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Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of November 28, 2000 (this "Registration
Rights Agreement" or "Agreement") by, between, and among SELECT MEDIA
COMMUNICATIONS, INC., a corporation organized and existing under the laws of the
State of New York ("Company"), having an office located at 666 Third Avenue,
Thirty-second Floor, New York City, NY 10017, and John Servidio (collectively,
"Option Holder").
RECITALS
WHEREAS, Betelgeuse Production, L.L.C., a Delaware limited liability company
organized and existing under the laws of the State of Delaware ("Seller"),
having an office located at 44 E. 32nd Street, Penthouse, New York City, NY
10016, operates a post production facility (the "Business"), which Business has
its principal office located at 44 E. 32nd Street, Penthouse, New York City, NY
10016.
WHEREAS, Company and Seller have entered into an Asset Purchase and Sale
Agreement dated as of November 28, 2000 (the "Asset Purchase Agreement")
pursuant to which, among other things, Company and John Servidio have agreed to
enter into an Employment Agreement dated as of November 28, 2000 ("Employment
Agreement")
WHEREAS, Pursuant to the Asset Purchase Agreement and the Employment
Agreement, Company and John Servidio have executed and delivered a Stock Option
Agreement dated as of November 28, 2000 (the "Stock Option Agreement"), pursuant
to which, Company has agreed to grant to John Servidio, stock options with
respect to Company's common stock (the "Options").
WHEREAS, Pursuant to the Employment Agreement and the Stock Option
Agreement, Company has agreed to register the shares issuable upon exercise of
the Options in accordance with the terms and conditions set forth in this
Registration Rights Agreement.
NOW, THEREFORE, intending to be legally bound, in accordance with the terms
and conditions set forth in this Registration Rights Agreement, having
determined that it is in their best interest to execute and deliver this
Registration Rights Agreement, and for other good and valuable consideration,
the receipt and adequacy of which is acknowledged, Optionholders and Company
agrees as follows:
1 DEFINITIONS.
1.1 GENERAL DEFINITIONS. Unless the context of this Registration Rights
Agreement clearly requires otherwise, the plural includes the singular, the
singular includes the plural, the use of any gender shall be applicable to all
genders, the part includes
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the whole, "including" is not limiting, and "or" has the inclusive meaning of
the phrase "and/or". Unless otherwise expressly stated, the words "hereof",
"herein", "hereby", "hereunder", and other similar terms in this Registration
Rights Agreement refer to this Registration Rights Agreement as a whole and not
exclusively to any particular provision of this Registration Rights Agreement.
1.2 SPECIFIC DEFINITIONS. Terms defined in Recitals above shall have the
meanings set forth therein and such Recitals, by this reference, are
incorporated in and made a part of this Section 1 and this Registration Rights
Agreement. Capitalized terms used and not otherwise defined in this Registration
Rights Agreement shall have the meanings set forth in the Asset Purchase
Agreement.
"ACT" means the Securities Act of 1933, as amended, and any successor statute,
and the rules and regulations promulgated thereunder.
"BUSINESS DAY" means a day on which the New York Stock Exchange is open for
business.
"EXPIRATION DATE" shall mean the fourth anniversary of the date of this
Registration Rights Agreement.
"INDEMNIFIED PERSONS" shall have the meaning given in Section 8.
"MAXIMUM AMOUNT" shall have the meaning given in Section 5.
"NASDAQ" means the Nasdaq National Market of The Nasdaq Stock Market.
"OPTIONS" shall mean the options granted to San Domenico and John Servidio,
respectively, pursuant to the Consulting and Non-Competition Agreement and
the Employment Agreement entered into with the Company.
"PRIORITY" shall have the meaning given in Section 5.
"REGISTERABLE SHARES" means the Shares issuable to Optionholders upon exercise
of the Options covered by this Registration Rights Agreement.
"REGISTRATION" shall mean registration under the Act pursuant to Section 2.
"REGISTRATION EXPENSES" shall have the meaning given in Section 4.
"REGISTRATION REQUEST" means a written request to Company pursuant to Section 2
for the registration of Registerable Shares pursuant to the Act.
"SELLER" shall have the meaning set forth in the Recitals to this Registration
Rights Agreement.
