject; and
(d) (i) notify the Holder of Registrable Securities covered by such
Registration Statement if, to its knowledge, such Registration Statement, at the
time it or any amendment thereto became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and, as
promptly as practicable, prepare and file with the SEC a post-effective
amendment to such Registration Statement and use commercially reasonable efforts
to cause such post-effective amendment to become effective such that such
Registration Statement, as so amended, shall not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) notify the
Holder of Registrable Securities covered by such Registration Statement, at any
time when a Prospectus relating thereto is required to be delivered under the
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Securities Act, if, to its knowledge, 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, in light of the circumstances under
which they were made, not misleading, and, as promptly as practicable, prepare
and furnish to such Holder a reasonable number of copies of a supplement to or
an amendment of such Prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such 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, in
light of the circumstances under which they were made, not misleading.
The Holder agrees that upon receipt of any notice from the Company
pursuant to Section 5.1(d), the Holder will promptly discontinue the Holder's
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until the Holder shall have received notice
from the Company that such Registration Statement has been amended and/or copies
of the supplemented or amended Prospectus contemplated by Section 5.1(d) have
been furnished. If so directed by the Company, the Holder of Registrable
Securities will deliver to the Company all copies, other than permanent file
copies, in the Holder's possession of the Prospectus covering such Registrable
Securities at the time of receipt of such notice.
5.2 SELLER INFORMATION. The Company may require the Holder of any
Registrable Securities as to which any Registration is being effected to furnish
to the Company such information regarding such Holder and the distribution of
such Registrable Securities as the Company may from time to time reasonably
request and as shall be required by law in connection therewith. The Holder
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially false or misleading.
SECTION 6. REGISTRATION EXPENSES.
The Company shall pay all Registration Expenses arising from or
incidental to the performance of, or compliance with, this Agreement, PROVIDED
that the Holder requesting such Registration shall bear any transfer taxes
applicable to its Registrable Securities registered thereunder, customary (both
as to type and amount) commissions, discounts or other compensation payable to
the underwriters (including fees and expenses of underwriters' counsel), selling
brokers, managers or other similar persons engaged in the distribution of any of
the Registrable Securities, and the fees and expenses of the Holder's own
counsel.
SECTION 7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE HOLDER OF REGISTRABLE SECURITIES. The
Company may require, as a condition to including any Registrable Securities in
any Registration Statement filed pursuant to this Agreement that the Company
shall have received an undertaking satisfactory to it from the Holder to
indemnify, defend and hold harmless, the Company, its directors and officers and
each person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company from and against
any and all losses, claims, damages and liabilities, joint or several, to which
any of the foregoing may become subject, under the Securities Act or otherwise,
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based upon or arising out of any untrue statement or alleged untrue statement of
a material fact in a Registration Statement, any preliminary prospectus, final
Prospectus or summary Prospectus, or any amendment or supplement thereto, or
omission or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such Holder expressly for use in the preparation of such Registration
Statement, preliminary prospectus, final Prospectus, summary 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
Registrable Securities by such Holder.
7.2 INDEMNIFICATION PAYMENTS. Any indemnification required to be made
by an indemnifying party pursuant to this Section 7 shall be made by periodic
payments to the indemnified party during the course of the action or proceeding,
as and when bills are received by such indemnifying party with respect to an
indemnifiable loss, claim, damage, liability or expense incurred by such
indemnified party.
7.3 OTHER REMEDIES. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, other
than by reason of the exceptions provided therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities, actions, proceedings or
expenses in such proportion as is appropriate to reflect the relative benefits
to and faults of the indemnifying party on the one hand and the indemnified
party on the other in connection with the offering of Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each such party) and the statements or omissions or alleged statements or
omissions which resulted in such loss, claim, damage, liability, action,
proceeding or expense, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall
be determined by reference to, among other things, whether the untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statements or omissions. 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. No party shall be liable for
contribution under this Section 7.3 except to the extent and under such
circumstances as such party would have been liable to indemnify under this
Section 7 if such indemnification were enforceable under applicable law.
SECTION 8. MISCELLANEOUS.
8.1 ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
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respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
8.2 NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election and unless notice is otherwise
given to the Company by the record owner, be treated as the Holder of such
Registrable Securities for purposes of any request or other action by the Holder
pursuant to this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Securities.
8.3 TERM. This Agreement shall be effective as of the date hereof and
shall continue in effect thereafter until the earlier of (a) its termination by
the consent of the parties hereto or their respective successors in interest and
(b) the date on which no Registrable Securities remain outstanding, and (c) the
date on which the Holder may resell all of the Registrable Securities under Rule
144.
8.4 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram:
(i) If to the Holder, at:
Continental Capital & Equity Corporation
195 Wekiva Springs Road, Suite 200
Longwood, Florida, 32779
(ii) If to the Company, at:
New Visual Entertainment, Inc.
5920 Friars Road, Suite 104
San Diego, California 92108
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.
8.5 AMENDMENTS; WAIVERS; ETC. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
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forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity.
8.6 SEVERABILITY. If any provision of this Agreement, including any
phrase, sentence, clause, Section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
8.8 SUCCESSORS, ASSIGNS AND TRANSFEREES. This Agreement shall not be
assignable or otherwise transferable by the Holder without the prior written
consent of the Company. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
8.9 NO THIRD PARTY BENEFICIARIES. Except as provided in Section 8 with
respect to indemnification of certain third parties hereunder, nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective heirs, successors and permitted assigns.
8.10 HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
8.12 CONFIDENTIALITY. The Holder shall treat as confidential and shall
not use confidential information of the Company acquired from the Company
pursuant to this Agreement except in accordance with the terms and provisions of
this Agreement and the Holder's rights and obligations hereunder, and will not
disclose the same or any part thereof to any third party without the prior
written approval of the Company; provided, however, that nothing contained
herein shall in any way restrict or impair the Holder's right to use, disclose,
or otherwise deal with any information of the Company which:
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(i) at the time of the disclosure is generally available to
the public or thereafter becomes generally available to the public by
publication or otherwise through no act of the Holder;
(ii) was in the Holder's possession prior to the time of
disclosure hereunder and was not acquired directly or indirectly from
the Company;
(iii) is independently made available to the Holder as a
matter of right by a third party, or
(iv) was developed independent of the confidential information
obtained from the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NEW VISUAL ENTERTAINMENT, INC.
By:
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Name:
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Title:
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CONTINENTAL CAPITAL & EQUITY CORPORATION
By:
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Name:
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Title:
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