EXHIBIT 10.8
▇▇▇▇▇▇▇ MEDIA INTERNATIONAL INC
PLACEMENT AGENT AGREEMENT
Dated as of: July ___, 2001
May ▇▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇▇ Media International Inc., (the "Company"),
hereby agrees with May ▇▇▇▇▇ Group, Inc. ("May ▇▇▇▇▇") as follows:
1. Offering. The Company hereby engages May ▇▇▇▇▇ to act as its
exclusive placement agent in connection with the Equity Line of Credit (as
defined herein) for the issuance and sale by the Company (the "Offering") of the
Company's Common Stock, par value $0.001 per share (the "Common Stock"), at a
price per share equal to the Purchase Price, as that term is defined in the
Equity Line of Credit dated the date hereof between the Company and the
Investors named therein ( the "Equity Line of Credit"), for an aggregate price
of Fifteen Million Dollars ($15,000,000). All capitalized terms used herein and
not otherwise defined shall have the same meaning ascribed to them as in the
Equity Line of Credit. The Investors will be granted certain registration
rights with respect to the Common Stock as more fully set forth in the
Registration Rights Agreement between the Company and the Investors dated the
date hereof. The documents to be executed and delivered in connection with the
Offering, including, but not limited, to this Agreement, the Equity Line of
Credit, the Registration Rights Agreement, the Escrow Agreement with First
Union National Bank (the "Escrow Agreement"), are referred to sometimes
hereinafter collectively as the "Offering Materials." The Company's Common Stock
is sometimes referred to hereinafter as the "Securities." May ▇▇▇▇▇ shall not be
obligated to sell any Securities and this Offering by May ▇▇▇▇▇ shall be solely
on a "best efforts basis."
2. Information.
A. Upon the occurrence of each Advance, the funds received in
respect of the shares of Common Stock purchased by the Investors will be
disbursed in accordance with the terms of the Equity Line of Credit Agreement,
net of (i) the commission payable to May ▇▇▇▇▇, equal to four percent (4%) of
the gross proceeds from the sale of Common Stock, and (ii) legal fees and other
expenses related thereto due to May ▇▇▇▇▇'▇ counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, an
amount not to exceed Fifteen Thousand Dollars ($15,000) shall be paid from the
gross proceeds of the sale of the Convertible Series B Series B Preferred Stock
pursuant to the Securities Purchase dated the date
hereof. Subsequently on each Advance Date, the Company will pay ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP the sum of Five Hundred Dollars ($500) Dollars for escrow fees, which shall
include the fees of First Union National Bank, as the escrow agent under the
Escrow Agreement.
B. In addition to the foregoing compensation the Company shall
issue to the May ▇▇▇▇▇ Group, Inc., a shares of the Company's Common Stock in an
amount equal to Four Hundred Thousand Dollars ($400,000) divided by the Closing
Bid Price of the Company's Common Stock on the date hereof. Such shares of
Common Stock shall have "piggy-back" and demand registration rights.
3. Representations, Warranties and Covenants of May ▇▇▇▇▇.
A. May ▇▇▇▇▇ represents, warrants and covenants as follows:
(i) May ▇▇▇▇▇ has the necessary power to enter into this
Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby and thereby.
(ii) The execution and delivery by May ▇▇▇▇▇ of this Agreement ,
the Escrow Agreement and the consummation of the transactions contemplated
herein and therein will not result in any violation of, or be in conflict with,
or constitute a default under, any agreement or instrument to which May ▇▇▇▇▇ is
a party or by which May ▇▇▇▇▇ or its properties are bound, or any judgment,
decree, order or, to May ▇▇▇▇▇'▇ knowledge, any statute, rule or regulation
applicable to May ▇▇▇▇▇. This Agreement and the Escrow Agreement when executed
and delivered by May ▇▇▇▇▇, ▇▇▇▇ constitute the legal, valid and binding
obligations of May ▇▇▇▇▇, enforceable in accordance with their respective terms,
except to the extent that (a) the enforceability hereof or thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity,
or (c) the indemnification provisions hereof or thereof may be held to be
violative of public policy.
