Document:

nght_ex104.htm

    EXHIBIT 10.4

 

Registration Rights Agreement

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of September 12, 2012, by and among NightCulture, Inc., a Nevada corporation (the “Company”), and the investors listed on the signature page hereto (individually, an “Investor” and collectively, the “Investors”).

 

WHEREAS, in connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the “Purchase Agreement”), the Company has agreed to issue and sell to each Investor convertible debentures of the Company (the “Debentures”), which will be convertible into the Company’s common stock, $0.001 par value (the “Common Stock”, and as issued upon conversion of the Debentures, the “Debenture Shares”), and warrants (the “Warrants”), which will be exercisable to purchase shares of Common Stock (as issued upon exercise of the Warrants, the “Warrant Shares”); and

 

WHEREAS, in accordance with the terms of the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”).

The Company and the Investors hereby agree as follows:

 

1.          Definitions; Section References.

 

(a)      Definitions. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan, (ii) a registration relating to an SEC Rule 145 transaction, (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities, or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

“Prospectus” means the prospectus included in the 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 promulgated under the 1933 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 the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

 

“Registrable Securities” means: (i) the Debenture Shares, (ii) the Warrant Shares and (iii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event, or any price adjustment as a result of such stock splits, reverse stock splits or similar events with respect to any of the securities referenced in (i) through (ii) above.  Notwithstanding the foregoing, a security shall cease to be a Registrable Security for purposes of this Agreement from and after such time as the Holder of such security may resell such security without volume restrictions under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected holders.

 

  

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“Registration Period” means, as to any Registration Statement required to be filed pursuant to this Agreement, the period commencing on the effective date of such Registration Statement and ending on the earliest to occur of (a) the second anniversary of such effective date, (b) such time as all of the Registrable Securities covered by such Registration Statement have been publicly sold by the Holders of the Registrable Securities included therein, or (c) such time as all of the Registrable Securities covered by such Registration Statement may be sold by the Holders without volume restrictions pursuant to Rule 144 as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders.

“Registration Statement” means each registration statement required to be filed hereunder, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

  

“SEC” means the U.S. Securities and Exchange Commission.

 

“Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities, including fees and disbursements of Legal Counsel for the holders.

 

“Underwriters’ Maximum Number” means, for any registration hereunder which is an underwritten registration, that number of securities to which such registration should, in the opinion of the managing underwriters of such registration in the light of marketing factors, be limited.

 

(b)     Section References. References in this Agreement to “Sections” shall be to Sections of this Agreement unless otherwise specifically provided.

 

2.           Demand Registration Rights

 

(a)      Registration Rights. Subject to the terms of this Agreement, at any time, any Investor may request that the Company effect a registration (a “Demand Registration”) under the Securities Act covering all or part of the Registrable Securities by giving written notice to the Company in accordance with Section 8(j), which request shall specify the number of Registrable Securities proposed to be sold and the intended method or methods of disposition of such Registrable Securities. Within ten days after receipt of any written request pursuant to this Section 2(a), the Company will give written notice of such request to all of the other Investors in accordance with Section 8(j), and will use its reasonable best efforts to include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion within ten days after delivery of the Company’s notice, and thereupon the Company will use its reasonable best efforts to effect, at the earliest possible date, the registration under the Securities Act.

 

(b)     Priority. If the Investors holding at least a majority of the Registrable Securities to be included in such Demand Registration so request that the offering be underwritten with a managing underwriter(s) and the managing underwriter(s) with respect to a Demand Registration involving more than one Investor advise the Company in writing that, in its opinion, the number of Registrable Securities requested to be included in such Demand Registration should be reduced due to adverse market conditions, market demand or otherwise, then, unless otherwise agreed by all of the Investors who have requested inclusion of Registrable Securities in the applicable Demand Registration, the number of Registrable Securities shall be reduced pro rata among the respective holders of such Registrable Securities on the basis of the number of such Registrable Securities requested by such Investors to be included in the applicable Demand Registration.

 

  

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(c)      Form. Registrations under this Section 2 shall be on such appropriate registration form of the SEC (i) as shall be selected by the Company and as shall be reasonably acceptable to the Investors holding at least a majority of the Registrable Securities to be included in such Demand Registration, and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Investor’s requests for such registration. Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the Company proposes to effect a registration by filing a Registration Statement on Form S-3 (or any successor or similar short-form registration statement), (y) such registration is in connection with an underwritten offering and (z) the managing underwriter(s) shall advise the Company in writing that, in its opinion, the use of another form of registration statement (or the inclusion, rather than the incorporation by reference, of information in the prospectus related to a Registration Statement on Form S-3 (or other short-form registration statement)) is of material importance to the success of such proposed offering, then such registration shall be effected on such other form (or such information shall be so included in such prospectus).

