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EXHIBIT 10.12
PLACEMENT AGREEMENT
OF
MICRO-MEDIA SOLUTIONS, INC.
April 30, 1998
EQUITY SERVICES, LTD.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Gentlemen:
The undersigned, Micro-Media Solutions, Inc., a Utah corporation (the
"Company"), confirms its agreement with Equity Services, Ltd., a Nevis company
("ESL") as follows:
22. Description of Securities and Offering.
(a) ESL has agreed to privately place Two Hundred Thirty Five Thousand
Eight Hundred Forty Nine (235,849) shares (the "Shares") of the Company's
Series D 6% cumulative convertible non-voting preferred stock (the "Series D
Preferred Stock")(the "Private Placement") at a price of Ten and 60/100 Dollars
($10.60) per Share (the "Private Placement Price"). Subject to the terms and
conditions herein, the placement of the Shares is to occur as follows: (i) One
Hundred Eighty Nine Thousand Three Hundred Forty (189,340) Shares will be
placed on or before April 30, 1998 ("Phase I") and (ii) Forty Six Thousand Five
Hundred Nine (46,509) Shares will be placed on or before June 30, 1998 ("Phase
II"). The Shares shall have a cumulative dividend of six percent (6%) per
annum, payable on a fiscal quarterly basis, which shall be paid in cash, or at
the option of a holder of Series D Preferred Stock, by the issuance of shares
of the Company's common stock, par value $0.10 per share (the "Common Stock")
based on the thirty (30) days average closing bid price of the Common Stock
immediately prior to the dividend date. Each Share shall be immediately
convertible into ten (10) shares of Common Stock subject to adjustment. The
closing of Phase I of the Private Placement will occur on or before April 30,
1998 (the "Phase I Closing") and the closing of Phase II of the Private
Placement will occur on or before June 30, 1998 (the "Phase II Closing");
provided, however that ESL will be given an opportunity to review the Company's
achievement of the business and financial milestones set forth on Exhibit "E"
attached hereto, before proceeding with each subsequent Phase of the Private
Placement. The Series D Preferred Stock Holders will agree that so long as the
Company remains certified as an Historically Underutilized Business ("HUB"),
they will not convert their Series D Preferred Stock in such a manner as to
cause the Company to lose its HUB status.
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The Company shall grant the holders of the Shares, the holders of the
Common Stock issued as dividends on the Shares and the holders of the Common
Stock issued upon conversion of the Shares, one (1) demand registration right,
beginning immediately after the closing of each Phase of the Private Placement
contemplated herein and "piggyback" registration rights beginning on the date
of Closing of each Phase of the Private Placement. The terms of these
registration rights shall be as set forth in a Registration Rights Agreement
(herein so called) substantially in the form attached hereto as Exhibit "A".
(b) The commissions to which ESL shall be entitled for such placement
shall be as follows: (i) a sum equal to seven percent (7%) of the total
proceeds resulting from the placement of the Shares; and (ii) shares of Series
D Preferred Stock with value equal to five percent (5%) of the total proceeds
resulting from the placement of the Shares (the "Placement Agent's Shares").
ESL shall also be paid in cash (i) a sum equal to three percent (3%) of the
total proceeds resulting from the placement of the Shares as a non-accountable
expense allowance and (ii) an amount equal to the legal fees of ESL's counsel
not to exceed Ten Thousand and No/100 Dollars ($10,000.00). ESL will be paid
the commissions and the non-accountable expense allowance simultaneously with
the closing of each Phase in which they are earned. ESL will be paid an amount
equal to the legal fees of ESL's counsel simultaneously with the Phase I
Closing.
(c) In addition, the Company agrees to sell to ESL, for an aggregate
price of $100.00, a five (5) year option ("ESL Purchase Option") to purchase up
to Two Hundred Thirty Five Thousand Eight Hundred Fifty (235,850) shares of
Common Stock ("ESL Option Shares") at a price of $1.59 per Option Share
exercisable for a period of five (5) years commencing one (1) year after the
Phase II Closing or June 30, 1999, whichever is earlier, as follows: ESL shall
be entitled to purchase for Fifty Dollars ($50.00) an option to purchase up to
One Hundred Seventy Nine Thousand Three Hundred Forty (179,340) ESL Option
Shares immediately upon the occurrence of the Phase I Closing; and ESL shall be
entitled to purchase for Fifty Dollars ($50.00) an option to purchase up to
Fifty Six Thousand Five Hundred Ten (56,510) ESL Option Shares immediately upon
the occurrence of the Phase II Closing. The holders of ESL Option Shares and
the Placement Agent's Shares will have registration rights as set forth in a
Registration Rights Agreement (herein so called) substantially in the form
attached hereto as Exhibit "B".
23. Appointment of Placement Agent. ESL's appointment by the Company as
Placement Agent shall commence upon the date of the execution of this
Agreement, and shall continue until and through July 31, 1998, unless (i) the
Shares shall be completely sold prior to that date, (ii) the offering has been
terminated by written agreement between ESL and the Company, or (iii) this
Agreement shall be terminated at a prior date as provided herein.
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24. Release of Placement Agent. ESL's commitment to serve as Placement Agent on
behalf of the Company is made subject to the release of ESL: (i) in the event
of war involving the United States of America, (ii) in the event of any
material adverse change in the business, property or financial condition of the
Company as reasonably determined by ESL, (iii) in the event of any action, suit
or proceeding at law or in equity against the Company, or by any Federal, State
or other commission, board or agency wherein any unfavorable decision would
materially affect the business, property, financial condition or income of the
Company (as reasonably determined by ESL), (iv) in the event of a breach by the
Company of any material covenant, representation or warranty contained in this
Agreement or (v) in the event of adverse market conditions (of which ESL shall
be the sole judge).
25. Representations and Warranties of the Company.
The Company represents and warrants to ESL as follows:
(a) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Utah with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as currently conducted, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification unless the failure to so register or qualify
would not have a material adverse effect on the financial condition of the
Company.
(b) The Company has registered shares of its Common Stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is in full compliance with all reporting requirements of the Exchange
Act, and the Common Stock is quoted on the NASDAQ Over-the-Counter Bulletin
Board (trading symbol: MSIA).
(c) The Company has furnished ESL with copies of the Company's
Business Plan dated July 3, 1997, its most recent Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission (the "Commission") and all
Forms 8-K and 10-QSB filed thereafter, together with any amendments thereto, if
any (collectively, the "Disclosure Documents"). Immediately prior to the
closing of each Phase there will be no other capital stock issued and
outstanding, nor will there be outstanding any rights to acquire, commitments
to issue or securities convertible into capital stock other than as stated in
the Disclosure Documents and except for those rights to demand Three Hundred
Thousand (300,000) shares of Common Stock that is the subject of a dispute
involving Argus Management, Inc. ("Argus"). The Disclosure Documents at the
time of their filing did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made not
misleading.
(d) Except as shown on the Company's most recent audited financial
statements dated March 31, 1997, prepared by Xxxxxxx Accountants, the Company's
independent certified public accountants, the Company will have no other
indebtedness outstanding immediately prior to the closing of each Phase except
as incurred in the ordinary course of business or disclosed in writing prior to
the closing of each Phase to ESL and approved by ESL or as contained in the
Disclosure Documents.
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(e) Upon issuance at the closing of each Phase in accordance with this
Agreement, the Shares will be duly and validly authorized and issued, fully
paid and nonassessable, free from all encumbrances and restrictions other than
restrictions on transfer imposed by applicable securities laws and/or this
Agreement, and will not subject the holders thereof to personal liability by
reason of being such holders. The shares of Common Stock, when issued and
delivered upon conversion of the Series D Preferred Stock, the ESL Option
Shares and the Placement Agent's Shares, will be duly and validly authorized
and issued, fully paid and nonassessable, free from all encumbrances and
restrictions other than restrictions on transfer imposed by applicable
securities laws and/or this Agreement, and will not subject the holders thereof
to personal liability by reason of being such holders.
(f) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and the Company has full power and authority to
execute and deliver this Agreement and the other agreements and documents
contemplated hereby and to perform its obligations hereunder and thereunder.
(g) The execution and delivery of this Agreement, the issuance of the
Shares, the shares of Common Stock issuable upon conversion of the Series D
Preferred Stock, the ESL Option Shares, and the Placement Agent's Shares and
the consummation of the transactions contemplated by the Investor Subscription
Agreement(s) (herein so called) by the Company, will not conflict with or
result in a breach of or a default under any of the terms or provisions of, the
Company's certificate of incorporation or By-laws, or of any material provision
of any indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company is a party or by which it or any of its
properties or assets is bound, any material provision of any law, statute,
rule, regulation, or any existing applicable decree, judgment or order by any
court, federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company, or any of its
properties or assets and will not result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be bound or to
which any of their property or any of them is subject.
(h) No authorization, approval, filing with or consent of any
governmental body is required for the issuance and sale of the Shares, except
for filings pursuant to Regulation D promulgated under the Securities Act of
1933, as amended (the "Act") or any state blue sky filings.
(i) Except as previously disclosed in writing to ESL and except as
stated in the Disclosure Documents, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or foreign, now
pending or threatened against or affecting the Company, or any of its
properties, which would reasonably be anticipated to result in any material
adverse change in the condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of the Company.
(j) Subsequent to the dates as of which information is given in the
Disclosure
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Documents, except as contemplated herein, the Company has not incurred any
material liabilities or material obligations, direct or contingent, or entered
into any material transactions not in the ordinary course of business, and
there has not been any change in its capitalization or any material adverse
change in its condition (financial or otherwise) net worth, results of
operations or prospects, except as otherwise previously disclosed to ESL.
(k) The Company has conducted, is conducting and will conduct its
business so as to comply in all material respects with all applicable statutes
and regulations, and the Company is not charged with and, to the knowledge of
the Company, is not under investigation with respect to any violation of any
statutes or regulations nor is it the subject of any pending or threatened
adverse proceedings by any regulatory authority having jurisdiction over its
business or operations.
(l) Except as set forth in the Disclosure Documents, the Company has
good and marketable title to all properties and assets described therein as
owned by it, free and clear of all liens, charges, encumbrances, or
restrictions.
(m) The Company has filed all necessary federal and state income and
franchise tax returns and has paid all taxes shown as due thereon.
(n) The Company has no knowledge of any tax deficiency that might be
asserted against it that might materially and adversely affect its business or
properties.
(o) The Company maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies and businesses, including, but not
limited to, insurance covering all real and personal property owned or leased
by the Company against theft, damage, destruction, acts of vandalism, products
liability and all other risks customarily insured against, all of which
insurance is in full force and effect.
(p) No labor disturbance by the employees of the Company exists or is
imminent that could reasonably be expected to have a material adverse effect on
the conduct of the business, operations, financial condition, or income of the
Company.
(q) Neither the Company nor any employee or agent of the Company has
made any payment of funds of the Company or received or retained any funds in
violation of law other than payment of potentially usurious interest and as
stated in the Disclosure Documents.
(r) Subject in part to the truth and accuracy of the subscriber's
representations set forth in the Investor Subscription Agreement, the offer,
sale and issuance of the Shares are exempt from registration requirements of
the 1933 Act, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that will cause the loss of such
exemption.
(s) The Company has no patents, trademarks, service marks, copyrights,
or licenses other than commercially available software licenses. After
reasonable investigation, the Company is not aware that any of its executive
officers is obligated under any contract (including
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licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative agency
that would interfere with the use of his or her best efforts to promote the
interest of the Company or that would conflict with the Company's business as
proposed to be conducted.
(t) Except for agreements explicitly contemplated hereby or set forth
in the Disclosure Documents, there are no agreements between the Company and
any of its officers, directors, affiliates or any affiliate thereof, other than
employment agreements between the Company and its officers and directors.
(u) As of the date of the Phase I Closing and at such time as the
Phase II Closing, no representation or warranty of the Company contained in
this Section 4, and no statement contained in any exhibit, schedule,
certificate, list, summary or other disclosure document provided or to be
provided to ESL pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact which is
necessary in order to make statements contained therein not misleading.
The representations, warranties and covenants of the Company contained in this
Agreement shall inure to the benefit of each subscriber to the Private
Placement and such subscribers shall constitute identified third-party
beneficiaries under this Agreement. No termination, modification, or waiver of
the representations, warranties and covenants of the Company contained in this
Agreement shall be permitted in any manner adversely affecting their interests
without their prior written consent. The representations and warranties of the
Company contained in this Agreement shall survive the Phase I Closing and Phase
II Closing.
