EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT (the "Agreement") dated as of March 2,
2005, by and among Media Sciences International, Inc., a Delaware corporation
(the "Seller"), and MicroCapital Fund LP, a Delaware limited partnership, and
MicroCapital Fund Ltd., a Cayman Islands corporation (individually a "Purchaser"
and collectively the "Purchasers").
WITNESSETH:
WHEREAS, the Seller desires to sell to the Purchasers and the Purchasers
desire to purchase an aggregate of 500,000 shares of Seller's Common Stock, par
value $0.01 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
Article I - Purchase and Sale
1.1 Purchase and Sale. On the terms and subject to the conditions set
forth in this Agreement, at the Closing (as defined in Section 1.3), the Seller
will sell, assign, transfer and deliver and Purchasers will purchase an
aggregate of 500,000 shares of Seller's Common Stock (the "Shares") (of which
375,000 shares are being purchased by MicroCapital Fund LP and 125,000 shares
are being purchased by MicroCapital Fund Ltd.) for the purchase price set forth
in Section 1.2.
1.2 Purchase Price. The aggregate consideration (the "Purchase Price") to
be paid by Purchasers for the sale, assignment, transfer and delivery of the
Shares by the Seller to Purchaser as provided herein shall be in the aggregate
One Million Dollars ($1,000,000) paid to the Seller in cash by cashier or bank
check or wire transfer of immediately available funds.
1.3 The Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Law Offices of Xxx Xxxxxxx, 00
Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m. local time on March
2, 2005 (the "Closing Date"), or such other time, date and place as the parties
may agree in writing, provided that all conditions to the Closing have been
satisfied or waived in writing.
1.4 Deliveries.
(a) Deliveries by the Seller. At the Closing, the Seller shall deliver
or cause to be delivered to Purchasers the following:
(1) Irrevocable instruction letter to the Company's transfer
agent, accompanied by an appropriate legal opinion, for the issuance
of two common stock certificates evidencing in the aggregate 500,000
Shares of Common Stock, duly authorized, issued, fully paid and
non-assessable, registered in the name of the respective Purchaser;
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(2) The Registration Rights Agreement, in the form attached
hereto as Exhibit A (the "Registration Rights Agreement"), duly
executed by the Seller.
(3) A legal opinion of Law Offices of Xxx Xxxxxxx ("Seller's
Counsel"), counsel to the Seller, in form and substance satisfactory
to the Purchasers.
(4) A certificate of the Secretary of the Seller (the
"Secretary's Certificate"), in form and substance satisfactory to the
Purchasers, certifying as follows:
(i) that attached to the Secretary's Certificate is a true
and complete copy of the Certificate of Incorporation of the
Seller, as amended to date, including all certificates of
designation and documents or instruments amending or restating
the Certificate of Incorporation of the Seller;
(ii) that a true copy of the Bylaws of the Seller, as
amended to the date hereof, is attached to the Secretary's
Certificate;
(iii) that attached thereto are true and complete copies of
the resolutions of the Board of Directors of the Seller (A)
authorizing the execution, delivery and performance of this
Agreement and the Registration Rights Agreement, instruments and
certificates required to be executed by it in connection herewith
and approving the consummation of the transactions in the manner
contemplated hereby including, but not limited to, the
authorization and issuance of the Common Stock; and
(iv) at the Closing, that the representations and warranties
herein are true and complete as of the date thereof, and that
there has not occurred any event which has had a Material Adverse
Effect on the Seller or any Subsidiary;.
(b) Deliveries by the Purchasers. At the Closing, Purchasers shall
deliver or cause to be delivered to the Seller payment of the Purchase
Price in cash by either (x) wire transfer of immediately available funds to
an account designated in writing by Seller prior to the date hereof, or (y)
bank or cashier's check; (ii) an executed copy of this Agreement; and (iii)
an executed copy of the Registration Rights Agreement.
Article II - Representations And Warranties of The Seller
The Seller represents and warrants to the Purchasers as follows:
2.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
Seller is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Seller is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it or in which the transaction of its
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business makes such qualification necessary, except where the failure to be so
qualified or to be in good standing would not have a material adverse effect on
the business, results of operations or financial condition of Seller and its
subsidiaries taken as a whole (a "Material Adverse Effect. Each of Seller's
subsidiaries ("Subsidiaries") is a corporation, partnership or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization, has the corporate or
partnership power and authority to own its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing in each jurisdiction in which the ownership of its property
or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not have a Material Adverse Effect on Seller. Neither Seller nor any
Subsidiary is in violation in any material respect of any order of any court,
governmental authority or arbitration board or tribunal, or any law, ordinance,
governmental rule or regulation to which Seller or any of its Subsidiaries or
any of their respective properties or assets is subject. Seller and its
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations in
connection with their business as now conducted. The copies of Seller's
Certificate of Incorporation and Bylaws delivered to Purchasers in connection
herewith are true and correct.