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"SELLING EXPENSES" shall have the meaning given in Section 4.
"SHARES" shall have the meaning set forth in the Recitals to this Registration
Rights Agreement.
"SEC" means the Securities and Exchange Commission.
2 REGISTRATION.
If at any time on and after the second anniversary of the date of this
Registration Rights Agreement but on or before the Expiration Date, Company
proposes to register its securities under the Act for sale to the public by
Company or any other person, except as otherwise provided in Section 6, Company
shall, not less than twenty (20) days prior to the proposed date of filing of a
registration statement under the Act, give written notice to the Optionholders
of its intention to do so. If the Company receives a Registration Request from
any Optionholder given within ten (10) days after Company's notice under this
Section 2, Company, subject to the conditions and limitations of Section 3, will
use its best efforts to cause the Registerable Shares covered by Registration
Request to be so registered under the Act in the proposed registration statement
if the proposed registration statement becomes effective, but Company shall have
no obligation to cause, or use any efforts to cause, any such registration
statement to become effective. A Registration Request from any such holder shall
state the number of Registerable Shares to be registered and the intended plan
of distribution thereof. Registerable Shares covered by a Registration Request
shall be sold pursuant to the same plan of distribution that applies to the
majority of the other Shares covered by such registration statement, except to
the extent that Company otherwise agrees in writing.
3 REGISTRATION PROCEDURES AND PURCHASE ALTERNATIVE.
If Company is required by the provisions of Section 2 to effect Registration
of any shares of Registerable Shares, Company will as promptly as practicable:
(a) Comply with Rule 424 under the Act relating to filing of prospectuses
and furnish to each Optionholder and to each underwriter such number of
conformed copies of the registration statement and the prospectus
included therein (including each preliminary prospectus) as such persons
reasonably may request in order to facilitate the public sale of the
Registerable Shares covered by such registration statement;
(b) If the offering is to be underwritten, Company and each seller of
Registerable Shares shall enter into a written agreement with any
managing underwriter selected in the manner herein provided in such
form and containing such provisions
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as are satisfactory to Company and such seller of Registerable Shares,
and as are customary in the securities business for such an arrangement
between such underwriter, such seller, and corporations of Company's
size and investment stature.
(c) Give the selling Optionholders of Registerable Shares five (5) days'
advance notice of its anticipated filing date of the registration
statement and amendments thereto.
If, after a registration statement becomes effective, Company notifies the
Optionholders who own Registerable Shares covered by such registration
statement that Company considers it appropriate for the registration statement
to be amended or supplemented, the Optionholders who own such Registerable
Shares shall suspend any further sales of their Registerable Shares until
Company advises them that the registration statement has been amended or
supplemented. Company may give such advice if there exists at any time material
non-public information relating to Company that, in the reasonable opinion of
Company's Board of Directors, would be prejudicial to Company or its
shareholders to be disclosed at that time.
In connection with each registration under this Registration Rights
Agreement, each seller of Registerable Shares will (i) furnish promptly to
Company in writing such information with respect to themselves and the proposed
distribution by each seller as reasonably shall be requested by Company in order
to assure compliance with federal and applicable state securities laws, and (ii)
comply with all applicable rules promulgated by the SEC or any securities
exchange (including NASDAQ).
4 EXPENSES.
All expenses incurred by Company in complying with Sections 2 and 3,
including without limitation all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for Company, fees and expenses (including counsel fees) incurred in connection
with complying with state securities or "blue sky" laws (other than those which
by law must be paid by the selling security holders), fees of securities
exchanges or the National Association of Securities Dealers, Inc., fees of
transfer agents and registrars, but excluding any Selling Expenses, are called
"Registration Expenses." All underwriting discounts, selling commissions and
transfer taxes applicable to the sale of outstanding shares and any legal fees
and expenses of counsel or other advisers and agents of the holders of
Registerable Shares being registered are called "Selling Expenses." Company
will pay all Registration Expenses. All Selling Expenses shall be borne by the
participating sellers, in proportion to the number of Registerable Shares sold
by each unless they otherwise agree among themselves.
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5 MARKETING ARRANGEMENTS.
