Initial Public Offering (IPO): Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1 S-1/ Common Stock - $10,822,500 95 448K
2: EX-1.1 Selling Group Agreement 7 43K
3: EX-3.1 Articles of Incorporation - Msh Entertainment 14 65K
4: EX-3.2 Bylaws - Msh Entertainment Corp. 6 32K
5: EX-4.1 Subscription Agreement 3 16K
6: EX-5.1 Opinion - Glenn Gearhart 2± 11K
7: EX-10.1 Employment Agreement - Msh & Robert Maerz 12 48K
16: EX-10.10 Cooperation Agreement - Msh & Happy Zone 16 61K
17: EX-10.11 Promissory Note - Msh & Robert Maerz 1 10K
18: EX-10.12 Promissory Note - Msh & Alfred Morgan 1 10K
19: EX-10.13 Promissory Note - Msh & Rick Seibold 1 10K
20: EX-10.14 Promissory Note - Msh & Jonathan Stathakis 1 10K
21: EX-10.15 Credit Agreement - Msh & Happy Zone 3 17K
8: EX-10.2 Employment Agreement - Msh & Jonathan Stathakis 12 48K
9: EX-10.3 Employment Agreement - Msh & Christopher Haigh 9 47K
10: EX-10.4 Employment Agreement - Msh & Fred Aurelio 10 43K
11: EX-10.5 Promissory Note - Christopher Haigh 2 14K
12: EX-10.6 Msh - 1996 Stock Option Plan 12 48K
13: EX-10.7 Credit Agreement - Msh & Robert Posner 5 25K
14: EX-10.8 Cooperation & Warrant Agreement - Msh & Intel 37 160K
15: EX-10.9 Production Agreement - Msh & Abrams/Gentle 19 75K
22: EX-27 Financial Data Schedule 2 10K
EX-10.8 — Cooperation & Warrant Agreement – Msh & Intel
Exhibit Table of Contents
EXHIBIT 10.8
COOPERATION AGREEMENT
This Cooperation Agreement ("Agreement") is made and entered into on Nov. 4,
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1996 ("Effective Date") by and between Intel Corporation, having a business
address at 2200 Mission College Blvd., Santa Clara, California 95052-8119
(hereinafter "Intel") and MSH Entertainment Corporation, having a business
address at 768 Brannan Street, San Francisco, California 94103 (hereinafter
"MSH").
WHEREAS, Intel wishes to see the widespread adoption of cost-effective
networked graphics rendering on personal computers, the demonstration of such
capabilities through the creation of digitally created content, and the
development of tools to allow production companies to use Intel Architecture
platforms to develop high performance capabilities; and
WHEREAS, MSH is a production house engaged in the production of industrial
and animation content and has prototyped a workflow management system for
networked graphics rendering called "Overlord" which MSH wishes to offer to the
industry through appropriate channels; and
WHEREAS, Intel will make an equity investment of [[text omitted for
confidentiality]], in the form of cash, for a warrant to purchase up to one
million (1,000,000) of MSH's common shares, as more fully reflected in the
Warrant and Warrant Purchase Agreement between the parties.
NOW, THEREFORE, in consideration of the covenants and conditions contained
herein, Intel and MSH agree as follows:
1. DEFINITIONS
1.1 "Overlord" means the code name for an MSH-designed product for managing
graphic animation rendering workflow using Intel Architecture based
platforms.
1.2 "Intel Architecture" means microprocessors implementing the Intel
instruction set and derivatives, for example, the i486(TM),
Pentium(R)/, and Pentium Pro processors .
1.3 "AGE" means Abrams-Gentile Entertainment, Inc.
1.4 "UPN" means Universal Paramount Network.
1.5 "Content" initially means [[text omitted for confidentiality]], AGE's
licensed script being produced in conjunction with MSH and UPN.
"Content" also includes a new original children's animation project or
series selected by Intel pursuant to Section 3.2.1 hereunder.
1.6 "MSH Products" means current and future hardware and software products
manufactured or sold by MSH that perform the function of managing
graphic rendering in a networked or non-networked environment.
1.7 "MSH Customers" means current and future purchasers of MSH Products,
Overlord and/or Content.
1.8 "Intel Bong" means the approved three (3) second, five (5) tone melody
to create, or used in connection with the creation, of an auditory only
Intel logo or an audio-visual Intel logo.
2. INTEROPERABILITY/PORT OF CHOICE
2.1 During the term of this Agreement, MSH will use commercially reasonable
efforts to insure that MSH Products, Overlord and Content are (i) fully
interoperable with Intel Architecture based multiprocessor platforms,
(ii) created on an Intel Architecture based system, and (iii) made
available on Intel Architecture prior to other architectures.
2.2 Intel will use commercially reasonable efforts to provide MSH with
information or products to support such interoperability testing.
3. DELIVERABLES
3.1 Overlord
3.1.1 During the first six (6) months after the Effective Date of this
Agreement (the "Development Phase"), MSH will develop a plan
acceptable to Intel for the development and distribution of
Overlord. The plan will include deliverables and milestones and
will address at least: (a) the Overlord system architecture
definition (including features and functions); (b) interface
design; (c) benchmarking data; (d) interoperability testing on
various OEM platforms; (e) Beta program; and (f) a marketing and
licensing program to OEMs, Value Added Resellers or
resellers/integrators.
3.1.2 During the Development Phase of this Agreement, both Intel and
MSH would appoint Program Managers who would serve as primary
contacts for issues related to the project and which would hold
Program Reviews at regular intervals.
3.2 Content
3.2.1 [[TEXT OMITTED FOR CONFIDENTIALITY]]
3.2.2 MSH will create all Content according to Intel content
standards. MSH represents and warrants that it will not market
Content with explicit depictions (such as blood, gore and
organs) of the physical effects of violence on humans or human-
like characters, rape, explicit sexual contents, sex crimes,
disparagement of ethnic or religious groups, racial epithets,
hate speech, or profanity.
3.3 Support
3.3.1 MSH will provide all technical support to MSH Customers for MSH
Products and Content.
3.3.2 Intel will provide all technical support to Intel customers for
Intel products according to Intel's then-current standard terms
and conditions of sale.
4. INTELLECTUAL PROPERTY WARRANTIES AND INDEMNIFICATION
4.1 MSH represents and warrants that it owns or has all the necessary
rights in the intellectual property in Overlord or the Content and the
authority to enter this Agreement and grant Intel the rights to
Overlord or Content that are granted in this Agreement and that it has
not done any act or entered into any agreement which would prevent
performance of this Agreement.
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4.2 MSH represents and warrants to Intel that the adoption, publication,
incorporation, reproduction or distribution of Overlord or Content will
not infringe upon or misappropriate the proprietary rights of any third
party.
4.3 MSH agrees to indemnify, defend and hold Intel harmless for all loss,
cost, liability and expense (including legal fees) incurred by Intel
and any of its subsidiaries which may arise out of any claim or action
that MSH breached its representations and warranties set forth above.
Intel agrees to provide MSH with prompt notice of any such claims or
actions and shall provide MSH with reasonable assistance (at MSH's
expense) in the defense or settlement of such claims or actions. In no
event will a settlement affect Intel's rights hereunder without Intel's
prior written consent.
5. [[text omitted for confidentiality]]
[[text omitted for confidentiality]]
6. TRADEMARKS
6.1 Intel has the right, but not the obligation, to associate the Intel
Bong, and/or other Intel trademarks or designations, in or on any
Content, and any advertising and other promotional materials which are
for the purpose of marketing MSH Products and promoting networked
graphics rendering in connection with MSH Products.
6.2 MSH grants Intel the right to use any applicable trademarks relating to
MSH Products, Overlord or Content, for purposes relating to marketing
Intel Architecture solutions to third parties using, or contemplating
the use of, MSH Products, Overlord or Content.
7. CONFIDENTIALITY
(a) This Agreement, the terms hereof and the relationship of the parties
shall be governed by the Confidentiality and Nondisclosure Agreement,
dated as of August 22, 1996, between Intel and MSH. The terms and
existence of the transactions contemplated by this Agreement and the
Cooperation Agreement shall be deemed confidential information of both
parties.
