Exhibit 10.6
AGREEMENT
This Agreement (this "Agreement") is made and entered into as of August 15,
2005, by and among Xxxxxxx Xxxxxxxx ("SH") and Jewelcor Management, Inc. ("JMI",
and together with SH, "Jewelcor"), on the one hand, and Xxxxxx Xxxxxxx ("GF")
and Xxxxxx Xxxxxxx Productions, Inc., a Nevada corporation ("GFPI", and together
with GF, "Xxxxxxx"), on the other hand.
RECITALS
WHEREAS, concurrently with the execution and delivery of this Agreement,
Xxxxxxx, on the one hand, and Xxxxxx Xxxxxxx Ventures LLC, a Delaware limited
liability company ("GFV"), on the other hand, are entering into an assignment
agreement, in substantially the form attached hereto as Exhibit A (such
agreement, the "Assignment Agreement"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
GFV, on the one hand, and GF and GFPI, on the other hand, are entering into a
subscription agreement, in substantially the form attached hereto as Exhibit B
(the "Subscription Agreement"), pursuant to which GFV is issuing to Xxxxxxx
membership interests in GFV ("Membership Interests") having the rights set forth
in the Operating Agreement, which is being executed and delivered by Xxxxxxx
concurrently with the execution and delivery of this Agreement (the membership
interests issued pursuant to the Subscription Agreement, the "Xxxxxxx
Interests"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
GFV and MM Companies, Inc., a Delaware corporation and a member of GFV ("MM"),
on the one hand, and GF and GFPI, on the other hand, are entering into an
investor rights agreement, in substantially the form attached hereto as Exhibit
C (the "Investor Rights Agreement"), pursuant to which, among other things,
Xxxxxxx shall have the right to exchange the Xxxxxxx Interests for shares of
common stock of MM ("Common Stock"), subject to the terms of the Investor Rights
Agreement; and
WHEREAS, SH is a director of MM and the president and sole director of JMI,
the largest holder of Common Stock; and
WHEREAS, SH and his wife own, as tenants by the entirety, a controlling
interest in S.H. Holdings, Inc., the indirect sole stockholder of JMI; and
WHEREAS, it is a condition to Xxxxxxx'x entering into the Assignment
Agreement and the Subscription Agreement that Xxxxxxx and Jewelcor enter into
this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Right of First Refusal; Tag-Along Right.
(a) In the event that, prior to the earlier of (x) the first
anniversary of the Closing Date and (y) the date on which all of the Xxxxxxx
Shares have been registered under the
Securities Act pursuant to an effective registration statement (the earlier of
such dates, the "Extended Notification Date"), a Holder seeks to transfer any
shares of Common Stock, whether voluntarily or involuntarily, except to a
Permitted Transferee (as defined below) or pursuant to a De Minimis Sale (as
defined below) (such Holder, in such capacity, the "Selling Holder"), such
Selling Holder shall provide ninety (90) days' prior written notice of such
Selling Holder's intention (the "Selling Notice") to the other Holder (in such
capacity, the "Notified Holder"). The Selling Notice shall specify the number of
shares of Common Stock to be transferred (the "Selling Holder Shares") and shall
state the price (the "Offered Price") and all other terms of the proposed
transaction.
(b) The Notified Holder shall have the right, exercisable upon
written notice to the Selling Holder prior to the end of the fifteen (15) day
period following the Notified Holder's receipt of the Selling Notice, to:
(i) Elect, by giving written notice to the Selling Holder within
fifteen (15) days receipt of the Selling Notice, to purchase
all of the Selling Holder Shares at the Offered Price.
Payment of the Offered Price shall be made within thirty
(30) days after delivery of the Notified Holder Notice or,
if later, at the time set forth in the Selling Notice. At
the time of payment, the Selling Holder shall deliver to the
Notified Holder a duly endorsed stock certificate or
certificates evidencing the Selling Holder Shares.
or
(ii) Participate in such sale of Selling Holder Shares pursuant
to the terms specified in the Selling Notice (such right,
the "Tag-Along Right"). To the extent that the Tag Along
Holder exercises the Tag-Along Right in accordance with the
terms and conditions set forth below, the number of Selling
Holder Shares the Selling Holder may sell pursuant to the
Selling Notice shall be correspondingly reduced. The
Tag-Along Right shall be subject to the following terms and
conditions:
(A) Number of Shares. The Notified Holder may sell up to
fifty percent (50%) of the number of Selling Holder
Shares.
