SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )*
MICRO-MEDIA SOLUTIONS, INC.
(Name of Issuer)
Common Stock, par value $0.10 per share
(Title of Class of Securities)
594859100
(CUSIP Number)
Robert E. Cordes
c/o Entrepreneurial Investors, Ltd.
Citibank Building -- 2nd Floor
East Mall Drive
Freeport, Bahamas
(242) 352-7063
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
April 30, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box ?.
Check the following box if a fee is being paid with the
statement ?.
1) Names of Reporting Persons S.S. or I.R.S.
Identification Nos. of Above Persons
Entrepreneurial Investors, Ltd.
2) Check the Appropriate Box if a Member of a Group (See
Instructions)
a)
b)
3) SEC Use Only
4) Source of Funds (See Instructions) WC
5) Check if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e)
6) Citizenship or Place of Organization Bahamas
Number of Shares 7) Sole Voting Power 8,286,740
Beneficially Owned
By Each Reporting
Person With 8) Shared Voting Power
9) Sole Dispositive Power 8,286,740
10) Shared Dispositive Power
11) Aggregate Amount Beneficially Owned By Each reporting
person 8,286,740 shares
12) Check if the Aggregate Amount in Row (11) Excludes
Certain Shares (See Instructions)
13) Percent of Class Represented by Amount
in Row (11) 36.58%
14) Type of Reporting Person (See Instructions) CO
Item 1. Security and Issuer.
This statement relates to the common stock, $0.10 par value
per share (the "Common Stock") issued by Micro-Media
Solutions, Inc., a Utah corporation ("MSIA") whose principal
executive offices are located at 501 Waller, Austin, Texas
78702.
Item 2. Identity and Background.
Entrepreneurial Investors, Ltd. ("EIL") is a Bahamas company
which serves as an investment vehicle for a group of private
European investors. The sole director and President of EIL
is Mr. Robert E. Cordes.
EIL maintains its principal office and its principal business
operations at Citibank Building, 2nd Floor, East Mall Drive,
Freeport, Bahamas.
EIL has not been convicted in any criminal proceeding and has
not been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of
which it was or is subject to a judgment, decree of final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
The business address of Robert E. Cordes is c/o
Entrepreneurial Investors, Ltd., Citibank Building, 2nd Floor,
East Mall Drive, Freeport, Bahamas. His principal occupation
or employment is Officer and Director of EIL. He has not been
convicted in a criminal proceeding. He has not been a party
to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation
with respect to such laws. He is a citizen of Canada.
Item 3. Source and Amount of Funds or Other
Consideration.
To effect the transaction described, EIL utilized existing
available funds.
Item 4. Purpose of Transaction.
On April 30, 1998, EIL entered into a Subscription Agreement
by and among EIL and MSIA with respect to the purchase of
94,340 shares (the "Shares") of MSIA's Series D 6% cumulative
convertible non-voting preferred stock of MSIA, convertible
into shares of Common Stock of MSIA, par value $0.10 per share
(the "Common Stock"), for an aggregate purchase price of
$1,000,000.00 ($10.60 per Share).
Pursuant to a Registration Rights Agreement entered into by
and among EIL and MSIA on April 30, 1998, EIL has been granted
certain registration rights, consisting of one demand
registration right and unlimited incidental (piggyback)
registration rights. Such registration rights began
immediately upon the completion of the sale and purchase of
the Shares.
EIL may acquire additional securities of MSIA in the future.
Except as set forth above, EIL has no present plans or
proposals which related to or would result in:
An extraordinary corporation transaction, such as a merger,
reorganization or liquidation, involving MSIA; a sale or
transfer of a material amount of assets of MSIA; any change in
the present board of directors or management of MSIA,
including any plans or proposals to change the number of term
of directors or to fill any existing vacancies on the board;
any material change in the present capitalization or dividend
policy of MSIA; any other material change in MSIA's business
or corporate structure; changes in MSIA's charter, by-laws or
instruments corresponding thereto or other actions which may
impede the acquisition of control of MSIA by any person;
causing a class of securities of MSIA to be delisted from a
national securities exchange or to cease to be authorized to
be quoted in an inter-dealer quotation system of a registered
national securities association; a class of equity securities
of MSIA becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Act; or any action similar
to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) and (b)
Entity Percentage Sole Voting Shared Sole Shared
of Class Power Voting Disposition
Power Power Power
EIL 37.46% 8,286,740 - 8,286,740 -
Item 6. Contracts, Arrangements, Understandings
or Relationships With Respect to
Securities of the Issuer.
See Item 4 above.
Item 7. Material to be Filed as Exhibits.
A. Investor Subscription Agreement
B. Registration Rights Agreement.
Signature
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information in this statement is
true, complete and correct.
ENTREPRENEURIAL
INVESTORS, LTD.
By: /s/ Robert E. Cordes, Date: August 7, 1998
Robert E. Cordes, Director
INVESTOR SUBSCRIPTION AGREEMENT
OF MICRO-MEDIA SOLUTIONS, INC.
THIS INVESTOR SUBSCRIPTION AGREEMENT (the "Agreement") is made
and entered into as of the day of April, 1998, by and between
MICRO-MEDIA SOLUTIONS, INC., a Utah corporation ("Seller"),
with offices at 501 Waller, Austin, Texas 78702 and
ENTREPRENEURIAL INVESTORS, LTD., a Bahamas company ("Buyer"),
with offices at Citibank Building, 2nd Floor, East Mall Drive,
P. O. Box 40643, Freeport, Bahamas, providing for the purchase
and sale of Ninety Four Thousand Three Hundred Forty (94,340)
shares (the "Shares") of the Series D 6% cumulative
convertible preferred stock of Seller (the "Series D Preferred
Stock"), convertible into shares of the common stock, par
value $0.10 per share, of Seller (the "Common Stock"). Seller
and Buyer (collectively, the "Parties") hereby represent and
agree as follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Buyer hereby subscribes for Ninety Four Thousand Three
Hundred Forty (94,340) Shares in exchange for One Million and
no/100 Dollars ($1,000,000.00) in cash (the "Purchase Price").