(b) MSH shall not use Intel's name or refer to Intel directly or indirectly
in connection with Intel's relationship with MSH in any advertisement,
news release or professional or trade publication, or in any other
manner, unless otherwise required by law or with Intel's prior written
consent, which consent will generally not be granted. The parties
acknowledge that MSH may be required to disclose in a press release
and/or a registration statement certain information relating to the
transactions contemplated by this Agreement following consummation
hereof. Notwithstanding the foregoing, the provisions of this Section
7 shall apply to any such disclosure and MSH shall provide Intel a
reasonably adequate opportunity to review and comment on such
disclosure and shall not make any such disclosure without Intel's prior
written consent. The parties agree that at no time will there be any
press release or other public statement issued by either party relating
to this Agreement or the transactions contemplated hereby unless agreed
to in advance by both parties in writing.
8. TERM AND TERMINATION
8.1 This Agreement, and the licenses granted hereunder, shall continue for
a period of [[TEXT OMITTED FOR CONFIDENTIALITY]] from the Effective
Date, at which time this Agreement shall terminate without
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notice unless the parties agree to renew this agreement prior to the
expiration of the term by letter agreement signed by the authorized
representatives of both parties.
8.2 Intel may terminate this Agreement at any time if Licensee:
i. materially breaches any provision of this Agreement and fails to
cure such breach within thirty (30) days after receipt of written
notice thereof from Intel,
ii. files or has filed against it a petition in bankruptcy,
iii. ceases to do business in the ordinary course,
iv. has a receiver appointed to handle its assets or affairs,
v. undergoes a change in control through acquisition or merger,
except as provided for in Section 9.4, Assignment.
8.3 The rights and remedies provided in this Section 8.0 are in addition to
any other rights and remedies provided at law or equity.
8.4 The provisions of Sections 4, 7 and 9 shall survive any termination or
expiration of this Agreement.
9. MISCELLANEOUS PROVISIONS
9.1 Governing Law. This Agreement and matters connected with the
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performance thereof shall be construed, interpreted, applied and
governed in all respects in accordance with the laws of the United
States of America and the State of Delaware, without reference to its
conflict of laws principles.
9.2 Jurisdiction. Intel and MSH agree that all disputes and litigation
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regarding this Agreement and matters connected with its performance
shall be subject to the exclusive jurisdiction of, and venue in, the
state and federal courts in Santa Clara County, California.
9.3 Dispute Resolution. The parties agree to negotiate in good faith to
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resolve any dispute between them regarding this Agreement. If the
negotiations do not resolve the dispute to the reasonable satisfaction
of both parties, then each party shall nominate one senior officer of
the rank of Vice President or higher as its representative. These
representatives shall, within thirty (30) days of a written request by
either party to call such a meeting, meet in person and alone (except
for one assistant for each party) and shall attempt in good faith to
resolve the dispute. If the disputes cannot be resolved by such senior
managers in such meeting, the parties agree that they shall, if
requested in writing by either party, meet within thirty (30) days
after such written notification for one day with an impartial mediator
and consider dispute resolution alternatives other than litigation. If
an alternative method of dispute resolution is not agreed upon within
thirty (30) days after the one day mediation, either party may begin
litigation proceedings. This procedure shall be a required prerequisite
before taking any additional action hereunder. Notwithstanding the
foregoing, either party may apply to a court of competent jurisdiction
hereunder for temporary equitable relief while pursuing dispute
resolution as provided hereunder.
9.4 No Assignment. This Agreement is personal to the parties, and the
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Agreement or any right or obligation hereunder is not assignable,
whether in conjunction with a change in ownership, merger, acquisition
or, the sale or transfer of all, or substantially all or any part of a
party's business or assets
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or otherwise, either voluntarily, by operation of law, or otherwise,
without the prior written consent of the other party. Any such
purported assignment or transfer shall be deemed a material breach of
this Agreement and shall be null and void.
9.5 Export Controls. MSH understands and acknowledges that Intel is subject
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to regulation by agencies of the U.S. government, including the U.S.
Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations
of Intel to provide technical information, technical assistance, any
media in which any of the foregoing is contained, training and related
technical data (collectively, "Data") shall be subject in all respects
to such United States laws and regulations as shall from time to time
govern the license and delivery of technology and products abroad by
persons subject to the jurisdiction of the United States, including the
Export Administration Act of 1979, as amended, any successor
legislation, and the Export Administration Regulations issued by the
Department of Commerce, or the Bureau of Export Administration. MSH
warrants that it will comply in all respects with the export and re-
export restrictions set forth in any export license (if necessary) for
Data disclosed to MSH hereunder; provided that Intel informs MSH of
such restrictions.
9.6 Notice. All notices required or permitted to be given hereunder shall
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be in writing and shall be mailed by first class mail, postage prepaid,
addressed as follows:
[Download Table]
If to MSH: If to Intel:
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MSH Entertainment Corporation General Counsel
768 Brannan Street Intel Corporation
San Francisco, CA 94103 2200 Mission College Blvd.
Santa Clara, CA 95052
Such notices shall be deemed to have been served when received by
addressee or, if delivery is not accomplished by reason of some fault
of the addressee, when tendered for delivery. Either party may give
written notice of a change of address and, after notice of such change
has been received, any notice or request shall thereafter be given to
such party as above provided at such changed address.
9.7 Entire Agreement. This Agreement embodies the entire understanding of
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the parties with respect to the subject matter hereof, and merges all
prior discussions between them, and neither of the parties shall be
bound by any conditions, definitions, warranties, understandings, or
representations with respect to the subject matter hereof other than as
expressly provided herein. No oral explanation or oral information by
either party hereto shall alter the meaning or interpretation of this
Agreement.
9.8 Modification; Waiver. No modification or amendment to this Agreement,
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nor any waiver of any rights, will be effective unless assented to in
writing by the party to be charged, and the waiver of any breach or
default will not constitute a waiver of any other right.
9.9 Compliance with Laws. Anything contained in this Agreement to the
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contrary notwithstanding, the obligations of the parties hereto and of
the Subsidiaries of the parties shall be subject to all laws, present
and future, of any government having jurisdiction over the parties
hereto or the Subsidiaries of the parties, and to orders, regulations,
directions or requests of any such government.
9.10 Force Majeure. The parties hereto shall be excused from any failure
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to perform any obligation hereunder to the extent such failure is
caused by war, acts of public enemies, strikes or other labor
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disturbances, fires, floods, acts of God, or any causes of like or
different kind beyond the control of the parties.
9.11 Partial Invalidity. If any paragraph, provision, or clause thereof in
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this Agreement shall be found or be held to be invalid or unenforceable
in any jurisdiction in which this Agreement is being performed, the
remainder of this Agreement shall be valid and enforceable and the
parties shall use their respective best efforts to negotiate a
substitute, valid and enforceable provision which most nearly effects
the parties' intent in entering into this Agreement.
9.12 Counterparts. This Agreement may be executed in two (2) or more
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counterparts, all of which, taken together, shall be regarded as one
and the same instrument.
9.13 Section Headings. The section headings contained in this Agreement
----------------
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.14 Relationship of Parties. Nothing herein shall be construed as forming
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a partnership or joint venture between the parties.
UNDERSTOOD AND AGREED:
[Download Table]
INTEL CORPORATION MSH ENTERTAINMENT
CORPORATION
/s/ P. S. OTELLINI /s/ ROBERT P. MAERZ
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Signature Signature
P. S. Otellini Robert P. Maerz
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Printed Name Printed Name
EVP Chairman
------------------ -------------------
Title Title
11/4/96 11/1/96
------------------ -------------------
Date Date
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of November 4,
1996, is entered into by and between MSH ENTERTAINMENT CORPORATION, a Utah
corporation (the "Company"), and INTEL CORPORATION, a Delaware corporation
(together with its successors and assigns, the "Purchaser").
RECITALS
A. The Company has agreed to sell to the Purchaser, and the Purchaser has
agreed to purchase a warrant to purchase shares of capital stock of the Company,
subject to the terms and conditions of this Agreement.
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B. As of the Closing Date (as defined below), the Company and the
Purchaser also shall enter into that certain Cooperation Agreement (the
"Cooperation Agreement"), which provides a framework for the parties to
cooperate on future infrastructure enhancements to enable networked graphics
rendering of episodic television content.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. ISSUANCE OF WARRANT; PURCHASE PRICE; CLOSING.