(iii) Upon receipt of an executed Equity Line of Credit , a
Registration Rights Agreement and Escrow Agreement and the documents related
thereto, May ▇▇▇▇▇ will, through the Escrow Agent, promptly forward copies of
the Purchase Agreement, Registration Rights Agreement and Escrow Agreement and
the documents related thereto to the Company or its counsel.
(iv) May ▇▇▇▇▇ will not deliver any documents related to the
Offering to any person it does not reasonably believe to be an Accredited
Investors as defined in Rule 501 (a) (3) of Regulation D. May ▇▇▇▇▇ will arrange
for the securities to be sold exclusively to Accredited Investors in a Private
Placement transaction exempt from the Registration requirements of the 1933 Act.
(v) May ▇▇▇▇▇ will not intentionally take any action that it
reasonably believes would cause the Offering to violate the provisions of the
1933 Act, the 1934 Act, the respective rules and regulations promulgated there
under (the "Rules and Regulations") or applicable "Blue Sky" laws of any state
or jurisdiction.
(vi) May ▇▇▇▇▇ shall use all reasonable efforts to determine (a)
whether the Investors is an Accredited Investors and (b) that any information
furnished by the Investors is true and accurate. May ▇▇▇▇▇ shall have no
obligation to insure that (x) any check, note, draft or other means of payment
for the Common Stock will be honored, paid or enforceable against the Investors
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in accordance with its terms, or (y) subject to the performance of May ▇▇▇▇▇'▇
obligations and the accuracy of May ▇▇▇▇▇'▇ representations and warranties
hereunder, (1) the Offering is exempt from the registration requirements of the
1933 Act or any applicable state "Blue Sky" law or (2) the Investors is an
Accredited Investors.
(vii) May ▇▇▇▇▇ is a member of the National Association of
Securities Dealers, Inc., and is a broker-dealer registered as such under the
1934 Act and under the securities laws of the states in which the Securities
will be offered or sold by May ▇▇▇▇▇, unless an exemption for such state
registration is available to May ▇▇▇▇▇. May ▇▇▇▇▇ is in compliance with all
material rules and regulations applicable to May ▇▇▇▇▇ generally and applicable
to May ▇▇▇▇▇'▇ participation in the Offering. The Company and May ▇▇▇▇▇
acknowledge and agree that in the event the NASD, SEC or other regulatory
authority determines that the aggregate or any portion of the compensation to be
paid to May ▇▇▇▇▇ under this Agreement violates the NASD's Corporate Financing
Rules, including without limitation, Rule 2710 of the NASD, May ▇▇▇▇▇ will
reduce the aggregate compensation to be paid to May ▇▇▇▇▇ hereunder to be in
compliance with such Rules, and such reduced compensation shall be the
compensation to be paid by the Company to May ▇▇▇▇▇ hereunder. May ▇▇▇▇▇ shall
not be entitled to terminate this Agreement as a result of limitations place on
the Compensation to be paid to May ▇▇▇▇▇ under the NASD's Corporate Financing
Rules.
4. Representations and Warranties of the Company.
A. The Company represents and warrants as follows:
Except as stated below or on the disclosure schedules attached hereto,
the Company hereby represents and warrants to, and covenants with, the Investors
that the following are true and correct as of the date hereof.
(i) Organization and Qualification. Each of the Company and its
subsidiaries is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite power
and authority corporate power to own their properties and to carry on their
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.
(ii) Authorization, Enforcement, Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Registration Rights Agreement and any related
agreements, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Registration Rights Agreement, the Escrow
Agreement and any related agreements by the Company and the consummation by it
of the transactions contemplated hereby and thereby, have been duly authorized
by the Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders( other than
as may be required as stated in Section 7.2(g) hereof), (iii) this Agreement,
Registration Rights Agreement, the Escrow Agreement and any related agreements
have been duly executed and delivered by the Company, (iv) this Agreement, the
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Registration Rights Agreement, Escrow Agreement and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies.