26. Affirmative Covenants of the Company.
(a) The Company will use its best efforts to: (i) list shares of its
Common Stock on The NASDAQ SmallCap Market or a national securities exchange
(such as AMEX or NYSE) and, (ii) at a minimum, to maintain such listing for a
period of five (5) years from the time of such listing;
(b) The financial statements of the Company shall be audited by a "Big
Six" or such other independent public accounting firm as ESL may consent to.
Further, the Company shall not effect a change in its accounting firm to other
than a "Big Six" firm for a period of two (2) years following the Closing.
(c) The Company shall be responsible for and shall bear all expenses
directly and necessarily incurred in connection with the Private Placement,
including but not limited to, the cost of preparing, printing and delivering
all placement and selling documents, including but not limited to the Placement
Agreement, Investor Subscription Agreement, Registration Rights Agreement,
Placement Agent's Option Agreement and blue sky memorandum and stock
certificates; blue sky fees, filing fees, legal fees and disbursements of
counsel in connection with blue sky matters; fees and disbursements of the
transfer and warrant agent; the cost of two (2) sets of bound closing volumes
for ESL and its counsel; the cost of three (3) tombstone advertisements, at
least one (1) of which shall be in a national business newspaper, one (1) of
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which shall be in a major Texas newspaper and one (1) shall be in a publication
chosen by ESL; an amount equal to the legal fees of ESL's counsel, not to
exceed Ten Thousand Dollars ($10,000.00) and the cost of five (5) lucite
tombstones for ESL and its counsel (collectively, the "Company Expenses"). If
the Private Placement is not completed because the Company prevents it or
because of a breach by the Company of any covenants, representations or
warranties contained herein, the Company will continue to be liable to ESL for
ESL's expenses and disbursements, but the Company's liability for such expenses
and disbursements shall be limited to Ten Thousand and No/100 Dollars
($10,000.00).
(d) The Company will, and will cause its subsidiaries, if any, to do
the following: (i) maintain and preserve its and their respective businesses;
(ii) conduct its and their respective business, taken together as a group, in
an orderly, efficient and customary manner; and (iii) keep and maintain all of
its and their respective properties in good working order and condition.
(e) The Company will deliver to ESL for a period of three (3) years
from the Phase II Closing or June 30, 1998, whichever is earlier:
(i) within forty-five (45) days after the close of each
calendar month, except with respect to the last month of each fiscal
year, a copy of its consolidated balance sheet as of the close of such
month and its profit and loss statement and surplus reconciliation for
that month, all prepared in accordance with generally accepted
accounting principles consistently applied, and certified as being
fairly presented in all material respects by the Company's President
or its Chief Financial Officer;
(ii) within forty-five (45) days after the close of each
calendar month, a copy of the internal accounting reports prepared by
the Company for its officers and/or directors;
(iii) at any time within the period from thirty (30) days
prior to and until thirty (30) days after the start of any fiscal
year, financial projections of the Company and its subsidiaries, if
any, for such fiscal year prepared in reasonable detail, which
financial projections shall be presented to the Company's Board of
Directors for their approval at their regular meeting first following
the preparation of such projections;
(iv) promptly upon the filing thereof, all reports and
statements filed with the Commission (or any governmental authority
succeeding to any of its functions) or with any securities exchange;
and
(v) such other information and data with respect to the
Company or any of its subsidiaries, if any, as from time to time may
be reasonably requested by ESL (including, without limitation, such
other information as the Company shall have supplied to any of its
security holders in their capacity as such) to the extent the Company
possesses such information or can acquire it without unreasonable
effort or expense.
(f) The Company will continue to pay the premiums and keep in force
One Million and No/100 Dollars ($1,000,000.00) of "key man" life insurance on
the life of Xxxx Xxxxxx. Such "key man" life insurance will be kept in force
for a minimum period of either three (3) years
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from the Phase II Closing or the term of the employment agreement between the
Company and Xxxx Xxxxxx, whichever is longer.
(g) For a period of three (3) years from the Closing, the Company, at
its expense, shall, upon request by ESL from time to time, provide ESL with
copies of the Company's daily transfer sheets.
(h) The Company and its President shall call a meeting of the Board of
Directors at such times as may be necessary but at least once every fiscal
quarter. In addition, the Company will allow one (1) designated representative
of ESL to receive timely notice of, attend and make comments at all meetings of
its Board of Directors. (Such designated representative shall also be sent all
standard communications and notifications from the Company to the members of
its Board of Directors concerning annual and special meetings in the same
fashion and on the same basis, including with respect to timing, as he would if
he were a member of the Board of Directors.) Further, for a period of five (5)
years from the Phase I Closing the holders of the Series D Preferred Stock
shall have the right to designate one (1) member of the Board of Directors and
the Company shall cause such designee to be elected to the Company's Board of
Directors.
(i) The Company will cause the Board of Directors to maintain a
Compensation Committee, which shall be comprised of three (3) members, of which
one (1) member shall be the designated representative of the holders of the
Series D Preferred Stock. The Compensation Committee shall have authority with
respect to the matters set forth in clauses (i) and (ii) of paragraph (m) of
this Section 5.
(j) The Company will cause the Board of Directors to maintain an Audit
Committee, which shall be comprised of three (3) members, of which one (1)
member shall be the designated representative of the holders of the Series D
Preferred Stock.
(k) The management of the Company shall prepare and deliver to each
member of the Board of Directors (including ESL's designee) monthly reports
highlighting business developments and activities, with those persons having
assigned responsibilities reporting on operations and activities in their areas
of responsibility.
(l) The Company will promptly send to ESL and each subscriber to the
Private Placement, in no event later than ninety (90) days following each
meeting (unless ESL and such subscriber shall waive such right in writing)
copies of the complete minutes of each meeting of its Board of Directors,
executive and similar committees thereof.
(m) Without in any way limiting the generality of matters which may be
appropriate for consideration or action by the Board of Directors, prior to
taking action with respect to any of the following items, the Board of
Directors or, in the case of clauses (i) and (ii), the Compensation Committee
thereof, must approve the following actions:
(i) Changes in officers and their compensation, including,
without limitation, all significant employee benefits other than
health care and similar insurance plans;
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(ii) All incentive programs (and revisions thereto) for
employees such as stock option plans, equity plans, bonus plans, etc.;
(iii) Company budgets, which shall be submitted within the
period from thirty (30) days prior to and until thirty (30) days after
the commencement of each fiscal year covering sales, direct costs,
indirect costs, profit targets, capital expenditures, and cash flow;
(iv) Major appropriations in excess of One Hundred Thousand
Dollars ($100,000.00) for any capital items not in the Company budget
for the fiscal year;
(v) Major new facilities and their location, excluding any
small leased facilities in the local area so long as their annual
rental obligation does not exceed One Hundred Thousand Dollars
($100,000.00) per year;
(vi) All matters pertaining to mergers and acquisitions,
without exception;
(vii) Purchase contracts of a major nature;
(viii) Sales contracts of an unusual size or complexity;
(ix) Sale or purchase of patents, rights, or any royalty or
license agreements, other than in the ordinary course of business;
(x) Warranty and distribution policies of an unusual nature
which are not representative of industry patterns;
(xi) Financing programs and policies applicable to public
offerings, private placements, and long-term debt;
(xii) Treasury policies;
(xiii) Selection of auditors and corporate counsel;
(xiv) Banking resolutions;
(xv) Cash policies such as pension funds, investments, etc.,
other than normal bank deposits;
(xvi) All matters of litigation in which the Company is to be
the plaintiff or other initiating party; and
(xvii) Conflict of interest matters.
(n) The management of the Company shall notify and consult with the
Board of Directors (by written, telegraphic or telephonic notice) prior to
taking any initial action with respect to any of the following matters (it
being understood that the Board of Directors will
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determine the propriety of further or alternative action with respect to such
matters at their next meeting):
(i) All matters of personnel policies as they apply to any
labor agreements or organization of unions;
(ii) All matters of public policy, wherein the Company is to
be involved in any community, political, or religious cause or
program;
(iii) All matters of litigation that involve or may involve
the Company as a defendant;
(iv) Audit programs and policies; and
(v) Any operating decisions which in the judgment of the
President and Chief Executive Officer should be presented to the
Board.
(o) The Company shall file a Certificate of Designation with the
Secretary of State of Utah setting forth the rights and preferences of the
Series D Preferred Stock substantially in the form attached hereto as Exhibit
"C".
(p) In the event that the Company enters into a transaction whereby
the existing Shareholders of the Company (including the holders of the Series D
Preferred Stock) are diluted by ten percent (10%) or more, or in the event that
an officer or director of the Company makes an offer to purchase ten percent
(10%) or more of the outstanding equity of the Company, the holders of the
Series D Preferred Stock shall have the preferential right, but not the
obligation, to purchase an equivalent amount of shares from the Company or the
offering officer or director, as the case may be, on equivalent terms.
(q) For a period of five (5) years from the Phase II Closing, or June
30, 1998, whichever is earlier, if the Company proposes to sell, dispose of or
otherwise transfer any Common Stock ("Securities")(each a "Disposing
Stockholder'), such Disposing Stockholder shall refrain from effecting such
transaction unless, prior to the consummation thereof, each holder of Series D
Preferred Stock (a "Stockholder") shall have been afforded the opportunity to
join in such sale on a pro rata basis, as hereinafter provided.
Prior to consummation of any proposed sale, disposition or
transfer of the Securities as described above, the Disposing Stockholder shall
cause the person or entity that proposes to acquire such shares (the "Proposed
Purchaser") to offer (the "Purchase Offer") in writing to each holder of Series
D Preferred Stock to purchase shares of Common Stock and Preferred Stock, as
the case may be, owned by such other Stockholder, such that the number of
shares of Common Stock or Preferred Stock, as the case may be, so offered to be
purchased from such Stockholder shall be equal to the product obtained by
multiplying the total number of shares of such Common Stock and Preferred
Stock, as the case may be, then owned by such Stockholder, computed on a fully
diluted basis, by a fraction, the numerator of which is the aggregate number of
shares of Common Stock and Preferred Stock, as the case may be, proposed to be
purchased by the Proposed Purchaser from all Stockholders (including all
Disposing
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Stockholders) and the denominator of which is the aggregate number of shares of
Common Stock and Preferred Stock, as the case may be, then outstanding,
computed on a fully diluted basis. Such purchase shall be made at the highest
price per share of Common Stock and on such other terms and conditions as the
Proposed Purchaser has offered to purchase shares of Common Stock or Preferred
Stock, as the case may be, to be sold by the Disposing Stockholder; the price
per unconverted share of Preferred Stock shall be its liquidation value. Each
Stockholder shall have twenty (20) days from the date of receipt of the
Purchase Offer in which to accept such Purchase Offer, and the closing of such
purchase shall occur within thirty (30) days after such acceptance or at such
other time as such Stockholder and the Proposed Purchaser may agree. The number
of shares of Common Stock and Preferred Stock, as the case may be, to be sold
to the Proposed Purchaser by the Disposing Stockholder or Stockholders shall be
reduced by the aggregate number of shares of Common Stock or Preferred Stock,
as the case may be, purchased by the Proposed Purchaser from the other
Stockholders pursuant to the acceptance by them of Purchase Offers in
accordance with the provisions of this subparagraph. In the event that a sale
or other transfer, subject to this subsection 5.(q) is to be made to a Proposed
Purchaser who is not a Stockholder, the Disposing Stockholder shall notify the
Proposed Purchaser that the sale or other transfer is subject to this Section
5.(q) and shall ensure that no sale or other transfer is consummated without
the Proposed Purchaser first complying with this Section 5.(q). It shall be the
responsibility of each Disposing Stockholder to determine whether any
transaction to which it is a party is subject to this Section 5.(q).
27. Negative Covenants of the Company.
(a) During the completion of the Private Placement and for a period of
eighteen (18) months following the Phase II Closing or June 30, 1998, whichever
is earlier, the Company will not, without the prior written consent of ESL,
grant any options to purchase securities of the Company to employees that are
exercisable at a price below the greater of the Private Placement Price or the
fair market value of the securities on the date of grant.