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1.1. Issuance of Warrant. Subject to the terms and conditions
-------------------
hereof, on the date of the Closing (as defined in Section 1.3 below), upon
payment of the Purchase Price (as defined in Section 1.2 below) by the Purchaser
to the Company, the Company shall issue to the Purchaser, and the Purchaser
shall accept from the Company, a Warrant in the form attached hereto as Exhibit
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A (the "Warrant"). The shares of capital stock issued or issuable upon exercise
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of the Warrant, as well as any shares of capital stock issued or issuable upon
conversion of such capital stock, shall be referred to collectively herein as
the "Warrant Stock", and the Warrant and the Warrant Stock shall be referred to
collectively herein as the "Securities."
1.2. Purchase Price. The purchase price for the Warrant shall be
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[[TEXT OMITTED FOR CONFIDENTIALITY]] (the "Purchase Price"), which shall be
payable in cash. The Purchase Price shall be paid at the Closing by check made
payable to the order of the Company or by wire transfer of funds to a designated
account of the Company, provided that wire transfer instructions are delivered
to the Purchaser at least one (1) business day prior to the Closing.
1.3. Closing. The closing of the transactions contemplated hereby
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("Closing") shall be held at the offices of Intel Corporation on November 4,
1996, at 10:00 a.m., Pacific Time, or at such other place, date and time as may
be agreed upon by the parties (the "Closing Date"). At the Closing, the Company
shall deliver to the Purchaser the Warrant against payment of the Purchase Price
therefor, and the parties shall deliver to each other such other agreements,
instruments and documents as are required to be delivered pursuant hereto.
1.4 Use of Proceeds. The cash portion of the Purchase Price shall
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be used by the Company solely for the purchases of Intel Architecture-based
computer and server equipment for the Company's rendering farm as agreed to in
advance by the Purchaser in writing. "Intel Architecture" means microprocessors
implementing the Intel instruction set and derivatives, for example, the
I486,(TM), Pentium(R) and Pentium(R) Pro processors.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser, as of the date hereof, as of the date
of Closing and as of the date of exercise of the Warrant (but not during the
periods between such dates), except as set forth in the Schedule of Exceptions
("Schedule of Exceptions") attached to this Agreement as Exhibit B (which
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Schedule of Exceptions shall be deemed to be representations and warranties to
the Purchaser, and may be updated by the Company to the
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extent reasonably necessary to make the representations and warranties set forth
herein true and complete as of the Closing and as of the exercise of the
Warrant), as follows:
2.1. Organization, Good Standing and Qualification; Subsidiaries.
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The Company is a corporation duly organized, validly existing and in good
standing under, and by virtue of, the laws of the State of Utah and has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as now conducted and as presently proposed to be
conducted. The Company is qualified to do business as a foreign corporation in
each jurisdiction where failure to be so qualified would have a material adverse
effect on its financial condition, business, prospects or operations. The
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, trust, joint venture, association, or
other entity.
2.2. Due Authorization; Consents. All corporate action on the part
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of the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance of all obligations
of the Company under, this Agreement and the Cooperation Agreement, the
authorization, issuance and delivery of the Warrant, and the authorization,
issuance, reservation for issuance and delivery of all of the Warrant Stock, has
been taken or will be taken prior to the Closing. Each of this Agreement and
the Cooperation Agreement is a valid and binding obligation of the Company
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors' rights generally and to general equitable
principles. All consents, approvals and authorizations of, and registrations,
qualifications and filings with, any federal or state governmental agency,
authority or body, or any third party, required in connection with the
execution, delivery and performance of this Agreement and the Cooperation
Agreement and the consummation of the transactions contemplated hereby and
thereby shall have been obtained prior to and be effective as of the Closing.
2.3. Status of Proprietary Assets.
----------------------------
(a) Ownership. The Company has full title and ownership of, or
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has license to, all patents, patent applications, trademarks, service marks,
trade names, copyrights, moral rights, mask works, trade secrets, confidential
and proprietary information, compositions of matter, formulas, designs,
proprietary rights, know-how and processes (all of the foregoing collectively
hereinafter referred to as the "Proprietary Assets") necessary to enable it to
carry on its business as now conducted and as presently proposed to be conducted
without any conflict with or infringement of the rights of others. To the best
of the Company's knowledge, no governmental agency, authority or body or third
party has any ownership right, title, interest, claim in or lien on any of the
Company's Proprietary Assets and the Company has taken, and in the future the
Company will use its best efforts to take, all steps reasonably necessary to
preserve its legal rights in, and the secrecy of, all its Proprietary Assets,
except those for which disclosure is required for legitimate business or legal
reasons. The Company has all rights, in conjunction with Abrams-Gentile
Entertainment and Universal Paramount Network, to develop, enhance, market and
create products related to the [[TEXT OMITTED FOR CONFIDENTIALITY]] concept and
the scripts for the [[TEXT OMITTED FOR CONFIDENTIALITY]] animation programs.
[[TEXT OMITTED FOR CONFIDENTIALITY]] All rights, title, claim, trademarks and
copyrights to the concepts, characters,
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products, use of names, merchandising and toys shall be owned or controlled by
the Company (subject to Section 6 of the Cooperation Agreement), and the Company
shall have the unencumbered right to develop, enhance, script, market and create
animated programs related to the concepts (subject to Section 3.2.2 of the
Cooperation Agreement). The Purchaser shall have the right to select the
property of its choice for further development by the Company, or in conjunction
with the Purchaser.
(b) Licenses; Other Agreements. Except as set forth in the
--------------------------
Cooperation Agreement, the Company has not granted, and, to the best of the
Company's knowledge, there are not outstanding, any options, licenses or
agreements of any kind relating to any Proprietary Asset of the Company, nor is
the Company bound by or a party to any option, license or agreement of any kind
with respect to any of its Proprietary Assets. The Company is not obligated to
pay any royalties or other payments to third parties with respect to the
marketing, sale, distribution, manufacture, license or use of any Proprietary
Asset or any other property or rights.
(c) No Infringement. To the best of the Company's knowledge, the
---------------
Company has not violated or infringed, and is not currently violating or
infringing, and the Company has not received any communications alleging that
the Company (or any of its employees or independent contractors) has violated or
infringed or, by conducting its business as proposed, would violate or infringe,
any Proprietary Asset of any other person or entity.
(d) No Breach by Employee. To the Company's best knowledge, the
---------------------
Company is not aware that any employee or independent contractor of the Company
is obligated under any agreement (including licenses, covenants or commitments
of any nature), or subject to any judgment, decree or order of any court or
administrative agency or any other restriction, that would interfere with the
use of his or her best efforts to carry out his or her duties for the Company or
to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
2.4. Litigation. There is no action, suit, proceeding, claim,
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arbitration or investigation ("Action") pending (or, to the best of the
Company's knowledge, threatened) against the Company, its activities, properties
or assets or, to the best of the Company's knowledge, against any officer,
director or employee of the Company in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, the
Company. To the best of the Company's knowledge, there is no factual or legal
basis for any such Action that might result, individually or in the aggregate,
in any material adverse change in the business, properties, assets, financial
condition, affairs or prospects of the Company.
2.5. Reports; Accuracy of Information. The Company does not have any
--------------------------------
securities registered under the Securities Act of 1933, as amended, and is not a
reporting company under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"). The Company shall provide the Purchaser with true and complete
copies of the Company's financial reports and all other reports, proxy
statements and other documents required to be filed by the Company with the
Securities and Exchange Commission ("SEC") as soon as practicable after such
documents have been filed with the SEC. As of their respective dates (or, if
any such
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report or proxy statement shall have been amended, as of the date of
such amendment), such reports and proxy statements, if any, (A) complied with
all applicable provisions, rules and regulations of federal securities laws and
(B) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances in which such statements were
made, not misleading. Since January 1, 1994, the Company has timely filed all
reports and registration statements, if any, required to be filed by the Company
with the SEC under the rules and regulations of the SEC.
2.6. Share Ownership. The 1,000,000 shares of Warrant Stock
---------------
currently represent approximately 7.6% of the outstanding Common Stock of the
Company on a fully-diluted basis, assuming the exercise of and conversion of all
outstanding options, warrants, convertible securities and other rights to
acquire the Company's Common Stock, and those contemplated to be issued by the
Company in the near future, as reflected on the Schedule of Exceptions.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
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represents and warrants to the Company as follows:
3.1. Authorization. Each of this Agreement and the Cooperation
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Agreement when executed and delivered by the Purchaser will constitute a valid
and legally binding obligation of the Purchaser.