2.2 Authorization, Validity and Effect of Agreements. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby and to perform its
obligations hereunder and thereunder. The consummation by Seller of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto for value
received) will constitute, the valid and legally binding obligations of Seller,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
2.3 Capitalization. The authorized capital stock of Seller consists of
20,000,000 shares of Common Stock, $0.001 par value ("Seller Common Stock"), and
5,000,000 shares of Preferred Stock, $0.001 par value ("Seller Preferred
Stock"). As of January 8, 2005, there were 10,048,544 shares of Seller's Common
Stock and zero shares of Seller Preferred Stock, issued and outstanding. Seller
has no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Seller on any
matter, other than outstanding warrants and options (including out-of-the-money
warrants and options) to purchase up to 2,263,939 shares of common stock. All
issued and outstanding shares of Seller Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
2.4 Subsidiaries. Seller owns directly or indirectly all of the
outstanding shares of capital stock or membership or partnership interests of
each of Seller's Subsidiaries. As applicable, each of the outstanding shares of
capital stock of each of Seller's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and each share or interest is owned,
directly or indirectly, by Seller free and clear of all liens, pledges, security
interests, claims or other encumbrances other than liens imposed by local law
which are not material. The name and
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jurisdiction of incorporation of each Subsidiary of Seller are: Cadapult Graphic
Systems, Inc., a New Jersey corporation; and Media Sciences, Inc., a New Jersey
corporation.
2.5 Other Interests. Except for interests in the Seller Subsidiaries,
neither Seller nor any Seller Subsidiary owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation, partnership,
joint venture, business, trust or entity (other than investments in short-term
investment securities and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into in the ordinary
course of business).
2.6 No Violation. Neither the execution and delivery by Seller of this
Agreement, nor the consummation by Seller of the transactions contemplated
hereby in accordance with the terms hereof, will: (i) conflict with or result in
a breach of any provisions of the Certificate of Incorporation or Bylaws of
Seller; (ii) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the creation of any lien, security interest, charge or encumbrance upon any
of the material properties of Seller or its Subsidiaries under, or result in
being declared void, voidable, or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any material license, franchise, permit, lease, contract, agreement or
other instrument, preemptive right, commitment or obligation to which Seller or
any of its Subsidiaries is a party, or by which Seller or any of its
Subsidiaries or any of their respective properties is bound or affected; or
(iii) require any material consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority.
2.7 SEC Documents. Seller has delivered (incorporated by reference to the
Seller's filings as reported on the SEC's web site) to Purchasers each
registration statement, report, proxy statement or information statement
prepared and filed with the Securities and Exchange Commission by it since June
30, 2004, including, without limitation, its Annual Report on Form 10-KSB for
the year ended June 30, 2004, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Seller Reports"). As
of their respective dates, the Seller Reports (i) complied as to form in all
material respects with the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each of the consolidated balance
sheets included in or incorporated by reference into the Seller Reports
(including the related notes and schedules) fairly presents, in all material
respects, the consolidated financial position of Seller and its Subsidiaries as
of its date, and each of the consolidated statements of income, retained
earnings and cash flows included in or incorporated by reference into the Seller
Reports (together with the related notes and schedules) fairly presents, in all
material respects, the results of operations, retained earnings or cash flows,
as the case may be, of Seller and its Subsidiaries for the periods set forth
therein (subject to the lack of footnote disclosure and normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance with generally
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accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. Except as and to the extent set forth in the
consolidated balance sheet of Seller and its Subsidiaries at June 30, 2004,
including all notes thereto, or as set forth in the Seller Reports, neither
Seller nor any of its Subsidiaries has any material liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of Seller
or in the notes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except liabilities arising in the
ordinary course of business since such date.
2.8 Litigation. There are no actions, suits or proceedings pending against
Seller or its Subsidiaries or, to the knowledge of Seller, threatened against
Seller or any of its Subsidiaries, at law or in equity, or before or by any
federal or state commission, board, bureau, agency or instrumentality, that are
reasonably likely to have a Seller Material Adverse Effect.
2.9 Absence of Certain Changes. Since June 30, 2004, Seller has conducted
its business only in the ordinary course of such business, and, other than as
set forth in the Seller Reports, there has not been (i) any Seller Material
Adverse Effect; (ii) any declaration, setting aside or payment of any dividend
or other distribution with respect to its capital stock; or (iii) any material
change in its accounting principles, practices or methods.
2.10 Taxes. Seller and each of its Subsidiaries (i) have timely filed all
material federal, state and foreign tax returns required to be filed by any of
them for tax years ended prior to the date of this Agreement or requests for
extensions have been timely filed and any such request shall have been granted
and not expired, and all such returns are complete in all material respects,
(ii) have paid or accrued all taxes shown to be due and payable on such returns,
(iii) have properly accrued all such taxes for such periods subsequent to the
periods covered by such returns, and (iv) have no "open" years for federal
income tax returns.
2.11 Labor Matters. Neither Seller nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the actual
knowledge of the executive officers of Seller, threatened against Seller or its
Subsidiaries relating to their business. To the actual knowledge of the
executive officers of Seller, there are no organizational efforts with respect
to the formation of a collective bargaining unit presently being made or
threatened involving employees of Seller or any of its Subsidiaries.
2.12 Seller Common Stock. The issuance and delivery by Seller of all
shares of Seller Common Stock to be issued in connection with this Agreement
have been duly and validly authorized by all necessary corporate action on the
part of Seller and no shareholder approval is required in connection therewith.
The shares of Seller Common Stock to be issued in connection with this
Agreement, when issued in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, and issued without violation of
any preemptive right of any other person or entity.