(b) For a period of three (3) years following the Closing, the Company
will not, without the prior written consent of ESL, offer or sell any of its
securities in reliance on Regulation S of the Securities Act of 1933, as
amended.
(c) The Company will not use any proceeds from the Private Placement
to repay any indebtedness of the Company, including but not limited to any
indebtedness to current executive officers or principal shareholders of the
Company except for indebtedness currently existing in favor of Bank One, N.A.
and other vendors as more fully set forth in Exhibit "F" attached hereto and
made a part hereof.
(d) The Company shall not, without the prior unanimous written consent
of ESL and the holders of the Series D Preferred Stock, create any new class or
series of stock having a dividend and/or liquidation preference senior to the
Series D Preferred Stock or increase the size of the authorized number of
shares of Series D Preferred Stock.
(e) The Company will not issue press releases without first providing
ESL a copy of the proposed release for ESL's approval prior to its
dissemination for a period of eighteen (18) months from the Phase I Closing, or
April 30, 1998, whichever is earlier.
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(f) For a period of thirteen (13) months from the Phase I Closing or
April 30, 1998, whichever is earlier, the compensation of the executive
officers of the Company shall be subject to the approval of ESL, which approval
shall not unreasonably be withheld.
(g) The Company will not sell any of its securities at a price lower
than the Private Placement Price for a period of twenty-four (24) months from
Phase II Closing or June 30, 1998, whichever is earlier, without the prior
written consent of ESL.
28. Representations and Warranties of ESL.
ESL represents, warrants and covenants to the Company as follows:
(a) ESL has been duly incorporated and is validly existing and in good
standing under the laws of Nevis, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as currently
conducted.
(b) This Agreement has been duly authorized, validly executed and
delivered on behalf of ESL and is a valid and binding agreement of ESL
enforceable in accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors'
rights generally, and ESL has full power and authority to execute and deliver
this Agreement and the other agreements and documents contemplated hereby and
to perform its obligations hereunder and thereunder.
29. Indemnification. The Company hereby agrees to indemnify and hold
harmless ESL and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person insofar as such losses, claims, demands,
liabilities and expenses arise out of or are based upon, in whole or in part,
(i) any untrue statement or alleged untrue statement of a material fact made by
the Company in this Agreement or any exhibit, schedule, certificate, list,
summary or Disclosure Document provided to ESL, (ii) any omission or alleged
omission of a material fact with respect to the Company in this Agreement or
any exhibit, schedule, certificate, list, summary or Disclosure Document
provided to ESL, or (iii) any breach of any representation, warranty or
agreement made by the Company in this Agreement or any exhibit, schedule,
certificate, list, summary or Disclosure Document provided to ESL. This
indemnity shall also cover all costs and expenses accrued by an indemnified
Party in connection with defending or investigating any such claims or
liabilities, including any costs or expenses incurred, to which any such
indemnified party may become subject under the Securities' Act, or under any
other statute, at common law or otherwise.
30. Mergers and Acquisitions.
(a) The Company agrees that ESL will be paid a finder's fee of seven
percent (7%) of the first $1,000,000.00, six percent (6%) of the second
$1,000,000.00 and five percent (5%) of the next $5,000,000.00 ranging in
$1,000,000.00 increments down to two and one-half percent (2-1/2%) of the
excess (with a reduction by one-half percent (0.5%) for each $1,000,000.00
thereafter up to $9,000,000.00), if any, over $9,000,000.00 of the
consideration (stock or other property to be valued at the fair market value of
same on the date of receipt by the Company) involved in any transaction
(including mergers, acquisitions, joint ventures and any other
13
business for the Company introduced by ESL) consummated by the Company, in
which ESL introduced the other party to the Company during a period ending five
(5) years from April 30, 1998 (an "Introduced Transaction") and with whom the
Company did not have a prior relationship; and
(b) Any such finder's fee due to ESL will be paid in cash at the
closing of the particular Introduced Transaction for which the finder's fee is
due. This finder's fee is not in addition to the finder's fee contained in that
certain placement agreement dated November 11, 1997, or that certain placement
agreement dated January 31, 1998, both by and between the Company and ESL, but
is merely a restatement thereof.
31. Conditions Precedent to Closing.
(a) ESL shall have received an opinion addressed to Equity Services,
Ltd. and each subscriber to the Private Placement, from Vial, Hamilton, Xxxx &
Xxxx, L.L.P., substantially in the form attached hereto as Exhibit "D".
(b) ESL shall have received a fully executed Placement Agent's Option
Certificate from the Company for the options earned upon the closing of each
Phase of the Private Placement before the closing of each Phase in which they
are earned.
(c) ESL shall have received a fully executed Registration Rights
Agreement with respect to the Placement Agent's Shares and the ESL Option
Shares from the Company for the Placement Agent's Shares and the ESL Option
Shares earned upon the closing of each Phase of the Private Placement.
(d) ESL shall have received a certified copy of the resolution of the
Board of Directors of the Company authorizing the transactions contemplated
herein.
(e) The Company shall have filed with the Office of the Secretary of
State of Utah a Certificate of Designation acceptable to ESL, substantially in
the form attached hereto as Exhibit "C".
(f) The Company shall have amended its Bylaws in such a manner as to
make its Bylaws consistent with the terms and conditions of this Agreement and
the transactions contemplated herein, a copy of which will have been provided
to ESL prior to the Phase I Closing.
(g) Prior to the closing of each of Phase(s) I and II, ESL shall have
received a certificate representing the Placement Agent's Shares earned for
each such Phase.
(h) Prior to the closing of each of Phase(s) I and II ESL shall have
received a fully executed subscription agreement from each subscriber to Phase
I and Phase II, respectively.
(i) Prior to the closing of each Phase of the Private Placement, ESL
shall have had the opportunity to review the business and financial milestones
of the Company set forth on Exhibit "E" and to ascertain the Company's
compliance therewith (in ESL's sole judgment). In
14
the event that ESL determines that the Company is not in compliance with said
milestones, ESL will be released from its obligation to complete subsequent
Phases of the Private Placement.
32. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective upon its execution by ESL.
(b) This Agreement shall terminate on the earlier of July 31, 1998, or
the consummation of the Private Placement, provided the representations and
warranties of the Company contained herein shall survive any termination
hereof.
33. Parties. This Agreement shall inure to the benefit of and be binding
upon ESL, the Company and ESL's and its respective successors and assigns.
Except as provided for in Section 4 hereinabove, nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person or
corporation, other than the parties hereto and their respective successors and
assigns and the controlling persons, officers, directors, employees, agents and
attorneys of the parties, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and said controlling persons, officers,
directors, employees, agents and attorneys, and for the benefit of no other
person or corporation.
34. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied (followed by registered mail or overnight courier), initially to the
address set forth below, and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 13.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Vial, Hamilton, Xxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
15
if to ESL:
Equity Services, Ltd
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xx. Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, registered mail, return receipt requested, postage
prepaid, if mailed; when received after being deposited in the regular mail;
the next business day after being deposited with an overnight courier, if
deposited with a nationally recognized, overnight courier service; when receipt
is acknowledged, if telecopied (subject to follow up as discussed above).
35. Attorneys' Fees. If any action is necessary to enforce or interpret
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and costs, in addition to any other relief to which
he is or may be entitled. This provision shall be construed as applicable to
the entire agreement.
36. Remedies. Each party hereto, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation to ESL for any loss
incurred by reason of a breach by the Company of the provisions of this
Agreement and the Company hereby agrees to waive (to the extent permitted by
law) the defense in any action for specific performance that a remedy of law
would be adequate.
37. Time of Essence. Time shall be of the essence of this Agreement.
38. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of Texas.
39. Execution. This Agreement may be executed in any number of
counterparts each of which taken together shall constitute one and the same
instrument.
16
40. Joint Drafting of Agreement. This Agreement has been prepared by the
joint efforts of the respective counsel for each of the parties hereto and
shall not be construed against a particular party simply by reason of such
party being the drafting party.
41. Entire Agreement. This Agreement, together with those certain Investor
Subscription Agreements by and between the Company and each subscriber to the
Private Placement, constitute the entire understanding by and between the
parties with respect to the subject matter hereof. This Agreement can only be
modified, including any extension of the offering period, by a written
agreement duly signed by persons authorized to sign agreements on behalf of the
respective parties.
42. Facsimile Signature. This Agreement may be executed by facsimile copy
and any such facsimile copy bearing the facsimile signature of any party hereto
shall have full legal force and effect and shall be binding against the party
having executed this Agreement by facsimile.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
17
If the foregoing is in accordance with your understanding, please sign
below and return to us a counterpart hereof, and upon your acceptance hereof,
this letter and the acceptance hereof shall constitute a binding agreement
between ESL and the Company.
Very truly yours,
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
XXXX XXXXXX,
President
Accepted and agreed to as of the
date first above written by:
EQUITY SERVICES, LTD.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
XXXX XXXXXXXXX, Director
18
EXHIBIT "A"
Registration Rights Agreement - Subscribers to Private Placement
EXHIBIT "B"
Registration Rights Agreement - ESL
EXHIBIT "C"
Form of Certificate of Designation
EXHIBIT "D"
Form of Opinion
EXHIBIT "E"
Business and Financial Milestones
of Company
EXHIBIT "F"
Schedule of Indebtedness of the Company
of Company
10.12 Placement Agreement dated April 30, 1998 by and between Equity Services,
LTD and MSHI.
19
d
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of the day of June, 1998 by and between MICRO-MEDIA SOLUTIONS,
INC., a Utah corporation (the "Company") and EQUITY SERVICES, LTD., a Nevis
company (the "Shareholder").
R E C I T A L S:
WHEREAS, the Shareholder is acquiring (i) Three Thousand Seventy Five
(3,075) shares of the Company's Series D 6% cumulative convertible preferred
stock, stated value $10.60 per share (the "Series D Preferred Stock") pursuant
to that certain placement agreement by and between the Company and the
Shareholder dated April 21, 1998 (the "Placement Agreement"), as amended by
that certain first amendment to the Placement Agreement by and between the
Company and the Shareholder dated May 30, 1998 (the "First Amendment") and (ii)
an option to purchase up to Sixty One Thousand Five Hundred Ten (61,510) shares
of the Company's common stock, par value $0.10 per share (the "Common Stock")
pursuant to that certain Placement Agent's Option Certificate dated June , 1998
(the "Option Shares"); and
WHEREAS, the Company desires to grant to the Shareholder certain
registration rights relating to the shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock and the Option Shares
(collectively, the "Shares"); and the Shareholder desires to obtain such
registration rights, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
25. Definitions and References. For purposes of this Agreement, in
addition to the definitions set forth above and elsewhere herein, the following
terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
(b) The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the 1933
Act (as herein defined) and the declaration or ordering of
effectiveness of such registration statement or document.
20
(c) For purposes of this Agreement, the term "Registrable
Stock" shall mean (i) any shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock, (ii) the Option
Shares, (iii) any shares of Common Stock issued by way of a stock
split, reorganization, merger or consolidation, and (iv) any Common
Stock issued as a dividend on the Shares. For purposes of this
Agreement, any Registrable Stock shall cease to be Registrable Stock
when (v) a registration statement covering such Registrable Stock has
been declared effective and such Registrable Stock has been disposed
of pursuant to such effective registration statement, (w) such
Registrable Stock is sold pursuant to Rule 144 (or any similar
provision then in force) under the 1933 Act, (x) such Registrable
Stock is eligible to be sold pursuant to Rule 144(k) under the 1933
Act, (y) such Registrable Stock has been otherwise transferred, no
stop transfer order affecting such stock is in effect and the Company
has delivered new certificates or other evidences of ownership for
such Registrable Stock not bearing any legend indicating that such
shares have not been registered under the 1933 Act, or (z) such
Registrable Stock is sold by a person in a transaction in which the
rights under the provisions of this Agreement are not assigned.
(d) The term "Holder" shall mean the Shareholder or any
transferee or assignee thereof to whom the rights under this Agreement
are assigned in accordance with Section 10 hereof, provided that the
Shareholder or such transferee or assignee shall then own the
Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of
1933, as amended.
(f) An "affiliate of such Holder" shall mean a person who
controls, is controlled by or is under common control with a Holder,
or the spouse or children (or a trust exclusively for the benefit of
the spouse and/or children) of a Holder, or, in the case of a Holder
that is a partnership, its partners.
