WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated as of the ______ day of ________, 2003, by and
among One Financial Securities, Ltd. ("One Financial"), Mac Filmworks, Inc., a
Delaware corporation (the "Company") and Interwest Transfer Company,
Inc. (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of 250,000 Units, the
Company proposes to issue, in accordance with an agreement dated as of
____________________, 2003, by and between the Company and the Warrant Agent
(the "Warrant Agreement"), Warrants to purchase shares of Common Stock; and
WHEREAS, the parties hereto wish to provide One Financial, a member of
the National Association of Securities Dealers, Inc. ("NASD"), with certain
rights on an exclusive basis in connection with the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. Description of the Warrants. The Company's Warrants may be
exercised on or after _____________, 2003 and expire at 5:00 p.m. Houston, Texas
time on ____________ (the "Expiration Date"), subject to redemption rights
commencing on or after ________________. In accordance with the provisions of
the Warrant Agreement, the holder of each Warrant shall have the right to
purchase from the Company, and the Company shall issue and sell to such holders
of Warrants, one fully paid and non-assessable share of the Company's Common
Stock for every Class A Warrant exercised at an exercise price of $2.00 per
share, every Class B Warrant exercised at an exercise price of $3.00 per share,
every Class C Warrant exercised at an exercise price of $4.00 per share, every
Class D Warrant exercised at an exercise price of $5.00 per share, every Class E
Warrant exercised at an exercise price of $6.00 per share, every Class F Warrant
exercised at an exercise price of $7.00 per share, every Class G Warrant
exercised at an exercise price of $8.00 per share (collectively, the "Exercise
Price"), subject to adjustment as provided in the Warrant Agreement.
Section 2. Notification of Exercise. Within ten (10) days of the last
day of each month commencing on the date of the Company's Prospectus, the
Warrant Agent or the Company will notify One Financial of each Warrant
certificate which has been properly completed and delivered for exercise by
holders of Warrants during each such month, the determination of the proper
completion to be in the sole and absolute reasonable discretion of the Company
and the Warrant Agent. The Company or the Warrant Agent will provide One
Financial with such information, in connection with the exercise of each
Warrant, as One Financial shall reasonably request.
Section 3. Payment to One Financial. The Company hereby agrees to pay
to One Financial an amount equal to five (5%) percent of the Exercise Price for
each Warrant exercised (the "Exercise Fee") a portion of which may be allowed by
One Financial to the dealer who solicited the exercise (which may also be One
Financial) provided that:
(a) at the time of exercise, the market price of the Company's
Common Stock is higher than the applicable Exercise Price of the
Warrant being exercised; (c) the holders of Warrants being exercised
have specifically indicated in writing, either in the Form of Election
contained on the specimen Warrant Certificate or by written documents
signed and dated by the holders that the exercise of such Warrants was
solicited by One Financial or another member of the NASD; and
(b) One Financial and/or the member of the NASD which
solicited the exercise of Warrants delivers a certificate to the
Company within five (5) business days of receipt of information
relating to such exercised Warrants from the Company or the Warrant
Agent in the form attached hereto as Exhibit A, stating that:
(1) The Warrants exercised were not held in a
discretionary account;
(2) The member which solicited the exercise of
Warrants did not (unless granted an exemption by the
Securities and Exchange Commission ("the Commission") from the
provisions thereof), within the applicable number of business
days under Regulation M immediately preceding the date of
exercise of the Warrant bid for or purchase the Common Stock
of the Company or any securities of the Company immediately
convertible into or exchangeable for the Common Stock
(including the Warrants) or otherwise engage in any activity
that would be prohibited by Regulation M under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to a
broker-dealer engaged in a distribution of the Company's
securities; and
(3) In connection with the solicitation, it disclosed
the compensation it would receive upon exercise of the
Warrant.
Section 4. Payment of the Exercise Fee. The Company hereby agrees to
pay over to One Financial within two (2) business days after receipt by the
Company of the certificate described in Section 3(b) above, the Exercise Fee out
of the proceeds it received from the applicable Exercise Price paid for the
Warrants to which the certificate relates.
Section 5. Inspection of Records. One Financial may at any time during
business hours, at its expense, examine the records of the Company and the
Warrant Agent which relate to the exercise of the Warrants.