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2.13 No Brokers. Seller has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligations of
Seller to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. Seller is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
Article III - Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants as follows:
3.1 Existence and Power. The Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization.
3.2 Authorization. The execution, delivery and performance by the
Purchaser of this Agreement, and the consummation by the Purchaser of the
transactions contemplated hereby, have been duly authorized, and no additional
action is required for the approval of this Agreement by the Purchaser. This
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby have been or, to the extent contemplated hereby, will be duly executed
and delivered and constitute valid and binding agreements of the Purchaser,
enforceable against the Purchaser in accordance with their terms, except as may
be limited by bankruptcy, reorganization, insolvency, moratorium and similar
laws of general application relating to or affecting the enforcement of rights
of creditors and except that enforceability of their obligations thereunder are
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.3 Investment. The Purchaser is acquiring the Shares for its own account
for investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with the intention of distributing or reselling the
same, provided, however, that by making the representation herein, the Purchaser
does not agree to hold any of the Shares for any minimum or other specific term
and reserves the right to dispose of the Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities Act
of 1933, as amended ("Securities Act"). The Purchaser is aware that none of the
Shares has been registered under the Securities Act or under applicable state
securities or blue sky laws, and that the Shares will bear appropriate
restrictive legend. The Purchaser is an "Accredited Investor" as such term is
defined in Rule 501 of Regulation D, as promulgated under the Securities Act.
3.4 Reliance on Exemptions. The Purchaser understands that the Common
Stock is being offered and sold to the Purchaser in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Seller is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.
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3.5 Experience of the Purchaser. The Purchaser has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
Article IV - Covenants of the Seller
4.1 Public Announcements. Neither the Purchasers nor the Seller shall (and
each such party shall use its reasonable efforts to cause its Subsidiaries,
affiliates, directors, officers, employees and authorized representatives not
to), issue any press release, make any public announcement or furnish any
written statement to its employees or stockholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent shall not be unreasonably withheld), except to the extent
required by applicable law or as otherwise contemplated herein (and in either
such case such party shall, to the extent consistent with timely compliance with
such requirement, consult with the other party prior to making the required
release, announcement or statement).
4.2 Taxes and Claims. All liabilities for income tax attributable to the
sale of the Shares by the Seller to Purchasers pursuant to this Agreement shall
be and remain the sole liability of the Seller and Purchasers shall have no
responsibility therefor.
4.3 State Securities Laws. The Seller shall timely prepare and file such
applications, consents to service of process and similar documents and take such
other steps and perform such further acts with respect to the sale of the Shares
under this Agreement as shall be required by the state securities law
requirements of the jurisdiction where the Purchasers reside.
4.4 Further Assurances. The Seller shall, at its cost and expense, upon
written request of the Purchasers, duly execute and deliver, or cause to be duly
executed and delivered, to the Purchasers such further instruments and do and
cause to be done such further acts as may be necessary, advisable or proper, in
the reasonable discretion of the Purchasers, to carry out more effectually the
provisions and purposes of this Agreement.
Article V - Indemnification and Termination
5.1 Survival of Representations. Except as otherwise provided herein, the
representations and warranties of the Seller and the Purchasers contained in or
made pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date and shall continue in full force and effect for a
period of two (2) years from the Closing; provided, however, that the Seller's
warranties and representations under Sections 2.10 (Taxes), 2.4 (Subsidiaries)
and 2.3 (Capitalization), shall survive the Closing Date and continue in full
force and effect until the expiration of all applicable statutes of limitation.
The Seller's warranties and representations shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the Seller
or the Purchasers.
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5.2 Indemnification. (a) The Seller agrees to indemnify and hold harmless
the Purchasers, their affiliates, each of their officers, directors, employees
and agents and their respective successors and assigns, from and against any
losses, damages, or expenses which are caused by or arise out of (i) any breach
or default in the performance by the Seller or any Subsidiary of any covenant or
agreement made by the Seller or any Subsidiary in this Agreement or in any of
the documents contemplated hereby; (ii) any breach of warranty or representation
made by the Seller or any Subsidiary in this Agreement or in any of the
documents contemplated hereby, and (iii) any and all third party actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) incident to any of the foregoing.
(b) The Purchasers agree to indemnify and hold harmless the Seller, its
affiliates, each of its officers, directors, employees and agents and their
respective successors and assigns, from and against any third party losses,
damages, or expenses which are caused by or arise out of (A) any breach or
default in the performance by the Purchasers of any covenant or agreement made
by the Purchasers in this Agreement or in any of the documents contemplated
hereby; (B) any breach of warranty or representation made by the Purchasers in
this Agreement or in any of the documents contemplated hereby; and (C) any and
all third party actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal fees and expenses) incident to any of
the foregoing, provided, however, that in no event shall Purchasers' liability
hereunder exceed the Purchase Price paid by the Purchasers.
5.3 Indemnity Procedure. (a) A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".
(b) An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to the
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying Party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
(c) Each Indemnified Party shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
the Indemnifying Party acknowledges its obligations to indemnify the Indemnified
Party with respect to the claim and provided further that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article V
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except to the extent that the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or separate and different
defenses but shall bear the expense of such defense nevertheless. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, 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 to such claim or litigation. If the
Indemnifying Party does not assume the defense of any claim or proceeding
resulting therefrom, the Indemnified Party may defend against such claim or
proceeding as the Indemnified Party may deem appropriate and may settle such
claim or proceeding in such manner as the Indemnified Party may deem
appropriate, all without prejudice to its right to indemnification hereunder.
