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Exhibit 10.10
PLACEMENT AGREEMENT
OF
MICRO-MEDIA SOLUTIONS, INC.
November 11, 1997
EQUITY SERVICES, LTD.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Gentlemen:
The undersigned, Micro-Media Solutions, Inc., a Utah corporation (the
"Company"), confirms its agreement with Equity Services, Ltd., a Nevis company
("ESL") as follows:
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1. Description of Securities and Offering.
(a) ESL has agreed to privately place (the "Private Placement")
Four Hundred Thousand (400,000) units of the Company's securities (the
"Units"), each Unit consisting of one (1) share (the "Shares") of the Company's
Series A 5% Cumulative Convertible Non-Voting Preferred Stock (the "Series A
Preferred Stock"), each Share being immediately convertible into ten (10)
shares of the Company's common stock, and six (6) Class A warrants (the "Class
A Warrants"), at a price of Five and 30/100 Dollars ($5.30) per Unit (the
"Private Placement Price"), on or before November 14, 1997 (the "Closing").
The Shares shall have a cumulative dividend of 5% per annum, payable on
a fiscal quarterly basis, which shall be paid by the issuance of shares of the
common stock of the Company, par value $0.10 per share (the "Common Stock")
based on the thirty (30) day average closing bid price of the Common Stock
immediately prior to the dividend date. Each Class A Warrant included in the
Units will upon its exercise entitle the holder thereof to purchase one (1)
share of Common Stock and will be exercisable during a period beginning January
31, 1998, and ending two (2) years thereafter. The Class A Warrant exercise
price will be One Dollar and Fifty Cents ($1.50) per share subject to
adjustment as described below. Each Warrant will have anti-dilution provisions
for stock dividends, splits, mergers, sale of all or substantially all of the
Company's assets. The components of the Units will be separately transferrable
immediately after the Closing. The Warrant holders will agree that so long as
the Company remains certified as an Historically Underutilized Business
("HUB"), they will not exercise their Warrants and/or convert their preferred
stock in such a manner as to cause the Company to lose its HUB status.
Immediately upon the occurrence of the Closing, the Company shall grant
the holders of the Shares, the holders of the Common Stock issued upon
conversion of the Shares, the holders of the Common Stock issued as dividends
on the Shares and the holders of the Common Stock issued upon the exercise of
any of the Warrants one (1) demand registration right and "piggyback"
registration rights. The terms of these registration rights shall be as set
forth in a Registration Rights Agreement (herein so called) substantially in
the form attached hereto as Exhibit "A". The Company shall bear all expenses
in connection with the preparation and filing of such registration statements.
(b) The commissions to which ESL shall be entitled, and which the
Company shall pay, for such placement shall be as follows: (i) a sum equal to
seven percent (7%) of the total proceeds resulting from the placement of the
Units, payable in cash; and (ii) Twenty Thousand (20,000) Units (the "Placement
Agent's Units"). ESL shall be paid a commission of five percent (5%) of the
aggregate strike price paid upon the exercise of any Warrants. ESL shall also
be paid (i) a sum equal to three percent (3%) of the total proceeds resulting
from the placement of the Units as a non-accountable expense allowance and (ii)
an amount equal to the legal fees of ESL's counsel not to exceed Ten Thousand
and No/100 Dollars ($10,000.00). ESL will be paid the commission, fees, and
non-accountable expense allowance simultaneously with the Closing.
(c) In addition, the Company agrees to sell to ESL, for an
aggregate price of $100, a five (5) year option ("ESL Purchase Option") to
purchase up to Four Hundred Thousand
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
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(400,000) shares of Common Stock ("ESL's Option Shares") at a price of
One Dollar and Fifty Cents ($1.50) per Option Share exercisable for a period of
five (5) years commencing January 31, 1998. The holders of ESL's Option Shares
and the Placement Agent's Units will have registration rights as set forth in
the Registration Rights Agreement substantially in the form attached hereto as
Exhibit "B".
2. Appointment of Placement Agent. ESL's appointment by the Company as
Placement Agent shall commence upon the date of the execution of this
Agreement, and shall continue until and through November 30, 1998, unless (i)
the Units shall be completely sold prior to that date, (ii) the offering has
been terminated by written agreement between ESL and the Company, or (iii) this
Agreement shall be terminated at a prior date as provided herein.
3. Release of Placement Agent. ESL's commitment to serve as Placement
Agent on behalf of the Company is made subject to the release of ESL: (i) in
the event of war, (ii) in the event of any material adverse change in the
business, property or financial condition of the Company (of which ESL shall be
the sole judge), (iii) in the event of any pending or threatened action, suit
or proceeding at law or in equity against the Company, or by any Federal, State
or other commission, board or agency wherein any unfavorable decision would
materially affect the business, property, financial condition or income of the
Company (of which ESL shall be the sole judge), (iv) in the event of a breach
by the Company of any covenant, representation or warranty contained in this
Agreement or (v) in the event of adverse market conditions (of which ESL shall
be the sole judge).
4. Representations and Warranties of the Company.
The Company represents and warrants to ESL as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the State of Utah, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as currently conducted, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification.
(b) The Company has registered shares of its Common Stock pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is in full compliance with all reporting requirements of the Exchange
Act, and the Common Stock is quoted on the NASDAQ Over-the-Counter Bulletin
Board (trading symbol: MSIA).
(c) The Company has furnished ESL with copies of the Company's
Business Plan dated July 3, 1997, most recent Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission (the "Commission") and all
Forms 10-QSB and 8-K filed thereafter, if any (collectively, the "Disclosure
Documents"). Immediately prior to the Closing, there will be no other capital
stock issued and outstanding, nor will there be outstanding any rights to
acquire,
PLACEMENT AGREEMENT OF
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commitments to issue or securities convertible into capital stock other than as
evidenced in the Disclosure Documents. The Disclosure Documents at the time of
their filing did not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made not
misleading.
(d) Except as shown on the Company's most recent audited financial
statements prepared by Xxxxxxx Accountants dated March 31, 1997, a copy of
which has been furnished to ESL, and as otherwise previously disclosed in
writing to ESL, the Company will have no other indebtedness outstanding
immediately prior to the Closing.
(e) Upon issuance at the Closing, in accordance with this
Agreement, the Units will be duly and validly authorized and issued, fully paid
and nonassessable, free from all encumbrances and restrictions other than
restrictions on transfer imposed by applicable securities laws and/or this
Agreement, and will not subject the holders thereof to personal liability by
reason of being such holders. The shares of Common Stock, when issued and
delivered upon conversion of the Series A Preferred Stock or exercise of any of
the Warrants, the ESL Option Shares and the Placement Agent's Units, will be
duly and validly authorized and issued, fully paid and nonassessable, free from
all encumbrances and restrictions other than restrictions on transfer imposed
by applicable securities laws and/or this Agreement, and will not subject the
holders thereof to personal liability by reason of being such holders.
(f) This Agreement has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms, subject to general principles
of equity and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and the Company has full power and authority to
execute and deliver this Agreement and the other agreements and documents
contemplated hereby and to perform its obligations hereunder and thereunder.
(g) The execution and delivery of this Agreement, the issuance of
the Units, the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock, the ESL Option Shares, the Placement Agent's Units, the
Warrants, the shares of Common Stock issuable upon exercise of any of the
Warrants, and the consummation of the transactions contemplated by the Investor
Subscription Agreement (herein so called) by the Company, will not conflict
with or result in a breach of or a default under any of the terms or provisions
of, the Company's articles of incorporation or By-laws, or of any material
provision of any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Company is a party or by which it or any of its
properties or assets is bound, any material provision of any law, statute,
rule, regulation, or any existing applicable decree, judgment or order by any
court, federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company, or any of its
properties or assets and will not result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to the terms of any agreement or instrument
to which any of them is a party or by which any of them may be bound or to
which any of their property or any of them is subject.
PLACEMENT AGREEMENT OF
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(h) No authorization, approval, filing with or consent of any
governmental body is required for the issuance and sale of the Units, except
for filings pursuant to Regulation D promulgated under the Securities Act of
1933, as amended (the "Act") or any state blue sky filings.
(i) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending or threatened
against or affecting the Company, or any of its properties, which would
reasonably be anticipated to result in any material adverse change in the
condition (financial or otherwise) or in the earnings, business affairs,
business prospects, properties or assets of the Company.
(j) Subsequent to the dates as of which information is given in
the Disclosure Documents, except as contemplated herein, the Company has not
incurred any material liabilities or material obligations, direct or
contingent, or entered into any material transactions not in the ordinary
course of business, and there has not been any change in its capitalization or
any material adverse change in its condition (financial or otherwise) net
worth, results of operations or prospects, except as otherwise previously
disclosed to ESL.
(k) The Company has conducted, is conducting and will conduct its
business so as to comply in all material respects with all applicable statutes
and regulations, and the Company is not charged with and, to the knowledge of
the Company, is not under investigation with respect to any violation of any
statutes or regulations nor is it the subject of any pending or threatened
adverse proceedings by any regulatory authority having jurisdiction over its
business or operations.
(l) Except as set forth in the Disclosure Documents, the Company
has good and marketable title to all properties and assets described therein as
owned by it, free and clear of all liens, charges, encumbrances, or
restrictions.
(m) The Company has filed all necessary federal and state income
and franchise tax returns and has paid all taxes shown as due thereon, except
as previously disclosed to ESL.
(n) The Company has no knowledge of any tax deficiency that might
be asserted against it that might materially and adversely affect its business
or properties.
(o) The Company maintains insurance of the types and in amounts
generally deemed adequate for its business and consistent with insurance
coverage maintained by similar companies and businesses, including, but not
limited to, insurance covering all real and personal property owned or leased
by the Company against theft, damage, destruction, acts of vandalism, products
liability and all other risks customarily insured against, all of which
insurance is in full force and effect.
(p) No labor disturbance by the employees of the Company exists or
is imminent that could reasonably be expected to have a material adverse effect
on the conduct of the business, operations, financial condition, or income of
the Company.
PLACEMENT AGREEMENT OF
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(q) Neither the Company nor any employee or agent of the Company
has made any payment of funds of the Company or received or retained any funds
in violation of law.
(r) Subject in part to the truth and accuracy of the subscriber's
representations set forth in the Investor Subscription Agreement, the offer,
sale and issuance of the Units are exempt from registration requirements of the
1933 Act, and neither the Company nor any authorized agent acting on its behalf
will take any action hereafter that will cause the loss of such exemption.
(s) The Company has no patents, trademarks, service marks,
copyrights, or licenses other than commercially available software licenses.
The Company is not aware that any of its executive officers is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency that would interfere with the use of his or her best
efforts to promote the interest of the Company or that would conflict with the
Company's business as proposed to be conducted.