 

(d)     Limitations. The Company will not be obligated to effect any Demand Registration within 180 days after the effective date of a previous Demand Registration. In addition, with respect to any Demand Registration, if (i) (A) in the good faith judgment of the Board of Directors of the Company, there is a material development relating to the business, results of operations, condition (financial or otherwise) or prospects of the Company that has not been disclosed to the general public and is required to be disclosed under applicable securities law in the opinion of counsel to the Company, or (B) the Company is planning to prepare and file a registration statement for a primary offering by the Company of its securities, and (ii) the chief executive officer or chief financial officer of the Company notifies in writing the Investor(s) requesting such Demand Registration that such officer has reasonably concluded that under such circumstances it would be in the Company’s best interest to postpone the filing of a Demand Registration, then the Company may postpone for up 60 days the filing or the effectiveness (but not the preparation) of a registration statement for a Demand Registration. No such postponement shall exceed 60 consecutive days, no subsequent postponement shall commence fewer than 15 days following the expiration of any preceding period of postponement, and the aggregate of all postponements shall not exceed 150 days in any 360-day period

 

3.           Piggyback Registration Rights.

 

(a)      Company Registration. In addition to the Demand Registration rights provided hereunder, if (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for shareholders other than the Investors) any of its securities under the Securities Act in connection with the public offering of such securities (other than with respect to an Excluded Registration), the Company shall, at such time, promptly give each Investor written notice of such registration. Upon the written request of each Investor given within twenty (20) days after such notice by the Company in accordance with Section 8(j), the Company shall, subject to the provisions of Section 3(c), use commercially reasonable efforts to cause (i) to be registered under the Securities Act all of the Registrable Securities that each such Investor has requested to be registered, and (ii) the aggregate number of Registrable Securities requested by the Investors to be included in any public offering to be not less than twenty-five percent (25%) of the Company’s securities included in such offering.

 

(b)     Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 prior to the effectiveness of such registration whether or not any Investor has elected to include Registrable Securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 6.

 

  

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(c)      Underwriting Requirements. In connection with any offering involving an underwriting of the Company securities, including Registrable Securities, the Company shall not be required under this Section 3 to include any Investor’s Registrable Securities in such underwriting unless such Investor accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enters into an underwriting agreement in customary form with an underwriter or underwriters so selected, and then only in such quantity as determined in accordance with the remainder of this Section 3(c). If the managing underwriters shall give written advice to the Company of an Underwriters’ Maximum Number, then: (i) if the registration has been initiated by the Company, then, subject to Section 3(a)(ii), (A) the Company shall be entitled to include in such registration the maximum number of securities which the Company proposes to offer and sell for its own account in such registration and which does not exceed the Underwriters’ Maximum Number, (B) if the Underwriters’ Maximum Number exceeds the number of securities which the Company proposes to offer and sell for its own account in such registration, then the Company will be obligated and required to include in such registration the maximum number of Registrable Securities requested by the Investors (on a pro rata basis based on such Investors’ respective ownership of Registrable Securities) to be included in such registration and which does not exceed such excess, and (C) if the Underwriters’ Maximum Number exceeds the sum of the number of Registrable Securities which the Company shall be required to include in such registration pursuant to the foregoing clause (B) and the number of securities which the Company proposes to offer and sell for its own account in such registration, then the Company may include in such registration that number of securities which other persons shall have requested be included in such registration and which shall not be greater than such excess; and (ii) if the registration has been initiated by any other person(s), then (A) the Company shall be entitled to include in such registration the maximum number of securities which such other person(s) propose to offer and sell for their own account in such registration and which does not exceed the Underwriters’ Maximum Number, (B) if the Underwriters’ Maximum Number exceeds the number of securities which such other person(s) proposes to offer and sell for their own account in such registration, then the Company will be obligated and required to include in such registration the maximum number of Registrable Securities requested by the Investors (on a pro rata basis based on such Investors’ respective ownership of Registrable Securities) to be included in such registration and which does not exceed such excess, (C) if the Underwriters’ Maximum Number exceeds the sum of the number of Registrable Securities which the Company shall be required to include in such registration pursuant to the foregoing clauses (A) and (B), then the Company may include in such registration that number of other securities which the Company and/or any other holders of the Company’s securities be included in such registration and which shall not be greater than such excess.

  

4.           Registration Procedures. When the Company proposes to effect the registration of any of the Registrable Securities pursuant to Section 2 or 3, the Company shall have the following obligations:

 

(a)      Subject to Section 6, the Company agrees that the Investors that have elected to participate in a registration pursuant to Section 2 or 3 and holding at least a majority of the Registrable Securities to be included in such registration shall have the right to select one legal counsel to represent such Investors as a group to review and oversee any such registration (“Legal Counsel”). The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s obligations under this Agreement. The Company shall permit Legal Counsel to review and comment upon (i) each Registration Statement at least three (3) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC.

 

  

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(b)     The Company shall furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary Prospectus, (ii) upon the effectiveness of any Registration Statement, one copy of the Prospectus and all amendments and supplements thereto (or such other number of copies as such Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final Prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

 

(c)      The Company shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of the Registrable Securities covered by a Registration Statement under such other securities or blue sky laws of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(c), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and each Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(d)     The Company shall notify Legal Counsel and each Investor in writing of the happening of any event, as promptly as practicable after becoming aware of such event, as a result of which the Prospectus, as then in effect, includes an untrue statement of a material fact or omission to state 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 (provided that in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and promptly prepare a supplement or amendment to such Registration Statement and the Prospectus to correct such untrue statement or omission and deliver one copy of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor may reasonably request). The Company shall also promptly notify Legal Counsel and each Investor in writing (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel and each Investor by facsimile or e-mail on the same day of such effectiveness and by overnight mail), and when the Company receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related Prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate; and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information relating to the Registration Statement or any amendment or supplement thereto or any related Prospectus.

  

  

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(e)      The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify Legal Counsel and each Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

(f)       If any Investor is required under applicable securities laws to be described in the Registration Statement as an underwriter and such Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and (ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the Investors.