(iii) Capitalization. Capitalization. The authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock $0.001 par
value, and 100,000,000 shares of Preferred Stock, $0.0011 par value. As of July
23, 2001, the Company had 62,167,450 shares of Common Stock outstanding
excluding 60,000 shares of Common Stock in its treasury which are being
cancelled, the Company filed a Certificate of Designations authorizing 600,000
shares of Series B Convertible Redeemable Preferred Stock par value $0.001 per
share (the "Series B Stock") in connection with a proposed transaction with
▇▇▇▇▇▇▇▇ Media and Communications Ltd. Such transaction was not consummated and
no shares of the Series A Stock were issued in connection therewith. There are
no shares of Preferred Stock issued and outstanding except for the transactions
of the reorganized entities preceding the Reorganizations, for which the Company
has relied on third party representations,all of such outstanding shares have
been validly issued and are fully paid and nonassessable. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents or Schedule 4.3, no
shares of Common Stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company. Except
as disclosed in the SEC Documents or Schedule 4.3, no shares of Common Stock are
subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company. Except as disclosed in
Schedule 4.3 hereto, as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the Securities Act (except pursuant to the Registration
Rights Agreement). There are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the consummation of the transactions described herein
or therein. The Company has furnished to the Investors true and correct copies
of the Company's Certificate of Incorporation, as amended and as in effect on
the date hereof (the "Certificate of Incorporation"), and the Company's By-laws,
as in effect on the date hereof (the "By-laws").
(iv) No Conflict. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and assuming receipt of shareholder approval under Section
2.7 herein will not (i) result in a violation of the Certificate of
Incorporation, any certificate of designations of any outstanding series of
4
preferred stock of the Company or By-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is quoted) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company or any of its subsidiaries is bound or affected and which could cause a
Material Adverse Effect. Except as disclosed in the SEC Documents, neither the
Company nor its subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation or By-laws or their organizational charter or
by-laws, respectively, or any material contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its subsidiaries. The business
of the Company and its subsidiaries is not being conducted in violation of any
material law, ordinance, regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement or the Registration Rights Agreement in accordance with the terms
hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been or will be obtained or effected on or prior to the Effective
Date. The Company and its subsidiaries are unaware of any fact or circumstance
which might give rise to any of the foregoing.
(v) SEC Documents; Financial Statements. Except as set forth in Schedule
4.5 attached the Equity Line of Credit Agreement, since April 2000, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC under of the Exchange Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents"). The Company has
delivered to the Investors or its representatives, or made available through the
SEC's website at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇, true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "Financial Statements") complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(vi) 10b-5. The SEC Documents, when filed, did not include any untrue
statements of material fact, nor do they omit to state any material fact
required to be stated therein
5
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading.
(vii) No Default. Except as disclosed Section 4.5 the Company is not in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by which it is
or its property is bound and neither the execution, nor the delivery by the
Company, nor the performance by the Company of its obligations under this
Agreement or any of the exhibits or attachments hereto will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company's
business or financial condition.
(viii) Absence of Events of Default. Except for matters described in the
SEC Documents and/or this Agreement, no Event of Default, as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect on the Company's business, properties, prospects,
financial condition or results of operations.
(ix) Intellectual Property Rights. The Company and its subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service ▇▇▇▇ registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service ▇▇▇▇ registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company, there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service ▇▇▇▇ registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
(x) Employee Relations Neither the Company nor any of its subsidiaries
is involved in any labor dispute nor, to the knowledge of the Company or any of
its subsidiaries, is any such dispute threatened. None of the Company's or its
subsidiaries' employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.
6
(xi) Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable material foreign, federal, state and
local laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval.