(t) Except for agreements explicitly contemplated hereby or set
forth in the Disclosure Documents, there are no agreements between the Company
and any of its officers, directors, affiliates or any affiliate thereof.
(u) As of the Closing, no representation or warranty of the
Company contained in this Section 4, and no statement contained in any exhibit,
schedule, certificate, list, summary or other disclosure document provided or
to be provided to ESL pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact which is
necessary in order to make statements contained therein not misleading.
The representations, warranties and covenants of the Company contained in this
Agreement shall inure to the benefit of each subscriber to the Private
Placement contemplated by this Agreement and such subscribers shall constitute
identified third-party beneficiaries under this Agreement. No termination,
modification, or waiver of the representations, warranties and covenants of the
Company contained in this Agreement shall be permitted in any manner adversely
affecting their interests without their prior written consent.
5. Affirmative Covenants of the Company.
(a) Upon completion of the Private Placement, the Company will use
its best efforts to list shares of its Common Stock on The Nasdaq SmallCap
Market or a national securities exchange (such as AMEX or NYSE) and, at a
minimum, to maintain such listing for a period of five (5) years from the time
of such listing.
(b) The Company will engage a financial public relations firm
reasonably acceptable to ESL within ninety (90) days of Closing.
(c) The financial statements of the Company shall be audited by a
"Big Six" or such
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
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other independent public accounting firm to which ESL may consent. Further,
the Company shall not effect a change in its accounting firm to other than a
"Big Six" firm for a period of two (2) years following the Closing.
(d) The Company shall be responsible for and shall bear all
expenses directly and necessarily incurred in connection with the Private
Placement, including but not limited to, the cost of preparing, printing and
delivering all placement and selling documents, including but not limited to
the Placement Agreement, Investor Subscription Agreements, Registration Rights
Agreements, Placement Agent's Option Agreements and blue sky memorandum and
stock certificates; blue sky fees, filing fees, legal fees and disbursements of
counsel in connection with blue sky matters; fees and disbursements of the
transfer and warrant agent; the cost of two (2) sets of bound closing volumes
for ESL and its counsel; the cost of three (3) tombstone advertisements, one
(1) of which shall be in a national business newspaper, one (1) of which shall
be in a major Texas newspaper and one (1) shall be in a publication chosen by
ESL; and an amount equal to the legal fees of ESL's counsel not to exceed Ten
Thousand Dollars ($10,000.00)(collectively, the "Company Expenses"). If the
Private Placement is not completed because the Company prevents it or because
of a breach by the Company of any covenants, representations or warranties
contained herein, the Company's liability for such expense allowance shall be
limited to Ten Thousand and No/100 Dollars ($10,000.00).
(e) The Company will, and will cause its subsidiaries, if any, to
do the following: (i) maintain and preserve its and their respective
businesses consistent with normal business practices; (ii) conduct its and
their respective business, taken together as a group, in an orderly, efficient
and customary manner consistent with normal business practices; and (iii) keep
and maintain all of its and their respective properties in good working order
and condition, ordinary wear and tear excepted.
(f) The Company will deliver to ESL for a period of three (3)
years from the Closing:
(i) within thirty (30) days after the close of each
quarter, a copy of its consolidated balance sheet as of the close of
such month and its profit and loss statement and surplus reconciliation
for that month, all prepared in accordance with generally accepted
accounting principles consistently applied, and certified as being
fairly presented in all material respects by the Company's President or
its Chief Financial Officer;
(ii) at any time within the period from thirty (30) days
prior to and until thirty (30) days after the start of any fiscal year,
financial projections of the Company and its subsidiaries, if any, for
such fiscal year prepared in reasonable detail, which financial
projections shall be presented to the Company's Board of Directors for
their approval at their regular meeting first following the preparation
of such projections;
(iii) promptly upon the filing thereof, all reports and
statements filed with the Commission (or any governmental authority
succeeding to any of its functions) or with any securities exchange;
and
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(iv) such other information and data with respect to the
Company or any of its subsidiaries, if any, as from time to time may be
reasonably requested by ESL (including, without limitation, such other
information as the Company shall have supplied to any of its security
holders in their capacity as such) to the extent the Company possesses
such information or can acquire it without unreasonable effort or
expense.
(g) The Company will cause at least One Million and No/100 Dollars
($1,000,000.00) of "key man" life insurance to be written on the life of Xxxx
Xxxxxx. Such "key man" life insurance will be kept in force for a minimum
period of either three (3) years from the Closing or the term of the employment
agreement between the Company and Xxxx Xxxxxx, whichever is longer.
(h) For a period of three (3) years from the Closing, the Company,
at its expense, shall, upon request by ESL from time to time, provide ESL with
copies of the Company's daily transfer sheets.
(i) The Company and its President shall call a meeting of the
Board of Directors at such times as may be necessary but at least once every
fiscal quarter. The Board of Directors shall include at least two (2) non-
affiliated directors, which directors shall not be officers or employees of the
Company ("Outside Directors"). In addition, the Company will allow one (1)
designated representative of ESL to receive timely notice of, attend and make
comments at all meetings of its Board of Directors. (Such designated
representative shall also be sent all standard communications and notifications
from the Company to the members of its Board of Directors concerning annual and
special meetings in the same fashion and on the same basis, including with
respect to timing, as he would if he were a member of the Board of Directors.)
Further, for a period of five (5) years from the Closing, the holders of the
Series A Preferred Stock shall have the right to designate one (1) member of
the Board of Directors and the Company will cause such designee to be elected
to the Company's Board of Directors.
(j) The Company will cause the Board of Directors to maintain a
Compensation Committee, which shall be comprised of three (3) members, of which
one (1) member shall be a director designated by the holders of the Shares.
The Compensation Committee shall have authority with respect to the matters set
forth in clauses (i) and (ii) of paragraph (m) of this Section 5.
(k) The management of the Company shall prepare and deliver to
each member of the Board (including ESL's designee) monthly reports
highlighting business developments and activities, with those persons having
assigned responsibilities reporting on operations and activities in their areas
of responsibility.
(l) The Company will promptly send to ESL and each subscriber to
the Private Placement, in no event later than ninety (90) days following each
meeting (unless ESL or each such subscriber shall waive such right in writing)
copies of the complete minutes of each meeting of its Board of Directors,
executive and similar committees thereof.
(m) Without in any way limiting the generality of matters which
may be appropriate
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
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for consideration or action by the Board of Directors, prior to taking action
with respect to any of the following items, the Board of Directors or, in the
case of clauses (i) and (ii), the Compensation Committee thereof, must approve
the following actions:
(i) Changes in officers and their compensation, including,
without limitation, all significant employee benefits other than health
care and similar insurance plans;
(ii) All incentive programs (and revisions thereto) for
employees such as stock option plans, equity plans, bonus plans, etc.;
(iii) Company budgets, which shall be submitted within the
period from thirty (30) days prior to and until thirty (30) days after
the commencement of each fiscal year covering sales, direct costs,
indirect costs, profit targets, capital expenditures, and cash flow;
(iv) Major appropriations in excess of Fifty Thousand
Dollars ($50,000.00) for any capital items not in the Company budget
for the fiscal year;
(v) Major new facilities and their location, excluding any
small leased facilities in the local area so long as their annual
rental obligation does not exceed Fifty Thousand Dollars ($50,000.00)
per year;
(vi) All matters pertaining to mergers and acquisitions,
without exception;
(vii) Purchase contracts of a major nature;
(viii) Sales contracts of an unusual size or complexity;
(ix) Sale or purchase of patents, rights, or any royalty or
license agreements;
(x) Warranty and distribution policies of an unusual
nature which are not representative of industry patterns;
(xi) Financing programs and policies applicable to public
offerings, private placements, and long-term debt;
(xii) Treasury policies;
(xiii) Selection of auditors and corporate counsel;
(xiv) Banking resolutions;
(xv) Cash policies such as pension funds, investments,
etc., other than normal bank deposits;
(xvi) All matters of litigation in which the Company is to
be the plaintiff or
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other initiating party; and
(xvii) Conflict of interest matters.
(n) The management of the Company shall notify and consult with
the Board of Directors (by written, telegraphic or telephonic notice) prior to
taking any initial action with respect to any of the following matters (it
being understood that the Board of Directors will determine the propriety of
further or alternative action with respect to such matters at their next
meeting):
(i) All matters of personnel policies as they apply to any
labor agreements or organization of unions;
(ii) All matters of public policy, wherein the Company is
to be involved in any community, political, or religious cause or
program;
(iii) All matters of litigation that involve or may involve
the Company as a defendant;
(iv) Audit programs and policies; and
(v) Any operating decisions which in the judgment of the
President and Chief Executive Officer should be presented to the Board.
(o) ESL shall be paid a commission of five percent (5%) of the
aggregate price paid upon the exercise or redemption of any of the Warrants.
Any costs incurred by ESL in connection with the solicitation of Warrant
exercises or the redemption of Warrants shall be borne by the Company.
(p) The Company shall file a Certificate of Designation with the
Secretary of State of Utah, setting forth the rights and preferences of the
Series A Preferred Stock substantially in the form attached hereto as Exhibit
"C".
6. Negative Covenants of the Company.
(a) For a period of eight (8) months following the Closing, the
Company will not, without the prior written consent of ESL, grant any options
to purchase securities of the Company to employees that are exercisable at a
price below the greater of the Private Placement Price or the fair market value
of the securities on the date of grant.
(b) For a period of three (3) years following the Closing, the
Company will not, without the prior written consent of ESL, offer or sell any
of its securities in reliance on Regulation S of the Securities Act of 1933, as
amended.
(c) The Company will use its best efforts to cause all of (i) the
current directors and executive officers of the Company who are stockholders,
(ii) the holders of Five Hundred
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Thousand (500,000) shares issued by the Company pursuant to a registration
statement filed on Form S-8 in January, 1997, and (iii) the holders of the Four
Hundred Eighty Thousand (480,000) shares of Common Stock controlled by Xxxxxxx
X'Xxxx, agree that their shares will be subject to the provisions of a Lock-Up
Agreement (herein so called) substantially in the form attached hereto as
Exhibit "D". The shares subject to the Lock-Up Agreement shall not be
assignable or transferable. The Company will take all such steps necessary to
enforce the provisions of the Lock-Up Agreements, including, but not limited
to, notifying the Company's transfer agent of the existence of the Lock-Up
Agreements. The shares subject to the Lock-Up Agreement shall be released
therefrom in accordance with the terms of the Lock-Up Agreement.
(d) The Company will not use any proceeds from the Private
Placement to repay any indebtedness of the Company including but not limited to
any indebtedness to current executive officers or principal stockholders of the
Company, other than the aggregate sum of One Million One Hundred Thousand
Dollars ($1,100,000.00) payable to various vendors of the Company as disclosed
in the Company's most recent financial statements prepared by Xxxxxxx
Accountants dated March 31, 1997.