 

(g)      If any Investor is required under applicable securities laws to be described in any Registration Statement as an underwriter and such Investor consents to being so named, upon the written request of such Investor, the Company shall make available for inspection by such Investor and Legal Counsel (collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request; provided, however, that each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such Investor) or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required under the Securities Act, (2) the release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the information in such Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. Such Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor, if any) shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

 

  

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(h)      The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company pursuant to this Agreement unless (i) disclosure of such information is necessary to comply with federal or blue sky laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

  

(i)       The Company shall use commercially reasonable efforts either to (i) cause all of the Registrable Securities covered by a Registration Statement to be listed on (A) each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange or (B) the OTC Bulletin Board, or (ii) secure the inclusion for quotation of all of the Registrable Securities on The NASDAQ Global Market, The New York Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Capital Market or the NYSE Amex for such Registrable Securities and, without limiting the generality of the foregoing, to use commercially reasonable efforts to arrange for at least two market makers to register with the Financial Industry Regulatory Authority, Inc. (“FINRA”) as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 4(i).

 

(j)       The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors may reasonably request from time to time and registered in such names as the Investors may request.

 

(k)      If requested by an Investor, the Company shall as soon as practicable (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any Registrable Securities.

 

(l)       The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following the applicable effective date of each Registration Statement.

 

  

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(m)     The Company shall otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC in connection with any registration hereunder.

 

(n)     The Company shall notify all Investors holding Registrable Securities being offered in the event that, in the judgment of the Company, it becomes advisable to suspend use of a Prospectus included in a Registration Statement, as then in effect, due to pending material developments or other events that have not yet been publicly disclosed and as to which the Company believes public disclosure would be detrimental to the Company. Upon receipt of such notice, each such Investor shall immediately discontinue any sales of Registrable Securities pursuant to such Prospectus and the related Registration Statement until such Investor has received copies of a supplement or amendment to such Prospectus and the related Registration Statement or until such Investor has been advised in writing by the Company that such Prospectus and the related Registration Statement, as then in effect, may again be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus and the related Registration Statement. Notwithstanding anything to the contrary herein, the Company shall not exercise its rights under this Section 4(n) to suspend sales of Registrable Securities for a period in excess of 60 days in any 360-day period.

 

5.           Obligations of the Investors.

 

(a)      Information to be Furnished. At least five (5) business days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing of the information the Company requires from each such Investor if such Investor elects to have any of such Investor’s Registrable Securities included in such Registration Statement. It shall be a condition precedent to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

 

(b)      Cooperation. Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.

 

(c)      Obligation to Discontinue Dispositions. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e) or the first sentence of Section 4(d), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of copies of the supplemented or amended Prospectus as contemplated by Section 4(e) or the first sentence of Section 4(d) or receipt of notice that no supplement or amendment is required.

 

(d)      Compliance with Prospectus Delivery Requirements. Each Investor covenants and agrees that it will comply with the Prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.

 

6.           Registration Expenses. All reasonable expenses relating to the Company’s compliance with Sections 2, 3, and 4, including, without limitation, all registration and filing fees, underwriting expenses (other than fees, commissions or discounts), expenses of any audits incident to or required by any such registration, fees and expenses of complying with securities and blue sky laws, printing expenses, fees and expenses of the Company’s counsel and accountants, shall be paid by the Company. All Selling Expenses relating to Registrable Securities registered pursuant to this Agreement shall be borne and paid by the holders of such Registrable Securities, in proportion to the number of Registrable Securities registered for each such holder.

 

  

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7.           Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Agreement:

 

(a)      Indemnification by the Company. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor, the directors, officers, partners, employees, agents, representatives of, and each person, if any, who controls any Investor within the meaning of the Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”), incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities laws of any jurisdiction in which Registrable Securities are offered, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus if used prior to the effective date of such Registration Statement, or contained in the final Prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any blue sky law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”). Subject to Section 7(c), the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 7(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such Prospectus was timely made available by the Company pursuant to Section 4(b); and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 8(d).

 

  

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(b)      Indemnification by the Investors. In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 7(a), the Company, each of its directors and officers and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each, an “Indemnified Party”) against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act, any blue sky law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 7(c), such Investor shall reimburse the Indemnified Party, promptly as such expenses are incurred and are due and payable, for any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 7(b) and the agreement with respect to contribution contained in Section 7(d)(i) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld or delayed; provided, further, however, that the Investor shall be liable under this Section 7(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 8(d).

 

(c)      Procedures. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 7 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 7, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for all such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, as applicable, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates. The Indemnified Party or Indemnified Person shall cooperate reasonably with the indemnifying party in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such Claim or litigation and such settlement shall not include any admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 7, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

  

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(d)      Contributions; Investors Treated Separately.

 

(i)       To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 7 to the fullest extent permitted by law; provided, however, that: (1) no person involved in the sale of Registrable Securities which person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (2) contribution by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

 

(ii)      Notwithstanding any provision of this Agreement to the contrary, each Investor shall be treated individually and separately from all other Investors under this Section 7, and will neither (1) become the subject of any obligation under this Section 7 as a result of any action, failure to act, statement, omission, or otherwise of any other Investor hereunder, nor (2) benefit from the provisions of Section 7(a) as a result of any indemnification obligation of the Company to any other Investor under said Section.

 

8.           Miscellaneous.

 

(a)      Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Texas, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Texas.

 

(b)      Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(c)       Remedies. The remedies provided in this Agreement shall be cumulative and in addition to all other remedies available under this Agreement and any of the other Transaction Documents (as defined in the Purchase Agreement) at law or in equity (including a decree of specific performance and/or other injunctive relief). The Company acknowledges that a breach by it of its obligations hereunder may cause irreparable harm to the Investors and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Investors shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without any bond or other security being required.