(g) The term "Person" shall mean an individual, corporation,
partnership, trust, limited liability company, unincorporated
organization or association or other entity, including any
governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or
Holders of in the aggregate at least a majority of the Registrable
Stock.
(i) References in this Agreement to any rules, regulations or
forms promulgated by the Commission shall include rules, regulations
and forms succeeding to the functions thereof, whether or not bearing
the same designation.
26. Demand Registration.
(a) Commencing immediately upon the date of Closing (as
defined in the Placement Agreement), any Requesting Holders may make a
written request to the Company (specifying that it is being made
pursuant to this Section 2) that the Company file a registration
statement under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 0000 Xxx) covering
the registration of Registrable Stock. In such event, the Company
shall (x) within ten (10) days thereafter notify in writing all other
Holders of Registrable Stock of such request, and (y) use its best
efforts to cause to
21
be registered under the 1933 Act all Registrable Stock that the
Requesting Holders and such other Holders have, within forty-five (45)
days after the Company has given such notice, requested be registered.
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an underwritten
offering, they shall so advise the Company as a part of their request
pursuant to Section 2.(a) above, and the Company shall include such
information in the written notice referred to in clause (x) of Section
2.(a) above. In such event, the Holder's right to include its
Registrable Stock in such registration shall be conditioned upon such
Holder's participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten offering to the
extent provided in this Section 2. All Holders proposing to distribute
Registrable Stock through such underwritten offering shall enter into
an underwriting agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be selected by a
majority in interest of the Requesting Holders and shall be approved
by the Company, which approval shall not be unreasonably withheld;
provided, that all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement
shall be conditions precedent to the obligations of such Holders; and
provided further, that no Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Stock of such Holder and such
Holder's intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section 2 to
the contrary, if the managing underwriter of an underwritten offering
of the Registrable Stock requested to be registered pursuant to this
Section 2 advises the Requesting Holders in writing that in its
opinion marketing factors require a limitation of the number of shares
to be underwritten, the Requesting Holders shall so advise all Holders
of Registrable Stock that would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Stock that may be
included in such underwritten offering shall be allocated among all
such Holders, including the Requesting Holders, in proportion (as
nearly as practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of filing
the registration statement; provided, that in the event of such
limitation of the number of shares of Registrable Stock to be
underwritten, the Holders shall be entitled to an additional demand
registration pursuant to this Section 2. If any Holder of Registrable
Stock disapproves of the terms of the underwriting, such Holder may
elect to withdraw by written notice to the Company, the managing
underwriter and the Requesting Holders. The securities so withdrawn
shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration
pursuant to this Section 2 during the period starting with the
fourteenth (14th) day immediately preceding the date of an anticipated
filing by the Company of, and ending on a date ninety (90) days
following the effective date of, a registration statement pertaining
to a public offering of securities for the
22
account of the Company; provided, that the Company shall actively
employ in good faith all reasonable efforts to cause such registration
statement to become effective; and provided further, that the
Company's estimate of the date of filing such registration statement
shall be made in good faith.
(e) The Company shall be obligated to effect and pay for a
total of only two (2) registrations pursuant to this Section 2, unless
increased pursuant to Section 2.(c) hereof; provided, that a
registration requested pursuant to this Section 2 shall not be deemed
to have been effected for purposes of this Section 2.(e), unless (i)
it has been declared effective by the Commission, (ii) if it is a
shelf registration, it has remained effective for the period set forth
in Section 3.(b), (iii) the offering of Registrable Stock pursuant to
such registration is not subject to any stop order, injunction or
other order or requirement of the Commission (other than any such
action prompted by any act or omission of the Holders), and (iv) no
limitation of the number of shares of Registrable Stock to be
underwritten has been required pursuant to Section 2.(c) hereof.
27. Obligations of the Company. Whenever required under Section 2 to
use its best efforts to effect the registration of any Registrable Stock, the
Company shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later than
ninety (90) days after receipt of a request to file a registration
statement with respect to such Registrable Stock, a registration
statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be
available for the sale of such issue of Registrable Stock in
accordance with the intended method of distribution thereof, and use
its best efforts to cause such registration statement to become
effective as promptly as practicable thereafter; provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will (i) furnish to one (1) counsel
selected by the Requesting Holders copies of all such documents
proposed to be filed, and (ii) notify each such Holder of any stop
order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for such period of time as would satisfy the
holding period requirements of Rule 144(k) promulgated by the
Commission with respect to the Shares or such shorter period which
will terminate when all Registrable Stock covered by such registration
statement has been sold (but not before the expiration of the forty
(40) or ninety (90) day period referred to in Section 4(3) of the 1933
Act and Rule 174 thereunder, if applicable), and comply with the
provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement during such period
in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Holder and any underwriter of Registrable
Stock to be included in a registration statement copies of such
registration statement as filed and each
23
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as
such Holder may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such Holder;
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws of such
jurisdictions as any selling Holder or any underwriter of Registrable
Stock reasonably requests, and do any and all other acts which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Stock owned
by such Holder; provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3.(d)
hereof, (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with or
approved by such other governmental agencies or other authorities as
may be necessary by virtue of the business and operations of the
Company to enable the selling Holders thereof to consummate the
disposition of such Registrable Stock;
(f) notify each selling Holder of such Registrable Stock and
any underwriter thereof, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act (even if such
time is after the period referred to in Section 3.(b)), of the
happening of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus will not contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances being made not misleading;
(g) make available for inspection by any selling Holder, any
underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Inspector, as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, in connection with such registration statement.
Records or other information which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records or other information is necessary to avoid
or correct a misstatement or omission in the registration statement,
or (ii) the release of such Records or other information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction. Each selling Holder shall, upon learning that disclosure
of such Records or other information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at
24
the Company's expense, to undertake appropriate action to prevent
disclosure of the Records or other information deemed confidential;
(h) furnish, at the request of any Requesting Holder, on the
date that such shares of Registrable Stock are delivered to the
underwriters for sale pursuant to such registration or, if such
Registrable Stock is not being sold through underwriters, on the date
that the registration statement with respect to such shares of
Registrable Stock becomes effective, (1) a signed opinion, dated such
date, of the legal counsel representing the Company for the purposes
of such registration, addressed to the underwriters, if any, and if
such Registrable Stock is not being sold through underwriters, then to
the Requesting Holders as to such matters as such underwriters or the
Requesting Holders, as the case may be, may reasonably request and as
would be customary in such a transaction; and (2) a letter dated such
date, from the independent certified public accountants of the
Company, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver such
letter to such Holder, then to the Company (i) stating that they are
independent certified public accountants within the meaning of the
1933 Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, and (ii)
covering such other financial matters (including information as to the
period ending not more than five (5) business days prior to the date
of such letter) with respect to the registration in respect of which
such letter is being given as the Requesting Holders may reasonably
request and as would be customary in such a transaction;
(i) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than eighteen (18) months after the effective date of the
registration statement, an earnings statement covering the period of
at least twelve (12) months beginning with the first full month after
the effective date of such registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the 1933
Act; and
(k) use its best efforts to cause all such Registrable Stock
to be listed on The Nasdaq Small Cap Market and/or any other
securities exchange on which similar securities issued by the Company
are then listed or traded.
The Company may require each selling Holder of Registrable Stock as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the Company
may from time to time reasonably request in writing.
25
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3.(f) hereof,
such Holder will forthwith discontinue disposition of Registrable Stock
pursuant to the registration statement covering such Registrable Stock until
such Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.(f) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Stock current at the time of receipt of such notice.
In the event the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement (including the period referred to in
Section 3.(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 3.(f) hereof to and
including the date when each selling Holder of Registrable Stock covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 3.(f) hereof.
28. Incidental Registration. Commencing immediately after the date of
Closing (as defined in the Investor Agreement), if the Company determines that
it shall file a registration statement under the 1933 Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company's existing
stockholders) on any form that would also permit the registration of the
Registrable Stock and such filing is to be on its behalf and/or on behalf of
selling holders of its securities for the general registration of its common
stock to be sold for cash, at each such time the Company shall promptly give
each Holder written notice of such determination setting forth the date on
which the Company proposes to file such registration statement, which date
shall be no earlier than thirty (30) days from the date of such notice, and
advising each Holder of its right to have Registrable Stock included in such
registration. Upon the written request of any Holder received by the Company no
later than twenty (20) days after the date of the Company's notice, the Company
shall use its best efforts to cause to be registered under the 1933 Act all of
the Registrable Stock that each such Holder has so requested to be registered.
If, in the written opinion of the managing underwriter or underwriters (or, in
the case of a non-underwritten offering, in the written opinion of the
placement agent, or if there is none, the Company), the total amount of such
securities to be so registered, including such Registrable Stock, will exceed
the maximum amount of the Company's securities which can be marketed (i) at a
price reasonably related to the then current market value of such securities,
or (ii) without otherwise materially and adversely affecting the entire
offering, then the amount of Registrable Stock to be offered for the accounts
of Holders shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such offering to the recommended
amount; provided, that if securities are being offered for the account of other
Persons as well as the Company, such reduction shall not represent a greater
fraction of the number of securities intended to be offered by Holders than the
fraction of similar reductions imposed on such other Persons other than the
Company over the amount of securities they intended to offer.
29. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law, each
Holder whose Registrable Stock is included in a registration statement
agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale
26
pursuant to Rule 144 under the 1933 Act, during the fourteen (14) days
prior to, and during the ninety (90) day period beginning on, the
effective date of such registration statement (except as part of the
registration), if and to the extent requested by the Company in the
case of a nonunderwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the case of
an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or distribution
of any securities similar to those being registered, or any securities
convertible into or exchangeable or exercisable for such securities,
during the fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of any registration statement
in which Holders are participating (except as part of such
registration), if and to the extent requested by the Holders in the
case of a non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the case of
an underwritten public offering; and (ii) that any agreement entered
into after the date of this Agreement pursuant to which the Company
issues or agrees to issue any securities convertible into or
exchangeable or exercisable for such securities (other than pursuant
to an effective registration statement) shall contain a provision
under which holders of such securities agree not to effect any public
sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to Rule
144 under the 1933 Act.
30. Expenses of Registration. The Company shall bear all expenses
incurred in connection with each registration pursuant to Sections 2 and 4 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holders shall bear and
pay the underwriting commissions and discounts applicable to the Registrable
Stock offered for their account in connection with any registrations, filings
and qualifications made pursuant to this Agreement.
31. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify, to the full extent permitted by law, each Holder, its
officers, directors and agents and each Person who controls such
Holder (within the meaning of the 0000 Xxx) against all losses,
claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein (in
case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The Company
will also indemnify any underwriters of the Registrable Stock, their
officers and directors and each Person who controls such underwriters
(within the meaning of the 0000 Xxx) to the same extent as provided
above with respect to the indemnification of the selling Holders.
27
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating, each such
Holder will furnish to the Company in writing such information with
respect to such Holder as the Company reasonably requests for use in
connection with any such registration statement or prospectus and
agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each Person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission
of a material fact required to be stated in the registration
statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in the
light of the circumstances under which they were made) not misleading,
to the extent, but only to the extent, that such untrue statement or
omission is contained in any information with respect to such Holder
so furnished in writing by such Holder. Notwithstanding the foregoing,
the liability of each such Holder under this Section 7.(b) shall be
limited to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises
out of or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of
any written notice of the commencement of any action, suit, proceeding
or investigation or threat thereof made in writing for which such
Person will claim indemnification or contribution pursuant to this
Agreement and, unless in the reasonable judgment of such indemnified
party, a conflict of interest may exist between such indemnified party
and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claims with counsel
reasonably satisfactory to such indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld).
Failure by such Person to provide said notice to the indemnifying
party shall itself not create liability except to the extent of any
injury caused thereby. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. If the indemnifying party IS not entitled
to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one (1) counsel
with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such
indemnified party and any other such indemnified parties with respect
to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or
counsels.
(d) Contribution. If for any reason the indemnity provided
for in this Section 7 is unavailable to, or is insufficient to hold
harmless, an indemnified party, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other, or (ii) if the allocation provided by clause (i)
28
above is not permitted by applicable law, or provides a lesser sum to
the indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or
indemnified parties; and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 7.(c), any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the
full extent provided in Sections 7.(a) and 7.(b) without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 7.
32. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
33. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations adopted by the Commission
thereunder; and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it
has complied with such requirements.
