EXHIBIT 10.4
AGREEMENT FOR THE PURCHASE AND SALE OF STOCK
THIS AGREEMENT (this "Agreement") is made and entered into effective as of
the 1st day of December, 2001, by and between In Store Media Systems, Inc.,
00000 Xxxx Xxxxxxx Xxxxx, Xxxxxx Xxxxxxxx 00000 (the "Seller") and Xxxxxxx
Xxxxxxx, 419 Highway Y, Hatley, Wisconsin (the "Buyer").
RECITALS
WHEREAS, the Buyer desires to purchase 405,093 shares (the "Shares") of the
Seller's common stock, $.001 par value per share (the "Common Stock") from the
Seller on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above recitals (which are an
integral part of this Agreement), the terms and conditions hereof, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller and the Buyer hereby agree as follows:
TERMS AND CONDITIONS
1. Purchase and Sale of Shares. Subject to the terms and conditions contained in
this Agreement, the Seller hereby agrees to sell and deliver to the Buyer the
Shares and the Buyer will accept and purchase the same in accordance with the
provisions of this Agreement.
2. Purchase Price; Payment. The Buyer agrees to purchase the Shares from the
Seller for One Hundred Seventy-Five Thousand and No/100 Dollars ($175,000.00)
(the "Purchase Price"). Payment of the Purchase Price shall be made on the
Closing Date (defined herein).
3. Closing Date. The closing of the purchase of the Shares shall be held on
December 1, 2001, at the offices of the Seller, or at such time and other place
as shall be mutually satisfactory to the Seller and the Buyer (the "Closing
Date"). On the Closing Date, the Seller shall deliver the Purchase Price and the
Seller shall cause to be delivered to the Buyer one or more certificates
representing the Shares.
4. Representations of the Buyer. The Buyer hereby represents and warrants as
follows:
a. He has been given access to full and complete information regarding
the Seller, the purchase of the Shares and all matters related thereto
(including the opportunity to meet with, ask questions of and receive
answers from officers of the Seller and review such other documents,
including written information concerning the Shares, as he may have
requested in writing) and has utilized such access to his
satisfaction.
b. He is an "accredited investor" as that term is defined in Rule 501(a)
of Regulation D promulgated under the Securities Act of 1933, as
amended (the "1933 Act"). He is a sophisticated investor, experienced
and knowledgeable in financial and business matters, capable of
evaluating the merits and risks of making an investment in the Shares,
and does not need or desire the assistance of a knowledgeable
representative to aid in the evaluation of such risks (or, in the
alternative, has used a knowledgeable representative in connection
with his decision to purchase the Shares).
c. He understands that an investment in the Shares is speculative and
involves a high degree of risk; that he believes the investment is
suitable based on his investment objectives; that he has adequate
means for providing for his current financial needs and has no need
for liquidity with respect to the Shares; and that he can bear the
economic risk of holding the Shares for an indefinite period of time
and can afford a complete loss of such investment.
d. He has been advised that the Shares have not been registered under the
1933 Act, or under applicable state securities laws (the "State
Laws"), and are sold by the Seller pursuant to exemptions from
registration under the 1933 Act and the State Laws; and that he
understands that the Seller's reliance on such exemptions is
predicated in part on the Buyer's representations contained herein.
5. Investment Intent; Restrictions on Transfer of Shares.
a. The Buyer represents and warrants that he is acquiring the Shares for
his own account, for long term investment and without the intention of
reselling or redistributing the Shares. The Buyer has made no
agreement with others regarding any of the Shares, and his financial
condition is such that it is not likely that it will be necessary for
him to dispose of any of the Shares in the foreseeable future. The
Buyer understands that the Seller does not have any obligation to
register the Shares under the 0000 Xxx.
b. The Shares are being acquired by the Buyer in his name solely for his
own beneficial interest and not as nominee for, on behalf of, for the
beneficial interest of, or with the intention to transfer to, any
other person, trust, or organization.
c. The Buyer understands that (i) the transferability of the Shares is
restricted, (ii) the Shares may be sold only pursuant to registration
under the 1933 Act and the State Laws, or an opinion of counsel
reasonably acceptable to the Seller that such registration is not
required, such opinion to be rendered at the expense of the Buyer.
d. The Buyer understands that any sale, transfer, pledge or other
disposition of the Shares (i) requires conformity with the
restrictions contained in this paragraph 5, and (ii) will be further
restricted by a legend placed on the certificate(s) representing the
Shares containing substantially the following language:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
applicable state securities laws. No transfer of such shares or
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any interest therein may be made except pursuant to registration
under said laws, unless the company has received an opinion of
counsel acceptable to the company stating that such transfer does
not require registration under said laws."
e. The Buyer represents that he will comply with all applicable federal
and state securities laws, rules and regulations in connection with
any subsequent resale of the Shares.