  

(d)      Assignment. All or any portion of the rights under this Agreement shall be assignable by each Investor in connection with any transfer of such Investor’s Registrable Securities or Debentures or Warrants made in accordance with the provisions of the same, if: (i) such Investor agrees in writing with such transferee, assignee or participant (as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such transferee, assignee or participant (as the case may be); (ii) the Company is, within a reasonable time after such transfer, assignment or participation (as the case may be), furnished with written notice of (a) the name and address of such transferee, assignee or participant (as the case may be), and (b) the securities with respect to which such registration rights are being assigned; and (iii) such transferee, assignee or participant (as the case may be) agrees in writing with the Company to be bound by all of the provisions contained herein.

 

(e)      Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

 

  

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(f)       Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(g)      Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(h)      Entire Agreement. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements between the Investors, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding of the parties with respect to the matters covered herein and therein.

 

(i)       Amendments and Waivers. No provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the holders of a majority of the Registrable Securities (determined at the time of such amendment or waiver), and any amendment or waiver to this Agreement made in conformity with the provisions of this Section 8(i) shall be binding on all of the Investors. No such amendment shall be effective to the extent that it applies to less than all of the holders of the applicable Registrable Securities then outstanding.

 

(j)       Notices. Whenever notice is required to be given under this Agreement, unless otherwise provided herein, such notice shall be given in accordance with Section 4.7 of the Purchase Agreement.

 

(k)      Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

 

(l)       No Third Party Beneficiaries. Subject to the requirements of Section 8(d), this Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

(m)     Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  

(n)      No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

[Signature Page Follows]

 

  

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IN WITNESS WHEREOF, the Company and each Investor has executed this Registration Rights Agreement as of the date first written above.

 

	  	
ISSUER:

	 
	  	  	 
	  	
NIGHTCULTURE, INC.

	 
	  	  	  	 
	  	
By:

	  	 
	  	
Name:

	
Michael Long

	 
	  	
Title:

	
CEO

	 
	  	  	  	 
	  	 	 
	  	INVESTORS:	 
	  	  	  	 
	  	
By:

	  	 
	  	
Name:

	  	 
	  	
Title:

	  	 
	  	  	  	 
	  	  	 	 

 

[Signature Page to Registration Rights Agreement]

 

 

 

13nght_ex105.htm

EXHIBIT 10.5

 

Employment Agreement

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made effective as of September 13, 2012 (the “Effective Date”), by and between NIGHTCULTURE, INC., a Nevada corporation (“Company”), and JEREMY WORD (“Employee”) (each a “Party” and, collectively, the “Parties”).  Unless otherwise indicated, capitalized terms are defined in Article VII.

 

WHEREAS, Employee and Company are party to that certain Asset Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), pursuant to which the Company agreed to purchase, and Employee agreed to sell (the “Acquisition”), substantially all of the assets used, or usable in an event promotion business operated by Employee and Brooke Humphries under the name “Full Access and Prototype Industries” (the “Business”) in Dallas County, Texas and each county adjoining Dallas County (the “Subject Market”); and

WHEREAS, pursuant to the terms of the Purchase Agreement, and as a condition to closing of the purchase and sale contemplated in the Purchase Agreement, the Company and Employee agreed to enter into an employment agreement pursuant to which Employee would provide services exclusively to the Company as an employee in connection with events promoted and produced by the Company in the Subject Market in order to preserve the value of the Business following closing of the purchase and sale contemplated in the Purchase Agreement.

NOW, THEREFORE, in consideration of the recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

EMPLOYMENT TERMS

1.1.           Employment.  The Company hereby employs Employee, and Employee hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 3.1 hereof (the “Employment Period”).

1.2.           Position and Duties.

  1.2.1.           Generally.  During the Employment Period, Employee will be an employee of the Company and will serve in such position(s) as management of the Company shall determine from time to time.  In any such capacity, Employee shall provide such services to the Company and its subsidiaries as are commensurate with the customary duties, responsibilities and authority of such offices as to which he may be appointed and subject to the power of the Board of Directors of the Company (the “Board”).  Employee shall also perform such other services on behalf of the Company as the Board may reasonably direct from time to time.

 

  

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  1.2.2.           Duties and Responsibilities.  Employee shall report to the President and the Board of the Company and shall devote his best efforts and his full business time and attention to the business and affairs of the Company and its subsidiaries and, in particular, all aspects of the promotion and production of events (the “Covered Events”) in the Subject Market and such other aspects of the operations of the Business as the President and/or the Board may from time to time determine.  Employee shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.  During the Employment Period, Employee shall not engage in any other business activities which could reasonably be expected to conflict with Employee’s duties, responsibilities and obligations hereunder.  Except in connection with charitable or civic endeavors, Employee will not serve as a member of the board of directors of any business, other than the Company or any of its subsidiaries, without the prior approval of the Board.  Employee shall also comply with all policies, rules and regulations of the Company as well as all reasonable directives and instructions from the Board.  The Company shall have the right to purchase in Employee’s name a “key man” life insurance policy naming the Company and any of its subsidiaries as the sole beneficiary thereunder and Employee shall cooperate with the Company in obtaining such insurance if the Company elects to purchase such insurance. Notwithstanding anything herein to the contrary, during the Employment Period, Employee may, from time to time upon prior notice to and written consent of the Company, provide contract DJ, music production and remixing services to third parties (“Permitted Outside Services”) provided that the same does not conflict with Employee’s service to the Company hereunder.