(e) The Company shall not, without the prior unanimous written consent
of ESL and the holders of the Series A Preferred Stock, create any new class or
series of stock having a dividend and/or liquidation preference senior to the
Series A Preferred Stock or increase the size of the authorized number of
shares of Series A Preferred Stock.
(f) The Company will not issue press releases without first providing
ESL a copy of the proposed prior to its dissemination for a period of eighteen
(18) months from the Closing or November 30, 1997, whichever is earlier.
(g) For a period of thirteen (13) months from the Closing or November
30, 1998, whichever is earlier, the compensation of the executive officers of
the Company shall be subject to the approval of ESL, which approval shall not
unreasonably be withheld.
(h) The Company will not sell any of its securities at a price lower
than the Private Placement Price for a period of twenty-four (24) months from
the Closing or November 30, 1997, whichever is earlier, without the prior
written consent of ESL.
7. Representations and Warranties of ESL.
ESL represents, warrants and covenants to the Company as follows:
(a) ESL has been duly incorporated and is validly existing and in
good standing under the laws of Nevis, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
currently conducted.
(b) This Agreement has been duly authorized, validly executed and
delivered on behalf of ESL and is a valid and binding agreement of ESL
enforceable in accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors'
rights generally, and ESL has full power and authority to execute and
PLACEMENT AGREEMENT OF
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deliver this Agreement and the other agreements and documents contemplated
hereby and to perform its obligations hereunder and thereunder.
8. Indemnification. The Company hereby agrees to indemnify and hold
harmless ESL and its officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages, liabilities and expenses
incurred by each such person in connection with defending or any reasonable
investigation of colorable claims or liabilities, including any costs or
expenses incurred, to which any such indemnified party may become subject under
the Securities' Act, or under any other statute, at common law or otherwise,
insofar as such losses, claims, demands, liabilities and expenses arise out of
or are based upon, in whole or in part, (i) any untrue statement or alleged
untrue statement of a material fact made by the Company, (ii) any omission or
alleged omission of a material fact with respect to the Company, or (iii) any
breach of any representation, warranty or agreement made by the Company in this
Agreement.
9. Mergers and Acquisitions.
(a) The Company agrees that ESL will be paid a finder's fee of
seven percent (7%) of the first $1,000,000.00, six percent (6%) of the second
$1,000,000.00 and five percent (5%) of the next $5,000,000.00 ranging in
$1,000,000.00 increments down to two and one-half percent (2-1/2%) of the
excess (with a reduction by one-half percent (0.5%) for each $1,000,000.00
thereafter up to $9,000,000.00), if any, over $9,000,000.00 of the
consideration involved in any transaction (including mergers, acquisitions,
joint ventures and any other business for the Company introduced by ESL)
consummated by the Company, in which ESL introduced the other party to the
Company during a period ending five (5) years from the Closing (an "Introduced
Transaction") and with whom the Company did not have a prior relationship; and
(b) Any such finder's fee due to ESL will be paid in cash at the
closing of the particular Introduced Transaction for which the finder's fee is
due.
10. Conditions Precedent to Closing.
(a) Prior to the Closing, ESL shall have received legal opinions
addressed to ESL and each subscriber to the Private Placement from counsel for
the Company, confirming the representations and warranties of the Company
contained in Section 4, substantially in the form attached hereto as Exhibit
"E".
(b) ESL shall have received a fully executed Placement Agent's
Option Certificate from the Company for the options earned upon the Closing.
(c) ESL shall have received a fully executed Registration Rights
Agreement with respect to the Placement Agent's Units and the ESL Option Shares
from the Company for the ESL Option Shares and Placement Agent's Units earned
upon the Closing.
(d) ESL shall have received a fully-executed Lock-Up Agreement
from each shareholder of the Company as set forth in Paragraph 6(c).
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
13
(e) ESL shall have received a certified copy of the resolution of
the Board of Directors of the Company authorizing the transactions contemplated
herein.
(f) The Company shall have filed with the Office of the Secretary
of State of Utah a Certificate of Designation acceptable to ESL, substantially
in the form attached hereto as Exhibit "C".
(g) The Company shall have amended its Bylaws in such a manner so
as to make its Bylaws consistent with the terms and conditions of this
Agreement and the transactions contemplated herein, a copy of which will have
been provided to ESL.
(h) Prior to the Closing, the escrow agent, Cardinal International
Bank & Trust Co., Ltd. (the "Escrow Agent"), shall have received the
certificates representing the Placement Agent's Units earned for the Private
Placement.
(i) Prior to the Closing, the Escrow Agent, shall have received a
fully-executed subscription agreement from each subscriber to the Private
Placement.
(j) ESL shall have received an opinion addressed to ESL and each
subscriber to the Private Placement, from counsel satisfactory to ESL,
concerning the merger of the Company with and into Mountain State Resources
Corporation, in form and substance satisfactory to ESL.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective upon its execution by
ESL.
(b) This Agreement shall terminate on the earlier of November 30,
1997, or the Closing.
12. Parties. This Agreement shall inure to the benefit of and be
binding upon ESL, the Company and ESL's and its respective successors and
assigns. Except as provided for in Section 4 hereinabove, nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
successors and assigns and the controlling persons, officers, directors,
employees, agents and attorneys of the parties, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. Except as provided in Section 4, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
said controlling persons, officers, directors, employees, agents and attorneys,
and for the benefit of no other person or corporation.
13. Secondary Public Offering. ESL agrees and consents to the Company
conducting a secondary public offering of its Securities by means of an
underwritten offer at a price equal to or greater than the Private Placement
Price.
14. Notices. All notices and other communications provided for or
permitted hereunder shall
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
14
be made in writing by hand delivery, express overnight courier, registered
first class mail, overnight courier, or telecopied (followed by registered mail
or overnight courier), initially to the address set forth below, and thereafter
at such other address, notice of which is given in accordance with the
provisions of this Section 14.
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to ESL:
Equity Services, Ltd
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xx. Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, registered mail, return receipt requested, postage
prepaid, if mailed; when received after being deposited in the regular mail;
the next business day after being deposited with an overnight courier, if
deposited with a nationally recognized, overnight courier service; when receipt
is acknowledged, if telecopied.
15. Attorneys' Fees. If any action is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs, in addition to any other
relief to which he is or may be entitled. This provision shall be construed as
applicable to the entire agreement.
16. Time of Essence. Time shall be of the essence of this Agreement.
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
15
17. Construction. This Agreement shall be construed in accordance with the
internal laws of the State of Texas.
18. Execution. This Agreement may be executed in any number of
counterparts each of which taken together shall constitute one and the same
instrument.
19. Joint Drafting of Agreement. This Agreement has been prepared by the
joint efforts of the respective counsel for each of the parties hereto and
shall not be construed against a particular party simply by reason of such
party being the drafting party.
20. Entire Agreement. This Agreement constitutes the entire
understanding by and between the parties with respect to the subject matter
hereof. This Agreement can only be modified, including any extension of the
offering period, by a written agreement duly signed by persons authorized to
sign agreements on behalf of the respective parties.
21. Facsimile Signature. This Agreement may be executed by facsimile copy
and any such facsimile copy bearing the facsimile signature of any party hereto
shall have full legal force and effect and shall be binding against the party
having executed this Agreement by facsimile.
If the foregoing is in accordance with your understanding, please sign
below and return to us a counterpart hereof, and upon your acceptance hereof,
this letter and the acceptance hereof shall constitute a binding agreement
between ESL and the Company.
Very truly yours,
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ XXXX XXXXXX, President
Accepted and agreed to as of the
date first above written by:
EQUITY SERVICES, LTD.
By:/s/ XXXX XXXXXXXXX, Director
PLACEMENT AGREEMENT OF
MICRO-MEDIA SOLUTIONS, INC.
16
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT - EIL
17
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT - ESL
18
EXHIBIT "C"
CERTIFICATE OF DESIGNATION
19
EXHIBIT "D"
LOCK-UP AGREEMENT
20
EXHIBIT "E"
FORM OF LEGAL OPINION
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of the 11 day of November, 1997 by and between MICRO-MEDIA
SOLUTIONS, INC., a Utah corporation (the "Company") and EQUITY SERVICES, LTD.,
a Nevis company (the "Shareholder").
R E C I T A L S:
WHEREAS, the Shareholder is acquiring (i) Twenty Thousand (20,000)
units of the Company's securities (the "Units"), each Unit consisting of one
(1) share of the Company's Series A 5% Cumulative Convertible Preferred Stock,
par value per share (the "Series A Preferred Stock") and six (6)
warrants (the "Warrants") to purchase one share each of common stock, par value
$0.010 per share, of the Company (the "Common Stock") pursuant to that certain
placement agreement by and between the Company and the Shareholder dated
November 11, 1997 (the "Placement Agreement") and (ii) an option to purchase up
to Four Hundred Thousand (400,000) shares of Common Stock pursuant to that
certain Placement Agent's Option Certificate dated November 11, 1997 (the
"Option Shares"); and
WHEREAS, the Company desires to grant to the Shareholder certain
registration rights relating to the shares of Common Stock issuable upon
conversion of any of the Series A Preferred Stock or exercise of any of the
Warrants and the Option Shares (collectively, the "Shares"); and the
Shareholder desires to obtain such registration rights, subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions and References. For purposes of this Agreement, in
addition to the definitions set forth above and elsewhere herein, the following
terms shall have the following meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
21
(b) The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the 1933
Act (as herein defined) and the declaration or ordering of
effectiveness of such registration statement or document.
(c) For purposes of this Agreement, the term "Registrable
Stock" shall mean (i) any shares of Common Stock issuable upon
conversion of any of the Series A Preferred Stock or exercise of any of
the Warrants, (ii) the Option Shares, (iii) any shares of Common Stock
issued by way of a stock split, reorganization, merger or
consolidation, and (iv) any Common Stock issued as a dividend on the
Shares. For purposes of this Agreement, any Registrable Stock shall
cease to be Registrable Stock when (v) a registration statement
covering such Registrable Stock has been declared effective and such
Registrable Stock has been disposed of pursuant to such effective
registration statement, (w) such Registrable Stock is sold pursuant to
Rule 144 (or any similar provision then in force) under the 1933 Act,
(x) such Registrable Stock is eligible to be sold pursuant to Rule
144(k) under the 1933 Act, (y) such Registrable Stock has been
otherwise transferred, no stop transfer order affecting such stock is
in effect and the Company has delivered new certificates or other
evidences of ownership for such Registrable Stock not bearing any
legend indicating that such shares have not been registered under the
1933 Act, or (z) such Registrable Stock is sold by a person in a
transaction in which the rights under the provisions of this Agreement
are not assigned.
(d) The term "Holder" shall mean the Shareholder or any
transferee or assignee thereof to whom the rights under this Agreement
are assigned in accordance with Section 10 hereof, provided that the
Shareholder or such transferee or assignee shall then own the
Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of
1933, as amended.