Section 6. Termination. One Financial shall be entitled to terminate
this Agreement prior to the exercise of all Warrants at any time upon five (5)
business days' prior notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, One Financial shall be entitled to
receive an Exercise Fee for the exercise of any Warrant for which it has already
delivered to the Company prior to any such termination the certificate required
by Section 3(d) of this Agreement.
Section 7. Representations and Warranties of One Financial. At the date
of execution hereof and at the time of solicitation of exercise of Warrants, One
Financial represents that it is, and will, (i) be registered as a broker-dealer
under the Exchange Act, (ii) be a member in good standing of the NASD, and (iii)
maintain its registration, qualification and membership in full force and effect
and in good standing throughout the term of this Agreement. One Financial
acknowledges and agrees that it will not solicit the exercise of Warrants, or
offer or sell the underlying Common Stock, in any state or jurisdiction except
those in which the Common Stock underlying the Warrants has been qualified or
qualification is not required. Further, One Financial agrees to comply with the
laws of the states in which it may solicit exercise of the Warrants or in which
the Common Stock underlying the Warrants may be offered or sold by it, with the
applicable rules and regulations of the NASD, and will comply with federal laws
including, but not limited to, the Securities Act of 1933, as amended (the
"Act"), the Exchange Act and the rules and regulations of the Commission
thereunder.
Section 8. Indemnification.
a. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless any and all statutory or
designated underwriters (the "Underwriters"), the representative of the
Underwriters, if any (the "Representative"), and each of their
officers, directors, partners, employees, agents, and counsel, and each
person, if any, who controls the Representative or any one of the
Underwriters within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes
of this Section 8, but not be limited to, attorneys' fees and any and
all expense whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in
connection with (i) any untrue statement or alleged untrue statement of
a material fact contained (A) in any preliminary prospectus, the
registration statement, or any post-effective amendment thereto, or the
prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, relating to the offer or sale of
Common Stock underlying the Warrants or the solicitation of exercise of
the Warrants (such preliminary prospectus, registration statement,
post-effective amendment or prospectus hereinafter collectively, the
"Offering Documents") or (B) in any application or other document or
communication (in this Section 8 collectively called an "application")
in any jurisdiction in order to qualify the Common Stock and Warrants
under the "blue sky" or securities laws thereof or filed with the
Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any
breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement;
however, the Company shall have no liability under this Section 8 if
such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section
8(b) with respect to the Underwriters by or on behalf of the
Underwriters expressly for inclusion in any of the Offering Documents,
or in any application, as the case may be.
If any action is brought against the Underwriters, the
Representative or any of their officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an
Underwriter or the Representative (an "indemnified party") in respect
of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but
the failure so to notify shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not
have promptly employed counsel satisfactory to such indemnified party
or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses
shall be borne by the Company. Anything in this paragraph to the
contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its written
consent. The Company agrees promptly to notify the Underwriters and the
Representative of the commencement of any litigation or proceedings
against the Company or against any of its officers or directors in
connection with the sale of the Common Stock underlying the Warrants,
any Offering Documents, or any application.
b. The Underwriters agree to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who
shall have signed the Registration Statement, each other person, if
any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Underwriters in Section
8(a), but only with respect to statements or omissions, if any, made in
any of the Offering Documents, or in any application, in reliance upon
and in conformity with written information furnished to the Company as
stated in this Section 8(b) with respect to the Underwriters by or on
behalf of the Underwriters expressly for inclusion in any of the
Offering Documents, or in any application, as the case may be;
provided, however, that the obligation of the Underwriters to provide
indemnity under the provisions of this Section 8(b) shall be limited to
the amount which represents the product of the number of shares of
Common Stock issued on exercise of Warrants and the Warrant Exercise
Price. For all purposes of this Agreement, the amounts of the Exercise
Fee set forth in the Offering Documents, the information under "Plan of
Distribution" and the identification of counsel to the Representative
under "Legal Matters" constitute the only information furnished in
writing by or on behalf of the Underwriters expressly for inclusion in
any of the Offering Documents, or in any application, as the case may
be. If any action shall be brought against the Company or any other
person so indemnified based on any of the Offering Documents, or any
application, and in respect of which indemnity may be sought against
the Underwriters pursuant to this Section 8(b), the Underwriters shall
have the rights and duties given to the Company, and the Company and
each other person so indemnified shall have the rights and duties given
to the indemnified parties, by the provisions of Section 8(a).
c. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this
Section 8 is for any reason held to be unavailable to the Underwriters
or the Company, then the Company shall contribute to the damages paid
by the several Underwriters, and the several Underwriters shall
contribute to the damages paid by the Company; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties
are entitled, there shall be considered the relative benefits received
by each party from the sale of the Common Stock underlying the Warrants
(taking into account the portion of the proceeds of the offering
realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro
rata or per capita allocation (even if the Underwriters were treated as
one entity for such purpose). No Underwriter or person controlling such
Underwriter shall be obligated to make contribution hereunder which in
the aggregate exceeds the total Exercise Price of the Warrants,
exercise of which was solicited by such Underwriter under this
Agreement, less the aggregate amount of any damages which such
Underwriter and its controlling persons have otherwise been required to
pay in respect of the same or any substantially similar claim. The
Underwriters' obligations to contribute hereunder are several in
proportion to their respective underwriting obligations and not joint.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act shall have the
same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Offering
Documents, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, shall have the same rights to
contribution as the Company. Anything in this Section 8(c) to the
contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without
its written consent. This Section 8(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or otherwise.
Section 9. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows:
if to the Company:
Mac Filmworks, Inc.
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Sr., President and CEO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice to such party):
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to One Financial:
One Financial Securities, Ltd.
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice to the Company):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Sonfield & Sonfield
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as such party shall have given notice to
other parties hereto in accordance with this Section. All such notices
or other communications shall be deemed given three (3) business days
after mailing, as aforesaid.
Section 10. Supplements and Amendments. The Company, the Warrant Agent
and One Financial may from time-to-time supplement or amend this Agreement by a
written instrument signed by the party to be charged, without the approval of
any holders of Warrants in order to cure any ambiguity or to correct or
supplement any provisions contained herein or to make any other provisions in
regard to matters or questions arising hereunder which the Company, the Warrant
Agent and One Financial may deem necessary or desirable and which do not
adversely affect the interest of the holders of Warrants.
Section 11. Assignment. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that One
Financial may assign this Agreement to its successors, if any.
Section 12. Governing Law. This Agreement will be deemed made under the
laws of the State of Colorado with respect to matters of contract law and for
all purposes shall be governed by and construed in accordance with the internal
laws of said State, without regard to the conflicts of laws provisions thereof.
Section 13. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give any person or corporation other than the Company, the
Warrant Agent and One Financial any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of, and be binding upon, the Company, the Warrant Agent and One
Financial and their respective successors and permitted assigns.
Section 14. Descriptive Headings. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
Section 15. Superseding Agreement. This Agreement supersedes any and
all prior agreements between the parties with respect to the subject matter
hereof.
Section 16. Exclusive Agreement. It is understood that this Agreement
is on an exclusive basis to solicit the exercise of the Warrants and that the
Company shall not engage other broker-dealers to solicit the exercise of
Warrants without the consent of One Financial.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MAC FILMWORKS, INC.
By:
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▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President and CEO
ONE FINANCIAL SECURITIES, LTD.
By:
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▇▇▇▇▇▇ ▇▇▇▇▇, President
Interwest Transfer Company, Inc.
By:
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Name:
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Title:
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EXHIBIT A
CERTIFICATE
The undersigned, being the _______________ of _______________________
(the "NASD Member") pursuant to Section 3(d) of the Warrant Exercise Fee
Agreement relating to the exercise of Warrants dated _________, 2003 among Mac
Filmworks, Inc., a Delaware corporation (the "Company"), One Financial
Securities, Ltd. and Interwest Transfer Company, Inc. (the "Warrant Agent")
hereby certifies that:
1. The Company or the Warrant Agent has notified the NASD
Member that ____________ Warrants (as defined in the Agreement) have
been exercised during _______________.
2. The exercise of _________ of such Warrants was solicited by
the NASD Member.
3. Such Warrants were not held in a discretionary account.
4. The NASD Member did not, within _____ business days
immediately preceding _______________, bid for or purchase the Common
Stock of the Company or any securities of the Company immediately
convertible into or exchangeable for the Common Stock (including
Warrants) or otherwise engage in any activity that would be prohibited
by Regulation M under the Securities Exchange Act of 1934, as amended,
to one engaged in a distribution of the Company's securities.
5. In connection with the solicitation of the exercise of the
Warrants, the NASD Member disclosed to holders of the Warrants the
compensation it will receive.
DATED: _______________
(Firm Name)
By:
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Name:
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Title:
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