Buyer shall pay the Purchase Price for the Shares by wire
transfer of immediately available, federal funds in United
States dollars against counter-delivery of the Shares by
Seller. The closing of the purchase and sale of the Shares
(the "Closing") shall take place on or about April 30, 1998.
(ii) The rights, privileges and preferences of the Series
D Preferred Stock shall be as set forth in the Certificate of
Designation attached as Exhibit "A" to this Agreement.
2. BUYER'S REPRESENTATIONS AND COVENANTS.
Buyer represents, warrants and covenants to Seller as follows:
(i) This Agreement has been duly authorized, validly
executed and delivered on behalf of Buyer and is a valid and
binding agreement of Buyer enforceable in accordance with its
terms, subject to general principles of equity and of
bankruptcy or other laws affecting the enforcement of
creditors' rights;
(ii) Buyer is purchasing the Shares for its own account
for investment purposes only and not with a view towards
distribution. Buyer understands and agrees that it must bear
the economic risks of investments for an indefinite period of
time. Buyer has received and carefully reviewed copies of the
Disclosure Documents (as defined in Section 3). No
representations or warranties have been made to Buyer by
Seller, the officers or directors of Seller, or any agent,
employee or affiliate of any of them, except as specifically
set forth herein or in the placement agent's agreement between
the Seller and Equity Services, Ltd. (the "Placement
Agreement"). Buyer shall be a third party beneficiary of the
representations, warranties and covenants made by Seller in
the Placement Agreement. Buyer is aware that the purchase of
the Shares involves a high degree of risk and that it may
sustain, and has the financial ability to sustain, the loss of
its entire investment. Buyer has had the opportunity to ask
questions of, and receive answers satisfactory to it from,
Seller's management regarding Seller. Buyer understands that
no federal or state governmental authority has made any
finding or determination relating to the fairness of an
investment in the Shares and that no federal or state
governmental authority has recommended or endorsed, or will
recommend or endorse, the investment herein. Buyer has
significant assets and upon consummation of the purchase of
the Shares will continue to have significant assets exclusive
of the Shares. Buyer has not been organized for the sole
purpose of acquiring the Shares;
(iii) Buyer (a) is not a citizen or resident of the United
States of America, (b) is not an entity organized under any
laws of any state of the United States of America, and (c)
does not have offices in the United States of America;
(iv) Buyer is an "accredited investor" within the meaning
of Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended (the "Securities Act");
(v) Buyer understands that the Shares are being offered
and sold to it in reliance on specific provisions of federal
and state securities laws and that Seller is relying upon the
truth and accuracy of the representations, warranties,
agreements, acknowledgements and understandings of Buyer set
forth herein in order to determine the applicability of such
provisions;
(vi) Buyer is capable of evaluating the risks and merits
of this investment by virtue of its experience as an Investor
and its knowledge, experience, and sophistication in financial
and business matters;
(vii) Buyer shall execute the Registration Rights
Agreement in the form attached hereto as Exhibit "B";
(viii) Buyer has not employed any investment banker,
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement; and
(ix) Buyer understands that neither the Shares nor the
shares of Common Stock issuable upon conversion of the Series
D Preferred Stock have been registered under the Securities
Act and therefore it cannot dispose of any or all of the
Shares or the shares of Common Stock issuable upon conversion
of the Series D Preferred Stock unless and until such Shares
or Common Stock, as the case may be, are subsequently
registered under the Securities Act or exemptions from such
registration are available. Buyer acknowledges that a legend
substantially as follows will be placed on the certificates
representing the Shares and/or Common Stock:
THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THE ISSUER OF THESE
SECURITIES WILL NOT TRANSFER SUCH SECURITIES EXCEPT UPON
RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT THE
REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR
THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER
WILL NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE SECURITIES
LAWS.
3. SELLER'S REPRESENTATIONS AND COVENANTS.
Seller represents, warrants and covenants to Buyer as follows:
(i) The Seller has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Utah, with full corporate power and authority to own, lease
and operate its properties and to conduct its business as
currently conducted, and is duly registered and qualified to
conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or
qualification and failure to so register or qualify would have
a material adverse effect on the Company.
(ii) The Seller has registered shares of its Common Stock
pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), is in full compliance with
all reporting requirements of the Exchange Act, and the Common
Stock is quoted on the NASDAQ Over-the-Counter Bulletin Board
(trading symbol: MSIA).
(iii) The Seller has furnished Equity Services, Ltd.
("ESL") with copies of the Company's Business Plan dated July
3, 1997, most recent Annual Report on Form 10-KSB filed with
the Securities and Exchange Commission (the "Commission") and
all Forms 10-QSB and 8-K, together with any amendments
thereto, filed thereafter, if any (collectively, the
"Disclosure Documents"). Immediately prior to the Closing,
there is no other capital stock issued and outstanding, nor
are there outstanding any rights to acquire, commitments to
issue or securities convertible into capital stock other than
as stated in the Disclosure Documents and except for those
rights to demand Three Hundred Thousand (300,000) shares of
Common Stock that is the subject of a dispute involving Argus
Management, Inc. ("Argus"). The Disclosure Documents at the
time of their filing did not include any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements contained therein, in light of
the circumstances under which they were made not misleading.
(iv) Except as shown on the Seller's most recent audited
financial statements prepared by Salazar Accountants, dated
March 31, 1997, the Seller's independent certified public
accountants, a copy of which has been furnished to ESL, and as
otherwise previously disclosed in writing to ESL, the Seller
has no other indebtedness outstanding immediately prior to the
Closing.
(v) Upon issuance at the Closing in accordance with this
Agreement, the Shares will be duly and validly authorized and
issued, fully paid and nonassessable, free from all
encumbrances and restrictions other than restrictions on
transfer imposed by applicable securities laws and/or this
Agreement, and will not subject the holders thereof to
personal liability by reason of being such holders. The
shares of Common Stock, when issued and delivered upon
conversion of the Series D Preferred Stock, will be duly and
validly authorized and issued, fully paid and nonassessable,
free from all encumbrances and restrictions other than
restrictions on transfer imposed by applicable securities laws
and/or this Agreement, and will not subject the holders
thereof to personal liability by reason of being such holders.