(f) An "affiliate of such Holder" shall mean a person who
controls, is controlled by or is under common control with a Holder, or
the spouse or children (or a trust exclusively for the benefit of the
spouse and/or children) of a Holder, or, in the case of a Holder that
is a partnership, its partners.
(g) The term "Person" shall mean an individual,
corporation, partnership, trust, limited liability company,
unincorporated organization or association or other entity, including
any governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or
Holders of in the aggregate at least a majority of the Registrable
Stock.
(i) References in this Agreement to any rules, regulations
or forms promulgated by the Commission shall include rules, regulations
and forms succeeding to the functions thereof, whether or not bearing
the same designation.
2. Demand Registration.
REGISTRATION RIGHTS AGREEMENT
22
(a) Commencing immediately upon the date of Closing (as
defined in the Placement Agreement), any Requesting Holders may make a
written request to the Company (specifying that it is being made
pursuant to this Section 2) that the Company file a registration
statement under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 0000 Xxx) covering
the registration of Registrable Stock. In such event, the Company shall
(x) within ten (10) days thereafter notify in writing all other Holders
of Registrable Stock of such request, and (y) use its best efforts to
cause to be registered under the 1933 Act all Registrable Stock that
the Requesting Holders and such other Holders have, within forty-five
(45) days after the Company has given such notice, requested be
registered.
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an underwritten
offering, they shall so advise the Company as a part of their request
pursuant to Section 2.(a) above, and the Company shall include such
information in the written notice referred to in clause (x) of Section
2.(a) above. In such event, the Holder's right to include its
Registrable Stock in such registration shall be conditioned upon such
Holder's participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten offering to the
extent provided in this Section 2. All Holders proposing to distribute
Registrable Stock through such underwritten offering shall enter into
an underwriting agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be selected by a
majority in interest of the Requesting Holders and shall be approved by
the Company, which approval shall not be unreasonably withheld;
provided, that all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement
shall be conditions precedent to the obligations of such Holders; and
provided further, that no Holder shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Stock of such Holder and such
Holder's intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section 2
to the contrary, if the managing underwriter of an underwritten
offering of the Registrable Stock requested to be registered pursuant
to this Section 2 advises the Requesting Holders in writing that in its
opinion marketing factors require a limitation of the number of shares
to be underwritten, the Requesting Holders shall so advise all Holders
of Registrable Stock that would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Stock that may be
included in such underwritten offering shall be allocated among all
such Holders, including the Requesting Holders, in proportion (as
nearly as practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of filing
the registration statement; provided, that in the event of such
limitation of the number of shares of Registrable Stock to be
underwritten, the Holders shall be entitled to an additional demand
registration pursuant to this Section 2. If any Holder of Registrable
Stock disapproves of the terms of the underwriting, such Holder may
elect to withdraw by written notice to the Company, the managing
underwriter and
REGISTRATION RIGHTS AGREEMENT
23
the Requesting Holders. The securities so withdrawn shall also be
withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration
pursuant to this Section 2 during the period starting with the
fourteenth (14th) day immediately preceding the date of an anticipated
filing by the Company of, and ending on a date ninety (90) days
following the effective date of, a registration statement pertaining to
a public offering of securities for the account of the Company;
provided, that the Company shall actively employ in good faith all
reasonable efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate of the
date of filing such registration statement shall be made in good faith.
(e) The Company shall be obligated to effect and pay for a
total of only two (2) registrations pursuant to this Section 2, unless
increased pursuant to Section 2.(c) hereof; provided, that a
registration requested pursuant to this Section 2 shall not be deemed
to have been effected for purposes of this Section 2.(e), unless (i) it
has been declared effective by the Commission, (ii) if it is a shelf
registration, it has remained effective for the period set forth in
Section 3.(b), (iii) the offering of Registrable Stock pursuant to such
registration is not subject to any stop order, injunction or other
order or requirement of the Commission (other than any such action
prompted by any act or omission of the Holders), and (iv) no limitation
of the number of shares of Registrable Stock to be underwritten has
been required pursuant to Section 2.(c) hereof.
3. Obligations of the Company. Whenever required under Section 2
to use its best efforts to effect the registration of any Registrable Stock,
the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission, not later than
ninety (90) days after receipt of a request to file a registration
statement with respect to such Registrable Stock, a registration
statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall be
available for the sale of such issue of Registrable Stock in accordance
with the intended method of distribution thereof, and use its best
efforts to cause such registration statement to become effective as
promptly as practicable thereafter; provided that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to one (1) counsel selected by
the Requesting Holders copies of all such documents proposed to be
filed, and (ii) notify each such Holder of any stop order issued or
threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective for such period of time as would satisfy the
holding period requirements of Rule 144(k) promulgated by the
Commission with respect to the Shares or such shorter period which will
terminate when all Registrable Stock covered by such registration
statement has been sold (but not before the
REGISTRATION RIGHTS AGREEMENT
24
expiration of the forty (40) or ninety (90) day period referred to in
Section 4(3) of the 1933 Act and Rule 174 thereunder, if applicable),
and comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each Holder and any underwriter of
Registrable Stock to be included in a registration statement copies of
such registration statement as filed and each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Stock
owned by such Holder;
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws of such
jurisdictions as any selling Holder or any underwriter of Registrable
Stock reasonably requests, and do any and all other acts which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of the Registrable Stock owned by
such Holder; provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.(d) hereof,
(ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with or
approved by such other governmental agencies or other authorities as
may be necessary by virtue of the business and operations of the
Company to enable the selling Holders thereof to consummate the
disposition of such Registrable Stock;
(f) notify each selling Holder of such Registrable Stock
and any underwriter thereof, at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act (even if such
time is after the period referred to in Section 3.(b)), of the
happening of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Stock, such prospectus will not contain
an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances being made not misleading;
(g) make available for inspection by any selling Holder,
any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any
REGISTRATION RIGHTS AGREEMENT
25
such Inspector, as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, in connection with such
registration statement. Records or other information which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records or other information is
necessary to avoid or correct a misstatement or omission in the
registration statement, or (ii) the release of such Records or other
information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction. Each selling Holder shall, upon
learning that disclosure of such Records or other information is sought
in a court of competent jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake appropriate
action to prevent disclosure of the Records or other information deemed
confidential;
(h) furnish, at the request of any Requesting Holder, on
the date that such shares of Registrable Stock are delivered to the
underwriters for sale pursuant to such registration or, if such
Registrable Stock is not being sold through underwriters, on the date
that the registration statement with respect to such shares of
Registrable Stock becomes effective, (1) a signed opinion, dated such
date, of the legal counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and if such
Registrable Stock is not being sold through underwriters, then to the
Requesting Holders as to such matters as such underwriters or the
Requesting Holders, as the case may be, may reasonably request and as
would be customary in such a transaction; and (2) a letter dated such
date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable Stock is
not being sold through underwriters, then to the Requesting Holders
and, if such accountants refuse to deliver such letter to such Holder,
then to the Company (i) stating that they are independent certified
public accountants within the meaning of the 1933 Act and that, in the
opinion of such accountants, the financial statements and other
financial data of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act, and (ii) covering such other financial
matters (including information as to the period ending not more than
five (5) business days prior to the date of such letter) with respect
to the registration in respect of which such letter is being given as
the Requesting Holders may reasonably request and as would be customary
in such a transaction;
(i) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an underwriting
agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition
of the Registrable Stock to be so included in the registration
statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than eighteen (18) months after the effective date of the
registration statement, an earnings statement covering the period of at
least twelve (12) months beginning with the first full month after the
effective date of such registration statement, which earnings
statements shall satisfy the provisions of Section
REGISTRATION RIGHTS AGREEMENT
26
11(a) of the 1933 Act; and
(k) use its best efforts to cause all such Registrable
Stock to be listed on The Nasdaq Small Cap Market and/or any other
securities exchange on which similar securities issued by the Company
are then listed or traded.
The Company may require each selling Holder of Registrable Stock as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Stock as the Company
may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3.(f) hereof, such
Holder will forthwith discontinue disposition of Registrable Stock pursuant to
the registration statement covering such Registrable Stock until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 3.(f) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Stock current at the time of receipt of such notice.
In the event the Company shall give any such notice, the Company shall extend
the period during which such registration statement shall be maintained
effective pursuant to this Agreement (including the period referred to in
Section 3.(b)) by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 3.(f) hereof to and
including the date when each selling Holder of Registrable Stock covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 3.(f) hereof.
4. Incidental Registration. Commencing immediately after the
date of Closing (as defined in the Investor Agreement), if the Company
determines that it shall file a registration statement under the 1933 Act
(other than a registration statement on a Form S-4 or S-8 or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that would also permit the
registration of the Registrable Stock and such filing is to be on its behalf
and/or on behalf of selling holders of its securities for the general
registration of its common stock to be sold for cash, at each such time the
Company shall promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such registration
statement, which date shall be no earlier than thirty (30) days from the date
of such notice, and advising each Holder of its right to have Registrable Stock
included in such registration. Upon the written request of any Holder received
by the Company no later than twenty (20) days after the date of the Company's
notice, the Company shall use its best efforts to cause to be registered under
the 1933 Act all of the Registrable Stock that each such Holder has so
requested to be registered. If, in the written opinion of the managing
underwriter or underwriters (or, in the case of a non-underwritten offering, in
the written opinion of the placement agent, or if there is none, the Company),
the total amount of such securities to be so registered, including such
Registrable Stock, will exceed the maximum amount of the Company's securities
which can be marketed (i) at a price reasonably related to the then current
market value of such securities, or (ii) without otherwise materially and
adversely affecting the entire offering, then the amount of Registrable Stock
to be offered for the accounts of Holders shall be reduced pro rata to the
extent necessary to reduce the
REGISTRATION RIGHTS AGREEMENT
27
total amount of securities to be included in such offering to the
recommended amount; provided, that if securities are being offered for the
account of other Persons as well as the Company, such reduction shall not
represent a greater fraction of the number of securities intended to be offered
by Holders than the fraction of similar reductions imposed on such other
Persons other than the Company over the amount of securities they intended to
offer.