(xii) Title. Except as set forth in the SEC Documents, the Company has
good and marketable title to its properties and material assets owned by it,
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest other than such as are not material to the business of the
Company. Any real property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(xiii) Insurance. The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
(xiv) Regulatory Permits. The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(xv) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(xvi) No Material Adverse Breaches, etc. Except as set forth in the SEC
7
Documents, neither the Company nor any of its subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has or is
expected in the future to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries. Neither the Company nor any of its
subsidiaries is in breach of any contract or agreement which breach, in the
judgment of the Company's officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its subsidiaries.
(xvii) Absence of Litigation. Except as set forth in the SEC Documents,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i) have a Material Adverse Effect on the transactions contemplated hereby (ii)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a Material Adverse Effect on the business, operations,
properties, financial condition or results of operation of the Company and its
subsidiaries taken as a whole.
(xviii) Subsidiaries. Except as disclosed in the SEC Documents, the
Company does not presently own or control, directly or indirectly, any interest
in any other corporation, partnership, association or other business entity.
(xix) Other Outstanding Securities/Financing Restrictions. As of the
date hereof, other than warrants and options to acquire shares of Common Stock
as disclosed in Schedule 4.3, there are no other warrants and options registered
with the SEC, which are available for sale as unrestricted ("free trading")
stock.
(xx) Tax Status. The Company and each of its subsidiaries has made,
filed, or has obtained current extensions for all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.
(xxi) Certain Transactions. Except as set forth in the SEC Documents,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract,
8
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(xxii) Fees and Rights of First Refusal. Except as set forth in the SEC
Documents, the Company is not obligated to offer the securities offered
hereunder on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.
(xxiii) Use of Proceeds. The Company represents that the net proceeds
from this offering will be used for working capital purposes and to reduce
indebtedness. However, in no event shall the net proceeds from this offering be
used by the Company for the payment (or loaned to any such person for the
payment) of any judgment, or other liability, incurred by any executive officer,
officer, director, or employee of the Company.
(xxiv) Further Representation and Warranties of the Company. For so long
as any securities issuable hereunder held by the Investors remain outstanding,
the Company acknowledges, represents, warrants and agrees that it will use
commercially reasonable efforts to maintain the listing of its Common Stock on
NASD Bulletin Board.
(xxv) Opinion of Counsel. Investors shall receive an opinion letter from
counsel to the Company (updated where applicable) on the date hereof and updated
annually for the life of the this Agreement in form substantially acceptable to
the Investors.
(xxvi) Opinion of Counsel. The Company will obtain for the Investors, at
the Company's expense, any and all opinions of counsel which may be reasonably
required in order to sell the securities issuable hereunder without restriction.
(xxvii) Dilution. The Company is aware and acknowledges that issuance of
shares of the Company's Common Stock could cause dilution to existing
shareholders and could significantly increase the outstanding number of shares
of Common Stock.
(xxviii) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the shares of Common Stock offered hereby.
B. There are no claims for services in the nature of a finder's
or origination fee with respect to the sale of the Common Stock or any other
arrangements, agreements or understandings that may affect May ▇▇▇▇▇'▇
compensation, as determined by the National Association of Securities Dealers,
Inc.
9
C. Subject to the performance by May ▇▇▇▇▇ of its obligations
hereunder, the Equity Line of Credit and the offer and sale of the Securities
comply, and will continue to comply, up to the Registration Period (as defined
in the Equity Line of Credit ) in all material respects with the requirements of
Rule 506 of Regulation D promulgated by the SEC pursuant to the 1933 Act and any
other applicable federal and state laws, rules, regulations and executive
orders. Neither the Offering Materials nor any amendment or supplement thereto
nor any documents prepared by the Company in connection with the Offering will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. All
statements of material facts in the Offering Materials are true and correct as
of the date of the Offering Materials and will be true and correct on the date
of the Closing.
D. All material taxes which are due and payable from the Company
have been paid in full or adequate provision has been made for such taxes on the
books of the Company except for those taxes disputed in good faith the Company
does not have any tax deficiency or claim outstanding assessed or proposed
against it.