3.2. Investigation; Economic Risk. The Purchaser acknowledges that
----------------------------
it has had an opportunity to discuss the business, affairs and current prospects
of the Company with its officers. The Purchaser further acknowledges having had
access to information about the Company that it has requested. The Purchaser
acknowledges that it is able to fend for itself in the transactions contemplated
by this Agreement and has the ability to bear the economic risks of its
investment pursuant to this Agreement.
3.3. Purchase for Own Account. The Securities will be acquired for
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the Purchaser's own account, not as a nominee or agent, and not with a view to
or in connection with the sale or distribution of any part thereof.
3.4. Exempt from Registration; Restricted Securities. The Purchaser
-----------------------------------------------
understands that the Warrant will not be registered under the Securities Act of
1933, as amended (the "Act"), on the ground that the sale provided for in this
Agreement is exempt from registration under of the Act, and that the reliance of
the Company on such exemption is predicated in part on the Purchaser's
representations set forth in this Agreement. The Purchaser understands that
the Securities are restricted securities within the meaning of Rule 144 under
the Act, and must be held indefinitely unless they are subsequently registered
or an exemption from such registration is available.
3.5. Restrictive Legends. It is understood that the Warrant and each
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certificate representing the Warrant Stock and any other securities issued in
respect of the Warrant Stock upon any stock split, stock dividend,
recapitalization, merger or similar event (unless no longer required in the
opinion of counsel for the Company) shall be stamped or otherwise imprinted
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with a legend substantially in the following form (in addition to any legend
that may now or hereafter be required by applicable state law):
THE WARRANT/SECURITIES EVIDENCED OR CONSTITUTED HEREBY AND THE SHARES
OF COMMON STOCK ISSUABLE HEREUNDER HAVE BEEN AND WILL BE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT
REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH
SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO
SECURITIES AND EXCHANGE COMMISSION RULE 144.
The legend set forth above shall be removed by the Company from any
certificate evidencing Warrant Stock upon delivery to the Company of an opinion
by counsel, reasonably satisfactory to the Company, that a registration
statement under the Act is at that time in effect with respect to the legend
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the Warrant Stock.
4. REGISTRATION RIGHTS.
-------------------
4.1. Definitions. As used in this Section 4:
-----------
(a) The terms "register", "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of the effectiveness of
such registration statement;
(b) The term "Registrable Securities" means: (i) any Common
Stock issued or to be issued pursuant to exercise of the Warrant, and (ii) any
Common Stock or other securities issued as a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the Common Stock described
in subsections (i) and (ii) of this Section 4.1(b); provided, however, that any
-------- -------
such securities shall cease to be Registrable Securities with respect to a
proposed offer or sale thereof when such securities shall have been disposed of
under SEC Rule 144 or in accordance with the plan of distribution set forth in
an effective registration statement under the Act.
(c) The term "Holder" means any holder of outstanding
Registrable Securities or any person to which the registration rights provided
for in this Section 4 shall have been properly assigned in accordance with
Section 4.10 hereof;
(d) The term "Initiating Holders" means any Holder or Holders
making a request for registration pursuant to the provisions of Section 4.2; and
(e) The term "Substantial Amount of Registrable Securities"
means either (i) at least fifty-one (51%) of the Registrable Securities then
outstanding that have not been
-11-
resold to the public in a registered public offering, or (ii) a number of
Registrable Securities such that the anticipated net proceeds from the sale of
Registrable Securities would be greater than $750,000.
4.2. Requested Registration.
----------------------
(a) Requested Registration. If, at any time from and after the first
----------------------
anniversary of the Closing Date, the Company shall receive from any Holder or
Holders of a Substantial Amount of Registrable Securities a written request that
the Company effect any registration, qualification or compliance with respect to
all or a part of the Registrable Securities, the Company will:
(1) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(2) as soon as practicable, use its diligent best efforts to
effect such registration, qualification and compliance (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under the applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of the Registrable Securities of such Holder(s) as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
notice given within fifteen (15) days after receipt of written notice of the
proposed registration from the Company. Without limiting the generality of the
foregoing, the Company shall file a registration statement covering the
Registrable Securities so requested to be registered as soon as practicable, but
in any event within forty-five (45) days after receipt of the request or
requests of the Initiating Holders.
(b) Underwriting. If the Initiating Holders intend to distribute the
------------
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company and shall designate the underwriter or
underwriters to be employed in connection therewith (who shall be selected by
the majority in interest of the Initiating Holders and who shall be subject to
the Company's right of reasonable approval) as a part of their request made
pursuant to Section 4.2(a) and the Company shall include such information in the
written notice referred to in Section 4.2(a)(1). In such event, the right of
any Holder to registration pursuant to this Section 4.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. The Company shall (together with all Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders. Notwithstanding any other provision of this Section 4.2, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, the securities
of the Company (other than Registrable Securities) held by officers or directors
and by other shareholders shall be excluded from such registration to
-12-
the extent so required by such limitation and if a limitation of the number of
shares is still required, then the Initiating Holders shall so advise all
Holders of Registrable Securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares included in the
registration and underwriting shall be allocated among the Holders of
Registrable Securities requesting registration in proportion, as nearly as
practicable, to the total number of Registrable Securities held by such Holders
at the time of filing of the registration statement and requested to be included
in the registration. If any Holder disapproves of the terms of the underwriting,
it may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration.
(c) Inclusion of Other Securities. The Company shall have the right
-----------------------------
to include in any registration statement effected pursuant to this Section 4.2
securities to be sold on behalf of the Company. Notwithstanding any other
provision of this Section 4.2, if the underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise the Company and
the number of shares to be included in the registration and underwriting on
behalf of the Company shall be reduced first, and prior to any reduction in the
number of shares of Registrable Securities to be included in the offering on
behalf of the Holders, to the extent necessary to comply with the underwriters'
limitation.
(d) Deferral by Company. If the Company shall furnish to the
-------------------
Initiating Holders, within ten (10) days of the delivery of their request for
registration pursuant to this Section 4.2, a certificate signed by the President
of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its shareholders for such registration to be effected at such time, the Company
shall have the right to defer the filing of the registration' statement for a
period of not more than one hundred twenty (120) days after the receipt of the
request of the Initiating Holders under this Section 4.2, except that the
Company shall not utilize this right more than once in any two (2) year period.
(e) Limitations. Notwithstanding the foregoing provisions of this
-----------
Section 4.2, the Holder's right to request registration of Registrable
Securities under this Section 4.2 shall be subject to the following limitations:
(1) The Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 4.2 after the Company has effected two (2) registrations, qualifications
or compliances pursuant to requests under this Section 4.2. A registration,
qualification or compliance shall not be deemed "effected" for purpose of this
Section 4.2 (i) unless it has become effective and is maintained effective until
all Registrable Securities are sold thereunder, (ii) if, after it has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency,
authority or body for any reason other than a material misrepresentation or
omission by the Holders of Registrable Securities included therein, or (iii) if
the conditions to closing specified in the purchase or underwriting agreement
entered into in
-13-
connection with such registration are not satisfied other than by reason of some
act or omission by any of the Holders of Registrable Securities included
therein;
(2) The Company shall not be obligated to effect any registration
hereunder in any particular jurisdiction in which the Company would be required
to qualify to do business or to execute a general consent to the service of
process in effecting such registration.
4.3. Company Registration.
--------------------
(a) Notice of Registration. If, at any time or from time to time from
----------------------
and after the first anniversary of the Closing Date, the Company shall determine
to register any of its securities, either for its own account or for the account
of a security holder or holders (other than a registration relating solely to
employee stock option or purchase plans or relating solely to an SEC Rule 145
transaction), the Company will:
(1) promptly and in any event within twenty (20) days prior to the
anticipated filing date of such registration statement, give to each Holder
written notice thereof which shall include a list of the jurisdictions in which
the Company intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws;
(2) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in any written request or
requests, made within ten (10) days after receipt of such written notice from
the Company, by any Holder or Holders, except as set forth in Section 4.3(b)
below.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 4.3(a)(1). In such event, the right of any Holder to
registration pursuant to this Section 4.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 4.3, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the Company shall include in such registration (i)
first, all of the securities to be included in such registration for the
Company's own account, and (ii) second, up to the full number of Registrable
Securities and other securities of the Company sought to be included in such
registration by Holders and other security holders to whom the Company has
granted registration rights ("Other Holders"); and, if less than the full number
of such securities is to be included, the number to be included shall be
allocated pro rata on the basis of the total number of Registrable Securities
and other securities sought to be included in such registration by the Holders
and Other Holders; provided, however, that in no event shall the securities
-------- -------
being offered by the Holders be less than thirty percent (30%) of the total
number of securities requested by the Holders to be included in
-14-
such registration and underwriting. The Company shall advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto of any such limitations, and the number of shares of Registrable
Securities that may be included in the registration. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter. The Registrable
Securities so withdrawn shall also be withdrawn from registration.