(d) The parties agree to cooperate in defending such third party claims,
and the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably request
with respect to any matter for which indemnification is sought hereunder; and
the parties hereto agree to cooperate with each other in order to ensure the
proper and adequate defense thereof.
(e) With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, the reasonable fees and disbursements
of counsel to the Indemnified Party shall be reimbursed on a current basis by
the Indemnifying Party if such fees and disbursements are a liability of the
Indemnifying Party. With regard to other claims for which indemnification is
payable hereunder, such indemnification shall be paid promptly by the
Indemnifying Party upon demand by the Indemnified Party.
Article VI - Miscellaneous
6.1 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement.
6.2 Fees and Expenses. Each party shall be responsible for the payment of
its own fees and expenses relating to the preparation and negotiation of this
Agreement.
6.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via
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facsimile at the facsimile number specified in this Section prior to 5:00 p.m.
(New York City time) on a business day, (b) the next business day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section on a day that is not a business
day or later than 5:00 p.m. (New York City time) on any business day, or (c) the
business day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service such as Federal Express. The address for
such notices and communications shall be as follows:
If to the Purchasers, to: If to the Seller, to:
MicroCapital Fund LP Media Sciences International, Inc.
x/x XxxxxXxxxxxx XXX 0 Xxxxxxxx Xxxx
000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxxx, XX 00000
Xxx Xxxxxxxxx, XX 00000 Att'n: Xxxxxxx X. Xxxxx
Att'n: Xxxxxxxxxxx Xxxxxxx Fax No.: 000-000-0000
Fax No.: 000-000-0000
MicroCapital Fund Ltd. With a copy to:
c/o MicroCapital LLC Law Offices of Xxx Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx 0000 00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Att'n: Xxxxxxxxxxx Xxxxxxx Att'n: Xxx Xxxxxxx, Esq.
Fax No.: 000-000-0000 Fax No.: 000-000-0000
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.
6.4 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
enforced in accordance with the laws of the State of New York without reference
to the choice of law principles thereof.
6.5 Successors and Assigns. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that Purchasers shall be permitted to assign their
rights under this Agreement to any affiliate of the Purchasers.
6.6 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated.
6.7 Entire Agreement. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.
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6.8 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law, or in equity
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.
6.9 Amendment and Waivers. Any term or provision of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the Seller and the Purchasers. The waiver by a party
of any breach hereof or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
This Agreement may not be amended or supplemented by any party hereto except
pursuant to a written amendment executed by the Seller and Purchasers.
6.10 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.
6.12 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
6.13 Gender, Singular and Plural. The use of any gender shall be construed to
include all other genders, unless the context clearly indicates that less than
all the genders is intended. The use of the singular or the plural shall include
both the singular and the plural unless the context clearly indicates that only
the singular or only the plural is intended.
[Signature Page Follows]
11
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
PURCHASERS: SELLER:
MicroCapital Fund LP, a Delaware limited Media Sciences International, Inc., a
partnership Delaware corporation
By its General Partner, MicroCapital LLC By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
By: /s/ Xxx X. Xxxxx Title: President
----------------------------------
Name: Xxx X. Xxxxx
Title: President
MicroCapital Fund Ltd., a Cayman Islands
corporation
By its Authorized Agent, MicroCapital LLC
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
Title: President
12
EXHIBIT A
TO COMMON STOCK PURCHASE AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of March
2, 2005, among MEDIA SCIENCES INTERNATIONAL, INC., a Delaware corporation (the
"Company"), and MICROCAPITAL FUND LP, a Delaware limited partnership, and
MICROCAPITAL FUND LTD., a Cayman Islands corporation (individually a
"Stockholder" or "Holder" and collectively "Stockholders" or "Holders").
RECITAL:
The Company and Stockholders are parties to that certain Common Stock
Purchase Agreement of even date herewith (the "Purchase Agreement"), whereby
Stockholders purchased an aggregate of 500,000 shares of the common stock of the
Company, par value $0.001 per share (the "Common Stock"). Capitalized terms used
but not defined in this Agreement have the meanings assigned to such terms in
the Purchase Agreement. As an inducement to Stockholders to enter into the
Purchase Agreement, the Company agrees with Stockholders as follows:
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
1.1 Affiliates. "Affiliate" shall mean any person that, directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, any party specified in this Agreement.
1.2 Commission. "Commission" shall mean the United States Securities
Exchange Commission or any other federal agency at the time administering the
Securities Act.
1.3 Common Shares. "Common Shares" shall mean the shares of Common Stock
issued at any time to the Stockholders pursuant to the Purchase Agreement.
1.4 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time to
time.
1.5 Person. "Person" shall mean any individual, partnership, limited
liability company, corporation, trust or other entity.
1.6 Register; Registered; Registration. "Register," "registered" and
"registration" shall refer to a registration effected by preparing and filing a
registration statement
1
in compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
1.7 Registrable Shares. "Registrable Shares" shall mean (i) the Common
Shares, (ii) any other shares of the Company's restricted common stock held by
Holders at the time of the initial filing of the registration statement pursuant
to this Agreement, and (iii) all shares of the Company's Common Stock issued as
a dividend on, or other distribution with respect to, or in exchange or in
replacement of, the Common Shares, until, in the case of any such security, the
earliest of (A) its effective registration under the Securities Act and resale
in accordance with the registration statement covering it, (B) the earliest date
all of such shares may be sold pursuant to Rule 144 under the Securities Act,
(C) its sale pursuant to Rule 144 or otherwise, except in sales referenced in
the proviso to Section 5.1.