6. Royalty Payments to the Buyer.
Commencing on December 1, 2001 and terminating on the Termination Date
(defined below), the Seller shall pay the Buyer a royalty amount equal to one
quarter of one cent ($.0025) for each coupon (each, a "Coupon") processed by the
Seller or its affiliates through the LGS Coupon Promotion Program as evidenced
by a licensing agreement dated as of November 29, 2001 (the "Licensing
Agreement") by and between the Seller and Lets Go Shopping, Inc. (the "Royalty
Payments"). Said Royalty Payments shall continue until the date that the bid
price for the Seller's Common Stock shall have equaled or exceeded $2.00 for at
least 72 days in a 90 consecutive day period (the "Termination Date"); provided,
however, in no event shall the Termination Date occur on a date that is less
than the one year following on the first date on which the Seller receives its
first coupon redemption payment under the "Lets Go Shopping" program. The
Royalty Payments shall be paid by the Seller within fifteen days of the end of
each calendar month, and shall include amounts received for each Coupon duly
accepted for redemption by the related retailer who has a contract with the
Seller for the time period commencing on the first calendar month following the
month when the Seller receives a payment for a coupon promotion pursuant to the
LGS Program The Seller shall also provide a detailed calculation of the Royalty
Payments concurrently with each payment. In addition, upon thirty (30) days
written notice to the Seller, the Buyer shall have the right either personally,
or through its duly authorized agent(s) and/or representative(s) during normal
business hours, to review and inspect the books, records and ledgers of the
Seller or its affiliates, relating to the number of Coupons processed by the
Seller. Such review and inspection shall not be made more frequently than
quarterly and shall be at the Buyer's cost and expense.
7. The Buyer's Right of First Refusal.
If at any time during the period beginning the date hereof and ending on
the day preceding the day in which the Company has the LGS Coupon Promotion
Program in operation in at least 100 stores as set forth in the Licensing
Agreement (the "First Refusal Period"), the Seller intends to sell up to
$2,250,000 of its Common Stock (a "Proposed Equity Financing"), the Seller
agrees to notify the Buyer in writing of such intention and the proposed terms
of the sale and the Buyer, or his assigns, shall have the right of first refusal
to purchase up to $2,250,000 of Common Stock offered at a price per share equal
to [the price per share of Common Stock paid pursuant to this Agreement ($.432)]
If within thirty (30) days of the receipt of the Seller's notice of intention or
statement of terms relating to the Proposed Equity Financing the Buyer, or his
assigns, does not accept in writing such offer, the Seller shall be free to
effect the Proposed Equity Financing on the same terms. Upon completion of the
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Proposed Equity Financing with purchasers other than the Buyer, the Buyer shall
be paid the Option Termination Fee defined below, within five (5) days of the
closing of said financing. For purposes of this paragraph, the term "Option
Termination Fee" shall mean the amount equal to twenty-five percent (25%) of the
amount determined by the difference between the sale price per share of Common
Stock sold by the Seller and $.432 per share multiplied by the number of shares
of Common Stock sold. (For example, if the Seller sells 100,000 shares of Common
Stock at $.532 per share, the Option Termination Fee shall equal ($.532 - $.432)
x 100,000 x .25 = $2,500)). The Option Termination Fee shall be paid each time
Common Stock is purchased by a third party other than the Buyer or his assigns
until the earlier of (a) the date the Seller has raised $2,250,000 from the sale
of its Common Stock after the date hereof and (b) the expiration of the First
Refusal Period.