4.4. Form S-3 Registration. If, at any time from and after the first
---------------------
anniversary of the Closing Date, the Company shall receive, from any Holder or
Holders, a written request or requests that the Company effect a registration on
Form S-3 (or any substantially equivalent registration form under the Act
subsequently adopted by the SEC that permits incorporation by reference to other
documents filed by the Company with the SEC), and any related qualification or
compliance, with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of the
Registrable Securities of such Holder(s) as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holders joining in such request as are specified in a written notice given
within fifteen (15) days after receipt of written notice of the proposed
registration from the Company; provided, however, that the Company shall not be
-------- -------
obligated to effect any such registration, qualification or compliance pursuant
to this Section 4.4:
(1) if Form S-3 is not then available for such offering by the
Holders; or
(2) if the Company shall furnish to the Holders, within ten (10)
days of the delivery of their request for registration pursuant to this Section
4.4, a certificate signed by the President of the Company stating that, in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
registration to be effected at such time, in which event the Company shall have
the right to defer the filing of a Form S-3 registration statement for a period
of not more than one hundred twenty (120) days after receipt of the request of
the Holder or Holders under this Section 4.4, except that the Company shall not
utilize this right more than once in any two (2) year period; or
(3) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected one registration on Form S-
3 for the Holders pursuant to this Section 4.4; or
(4) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
-15-
Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 4.4 shall not be counted as demands for registration or registrations
effected pursuant to Section 4.2 or Section 4.3, respectively.
4.5. Expenses of Registration. All expenses incurred in connection
------------------------
with any registration, qualification or compliance pursuant to Section 4.2,
Section 4.3 or Section 4.4, including without limitation, all registration,
filing and qualification fees, printing expenses, fees and disbursements of
counsel for the Company, expenses of any special audits incidental to or
required by such registration and the fees and disbursements of one counsel
retained by the Holders of Registrable Securities covered by such registration,
qualification or compliance shall be borne by Company, except that:
(a) the Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to Section 4.2, the request of which has
been subsequently withdrawn by the Initiating Holders, in which case such
expenses shall be borne by the Initiating Holders requesting or causing such
withdrawal; and
(b) the Company shall not be required to pay any underwriters'
discounts, commissions or stock transfer taxes relating to Registrable
Securities.
4.6. Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 4,
the Company will keep each Holder participating therein advised in writing as to
the initiation of such registration, qualification and compliance and as to the
completion thereof. At its expense (except as otherwise provided in Section 4.5
above), the Company will:
(a) keep any such registration, qualification or compliance
pursuant to Sections 4.2 and 4.3 above effective for a period of ninety (90)
days or until the Holder or Holders have completed the distribution described in
the registration statement relating thereto, whichever first occurs;
(b) furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(c) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statements as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement;
(d) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
-16-
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(e) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 4, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 4, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statements with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
4.7. Indemnification.
---------------
(a) Indemnification by the Company. The Company will indemnify
------------------------------
each Holder of Registrable Securities with respect to which registration,
qualification or compliance has been effected pursuant to this Section 4, each
of its officers and directors, and each person controlling such Holder, and each
underwriter, if any, of such Registrable Securities and each person who controls
any such underwriter, against all claims, losses, damages, costs, expenses and
liabilities of any nature whatsoever (or actions in respect thereof) arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other documents (including any related registration, statement, notification or
the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Act or any state securities
law or of any rule or regulation promulgated under the Act or any state
securities law applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, and each such underwriter
and each person who controls any such underwriter, for any legal and other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, cost, expense, liability or action, except that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, cost, expense, liability or action arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company in an instrument duly executed by any Holder or underwriter and stated
to be specifically for use therein, and except that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
made in the preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the registration statement becomes
effective or in the amended prospectus filed with the SEC pursuant to Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall
-17-
not inure to the benefit of any underwriter or any Holder, if there is no
underwriter, if a copy of the Final Prospectus was furnished to the person or
entity asserting the claim, loss, damage, cost, expense, liability or action at
or prior to the time such action is required by the Act.
(b) Indemnification by the Holders. Each Holder will, if Registrable
------------------------------
Securities held by or issuable to such Holder are included in the securities to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company within the meaning of the Act, and each other
Holder, each of such other Holder's officers and directors and each person
controlling such other Holder, against all claims, losses, damages, costs,
expenses and liabilities of any nature whatsoever (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other documents (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such other Holders, such directors, officers, persons or underwriters
for any legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, cost, expense,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company in an instrument duly executed by such Holder and
stated to be specifically for use therein, except that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
made in the preliminary prospectus but eliminated or remedied in the Final
Prospectus, such indemnity agreement shall not inure to the benefit of the
Company or any underwriter or any Holder, if there is no underwriter, if a copy
of the Final Prospectus was furnished to the person or entity asserting the
claim, loss, damage, cost, expense, liability or action at or prior to the time
such action is required by the Act. In no event shall the indemnity under this
Section 4.7(b) exceed the gross proceeds from the offering received by such
Holder.
(c) Procedures for Indemnification. Each party entitled to
------------------------------
indemnification under this Section 4.7 (the "Indemnified Party"), shall give
notice to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom,
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense. Failure of the Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 4.7, unless the failure or delay in giving notice has a
material adverse impact on the ability of the Indemnifying Party to defend
against such claim. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does
-18-
not include as an unconditional term thereof, the giving of a release from all
liability in respect to such claim or litigation. If any such Indemnified Party
shall have been advised by counsel chosen by it that there may be one or more
legal defenses available to such Indemnified Party that are different from or
additional to those available to the Indemnifying Party, the Indemnifying Party
shall not have the right to assume the defense of such action on behalf of such
Indemnified Party and will reimburse such Indemnified Party and any person
controlling such Indemnified Party for the reasonable fees and expenses of any
counsel retained by the Indemnified Party, it being understood that the
Indemnifying Party shall not, in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for such Indemnified Party
or controlling person, which firm shall be designated in writing by the
Indemnified Party to the Indemnifying Party.
4.8. Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 4.
4.9. Rule 144 Reporting. From and after such time that the Company
------------------
becomes a reporting company under the Exchange Act, with a view to making
available the benefits of certain rules and regulations of the SEC which may
permit the sale of Warrant Stock or Registrable Securities to the public without
registration, the Company agrees to:
(a) at all times make and keep public information available, as
those terms are understood and defined in SEC Rule 144;
(b) take such action as soon as practicable, including the
voluntary registration of its Common Stock under Section 12 of the Exchange Act,
as is necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act; and
(d) furnish to the Purchaser, so long as the Purchaser owns any
Warrant Stock or Registrable Securities, forthwith upon written request a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested in availing the
Purchaser of any rule or regulation of the SEC permitting the selling of any
such securities without registration.
4.10. Transfer of Registration Rights. The registration rights
-------------------------------
granted by the Company under this Section 4 may be assigned by any Holder to any
permitted transferee or permitted assignee of the Warrant, Warrant Stock or
Registrable Securities, provided that such transfer may otherwise be and is
effected in accordance with applicable federal and state securities laws and
provided further that the Company is given written notice of such transfer at
-19-
the time of or within a reasonable time after such transfer, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned.
4.11. Limitations on Subsequent Registration Rights. Any right given
---------------------------------------------
by Company to any holder or prospective holder of Company's securities in
connection with the registration of securities shall be conditioned such that it
shall be consistent with the provisions of this Section 4 and with the rights of
the Holders provided in this Agreement. This Section 4 shall not limit the
right of the Company to enter into any agreements with any holder or prospective
holder of any securities of the Company giving such holder or prospective holder
the right to require the Company, upon any registration of any of its
securities, to include, among the securities which the Company is then
registering, securities owned by such holder, but only if such rights provide
that, if the underwriter in any such registration requires a reduction in the
number of securities to be included in such registration, then the amount of
securities included in any such registration at the request and on behalf of
such holder shall be reduced (or eliminated, if necessary) prior to any
reduction in the securities requested by the Purchaser to be included in such
registration.