(B) Delivery of Certificates. The Notified Holder shall
effect his or its participation in the sale by
delivering to the Selling Holder for transfer to the
prospective purchaser one or more certificates,
properly endorsed for transfer, which represent the
shares of Common Stock that the Notified Holder elects
to sell. The stock certificate or certificates which
the Notified Holder delivers to the Selling Holder
shall be delivered by the Selling Holder to the
prospective purchaser in consummation of the sale
pursuant to the terms and conditions specified in the
Selling Notice, and such purchaser shall pay to such
account or in such manner as may be reasonably
designated by the Notified Holder or, if the purchaser
refuses to agree to direct remittance after reasonable
efforts by the
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Selling Holder to obtain such agreement, the Selling
Holder shall promptly thereafter remit to the Notified
Holder that portion of the sale proceeds to which the
Notified Holder is entitled by reason of his
participation in such sale.
Section 2. Additional Covenants.
(a) In the event that, on or after the Extended Notification Date,
a Holder seeks to transfer any shares of Common Stock, whether voluntarily or
involuntarily, except to a Permitted Transferee (as defined below) or pursuant
to a De Minimis Sale (as defined below), such Holder shall provide ten (10)
days' prior written notice of such Selling Holder's intention, which notice
shall specify the number of shares of Common Stock to be transferred and shall
state the price and all other terms of the proposed transaction.
(b) Prior to the Extended Notification Date, Jewelcor shall not
engage in any sales or transfers of Common Stock if, immediately following such
sale or transfer, the number of Jewelcor Shares shall be less than seventy-five
percent (75%) of the number of Jewelcor Shares on the date hereof.
(c) Each of GF and GFPI shall comply with their covenants in
Sections 5(a) and 5(b) of the Investor Rights Agreement, and each of GF and GFPI
agrees that Jewelcor shall be deemed to be a third party beneficiary of such
covenants and shall have the right to an injunction, temporary restraining order
or other equitable relief in any court of competent jurisdiction enjoining any
breach of such Section 5(a) or such Section 5(b) and enforcing specifically the
terms and provisions thereof.
(d) No sale, transfer or other disposition of any Xxxxxxx Shares
or Jewelcor Shares (or of Membership Interests convertible into Xxxxxxx Shares),
other than a De Minimis Sale or a sale to the public pursuant to a valid
registration statement or Rule 144 promulgated under the Securities Act, shall
be effected unless the transferee of such shares (or Membership Interests) first
agrees in writing, in form and substance reasonably acceptable to the other
party hereto, to be bound by the transferee agrees to be bound by the terms and
conditions of this Agreement and the Investor Rights Agreement to the same
extent as the transferor of such shares.
Section 3. Pledges of Stock. Notwithstanding anything herein to the contrary,
a Holder may pledge shares of Common Stock to a bank or other financial
institution without complying with the provisions of Section 1 hereof, provided
that the pledge or security agreement under which such shares are pledged
specifies that the pledgee agrees to be bound by the terms and conditions of
this Agreement if such pledgee becomes a Holder with respect to such shares.
Section 4. Certain Definitions.
Affiliate: With respect to a specified Person, any other Person
that directly or indirectly, through one or more intermediaries, has control of,
is controlled by, or is under common control with, such specified Person. For
purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, direct or indirect, of the power to direct or cause the direction of
the management or policies of a Person whether through the ownership of voting
securities, by contract or otherwise.
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Closing Date: The date of the closing of the transactions
contemplated by the Assignment Agreement, the Subscription Agreement and the
Investor Rights Agreement.
De Minimis Sale: A sale or transfer by a Holder of a number of
shares of Common Stock that, together with all sales of Common Stock for the
account of such Holder within the preceding three months, does not exceed the
greater of (i) one percent (1%) of the shares of Common Stock outstanding as
shown by the most recent report or statement published by MM, or (ii) the
average weekly reported volume of trading in such shares of Common Stock on all
national securities exchanges and/or reported through the automated quotation
system of a registered securities association during the four calendar weeks
preceding the filing of notice required by paragraph (h) of Rule 144 promulgated
under the Securities Act, or if no such notice is required the date of receipt
of the order to execute the transaction by the broker or the date of execution
of the transaction directly with a market maker, or (iii) the average weekly
volume of trading in shares of Common Stock reported through the consolidated
transaction reporting system, contemplated by Rule 11Aa3-1 under the Securities
Exchange Act of 1934, as amended, during the four-week period specified in
clause (ii).