(vi) This Agreement has been duly authorized, validly
executed and delivered on behalf of the Seller and is a valid
and binding agreement of the Seller enforceable in accordance
with its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and the Seller has full power and
authority to execute and deliver this Agreement and the other
agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder.
(vii) The execution and delivery of this Agreement, the
issuance of the Shares, the shares of Common Stock issuable
upon conversion of the Series D Preferred Stock, and the
consummation of the transactions contemplated by this
Agreement, will not conflict with or result in a breach of or
a default under any of the terms or provisions of, the
Seller's articles of incorporation or By-laws, or of any
material provision of any indenture, mortgage, deed of trust
or other material agreement or instrument to which the Seller
is a party or by which it or any of its properties or assets
is bound, any material provision of any law, statute, rule,
regulation, or any existing applicable decree, judgment or
order by any court, federal or state regulatory body,
administrative agency, or other governmental body having
jurisdiction over the Seller, or any of its properties or
assets and will not result in the creation or imposition of
any material lien, charge or encumbrance upon any property or
assets of the Seller or any of its subsidiaries pursuant to
the terms of any agreement or instrument to which any of them
is a party or by which any of them may be bound or to which
any of their property or any of them is subject.
(viii) No authorization, approval, filing with or consent
of any governmental body is required for the issuance and sale
of the Shares, except for filings pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the
"Act") or any state blue sky filings.
(ix) Except as previously disclosed in writing to ESL and
except as stated in the Disclosure Documents, there is no
action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending
or threatened against or affecting the Seller, or any of its
properties, which would reasonably be anticipated to result in
any material adverse change in the condition (financial or
otherwise) or in the earnings, business affairs, business
prospects, properties or assets of the Seller.
(x) Subsequent to the dates as of which information is
given in the Disclosure Documents, except as contemplated
herein, the Seller has not incurred any material liabilities
or material obligations, direct or contingent, or entered into
any material transactions not in the ordinary course of
business, and there has not been any change in its
capitalization or any material adverse change in its condition
(financial or otherwise) net worth, results of operations or
prospects.
(xi) The Seller has conducted, is conducting and will
conduct its business so as to comply in all material respects
with all applicable statutes and regulations, and the Seller
is not charged with and, to the knowledge of the Seller, is
not under investigation with respect to any violation of any
statutes or regulations nor is it the subject of any pending
or threatened adverse proceedings by any regulatory authority
having jurisdiction over its business or operations.
(xii) Except as set forth in the Disclosure Documents, the
Seller has good and marketable title to all properties and
assets described therein as owned by it, free and clear of all
liens, charges, encumbrances, or restrictions.
(xiii) The Seller has filed all necessary federal and
state income and franchise tax returns and has paid all taxes
shown as due thereon.
(xiv) The Seller has no knowledge of any tax deficiency
that might be asserted against it that might materially and
adversely affect its business or properties.
(xv) The Seller maintains insurance of the types and in
amounts generally deemed adequate for its business and
consistent with insurance coverage maintained by similar
companies and businesses, including, but not limited to,
insurance covering all real and personal property owned or
leased by the Seller against theft, damage, destruction, acts
of vandalism, products liability and all other risks
customarily insured against, all of which insurance is in full
force and effect.
(xvi) No labor disturbance by the employees of the Seller
exists or is imminent that could reasonably be expected to
have a material adverse effect on the conduct of the business,
operations, financial condition, or income of the Seller.
(xvii) Neither the Seller nor any employee or agent of the
Seller has made any payment of funds of the Seller or received
or retained any funds in violation of law.
(xviii) Subject in part to the truth and accuracy of
Buyer's
representations set forth in this Agreement, the offer, sale
and issuance of the Shares are exempt from registration
requirements of the 1933 Act, and neither the Seller nor any
authorized agent acting on its behalf will take any action
hereafter that will cause the loss of such exemption.
(xix) Seller has no patents, trademarks, service marks,
copyrights, or licenses other than commercially available
software licenses. After reasonable investigation, Seller is
not aware that any of its executive officers is obligated
under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to
any judgment, decree or order of any court or administrative
agency that would interfere with the use of his or her best
efforts to promote the interest of Seller or that would
conflict with the Seller's business as proposed to be
conducted.
(xx) Except for agreements explicitly contemplated hereby
or set forth in the Disclosure Documents, there are no
material agreements between the Seller and any of its
officers, directors, affiliates or any affiliate thereof,
other than employment agreements between the Seller and its
officers and directors.
(xxi) No representation or warranty of the Seller
contained in this Section 3, and no statement contained in any
exhibit, schedule, certificate, list, summary or other
disclosure document provided or to be provided to Buyer
pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state
any material fact which is necessary in order to make
statements contained therein not misleading.
(xxii) Seller has not employed any investment banker,
broker or
finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the
transactions contemplated by this Agreement except that Seller
has retained, directly or indirectly, Equity Services, Ltd.
("ESL") and Capital Solutions, Inc. ("CSI").
The representation and warranties of Seller contained herein
shall survive the Closing.
4. INDEMNIFICATION.
(i) Seller hereby agrees to indemnify and hold harmless
Buyer and its
officers, directors, shareholders, employees, agents and
attorneys against any
and all losses, claims, damages, liabilities and expenses
incurred by each such
person insofar as such losses, claims, demands, liabilities
and expenses arise
out of or are based upon, in whole or in part, (i) any untrue
statement or
alleged untrue statement of a material fact made by the
Company in this Agreement
or any exhibit, schedule, certificate, list, summary or
Disclosure Document
provided to Buyer, (ii) any omission or alleged omission of a
material fact with respect to the Company in this Agreement or
any exhibit, schedule, certificate, list, summary or
Disclosure Document provided to Buyer, or (iii) any breach of
any representation, warranty or agreement made by the Company
in this Agreement or any exhibit, schedule, certificate, list,
summary or Disclosure Document provided to Buyer. This
indemnity shall also cover all costs and expenses incurred by
an indemnified Party in connection with defending or
investigating any such claims or liabilities, including any
costs or expenses incurred, to which any such indemnified
party may become subject under the Securities Act, or under
any other statute, at common law or otherwise. (ii) Buyer
hereby agrees to indemnify and hold harmless Seller and its
officers, directors, shareholders, employees, agents and
attorneys against any and all losses, claims, damages,
liabilities and expenses incurred by each such person in
connection with defending or investigating any such claims or
liabilities, including any costs or expenses incurred, to
which any such indemnified party may become subject under the
Securities Act, or under any other statute, at common law or
otherwise, insofar as such losses, claims, demands,
liabilities and expenses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material
fact made by Buyer, (ii) any omission or alleged omission of a
material fact with respect to the Buyer or (iii) any breach of
any representation, warranty or agreement made by the Buyer in
this Agreement.