1.8 Registration Expenses. "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Section 3, including all registration
and filing fees, exchange listing fees, printing expenses, fees and
disbursements of counsel for the Company, state securities' law fees and
expenses, and the expense of any special consents and advice or similar audit
services of independent auditors incident to or required by any such
registration.
1.9 Securities Act. "Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
1.10 Selling Expenses. "Selling Expenses" shall mean any underwriting
discounts and selling commissions associated with the sale of Registrable
Securities by a Holder hereunder. Selling Expenses are and shall be the
responsibility of the Holder.
2. RESTRICTIONS ON TRANSFER.
2.1 Restrictive Legend. Each certificate representing the Common Shares or
securities issued in respect of the Common Shares, shall, until such shares are
sold under the Shelf Registration Statement or otherwise are no longer
Registrable Securities, be stamped or otherwise imprinted with a legend in
substantially the following form (in addition to any legend required under
applicable state securities laws):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of in the
absence of (i) an effective registration statement for such securities
under said Act or (ii) an opinion of company counsel that such
registration is not required.
2.2 Notice of Proposed Transfers. Unless there is an effective registration
statement under the Securities Act covering a proposed transfer, a Stockholder
shall notify the Company of its intention to affect a transfer of any of its
Common Shares. Such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied (except that
the
2
requirements set forth in the balance of this sentence need not be complied with
where the proposed transaction complies with Rule 144 as long as the Company is
furnished with evidence of compliance with such rule) by:
(a) an unqualified written opinion of legal counsel which is
reasonably satisfactory to the Company addressed to the Company's counsel,
to the effect that the proposed transfer of the Common Shares may be
effected without registration of the Securities Act; or
(b) a "no action" letter from the Commission to the effect that the
distribution of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with
respect thereto;
provided, that this Section 2.2 shall not require a legal opinion or "no
action letter" in connection with any transfer described in the proviso to
Section 5.1 of this Agreement.
2.3 Compliance. Each certificate evidencing the Common Shares transferred
as above provided shall bear the appropriate restrictive legend set forth in
Section 2.1, except that such certificate shall not bear such restrictive legend
if in the opinion of counsel for the Company such legend is not required in
order to establish compliance with any provisions of the Securities Act or
applicable state securities laws.
3. REGISTRATION RIGHTS
3.1 Shelf Registration.
(a) The Company shall prepare and file with the Commission as
soon as practicable but in no event later than 30 days after the Closing Date
and after the effective date of a currently pending registration statement
(provided, however, that should such 30-day period fall within 30 days of the
filing due date of Company's 10-KSB or 10-QSBs, then such 30-day period shall be
extended by 30 days), a registration statement (the "Initial Shelf Registration
Statement," and together with any Subsequent Shelf Registration Statement (as
defined below), including, in each case, the prospectus, amendments and
supplements to such registration statements, including post-effective
amendments, all exhibits, and all materials incorporated by reference or deemed
to be incorporated by reference in such registration statements, are herein
collectively referred to as the "Shelf Registration Statement") for an offering
to be made on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act") (the "Shelf
Registration"), registering the resale from time to time by a Stockholder of all
of the Registrable Shares. The Initial Shelf Registration Statement shall be on
an appropriate form under the Securities Act permitting registration of such
Registrable Securities for resale by a Stockholder from time to time as set
forth in the Initial Shelf Registration Statement. Thereafter, the Company shall
(a) use its best efforts, subject to receipt of necessary information from the
Stockholders, to cause the Shelf Registration Statement to become effective as
soon as practicable after its filing, (b) prepare and file with the SEC any
amendments or supplements to the Shelf Registration Statement and the prospectus
used in connection therewith that may be necessary to keep the Shelf
Registration Statement effective throughout the period (the "Registration
Period") until the earlier of (i) such date that all of the
3
Registrable Shares have been sold by the Stockholders, (ii) such time that all
of the Registrable Shares have become eligible for sale pursuant to paragraph
(k) of Rule 144 under the Securities Act ("Rule 144"), or (iii) such time that
all of the Registrable Shares then held by a Holder can be sold in reliance upon
an exemption from registration under the Federal securities laws pursuant to
Rule 144, (c) furnish to the Stockholders such number of copies of prospectuses
in conformity with the requirements of the Securities Act and other documents as
the Stockholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Shares by the Stockholders and (d) bear all
expenses in connection with the foregoing procedures, other than selling
commissions and fees and expenses of counsel or other advisors, if any, to the
Stockholders.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than because all Registrable Securities
registered thereunder have been resold pursuant thereto or have otherwise ceased
to be Registrable Securities), the Company shall use its best efforts to obtain
the prompt withdrawal of any order suspending the effectiveness thereof, and in
any event shall within thirty (30) days of such cessation of effectiveness amend
such Shelf Registration Statement in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement covering all of the securities that as
of the date of such filing are Registrable Securities (a "Subsequent Shelf
Registration Statement"). If a Subsequent Shelf Registration Statement is filed,
the Company shall use its best efforts to cause the Subsequent Shelf
Registration Statement to become effective as promptly as is practicable after
such filing and to keep such Subsequent Shelf Registration Statement
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration Statement
if required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement, if
required by the Securities Act.