5. Holdback Agreement - Restrictions on Public Sale by Holder.
(a) To the extent not inconsistent with applicable law,
each Holder whose Registrable Stock is included in a registration
statement agrees not to effect any public sale or distribution of the
issue being registered or a similar security of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities, including a sale pursuant to Rule 144 under the 1933 Act,
during the fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of such registration statement
(except as part of the registration), if and to the extent requested by
the Company in the case of a nonunderwritten public offering or if and
to the extent requested by the managing underwriter or underwriters in
the case of an underwritten public offering.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or distribution of
any securities similar to those being registered, or any securities
convertible into or exchangeable or exercisable for such securities,
during the fourteen (14) days prior to, and during the ninety (90) day
period beginning on, the effective date of any registration statement
in which Holders are participating (except as part of such
registration), if and to the extent requested by the Holders in the
case of a non-underwritten public offering or if and to the extent
requested by the managing underwriter or underwriters in the case of an
underwritten public offering; and (ii) that any agreement entered into
after the date of this Agreement pursuant to which the Company issues
or agrees to issue any securities convertible into or exchangeable or
exercisable for such securities (other than pursuant to an effective
registration statement) shall contain a provision under which holders
of such securities agree not to effect any public sale or distribution
of any such securities during the periods described in (i) above, in
each case including a sale pursuant to Rule 144 under the 1933 Act.
6. Expenses of Registration. The Company shall bear all expenses
incurred in connection with each registration pursuant to Sections 2 and 4 of
this Agreement, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holders shall bear and
pay the underwriting commissions and discounts applicable to the Registrable
Stock offered for their account in connection with any registrations, filings
and qualifications made pursuant to this Agreement.
REGISTRATION RIGHTS AGREEMENT
28
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify, to the full extent permitted by law, each Holder, its
officers, directors and agents and each Person who controls such Holder
(within the meaning of the 0000 Xxx) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged
untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the circumstances
under which they were made) not misleading. The Company will also
indemnify any underwriters of the Registrable Stock, their officers and
directors and each Person who controls such underwriters (within the
meaning of the 0000 Xxx) to the same extent as provided above with
respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating, each such
Holder will furnish to the Company in writing such information with
respect to such Holder as the Company reasonably requests for use in
connection with any such registration statement or prospectus and
agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each Person who controls the Company (within
the meaning of the 0000 Xxx) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein (in the
case of a prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission
is contained in any information with respect to such Holder so
furnished in writing by such Holder. Notwithstanding the foregoing, the
liability of each such Holder under this Section 7.(b) shall be limited
to an amount equal to the initial public offering price of the
Registrable Stock sold by such Holder, unless such liability arises out
of or is based on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt written
notice to the indemnifying party after the receipt by such Person of
any written notice of the commencement of any action, suit, proceeding
or investigation or threat thereof made in writing for which such
Person will claim indemnification or contribution pursuant to this
Agreement and, unless in the reasonable judgment of such indemnified
party, a conflict of interest may exist between such indemnified party
and the indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claims with counsel
reasonably satisfactory to such indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld).
Failure by such Person to provide said notice to the indemnifying party
shall itself not create liability except to the extent of any injury
caused thereby. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include
REGISTRATION RIGHTS AGREEMENT
29
as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation. If the indemnifying party IS not
entitled to, or elects not to, assume the defense of a claim, it will
not be obligated to pay the fees and expenses of more than one (1)
counsel with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other such indemnified parties with respect
to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnity
provided for in this Section 7 is unavailable to, or is insufficient to
hold harmless, an indemnified party, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, or provides a lesser sum to
the indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties; and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7.(c), any legal or
other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx)
shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 7.(a) and 7.(b) without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 7.
8. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holders entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires,
REGISTRATION RIGHTS AGREEMENT
30
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.
9. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the 1933 Act and the Securities Exchange Act
of 1934, as amended, and the rules and regulations adopted by the Commission
thereunder; and it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Registrable Stock without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it
has complied with such requirements.
10. Transfer of Registration Rights. The registration rights of
any Holder under this Agreement with respect to any Registerable Stock may be
transferred to any transferee of such Registrable Stock; provided that such
transfer may otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall give the Company
written notice at or prior to the time of such transfer stating the name and
address of the transferee and identifying the securities with respect to which
the rights under this Agreement are being transferred; provided further, that
such transferee shall agree in writing, in form and substance satisfactory to
the Company, to be bound as a Holder by the provisions of this Agreement; and
provided further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by such
transferee is restricted under the 1933 Act. Except as set forth in this
Section 10, no transfer of Registrable Stock shall cause such Registrable Stock
to lose such status.
11. Mergers, Etc. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to "Registrable Stock" shall be deemed to
be references to the securities which the Holders would be entitled to receive
in exchange for Registrable Stock under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Section 11 shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if each Holder is entitled to
receive in exchange for its Registrable Stock consideration consisting solely
of (i) cash, (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the 1933 Act, or
(iii) securities of the acquiring corporation which the acquiring corporation
has agreed to register within ninety (90) days of completion of the transaction
for resale to the public pursuant to the 1933 Act.
REGISTRATION RIGHTS AGREEMENT
31
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the Holders in this
Agreement.
(b) Remedies. Each Holder, in addition to being entitled
to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive (to the
extent permitted by law) the defense in any action for specific
performance that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of the Holders of
at least a majority of the Registrable Stock then outstanding affected
by such amendment, modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective successors and
assigns of the parties hereto. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
Texas applicable to contracts made and to be performed wholly within
that state, without regard to the conflict of law rules thereof.
(f) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
(g) Headings. The headings in this Agreement are used for
convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be delivered in person or
by telecopy or by overnight courier guaranteeing no later than second
business day delivery, directed to (i) the Company at the address set
forth below its signature hereof or (ii) a Holder at the address of the
Administrator set forth below its signature hereof. Any party may
change its address for notice by giving ten (10) days advance written
notice to the other parties. Every notice or other communication
hereunder shall be deemed to have been duly given or served on the
REGISTRATION RIGHTS AGREEMENT
32
date on which personally delivered, or on the date actually received,
if sent by telecopy or overnight courier service, with receipt
acknowledged.
(i) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Holders shall be
enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties or undertakings other
than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Enforceability. This Agreement shall remain in full
force and effect notwithstanding any breach or purported breach of, or
relating to, the Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the
Agreement as if fully set forth herein.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written hereinabove.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxx
Name: XXXX XXXXXX
Title: President
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
REGISTRATION RIGHTS AGREEMENT
34
EQUITY SERVICES, LTD.
By: /s/ Xxxx Xxxxxxxxx
Name: XXXX XXXXXXXXX
Title: Director
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
INSERT FILE ON DISK
THE OPTION REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IS
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE. THIS OPTION MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN OPINION OF COUNSEL TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER
THE ACT.
MICRO-MEDIA SOLUTIONS, INC.
PLACEMENT AGENT'S OPTION CERTIFICATE
THIS PLACEMENT AGENT'S OPTION CERTIFICATE (the "Option Certificate")
certifies that for value received, EQUITY SERVICES, LTD. (the "Holder"), is the
owner of this option (the "Option"), which entitles the Holder thereof to
purchase, commencing January 31, 1998 and before the Expiration Date (as
defined below) Four Hundred Thousand (400,000) shares (the "Option Shares") of
fully paid and non-assessable shares of the common stock, $0.10 par value per
share (the "Common Stock"), of MICRO-MEDIA SOLUTIONS, INC., a Utah corporation
(the "Company") at a purchase price of One Dollar and Fifty Cents ($1.50) per
REGISTRATION RIGHTS AGREEMENT
35
Option Share (the "Strike Price"), in lawful money of the United States of
America by bank or certified check, subject to adjustment as hereinafter
provided.
m. OPTION; PURCHASE PRICE.
This Option shall entitle the Holder hereof to purchase the Option
Shares at the Strike Price. The Strike Price and the number of Option Shares
evidenced by this Option Certificate are subject to adjustment as provided in
Article 6.
n. EXERCISE; EXPIRATION DATE.
a. Exercise. This Option is exercisable, at the option of the
Holder, commencing on January 31, 1998, and before the Expiration Date (as
defined below) by delivering to the Company written notice of exercise (the
"Exercise Notice"), stating the number of Option Shares to be purchased
thereby, accompanied by bank or certified check payable to the order of the
Company for the Option Shares being purchased. Within ten (10) days of the
Company's receipt of the Exercise Notice accompanied by the consideration for
the Option Shares being purchased, the Company shall issue and deliver to the
Holder a certificate representing the Option Shares being purchased. In the
case of exercise for less than all of the Option Shares represented by this
Option Certificate, the Company shall cancel this Option Certificate upon the
surrender hereof and shall execute and deliver a new Option Certificate for the
remaining balance of such Option Shares.
b. Termination. The term "Expiration Date" shall mean 5:00 p.m.,
Austin, Texas time, on January 31, 2003 or if such date in the State of Texas
shall be a holiday or a day on which banks are authorized to close, then 5:00
p.m., Austin, Texas time, the next following day which in the State of Texas is
not a holiday or a day on which banks are authorized to close.
o. RESTRICTIONS ON TRANSFER.
a. Restrictions. This Option, and the Option Shares or any other
security issuable upon exercise of this Option may not be assigned,
transferred, sold or otherwise disposed of unless (i) there is in effect a
registration statement under the Securities Act of 1933, as amended (the "Act")
covering such sale, transfer or other disposition or (ii) the Holder furnishes
to the Company an opinion of counsel, reasonably acceptable to counsel for the
Company, to the effect that the proposed sale, transfer or other disposition
may be effected without registration under the Act, as well as other
documentation incidental to such sale, transfer or other disposition as the
Company's counsel shall reasonably request.
b. Legend. Any Option Shares issued upon the exercise of this
Option shall bear a legend in substantially the form as follows:
"The shares evidenced by this certificate were issued upon
exercise of an Option and may not be sold, transferred or
otherwise disposed of in the absence of an effective
registration statement under the Securities Act of 1933 (the
"Act") or an opinion of counsel to the effect that the
proposed sale, transfer or disposition
REGISTRATION RIGHTS AGREEMENT
36
may be effectuated without registration under the Act."
p. RESERVATION OF SHARES.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Option, such number of shares of Common Stock as
shall then be issuable upon the exercise of this Option. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of this
Option shall be duly and validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issue thereof.
q. LOSS OR MUTILATION.
Upon receipt by the Company of evidence of the loss, theft, destruction
or mutilation of this Option Certificate and, in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to the Company, or in the
case of mutilation, upon surrender and cancellation of the mutilated Option
Certificate, the Company shall execute and deliver in lieu thereof, a new
Option Certificate representing an equal number of Option Shares exercisable
thereunder.
r. ANTI-DILUTION PROVISIONS.
a. Number of Option Shares. The number of shares of Common Stock
and the Strike Price per Option Share pursuant to this Option shall be subject
to adjustment from time to time as provided for in this Section 6(a).