ARTICLE II

COMPENSATION

2.1.           Salary.  Commencing on the Effective Date and continuing through the Employment Period, the Company shall pay to Employee a base salary in the amount of $50,000.00 per year (the “Salary”); provided, however, that, the Board may, at its sole discretion, increase, but not decrease, the Salary.  The Salary will be payable by the Company in regular installments in accordance with the Company’s general payroll practices, currently providing for payments on the 1st and 15th days of each month, and shall be subject to customary withholding for income tax, social security and other such taxes.

2.2.           Covered Event Bonuses.  In addition to the Salary, during the Employment Period, Employee shall receive cash bonuses from time to time in an amount equal to twenty percent (20%) of the Net Profits for each Covered Event in the Subject Market (the “Covered Event Bonuses”) and payable not later than twenty (20) days after each Covered Event. For purposes hereof, “Net Profits” shall mean the excess of all revenues received by Company from a Covered Event over all direct costs incurred by Company attributable to the promotion and production, or otherwise directly incurred with respect to the subject Covered Event.  Net Profits for a Covered Event shall be calculated (i) after deducting amounts paid or payable to co-promoters, co-producers, partners or any third parties holding an interest in the profits from the Covered Event, other than Brooke Humphries, and (ii) before deducting (a) any corporate overhead of Company, (b) any Covered Event Bonus attributable to the Covered Event, and (c) amounts paid, or payable, to Brooke Humphries as Consultant Fees under the Advisory Board Consulting Agreement between the Company and Brooke Humphries.

 

  

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2.3.           Vacation.  Employee shall be entitled to paid vacation time each year as provided under the Company’s prevailing policy, as such policy may be in effect from time to time, and consistent with that provided to other non-officers of the Company.

2.4.           Additional Benefits.  During the Employment Period, Employee shall be entitled to participate in any employee welfare and health benefit plans provided to salaried employees of the Company which may be established by the Company from time to time for the benefit of other Company employees (collectively “Benefits”).  Employee shall be required to comply with the conditions attendant to coverage by such plans and shall comply with and be entitled to Benefits only in accordance with the terms and conditions of such plans as they may be amended from time to time.  Nothing herein shall be construed as requiring the Company to establish or continue any particular Benefits in discharge of its obligations under this Agreement.

2.5.           Expenses.  The Company shall reimburse Employee for all reasonable expenses incurred by him for the benefit of the Company in the course of performing his duties under this Agreement that are consistent with the Company’s policies in effect at that time with respect to travel, entertainment and other business expenses; provided that:  (i) such expenditures are of a nature qualifying them as proper deductions on the federal and state income tax returns of the Company; (ii) Employee furnishes to the Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction; and (iii) such expenditures otherwise comply with the Company’s requirements with respect to reporting and documentation of such reimbursable expenses.

2.6.           Applicable Withholdings.  The Salary, Covered Event Bonuses, Benefits and any other compensation will be subject to all withholdings and deductions required by law and will be payable in accordance with the Company’s normal periodic payroll practices.

ARTICLE III

TERM AND TERMINATION

3.1.           Duration.  The “Employment Period” shall commence on the Effective Date and shall continue until the first to occur of: (i) Employee’s voluntary termination without or without Good Reason, (ii) Employee’s death or Disability, (iii) termination for Cause pursuant to Section 3.2, or (iv) the third (3rd) anniversary of the Effective Date (at such third anniversary or the end of any applicable extension, the “Expiration”); provided, however, that the Company shall have the right, at its sole discretion and subject to delivery of written notice of intent to extend on or before the then applicable Expiration, to extend the Employment Period  for up to two additional one year periods.

3.2.           Termination for Cause.  Employee may be terminated by the Company at any time for “Cause” by written notice to Employee, setting forth in reasonable detail the nature of the Cause and, in such event, the Company shall be released from any and all further obligations under this Agreement, except that the Company shall be obligated to pay Employee, or Employee’s heirs and assigns, his Salary, Covered Event Bonuses and Benefits, and reimbursable expenses owing to Employee through the date of such termination.

 

  

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3.3.           Voluntary Termination.  Employee may voluntarily terminate his employment with the Company upon 30 days prior written notice.  In the event such voluntary termination is without Good Reason, the Company shall be released from any and all further obligations under this Agreement, except that, so long as Employee continues to perform his duties in accordance with this Agreement, the Company shall be obligated to pay Employee the Salary, Covered Event Bonuses, Benefits and reimbursable expenses owing to Employee through the date of such termination (such period not to exceed 30 days from the date of notice).

3.4.           Termination due to Death or Disability.  This Agreement shall terminate upon the death of Employee, and Employee may be terminated by reason of “Disability” and, in such event, the Company shall be released from any and all further obligations under this Agreement, except that the Company shall be obligated to pay Employee, or Employee’s heirs or estate, his Salary, Covered Event Bonuses, Benefits, including accrued vacation, and reimbursable expenses owing to Employee through the date of such termination.

3.5.           Termination for Good Reason or Without Cause.  In the event of termination of employment prior to Expiration, (i) by the Company without Cause or (ii) by Employee with Good Reason, the Company will pay all of Employee’s reimburseable expenses through the date of such termination and continue to pay Employee’s base Salary until the earlier of the Expiration Date or 12 consecutive months after the date of such termination.

3.6.           Other Rights.  Except as set forth in Article III, all of Employee’s rights to Benefits, Covered Event Bonuses and Salary hereunder (if any) which accrue or become payable after the termination of the Employment Period shall cease upon such termination.  The Company and its Subsidiaries may offset any amounts Employee owes any of them against any amounts the Company owes Employee hereunder; provided that such offset shall occur only upon Employee’s termination of employment with the Company.