(d) Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall cause the Shelf Registration Statement and the related
prospectus and any amendment or supplement thereto, as of the effective date of
the Shelf Registration Statement, amendment or supplement, (i) to comply in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.
(e) The Company shall (a) file the Initial Shelf Registration Statement
within the timeline set forth in Section 3.1(a), (b) file a request for
acceleration in accordance with Rule 461 under the Securities Act within five
business days after being notified by the SEC that the Initial Shelf
Registration Statement or Shelf Registration Statement, as the case may be, will
not be reviewed or will not be subject to further review, (c) promptly file a
pre-effective amendment and otherwise respond in writing to address, in good
faith, comments made by the SEC in connection with any review of the Shelf
Registration Statement and shall use its best efforts to do so after the receipt
of those comments or notice from the SEC that an amendment is required for the
Shelf Registration Statement, or (d) maintain the effectiveness of the Shelf
4
Registration Statement for all Registrable Shares after it is declared
effective. In the event the Company fails to perform its obligations pursuant to
this provision, the Holders shall have the remedy of specific performance.
3.2 Registration Procedures. In connection with the Shelf Registration
contemplated by Section 3.1 hereof, the following provisions shall apply:
(a) The Company shall (i) furnish to Stockholders, prior to the filing
thereof with the Commission, a copy of any Shelf Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and the Company shall use its best efforts to reflect in the Shelf
Registration Statement, when so filed with the Commission, such comments as the
Stockholders may reasonably and timely propose.
(b) The Company shall give written notice to Stockholders (which notice
pursuant to clauses (ii) through (v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made):
(i) when the Shelf Registration Statement or any amendment thereto has
been filed with the Commission and when the Shelf Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Shelf Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to make
changes in the Shelf Registration Statement or the prospectus in order that
the Shelf Registration Statement or the prospectus do not contain an untrue
statement of a material fact nor omit to state a material fact required to
be stated therein or necessary to make the statements therein (in the case
of the prospectus, in light of the circumstances under which they were
made) not misleading.
(c) The Company shall make every reasonable effort to obtain the withdrawal
at the earliest possible time, of any order suspending the effectiveness of the
Shelf Registration Statement or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction in which they have been qualified for
sale.
5
(d) The Company shall furnish to Stockholders, without charge, at least one
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Stockholders
so request, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company shall, during the Effectiveness Period, deliver to
Stockholders, without charge, except for normal copying and actual delivery
costs, as many copies of the prospectus (including each preliminary prospectus,
if any) included in the Shelf Registration Statement and any amendment or
supplement thereto as Stockholders may reasonably request. The Company consents,
subject to the provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto by Stockholders in connection with the offering
and sale of the Registrable Securities covered by the prospectus, or any
amendment or supplement thereto, included in the Shelf Registration Statement.
(f) Prior to any public offering of the Registrable Securities pursuant to
any Shelf Registration Statement the Company shall register or qualify or
cooperate with the Stockholders and its counsel in connection with the
registration or qualification of the Registrable Securities for offer and sale
under the securities or "blue sky" laws of such states of the United States as
the Stockholders reasonably request in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Registrable Securities covered by such Shelf Registration Statement,
provided, however, that in no event shall the Company be required to qualify to
do business as a foreign corporation in any jurisdiction where it would not, but
for the requirements of this paragraph (f), be required to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction.
(g) The Company shall cooperate with Stockholders to facilitate the timely
preparation and delivery of certificates representing the Registrable Securities
to be sold pursuant to any Shelf Registration Statement free of any restrictive
legends and in such denominations and registered in such names as the Holders
may request a reasonable period of time prior to sales of the Registrable
Securities pursuant to such Shelf Registration Statement. Stockholders shall
provide such representations as may be reasonably requested by the Company's
transfer agent in this regard.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3.2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or a supplement to the related prospectus and any other
required document so that, as thereafter delivered to Stockholders, the
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 under which they were made,
not misleading. If the Company notifies the Stockholders in accordance with
paragraphs (ii) through (v) of Section 3.2(b) above to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Stockholders shall suspend use of such prospectus and, if so directed by the
Company, destroy or deliver to the Company all copies then in Stockholders'
possession of the prospectus covering
6
such Registrable Securities that was in effect at the time of such notice (such
period during which the availability of the Shelf Registration Statement and any
related prospectus is suspended being a "Deferral Period"). The period of
effectiveness of the Shelf Registration Statement provided for in Section 3.1(a)
above shall be extended by the number of days from and including the date of the
giving of such notice to and including the date when the Holders of Registrable
Securities shall have received such amended or supplemented prospectus pursuant
to this Section 3.2(h). The Company will use its best efforts to ensure that the
use of the prospectus may be resumed as promptly as is practicable. The Company
shall be entitled to exercise its right under this Section 3.2(h) to suspend the
availability of the Shelf Registration Statement or any prospectus for one or
more periods not to exceed 30 days in any 3 month period and not to exceed, in
the aggregate, 90 days in any 12 month period.
(i) The Company shall prepare and file with the Commission such amendments
and post-effective amendments to each Shelf Registration Statement as may be
necessary to keep such Shelf Registration Statement continuously effective for
the applicable period specified in Section 3.1(a) and shall cause the related
prospectus to be supplemented by any required prospectus supplement to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act. The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration.