Notwithstanding anything contained herein, the aggregate Strike Price for the
total number of Option Shares issuable pursuant to this Option shall remain
unchanged. In case the Company shall at any time change as a whole, by
subdivision or combination in any manner or by the making of a stock dividend,
the number of outstanding shares of Common Stock into a different number of
shares (i.e. forward or reverse stock split), (i) the number of shares which
the Holder of this Option shall have been entitled to purchase pursuant to this
Option shall be increased or decreased in direct proportion to such increase or
decrease of shares, as the case may be, and (ii) the Strike Price per Option
Share (but not the aggregate Strike Price) in effect immediately prior to such
change shall be increased or decreased in inverse proportion to such increase
or decrease of shares, as the case may be.
b. Fractional Shares. No certificate for fraction shares shall
be issued upon the exercise of this Option, but in lieu thereof the Company
shall purchase any such fractional shares calculated to the nearest cent.
c. Rights of the Holder. The Holder of this Option shall not be
entitled to any rights of a shareholder of the Company in respect of any Option
Shares purchasable upon the exercise hereof until such Option Shares have been
paid for in full and issued to it. The Holder of this Option shall be deemed
to be a shareholder of the Company from and after the time this Option is
exercised and the Option Shares therefor exercised have been paid for in full.
As soon as practicable after such exercise, the Company shall deliver a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, to the person or persons entitled to receive the
same.
PLACEMENT AGENTS OPTION CERTIFICATE
37
s. REGISTRATION RIGHTS.
The Holder of this Option and the Option Shares issued upon exercise of
this Option will have registration rights beginning on the date of execution of
this Option Certificate. The terms of these registration rights shall be as
set forth in the Registration Rights Agreement by and between the Holder and
the Company, in substantially the form attached hereto as Exhibit "A".
t. REPRESENTATIONS AND WARRANTIES.
The Holder, by acceptance of this Option, represents and warrants to,
and covenants and agrees with, the Company as follows:
a. The Option is being acquired for the Holder's own account for
investment and not with a view toward resale or distribution of any part
thereof, and the Holder has no present intention of selling, granting any
participation in, or otherwise distributing the same.
b. The Holder is an "accredited investor" within the meaning of
Rule 501 of Regulation D under the Act.
c. The Holder (i) is not a citizen or resident of the United
States of America, (ii) is not an entity organized under any laws of any state
of the United States of America and (iii) does not have any offices in the
United States of America.
u. MISCELLANEOUS.
a. Transfer Taxes; Expenses of Registration. The Company shall
bear all expenses incurred in connection with each registration pursuant to
this Option Certificate, excluding underwriters' discounts and commissions, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers' and accounting fees (including the
expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws, fees and
disbursements of counsel for the Company. The selling Holder shall bear and
pay the underwriting commissions and discounts applicable to the Option Shares
offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Option Certificate. The Holder shall pay
any and all brokerage fees and transfer taxes incidental to the sale or
exercise of this Option or the sale of the underlying shares issuable
hereunder.
b. Notice. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, express
overnight courier, registered first class mail, overnight courier, or
telecopied, initially to the address set forth below, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 9b.
PLACEMENT AGENTS OPTION CERTIFICATE
38
if to the Company:
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
if to Holder:
Equity Services, Ltd.
Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxx Steps
P.O. Box N-4805
Nassau, Bahamas
Attn: Xxxx Xxxxxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; three (3) business days after
being deposited in the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited with a nationally
recognized, overnight courier service; when receipt is acknowledged, if
telecopied.
c. Governing Law. This Option Certificate shall be governed by,
and construed in accordance with, the laws of the State of Texas, without
reference to its principles regarding conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to
be fully executed as of the date set forth below.
MICRO-MEDIA SOLUTIONS, INC.
By:
---------------------------------
PLACEMENT AGENTS OPTION CERTIFICATE
39
XXXX XXXXXX, President
ATTEST:
-------------------------
Name:
Title: Secretary
Date: November , 1997
PLACEMENT AGENTS OPTION CERTIFICATE
40
FORM OF EXERCISE OF OPTION
The undersigned hereby elects to exercise this Option as to shares of
Common Stock covered hereby. Enclosed herewith is a bank or certified check in
the amount of $ .
Date:
-------------------- -----------------------------
Name:
Address:
Signature
-----------------------------
41
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
between ESL and MSI
"OptionCert-A"
MICRO-MEDIA SOLUTIONS, INC.
(A Utah Corporation)
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
Effective November 11, 1997
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT (1) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (2) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER
THE SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR OTHER JURISDICTION. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANING GIVEN THEM BY REGULATION S UNDER THE
SECURITIES ACT.
THIS CERTIFIES THAT, for value received, EQUITY SERVICES, LTD. or
registered assigns ("Holder"), is entitled to purchase, subject to the
conditions set forth below, at any time or from time to time during the
Exercise Period (as defined in subsection 1.2, below), 120,000 shares
("Shares") of fully paid and non-assessable Common Stock, $0.10 par value
("Common Stock"), of MICRO-MEDIA SOLUTIONS, INC., a Utah corporation (the
"Company"), at the per share purchase price (the "Warrant Price") set forth in
subsection 1.1, subject to the further provisions of this Warrant. The term
"Warrants" as used herein shall mean this Warrant and all instruments issued by
the Company which are substantially identical to this Warrant (except for the
name of the holder and the number of securities purchasable by the holder).
1. EXERCISE OF WARRANT
The terms and conditions upon which this Warrant may be exercised, and
the Common Stock covered hereby may be purchased, are as follows:
1.1 Warrant Price. The Warrant Price shall be equal to $1.50 per
share, subject to
42
adjustment as provided in Section 4, below.
1.2 Method Of Exercise. The holder of this Warrant, may at any
time beginning January 3, 1998, and prior to January 31, 2000, or such later
date as the Company may in its sole discretion determine (the "Exercise
Period"), exercise in whole or in part the purchase rights evidenced by this
Warrant. Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly executed copy of
the form of subscription attached hereto, to the Secretary of the Company at
its principal offices;
(b) the payment to the Company, by cash, check payable to its order or
wire transfer, of an amount equal to the aggregate Warrant Price for the number
of Shares for which the purchase rights hereunder are being exercised; and
(c) the delivery to the Company, if necessary, to assure compliance
with federal and state securities laws, of an instrument executed by the holder
certifying that the Shares are being acquired for the sole account of the
holder and not with a view to any resale or distribution.
1.3 Satisfaction with Requirements of Securities Act of 1933.
Notwithstanding the provisions of subsection 1.2(c) and Section 7, each and
every exercise of this Warrant is contingent upon the Company's satisfaction
that the issuance of Common Stock upon the exercise is exempt from the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and all applicable state securities laws. The holder of this Warrant agrees to
execute any and all documents deemed necessary by the Company to effect the
exercise of this Warrant. Holder represents and warrants that: (a) it is not a
citizen or resident of the United States of America, (b) it is not an entity
organized under any laws of any state of the United States of America, and (c)
it does not have offices in the United States of America.
1.4 Issuance Of Shares and New Warrant. In the event the purchase
rights evidenced by this Warrant are exercised in whole or in part, one or more
certificates for the purchased Shares shall be issued as soon as practicable
thereafter to the person exercising such rights. Such holder shall also be
issued at such time a new Warrant representing the number of Shares (if any)
for which the purchase rights under this Warrant remain unexercised and
continuing in force and effect.
2. TRANSFERS
2.1 Transfers. Subject to Section 7 hereof, this Warrant and all
rights hereunder are transferable in whole or in part by the holder. The
transfer shall be recorded on the books of the Company upon the surrender of
this Warrant, properly endorsed, to the Secretary of the Company at its
principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. In the event of a partial
transfer, the Company shall issue to the several holders one or more
appropriate new Warrants.
2.2 Registered Holder. Each holder agrees that until such time as
any transfer pursuant to subsection 2.1 is recorded on the books of the
Company, the Company may treat the registered holder of this Warrant as the
absolute owner; provided that nothing herein affects any
PLACEMENT AGENTS OPTION CERTIFICATE
43
requirement that transfer of any Warrant or share of Common Stock issued or
issuable upon the exercise thereof be subject to compliance with the Securities
Act and all applicable state securities laws.
2.3 Form Of New Warrants. All Warrants issued in connection with
transfers of this Warrant shall bear the same date as this Warrant and shall be
substantially identical in form and provision to this Warrant except for the
number of Shares purchasable thereunder.
3. FRACTIONAL SHARES
Notwithstanding that the number of Shares purchasable upon the exercise
of this Warrant may have been adjusted pursuant to the terms hereof, the
Company shall nonetheless not be required to issue fractions of Shares upon
exercise of this Warrant or to distribute certificates that evidence fractional
shares nor shall the Company be required to make any cash payments in lieu
thereof upon exercise of this Warrant. Holder hereby waives any right to
receive fractional Shares.
4. ANTIDILUTION PROVISIONS
4.1 Stock Splits And Combinations. If the Company shall at any
time subdivide or combine its outstanding shares of Common Stock, this Warrant
shall, after that subdivision or combination, evidence the right to purchase
the number of shares of Common Stock that would have been issuable as a result
of that change with respect to the Shares of Common Stock that were purchasable
under this Warrant immediately before that subdivision or combination. If the
Company shall at any time subdivide the outstanding shares of Common Stock, the
Warrant Price then in effect immediately before that subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock, the Warrant Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this section shall become effective at the close of business
on the date the subdivision or combination becomes effective.
4.2 Reclassification, Exchange and Substitution. If the Common
Stock issuable upon exercise of this Warrant shall be changed into the same or
a different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares provided for above), the holder of this
Warrant shall, on its exercise, be entitled to purchase for the same aggregate
consideration, in lieu of the Common Stock that the holder would have become
entitled to purchase but for such change, a number of shares of such other
class or classes of stock equivalent to the number of shares of Common Stock
that would have been subject to purchase by the holder on exercise of this
Warrant immediately before that change.
4.3 Reorganizations, Mergers, Consolidations Or Sale Of Assets.
If at any time there shall be a capital reorganization of the Company's Common
Stock (other than a stock split, combination, reclassification, exchange, or
subdivision of shares provided for elsewhere above) or merger or consolidation
of the Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that
PLACEMENT AGENTS OPTION CERTIFICATE
44
the holder of this Warrant shall thereafter be entitled to receive upon
exercise of this Warrant, during the period specified in this Warrant and upon
payment of the Warrant Price then in effect, the number of shares of Common
Stock or other securities or property of the Company, or of the successor
corporation resulting from such merger or consolidation, to which a holder of
the Common Stock deliverable upon exercise of this Warrant would have been
entitled in such capital reorganization, merger or consolidation or sale if
this Warrant had been exercised immediately before that capital reorganization,
merger or consolidation or sale. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant with respect to the rights
and interests of the holder of this Warrant after the reorganization, merger,
consolidation, or sale to the end that the provisions of this Warrant
(including adjustment of the Warrant Price then in effect and number of Shares
purchasable upon exercise of this Warrant) shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other
property deliverable after that event upon exercise of this Warrant. The
Company shall, within thirty (30) days after making such adjustment, give
written notice (by first class mail, postage prepaid) to the registered holder
of this Warrant at the address of that holder shown on the Company's books.