34. Transfer of Registration Rights. The registration rights of any
Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided that such
transfer may otherwise be effected in accordance with
29
applicable securities laws; provided further, that the transferring Holder
shall give the Company written notice at or prior to the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which the rights under this Agreement are being transferred;
provided further, that such transferee shall agree in writing, in form and
substance satisfactory to the Company, to be bound as a Holder by the
provisions of this Agreement; and provided further, that such assignment shall
be effective only if immediately following such transfer the further
disposition of such securities by such transferee is restricted under the 1933
Act. Except as set forth in this Section 10, no transfer of Registrable Stock
shall cause such Registrable Stock to lose such status.
35. Mergers, Etc. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that
purpose references hereunder to "Registrable Stock" shall be deemed to be
references to the securities which the Holders would be entitled to receive in
exchange for Registrable Stock under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 11 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely
of (i) cash, (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the 1933 Act, or
(iii) securities of the acquiring corporation which the acquiring corporation
has agreed to register within ninety (90) days of completion of the transaction
for resale to the public pursuant to the 1933 Act.
36. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders in this
Agreement.
(b) Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
it of the provisions of this Agreement and hereby agrees to waive (to
the extent permitted by law) the defense in any action for specific
performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of the Holders of at least a
majority of the Registrable Stock then outstanding affected by such
amendment, modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors
and assigns of the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any Person other than the
parties hereto or their
30
respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas
applicable to contracts made and to be performed wholly within that
state, without regard to the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(g) Headings. The headings in this Agreement are used for
convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be delivered in person
or by telecopy or by overnight courier guaranteeing no later than
second business day delivery, directed to (i) the Company at the
address set forth below its signature hereof or (ii) a Holder at the
address of the Administrator set forth below its signature hereof. Any
party may change its address for notice by giving ten (10) days
advance written notice to the other parties. Every notice or other
communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier service,
with receipt acknowledged.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties or undertakings other
than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full force
and effect notwithstanding any breach or purported breach of, or
relating to, the Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the
Agreement as if fully set forth herein.
(m) Attorneys Fees. If any action is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs,
31
in addition to any other relief to which he is or may be entitled.
This provision shall be construed as applicable to the entire
agreement.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written hereinabove.
MICRO-MEDIA SOLUTIONS, INC.
By:/s/ Xxxx Xxxxxx
-----------------------------------
Name: XXXX XXXXXX
Title: President
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EQUITY SERVICES, LTD.
By:/s/Xxxx Xxxxxxxxx
Name: XXXX XXXXXXXXX
Title: Director
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
33
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of the day of April, 1998 by and between MICRO-MEDIA SOLUTIONS,
INC., a Utah corporation (the "Company") and EQUITY SERVICES, LTD., a Nevis
company (the "Shareholder").
R E C I T A L S:
WHEREAS, the Shareholder is acquiring (i) Nine Thousand Four Hundred
Sixty Seven (9,467) shares of the Company's Series D 6% cumulative convertible
preferred stock, stated value $10.60 per share (the "Series D Preferred Stock")
pursuant to that certain placement agreement by and between the Company and the
Shareholder dated April ____, 1998 (the "Placement Agreement") and (ii) an
option to purchase up to One Hundred Eighty Nine Thousand Three Hundred Forty
(189,340) shares of the Company's common stock, par value $0.10 per share (the
"Common Stock") pursuant to that certain Placement Agent's Option Certificate
dated April __, 1998 (the "Option Shares"); and
WHEREAS, the Company desires to grant to the Shareholder certain
registration rights relating to the shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock and the Option Shares
(collectively, the "Shares"); and the Shareholder desires to obtain such
registration rights, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
37. Definitions and References. For purposes of this Agreement, in
addition to the definitions set forth above and elsewhere herein, the following
terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
(b) The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the 1933
Act (as herein defined) and the declaration or ordering of
effectiveness of such registration statement or document.
(c) For purposes of this Agreement, the term "Registrable
Stock" shall mean (i) any shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock, (ii) the Option
Shares, (iii) any shares of Common Stock issued by way of a stock
split, reorganization, merger or consolidation, and (iv) any Common
Stock issued as a dividend on the Shares. For purposes of this
Agreement, any Registrable Stock shall cease
34
to be Registrable Stock when (v) a registration statement covering
such Registrable Stock has been declared effective and such
Registrable Stock has been disposed of pursuant to such effective
registration statement, (w) such Registrable Stock is sold pursuant to
Rule 144 (or any similar provision then in force) under the 1933 Act,
(x) such Registrable Stock is eligible to be sold pursuant to Rule
144(k) under the 1933 Act, (y) such Registrable Stock has been
otherwise transferred, no stop transfer order affecting such stock is
in effect and the Company has delivered new certificates or other
evidences of ownership for such Registrable Stock not bearing any
legend indicating that such shares have not been registered under the
1933 Act, or (z) such Registrable Stock is sold by a person in a
transaction in which the rights under the provisions of this Agreement
are not assigned.
(d) The term "Holder" shall mean the Shareholder or any
transferee or assignee thereof to whom the rights under this Agreement
are assigned in accordance with Section 10 hereof, provided that the
Shareholder or such transferee or assignee shall then own the
Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of
1933, as amended.
(f) An "affiliate of such Holder" shall mean a person who
controls, is controlled by or is under common control with a Holder,
or the spouse or children (or a trust exclusively for the benefit of
the spouse and/or children) of a Holder, or, in the case of a Holder
that is a partnership, its partners.
(g) The term "Person" shall mean an individual, corporation,
partnership, trust, limited liability company, unincorporated
organization or association or other entity, including any
governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or
Holders of in the aggregate at least a majority of the Registrable
Stock.
(i) References in this Agreement to any rules, regulations or
forms promulgated by the Commission shall include rules, regulations
and forms succeeding to the functions thereof, whether or not bearing
the same designation.
38. Demand Registration.
(a) Commencing immediately upon the date of Closing (as
defined in the Placement Agreement), any Requesting Holders may make a
written request to the Company (specifying that it is being made
pursuant to this Section 2) that the Company file a registration
statement under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 0000 Xxx) covering
the registration of Registrable Stock. In such event, the Company
shall (x) within ten (10) days thereafter notify in writing all other
Holders of Registrable Stock of such request, and (y) use its best
efforts to cause to be registered under the 1933 Act all Registrable
Stock that the Requesting Holders and such other Holders have, within
forty-five (45) days after the Company has given such notice,
requested be registered.
35
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an underwritten
offering, they shall so advise the Company as a part of their request
pursuant to Section 2.(a) above, and the Company shall include such
information in the written notice referred to in clause (x) of Section
2.(a) above. In such event, the Holder's right to include its
Registrable Stock in such registration shall be conditioned upon such
Holder's participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten offering to the
extent provided in this Section 2. All Holders proposing to distribute
Registrable Stock through such underwritten offering shall enter into
an underwriting agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be selected by a
majority in interest of the Requesting Holders and shall be approved
by the Company, which approval shall not be unreasonably withheld;
provided, that all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement
shall be conditions precedent to the obligations of such Holders; and
provided further, that no Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Stock of such Holder and such
Holder's intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section 2 to
the contrary, if the managing underwriter of an underwritten offering
of the Registrable Stock requested to be registered pursuant to this
Section 2 advises the Requesting Holders in writing that in its
opinion marketing factors require a limitation of the number of shares
to be underwritten, the Requesting Holders shall so advise all Holders
of Registrable Stock that would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Stock that may be
included in such underwritten offering shall be allocated among all
such Holders, including the Requesting Holders, in proportion (as
nearly as practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of filing
the registration statement; provided, that in the event of such
limitation of the number of shares of Registrable Stock to be
underwritten, the Holders shall be entitled to an additional demand
registration pursuant to this Section 2. If any Holder of Registrable
Stock disapproves of the terms of the underwriting, such Holder may
elect to withdraw by written notice to the Company, the managing
underwriter and the Requesting Holders. The securities so withdrawn
shall also be withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration
pursuant to this Section 2 during the period starting with the
fourteenth (14th) day immediately preceding the date of an anticipated
filing by the Company of, and ending on a date ninety (90) days
following the effective date of, a registration statement pertaining
to a public offering of securities for the account of the Company;
provided, that the Company shall actively employ in good faith all
reasonable efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate of the
date of filing such registration statement shall be made in good
faith.
36
(e) The Company shall be obligated to effect and pay for a
total of only two (2) registrations pursuant to this Section 2, unless
increased pursuant to Section 2.(c) hereof; provided, that a
registration requested pursuant to this Section 2 shall not be deemed
to have been effected for purposes of this Section 2.(e), unless (i)
it has been declared effective by the Commission, (ii) if it is a
shelf registration, it has remained effective for the period set forth
in Section 3.(b), (iii) the offering of Registrable Stock pursuant to
such registration is not subject to any stop order, injunction or
other order or requirement of the Commission (other than any such
action prompted by any act or omission of the Holders), and (iv) no
limitation of the number of shares of Registrable Stock to be
underwritten has been required pursuant to Section 2.(c) hereof.
39. Obligations of the Company. Whenever required under Section 2 to
use its best efforts to effect the registration of any Registrable Stock, the
Company shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later than
ninety (90) days after receipt of a request to file a registration
statement with respect to such Registrable Stock, a registration
statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be
available for the sale of such issue of Registrable Stock in
accordance with the intended method of distribution thereof, and use
its best efforts to cause such registration statement to become
effective as promptly as practicable thereafter; provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will (i) furnish to one (1) counsel
selected by the Requesting Holders copies of all such documents
proposed to be filed, and (ii) notify each such Holder of any stop
order issued or threatened by the Commission and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for such period of time as would satisfy the
holding period requirements of Rule 144(k) promulgated by the
Commission with respect to the Shares or such shorter period which
will terminate when all Registrable Stock covered by such registration
statement has been sold (but not before the expiration of the forty
(40) or ninety (90) day period referred to in Section 4(3) of the 1933
Act and Rule 174 thereunder, if applicable), and comply with the
provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement during such period
in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Holder and any underwriter of Registrable
Stock to be included in a registration statement copies of such
registration statement as filed and each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such Holder may reasonably
request in order to facilitate the disposition of the Registrable
Stock owned by such Holder;
37
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws of such
jurisdictions as any selling Holder or any underwriter of Registrable
Stock reasonably requests, and do any and all other acts which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Stock owned
by such Holder; provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3.(d)
hereof, (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with or
approved by such other governmental agencies or other authorities as
may be necessary by virtue of the business and operations of the
Company to enable the selling Holders thereof to consummate the
disposition of such Registrable Stock;
(f) notify each selling Holder of such Registrable Stock and
any underwriter thereof, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act (even if such
time is after the period referred to in Section 3.(b)), of the
happening of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus will not contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances being made not misleading;
(g) make available for inspection by any selling Holder, any
underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such Inspector, as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, in connection with such registration statement.
Records or other information which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records or other information is necessary to avoid
or correct a misstatement or omission in the registration statement,
or (ii) the release of such Records or other information is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction. Each selling Holder shall, upon learning that disclosure
of such Records or other information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Records or other information deemed confidential;
(h) furnish, at the request of any Requesting Holder, on the
date that such shares of Registrable Stock are delivered to the
underwriters for sale pursuant to such registration
38
or, if such Registrable Stock is not being sold through underwriters,
on the date that the registration statement with respect to such
shares of Registrable Stock becomes effective, (1) a signed opinion,
dated such date, of the legal counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any,
and if such Registrable Stock is not being sold through underwriters,
then to the Requesting Holders as to such matters as such underwriters
or the Requesting Holders, as the case may be, may reasonably request
and as would be customary in such a transaction; and (2) a letter
dated such date, from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver such
letter to such Holder, then to the Company (i) stating that they are
independent certified public accountants within the meaning of the
1933 Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, and (ii)
covering such other financial matters (including information as to the
period ending not more than five (5) business days prior to the date
of such letter) with respect to the registration in respect of which
such letter is being given as the Requesting Holders may reasonably
request and as would be customary in such a transaction;
(i) enter into customary agreements (including if the method
of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than eighteen (18) months after the effective date of the
registration statement, an earnings statement covering the period of
at least twelve (12) months beginning with the first full month after
the effective date of such registration statement, which earnings
statements shall satisfy the provisions of Section 11(a) of the 1933
Act; and
(k) use its best efforts to cause all such Registrable Stock
to be listed on The Nasdaq Small Cap Market and/or any other
securities exchange on which similar securities issued by the Company
are then listed or traded.