5. RIGHT TO JOIN IN SALE.
(i) If the Company proposes to sell, dispose of or
otherwise transfer any Common Stock ("Securities")(each a
"Disposing Stockholder"), such Disposing Stockholder shall
refrain from effecting such transaction unless, prior to the
consummation thereof, each holder of Series D Preferred Stock
(a "Stockholder") shall have been afforded the opportunity to
join in such sale on a pro rata basis, as hereinafter
provided.
(ii) Prior to consummation of any proposed sale,
disposition or transfer of the Securities as described above,
the Disposing Stockholder shall cause the person or entity
that proposes to acquire such shares (the "Proposed
Purchaser") to offer (the "Purchase Offer") in writing to each
holder of Series D Preferred Stock to purchase shares of
Common Stock and Preferred Stock, as the case may be, owned by
such other Stockholder, such that the number of shares of
Common Stock or Preferred Stock, as the case may be, so
offered to be purchased from such Stockholder shall be equal
to the product obtained by multiplying the total number of
shares of such Common Stock and Preferred Stock, as the case
may be, then owned by such Stockholder, computed on a fully
diluted basis, by a fraction, the numerator of which is the
aggregate number of shares of Common Stock and Preferred
Stock, as the case may be, proposed to be purchased by the
Proposed Purchaser from all Stockholders (including all
Disposing Stockholders) and the denominator of which is the
aggregate number of shares of Common Stock and Preferred
Stock, as the case may be, then outstanding, computed on a
fully diluted basis. Such purchase shall be made at the
highest price per share of Common Stock and on such other
terms and conditions as the Proposed Purchaser has offered to
purchase shares of Common Stock or Preferred Stock, as the
case may be, to be sold by the Disposing Stockholder; the
price per unconverted share of Preferred Stock shall be its
liquidation value. Each Stockholder shall have twenty (20)
days from the date of receipt of the Purchase Offer in which
to accept such Purchase Offer, and the closing of such
purchase shall occur within thirty (30) days after such
acceptance or at such other time as such Stockholder and the
Proposed Purchaser may agree. The number of shares of Common
Stock and Preferred Stock, as the case may be, to be sold to
the Proposed Purchaser by the Disposing Stockholder or
Stockholders shall be reduced by the aggregate number of
shares of Common Stock or Preferred Stock, as the case may be,
purchased by the Proposed Purchaser from the other
Stockholders pursuant to the acceptance by them of Purchase
Offers in accordance with the provisions of this subparagraph.
In the event that a sale or other transfer, subject to this
subsection 5.(ii) is to be made to a Proposed Purchaser who is
not a Stockholder, the Disposing Stockholder shall notify the
Proposed Purchaser that the sale or other transfer is subject
to this Section 5.(ii) and shall ensure that no sale or other
transfer is consummated without the Proposed Purchaser first
complying with this Section 5.(ii). It shall be the
responsibility of each Disposing Stockholder to determine
whether any transaction to which it is a party is subject to
this Section 5.(ii).
6. CONDITIONS PRECEDENT TO CLOSING.
(i) Buyer shall (a) deliver payment of the Purchase Price
to ESL; and (b) execute and deliver the Registration Rights
Agreement.
(ii) Seller shall (a) deliver to ESL certificates for the
Series D Preferred Stock in the name of the Buyer, (b) execute
and deliver the Registration Rights Agreement and (c) deliver
to Buyer an opinion from Vial, Hamilton, Koch & Knox, L.L.P.,
satisfactory to Equity Services, Ltd. and the Buyer, as to the
matters described in the Placement Agreement.
7. MISCELLANEOUS.
(i) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Texas without giving
effect to the rules governing the conflicts of laws.
(ii) This Agreement may be executed by facsimile signature
and in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
(iii) Each of the parties agrees to pay its own expenses
incident to this Agreement and the performance of its
obligations hereunder, including, but not limited to, the fees
and expenses of each such party's legal counsel.
(iv) All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery,
express overnight courier, registered first class mail,
overnight courier, or telecopied, initially to the address set
forth below, and thereafter at such other address, notice of
which is given in accordance with the provisions of this
Section 6.
if to Seller:
Micro-Media Solutions, Inc.
501 Waller
Austin, Texas 78702
Attn: Jose Chavez, President
Telephone: (512) 476-6925
Telecopier: (512) 473-2371
with a copy (which shall not constitute notice) to:
Vial, Hamilton, Koch & Knox, L.L.P.
1717 Main Street
Suite 4400
Dallas, Texas 75201-7388
Attn: Gary L. Woolfolk, Esq.
Telephone: (214) 712-4400
Telecopier: (214) 712-4402
if to Buyer:
Entrepreneurial Investors, Ltd.
Citibank Building, 2nd Floor
East Mall Drive
P.O. Box 40643
Freeport, Bahamas
Attn: Robert E. Cordes, Director
Telephone: (242) 352-7063
Telecopier: (242) 352-3932
with a copy (which shall not constitute notice) to:
Novakov, Davidson & Flynn, P.C.
2000 St. Paul Place
750 N. St. Paul Street
Dallas, Texas 75201-3286
Attn: I. Bobby Majumder, Esq.
Telephone: (214) 922-9221
Telecopier: (214) 969-7557
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally
delivered; three (3) business days after being deposited in
the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited
with a nationally recognized, overnight courier service; when
receipt is acknowledged, if telecopied.