If (i) the offering proposed to be made pursuant to Section 2 hereof is to
be an underwritten public offering, and (ii) the managing underwriter of such
public offering furnishes a written opinion that the total amount of securities
to be included in such offering would exceed the maximum amount of securities
(the "Maximum Amount") as specified in such opinion, that can be marketed at a
price reasonably related to the then current market value of such securities or
the anticipated market price, if no trading market then exists, and without
materially and adversely affecting such offering or the trading market for
Shares, then Company, the Optionholders and other holders of Shares desiring to
register their Shares by such registration shall have a right to participate in
such offering in the following order of priority (a "Priority") until the number
of Shares included in the offering reaches the Maximum Amount, and no additional
Shares will be included in the registration statement.
FIRST PRIORITY shall be to Company for Shares to be sold for the account of
Company.
SECOND PRIORITY shall be to shareholders who have made a Registration
Request for a Demand Registration pursuant to a legal, valid, and binding
Registration Rights Agreement, whether now or hereafter duly executed and
delivered by the Company.
THIRD PRIORITY shall be to holders of Shares who have a contractual right
granted to such holder on or prior to the date hereof to have their Shares
registered pursuant to Registration or incidental rights on terms comparable to
Section 2 (in a registration statement that such holders do not have a right to
initiate), including shareholders who have Registration Rights under this
Registration Rights Agreement.
FOURTH PRIORITY shall be to all other holders of Shares in any sequence that
may be agreed upon among the holders of such Shares and/or Company.
To the extent that some but not all of the Shares owned by persons within
any of the Priorities listed above are not included within the Maximum Amount,
the Shares to be included in the registration statement shall be allocated pro
rata to holders in such Priority in proportion to the respective numbers of
Shares each such person in such Priority wishes to include in the registration
statement.
6 EXCEPTIONS TO COMPANY'S OBLIGATIONS.
The right to Registration shall not apply, unless Company otherwise agrees
in writing, to any registration statement:
(a) To be filed on a registration form which is unavailable for the
registration of
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Registerable Shares;
(b) Relating primarily to Shares to be offered pursuant to (i) an employee
benefit plan, or (ii) a dividend or interest reinvestment plan
(including such a plan that has an open enrollment or cash investment
feature);
(c) Relating to Shares to be issued in the acquisition of another business,
through a merger, consolidation, exchange of securities, or otherwise;
(d) Relating to Company securities to be issued for a consideration other
than solely cash;
(e) Relating to Company securities to be offered primarily to existing
security holders of Company, through a "rights offering" or otherwise;
(f) Relating primarily to Company securities to be issued on the exercise of
options, warrants, and similar rights, or on the conversion or exchange
of other securities, issued by Company or any other person;
(g) Relating solely to debt securities of Company, including debt securities
that are convertible or exchangeable for equity securities of Company.
7 TERMINATION OF REGISTRATION RIGHTS.
Notwithstanding the foregoing provisions, Company's obligation to register
Registerable Shares under this Registration Rights Agreement shall terminate
as to any particular Registerable Shares (a) on the Expiration Date, (b) when
such Registerable Shares have been sold in an offering registered under the Act
or in a sale exempt from registration under the Act, or (c) when a written
opinion, to the effect that such Registerable Shares may be sold without
registration and without limitation under the Act or applicable state law, shall
have been received from counsel for Company which counsel is reasonably
acceptable to the owner of such Registerable Shares.
8 INDEMNIFICATION.
(a) In the event of any registration of Registerable Shares under the Act
pursuant to this Agreement, Company will, and hereby does, indemnify and
hold harmless, to the fullest extent permitted by law, the seller of
any Registerable Shares covered by such registration statement, each
person or entity that participates as an underwriter in the offering or
sale of such securities, each officer, director or partner of such
underwriter, and each other person, if any, who controls such seller or
any such underwriter within the meaning of the Act (collectively, the
"Indemnified Persons"), against any and all losses, claims, damages or
liabilities, joint
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or several, and expenses (including fees of counsel and any amounts paid
in any settlement effected with Company's consent, which consent shall
not be unreasonably withheld) to which such Indemnified Persons may
become subject under the Act, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof), or expenses arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement
under which Registerable Shares were registered under the Act or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary, final, or summary prospectus,
together with the documents incorporated by reference therein (as
amended or supplemented if Company shall have filed with the SEC any
amendment thereof or supplement thereto), or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii)
any violation by Company of any federal or state rule or regulation
applicable to Company and relating to action required of or inaction by
Company in connection with any such registration. Company will reimburse
Indemnified Persons for any reasonable legal or any other expenses
reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding.