3.7.           Obligation to Make Severance Payments.  The Company will be obligated to make the severance payments contemplated in this Article III if Employee has not breached, and only for so long as Employee does not breach, his obligations under Sections IV or V of this Agreement.

3.8.           Withholding.  All amounts payable to Employee as severance hereunder shall be subject to all required withholdings by the Company (including, but not limited to, Section 409A of the Internal Revenue Code).

ARTICLE IV

CONFIDENTIALITY

4.1.           Confidentiality. Employee will hold in confidence and not use to the detriment of the Company or any of its Affiliates, and will cause each of its Affiliates which it controls to hold in confidence and not use to the detriment of the Company or any of its Affiliates, both during the term of this Agreement and for a period of three (3) years after its termination, all Confidential Information (as defined below) with respect to the Business. Without limiting the generality of the foregoing, Employee agrees, covenants and acknowledges that, from and after the Effective Date, Employee will not, and will cause its affiliates which it controls not to, disclose, give, sell, use, or otherwise divulge any Confidential Information.  Notwithstanding the foregoing, Employee may disclose such information (i) if compelled to disclose the same by judicial or administrative process or by other requirements of Applicable Law, (ii) if the same currently is, or hereafter is, in the public domain through no fault of Employee, or (iii) if the same is later acquired by Employee from another source and Employee is not aware that such source is under an obligation to another Person to keep such information confidential. If Employee or any of its Affiliates (the “Disclosing Party”) are requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such information, the Disclosing Party shall provide Company with prompt written notice of any such request or requirement so that Company may seek, at its expense, a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section. If, in the absence of a protective order or other remedy or the receipt of a waiver by Company, the Disclosing Party nonetheless, based on the advice of counsel, is required to disclose such information to any tribunal, the Disclosing Party, without liability hereunder, may disclose that portion of such information which such counsel advises the Disclosing Party it is legally required to disclose.

 

  

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4.2.           Return of Confidential Information. Upon termination of this Agreement or upon an earlier request of Company, Employee will return or deliver to Company all tangible forms of such Confidential Information in Employee’s possession or control, including but not limited to documents, records or any other material and copies or reproductions thereof.

4.3.           Confidential Information.  For purposes hereof, “Confidential Information” shall mean information that is not generally known to the public and that is used, developed or obtained by Company or any of its subsidiaries in connection with their businesses, including but not limited to (i) customer lists, project or proposal lists and other related information; (ii) business development, growth and other strategic business plans; (iii) accounting and business methods, (iv) services or products and the marketing of such services and products; (v) fees, costs and pricing structures; (vi) designs; (vii) analysis; (viii) drawings, photographs and reports; (ix) computer software, including operating systems, applications and program listings, (x) flow charts, manuals and documentation; (xi) data bases; (xii) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice; (xiii) copyrightable works; (xiv) all technology and trade secrets; and (xv) all similar and related information in whatever form.

ARTICLE V

COVENANTS NOT TO COMPETE, SOLICIT OR DISPARAGE

5.1.           Non-Compete. During, and for a period of one year after, the term of this Agreement (the “Time Covenant”), Employee covenants that it shall not, either individually or as a partner, joint venturer, consultant, shareholder, member or representative of another Person or otherwise, directly or indirectly, participate in, engage in, or have a financial or management interest in, or assist any other Person in any business operation or any enterprise if such business operation or enterprise engages, or would engage, in the Business in the Subject Market, provided, however, that the foregoing shall not prohibit Employee from owning up to one percent (1%) of a publicly traded company nor shall it prohibit Employee from providing Permitted Outside Services.

 

  

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5.2.           Non-Solicit. During the Time Covenant, Employee shall not, directly or indirectly, whether for its own account or for the account of any Person (other than Company) that is in competition with Company (A) solicit, recruit, hire, engage in any activity that would cause any Person who is as of the Closing Date, or was during the 12 months prior to the Closing Date, employed in the Business to violate any agreement with Company, endeavor to entice away any such Person from Company, interfere with the relationship of Company with such Person or induce any such Person to reject any employment offer by Company or (B) solicit, entice or induce any Person who is, or was a Customer or Supplier to (i) become a Customer or Supplier of any other Person engaged in any business activity that competes with the Business, (ii) cease doing business with Company or (iii) otherwise interfere with the relationship of Company with any such person, team, Customer or Supplier. For purposes of this Section 5.2, a “Customer” means any Person which has been during the 12-month period prior to the Closing Date a customer of the Business or shall have been contacted by Employee in the six-month period prior to the Closing Date for the purpose of soliciting it to become a customer of the Business; and a “Supplier” means any Person which has been during the 12-month period prior to the Closing Date a supplier or vendor of the Business.

5.3.           Non-Disparage. Employee covenants that it will not, directly or indirectly, in any capacity whatsoever, make any statement, written or oral, or perform any other act or omission that is intended to be materially detrimental to the goodwill of the Business, except as compelled by judicial or administrative process.

5.4.           Enforceability and Remedies. The parties hereby agree that all restrictions and agreements contained in this Article V, including, without limitation, those relating to the Time Covenant, are necessary and fundamental to the protection of the Business and to carry out the purposes of the Purchase Agreement and any objections or reservations to such restrictions or agreements are hereby waived. Employee hereby agrees that the remedy at law for any breach of the provisions of this Article V will be inadequate, and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms.  Accordingly, the parties agree that upon any breach of this Article V, Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened further breach. Nothing in this Agreement shall be deemed to limit Company’s remedies at law or in equity for any breach by Employee of any of the provisions of this Agreement that may be pursued by or made available to Company.