(j) The Company may require Stockholders to furnish to the Company such
information regarding the Stockholders and the distribution of the Registrable
Securities as the Company may from time to time reasonably require for inclusion
in the Shelf Registration Statement.
(k) The Company shall (i) make reasonably available for inspection by
Stockholders, any underwriter participating in any disposition pursuant to the
Shelf Registration Statement and any attorney, accountant or other agent
retained by Stockholders or any such underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company and
(ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by Stockholders
or any such underwriter, attorney, accountant or agent in connection with the
Shelf Registration Statement, in each case, as shall be reasonably necessary to
enable such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act.
(l) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Registrable Securities covered by a
Shelf Registration Statement contemplated hereby.
(m) The Company shall as promptly as practicable (if reasonably requested
by Stockholders), incorporate in a prospectus supplement or post-effective
amendment to the Shelf Registration Statement such information as Stockholders
or shall, on the basis of an opinion of nationally recognized counsel
experienced in such matters, determine to be required to be included therein and
make any required filings of such prospectus supplement or such post-effective
amendment; provided that the Company shall not be required to take any actions
under
7
this Section 3.2(m) that are not, in the reasonable opinion of counsel for the
Company, in compliance with applicable law.
3.3 Expenses of Registration. The Company shall pay all Registration
Expenses incurred in connection with the performance of the Company's
obligations under this Agreement.
4. INDEMNIFICATION
4.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless Stockholders and their Affiliates, against all claims, losses,
damages and liabilities, joint or several (or actions in respect thereof, and
including, but not limited to, any claims, losses, damages, liabilities or
actions relating to purchases and sales of the Registrable Securities),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, to which any of them may become subject under the
Securities Act, the Exchange Act or other federal or state law, arising out of
or based on the following:
(a) any untrue statement or alleged untrue statement of a material fact
contained in any such registration statement, preliminary prospectus,
prospectus, offering circular or other similar document (including any related
registration statement, notification or the like, and including any amendment or
supplement thereto) incident to any such registration, or based on any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(b) any violation by the Company of any federal, state or common law rule
or regulation applicable to the Company in connection with any such
registration, qualification or compliance; and
(c) any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred related to the foregoing.
4.2 Indemnification by Stockholders. If Registrable Securities held by a
Stockholder are included in the securities as to which such registration is
being effected, the Stockholder shall indemnify the Company, each of its
officers and directors, each underwriter and each person who controls any
underwriter, and each person, if any, who controls the Company or any such
underwriter within the meaning of Section 15 of the Securities Act, and each
person affiliated with or retained by the Company and who may be subject to
liability under any applicable securities laws, against all claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened, to
which they may become subject under the Securities Act or other federal or state
law, arising out of or based on:
(a) any untrue statement or alleged untrue statement of a material fact
contained in any such registration statement, prospectus, offering circular or
other similar document, or any omission or alleged omission to state therein a
material fact required to be
8
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by Stockholders and stated to be specifically for use therein; and
(b) any legal and other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
incurred.
4.3 Limitation on the Indemnification Obligation.
(a) No party required to provide indemnification under this Section 4 (the
"Indemnifying Party") shall be liable, and shall have any indemnification
obligation hereunder, for any amounts paid in settlement by any party entitled
to indemnification hereunder (the "Indemnified Party") of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Indemnifying Party (which consent shall not be unreasonably withheld).
(b) The Company shall not be liable under Section 4.1 hereof for any such
claim, loss, damage, liability or expense to the extent it arises out of or is
based on any untrue statement or omission, made in reliance on and in conformity
with written information furnished to the Company by an instrument duly executed
by Stockholders, underwriter or controlling person and stated to be specifically
for use therein.
4.4 Indemnification Procedure. Each Indemnified Party shall give notice to
the Indemnifying Party promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, provided the Indemnifying Party acknowledges its
obligations to indemnify the Indemnified Party with respect to the claim and
provided further that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section 4
except to the extent that the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not assume the defense for
matters as to which there is a conflict of interest or separate and different
defenses but shall bear the expense of such defense nevertheless. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, 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 to such claim or litigation. If the
Indemnifying Party does not assume the defense of any claim or proceeding
resulting therefrom, the Indemnified Party may defend against such claim or
proceeding as the Indemnified Party may deem appropriate and may settle such
claim or proceeding in such manner as the
9
Indemnified Party may deem appropriate, all without prejudice to its right to
indemnification hereunder.
4.5 Contribution, Allocation, etc. If the indemnification provided for in
this Section 4 is unavailable or insufficient to hold harmless an Indemnified
Party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
Indemnifying Party shall in lieu of indemnifying such Indemnified Party
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and Stockholders, on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or actions as well as any other relevant equitable considerations,
including the failure to give any notice under Section 4.4. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information supplied by
the Company, on the one hand, or the underwriters or Stockholders, on the other,
and to the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
Stockholders agree that it would not be just and equitable if contributions
pursuant to this paragraph were determined by pro rata allocation or by any
other method of allocation which did not take account of the equitable
considerations referred to above in this paragraph. The amount paid or payable
by an Indemnified Party as a result of the losses, claims, damages, liabilities
or action in respect thereof, referred to above in this paragraph, shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this paragraph, Stockholders shall
not be required to contribute any amount in excess of the lesser of (i) the
proportion that the public offering price of shares sold by Stockholders under
such registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by
Stockholders for the sale of Registrable Shares covered by such registration
statement and (ii) the amount of any damages which it would have otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act), shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation.
