EXHIBIT 2.2
EXCHANGE AGREEMENT
Exchange Agreement, dated as of September 17, 2003 (the
"Agreement"), by and among Access Integrated Technologies, Inc., a Delaware
corporation (the "Company"), and MidMark Equity Partners II, L.P., a Delaware
limited partnership ("MidMark").
WHEREAS, the Company is contemplating an initial public
offering (the "Offering") of its shares of Class A Common Stock, $.001 par value
(the "Class A Common Stock"), pursuant to a registration statement on Form SB-2
filed with the Securities and Exchange Commission (the "SEC") on August 6, 2003;
and as may be amended from time to time prior to being declared effective by the
SEC (the "Registration Statement") and
WHEREAS, the parties hereto are parties to a Preferred Stock
and Warrant Purchase Agreement dated October 19, 2001 and a Preferred Stock and
Warrant Purchase Agreement dated November 27, 2002 (together, the "Purchase
Agreements"); and
WHEREAS, pursuant to the Purchase Agreements, MidMark acquired
from the Company, in the aggregate, 3,226,538 shares of Series A 8% Cumulative
Convertible Preferred Stock, $.001 par value (the "Series A Preferred Stock")
and 4,976,391 shares of Series B 8% Cumulative Convertible Preferred Stock,
$.001 par value (the "Series B Preferred Stock;" together with the Series A
Preferred Stock, the "Preferred Stock"), of the Company and four contingent
warrants: (1) the Contingent Warrant dated October 19, 2001 to purchase up to
2,151,025 shares of Class A Common Stock (the "2001 Contingent Warrant"); (2)
Contingent Warrant A dated November 27, 2002 to purchase up to 1,909,545 shares
of Class A Common Stock ("Contingent Warrant A"); (3) Contingent Warrant B dated
November 27, 2002 to purchase up to 723,313 shares of Class A Common Stock
("Contingent Warrant B"); and (4) Contingent Warrant C dated November 27, 2002
to purchase up to 502,003 shares of Class A Common Stock ("Contingent Warrant
C") (collectively, the "Contingent Warrants"); and
WHEREAS, the proposed managing underwriter for the Offering
has requested that, in connection with (and contingent upon the closing of) the
Offering, (i) the Preferred Stock held by MidMark be converted by MidMark into
an identical number of shares of Class A Common Stock in accordance with the
terms thereof; (ii) that Contingent Warrant B be exercised in full in accordance
with its terms (the parties agreeing that all conditions to exercise thereof
have been met); and (iii) that the 2001 Contingent Warrant, Contingent Warrant A
and Contingent Warrant C be exchanged for an aggregate of 1,600,000 shares of
Class A Common Stock; and
WHEREAS, the above-referenced changes to the Company's capital
structure are intended to constitute a recapitalization pursuant to Section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to facilitate the Offering
by undertaking the steps described above.
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, agree as follows:
1. Conversion of Preferred Stock and Payment of Accrued
Dividends.
A. Effective upon the closing of the Offering, each share of
Preferred Stock held by MidMark shall be converted into one fully paid
and non-assessable share of Class A Common Stock, in the same manner as
if such shares were being voluntarily converted in accordance with
Article NINTH, Section (B) of the Company's Third Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation")
(except that instead of having shares of Series A Preferred Stock
converted into shares of Class C Common Stock and shares of Series B
Preferred Stock converted into shares of Class D Common Stock, all such
shares of Preferred Stock shall be converted into shares of Class A
Common Stock).
B. In accordance with Article SEVENTH, Section (a) of the
Certificate of Incorporation, all accrued and unpaid dividends on the
shares of Preferred Stock so converted shall be payable upon the
effectiveness of such conversion, at the option of the Company, in the
form of cash and/or additional shares of Class A Common Stock, with the
Class A Common Stock valued for this purpose at the Offering price.
C. MidMark hereby acknowledges and agrees that, in connection
with MidMark's conversion of each of its shares of the Series A
Preferred Stock and Series B Preferred Stock and the Company's payment
of all accrued and unpaid dividends on shares of the Preferred Stock,
the Company may, as described in the Registration Statement, amend the
Certificate of Incorporation to eliminate the designations for the
Series A Preferred Stock, the Series B Preferred Stock and the Class C
Common Stock, par value $.001 and the Class D Common Stock, par value
$.001, into which such Preferred Stock is convertible.
2. Cashless Exercise of Contingent Warrant B. Effective upon
the closing of the Offering, Contingent Warrant B shall be deemed to
have been exercised by MidMark in full pursuant to the cashless
exercise option set forth in Section 2(b) (iv) thereof, and the Company
shall issue to MidMark 716,080 fully paid and non-assessable shares of
Class A Common Stock.