Notwithstanding the foregoing, Company shall not be liable to any
Indemnified Person to the extent that any such loss, claim, damage,
liability (or action or proceeding, whether commenced or threatened, in
respect thereof) or expense arises out of or is based upon (i) any
untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written
information furnished to Company by or on behalf of any such Indemnified
Person, for use in the preparation of the registration statement or
(ii) the failure of any such Indemnified Person to comply with any legal
requirement applicable to any such Indemnified Person to deliver a copy
of a prospectus or any supplements or amendments thereto after Company
has made such documents available to such persons, and it is established
that delivery of such prospectus, supplement or amendment would have
cured the defect giving rise to such loss, claim, damage, liability or
expense. Such indemnity and reimbursement of expenses shall remain in
full force and effect following the transfer of Registerable Shares by
such seller.
(b) Company, as a condition to including any Registerable Shares in any
registration statement filed in accordance with this Registration Rights
Agreement, shall have received an undertaking reasonably satisfactory to
it from the prospective seller of such Registerable Shares and any
underwriter, to indemnify and hold
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harmless (in the same manner and to the same extent as set forth in
clause (a) of this Section 8) Company and its directors and officers and
each person controlling Company within the meaning of the Act and all
other prospective sellers and their directors, officers, general and
limited partners and respective controlling persons with respect to any
statement or alleged statement in or omission from such registration
statement, any preliminary, final, or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or
alleged statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to Company or
its representatives by or on behalf of such seller or underwriter for
use in the preparation of such registration statement; provided,
however, that the aggregate amount which any such seller or prospective
seller shall be required to pay pursuant to such undertaking shall be
limited to the amount of the net proceeds received by such person upon
the sale of the Registerable Shares pursuant to the registration
statement giving rise to such claim.
(c) Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section
8, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section 8,
except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. If any such claim or action shall be
brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party;
and provided further that the indemnifying party shall not be entitled
to so participate or so assume the defense if, in the indemnified
party's reasonable judgment, a conflict of interest between the
indemnified party and the indemnifying party exists in respect of such
claim. After notice from the indemnifying party to such indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof unless the
indemnifying party has failed to assume the defense of such claim or to
employ counsel reasonably satisfactory to such indemnified party; and
provided further, that the indemnified parties shall have the right to
employ one counsel to represent such indemnified parties if, in such
indemnified parties' reasonable judgment, a conflict of interest between
the indemnified parties and the indemnifying parties exists in respect
of such claim,
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and in that event the fees and expenses of such separate counsel shall
be paid by the indemnifying party; and provided further, that if, in the
reasonable judgment of any of the indemnified parties, a conflict of
interest between such indemnified parties and any other indemnified
parties exists in respect of such claims, such indemnified parties shall
be entitled to additional counsel or counsels and the indemnifying party
shall be obligated to pay the fees and expenses of such additional
counsel or counsels. No indemnified party will consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimants or plaintiffs to
such indemnified party of a release from all liability in respect to
such claim or litigation. No indemnifying party will be liable for any
settlement effected without its prior written consent.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under the preceding
clauses, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in clause (a) and (b) above
in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and the indemnified party on the
other hand in connection with statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this
Section 8 were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 8. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this Section
8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any action or claim (which shall be limited as provided in
this clause (c) if the indemnifying party has assumed the defense of any
such action in accordance with the provisions thereof which is the
subject of this Section 8). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The provisions of this Section 8 shall be in addition to any other
rights to indemnification or contribution which any indemnified party
may have pursuant to law or contract and shall remain in full force and
effect following the transfer of the Registerable Shares by any such
party.
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9 COMPLIANCE WITH RULE 144.
At the request of any holder of Registerable Shares who proposes to sell
Registerable Shares in compliance with Rule 144 under the Act, or any similar
Rule, Company shall (a) furnish to such holder a written statement as to its
compliance with the filing requirements of the SEC as set forth in such Rule and
(b) make such additional filings with the SEC as will enable the Shareholders to
make sales of Registerable Shares pursuant to such Rule.