The Company may require each selling Holder of Registrable Stock as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the Company
may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3.(f) hereof,
such Holder will forthwith discontinue disposition of Registrable Stock
pursuant to the registration statement covering such Registrable Stock until
such Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.(f) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such
39
Holder's possession, of the prospectus covering such Registrable Stock current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the Company shall extend the period during which such registration
statement shall be maintained effective pursuant to this Agreement (including
the period referred to in Section 3.(b)) by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 3.(f) hereof to and including the date when each selling Holder of
Registrable Stock covered by such registration statement shall have received
the copies of the supplemented or amended prospectus contemplated by Section
3.(f) hereof.
40. Incidental Registration. Commencing immediately after the date of
Closing (as defined in the Investor Agreement), if the Company determines that
it shall file a registration statement under the 1933 Act (other than a
registration statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company's existing
stockholders) on any form that would also permit the registration of the
Registrable Stock and such filing is to be on its behalf and/or on behalf of
selling holders of its securities for the general registration of its common
stock to be sold for cash, at each such time the Company shall promptly give
each Holder written notice of such determination setting forth the date on
which the Company proposes to file such registration statement, which date
shall be no earlier than thirty (30) days from the date of such notice, and
advising each Holder of its right to have Registrable Stock included in such
registration. Upon the written request of any Holder received by the Company no
later than twenty (20) days after the date of the Company's notice, the Company
shall use its best efforts to cause to be registered under the 1933 Act all of
the Registrable Stock that each such Holder has so requested to be registered.
If, in the written opinion of the managing underwriter or underwriters (or, in
the case of a non-underwritten offering, in the written opinion of the
placement agent, or if there is none, the Company), the total amount of such
securities to be so registered, including such Registrable Stock, will exceed
the maximum amount of the Company's securities which can be marketed (i) at a
price reasonably related to the then current market value of such securities,
or (ii) without otherwise materially and adversely affecting the entire
offering, then the amount of Registrable Stock to be offered for the accounts
of Holders shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such offering to the recommended
amount; provided, that if securities are being offered for the account of other
Persons as well as the Company, such reduction shall not represent a greater
fraction of the number of securities intended to be offered by Holders than the
fraction of similar reductions imposed on such other Persons other than the
Company over the amount of securities they intended to offer.
41. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law, each
Holder whose Registrable Stock is included in a registration statement
agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the 1933 Act,
during the fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of such registration statement
(except as part of the registration), if and to the extent requested
by the Company in the case of a nonunderwritten public offering or if
and to the extent requested by the managing underwriter or
underwriters in the case of an underwritten public offering.
40
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or distribution
of any securities similar to those being registered, or any securities
convertible into or exchangeable or exercisable for such securities,
during the fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of any registration statement
in which Holders are participating (except as part of such
registration), if and to the extent requested by the Holders in the
case of a non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the case of
an underwritten public offering; and (ii) that any agreement entered
into after the date of this Agreement pursuant to which the Company
issues or agrees to issue any securities convertible into or
exchangeable or exercisable for such securities (other than pursuant
to an effective registration statement) shall contain a provision
under which holders of such securities agree not to effect any public
sale or distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant to Rule
144 under the 1933 Act.
42. Expenses of Registration. The Company shall bear all expenses
incurred in connection with each registration pursuant to Sections 2 and 4 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holders shall bear and
pay the underwriting commissions and discounts applicable to the Registrable
Stock offered for their account in connection with any registrations, filings
and qualifications made pursuant to this Agreement.
43. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify, to the full extent permitted by law, each Holder, its
officers, directors and agents and each Person who controls such
Holder (within the meaning of the 0000 Xxx) against all losses,
claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein (in
case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The Company
will also indemnify any underwriters of the Registrable Stock, their
officers and directors and each Person who controls such underwriters
(within the meaning of the 0000 Xxx) to the same extent as provided
above with respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating, each such
Holder will furnish to the Company in writing such information with
respect to such Holder as the Company reasonably requests for use in
connection with any such registration statement or prospectus and
agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each Person who controls the Company
(within the meaning of the 0000 Xxx) against any losses, claims,
41
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission
of a material fact required to be stated in the registration
statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or necessary to make the statements
therein (in the case of a prospectus or preliminary prospectus, in the
light of the circumstances under which they were made) not misleading,
to the extent, but only to the extent, that such untrue statement or
omission is contained in any information with respect to such Holder
so furnished in writing by such Holder. Notwithstanding the foregoing,
the liability of each such Holder under this Section 7.(b) shall be
limited to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises
out of or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of
any written notice of the commencement of any action, suit, proceeding
or investigation or threat thereof made in writing for which such
Person will claim indemnification or contribution pursuant to this
Agreement and, unless in the reasonable judgment of such indemnified
party, a conflict of interest may exist between such indemnified party
and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claims with counsel
reasonably satisfactory to such indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld).
Failure by such Person to provide said notice to the indemnifying
party shall itself not create liability except to the extent of any
injury caused thereby. No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. If the indemnifying party IS not entitled
to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one (1) counsel
with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such
indemnified party and any other such indemnified parties with respect
to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or
counsels.
(d) Contribution. If for any reason the indemnity provided
for in this Section 7 is unavailable to, or is insufficient to hold
harmless, an indemnified party, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, or provides a lesser sum to
the indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to,
among other
42
things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
parties; and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 7.(c), any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the
full extent provided in Sections 7.(a) and 7.(b) without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 7.
44. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
45. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations adopted by the Commission
thereunder; and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it
has complied with such requirements.
46. Transfer of Registration Rights. The registration rights of any
Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided that such
transfer may otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall give the Company
written notice at or prior to the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being transferred; provided further, that
such transferee shall agree in writing, in form and substance satisfactory to
the Company, to be bound as a Holder by the provisions of this Agreement; and
provided further, that such assignment shall be effective only if immediately
following such transfer
43
the further disposition of such securities by such transferee is restricted
under the 1933 Act. Except as set forth in this Section 10, no transfer of
Registrable Stock shall cause such Registrable Stock to lose such status.
47. Mergers, Etc. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that
purpose references hereunder to "Registrable Stock" shall be deemed to be
references to the securities which the Holders would be entitled to receive in
exchange for Registrable Stock under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 11 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely
of (i) cash, (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the 1933 Act, or
(iii) securities of the acquiring corporation which the acquiring corporation
has agreed to register within ninety (90) days of completion of the transaction
for resale to the public pursuant to the 1933 Act.
48. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders in this
Agreement.
(b) Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by
it of the provisions of this Agreement and hereby agrees to waive (to
the extent permitted by law) the defense in any action for specific
performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of the Holders of at least a
majority of the Registrable Stock then outstanding affected by such
amendment, modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors
and assigns of the parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any Person other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas
applicable to contracts made and to be performed wholly within that
state, without regard to the conflict of law rules thereof.
44
(f) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(g) Headings. The headings in this Agreement are used for
convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be delivered in person
or by telecopy or by overnight courier guaranteeing no later than
second business day delivery, directed to (i) the Company at the
address set forth below its signature hereof or (ii) a Holder at the
address of the Administrator set forth below its signature hereof. Any
party may change its address for notice by giving ten (10) days
advance written notice to the other parties. Every notice or other
communication hereunder shall be deemed to have been duly given or
served on the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier service,
with receipt acknowledged.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties or undertakings other
than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full force
and effect notwithstanding any breach or purported breach of, or
relating to, the Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the
Agreement as if fully set forth herein.
(m) Attorneys Fees. If any action is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs, in addition to any
other relief to which he is or may be entitled. This provision shall
be construed as applicable to the entire agreement.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
45
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written hereinabove.
MICRO-MEDIA SOLUTIONS, INC.
By:/s/ Xxxx Xxxxxx
-----------------------------------
Name: XXXX XXXXXX
Title: President
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
EQUITY SERVICES, LTD.
By:/s/Xxxx Xxxxxxxxx
Name: XXXX XXXXXXXXX
Title: Director
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
46
THE OPTION REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. THIS OPTION MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT.
MICRO-MEDIA SOLUTIONS, INC.
PLACEMENT AGENT'S OPTION CERTIFICATE
THIS PLACEMENT AGENT'S OPTION CERTIFICATE (the "Option Certificate")
certifies that for value received, EQUITY SERVICES, LTD. (the "Holder"), is the
owner of this option (the "Option"), which entitles the Holder thereof to
purchase, commencing June 30, 1999 and before the Expiration Date (as defined
below) One Hundred Eighty Nine Thousand Three Hundred Forty (189,340) shares
(the "Option Shares") of fully paid and non-assessable shares of the common
stock, $0.10 par value per share (the "Common Stock"), of MICRO-MEDIA
SOLUTIONS, INC., a Utah corporation (the "Company") at a purchase price of One
and 59/100 Dollars ($1.59) per Option Share (the "Strike Price"), in lawful
money of the United States of America by bank or certified check, subject to
adjustment as hereinafter provided.
n. OPTION; PURCHASE PRICE.
This Option shall entitle the Holder hereof to purchase the Option
Shares at the Strike Price. The Strike Price and the number of Option Shares
evidenced by this Option Certificate are subject to adjustment as provided in
Article 6.
o. EXERCISE; EXPIRATION DATE.
a. Exercise. This Option is exercisable, at the option of the Holder,
commencing on June 30, 1999, and before the Expiration Date (as defined below)
by delivering to the Company written notice of exercise (the "Exercise
Notice"), stating the number of Option Shares to be purchased thereby,
accompanied by bank or certified check payable to the order of the Company for
the Option Shares being purchased. Within ten (10) days of the Company's
receipt of the Exercise Notice accompanied by the consideration for the Option
Shares being purchased, the Company shall issue and deliver to the Holder a
certificate representing the Option Shares being purchased. In the case of
exercise for less than all of the Option Shares represented by this Option
Certificate, the
47
Company shall cancel this Option Certificate upon the surrender hereof and
shall execute and deliver a new Option Certificate for the remaining balance of
such Option Shares.
b. Termination. The term "Expiration Date" shall mean 5:00 p.m.,
Austin, Texas time, on June 30, 2004 or if such date in the State of Texas
shall be a holiday or a day on which banks are authorized to close, then 5:00
p.m., Austin, Texas time, the next following day which in the State of Texas is
not a holiday or a day on which banks are authorized to close.
p. RESTRICTIONS ON TRANSFER.
a. Restrictions. This Option, and the Option Shares or any other
security issuable upon exercise of this Option may not be assigned,
transferred, sold or otherwise disposed of unless (i) there is in effect a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering such sale, transfer or other disposition or (ii) the Holder furnishes
to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer or other disposition
may be effected without registration under the Act, as well as other
documentation incidental to such sale, transfer or other disposition as the
Company's counsel shall reasonably request.
b. Legend. Any Option Shares issued upon the exercise of this Option
shall bear a legend in substantially the form as follows:
"The shares evidenced by this certificate were issued upon
exercise of an Option and may not be sold, transferred or
otherwise disposed of in the absence of an effective
registration statement under the Securities Act of 1933 (the
"Act") or an opinion of counsel to the effect that the
proposed sale, transfer or disposition may be effectuated
without registration under the Act."
q. RESERVATION OF SHARES.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Option, such number of shares of Common Stock as
shall then be issuable upon the exercise of this Option. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of this
Option shall be duly and validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof.
r. LOSS OR MUTILATION.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Option Certificate and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to the Company, or
in the case of mutilation, upon surrender and cancellation of the mutilated
Option Certificate, the Company shall execute and deliver in lieu thereof, a
new Option Certificate representing an equal number of Option Shares
exercisable thereunder.
48
s. ANTI-DILUTION PROVISIONS.
a. Number of Option Shares. The number of shares of Common Stock and
the Strike Price per Option Share pursuant to this Option shall be subject to
adjustment from time to time as provided for in this Section 6(a).