3. Exchange of 2001 Contingent Warrant, Contingent Warrant A
and Contingent Warrant C. Effective upon the closing of the Offering,
the 2001 Contingent Warrant, Contingent Warrant A and Contingent
Warrant C shall be exchanged for an aggregate of 1,600,000 shares of
Class A Common Stock and the Company shall issue to MidMark that number
of fully paid and non-assessable shares of Class A Common Stock. In
connection with the issuance of such shares, MidMark shall return each
of the 2001 Contingent Warrant, Contingent Warrant A and Contingent
Warrant C.
4. Representations and Warranties.
4.1 MidMark represents and warrants to the Company as follows:
2
a. MidMark is an "accredited investor" as defined under
Regulation D promulgated under the Securities Act of 1933, as amended, and is
acquiring the shares of Class A Common Stock to be received by it in connection
with the transactions contemplated hereby for its own account, for investment
and not with a view to, or for sale in connection with, any distribution
thereof. MidMark has no present intention of distributing or reselling any of
the shares of Class A Common Stock that it receives in connection with the
transactions contemplated hereby.
b. MidMark, in making the decision to enter into this
Agreement, has not relied upon any representations or warranties, express or
implied, except for the representations and warranties expressly set forth in
this Agreement; and MidMark has been provided by the Company with such access to
the books and records and personnel and other representatives of the Company and
to such other information as MidMark has requested in order to make an informed
decision as to the advisability of participating in the transactions
contemplated hereby.
4.2 The Company represents and warrants to MidMark that:
a. The Company is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware.
b. The shares of Class A Common Stock to be issued in
connection with the transactions contemplated hereby have been duly authorized
and, when so issued, will be fully paid and non-assessable and free and clear of
any lien, claim or right of any other person.
c. The Company has all requisite power and authority and
all necessary licenses, permits, franchises and other governmental
authorizations necessary to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, except where the
failure to do so would not have a material adverse effect on the business,
assets, financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
d. This Agreement and the transactions contemplated hereby
have been duly authorized by all necessary corporate and stockholder action of
the Company. Neither this Agreement nor any of the transactions contemplated
hereby conflicts with or violates (i) any provision of the Certificate of
Incorporation or the By-laws of the Company, as of the date hereof or as amended
as described in the Registration Statement; (ii) any agreement by which the
Company, any subsidiary of the Company or any of its or their respective
properties is bound in any manner that, individually or in the aggregate, would
have a material adverse effect on the business, assets, financial condition or
results of operations of the Company and its subsidiaries taken as a whole;
(iii) any federal or state law, rule or regulation or judicial order; or (iv)
any local law, rule or regulations in any manner that, individually or in the
aggregate, would have material adverse effect on the business, assets, financial
condition or results of operations of the Company and its subsidiaries taken as
a whole. This Agreement is binding on the Company and enforceable against the
Company in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, moratorium, fraudulent transfer, preference and other
laws and equitable principles affecting the scope and enforcement of creditors'
rights generally, and are also limited by MidMark's implied covenants of good
faith, fair dealing and commercially reasonable conduct, and by the effects of
judicial discretion on the availability of remedies and realization of benefits
under and enforceability of this Agreement in all respects as written.
3
e. No consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority or any other
person on the part of the Company is required in connection with the execution,
delivery and performance of this Agreement or the issuance of the shares of
Class A Common Stock pursuant to this Agreement.
f. If, prior to the occurrence of the transactions
contemplated hereby, the Company reduces the number of shares of its Class A
Common Stock by means of a one-for-five reverse stock split as described in the
Registration Statement, then the number of shares of Class A Common Stock to be
issued as a result of the transactions contemplated hereby, and the exercise
price per share of the warrants, shall be proportionately adjusted.
5. Tax Treatment. The exchange of stock and stock rights for
Class A Common Stock of the Company described in this Agreement is intended to
constitute a recapitalization under Section 368(a)(1)(E) of the Code and the
Treasury Regulations promulgated thereunder (the "Regulations"). Consistent with
this characterization, this Agreement shall be deemed to constitute a "plan of
reorganization" within the meaning of Code Section 368(a) and Regulations
Section 1.368-2(g).
6. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof.
Any changes in or additions to this Agreement may be made only upon the written
consent of all parties hereto.
7. Successors. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
8. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the state of Delaware without regard to
any of its principles of conflicts of laws.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
4
IN WITNESS WHEREOF, the parties hereto have executed this
Exchange Agreement as of the date first set forth above.
ACCESS INTEGRATED TECHNOLOGIES, INC.
By: _______________________________________
A. Xxxx Xxxx,
President
MIDMARK EQUITY PARTNERS II, L.P.
By: MIDMARK ADVISERS II, LLC
General Partner
By: _______________________________________
5