4.12. Limitation on Registration. The Company shall not be obligated
--------------------------
to effect any registration pursuant to Sections 4.2, 4.3 or 4.4 hereof if the
Registrable Securities intended to be included in such registration on behalf of
the Holders could be sold by the Holders to the public in an offering without
registration within a period of three consecutive months.
5. CONDITIONS TO CLOSING. The Purchaser's obligation to purchase the
---------------------
Warrant at the Closing is subject to the fulfillment to the satisfaction of the
Purchaser on or prior to the Closing of the following conditions:
5.1. Representations and Warranties. The representations and
------------------------------
warranties made by the Company in Section 2 hereof shall be true when made, and
shall be true as of the Closing with the same force and effect as if they had
been made on and as of such date, subject to changes contemplated by this
Agreement.
5.2. Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein.
5.3. Securities Laws. The offer and sale of the Warrant to the
---------------
Purchaser pursuant to this Agreement shall be exempt from the registration
requirements of the Act and the registration and/or qualification requirements
of all applicable state securities laws.
5.4. Consents and Waivers. The Company shall have obtained any and
--------------------
all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
5.5. Compliance Certificate. At the Closing, the Company shall have
----------------------
delivered to the Purchaser a certificate, dated as of the date of Closing and
signed by the Company's
-20-
President, certifying that the conditions specified in Sections 5.1, 5.2, 5.3
and 5.4 have been fulfilled.
5.6. Cooperation Agreement. The Purchaser and the Company shall
---------------------
have executed and delivered the Cooperation Agreement.
5.7. Agreement with AGE. The Company and AGE shall have entered
------------------
into an agreement, on terms and conditions satisfactory to the Purchaser, with
respect to the production and merchandising of [[TEXT OMITTED FOR
CONFIDENTIALITY]]
5.8. Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Purchaser, and the Purchaser shall have received all
such counterpart originals or certified or other copies of such documents as it
may reasonably request.
5.9. Ownership of Technology. The Purchaser shall have received from
-----------------------
the Company all documents and other materials requested by the Purchaser for the
purpose of examining and determining the Company's rights in and to any
Proprietary Assets now used or proposed to be used in or necessary to the
Company's business as now conducted and proposed to be conducted, and the status
of the Company's ownership rights in and to all such Proprietary Assets shall be
reasonably satisfactory to the Purchaser.
6. OTHER AGREEMENTS AND COVENANTS.
------------------------------
6.1. Inspection Rights. The Purchaser shall have the right, upon
-----------------
reasonable notice to the Company and during normal business hours, to inspect
the Company's rendering farm in order to confirm that the proceeds from the
purchase of the Warrant have been used by the Company to acquire the equipment
specified in Section 1.4.
6.2. [[TEXT OMITTED FOR CONFIDENTIALITY]]
7. GENERAL PROVISIONS.
------------------
7.1. Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the state of Delaware without regard to provisions of such laws
concerning conflicts or choice of law.
7.2. Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by any party hereto
and the closing of the transactions contemplated hereby.
7.3. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
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7.4. Entire Agreement. This Agreement and the exhibits hereto
----------------
constitute the entire understanding and agreement between the parties with
regard to the subjects hereof and thereof; provided, however, that nothing in
-------- -------
this Agreement shall be deemed to terminate or supersede the provisions of any
confidentiality and nondisclosure agreements executed by the parties hereto
prior to the date hereof, which agreements shall continue in full force and
effect until terminated in accordance with their respective terms.
7.5. Notices. Except as otherwise provided, all notices and other
-------
communications required or permitted hereunder shall be in writing and shall be
mailed by first class mail, postage prepaid, addressed (a) if to the Purchaser,
to 2200 Mission College Boulevard, Mail Stop SC4-210, Santa Clara, California
95052-8119, Attn: Treasurer, and (b) if to the Company, to MSH Entertainment
Corporation, 768 Brannan Street, San Francisco, California 94103, or (c) to such
other address as the receiving party shall have furnished to the other in
writing.
7.6. Amendments and Waivers. Any term of this Agreement may be
----------------------
amended, and the observance of any term of the Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Purchaser
and only to the extent specifically set forth in such writing.
7.7. Delays or Omissions. No delay or omission to exercise any
-------------------
right, power or remedy accruing to any party hereto upon any breach or default
of the other party hereto under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of any similar breach of default
thereafter occurring. All remedies, either under this Agreement or by law or
otherwise afforded to the Company or the Purchaser shall be cumulative and not
alternative.
7.8. Legal Fees. In the event of any action at law, suit in equity
----------
or arbitration proceeding in relation to this Agreement or any securities of
Company issued or to be issued to the Purchaser, the prevailing party shall be
paid by the other party a reasonable sum for attorney's fees and expenses for
such prevailing party.
7.9. Finder's Fees. Each party (a) represents and warrants to the
-------------
other party hereto that it has retained no finder or broker in connection with
the transactions contemplated by this Agreement, and (b) hereby agrees to
indemnify and to hold harmless the other party hereto from and against any
liability for any commission or compensation in the nature of a finder's fee of
any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which the indemnifying party
or any of its employees or representatives are responsible.
7.10. Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.11. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-22-
7.12. Severability. Should any provision of this Agreement be
------------
determined to be illegal or unenforceable, such determination shall not affect
the remaining provisions of this Agreement.
7.13. Confidentiality; Public Disclosure.
----------------------------------
(a) This Agreement, the terms hereof and the relationship of
the parties shall be governed by the Confidentiality and Nondisclosure
Agreement, dated as of August 22, 1996, between the Purchaser and the Company.
The terms and existence of the transactions contemplated by this Agreement and
the Cooperation Agreement shall be deemed confidential information of both
parties.
(b) The Company shall not use the Purchaser's name or refer to
the Purchaser directly or indirectly in connection with the Purchaser's
relationship with the Company in any advertisement, news release or professional
or trade publication, or in any other manner, unless otherwise required by law
or with the Purchaser's prior written consent, which consent will generally not
be granted. The parties acknowledge that the Company may be required to disclose
in a press release and/or a registration statement certain information relating
to the transactions contemplated by this Agreement following consummation
hereof. Notwithstanding the foregoing, the provisions of this Section 7.13 shall
apply to any such disclosure and the Company shall provide Intel a reasonably
adequate opportunity to review and comment on such disclosure and shall not make
any such disclosure without Intel's prior written consent. The parties agree
that at no time will there be any press release or other public statement issued
by either party relating to this Agreement or the transactions contemplated
hereby unless agreed to in advance by both parties in writing.
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The parties have executed this Agreement to be effective as of the date first
set forth above.
[Download Table]
INTEL CORPORATION MSH ENTERTAINMENT CORPORATION
/s/ SATISH RISH /s/ ROBERT P. MAERZ
-------------------- ----------------------------------------
Signature Signature
Satish Rish Robert P. Maerz
-------------------- ----------------------------------------
Printed Name Printed Name
Assistant Treasurer-Int'l Chairman
------------------------------- ----------------------------------------
Title Title
LIST OF EXHIBITS
----------------
Exhibit A Warrant
---------
Exhibit B Schedule of Exceptions
---------
-24-
Exhibit A
---------
WARRANT
-------
-25-
Exhibit B
---------
SCHEDULE OF EXCEPTIONS
WARRANT
THE WARRANT EVIDENCED OR CONSTITUTED HEREBY AND THE SHARES OF COMMON STOCK
ISSUABLE HEREUNDER HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT
UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii)
THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE
COMMISSION RULE 144.
WARRANT TO PURCHASE 1,000,000 SHARES OF
COMMON STOCK OF MSH ENTERTAINMENT CORPORATION
(Subject to Adjustment)
NO. I-1
THIS CERTIFIES THAT, in consideration of the receipt by MSH Entertainment
Corporation, a Utah corporation (the "Company"), of [[TEXT OMITTED FOR
-------
CONFIDENTIALITY]] in cash from Intel Corporation, a Delaware corporation
("Intel"), Intel or its permitted registered assigns ("Holder"), is entitled,
----- ------
subject to the terms and conditions of this Warrant, at any time after November
4, 1996 (the "Effective Date"), and before 5:00 p.m. Pacific Time on [[TEXT
--------------
OMITTED FOR CONFIDENTIALITY]] (the "Expiration Date"), to purchase from the
---------------
Company, One Million (1,000,000) fully paid and nonassessable shares of the
Company's Common Shares, $.001 par value per share (the "Warrant Stock"), at the
-------------
Exercise Price (as defined in Section 1.5 below). Both the number of shares of
Warrant Stock purchasable under this Warrant and the Exercise Price are subject
to adjustment as provided herein. This Warrant is issued pursuant to that
certain Warrant Purchase Agreement between the Company and Intel Corporation of
even date herewith (the "Purchase Agreement"). This Warrant shall terminate on
------------------
the Expiration Date.