5.5.           Extension of Time Covenant. If, during the Time Covenant, Employee is not in compliance with such restrictions, then Company shall be entitled, among other remedies, to compliance by Employee with the terms of such provisions for an additional number of days that equals the number of days during which such noncompliance occurred.

 

  

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ARTICLE VI

DEFINED TERMS

 

 

6.1.           Definitions. For purposes of this Agreement, the following terms will have the following meanings:

“Cause” means, with respect to Employee, the occurrence of one or more of the following events:

(a)           Breach of any provision of this Employment Agreement by Employee, which breach has not been cured by Employee after having been given 30 calendar days notice of such breach;

(b)           Willful neglect or refusal to perform the duties assigned to Employee under or pursuant to this Employment Agreement, which neglect or refusal has not been cured by Employee after having been given 30 calendar days notice of such breach;

(c)           Gross misconduct by Employee as an employee of the Company, including but not limited to, misappropriating funds or property of the Company, materially and substantially violating any policy of the Company including violating any material policy set forth in the Company’s employee handbook or manuals; any attempt to obtain any personal profit from any transaction in which Employee has an interest that is adverse to the Company or any breach of the duty of loyalty and fidelity to the Company; or any other act or omission of Employee which substantially impairs the Company’s ability to conduct its ordinary business in its usual manner;

(d)           Conviction for a felony or plea of guilty or nolo contendre to a felony;

(e)           Acts of dishonesty or moral turpitude by Employee that are detrimental to the Company or that cause the Company to be in violation of governmental regulations that subject the Company either to material sanctions by governmental authority or to material civil liability to its employees or third parties;

(f)           Disclosure or use of confidential information of the Company, other than as authorized by the Company and required in the performance of Employee’s duties; or

(g)           Employee reports to work under the influence of alcohol or illegal drugs, the use of illegal drugs (whether or not at the workplace) or other repeated conduct causing the Company or any of its Subsidiaries or Affiliates public disgrace, disrepute or economic harm.

“Disability” means the reasonable, good faith determination by an independent physician selected in good faith by the Board and Employee that, due to a mental or physical impairment or disability, Employee has been incapable or unable, even with reasonable accommodations, to fully perform the material duties performed by Employee for the Company or its Subsidiaries immediately prior to such disability for a period of at least one hundred eighty (180) consecutive days.

 

  

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“Good Reason” means the occurrence, without the prior written consent of Employee, of any one of the following events: (a) the transfer of Employee to a principal work location outside of the Subject Market, or (b) a reduction in Employee’s annual salary.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity.  For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries.

6.2.           Other Definitional Provisions.

(a)           For purposes of this Agreement, employment by the Company means employment by the Company or any of its Subsidiaries.

(b)           Section references contained in this Agreement are references to sections in this Agreement, unless otherwise specified.  Each defined term used in this Agreement has a comparable meaning when used in its plural or singular form.  Each gender-specific term used in this Agreement has a comparable meaning whether used in a masculine, feminine or gender-neutral form.

(c)           Whenever the term “including” (whether or not that term is followed by the phrase “but not limited to” or “without limitation” or words of similar effect) is used in this Agreement in connection with a listing of items within a particular classification, that listing will be interpreted to be illustrative only and will not be interpreted as a limitation on, or an exclusive listing of, the items within that classification.

(d)           All capitalized terms used in this Agreement and not otherwise defined in this Agreement shall have the meanings set forth in the Purchase Agreement.

 

  

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ARTICLE VII

MISCELLANEOUS

7.1.           Dispute Resolution.

(a)           Except with respect to disputes and claims under Articles IV and V hereof (which the parties hereto may pursue in any court of competent jurisdiction and which may be pursued in any court of competent jurisdiction as specified below), any controversy or claim arising out of this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association.  There shall be one arbitrator who shall be appointed by the respective parties or, failing agreement, by the American Arbitration Association in Dallas County, Texas.  The arbitration shall be held in Dallas County, Texas, and the arbitrator shall apply the substantive law of Texas, except that the interpretation and enforcement of this arbitration provision shall be governed by the United States Arbitration Act.  Disputes about arbitration procedure shall be resolved by the arbitrator or failing agreement, by the American Arbitration Association in Dallas County, Texas.  Except as provided in Section 5.4, the award of the arbitrator shall be the sole and exclusive remedy of the parties and shall be enforceable in any court of competent jurisdiction, subject only to revocation on grounds of fraud or clear bias on the part of the arbitrator.  The parties further agree that, unless otherwise determined by the arbitrator, (x) each party to the arbitration shall bear its own costs and expenses (including, without limitation, all attorneys’ fees and expenses, except to the extent otherwise required by applicable law) and (y) all costs and expenses of the arbitration proceeding (such as filing fees, the arbitrator’s fees, hearing expenses, etc.) shall be borne equally by the parties hereto; provided that nothing herein shall be interpreted to preclude the arbitrator from allocating the costs and expenses of the parties and of such proceeding among the parties in any manner that the arbitrator may lawfully determine to do so.  Each party hereto hereby irrevocably submits to the jurisdiction of the State District Courts sitting in Dallas County, Texas and the United States District Court for the Northern District of Texas, and agrees that such courts shall be the exclusive forums for the enforcement of any such final judgment, award or determination of the arbitration.  Each party hereto irrevocably consents to service of process by registered mail or personal service and waives any objection on the grounds of personal jurisdiction, venue or inconvenience of the forum.  Each party hereto further agrees that each other party hereto may initiate litigation in any court of competent jurisdiction to execute any judicial judgment enforcing or not enforcing any award, judgment or determination of the arbitration.