(v) This Agreement together with the Exhibits hereto and
the Placement Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and
supersedes all prior oral or written proposals or agreements
relating thereto. This Agreement may not be amended or any
provision hereof waived in whole or in part, except by a
written amendment signed by both of the parties.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement was duly executed on the
date first
written above.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Jose Chavez
JOSE CHAVEZ, President
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Robert E. Cordes
ROBERT E. CORDES, Director
EXHIBIT "A"
CERTIFICATE OF DESIGNATION
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of the day of April, 1998 by and between
MICRO-MEDIA SOLUTIONS, INC., a Utah corporation (the
"Company") and ENTREPRENEURIAL INVESTORS, LTD., a Bahamas
company (the "Shareholder").
R E C I T A L S:
WHEREAS, the Shareholder is acquiring Ninety Four Thousand
Three Hundred Forty (94,340) shares of the Company's Series D
6% cumulative convertible preferred stock, stated value $10.60
per share (the "Series D Preferred Stock") pursuant to that
certain Investor Subscription Agreement by and between the
Company and the Shareholder of even date herewith (the
"Investor Agreement"); and
WHEREAS, the Company desires to grant to the Shareholder
certain
registration rights relating to the shares of Common Stock
issuable upon conversion of any of the Series D Preferred
Stock (the "Shares") and the Shareholder desires to obtain
such registration rights, subject to the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties and conditions set forth in this
Agreement, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions and References. For purposes of this
Agreement, in addition to the definitions set forth above and
elsewhere herein, the following terms shall have the following
meanings:
(a) The term "Commission" shall mean the Securities and
Exchange Commission and any successor agency.
(b) The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing
a registration statement or similar document in compliance
with the 1933 Act (as herein defined) and the declaration or
ordering of effectiveness of such registration statement or
document.
(c) For purposes of this Agreement, the term "Registrable
Stock" shall mean (i) any shares of Common Stock issuable upon
conversion of any of the Series D Preferred Stock, (ii) any
shares of Common Stock issued by way of a stock split,
reorganization, merger or consolidation, and (iii)
any Common Stock issued as a dividend on the Series D
Preferred Stock. For purposes of this Agreement, any
Registrable Stock shall cease to be Registrable Stock when (v)
a registration statement covering such Registrable Stock has
been declared effective and such Registrable Stock has been
disposed of pursuant to such effective registration statement,
(w) such Registrable Stock is sold pursuant to Rule 144 (or
any similar provision then in force) under the 1933 Act, (x)
such Registrable Stock is eligible to be sold pursuant to Rule
144(k) under the 1933 Act, (y) such Registrable Stock has been
otherwise transferred, no stop transfer order affecting such
stock is in effect and the Company has delivered new
certificates or other evidences of ownership for such
Registrable Stock not bearing any legend indicating that such
shares have not been registered under the 1933 Act, or (z)
such Registrable Stock is sold by a person in a transaction in
which the rights under the provisions of this
Agreement are not assigned.
(d) The term "Holder" shall mean the Shareholder or any
transferee or assignee thereof to whom the rights under this
Agreement are assigned in accordance with Section 10 hereof,
provided that the Shareholder or such transferee or assignee
shall then own the Registrable Stock.
(e) The term "1933 Act" shall mean the Securities Act of 1933,
as amended.
(f) An "affiliate of such Holder" shall mean a person who
controls, is controlled by or is under common control with a
Holder, or the spouse or children (or a trust exclusively for
the benefit of the spouse and/or children) of a Holder, or, in
the case of a Holder that is a partnership, its partners.
(g) The term "Person" shall mean an individual,
corporation,
partnership, trust, limited liability company, unincorporated
organization or association or other entity, including any
governmental entity.
(h) The term "Requesting Holder" shall mean a Holder or
Holders of in the aggregate at least a majority of the
Registrable Stock.
(i) References in this Agreement to any rules, regulations
or
forms promulgated by the Commission shall include rules,
regulations and forms succeeding to the functions thereof,
whether or not bearing the same designation.
2. Demand Registration.
(a) Commencing immediately upon the date of Closing (as
defined in the Investor Agreement), any Requesting Holders may
make a written request to the Company (specifying that it is
being made pursuant to this Section 2) that the Company file a
registration statement under the 1933 Act (or a similar
document pursuant to any other statute then in effect
corresponding to the 1933 Act) covering the registration of
Registrable Stock. In such event, the Company shall (x) within
ten (10) days thereafter notify in writing all other Holders
of Registrable Stock of such request, and (y) use its best
efforts to cause to be registered under the 1933 Act all
Registrable Stock that the Requesting Holders and such other
Holders have, within forty-five (45) days after the Company
has given such notice, requested be registered.
(b) If the Requesting Holders intend to distribute the
Registrable Stock covered by their request by means of an
underwritten offering, they shall so advise the Company as a
part of their request pursuant to Section 2.(a) above, and the
Company shall include such information in the written notice
referred to in clause (x) of Section 2.(a) above. In such
event, the Holder's right to include its Registrable Stock in
such registration shall be conditioned upon such Holder's
participation in such underwritten offering and the inclusion
of such Holder's Registrable Stock in the underwritten
offering to the extent provided in this Section 2. All
Holders proposing to distribute Registrable Stock through such
underwritten offering shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting
Holders and shall be approved by the Company, which approval
shall not be unreasonably withheld; provided, that all of the
representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting
agreement shall be conditions precedent to the obligations of
such Holders; and provided further, that no Holder shall be
required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such
Holder, the Registrable Stock of such Holder and such Holder's
intended method of distribution and any other representation
required by law or reasonably required by the underwriter.