Xxxxxxx Shares: At any time, the sum of (i) the number of shares of
Common Stock owned by Xxxxxxx and his Permitted Transferees and (ii) the number
of shares of Common Stock then issuable upon conversion of outstanding
securities convertible into or exercisable or exchangeable for Common Stock
(including shares of preferred stock, warrants, options and Membership
Interests) then held by Xxxxxxx and his Permitted Transferees.
Jewelcor Shares: At any time, the sum of (i) the number of shares
of Common Stock then held by Jewelcor and its Permitted Transferees, and (ii)
the number of shares of Common Stock then issuable upon conversion of
outstanding securities convertible into or exercisable or exchangeable for
Common Stock (including shares of preferred stock, warrants and options) then
held by Jewelcor and its Permitted Transferees.
LLC Percentage: With respect to each Member, the "Company
Percentage" (as such term is defined in the Operating Agreement) of such Member
in GFV with respect to the Non-Traditional Businesses.
Member. A Person whose name is set forth on Schedule A to the
Operating Agreement as a member of GFV, as such Schedule may be amended pursuant
to the terms of the Operating Agreement.
Operating Agreement: The amended and restated limited liability
company agreement of GFV, dated as of the date hereof.
Permitted Transferee: (a) With respect to any natural person, such
natural person's spouse, any lineal ancestor or descendant of such person or
spouse, the spouses of such lineal ancestors or descendants, trusts for the
benefit of any of the foregoing, a corporation all of the outstanding capital
stock of which is at all times solely owned by, a limited liability company all
of the members of which are at all times solely, or a partnership all of the
partners of which are at all times solely, such natural person and/or any
Permitted Transferee and, in the event of
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the death of such natural person, such natural person's estate; and (b) with
respect to any Person other than a natural person, any Affiliate of such Person;
provided that, in the case of each of clauses (a) and (b) above, each such
transferee will be a "Permitted Transferee" for purposes of this Agreement only
if such transferee shall have executed and delivered to the Company an
instrument pursuant to which the transferee will have agreed to be bound by all
of the terms of this Agreement applicable to the transferor.
Person: An individual, trust, estate, partnership, joint venture,
association, company, corporation or other entity.
Securities Act: The Securities Act of 1933, as amended.
Section 5. Miscellaneous.
(a) Successors and Assigns; Assignment. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by Xxxxxxx
on the one hand, or Jewelcor, on the other hand, without the prior written
consent of the other.
(b) Governing Law; Arbitration. This Agreement will be governed by
and construed and enforced under the internal laws of the State of New York,
without reference to principles of conflict of laws or choice of laws. Any
controversy or claim arising under, out of, or in relation to this Agreement or
any breach or alleged breach hereof, shall be determined and settled by
arbitration, pursuant to the rules then obtaining of the American Arbitration
Association (the "AAA"), and the procedures set forth herein. In the event of an
inconsistency between the rules of the AAA and the procedures set forth herein,
the procedures set forth herein shall control. The location of the arbitration
shall be in New York, New York. The arbitration shall be conducted by a panel of
three (3) neutral arbitrators who are independent and disinterested with respect
to the parties, the Agreement, and the outcome of the arbitration. The parties
shall first attempt to select mutually the three (3) arbitrators. If no
agreement can be reached by the parties within thirty (30) days of the filing of
the demand for arbitration, then each party shall select one (1) arbitrator and
the two (2) arbitrators thus selected shall then select the third arbitrator. If
any vacancy occurs in the board of arbitrators appointed hereunder by reason of
death, resignation, refusal to act, physical incapacity or otherwise, a new
arbitrator shall be appointed in the same manner and by the same party or
arbitrators, as applicable, by whom the previous incumbent was appointed. The
arbitrators shall be instructed and directed to assume case management
initiative and control over the arbitration process (including, without
limitation, scheduling of events, prehearing discovery and activities, and the
conduct of the hearing), in order to complete the arbitration as expeditiously
as is reasonably practical for obtaining a just resolution of the dispute. Each
party shall bear its own expenses in connection with the arbitration, and shall
share equally in the payment of the arbitrators' fees as and when billed by the
arbitrators, unless the arbitrators rule otherwise. Such determination by the
two (2) of the three (3) arbitrators shall be final, binding and conclusive upon
the parties hereto and shall be rendered in such form that it may be judicially
confirmed under the laws of the State of New York. The parties hereto expressly
consent to the exclusive jurisdiction of the courts in New York County to
enforce any award of the arbitrators.