(b)           Notwithstanding the foregoing, prior to any party hereto instituting any arbitration proceeding hereunder to resolve any claim, such party first shall submit the claim to a mediation proceeding between the parties hereto which shall be governed by the prevailing procedures of the Federal Mediation and Conciliation Service and shall be conducted in Dallas County, Texas.  If the parties hereto have not agreed in writing to a resolution of the claim pursuant to the mediation within 45 days after the commencement thereof of if any party refuses to participate in the mediation process, then the claim may be submitted to arbitration under Section 7.1(a) above.  Unless otherwise determined by the mediator, each party hereto shall bear its own costs and expenses incurred in connection with the mediation, and all costs and expenses of the mediation proceeding shall be borne equally by the parties hereto; provided that nothing herein shall be interpreted to preclude the mediator from allocating the costs and expenses of the parties and of such proceeding among the parties in any manner that the arbitrator may lawfully determine to do so.

 

  

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7.2.           Notices.  Any and all notices, requests or other communications hereunder shall be given in writing and delivered by: (a) regular, overnight or registered or certified mail (return receipt requested), with first class postage prepaid; (b) hand delivery; (c) facsimile transmission; or (d) overnight courier service, to the parties at the following addresses or facsimile numbers:

	
(i)

	
if to Employee, to:

 

Jeremy Word

2311 Barberry Dr.

Dallas, Texas 75211

	
(ii)

	
if to Company, to:

 

NightCulture, Inc.

6400 Richmond

Houston, Texas 77057

Attn:  Michael Long

Facsimile Number: (281) 605-1333

or at such other address or number as shall be designated by either of the parties in a notice to the other party given in accordance with this Section 7.2.  Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given: (A) in the case of a notice sent by regular or registered or certified mail, three business days after it is duly deposited in the mails; (B) in the case of a notice delivered by hand, when personally delivered; (C) in the case of a notice sent by facsimile, upon transmission subject to telephone confirmation of receipt; and (D) in the case of a notice sent by overnight mail or overnight courier service, the next business day after such notice is mailed or delivered to such courier, in each case given or addressed as aforesaid.

7.3.           Amendment and Waiver.  The provisions of this Agreement may be amended or waived only with the prior written consent of Company and Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity, binding effect or enforceability of this Agreement.

7.4.           Construction.  The language of this Agreement will be construed simply and according to its fair meaning, and will not be construed for or against any Party hereto as a result of the source of its draftsmanship.

7.5.           Complete Agreement.  This Agreement embodies the complete agreement and understanding among the parties with regard to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

  

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7.6.           Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Company, Employee, and their respective heirs, successors and assigns; provided, however, neither party may assign its respective rights or delegate its obligations hereunder without the prior written consent of the other party.

7.7.           Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by and construed in accordance with the domestic laws of the State of Texas without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas.

7.8.           Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law.  If, however, any provision of this Agreement is deemed or held to be illegal, invalid or unenforceable by any court of competent jurisdiction, this Agreement shall be considered divisible and inoperative as to such provision to the extent it is deemed to be illegal, invalid or unenforceable, and in all other respects this Agreement shall remain in full force and effect; provided, however, that if any provision of this Agreement is deemed or held to be illegal, invalid or unenforceable by any court of competent jurisdiction, such illegal, invalid or unenforceable provision shall be replaced with a provision that is legal, valid and enforceable and that will achieve, to the greatest extent possible, the economic, business and other purposes of such invalid or unenforceable provision.  Further, should any provision contained in this Agreement ever be reformed or rewritten by any judicial body of competent jurisdiction, such provision as so reformed or rewritten shall be binding upon all parties hereto.

7.9.           Remedies.  Subject to the provisions of Section 5.4, each party will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor.  Nothing herein shall prohibit any arbitrator or judicial authority from awarding attorneys’ fees or costs to a prevailing party in any arbitration or other proceeding to the extent that such arbitrator or authority may lawfully do so.  The parties agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that, notwithstanding the provisions of Section 5.4, any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

7.10.         Third Party Beneficiaries.  This Agreement will not confer any rights or remedies upon any Person other than the parties hereto and their respective successors and permitted assigns.

7.11.         Employee’s Representations.  Employee hereby represents and warrants to Company that the execution, delivery and performance of this Agreement by Employee do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which it is bound, Employee is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other Person and upon the execution and delivery of this Agreement by Company, this Agreement shall be the valid and binding obligation of Employee, enforceable in accordance with its terms.

 

  

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7.12.         Facsimiles and Counterparts.  Facsimile transmission of any signed original document and/or retransmission of any signed facsimile transmission will be deemed the same as delivery of an original.  At the request of either party, the other party shall reexecute an original of this document and deliver it to the requesting party.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.  No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation of a contract and each such party forever waives any such defense.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written.

 

	 	 	“EMPLOYEE”	 
	 	 	 	 
	 	 	/s/ Jeremy Word	 
	 	 	JEREMY WORD	 
	 	 	 	 
	 	 	 	 
	 	 	“COMPANY”	 
	 	 	 	 
	 	 	NIGHTCULTURE, INC.	 
	 	 	 	 
	 	By:   	/s/ Michael Long	 
	 	 	Michael Long	 
	 	 	President	 

 

 

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