1. CERTAIN DEFINITIONS. As used in this Warrant:
1.1. The term "Warrant Stock" shall mean the Common Shares, $0.001 par
-------------
value per share, of the Company, and any other securities and property at any
time receivable or issuable upon exercise of this Warrant, unless the context
otherwise requires.
1.2. The term "Warrant" as used herein, shall include this Warrant and any
-------
warrant delivered in substitution or exchange therefor as provided herein.
1.3. The term "Registered Holder" shall mean any Holder in whose name this
-----------------
Warrant is registered upon the books and records maintained by the Company.
1.4. The term "Fair Market Value" of a share of Warrant Stock as of a
-----------------
particular date (the "Determination Date") shall mean:
------------------
(a) If traded on a securities exchange or the Nasdaq National Market,
the Fair Market Value shall be deemed to be the average of the closing prices of
the Common Stock of the Company on such trading market over the 10 business days
ending three (3) days prior to the Determination Date;
(b) If actively traded over-the-counter, the Fair Market Value shall
be deemed to be the average of the closing bid prices over the 20-day period
ending three (3) days prior to the Determination Date; and
(c) If there is no active public market, the Fair Market Value shall
be the value thereof, as determined in good faith by the Board of Directors of
the Company.
1.5. The term "Exercise Price" shall mean [[TEXT OMITTED FOR
--------------
CONFIDENTIALITY]]
2. EXERCISE OF WARRANT
2.1. Payment.
-------
Subject to compliance with the terms and conditions of this Warrant
and applicable securities laws, this Warrant may be exercised, in whole or in
part at any time on or before the Expiration Date, by surrendering this Warrant
at the principal office of the Company together with:
(a) the form of Notice of Exercise attached hereto as Exhibit 1 (the
"Notice of Exercise") duly executed by the Holder, and
-------------------
(b) payment, (i) in cash (by check) or by wire transfer, (ii) by
cancellation by the Holder of indebtedness of the Company to the Holder or (iii)
by a combination of (i) and (ii), of an amount equal to the product obtained by
multiplying the number of shares of Warrant Stock being purchased upon such
exercise by the then effective Exercise Price (the "Exercise Amount").
---------------
2.2. Net Issue Exercise
------------------
In lieu of the payment methods set forth in Section 2.1(b) above, the
Holder may elect to exchange the Warrant for shares of Warrant Stock equal to
the value of the amount of the Warrant being exchanged on the date of exchange.
If Holder elects to exchange this Warrant as provided in this Section 2.2,
Holder shall tender to the Company the Warrant for the amount being exchanged,
along with written notice of Holder's election to exchange up to the full amount
of the Warrant, and the Company shall issue to Holder the number of shares of
the Company's Warrant Stock computed using the following formula:
-3-
X = Y (A-B)
-------
A
Where X = the number of shares of Warrant Stock to be issued to
Holder.
Y = the number of shares of Warrant Stock purchasable under the
amount of the Warrant being exchanged (as adjusted to the date of such
calculation).
A = the Fair Market Value of one share of the Company's Common Stock.
B = Exercise Price (as adjusted to the date of such calculation).
All references herein to an "exercise" of the Warrant shall include an
exchange pursuant to this Section 2.2.
2.3. Partial Exercise; Effective Date of Exercise.
--------------------------------------------
In case of any partial exercise of this Warrant, the Company shall
cancel this Warrant upon surrender hereof and shall execute and deliver a new
Warrant of like tenor and date for the balance of the shares of Warrant Stock
purchasable hereunder. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above. The person entitled to receive the shares of
Warrant Stock issuable upon exercise of this Warrant shall be treated for all
purposes as the holder of record of such shares as of the close of business on
the date the Holder is deemed to have exercised this Warrant.
2.4. Stock Certificates; Fractional Shares.
-------------------------------------
As soon as practicable on or after such date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Warrant Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share equal to
such fraction of the Fair Market Value of one whole share of Warrant Stock as of
the date of exercise of this Warrant. No fractional shares or scrip
representing fractional shares shall be issued upon an exercise of this Warrant.
3. VALID ISSUANCE; TAXES.
All shares of Warrant Stock issued upon the exercise of this Warrant shall
be validly issued, fully paid and non-assessable, and the Company shall pay all
taxes and other governmental charges that may be imposed in respect of the issue
or delivery thereof. The Company shall not be required to pay any tax or other
charge imposed in connection with any transfer involved in the issuance of any
certificate for shares of Warrant Stock in any name other than that of the
Registered Holder of this Warrant, and in such case the Company shall not be
required to issue or deliver any stock certificate or security until such tax or
other charge has been paid, or it has been established to the Company's
reasonable satisfaction that no tax or other charge is due.
-4-
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
The number of shares of Warrant Stock issuable upon exercise of this
Warrant (or any shares of stock or other securities or property receivable or
issuable upon exercise of this Warrant) and the Exercise Price are subject to
adjustment upon occurrence of the following events:
4.1. Adjustment for Stock Splits, Stock Subdivisions or Combinations of
------------------------------------------------------------------
Shares.
------
The Exercise Price of this Warrant shall be proportionally decreased
and the number of shares of Warrant Stock issuable upon exercise of this Warrant
(or any shares of stock or other securities at the time issuable upon exercise
of this Warrant) shall be proportionally increased to reflect any stock split or
subdivision of the Company's Common Stock. The Exercise Price of this Warrant
shall be proportionally increased and the number of shares of Warrant Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities at the time issuable upon exercise of this Warrant) shall be
proportionally decreased to reflect any combination of the Company's Common
Stock.
4.2. Adjustment for Dividends or Distributions of Stock or Other
-----------------------------------------------------------
Securities or Property.
----------------------
In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a dividend or
other distribution with respect to the Warrant Stock (or any shares of stock or
other securities at the time issuable upon exercise of the Warrant) payable in
(i) securities of the Company or (ii) assets (excluding cash dividends paid or
payable solely out of retained earnings), then, in each such case, the Holder of
this Warrant on exercise hereof at any time after the consummation, effective
date or record date of such dividend or other distribution, shall receive, in
addition to the shares of Warrant Stock (or such other stock or securities)
issuable on such exercise prior to such date, and without the payment of
additional consideration therefore, the securities or such other assets of the
Company to which such Holder would have been entitled upon such date if such
Holder had exercised this Warrant on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock available by it as
aforesaid during such period giving effect to all adjustments called for by this
Section 4.
4.3. Reclassification.
----------------
If the Company, by reclassification of securities or otherwise, shall
change any of the securities as to which purchase rights under this Warrant
exist into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of such
change with respect to the securities that were subject to the purchase rights
under this Warrant immediately prior to such reclassification or other change
and the Exercise Price therefore shall be appropriately adjusted, all subject to
further adjustment as provided in this Section 4.
-5-
4.4. Adjustment for Capital Reorganization, Merger or Consolidation.
--------------------------------------------------------------
In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), or any merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all the assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, 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 herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 4. The foregoing provisions of this Section 4.4 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, 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 after the transaction, to the end that the provisions 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.
4.5. Reservation of Securities and Assets.
------------------------------------
The Company shall reserve, for the life of the Warrant, such
securities or such other assets of the Company the Holder is entitled to receive
pursuant to this Section 4.
5. CERTIFICATE AS TO ADJUSTMENTS.
In each case of any adjustment in the Exercise Price, or number or type of
shares issuable upon exercise of this Warrant, the Chief Financial Officer of
the Company shall compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a statement of
the adjusted Exercise Price. The Company shall promptly send (by facsimile and
by either first class mail, postage prepaid or overnight delivery) a copy of
each such certificate to the Holder.