E. None of the Company nor any of its officers, directors,
employees or agents, nor any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (B) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of the Company as reflected in any
of the financial statements contained in the Offering Materials, or (C) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company in the future.
5. Certain Covenants and Agreements of the Company.
The Company covenants and agrees at its expense and without any expense
to May ▇▇▇▇▇ as follows:
A. To advise May ▇▇▇▇▇ of any material adverse change in the Company's
financial condition, prospects or business or of any development materially
affecting the Company or rendering untrue or misleading any material statement
in the Offering Materials occurring at any time as soon as the Company is either
informed or becomes aware thereof.
B. To use its commercially reasonable efforts to cause the Common Stock
issuable in connection with the Equity Line of Credit and upon exercise of the
Convertible Debentures to be qualified or registered for sale on terms
consistent with those stated in the Registration Rights Agreement and under the
securities laws of such jurisdictions as May ▇▇▇▇▇ and the Investors shall
reasonably request, provided that such states and jurisdictions do not require
the Company to qualify as a foreign corporation. Qualification, registration and
exemption charges and fees shall be at the sole cost and expense of the Company.
10
C. Upon written request, to provide and continue to provide the each
holder of Securities, copies of all quarterly financial statements and audited
annual financial statements prepared by or on behalf of the Company, other
reports prepared by or on behalf of the Company for public disclosure and all
documents delivered to the Company's stockholders.
D. To deliver, during the Registration Period, to May ▇▇▇▇▇, upon May
▇▇▇▇▇'▇ request, within forty five (45) days, a statement of its income for each
such quarterly period, and its balance sheet and a statement of changes in
stockholders' equity as of the end of such quarterly period, all in reasonable
detail, certified by its principal financial or accounting officer; (ii) within
ninety (90) days after the close of each fiscal year, its balance sheet as of
the close of such fiscal year, together with a statement of income, a statement
of changes in stockholders' equity and a statement of cash flow for such fiscal
year, such balance sheet, statement of income, statement of changes in
stockholders' equity and statement of cash flow to be in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
auditors if audited financial statements are prepared; and (iii) a copy of all
documents, reports and information furnished to its stockholders at the time
that such documents, reports and information are furnished to its stockholders.
E. To comply with the terms of the Equity Line of Credit , the
Registration Rights Agreement, and the Escrow Agreement.
F. To ensure that any transactions between or among the Company, or any
of its officers, directors and affiliates be on terms and conditions that are no
less favorable to the Company, than the terms and conditions that would be
available in an "arm's length" transaction with an independent third party.
6. Indemnification.
A. The Company hereby agrees that it will indemnify and hold May
▇▇▇▇▇ and each officer, director, shareholder, employee or representative of May
▇▇▇▇▇, and each person controlling, controlled by or under common control with
May ▇▇▇▇▇ within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act or the SEC's Rules and Regulations promulgated thereunder (the "Rules
and Regulations"), harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever (including, but not limited to, any and
all reasonable legal fees and other expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action, suit
or proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in any action, suit or proceeding, including any inquiry, investigation or
pretrial proceeding such as a deposition) to which May ▇▇▇▇▇ or such indemnified
person of May ▇▇▇▇▇ may become subject under the 1933 Act, the 1934 Act, the
Rules and Regulations, or any other federal or state law or regulation, common
law or otherwise, arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in (a) Section 4 of this
Agreement, (b) the Offering Materials (except those written statements relating
to May ▇▇▇▇▇ given by an indemnified person for inclusion therein), (c) any
application or other document or written communication executed by the Company
or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock under the securities laws
thereof, or any state securities commission or agency; (ii) the omission or
alleged omission from documents described in clauses (a), (b) or (c) above of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; or (iii) the breach of any representation,
11
warranty, covenant or agreement made by the Company in this Agreement. The
Company further agrees that upon demand by an indemnified person, at any time or
from time to time, it will promptly reimburse such indemnified person for any
loss, claim, damage, liability, cost or expense actually and reasonably paid by
the indemnified person as to which the Company has indemnified such person
pursuant hereto. Notwithstanding the foregoing provisions of this Paragraph 6(A)
the Company shall not be obligated to indemnify any indemnified person in any
proceeding in which a final judgment by a court of competent jurisdiction (after
all appeals or the expiration of time to appeal) is entered against May ▇▇▇▇▇ or
such indemnified person as a direct result of May ▇▇▇▇▇ or such person's gross
negligence or breach of this Agreement and the Company will not be required to
indemnify any person hereunder as a result of any statement made by any
indemnified person furnished to the Company arising out of or based upon i) the
conduct of May ▇▇▇▇▇ or its officers, employees or representatives in its acting
as Placement Agent for the Offering or (ii) the breach of any representation,
warranty, covenant or agreement made by May ▇▇▇▇▇ in this Agreement (iii) any
false or misleading information provided to the Company by one of the May ▇▇▇▇▇
indemnified persons.
