-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OPp6N+KjzF3oRnu+nPmf209+61nWxtSxvizcF5lolI9bq/EhplmegLqYHvdlnMJt /pV3mwk7ldUhH17simNgPg== 0000950144-04-006791.txt : 20040706 0000950144-04-006791.hdr.sgml : 20040705 20040706125900 ACCESSION NUMBER: 0000950144-04-006791 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20040706 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCOTT RICHARD L CENTRAL INDEX KEY: 0000915477 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 201 WEST MAIN ST CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025722104 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA SCIENCES INTERNATIONAL INC CENTRAL INDEX KEY: 0001024022 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 840475073 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-54247 FILM NUMBER: 04901854 BUSINESS ADDRESS: STREET 1: 40 BOROLINE ROAD CITY: ALLENDALE STATE: NJ ZIP: 07401 BUSINESS PHONE: 2012361100 MAIL ADDRESS: STREET 1: 40 BOROLINE ROAD CITY: ALLENDALE STATE: NJ ZIP: 07401 FORMER COMPANY: FORMER CONFORMED NAME: CADAPULT GRAPHIC SYSTEMS INC DATE OF NAME CHANGE: 19980902 FORMER COMPANY: FORMER CONFORMED NAME: SEAFOODS PLUS LTD DATE OF NAME CHANGE: 19961002 SC 13D/A 1 g89862sc13dza.htm MEDIA SCIENCES - FORM SC 13D/A RICHARD L. SCOTT MEDIA SCIENCES - FORM SC 13D/A RICHARD L. SCOTT
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 2)

MEDIA SCIENCES INTERNATIONAL, INC.
(Name of Issuer)

Common Stock, $.001 par value
(Title of Class of Securities)

58446X 10 7
(CUSIP Number)

Stephen T. Braun, Esq.
Boult Cummings Conners & Berry, PLC
414 Union Street, Suite 1600
Nashville, Tennessee 37219
(615) 252-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

June 30, 2004
(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 that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [  ].

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act.

 

 

CUSIP No. 58446X 10 7                     SCHEDULE 13D

                         
1.   Names of Reporting Persons: Richard L. Scott    
 
                        
    IRS Identification Nos. of above persons (entities only):    
 
                        
2.   Check the Appropriate Box if a Member of a Group (a)  [  ]  
 
                        
  N/A                                          (b)  [  ]
 
                        
3.
  SEC USE ONLY                    
 
                        
4.   Source of Funds: PF                
 
                        
5.   Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [  ]
 
                        
6.   Citizenship or Place of Organization: United States    
 
                        
NUMBER OF SHARES      7.   Sole Voting Power: 1,829,750          
 
                        
BENEFICIALLY OWNED      8.   Shared Voting Power: -0-            
 
                        
BY EACH REPORTING      9.   Sole Dispositive Power: 1,829,750          
 
                        
PERSON      10.   Shared Dispositive Power: -0-          
 
                        
11.   Aggregate Amount Beneficially Owned by Each Reporting Person: 1,829,750
 
                        
12.   Check if the Aggregate Amount in Row (11) Excludes Certain Shares: [  ]
 
                        
13.   Percent of Class Represented by Amount in Row (11): 18.6%
 
                        
14.   Type of Reporting Person: IN

3

 

This Amendment No. 2 amends the Schedule 13D filed by Richard L. Scott (the “Reporting Person”) on April 12, 2004 (the “Schedule 13D”), as amended on May 27, 2004, with respect to shares of Common Stock, $.001 par value (“Common Stock”), of Media Sciences International, Inc., a Delaware corporation (the “Issuer”). Capitalized terms used but not defined herein shall have the same meanings ascribed to such terms in the Schedule 13D.

The following Items are hereby amended as follows:

Item 3. Source and Amount of Funds or Other Consideration

The Reporting Person has used personal funds of approximately $1,256,735 to acquire 1,006,000 shares of Common Stock in both private and open market transactions. The Common Stock was purchased by two different entities controlled by the Reporting Person.

Item 5. Interest in Securities of the Issuer

(a)   The 1,829,750 shares of the Common Stock owned by the Reporting Person constitute 18.6% of the outstanding Common Stock of the Issuer. Such percentage of ownership is based on 9,857,210 outstanding shares of Common Stock, determined based on the representation of the Issuer in the Common Stock Purchase Agreement between an entity controlled by Reporting Person and the Issuer dated June 30, 2004, whereby the Reporting Person purchased 1,000,000 newly issued shares of Issuer Common Stock.
 
(b)   The Reporting Person has sole voting and dispositive power with respect to the Common Stock.