(c) Notwithstanding any other provision of this Section 2
to the contrary, if the managing underwriter of an
underwritten offering of the Registrable Stock requested to be
registered pursuant to this Section 2 advises the Requesting
Holders in writing that in its opinion marketing factors
require a limitation of the number of shares to be
underwritten, the Requesting Holders shall so advise all
Holders of Registrable Stock that would otherwise be
underwritten pursuant hereto, and the number of shares of
Registrable Stock that may be included in such underwritten
offering shall be allocated among all such Holders, including
the Requesting Holders, in proportion (as nearly as
practicable) to the amount of Registrable Stock requested to
be included in such registration by each Holder at the time of
filing the registration statement; provided, that in the event
of such limitation of the number of shares of Registrable
Stock to be underwritten, the Holders shall be entitled to an
additional demand registration pursuant to this Section 2. If
any Holder of Registrable Stock disapproves of the terms of
the underwriting, such Holder may elect to withdraw by written
notice to the Company, the managing underwriter and the
Requesting Holders. The securities so withdrawn shall also be
withdrawn from registration.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a
registration pursuant to this Section 2 during the period
starting with the fourteenth (14th) day immediately preceding
the date of an anticipated filing by the Company of, and
ending on a date ninety (90) days following the effective date
of, a registration statement pertaining to a public offering
of securities for the account of the Company; provided, that
the Company shall actively employ in good faith all reasonable
efforts to cause such registration statement to become
effective; and provided further, that the Company's estimate
of the date of filing such registration statement shall be
made in good faith.
(e) The Company shall be obligated to effect and pay for a
total of only one (1) registration pursuant to this Section 2,
unless increased pursuant to Section 2.(c) hereof; provided,
that a registration requested pursuant to this Section 2 shall
not be deemed to have been effected for purposes of this
Section 2.(e), unless (i) it has been declared effective by
the Commission, (ii) if it is a shelf registration, it has
remained effective for the period set forth in Section 3.(b),
(iii) the offering of Registrable Stock pursuant to such
registration is not subject to any stop order, injunction or
other order or requirement of the Commission (other than any
such action prompted by any act or omission of the Holders),
and (iv) no limitation of the number of shares of Registrable
Stock to be underwritten has been required pursuant to Section
2.(c) hereof.
3. Obligations of the Company. Whenever required under
Section 2 to use its best efforts to effect the registration
of any Registrable Stock, the Company shall, as expeditiously
as possible:
(a) prepare and file with the Commission, not later than
ninety (90) days after receipt of a request to file a
registration statement with respect to such Registrable Stock,
a registration statement on any form for which the Company
then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of
such issue of Registrable Stock in accordance with the
intended method of distribution thereof, and use its best
efforts to cause such registration statement to become
effective as promptly as practicable thereafter; provided that
before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i)
furnish to one (1) counsel selected by the Requesting Holders
copies of all such documents proposed to be filed, and (ii)
notify each such Holder of any stop order issued or threatened
by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if
entered;
(b) prepare and file with the Commission such amendments
and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for such period of time as
would satisfy the holding period requirements of Rule 144(k)
promulgated by the Commission with respect to the Shares or
such shorter period which will terminate when all Registrable
Stock covered by such registration statement has been sold
(but not before the expiration of the forty (40) or ninety
(90) day period referred to in Section 4(3) of the 1933 Act
and Rule 174 thereunder, if applicable), and comply with the
provisions of the 1933 Act with respect to the disposition of
all securities covered by such registration
statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in
such registration statement;
(c) furnish to each Holder and any underwriter of
Registrable
Stock to be included in a registration statement copies of
such
registration statement as filed and each amendment and
supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such
other documents as such Holder may reasonably request in order
to facilitate the disposition of the Registrable Stock owned
by such Holder;
(d) use its best efforts to register or qualify such
Registrable Stock under such other securities or blue sky laws
of such jurisdictions as any selling Holder or any underwriter
of Registrable Stock reasonably requests, and do any and all
other acts which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Stock owned by such Holder;
provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section
3.(d) hereof, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process
in any such jurisdiction;
(e) use its best efforts to cause the Registrable Stock
covered by such registration statement to be registered with
or approved by such other governmental agencies or other
authorities as may be necessary by virtue of the business and
operations of the Company to enable the selling Holders
thereof to consummate the disposition of such Registrable
Stock;
(f) notify each selling Holder of such Registrable Stock
and any underwriter thereof, at any time when a prospectus
relating thereto is required to be delivered under the 1933
Act (even if such time is after the period referred to in
Section 3.(b)), of the happening of any event as a result of
which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances being made not misleading, and prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Stock, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
in light of the circumstances being made not misleading;
(g) make available for inspection by any selling Holder,
any
underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other
agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any such Inspector, as shall be
reasonably necessary to enable them to exercise their due
diligence responsibility, in connection with such registration
statement. Records or other information which the Company
determines, in good faith, to be confidential and which it
notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such
Records or other information is necessary to avoid or correct
a misstatement or omission in the registration statement, or
(ii) the release of such Records or other information is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each selling Holder shall, upon
learning that disclosure of such Records or other information
is sought in a court of competent jurisdiction, give notice to
the Company and allow the Company, at the Company's expense,
to undertake appropriate action to prevent disclosure of the
Records or other information deemed confidential;
(h) furnish, at the request of any Requesting Holder, on
the date that such shares of Registrable Stock are delivered
to the underwriters for sale pursuant to such registration or,
if such Registrable Stock is not being sold through
underwriters, on the date that the registration statement with
respect to such shares of Registrable Stock becomes effective,
(1) a signed opinion, dated such date, of the legal counsel
representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and if
such Registrable Stock is not being sold through underwriters,
then to the Requesting Holders as to such matters as such
underwriters or the Requesting Holders, as the case may be,
may reasonably request and as would be customary in such a
transaction; and (2) a letter dated such date, from the
independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable
Stock is not being sold through underwriters, then to the
Requesting Holders and, if such accountants refuse to deliver
such letter to such Holder, then to the Company (i) stating
that they are independent certified public accountants within
the meaning of the 1933 Act and that, in the opinion of such
accountants, the financial statements and other financial data
of the Company included in the registration statement or the
prospectus, or any amendment or supplement thereto, comply as
to form in all material respects with the applicable
accounting requirements of the 1933 Act, and (ii) covering
such other financial matters (including information as to the
period ending not more than five (5) business days prior to
the date of such letter) with respect to the registration in
respect of which such letter is being given as the Requesting
Holders may reasonably request and as would be customary in
such a transaction;
(i) enter into customary agreements (including if the
method of distribution is by means of an underwriting, an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Stock to be so
included in the registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Comission, and make
available to its security holders, as soon as reasonably
practicable, but not later than eighteen (18) months after the
effective date of the registration statement, an earnings
statement covering the period of at least twelve (12) months
beginning with the first full month after the effective date
of such registration statement, which earnings statements
shall satisfy the provisions of Section 11(a) of the 1933 Act;
and
(k) use its best efforts to cause all such Registrable
Stock to be listed on The Nasdaq Small Cap Market and/or any
other securities exchange on which similar securities issued
by the Company are then listed or traded.