B. May ▇▇▇▇▇ hereby agrees that it will indemnify and hold the Company
and each officer, director, shareholder, employee or representative of the
Company, and each person controlling, controlled by or under common control with
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act or the Rules and Regulations, harmless from and against any and all
loss, claim, damage, liability, cost or expense whatsoever (including, but not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the conduct of May ▇▇▇▇▇ or its officers, employees or
representatives in its acting as Placement Agent for the Offering or (ii) the
breach of any representation, warranty, covenant or agreement made by May ▇▇▇▇▇
in this Agreement (iii) any false or misleading information provided to the
Company by one of the May ▇▇▇▇▇ indemnified persons.
C. Promptly after receipt by an indemnified party of notice of
commencement of any action covered by Section 6(A) or 6(B), the party to be
indemnified shall, within five (5) business days, notify the indemnifying party
of the commencement thereof; the omission by one (1) indemnified party to so
notify the indemnifying party shall not relieve the indemnifying party of its
obligation to indemnify any other indemnified party that has given such notice
and shall not relieve the indemnifying party of any liability outside of this
indemnification if not materially prejudiced thereby. In the event that any
action is brought against the indemnified party, the indemnifying party will be
entitled to participate therein and, to the extent it may desire, to assume and
control the defense thereof with counsel chosen by it which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
Section 6(A) or 6(B) for any legal or other expenses subsequently incurred by
such indemnified
12
party in connection with the defense thereof, but the indemnified party may, at
its own expense, participate in such defense by counsel chosen by it, without,
however, impairing the indemnifying party's control of the defense. Subject to
the proviso of this sentence and notwithstanding any other statement to the
contrary contained herein, the indemnified party or parties shall have the right
to choose its or their own counsel and control the defense of any action, all at
the expense of the indemnifying party if, (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action at the expense of the indemnifying party, or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties. No settlement of any action or proceeding against an indemnified party
shall be made without the consent of the indemnifying party.
D. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 6(A) or 6(B)
is due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Company and May ▇▇▇▇▇ shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or defense of same) which the other may incur in such proportion so that May
▇▇▇▇▇ shall be responsible for such percent of the aggregate of such losses,
claims, damages and liabilities as shall equal the percentage of the gross
proceeds paid to May ▇▇▇▇▇ and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 6(D), any person controlling, controlled by or under
common control with May ▇▇▇▇▇, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as May ▇▇▇▇▇ and each person controlling, controlled by or under
common control with the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each officer of the Company and each director
of the Company shall have the same rights to contribution as the Company. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
Section 6(D), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any obligation they may have hereunder or
otherwise if the party from whom contribution may be sought is not materially
prejudiced thereby. The indemnity and contribution agreements contained in this
Section 6 shall remain operative and in full
13
force and effect regardless of any investigation made by or on behalf of any
indemnified person or any termination of this Agreement.
7. Payment of Expenses.
The Company hereby agrees to bear all of it's own expenses in connection
with the Offering, including, but not limited to the following: filing fees,
printing and duplicating costs, advertisements, postage and mailing expenses
with respect to the transmission of Offering Materials, registrar and transfer
agent fees, fees of the Investors Counsel, Escrow Agent fees and expenses, fees
of the Company's counsel and accountants, issue and transfer taxes, if any.