8. The Buyer's Piggyback Registration Rights.
a. If at any time prior to December 31, 2012, the Seller proposes to
register under the 1933 Act (except by a registration statement on
Form S-4 or Form S-8 or any successor forms thereto) or qualify for a
public distribution under Section 3(b) of the 1933 Act, any of its
equity securities or debt securities convertible into equity
securities, it will give written notice to the Buyer of its intention
to do so and, on the written request of the Buyer given within twenty
(20) days after receipt of any such notice (which request shall
specify the Shares intended to be sold or disposed of by such Holder
and described the nature of any proposed sale or other disposition
thereof), the Seller will use its best efforts to cause all such
Shares purchased hereunder which shall have requested the registration
or qualification thereof, to be included in such registration
statement proposed to be filed by the Seller; provided, however, that
nothing shall prevent the Seller from, at any time, abandoning or
delaying any registration. If any registration pursuant to this
Section 8(a) is underwritten in whole or in part, or if the Seller
retains an agent or agents to assist in its public distribution of
securities under Section 3(b) of the 1933 Act, the Seller may require
that the Shares requested for inclusion pursuant to Section 8 to be
included in the underwriting or public distribution on the same terms
and conditions as the securities otherwise being sold through the
underwriters. If the registration is for a registered public offering
involving an underwriting, and the managing underwriter of the
underwriting determines that marketing factors require a limitation of
the number of shares to be offered in connection with such
underwriting, the managing underwriter may limit the number of Shares
to be included in the registration and underwriting. The Seller shall
so advise the Buyer, and the number of shares of Common Stock that may
be included in the registration and underwriting shall be allocated
first to the Seller for securities being sold for its own account and
thereafter to the Buyer, pro rata with any other holders of Common
Stock having registration rights at the time of the filing of the
registration statement. If the Buyer disapproves of the terms of any
such underwriting, it may elect to withdraw therefrom by written
notice to the Seller.
b. The Seller hereby indemnifies the Buyer against all losses, claims,
damages, and liabilities caused by (1) any untrue statement or alleged
untrue statement of a material fact contained in any registration
statement or prospectus prepared in connection with any registration
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statement pursuant to this Section 8 (and as amended or supplemented
if the Seller shall have furnished any amendments thereof or
supplements thereto), any preliminary prospectus or any state
securities law filings; (2) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages, or liabilities are caused by any untrue
statement or omission contained in information furnished in writing to
the Seller by the Buyer expressly for use therein (the "Buyer
Information"). With respect to the Buyer Information, the Buyer hereby
indemnifies and hold harmless the Seller, each of its officers and
each person, if any, who controls the Seller within the meaning of
Section 15 of the 1933 Act, against all losses, claims, damages, and
liabilities caused by (1) any untrue statement or alleged untrue
statement of a material fact included in any registration statement or
prospectus prepared in connection with any registration statement
pursuant to this Section 8 (and as amended or supplemented if the
Seller shall have furnished any amendments thereof or supplements
thereto), any preliminary prospectus or any state securities law
filings; (2) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were
made, not misleading.
9. Miscellaneous.
a. The Seller and the Buyer acknowledge and agree that the holding period
with respect to the Shares purchased by the Buyer pursuant to this
Agreement shall commence for purposes of Rule 144 promulgated under
the 1933 Act, on December 1, 2001.
b. The Buyer has had the opportunity to discuss this Agreement with its
accountants and legal counsel, understands the meaning and legal
consequences of the agreements, representations and warranties
contained herein, and agrees that such agreements, representations and
warranties shall survive and remain in full force and effect after the
execution hereof and the delivery of the Shares.
c. This Agreement shall be construed and interpreted in accordance with
substantive Colorado law applicable to agreements executed in
Colorado, without regard to the provisions thereof relating to
conflicts of laws.
d. The headings on the paragraphs of this Agreement are for convenience
of reference only, they do not form a part hereof, and they are in no
way to be used in interpreting or construing such paragraphs of this
Agreement.
e. This Agreement contains the entire agreement of the parties hereto,
and any and all agreements, negotiations and discussions, whether
written or oral, are hereby superseded by the terms and conditions of
this Agreement. This Agreement may not be changed orally but only by
an agreement in writing signed by the parties hereto.
f. All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the personal
representatives, successors and assigns of the parties hereto, it
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being understood, however, that such assignment shall in no way
relieve the parties to this Agreement of their responsibilities and
obligations under this Agreement.
g. This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same
instrument. Delivery of an executed counterpart of this Agreement by
facsimile shall be equally as effective as delivery of an original
executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by facsimile shall also deliver
an original executed counterpart of this Agreement but the failure to
deliver an original executed counterpart shall not affect the
validity, enforceability and binding effect of this Agreement.
[EXECUTION PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
BUYER: SELLER:
IN STORE MEDIA SYSTEMS, INC.
By:
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Xxxxxxx Xxxxxxx Its:
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