The Company may require each selling Holder of Registrable
Stock as to which any registration is being effected to
furnish to the Company such information regarding the
distribution of such Registrable Stock as the Company may from
time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 3.(f) hereof, such Holder will forthwith discontinue
disposition of Registrable Stock pursuant to the registration
statement covering such Registrable Stock until such Holder's
receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3.(f) hereof, and, if so
directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the
prospectus covering such Registrable Stock current at the time
of receipt of such notice. In the event the Company shall give
any such notice, the Company shall extend the period during
which such registration statement shall be maintained
effective pursuant to this Agreement (including the period
referred to in Section 3.(b)) by the number of days during the
period from and including the date of the giving of such
notice pursuant to Section 3.(f) hereof to and including the
date when each selling Holder of Registrable Stock covered by
such registration statement shall have received the copies of
the supplemented or amended prospectus contemplated by Section
3.(f) hereof.
4. Incidental Registration. Commencing immediately after
the date of Closing (as defined in the Investor Agreement), if
the Company determines that it shall file a registration
statement under the 1933 Act (other than a registration
statement on a Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that would also
permit the registration of the Registrable Stock and such
filing is to be on its behalf and/or on behalf of selling
holders of its securities for the general registration of its
common stock to be sold for cash, at each such time the
Company shall promptly give each Holder written notice of such
determination setting forth the date on which the Company
proposes to file such registration statement, which date shall
be no earlier than thirty (30) days from the date of such
notice, and advising each Holder of its right to have
Registrable Stock included in such registration. Upon
the written request of any Holder received by the Company no
later than twenty (20) days after the date of the Company's
notice, the Company shall use its best efforts to cause to be
registered under the 1933 Act all of the Registrable Stock
that each such Holder has so requested to be registered. If,
in the written opinion of the managing underwriter or
underwriters (or, in the case of a non-underwritten offering,
in the written opinion of the placement agent, or if there is
none, the Company), the total amount of such securities to be
so registered, including such Registrable Stock, will exceed
the maximum amount of the Company's securities which can be
marketed (i) at a price reasonably related to the then current
market value of such securities, or (ii) without otherwise
materially and adversely affecting the entire offering, then
the amount of Registrable Stock to be offered for the accounts
of Holders shall be reduced pro rata to the extent necessary
to reduce the total amount of securities to be included in
such offering to the recommended amount; provided, that if
securities are being offered for the account of other Persons
as well as the Company, such reduction shall not represent a
greater fraction of the number of securities intended to be
offered by Holders than the fraction of similar reductions
imposed on such other Persons other than the Company over the
amount of securities they intended to offer.
5. Holdback Agreement - Restrictions on Public Sale by
Holder.
(a) To the extent not inconsistent with applicable law,
each
Holder whose Registrable Stock is included in a registration
statement agrees not to effect any public sale or distribution
of the issue being registered or a similar security of the
Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to
Rule 144 under the 1933 Act, during the fourteen (14) days
prior to, and during the ninety (90) day period beginning on,
the effective date of such registration statement (except as
part of the registration), if and to the extent requested by
the Company in the case of a nonunderwritten public offering
or if and to the extent requested by the managing underwriter
or underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale by the Company and Others.
The
Company agrees (i) not to effect any public sale or
distribution of any
securities similar to those being registered, or any
securities
convertible into or exchangeable or exercisable for such
securities, during the fourteen (14) days prior to, and during
the ninety (90) day period beginning on, the effective date of
any registration statement in which Holders are participating
(except as part of such registration), if and to the extent
requested by the Holders in the case of a non-underwritten
public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an
underwritten public offering; and (ii) that any agreement
entered into after the date of this Agreement pursuant to
which the Company issues or agrees to issue any securities
convertible into or exchangeable or exercisable for such
securities (other than pursuant to an effective registration
statement) shall contain a provision under which holders of
such securities agree not to effect any public sale or
distribution of any such securities during the periods
described in (i) above, in each case including a sale pursuant
to Rule 144 under the 1933 Act.
6. Expenses of Registration. The Company shall bear all
expenses incurred in connection with each registration
pursuant to Sections 2 and 4 of this Agreement, excluding
underwriters' discounts and commissions, but including,
without limitation, all registration, filing and qualification
fees, word processing, duplicating, printers' and accounting
fees (including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance
and compliance), exchange listing fees or National Association
of Securities Dealers fees, messenger and delivery expenses,
all fees and expenses of complying with securities or blue sky
laws, fees and disbursements of counsel for the Company. The
selling Holders shall bear and pay the underwriting
commissions and discounts applicable to the Registrable Stock
offered for their account in connection with any
registrations, filings and qualifications made pursuant to
this Agreement.
7. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to
indemnify, to the full extent permitted by law, each Holder,
its officers, directors and agents and each Person who
controls such Holder (within the meaning of the 1933 Act)
against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or
preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statement therein (in case of a
prospectus or preliminary prospectus, in the light of the
circumstances under which they were made) not misleading. The
Company will also indemnify any underwriters of the
Registrable Stock, their officers and directors and each
Person who controls such underwriters (within the meaning of
the 1933 Act) to the same extent as provided above with
respect to the indemnification of the selling Holders.
(b) Indemnification by Holders. In connection with any
registration statement in which a Holder is participating,
each such Holder will furnish to the Company in writing such
information with respect to such Holder as the Company
reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify,
to the extent permitted by law, the Company, its directors and
officers and each Person who controls the Company (within the
meaning of the 1933 Act) against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in the
registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or necessary to
make the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is
contained in any information with respect to such Holder so
furnished in writing by such Holder. Notwithstanding the
foregoing, the liability of each such Holder under this
Section 7.(b) shall be limited to an amount equal to the
initial public offering price of the Registrable Stock sold by
such Holder, unless such liability arises out of or is based
on willful misconduct of such Holder.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder agrees to give prompt
written notice to the indemnifying party after the receipt by
such Person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof
made in writing for which such Person will claim
indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified
party, a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory to
such indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will
not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably
withheld). Failure by such Person to provide said notice to
the indemnifying party shall itself not create liability
except to the extent of any injury caused thereby. No
indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff
to such indemnified party of a release from all liability in
respect of such claim or litigation. If the indemnifying party
is not entitled to, or elects not to, assume the defense of a
claim, it will not be obligated to pay the fees and expenses
of more than one (1) counsel with respect to such claim,
unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party
and any other such indemnified parties with respect to such
claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel or counsels.