8. Conditions of Closing
The Closing shall be held at the offices of May ▇▇▇▇▇ or its counsel.
The obligations of May ▇▇▇▇▇ hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company herein as of the
date hereof and as of the Date of Closing (the "Closing Date") with respect to
the Company as if it had been made on and as of such Closing Date; the accuracy
on and as of the Closing Date of the statements of the officers of the Company
made pursuant to the provisions hereof; and the performance by the Company on
and as of the Closing Date of its covenants and obligations hereunder and to the
following further conditions:
A. At the Closing, May ▇▇▇▇▇ shall receive the opinion of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., dated as of the date of the Closing, which opinion shall be in
form and substance reasonably satisfactory to counsel for May ▇▇▇▇▇.
B. At or prior to the Closing, counsel for May ▇▇▇▇▇ shall have been
furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Agreement and the Offering Materials, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
C. At and prior to the Closing, (i) there shall have been no material
adverse change nor development involving a prospective change in the condition
or prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business, entered into by the Company which has not been disclosed in the
Offering Materials or to May ▇▇▇▇▇ in writing; (iii) except as set forth in the
Offering Materials, the Company shall not be in default under any provision of
any instrument relating to any outstanding indebtedness for which a waiver or
extension has not been otherwise received; (iv) except as set forth in the
Offering Materials, the Company shall not have issued any securities (other than
those to be issued as provided in the Offering Materials) or declared or paid
any dividend or made any distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities or obligations of the Company (contingent or otherwise) and trade
payable debt; (v) no material amount of the assets of the Company shall have
been pledged or mortgaged, except as indicated in the Offering Materials; and
(v) no action, suit or proceeding, at law or in equity, against the Company or
affecting any of its properties or businesses shall be pending or threatened
before or by any court or federal or state commission, board or other
administrative agency, domestic or foreign, wherein an unfavorable decision,
ruling or finding could materially adversely
14
affect the businesses, prospects or financial condition or income of the
Company, except as set forth in the Offering Materials.
D. At Closing, May ▇▇▇▇▇ shall receive a certificate of the Company
signed by an executive officer and chief financial officer, dated as of the
applicable Closing, to the effect that the conditions set forth in subparagraph
(C) above have been satisfied and that, as of the applicable closing, the
representations and warranties of the Company set forth herein are true and
correct.
9. Termination.
This Agreement shall be co-terminus with, and terminate upon the same
terms and conditions as those set forth in, the Equity Line of Credit . The
rights of the Investors and the obligations of the Company under the
Registration Rights Agreement, and the rights of May ▇▇▇▇▇ and the obligations
of the Company shall survive the termination of this Agreement unabridged.
10. Miscellaneous.
A. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all which shall be deemed to be one
and the same instrument.
B. Any notice required or permitted to be given hereunder shall be given
in writing and shall be deemed effective when deposited in the United States
mail, postage prepaid, or when received if personally delivered or faxed ( upon
confirmation of receipt received by the sending party), addressed as follows:
If to Placement Agent, to: The May ▇▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: ▇▇▇▇▇▇▇ Media International Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
15
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman and Chief Executive
Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address of which written notice is given to the others.
C. This Agreement shall be governed by and construed in all respects
under the laws of the State of New York, without reference to its conflict of
laws rules or principles. Any suit, action, proceeding or litigation arising out
of or relating to this Agreement shall be brought and prosecuted in such federal
or state court or courts located within the State of New York as provided by
law. The parties hereby irrevocably and unconditionally consent to the
jurisdiction of each such court or courts located within the State of New York
and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum.
D. This Agreement and the other agreements referenced herein contain the
entire understanding between the parties hereto and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
E. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
▇▇▇▇▇▇▇ MEDIA INTERNATIONAL INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
MAY ▇▇▇▇▇ GROUP, INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
17