That notice shall set forth, in reasonable detail, the event requiring the
adjustment and the method by which the adjustment was calculated and specify
the Warrant Price then in effect after the adjustment and the increased or
decreased number of Shares purchasable upon exercise of this Warrant. When
appropriate, that notice may be given in advance and be included as part of the
notice required under other provisions of this Warrant.
4.4 Common Stock Dividends; Distributions. In the event the
Company should at any time prior to the expiration of this Warrant fix a record
date for the determination of the holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such distribution, split or subdivision if no record date is
fixed), the Warrant Price shall be appropriately decreased and the number of
shares of Common Stock issuable upon exercise of the Warrant shall be
appropriately increased in proportion to such increase of outstanding shares.
4.5 Adjustments of Other Distributions. In the event the Company
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4.4, then, in
each such case for the purpose of this subsection 4.5, upon exercise of this
Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of the Company into which this Warrant may be exercised as of
the record date fixed for the determination of the holders of Common Stock of
the Company entitled to receive such distribution.
4.6 Certificate as to Adjustments. In the case of each adjustment
or readjustment of the Warrant Price pursuant to this Section 4, the Company
will promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause a certificate setting
PLACEMENT AGENTS OPTION CERTIFICATE
45
forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based, to be delivered to the holder
of this Warrant. The Company will, upon the written request at any time of the
holder of this Warrant, furnish or cause to be furnished to such holder a
certificate setting forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of shares of Common Stock issuable upon exercise of
the Warrant and the amount, if any, of other property at the time receivable
upon the exercise of the Warrant.
4.7 Reservation of Stock Issuable Upon Exercise. The Company
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting the
exercise of this Warrant such number of its shares of Common Stock as shall
from time to time be sufficient to effect the exercise of this Warrant and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the exercise of this Warrant, in addition to such
other remedies as shall be available to the holder of this Warrant, the Company
will use its best efforts to take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purposes.
5. RIGHTS PRIOR TO EXERCISE OF WARRANT
The Warrant holders will agree that so long as the Company remains
certified as an Historically Underutilized Business ("HUB"), they will not
exercise their Warrants and/or convert their preferred stock in such a manner
as to cause the Company to lose its HUB status. This Warrant does not entitle
the holder to any of the rights of a stockholder of the Company, including
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote, or to consent or to receive notice as
a stockholder of the Company. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following events shall
occur:
(a) the Company shall declare any dividend payable in any securities
upon its shares of Common Stock or make any distribution (other than a regular
cash dividend) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares of Common
Stock any additional shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock or any right to subscribe for or
purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation, merger, sale, transfer or lease of all or
substantially all of its property, assets, and business as an entirety) shall
be proposed and action by the Company with respect thereto has been approved by
the Company's Board of Directors,
Then in any one or more of said events the Company shall give notice in writing
of such event to
PLACEMENT AGENTS OPTION CERTIFICATE
46
the holder at his last address as it shall appear on the Company's records at
least twenty (20) days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled
to such dividends, distribution, or subscription rights, or for the
determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. Failure to publish,
mail or receive such notice or any defect therein or in the publication or
mailing thereof shall not affect the validity of any action taken in connection
with such dividend, distribution or subscription rights, or such proposed
dissolution, liquidation or winding up. Each person in whose name any
certificate for shares of Common Stock is to be issued shall for all purposes
be deemed to have become the holder of record of such shares on the date on
which this instrument was surrendered and payment of the Warrant Price was
made, irrespective of the date of delivery of such stock certificate, except
that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares of Common Stock at the close of business on
the next succeeding date on which the stock transfer books are open.
6. SUCCESSORS AND ASSIGNS
The terms and provisions of this Warrant shall inure to the benefit of,
and be binding upon, the Company and the holder thereof and their respective
successors and permitted assigns.
7. RESTRICTED SECURITIES
In order to enable the Company to comply with the Securities Act and
applicable state laws, the Company may require the holder as a condition of the
transfer or exercise of this Warrant, to give written assurance satisfactory to
the Company that the Warrant, or in the case of an exercise hereof the shares
subject to this Warrant, are being acquired for his own account, for investment
only, with no view to the distribution of the same, and that any disposition of
all or any portion of this Warrant or the Shares issuable upon the due exercise
of this Warrant shall not be made, unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b)(i) The holder has notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) the holder has
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such
securities under the Securities Act and applicable state law.
The holder acknowledges that this Warrant is, and each of the shares of
Common Stock issuable upon the due exercise hereof will be, a restricted
security, that he understands the provisions of Rule 144 of the Securities and
Exchange Commission, and that the certificate or certificates evidencing such
shares of Common Stock will bear a legend substantially similar to the
following:
PLACEMENT AGENTS OPTION CERTIFICATE
47
"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under the securities laws of any state.
They may not be sold, transferred or otherwise disposed of in the absence of an
effective registration statement covering these securities under the said Act
or laws, or an opinion of counsel satisfactory to the Company and its counsel
that registration is not required thereunder."
8. LOSS OR MUTILATION
Upon receipt by the Company of satisfactory evidence of the ownership
of and the loss, theft, destruction, or mutilation of any Warrant, and (i) in
the case of loss, theft, or destruction, upon receipt by the Company of
indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt
of such Warrant and upon surrender and cancellation of such Warrant, the
Company shall execute and deliver in lieu thereof a new Warrant representing
the right to purchase an equal number of shares of Common Stock.
9. NOTICES
All notices, requests, demands and other communications under this
Warrant shall be in writing and shall be deemed to have been duly given on the
date of service if served personally on the party to whom notice is to be
given, or on the date of mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows: if to the holder, at his address as shown in the
Company records; and if to the Company, at its principal office. Any party may
change its address for purposes of this subsection by giving the other party
written notice of the new address in the manner set forth above.
10. GOVERNING LAW
This Warrant and any dispute, disagreement or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided herein or performance shall be governed or
interpreted according to the laws of the State of Texas without regard to
conflicts of law.
DATED AS OF NOVEMBER 11, 1997
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ XXXX XXXXXX, President
SUBSCRIPTION
Micro-Media Solutions, Inc.
501 Waller
PLACEMENT AGENTS OPTION CERTIFICATE
48
Xxxxxx, Xxxxx 00000
Gentlemen:
The undersigned, , hereby elects to
purchase, pursuant to the provisions to the foregoing Warrant held by the
undersigned, shares of the Common Stock, $0.10 par
value ("Common Stock"), of Micro-Media Solutions, Inc.
Payment of the purchase price per Share required under such Warrant accompanies
this subscription.
The undersigned hereby represents and warrants that absent an effective
registration statement covering the Warrants, the undersigned is acquiring such
stock for the account of the undersigned and not for resale or with a view to
distribution of such Common Stock or any part hereof; that the undersigned is
fully aware of the transfer restrictions affecting restricted securities under
the pertinent securities laws and the undersigned understands that the shares
purchased hereby are restricted securities and that the certificate or
certificates evidencing the same will bear a legend to that effect.
DATED: , 199 .
Signature:
Address:
MICRO-MEDIA SOLUTIONS, INC.
(A Utah Corporation)
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
Effective November 11, 1997
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
PLACEMENT AGENTS OPTION CERTIFICATE
49
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT (1) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (2) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), AND
IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR OTHER JURISDICTION. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANING GIVEN THEM BY REGULATION S
UNDER THE SECURITIES ACT.
THIS CERTIFIES THAT, for value received, ENTREPRENEURIAL INVESTORS,
LTD. or registered assigns ("Holder"), is entitled to purchase, subject to the
conditions set forth below, at any time or from time to time during the
Exercise Period (as defined in subsection 1.2, below), 2,400,000 shares
("Shares") of fully paid and non-assessable Common Stock, $0.10 par value
("Common Stock"), of MICRO-MEDIA SOLUTIONS, INC., a Utah corporation (the
"Company"), at the per share purchase price (the "Warrant Price") set forth in
subsection 1.1, subject to the further provisions of this Warrant. The term
"Warrants" as used herein shall mean this Warrant and all instruments issued by
the Company which are substantially identical to this Warrant (except for the
name of the holder and the number of securities purchasable by the holder).
3. EXERCISE OF WARRANT
The terms and conditions upon which this Warrant may be exercised, and
the Common Stock covered hereby may be purchased, are as follows:
1.1 Warrant Price. The Warrant Price shall be equal to $1.50 per
share, subject to adjustment as provided in Section 4, below.
1.2 Method Of Exercise. The holder of this Warrant, may at any
time beginning January 3, 1998, and prior to January 31, 2000, or such later
date as the Company may in its sole discretion determine (the "Exercise
Period"), exercise in whole or in part the purchase rights evidenced by this
Warrant. Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly executed copy
of the form of subscription attached hereto, to the Secretary of the Company at
its principal offices;
(b) the payment to the Company, by cash, check payable to its order or
wire transfer, of an amount equal to the aggregate Warrant Price for the number
of Shares for which the purchase rights hereunder are being exercised; and
(c) the delivery to the Company, if necessary, to assure compliance
with federal and state securities laws, of an instrument executed by the holder
certifying that the Shares are being acquired for the sole account of the
holder and not with a view to any resale or distribution.
PLACEMENT AGENTS OPTION CERTIFICATE
50
1.3 Satisfaction with Requirements of Securities Act of 1933.
Notwithstanding the provisions of subsection 1.2(c) and Section 7, each and
every exercise of this Warrant is contingent upon the Company's satisfaction
that the issuance of Common Stock upon the exercise is exempt from the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and all applicable state securities laws. The holder of this Warrant agrees to
execute any and all documents deemed necessary by the Company to effect the
exercise of this Warrant. Holder represents and warrants that: (a) it is not a
citizen or resident of the United States of America, (b) it is not an entity
organized under any laws of any state of the United States of America, and (c)
it does not have offices in the United States of America.
1.4 Issuance Of Shares and New Warrant. In the event the purchase
rights evidenced by this Warrant are exercised in whole or in part, one or more
certificates for the purchased Shares shall be issued as soon as practicable
thereafter to the person exercising such rights. Such holder shall also be
issued at such time a new Warrant representing the number of Shares (if any)
for which the purchase rights under this Warrant remain unexercised and
continuing in force and effect.
4. TRANSFERS
2.1 Transfers. Subject to Section 7 hereof, this Warrant and all
rights hereunder are transferable in whole or in part by the holder. The
transfer shall be recorded on the books of the Company upon the surrender of
this Warrant, properly endorsed, to the Secretary of the Company at its
principal offices and the payment to the Company of all transfer taxes and
other governmental charges imposed on such transfer. In the event of a partial
transfer, the Company shall issue to the several holders one or more
appropriate new Warrants.