Notwithstanding anything contained herein, the aggregate Strike Price for the
total number of Option Shares issuable pursuant to this Option shall remain
unchanged. In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares of Common Stock into a different number of
shares (i.e. forward or reverse stock split), (i) the number of shares which
the Holder of this Option shall have been entitled to purchase pursuant to this
Option shall be increased or decreased in direct proportion to such increase or
decrease of shares, as the case may be, and (ii) the Strike Price per Option
Share (but not the aggregate Strike Price) in effect immediately prior to such
change shall be increased or decreased in inverse proportion to such increase
or decrease of shares, as the case may be.
b. Fractional Shares. No certificate for fraction shares shall be
issued upon the exercise of this Option, but in lieu thereof the Company shall
purchase any such fractional shares calculated to the nearest cent.
c. Rights of the Holder. The Holder of this Option shall not be
entitled to any rights of a shareholder of the Company in respect of any Option
Shares purchasable upon the exercise hereof until such Option Shares have been
paid for in full and issued to it. The Holder of this Option shall be deemed to
be a shareholder of the Company from and after the time this Option is
exercised and the Option Shares therefor exercised have been paid for in full.
As soon as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, to the person or persons entitled to receive the
same.
t. REGISTRATION RIGHTS.
The Holder of this Option and the Option Shares issued upon exercise
of this Option will have registration rights beginning on the date of execution
of this Option Certificate. The terms of these registration rights shall be as
set forth in the Registration Rights Agreement by and between the Holder and
the Company, in substantially the form attached hereto as Exhibit "A".
u. REPRESENTATIONS AND WARRANTIES.
The Holder, by acceptance of this Option, represents and warrants to,
and covenants and agrees with, the Company as follows:
a. The Option is being acquired for the Holder's own account for
investment and not with a view toward resale or distribution of any part
thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same.
b. The Holder is an "accredited investor" within the meaning of Rule
501 of Regulation D under the Act.
49
c. The Holder (i) is not a citizen or resident of the United States of
America, (ii) is not an entity organized under any laws of any state of the
United States of America and (iii) does not have any offices in the United
States of America.
v. MISCELLANEOUS.
a. Transfer Taxes; Expenses of Registration. The Company shall bear
all expenses incurred in connection with each registration pursuant to this
Option Certificate, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holder shall bear and pay
the underwriting commissions and discounts applicable to the Option Shares
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Option Certificate. The Holder shall pay
any and all brokerage fees and transfer taxes incidental to the sale or
exercise of this Option or the sale of the underlying shares issuable
hereunder.
b. Notice. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9b.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Holder:
Equity Services, Ltd.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
50
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
c. Governing Law. This Option Certificate shall be governed by, and
construed in accordance with, the laws of the State of Texas, without reference
to its principles regarding conflicts of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be fully executed as of the date set forth below.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
XXXX XXXXXX, President
ATTEST: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: XXXXXXXX X. XXXXXXXX
Title: Secretary
Date: April , 1998
---
52
FORM OF EXERCISE OF OPTION
The undersigned hereby elects to exercise this Option as to shares of
Common Stock covered hereby. Enclosed herewith is a bank or certified check in
the amount of $ .
Date:
----------------- -----------------------------------
Name:
Address:
Signature
-----------------------------------
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
between Holder and the Company
53
THE OPTION REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. THIS OPTION MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT.
MICRO-MEDIA SOLUTIONS, INC.
PLACEMENT AGENT'S OPTION CERTIFICATE
THIS PLACEMENT AGENT'S OPTION CERTIFICATE (the "Option Certificate")
certifies that for value received, EQUITY SERVICES, LTD. (the "Holder"), is the
owner of this option (the "Option"), which entitles the Holder thereof to
purchase, commencing June 30, 1999 and before the Expiration Date (as defined
below) Sixty-One Thousand Five Hundred Ten (61,510) shares (the "Option
Shares") of fully paid and non-assessable shares of the common stock, $0.10 par
value per share (the "Common Stock"), of MICRO-MEDIA SOLUTIONS, INC., a Utah
corporation (the "Company") at a purchase price of One and 59/100 Dollars
($1.59) per Option Share (the "Strike Price"), in lawful money of the United
States of America by bank or certified check, subject to adjustment as
hereinafter provided.
w. OPTION; PURCHASE PRICE.
This Option shall entitle the Holder hereof to purchase the Option
Shares at the Strike Price. The Strike Price and the number of Option Shares
evidenced by this Option Certificate are subject to adjustment as provided in
Article 6.
x. EXERCISE; EXPIRATION DATE.
a. Exercise. This Option is exercisable, at the option of the Holder,
commencing on June 30, 1999, and before the Expiration Date (as defined below)
by delivering to the Company written notice of exercise (the "Exercise
Notice"), stating the number of Option Shares to be purchased thereby,
accompanied by bank or certified check payable to the order of the Company for
the Option Shares being purchased. Within ten (10) days of the Company's
receipt of the Exercise Notice accompanied by the consideration for the Option
Shares being purchased, the Company shall issue and deliver to the Holder a
certificate representing the Option Shares being purchased. In the case of
exercise for less than all of the Option Shares represented by this Option
Certificate, the
54
Company shall cancel this Option Certificate upon the surrender hereof and
shall execute and deliver a new Option Certificate for the remaining balance of
such Option Shares.
b. Termination. The term "Expiration Date" shall mean 5:00 p.m.,
Austin, Texas time, on June 30, 2004 or if such date in the State of Texas
shall be a holiday or a day on which banks are authorized to close, then 5:00
p.m., Austin, Texas time, the next following day which in the State of Texas is
not a holiday or a day on which banks are authorized to close.
y. RESTRICTIONS ON TRANSFER.
a. Restrictions. This Option, and the Option Shares or any other
security issuable upon exercise of this Option may not be assigned,
transferred, sold or otherwise disposed of unless (i) there is in effect a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering such sale, transfer or other disposition or (ii) the Holder furnishes
to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer or other disposition
may be effected without registration under the Act, as well as other
documentation incidental to such sale, transfer or other disposition as the
Company's counsel shall reasonably request.
b. Legend. Any Option Shares issued upon the exercise of this Option
shall bear a legend in substantially the form as follows:
"The shares evidenced by this certificate were issued upon
exercise of an Option and may not be sold, transferred or
otherwise disposed of in the absence of an effective
registration statement under the Securities Act of 1933 (the
"Act") or an opinion of counsel to the effect that the
proposed sale, transfer or disposition may be effectuated
without registration under the Act."
z. RESERVATION OF SHARES.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Option, such number of shares of Common Stock as
shall then be issuable upon the exercise of this Option. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of this
Option shall be duly and validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof.
aa. LOSS OR MUTILATION.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Option Certificate and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to the Company, or
in the case of mutilation, upon surrender and cancellation of the mutilated
Option Certificate, the Company shall execute and deliver in lieu thereof, a
new Option Certificate representing an equal number of Option Shares
exercisable thereunder.
55
bb. ANTI-DILUTION PROVISIONS.
a. Number of Option Shares. The number of shares of Common Stock and
the Strike Price per Option Share pursuant to this Option shall be subject to
adjustment from time to time as provided for in this Section 6(a).
Notwithstanding anything contained herein, the aggregate Strike Price for the
total number of Option Shares issuable pursuant to this Option shall remain
unchanged. In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares of Common Stock into a different number of
shares (i.e. forward or reverse stock split), (i) the number of shares which
the Holder of this Option shall have been entitled to purchase pursuant to this
Option shall be increased or decreased in direct proportion to such increase or
decrease of shares, as the case may be, and (ii) the Strike Price per Option
Share (but not the aggregate Strike Price) in effect immediately prior to such
change shall be increased or decreased in inverse proportion to such increase
or decrease of shares, as the case may be.
b. Fractional Shares. No certificate for fraction shares shall be
issued upon the exercise of this Option, but in lieu thereof the Company shall
purchase any such fractional shares calculated to the nearest cent.
c. Rights of the Holder. The Holder of this Option shall not be
entitled to any rights of a shareholder of the Company in respect of any Option
Shares purchasable upon the exercise hereof until such Option Shares have been
paid for in full and issued to it. The Holder of this Option shall be deemed to
be a shareholder of the Company from and after the time this Option is
exercised and the Option Shares therefor exercised have been paid for in full.
As soon as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, to the person or persons entitled to receive the
same.
cc. REGISTRATION RIGHTS.
The Holder of this Option and the Option Shares issued upon exercise
of this Option will have registration rights beginning on the date of execution
of this Option Certificate. The terms of these registration rights shall be as
set forth in the Registration Rights Agreement by and between the Holder and
the Company, in substantially the form attached hereto as Exhibit "A".
dd. REPRESENTATIONS AND WARRANTIES.
The Holder, by acceptance of this Option, represents and warrants to,
and covenants and agrees with, the Company as follows:
a. The Option is being acquired for the Holder's own account for
investment and not with a view toward resale or distribution of any part
thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same.
b. The Holder is an "accredited investor" within the meaning of Rule
501 of Regulation D under the Act.
c. The Holder (i) is not a citizen or resident of the United States of
America, (ii) is not an entity organized under any laws of any state of the
United States of America and (iii) does not have any offices in the United
States of America.
56
ee. MISCELLANEOUS.
a. Transfer Taxes; Expenses of Registration. The Company shall bear
all expenses incurred in connection with each registration pursuant to this
Option Certificate, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holder shall bear and pay
the underwriting commissions and discounts applicable to the Option Shares
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Option Certificate. The Holder shall pay
any and all brokerage fees and transfer taxes incidental to the sale or
exercise of this Option or the sale of the underlying shares issuable
hereunder.
b. Notice. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9b.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Holder:
Equity Services, Ltd.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
57
with a copy (which shall not constitute notice) to:
Gardere & Xxxxx, L.L.P.
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
c. Governing Law. This Option Certificate shall be governed by, and
construed in accordance with, the laws of the State of Texas, without reference
to its principles regarding conflicts of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
58
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be fully executed as of the date set forth below.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
XXXX XXXXXX, President
ATTEST:/s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: XXXXXXXX X. XXXXXXXX
Title: Secretary
Date: June , 1998
----
59
FORM OF EXERCISE OF OPTION
The undersigned hereby elects to exercise this Option as to shares of
Common Stock covered hereby. Enclosed herewith is a bank or certified check in
the amount of $ .
Date:
----------------- -----------------------------------
Name:
Address:
Signature
-----------------------------------
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
between Holder and the Company
60
THE OPTION REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. THIS OPTION MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT.
MICRO-MEDIA SOLUTIONS, INC.
PLACEMENT AGENT'S OPTION CERTIFICATE
THIS PLACEMENT AGENT'S OPTION CERTIFICATE (the "Option Certificate")
certifies that for value received, EQUITY SERVICES, LTD. (the "Holder"), is the
owner of this option (the "Option"), which entitles the Holder thereof to
purchase, commencing June 30, 1999 and before the Expiration Date (as defined
below) Five Thousand (5,000) shares (the "Option Shares") of fully paid and
non-assessable shares of the common stock, $0.10 par value per share (the
"Common Stock"), of MICRO-MEDIA SOLUTIONS, INC., a Utah corporation (the
"Company") at a purchase price of One and 59/100 Dollars ($1.59) per Option
Share (the "Strike Price"), in lawful money of the United States of America by
bank or certified check, subject to adjustment as hereinafter provided.
ff. OPTION; PURCHASE PRICE.