5. MISCELLANEOUS PROVISIONS.
5.1 No Transfer of Registration Rights. The registration rights granted
under this Agreement may not be assigned or otherwise conveyed by Stockholders
without the consent of the Company, which consent shall not be unreasonably
withheld; provided, that registration rights may be assigned by a Stockholder in
connection with a sale or other transfer to an immediate family member or to an
entity controlled by or under common control with Stockholder.
5.2 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to conflict
10
of laws or any other rules or principles which may require the application of
the laws of any other jurisdiction.
5.3 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to Stockholders, upon any breach or default by the Company
under this Agreement, shall impair any such right, power or remedy of
Stockholders nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereunder occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of Stockholders or any breach or default under this Agreement, or any
waiver on the part of Stockholders of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to Stockholders, shall be cumulative
and not alternative.
5.4 Rule 144. The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time, the Company is not required to file such
reports, it will, upon the request of Stockholders, make publicly available
other information so long as necessary to permit sales of their securities
pursuant to Rule 144 under the Securities Act. The Company covenants that it
will take such further action as Stockholders may reasonably request, all to the
extent required from time to time to enable Stockholders to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144. Upon the request of Stockholders, the
Company shall deliver to Stockholders a written statement as to whether it has
complied with such filing requirements. Notwithstanding the foregoing, nothing
in this Section 5.5 shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act if not otherwise registered.
5.5 Remedies. Each of the parties hereto acknowledges and agrees that any
failure by a party to perform its obligations hereunder or otherwise breach this
Agreement, irreparable injury may occur for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, a party may obtain such relief as
may be required to specifically enforce the other party's obligations hereunder.
5.6 No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to Stockholders in this Agreement or
otherwise conflicts with the provisions hereof. The Company represents and
warrants that the rights granted to Stockholders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
securities of the Company under any agreement in effect on the date hereof.
5.7 Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements, correspondence, arrangements and
understandings relating to the subject matter hereof.
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5.8 Binding Effect. All of the terms, provisions and conditions hereof
shall be binding upon and shall inure to the benefit of and be enforceable by
the parties hereto, and their respective heirs, personal representatives,
successors and assigns.
5.9 Headings; Construction. The headings contained herein are for the
purposes of convenience only, and will not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way. Unless the context clearly states otherwise, the use of the singular or
plural in this Agreement shall include the other and the use of any gender shall
include all others. The parties have participated jointly in the negotiation and
drafting of this Agreement. If any ambiguity or question of intent or
interpretation arises, no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. All references herein to Sections shall refer to this Agreement
unless the context clearly otherwise requires.
5.10 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon (a) transmitter's confirmation of receipt
of a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand or (c) the expiration of five (5) business
days (or seven (7) business days where the addressee is not in the United
States) after the day when mailed by certified or registered mail, postage
prepaid, to:
THE COMPANY: Media Sciences International, Inc.
0 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Att'n: Xxxxxxx X. Xxxxx
Fax No.: 000-000-0000
With a copy to
(which shall not constitute notice): Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Att'n: Xxx Xxxxxxx, Esq.
Fax No.: 000-000-0000
STOCKHOLDERS: MicroCapital Fund LP
c/o MicroCapital LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Att'n: Xxxxxxxxxxx Xxxxxxx
Fax No.: 000-000-0000
MicroCapital Fund Ltd.
c/o MicroCapital LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Att'n: Xxxxxxxxxxx Xxxxxxx
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Fax No.: 000-000-0000
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
5.11 Severability of Provisions. If a court in any proceeding holds any
provision of this Agreement or its application to any person or circumstance
invalid, illegal or unenforceable, the remainder of this Agreement, or the
application of such provision to persons or circumstances other than those to
which it was held to be invalid, illegal or unenforceable, shall not be
affected, and shall be valid, legal and enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential objectives as
expressed in this Agreement. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties intend that the court add to this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be valid and enforceable, so as to effect the original intent
of the parties to the greatest extent possible.
5.12 No Third Party Beneficiaries. This Agreement does not create, and will
not be construed as creating, any rights enforceable by any person not a party
to this Agreement.
5.13 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS
WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY
SOURCE INCLUDING, BUT NOT LIMITED TO, THE CONSTITUTION OF THE UNITED STATES OR
ANY STATE THEREIN, COMMON LAW OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH
PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT
TO DEMAND TRIAL BY JURY.
5.14 Amendment. This Agreement may be amended, modified, superseded, or
canceled only by a written instrument signed by all of the parties hereto and
any of the terms, provisions and conditions hereof may be waived, only by a
written instrument signed by the waiving party.
5.15 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall for al purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
Signature Page Follows
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first written above.
MEDIA SCIENCES INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
MICROCAPITAL FUND LP
By its General Partner, MicroCapital LLC
By: /s/ Xxx X. Xxxxx
----------------------------------------------
Name: Xxx X. Xxxxx
Title: President
MICROCAPITAL FUND LTD.
By its Authorized Agent, MicroCapital LLC
By: /s/ Xxx X. Xxxxx
----------------------------------------------
Name: Xxx X. Xxxxx
Title: President
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