2.2 Registered Holder. Each holder agrees that until such time as
any transfer pursuant to subsection 2.1 is recorded on the books of the
Company, the Company may treat the registered holder of this Warrant as the
absolute owner; provided that nothing herein affects any requirement that
transfer of any Warrant or share of Common Stock issued or issuable upon the
exercise thereof be subject to compliance with the Securities Act and all
applicable state securities laws.
2.3 Form Of New Warrants. All Warrants issued in connection with
transfers of this Warrant shall bear the same date as this Warrant and shall be
substantially identical in form and provision to this Warrant except for the
number of Shares purchasable thereunder.
3. FRACTIONAL SHARES
Notwithstanding that the number of Shares purchasable upon the
exercise of this Warrant may have been adjusted pursuant to the terms hereof,
the Company shall nonetheless not be required to issue fractions of Shares upon
exercise of this Warrant or to distribute certificates that evidence fractional
shares nor shall the Company be required to make any cash payments in lieu
thereof upon exercise of this Warrant. Holder hereby waives any right to
receive fractional Shares.
4. ANTIDILUTION PROVISIONS
PLACEMENT AGENTS OPTION CERTIFICATE
51
4.1 Stock Splits And Combinations. If the Company shall at any
time subdivide or combine its outstanding shares of Common Stock, this Warrant
shall, after that subdivision or combination, evidence the right to purchase
the number of shares of Common Stock that would have been issuable as a result
of that change with respect to the Shares of Common Stock that were purchasable
under this Warrant immediately before that subdivision or combination. If the
Company shall at any time subdivide the outstanding shares of Common Stock, the
Warrant Price then in effect immediately before that subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of Common Stock, the Warrant Price then in effect
immediately before that combination shall be proportionately increased. Any
adjustment under this section shall become effective at the close of business
on the date the subdivision or combination becomes effective.
4.2 Reclassification, Exchange and Substitution. If the Common
Stock issuable upon exercise of this Warrant shall be changed into the same or
a different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares provided for above), the holder of this
Warrant shall, on its exercise, be entitled to purchase for the same aggregate
consideration, in lieu of the Common Stock that the holder would have become
entitled to purchase but for such change, a number of shares of such other
class or classes of stock equivalent to the number of shares of Common Stock
that would have been subject to purchase by the holder on exercise of this
Warrant immediately before that change.
4.3 Reorganizations, Mergers, Consolidations Or Sale Of Assets.
If at any time there shall be a capital reorganization of the Company's Common
Stock (other than a stock split, combination, reclassification, exchange, or
subdivision of shares provided for elsewhere above) or merger or consolidation
of the Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation or sale, lawful
provision shall be made so that the holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, during the period specified
in this Warrant and upon payment of the Warrant Price then in effect, the
number of shares of Common Stock or other securities or property of the
Company, or of the successor corporation resulting from such merger or
consolidation, to which a holder of the Common Stock deliverable upon exercise
of this Warrant would have been entitled in such capital reorganization, merger
or consolidation or sale if this Warrant had been exercised immediately before
that capital reorganization, merger or consolidation or sale. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder of this Warrant after
the reorganization, merger, consolidation, or sale to the end that the
provisions of this Warrant (including adjustment of the Warrant Price then in
effect and number of Shares purchasable upon exercise of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant. The Company shall, within thirty (30) days after making such
adjustment, give written notice (by first class mail, postage prepaid) to the
registered holder of this Warrant at the address of that holder shown on the
Company's books. That notice shall set forth, in reasonable detail, the event
requiring the adjustment and the method by which the adjustment was calculated
and specify the Warrant Price then in effect after the adjustment and the
increased or decreased number of Shares purchasable upon exercise of
PLACEMENT AGENTS OPTION CERTIFICATE
52
this Warrant. When appropriate, that notice may be given in advance and be
included as part of the notice required under other provisions of this Warrant.
4.4 Common Stock Dividends; Distributions. In the event the
Company should at any time prior to the expiration of this Warrant fix a record
date for the determination of the holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such distribution, split or subdivision if no record date is
fixed), the Warrant Price shall be appropriately decreased and the number of
shares of Common Stock issuable upon exercise of the Warrant shall be
appropriately increased in proportion to such increase of outstanding shares.
4.5 Adjustments of Other Distributions. In the event the Company
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets (excluding cash
dividends) or options or rights not referred to in subsection 4.4, then, in
each such case for the purpose of this subsection 4.5, upon exercise of this
Warrant the holder hereof shall be entitled to a proportionate share of any
such distribution as though such holder was the holder of the number of shares
of Common Stock of the Company into which this Warrant may be exercised as of
the record date fixed for the determination of the holders of Common Stock of
the Company entitled to receive such distribution.
4.6 Certificate as to Adjustments. In the case of each adjustment
or readjustment of the Warrant Price pursuant to this Section 4, the Company
will promptly compute such adjustment or readjustment in accordance with the
terms hereof and cause a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based, to be delivered to the holder of this Warrant. The
Company will, upon the written request at any time of the holder of this
Warrant, furnish or cause to be furnished to such holder a certificate setting
forth:
(a) Such adjustments and readjustments;
(b) The purchase price at the time in effect; and
(c) The number of shares of Common Stock issuable upon exercise of
the Warrant and the amount, if any, of other property at the time receivable
upon the exercise of the Warrant.
4.7 Reservation of Stock Issuable Upon Exercise. The Company
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting the
exercise of this Warrant such number of its shares of Common Stock as shall
from time to time be sufficient to effect the exercise of this Warrant and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the exercise of this Warrant, in addition to such
other remedies as shall be available to the holder of this Warrant, the Company
will use its best efforts to take such corporate action as may, in the
PLACEMENT AGENTS OPTION CERTIFICATE
53
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
5. RIGHTS PRIOR TO EXERCISE OF WARRANT
The Warrant holders will agree that so long as the Company remains
certified as an Historically Underutilized Business ("HUB"), they will not
exercise their Warrants and/or convert their preferred stock in such a manner
as to cause the Company to lose its HUB status. This Warrant does not entitle
the holder to any of the rights of a stockholder of the Company, including
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote, or to consent or to receive notice as
a stockholder of the Company. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following events shall
occur:
(a) the Company shall declare any dividend payable in any securities
upon its shares of Common Stock or make any distribution (other than a regular
cash dividend) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares of Common
Stock any additional shares of Common Stock or securities convertible into or
exchangeable for shares of Common Stock or any right to subscribe for or
purchase any thereof; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, sale, transfer or lease of all
or substantially all of its property, assets, and business as an entirety)
shall be proposed and action by the Company with respect thereto has been
approved by the Company's Board of Directors,
Then in any one or more of said events the Company shall give notice in writing
of such event to the holder at his last address as it shall appear on the
Company's records at least twenty (20) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividends, distribution, or subscription rights,
or for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in the
publication or mailing thereof shall not affect the validity of any action
taken in connection with such dividend, distribution or subscription rights, or
such proposed dissolution, liquidation or winding up. Each person in whose name
any certificate for shares of Common Stock is to be issued shall for all
purposes be deemed to have become the holder of record of such shares on the
date on which this instrument was surrendered and payment of the Warrant Price
was made, irrespective of the date of delivery of such stock certificate,
except that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares of Common Stock at the close of business on
the next succeeding date on which the stock transfer books are open.
6. SUCCESSORS AND ASSIGNS
The terms and provisions of this Warrant shall inure to the benefit
of, and be binding
PLACEMENT AGENTS OPTION CERTIFICATE
54
upon, the Company and the holder thereof and their respective successors and
permitted assigns.
7. RESTRICTED SECURITIES
In order to enable the Company to comply with the Securities Act and
applicable state laws, the Company may require the holder as a condition of the
transfer or exercise of this Warrant, to give written assurance satisfactory to
the Company that the Warrant, or in the case of an exercise hereof the shares
subject to this Warrant, are being acquired for his own account, for investment
only, with no view to the distribution of the same, and that any disposition of
all or any portion of this Warrant or the Shares issuable upon the due exercise
of this Warrant shall not be made, unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b)(i) The holder has notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) the holder has
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such
securities under the Securities Act and applicable state law.
The holder acknowledges that this Warrant is, and each of the shares
of Common Stock issuable upon the due exercise hereof will be, a restricted
security, that he understands the provisions of Rule 144 of the Securities and
Exchange Commission, and that the certificate or certificates evidencing such
shares of Common Stock will bear a legend substantially similar to the
following:
"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under the securities laws of any state.
They may not be sold, transferred or otherwise disposed of in the absence of an
effective registration statement covering these securities under the said Act
or laws, or an opinion of counsel satisfactory to the Company and its counsel
that registration is not required thereunder."
8. LOSS OR MUTILATION
Upon receipt by the Company of satisfactory evidence of the ownership
of and the loss, theft, destruction, or mutilation of any Warrant, and (i) in
the case of loss, theft, or destruction, upon receipt by the Company of
indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt
of such Warrant and upon surrender and cancellation of such Warrant, the
Company shall execute and deliver in lieu thereof a new Warrant representing
the right to purchase an equal number of shares of Common Stock.
9. NOTICES
All notices, requests, demands and other communications under this
Warrant shall be in writing and shall be deemed to have been duly given on the
date of service if served personally
PLACEMENT AGENTS OPTION CERTIFICATE
55
on the party to whom notice is to be given, or on the date of mailing if mailed
to the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows: if to the
holder, at his address as shown in the Company records; and if to the Company,
at its principal office. Any party may change its address for purposes of this
subsection by giving the other party written notice of the new address in the
manner set forth above.
10. GOVERNING LAW
This Warrant and any dispute, disagreement or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided herein or performance shall be governed or
interpreted according to the laws of the State of Texas without regard to
conflicts of law.
DATED AS OF NOVEMBER 11, 1997
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ XXXX XXXXXX, President
SUBSCRIPTION
Micro-Media Solutions, Inc.
501 Xxxxxx
Xxxxxx, Xxxxx 00000
Gentlemen:
The undersigned, , hereby elects to
purchase, pursuant to the provisions to the foregoing Warrant held by the
undersigned, shares of the Common Stock, $0.10 par
value ("Common Stock"), of Micro-Media Solutions, Inc.
Payment of the purchase price per Share required under such Warrant accompanies
this subscription.
The undersigned hereby represents and warrants that absent an effective
registration statement covering the Warrants, the undersigned is acquiring such
stock for the account of the undersigned and not for resale or with a view to
distribution of such Common Stock or any part hereof; that the undersigned is
fully aware of the transfer restrictions affecting restricted securities under
the pertinent securities laws and the undersigned understands that the shares
purchased hereby are restricted securities and that the certificate or
certificates evidencing the same will bear a legend to that effect.
PLACEMENT AGENTS OPTION CERTIFICATE
56
DATED: , 199 .
Signature:
Address:
PLACEMENT AGENT'S OPTION CERTIFICATE