This Option shall entitle the Holder hereof to purchase the Option
Shares at the Strike Price. The Strike Price and the number of Option Shares
evidenced by this Option Certificate are subject to adjustment as provided in
Article 6.
gg. EXERCISE; EXPIRATION DATE.
a. Exercise. This Option is exercisable, at the option of the Holder,
commencing on June 30, 1999, and before the Expiration Date (as defined below)
by delivering to the Company written notice of exercise (the "Exercise
Notice"), stating the number of Option Shares to be purchased thereby,
accompanied by bank or certified check payable to the order of the Company for
the Option Shares being purchased. Within ten (10) days of the Company's
receipt of the Exercise Notice accompanied by the consideration for the Option
Shares being purchased, the Company shall issue and deliver to the Holder a
certificate representing the Option Shares being purchased. In the case of
exercise for less than all of the Option Shares represented by this Option
Certificate, the
61
Company shall cancel this Option Certificate upon the surrender hereof and
shall execute and deliver a new Option Certificate for the remaining balance of
such Option Shares.
b. Termination. The term "Expiration Date" shall mean 5:00 p.m.,
Austin, Texas time, on June 30, 2004 or if such date in the State of Texas
shall be a holiday or a day on which banks are authorized to close, then 5:00
p.m., Austin, Texas time, the next following day which in the State of Texas is
not a holiday or a day on which banks are authorized to close.
hh. RESTRICTIONS ON TRANSFER.
a. Restrictions. This Option, and the Option Shares or any other
security issuable upon exercise of this Option may not be assigned,
transferred, sold or otherwise disposed of unless (i) there is in effect a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering such sale, transfer or other disposition or (ii) the Holder furnishes
to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer or other disposition
may be effected without registration under the Act, as well as other
documentation incidental to such sale, transfer or other disposition as the
Company's counsel shall reasonably request.
b. Legend. Any Option Shares issued upon the exercise of this Option
shall bear a legend in substantially the form as follows:
"The shares evidenced by this certificate were issued upon
exercise of an Option and may not be sold, transferred or
otherwise disposed of in the absence of an effective
registration statement under the Securities Act of 1933 (the
"Act") or an opinion of counsel to the effect that the
proposed sale, transfer or disposition may be effectuated
without registration under the Act."
ii. RESERVATION OF SHARES.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Option, such number of shares of Common Stock as
shall then be issuable upon the exercise of this Option. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of this
Option shall be duly and validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof.
jj. LOSS OR MUTILATION.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Option Certificate and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to the Company, or
in the case of mutilation, upon surrender and cancellation of the mutilated
Option Certificate, the Company shall execute and deliver in lieu thereof, a
new Option Certificate representing an equal number of Option Shares
exercisable thereunder.
62
kk. ANTI-DILUTION PROVISIONS.
a. Number of Option Shares. The number of shares of Common Stock and
the Strike Price per Option Share pursuant to this Option shall be subject to
adjustment from time to time as provided for in this Section 6(a).
Notwithstanding anything contained herein, the aggregate Strike Price for the
total number of Option Shares issuable pursuant to this Option shall remain
unchanged. In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares of Common Stock into a different number of
shares (i.e. forward or reverse stock split), (i) the number of shares which
the Holder of this Option shall have been entitled to purchase pursuant to this
Option shall be increased or decreased in direct proportion to such increase or
decrease of shares, as the case may be, and (ii) the Strike Price per Option
Share (but not the aggregate Strike Price) in effect immediately prior to such
change shall be increased or decreased in inverse proportion to such increase
or decrease of shares, as the case may be.
b. Fractional Shares. No certificate for fraction shares shall be
issued upon the exercise of this Option, but in lieu thereof the Company shall
purchase any such fractional shares calculated to the nearest cent.
c. Rights of the Holder. The Holder of this Option shall not be
entitled to any rights of a shareholder of the Company in respect of any Option
Shares purchasable upon the exercise hereof until such Option Shares have been
paid for in full and issued to it. The Holder of this Option shall be deemed to
be a shareholder of the Company from and after the time this Option is
exercised and the Option Shares therefor exercised have been paid for in full.
As soon as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, to the person or persons entitled to receive the
same.
ll. REGISTRATION RIGHTS.
The Holder of this Option and the Option Shares issued upon exercise
of this Option will have registration rights beginning on the date of execution
of this Option Certificate. The terms of these registration rights shall be as
set forth in the Registration Rights Agreement by and between the Holder and
the Company, in substantially the form attached hereto as Exhibit "A".
mm. REPRESENTATIONS AND WARRANTIES.
The Holder, by acceptance of this Option, represents and warrants to,
and covenants and agrees with, the Company as follows:
a. The Option is being acquired for the Holder's own account for
investment and not with a view toward resale or distribution of any part
thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same.
b. The Holder is an "accredited investor" within the meaning of Rule
501 of Regulation D under the Act.
c. The Holder (i) is not a citizen or resident of the United States of
America, (ii) is not an entity organized under any laws of any state of the
United States of America and (iii) does not have any offices in the United
States of America.
63
nn. MISCELLANEOUS.
a. Transfer Taxes; Expenses of Registration. The Company shall bear
all expenses incurred in connection with each registration pursuant to this
Option Certificate, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holder shall bear and pay
the underwriting commissions and discounts applicable to the Option Shares
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Option Certificate. The Holder shall pay
any and all brokerage fees and transfer taxes incidental to the sale or
exercise of this Option or the sale of the underlying shares issuable
hereunder.
b. Notice. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9b.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Holder:
Equity Services, Ltd.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
64
with a copy (which shall not constitute notice) to:
Gardere & Xxxxx, L.L.P.
3000 Thanksgiving Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
c. Governing Law. This Option Certificate shall be governed by, and
construed in accordance with, the laws of the State of Texas, without reference
to its principles regarding conflicts of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
65
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be fully executed as of the date set forth below.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxx
----------------------------------------
XXXX XXXXXX, President
ATTEST: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------------------
Name: XXXXXXXX X. XXXXXXXX
Title: Secretary
Date: June , 1998
-----
66
FORM OF EXERCISE OF OPTION
The undersigned hereby elects to exercise this Option as to shares of
Common Stock covered hereby. Enclosed herewith is a bank or certified check in
the amount of $ .
Date:
----------------- -----------------------------------
Name:
Address:
Signature
-----------------------------------
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
between Holder and the Company
67
THE OPTION REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. THIS OPTION MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
UNDER THE ACT.
MICRO-MEDIA SOLUTIONS, INC.
PLACEMENT AGENT'S OPTION CERTIFICATE
THIS PLACEMENT AGENT'S OPTION CERTIFICATE (the "Option Certificate")
certifies that for value received, EQUITY SERVICES, LTD. (the "Holder"), is the
owner of this option (the "Option"), which entitles the Holder thereof to
purchase, commencing June 30, 1999 and before the Expiration Date (as defined
below) One Hundred Eighty Nine Thousand Three Hundred Forty (189,340) shares
(the "Option Shares") of fully paid and non-assessable shares of the common
stock, $0.10 par value per share (the "Common Stock"), of MICRO-MEDIA
SOLUTIONS, INC., a Utah corporation (the "Company") at a purchase price of One
and 59/100 Dollars ($1.59) per Option Share (the "Strike Price"), in lawful
money of the United States of America by bank or certified check, subject to
adjustment as hereinafter provided.
oo. OPTION; PURCHASE PRICE.
This Option shall entitle the Holder hereof to purchase the Option
Shares at the Strike Price. The Strike Price and the number of Option Shares
evidenced by this Option Certificate are subject to adjustment as provided in
Article 6.
pp. EXERCISE; EXPIRATION DATE.
a. Exercise. This Option is exercisable, at the option of the Holder,
commencing on June 30, 1999, and before the Expiration Date (as defined below)
by delivering to the Company written notice of exercise (the "Exercise
Notice"), stating the number of Option Shares to be purchased thereby,
accompanied by bank or certified check payable to the order of the Company for
the Option Shares being purchased. Within ten (10) days of the Company's
receipt of the Exercise Notice accompanied by the consideration for the Option
Shares being purchased, the Company shall issue and deliver to the Holder a
certificate representing the Option Shares being purchased. In the case of
exercise for less than all of the Option Shares represented by this Option
Certificate, the
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Company shall cancel this Option Certificate upon the surrender hereof and
shall execute and deliver a new Option Certificate for the remaining balance of
such Option Shares.
b. Termination. The term "Expiration Date" shall mean 5:00 p.m.,
Austin, Texas time, on June 30, 2004 or if such date in the State of Texas
shall be a holiday or a day on which banks are authorized to close, then 5:00
p.m., Austin, Texas time, the next following day which in the State of Texas is
not a holiday or a day on which banks are authorized to close.
qq. RESTRICTIONS ON TRANSFER.
a. Restrictions. This Option, and the Option Shares or any other
security issuable upon exercise of this Option may not be assigned,
transferred, sold or otherwise disposed of unless (i) there is in effect a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering such sale, transfer or other disposition or (ii) the Holder furnishes
to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer or other disposition
may be effected without registration under the Act, as well as other
documentation incidental to such sale, transfer or other disposition as the
Company's counsel shall reasonably request.
b. Legend. Any Option Shares issued upon the exercise of this Option
shall bear a legend in substantially the form as follows:
"The shares evidenced by this certificate were issued upon
exercise of an Option and may not be sold, transferred or
otherwise disposed of in the absence of an effective
registration statement under the Securities Act of 1933 (the
"Act") or an opinion of counsel to the effect that the
proposed sale, transfer or disposition may be effectuated
without registration under the Act."
rr. RESERVATION OF SHARES.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Option, such number of shares of Common Stock as
shall then be issuable upon the exercise of this Option. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of this
Option shall be duly and validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof.
ss. LOSS OR MUTILATION.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Option Certificate and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to the Company, or
in the case of mutilation, upon surrender and cancellation of the mutilated
Option Certificate, the Company shall execute and deliver in lieu thereof, a
new Option Certificate representing an equal number of Option Shares
exercisable thereunder.
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tt. ANTI-DILUTION PROVISIONS.
a. Number of Option Shares. The number of shares of Common Stock and
the Strike Price per Option Share pursuant to this Option shall be subject to
adjustment from time to time as provided for in this Section 6(a).
Notwithstanding anything contained herein, the aggregate Strike Price for the
total number of Option Shares issuable pursuant to this Option shall remain
unchanged. In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares of Common Stock into a different number of
shares (i.e. forward or reverse stock split), (i) the number of shares which
the Holder of this Option shall have been entitled to purchase pursuant to this
Option shall be increased or decreased in direct proportion to such increase or
decrease of shares, as the case may be, and (ii) the Strike Price per Option
Share (but not the aggregate Strike Price) in effect immediately prior to such
change shall be increased or decreased in inverse proportion to such increase
or decrease of shares, as the case may be.
b. Fractional Shares. No certificate for fraction shares shall be
issued upon the exercise of this Option, but in lieu thereof the Company shall
purchase any such fractional shares calculated to the nearest cent.
c. Rights of the Holder. The Holder of this Option shall not be
entitled to any rights of a shareholder of the Company in respect of any Option
Shares purchasable upon the exercise hereof until such Option Shares have been
paid for in full and issued to it. The Holder of this Option shall be deemed to
be a shareholder of the Company from and after the time this Option is
exercised and the Option Shares therefor exercised have been paid for in full.
As soon as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, to the person or persons entitled to receive the
same.
uu. REGISTRATION RIGHTS.
The Holder of this Option and the Option Shares issued upon exercise
of this Option will have registration rights beginning on the date of execution
of this Option Certificate. The terms of these registration rights shall be as
set forth in the Registration Rights Agreement by and between the Holder and
the Company, in substantially the form attached hereto as Exhibit "A".
vv. REPRESENTATIONS AND WARRANTIES.
The Holder, by acceptance of this Option, represents and warrants to,
and covenants and agrees with, the Company as follows:
a. The Option is being acquired for the Holder's own account for
investment and not with a view toward resale or distribution of any part
thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same.
b. The Holder is an "accredited investor" within the meaning of Rule
501 of Regulation D under the Act.
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c. The Holder (i) is not a citizen or resident of the United States of
America, (ii) is not an entity organized under any laws of any state of the
United States of America and (iii) does not have any offices in the United
States of America.
ww. MISCELLANEOUS.
a. Transfer Taxes; Expenses of Registration. The Company shall bear
all expenses incurred in connection with each registration pursuant to this
Option Certificate, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holder shall bear and pay
the underwriting commissions and discounts applicable to the Option Shares
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Option Certificate. The Holder shall pay
any and all brokerage fees and transfer taxes incidental to the sale or
exercise of this Option or the sale of the underlying shares issuable
hereunder.
b. Notice. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9b.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Holder:
Equity Services, Ltd.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
71
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
c. Governing Law. This Option Certificate shall be governed by, and
construed in accordance with, the laws of the State of Texas, without reference
to its principles regarding conflicts of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be fully executed as of the date set forth below.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxx
----------------------------------------
XXXX XXXXXX, President
ATTEST: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------------------
Name: XXXXXXXX X. XXXXXXXX
Title: Secretary
Date: April 30, 1998
73
FORM OF EXERCISE OF OPTION
The undersigned hereby elects to exercise this Option as to shares of
Common Stock covered hereby. Enclosed herewith is a bank or certified check in
the amount of $ .
Date:
----------------- -----------------------------------
Name:
Address:
Signature
-----------------------------------
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
between Holder and the Company