10 MISCELLANEOUS.
10.1 BINDING EFFECT AND BENEFIT. This Registration Rights Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors, and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement without
the prior written consent of the other parties hereto; provided, however, that
the obligation to register Registerable Shares shall be enforceable by direct or
remote transferees of Registerable Shares now owned by the Optionholders only if
the transfer results from the death of any person, a gift made without
consideration, or the transfer of all or substantially all of the assets of an
entity, by merger, consolidation, asset sale, or otherwise. Without limiting the
foregoing, any transferee of Registerable Shares must agree in writing to be
bound by the provisions of Section 5 of this Registration Rights Agreement.
10.2 COMMUNICATIONS FROM OPTIONHOLDERS. If Shares are owned of record jointly
by two or more persons, Company may rely on any communication signed by one such
person. Company may ignore communications given by persons who purport to own
Registerable Shares beneficially unless such communications are confirmed by a
record owner, and it may ignore any communications from a record owner that
conflict with previously received communications from another person who is at
the relevant time also a record owner of the same Registerable Shares.
10.3 INTEGRATION. This Registration Rights Agreement and the other documents
specifically referred to in this Registration Rights Agreement contain the
entire agreement between the Optionholder and Company relating to the subject
matter of this Registration Rights Agreement and supersedes all oral statements
and prior writings with respect thereto, except such oral statements and prior
writings relating to the financial condition or business prospects of
Optionholder.
10.4 TIME IS OF THE ESSENCE. Time is of the essence with regard to the
performance of the obligations of Seller and Company in this Registration Rights
Agreement
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and each and every term, covenant, and condition in this Registration Rights
Agreement by or applicable to Seller or Company.
10.5 HEADINGS. The headings preceding the text of the Sections of this
Registration Rights Agreement are inserted solely for convenience of reference
only and shall neither define nor limit the provisions of this Registration
Rights Agreement nor constitute a part of this Registration Rights Agreement
nor shall they affect its meaning, construction, or effect.
10.6 AMENDMENT. This Registration Rights Agreement may not be amended,
modified, changed, waived, terminated, or discharged orally, but only by an
agreement in writing signed by both Optionholders and Company.
10.7 SEVERABILITY. Wherever possible each provision of this Registration
Rights Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but, if any provision of this Registration Rights
Agreement shall be found to be illegal, invalid, prohibited, or unenforceable
for any reason whatsoever under such law, such provision shall be ineffective to
the extent of such illegality, invalidity, prohibition, or unenforceability
without invalidating the remainder of such provision or the remaining provisions
of this Registration Rights Agreement.
10.8 COSTS, EXPENSES, AND TAXES. Each of the parties to this Registration
Rights Agreement shall pay their or its own expenses in connection with this
Registration Rights Agreement and the transactions contemplated thereby,
including the fees and expenses of counsel, certified public accountants, or
other professionals.
10.9 GOVERNING LAW. This Registration Rights Agreement shall be governed and
construed in accordance with laws of the State of New York (without giving
effect to the conflicts of laws principles thereof) applicable to contracts made
and to be performed in New York.
10.10 FURTHER ASSURANCES. Each party to this Registration Rights Agreement
covenants and agrees (i) to furnish all information and to make all filings
required by any statute or governmental regulation (ii) to deliver any further
instruments and (iii) to take any further action that may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement.
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10.11 COUNTERPARTS. This Registration Rights Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, and each of
which when taken together shall constitute but one and the same instrument and
shall be binding upon each of the undersigned as fully and completely as if all
had signed the same instrument.
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IN WITNESS WHEREOF, intending to be legally bound and intending this to be
a sealed instrument, Optionholders and Company have executed this Registration
Rights Agreement.
JOHN SERVIDIO
------------------------------------------
SAM DOMENICO
------------------------------------------
Signatures continued on following page
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SELECT MEDIA COMMUNICATIONS, INC., a corporation organized and existing
under the laws of the State of New York
By:
-------------------------------------------
Name:
Title:
(Corporate Seal)
Attest:
By:
---------------------------------------------
Name:
Title:
w:\Acquisitions\SelectMedia\Betelgeuse\PiggyBackRegistrationTwo.tex
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