(d) Contribution. If for any reason the indemnity
provided for in this Section 7 is unavailable to, or is
insufficient to hold harmless, an indemnified party, then the
indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits
received by the indemnifying party on the one hand and the
indemnified party on the other, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable
law, or provides a lesser sum to the indemnified party than
the amount hereinafter calculated, in such proportion as is
appropriate to reflect not only the relative benefits received
by the indemnifying party on the one hand and the indemnified
party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any
other relevant equitable considerations. The relative fault
of
such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or
indemnified parties; and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 7.(c), any legal or
other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.(d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to
the full extent provided in Sections 7.(a) and 7.(b) without
regard to the relative fault of said indemnifying party or
indemnified party or any other equitable consideration
provided for in this Section 7.
8. Participation in Underwritten Registrations. No Holder
may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder's securities
on the basis provided in any underwriting arrangements
approved by the Holders entitled hereunder to approve such
arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements.
9. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the 1933 Act and the
Securities Exchange Act of 1934, as amended, and the rules and
regulations adopted by the Commission thereunder; and it will
take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable such
Holder to sell Registrable Stock without registration under
the 1933 Act within the limitation of the exemptions provided
by (a) Rule 144 under the 1933 Act, as such Rule may be
amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the
request of any Holder, the Company will deliver to such Holder
a written statement as to whether it has complied with such
requirements.
10. Transfer of Registration Rights. The registration
rights of any Holder under this Agreement with respect to any
Registerable Stock may be transferred to any transferee of
such Registrable Stock; provided that such transfer may
otherwise be effected in accordance with applicable securities
laws; provided further, that the transferring Holder shall
give the Company written notice at or prior to the time of
such transfer stating the name and address of the transferee
and identifying the securities with respect to which the
rights under this Agreement are being transferred; provided
further, that such transferee shall agree in writing, in form
and substance satisfactory to the Company, to be bound as a
Holder by the provisions of this Agreement; and provided
further, that such assignment shall be effective only if
immediately following such transfer the further disposition of
such securities by such transferee is restricted under the
1933 Act. Except as set forth in this Section 10, no transfer
of Registrable Stock shall cause such Registrable Stock to
lose such status.
11. Mergers, Etc. The Company shall not, directly or
indirectly, enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving
corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this
Agreement, and for that purpose references hereunder to
"Registrable Stock" shall be deemed to be references to the
securities which the Holders would be entitled to receive in
exchange for Registrable Stock under any such merger,
consolidation or reorganization; provided, however, that the
provisions of this Section 11 shall not apply in the event of
any merger, consolidation or reorganization in which the
Company is not the surviving corporation if each Holder is
entitled to receive in exchange for its Registrable Stock
consideration consisting solely of (i) cash, (ii) securities
of the acquiring corporation which may be immediately sold to
the
public without registration under the 1933 Act, or (iii)
securities of the acquiring corporation which the acquiring
corporation has agreed to register within ninety (90) days of
completion of the transaction for resale to the public
pursuant to the 1933 Act.
12. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its
securities which is inconsistent with the rights granted to
the Holders in this Agreement.
(b) Remedies. Each Holder, in addition to being entitled
to
exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive (to the extent permitted
by law) the defense in any action for specific performance
that a remedy of law would be adequate.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written
consent of the Holders of at least a majority of the
Registrable Stock then outstanding affected by such amendment,
modification, supplement, waiver or departure.
(d) Successors and Assigns. Except as otherwise expressly
provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than the parties hereto or their
respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(e) Governing Law. This Agreement shall be governed by
and
construed in accordance with the internal laws of the State of
Texas applicable to contracts made and to be performed wholly
within that state, without regard to the conflict of law rules
thereof.
(f) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
(g) Headings. The headings in this Agreement are used for
convenience of reference only and are not to be considered in
construing or interpreting this Agreement.
(h) Notices. Any notice required or permitted under this
Agreement shall be given in writing and shall be delivered in
person or by telecopy or by overnight courier guaranteeing no
later than second business day delivery, directed to (i) the
Company at the address set forth below its signature hereof or
(ii) a Holder at the address of the Administrator set forth
below its signature hereof. Any party may change its address
for notice by giving ten (10) days advance written notice to
the other parties. Every notice or other communication
hereunder shall be deemed to have been duly given or served on
the date on which personally delivered, or on the date
actually received, if sent by telecopy or overnight courier
service, with receipt acknowledged.
(i) Severability. In the event that any one or more of
the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be
in any way impaired thereby, it being intended that all of the
rights and privileges of the Holders shall be enforceable to
the fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or
referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect
to such subject matter.
(k) Enforceability. This Agreement shall remain in full
force and effect notwithstanding any breach or purported
breach of, or relating to, the Investor Agreement.
(l) Recitals. The recitals are hereby incorporated in the
Agreement as if fully set forth herein.
(m) Attorneys Fees. If any action is necessary to enforce
or
interpret the terms of this agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs, in
addition to any other relief to which he is or may be
entitled. This provision shall be construed as applicable to
the entire agreement.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written hereinabove.
MICRO-MEDIA SOLUTIONS, INC.
By: /s/ Jose Chavez
Name: JOSE CHAVEZ
Title: President
501 Waller
Austin, Texas 78702
Telephone: (512) 476-6925
Telecopier: (512) 473-2371
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Robert E. Cordes
Name: ROBERT E. CORDES
Title: Director
Citibank Building, 2nd Floor
East Mall Drive, P.O. Box 40643
Freeport, Bahamas
Telephone: (242) 352-7063
Telecopier: (242) 352-3932