6. LOSS OR MUTILATION.
Upon receipt of evidence reasonably satisfactory to the Company of the
ownership of and the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the
-6-
Company will execute and deliver in lieu thereof a new Warrant of like tenor as
the lost, stolen, destroyed or mutilated Warrant.
7. RESERVATION OF COMMON STOCK.
The Company hereby covenants that at all times there shall be reserved for
issuance and delivery upon exercise of this Warrant such number of shares of
Common Stock or other shares of capital stock of the Company as are from time to
time issuable upon exercise of this Warrant and, from time to time, will take
all steps necessary to amend its Articles of Incorporation to provide sufficient
reserves of shares of Common Stock issuable upon exercise of this Warrant. All
such shares shall be duly authorized, and when issued upon such exercise, shall
be validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except encumbrances or restrictions
arising under federal or state securities laws. Issuance of this Warrant shall
constitute full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant.
8. TRANSFER AND EXCHANGE.
Subject to the terms and conditions of this Warrant and compliance with all
applicable securities laws, this Warrant and all rights hereunder may be
transferred, in whole or in part, on the books of the Company maintained for
such purpose at the principal office of the Company referred to above, by the
Registered Holder hereof in person, or by duly authorized attorney, upon
surrender of this Warrant properly endorsed and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. Upon any
permitted partial transfer, the Company will issue and deliver to the Registered
Holder a new Warrant or Warrants with respect to the shares of Warrant Stock not
so transferred. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that when this Warrant shall have been so endorsed,
the person in possession of this Warrant may be treated by the Company, and all
other persons dealing with this Warrant, as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; provided, however that until a
transfer of this Warrant is duly registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all purposes.
9. RESTRICTIONS ON TRANSFER.
The Holder, by acceptance hereof, agrees that, absent an effective
registration statement filed with the U.S. Securities and Exchange Commission
("SEC") under the Act covering the disposition or sale of this Warrant or the
Warrant Stock issued or issuable upon exercise hereof, as the case may be, and
registration or qualification under applicable state securities laws, such
Holder will not sell, transfer pledge, or hypothecate any or all such Warrants
or Warrant Stock, as the case may be, unless either (i) the Company has received
an opinion of counsel to the effect that such registration is not required in
connection with such disposition or (ii) the sale of such securities is made
pursuant to SEC Rule 144.
-7-
10. COMPLIANCE WITH SECURITIES LAWS.
By acceptance of this Warrant, the holder hereby represents, warrants and
covenants that any shares of stock purchased upon exercise of this Warrant shall
be acquired for investment only and not with a view to, or for sale in
connection with, any distribution thereof; that the Holder has had such
opportunity as such Holder has deemed adequate to obtain from representatives of
the Company such information as is necessary to permit the holder to evaluate
the merits and risks of its investment in the Company; that the Holder is able
to bear the economic risk of holding such shares as may be acquired pursuant to
the exercise of this Warrant for an indefinite period; that the Holder
understands that the shares of stock acquired pursuant to the exercise of this
Warrant will not be registered under the Act (unless otherwise required
pursuant to exercise by the holder of the registration rights, if any,
previously granted to the registered Holder) and will be "restricted securities"
within the meaning of Rule 144 under the Act and that the exemption from
registration under Rule 144 currently is not available for at least two years
from the date of exercise of this Warrant, subject to any special treatment by
the Securities and Exchange Commission for exercise of this Warrant pursuant to
Section 2.2, and even then will not be available unless a public market then
exists for the stock, adequate information concerning the Company is then
available to the public, and other terms and conditions of Rule 144 are complied
with; and that all stock certificates representing shares of stock issued to the
Holder upon exercise of this Warrant may have affixed thereto a legend
substantially in the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE BEEN AND WILL BE
ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("THE ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT OR UNLESS EITHER (i) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THE EFFECT THAT REGISTRATION
IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF
SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE
144.
11. NO RIGHTS OR LIABILITIES AS SHAREHOLDERS.
This Warrant shall not entitle the Holder to any voting rights or other
rights as a shareholder of the Company. In the absence of affirmative action by
such Holder to purchase Warrant Stock by exercise of this Warrant, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder hereof shall cause such Holder hereof to be a shareholder of the Company
for any purpose.
12. REGISTRATION RIGHTS.
All shares of Common Stock issuable upon exercise of this Warrant shall be
"Registrable Securities" as defined in the Purchase Agreement and entitled,
subject to the terms and conditions of that agreement, to all registration
rights granted to holders of Registrable Securities thereunder.
-8-
13. NOTICES.
All notices and other communications from the Company to the Holder shall
be given in accordance with Paragraph 7.5 of the Purchase Agreement.
14. HEADINGS.
The headings in this Warrant are for purposes of convenience in reference
only, and shall not be deemed to constitute a part hereof.
15. LAW GOVERNING.
This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of Delaware.
16. NO IMPAIRMENT.
The Company will not, by amendment of its Articles of Incorporation or
bylaws, or through reorganization, consolidation, merger, dissolution, issue or
sale of securities, sale of assets or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Registered Holder of this Warrant against impairment.
Without limiting the generality of the foregoing, the Company (a) will not
increase the par value of any shares of stock issuable upon the exercise of this
Warrant above the amount payable therefor upon such exercise, and (b) will take
all such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable shares of Warrant Stock
upon exercise of this Warrant.
17. NOTICES OF RECORD DATE. In case:
17.1. the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities or to receive any other right; or
17.2. of any consolidation or merger of the Company with or into another
corporation, any capital reorganization or the Company, any reclassification of
the Capital Stock of the Company, or any conveyance of all or substantially all
of the assets of the Company to another corporation in which holders of the
Company's stock are to receive stock, securities or property of another
corporation; or
17.3. of any voluntary dissolution, liquidation or winding-up of the
Company; or
17.4. of any redemption or conversion of all outstanding Common Stock;
then, and in each such case, the Company will mail or cause to be mailed to
the Registered Holder of this Warrant a notice specifying, as the case may be,
(i) the date on which a
-9-
record is to be taken for the purpose of such dividend, distribution or right,
or (ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, winding-up, redemption or
conversion is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities as at the
time are receivable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be delivered at least thirty (30) days prior to
the date therein specified.
18. SEVERABILITY.
If any term, provision, covenant or restriction of this Warrant is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
19. COUNTERPARTS.
For the convenience of the parties, any number of counterparts of this
Warrant may be executed by the parties hereto and each such executed counterpart
shall be, and shall be deemed to be, an original instrument.
20. NO INCONSISTENT AGREEMENTS.
The Company will not on or after the date of this Warrant enter into any
agreement with respect to its securities which is inconsistent with the rights
granted to the Holders of this Warrant or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to holders of
the Company's securities under any other agreements, except rights that have
been waived.
-10-
21. SATURDAYS, SUNDAYS AND HOLIDAYS.
If the Expiration Date falls on a Saturday, Sunday or legal holiday, the
Expiration Date shall automatically be extended until 5:00 p.m. the next
business day.
AGREED:
[Download Table]
INTEL CORPORATION MSH ENTERTAINMENT CORPORATION
------------------------ ------------------------------
Signature Signature
------------------------ ------------------------------
Printed Name Printed Name
------------------------ ------------------------------
Title Title
------------------------ ------------------------------
Date Date
-11-
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
MSH ENTERTAINMENT CORPORATION:
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and (check the applicable box):
[_] tenders herewith payment of the exercise price in full in the form of cash
or a certified or official bank check in same-day funds in the amount of
$____________ for _________ shares of Common Stock.
[_] Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________
shares of Common Stock.
Please issue a certificate or certificates for such Common Stock in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name:
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Address:
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Signature:
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Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns and transfers unto
________________________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:
[Download Table]
Name(s) of Assignee(s) Address # of Warrants
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And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.
Dated: 19
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Signature: --------------------------------
Notice: The signature to the foregoing Assignment must correspond to the name
as written upon the face of this security in every particular, without
alteration or any change whatsoever; signature(s) must be guaranteed by an
eligible guarantor institution (banks, stock brokers, savings and loan
associations and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Securities and Exchange Commission Rule
17Ad-15.
-2-
Dates Referenced Herein
| Referenced-On Page |
|---|
| This ‘S-1’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 4/4/97 | | | | | | | None on these Dates |
| | 11/4/96 | | 6 | | 26 |
| | 8/22/96 | | 3 | | 23 |
| | 1/1/94 | | 10 |
| List all Filings |
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Filing Submission 0000898430-97-001403 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
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