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(c) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Signed facsimile copies of
this Agreement will legally bind the parties to the same extent as original
documents.
(d) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections and
exhibits will, unless otherwise provided, refer to sections hereof and exhibits
attached hereto.
(e) Notices. Any notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered (i)
personally by hand or by courier, (ii) mailed by United States first-class mail,
postage prepaid or (iii) sent by facsimile directed (x) if to Jewelcor, at
Jewelcor's address or facsimile number set forth below, or at such address or
facsimile number as Jewelcor may designate by giving at least ten (10) days'
advance written notice to Xxxxxxx or (y) if to Xxxxxxx, at Xxxxxxx'x address or
facsimile number set forth below, or at such address or facsimile number as
Xxxxxxx may designate by giving at least ten (10) days' advance written notice
to Jewelcor. All such notices and other communications shall be deemed given
upon (i) receipt or refusal of receipt, if delivered personally, (ii) three (3)
days after being placed in the mail, if mailed, or (iii) confirmation of
facsimile transfer, if faxed.
The address of Jewelcor for the purpose of this Section 5(e) is as
follows:
Xxxxxxx Xxxxxxxx
Jewelcor Management, Inc.
000 X. Xxxxxx-Xxxxx Xxxx., 0xx Xxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Facsimile:
with a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
The address of Xxxxxxx for the purpose of this Section 5(e) is
as follows:
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx Productions, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
Facsimile:
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with a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(f) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived only with the written
consent of Jewelcor and Xxxxxxx. Any amendment effected in accordance with this
Section 5(f) will be binding upon Jewelcor, Xxxxxxx and their respective
successors and assigns.
(g) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its terms.
(h) Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties with
respect to the subject matter hereof.
(i) Further Assurances. From and after the date of this Agreement,
upon the request of Jewelcor or Xxxxxxx, Jewelcor and Xxxxxxx will execute and
deliver such instruments, documents or other writings, and take such other
actions, as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
(j) Negotiated Agreement. Each of Jewelcor and Xxxxxxx acknowledges
that he or it has been advised and represented by counsel in the negotiation,
execution and delivery of this Agreement and accordingly agrees that if an
ambiguity exists with respect to any provision of this Agreement, such provision
shall not be construed against any party because such party or such party's
representatives drafted such provision.
(k) Meaning of Include and Including. Whenever in this Agreement
the word "include" or "including" is used, it shall be deemed to mean "include,
without limitation" or "including, without limitation," as the case may be, and
the language following "include" or "including" shall not be deemed to set forth
an exhaustive list.
(l) Equitable Remedies. Notwithstanding the provisions of
Section 5(b) hereof, in the event of (x) a breach of this Agreement or (y) a
failure of a party to perform any of its or his obligations under this
Agreement, and, in either case, money damages would not be adequate compensation
for the damages that the other party would suffer by reason of such breach or
failure, each party hereto agrees that, in addition to and without limiting any
other remedy or right such party may have, the non-breaching party will have the
right to an injunction, temporary restraining order or other equitable relief in
any court of competent jurisdiction enjoining any such breach and enforcing
specifically the terms and provisions hereof. In the event of any controversy or
claim arising out of or relating to any such breach or failure, each of
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the parties hereto irrevocably (i) submits to the non-exclusive jurisdiction of
any New York state court sitting in the County of New York or any federal court
sitting in U.S. District Court for the Southern District of the State of New
York, (ii) waives any objection which such party may have at any time to the
laying of venue of any action or proceeding brought in any such court and (iii)
waives any claim that such action or proceeding has been brought in an
inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
XXXXXXX XXXXXXXX
/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
JEWELCOR MANAGEMENT, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
XXXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
XXXXXX XXXXXXX PRODUCTIONS, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