3

 

(c)   The Reporting Person purchased the following shares of the Common Stock of the Issuer in open market transactions since May 27, 2004, the date of filing of the latest Schedule 13D amendment:

                         
Purchase   Number of   Price   Aggregate
Date
   Shares
   Per Share
   Consideration
06/03/04
     6,000     $ 1.1225     $ 6,735  

    In addition, Reporting Person purchased the following newly issued shares of the Common Stock of the Issuer in a private transaction:

                         
Purchase   Number of   Price   Aggregate
Date
   Shares
   Per Share
   Consideration
06/30/04
     1,000,000     $ 1.25     $ 1,250,000  

(d)   The Common Stock was purchased by two different entities controlled by the Reporting Person, including 6,000 shares purchased by the Frances Annette Scott Revocable Trust, of which the Reporting Person’s spouse is the trustee and 1,000,000 shares purchased by GFX Investments, LLC, a member managed limited liability company of which Reporting Person is the controlling member.
 
(e)   Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

On June 30, 2004, an entity controlled by Reporting Person entered into a Common Stock Purchase Agreement with the Issuer whereby the Reporting Person purchased 1,000,000 newly issued shares of Issuer Common Stock. In addition, the parties entered into a Registration Rights Agreement whereby the Issuer is required to register the shares within 30 days of the purchase. These agreements are attached as exhibits hereto.

Item 7.  Exhibits

     
Exhibit 1
  Common Stock Purchase Agreement dated as of June 30, 2004, between Media Sciences International, Inc. and GFX Investments, LLC.
 
    
Exhibit 2
  Registration Rights Agreement dated as of June 30, 2004, between Media Sciences International, Inc. and GFX Investments, LLC.

4

 

Signature

     After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

     
DATED: July 6, 2004   /s/ Richard L. Scott
Richard L. Scott

5

EX-1 2 g89862exv1.txt EX-1 COMMON STOCK AGREEMENT 06/30/04 EXHIBIT 1 COMMON STOCK PURCHASE AGREEMENT (the "Agreement") dated as of June 30, 2004, by and among Media Sciences International, Inc., a Delaware corporation (the "Seller"), and GFX Investments, LLC, a Delaware limited liability company ("Purchaser"). WITNESSETH: WHEREAS, the Seller desires to sell to the Purchaser and the Purchaser desires to purchase an aggregate of 1,000,000 shares of Seller's Common Stock, par value $0.01 per share (the "Common Stock"). NOW, THEREFORE, in consideration of the mutual promises and representations, warranties, covenants and agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I - PURCHASE AND SALE 1.1 PURCHASE AND SALE. On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined in Section 1.3), the Seller will sell, assign, transfer and deliver and Purchaser will purchase 1,000,000 shares of Seller's Common Stock (the "Shares") for the purchase price set forth in Section 1.2. 1.2 PURCHASE PRICE. The aggregate consideration (the "Purchase Price") to be paid by Purchaser for the sale, assignment, transfer and delivery of the Shares by the Sellers to Purchaser as provided herein shall be One Million Two Hundred Fifty Thousand and No/100 Dollars ($1,250,000) paid to the Seller in cash by cashier or bank check or wire transfer of immediately available funds. 1.3 THE CLOSING. The closing of the transactions contemplated hereby (the "Closing") shall take place at the offices of Boult, Cummings, Conners & Berry, PLC, 414 Union Street, Suite 1600, Nashville, Tennessee, at 10:00 a.m. local time on June 30, 2004 (the "Closing Date"), or such other time, date and place as the parties may agree in writing, provided that all conditions to the Closing have been satisfied or waived in writing. 1.4 DELIVERIES. (a) DELIVERIES BY THE SELLER. At the Closing, the Seller shall deliver or cause to be delivered to Purchaser the following: 1. Irrevocable instruction letter to the Company's transfer agent, accompanied by an appropriate legal opinion, for the issuance of one certificate evidencing 1,000,000 Shares of Common Stock, duly authorized, issued, fully paid and non-assessable, registered in the name of Purchaser; 2. The Registration Rights Agreement, in the form attached hereto as EXHIBIT A (the "Registration Rights Agreement"), duly executed by the Seller. -1- 3. A legal opinion of Law Offices of Dan Brecher ("Seller's Counsel"), counsel to the Seller, in form and substance satisfactory to the Purchaser. 4. A certificate of the Secretary of the Seller (the "Secretary's Certificate"), in form and substance satisfactory to the Purchaser, certifying as follows: (i) that attached to the Secretary's Certificate is a true and complete copy of the Certificate of Incorporation of the Seller, as amended to date, including all certificates of designation and documents or instruments amending or restating the Certificate of Incorporation of the Seller; (ii) that a true copy of the Bylaws of the Seller, as amended to the date hereof, is attached to the Secretary's Certificate; (iii) that attached thereto are true and complete copies of the resolutions of the Board of Directors of the Seller (A) authorizing the execution, delivery and performance of this Agreement and the Registration Rights Agreement, instruments and certificates required to be executed by it in connection herewith and approving the consummation of the transactions in the manner contemplated hereby including, but not limited to, the authorization and issuance of the Common Stock; (vi) at the Closing, that the representations and warranties herein are true and complete as of the date thereof, and that there has not occurred any event which has had a Material Adverse Effect on the Seller or any Subsidiary, (vii) such other matters as the Purchaser may reasonably request. 5. Such other documents as the Purchaser shall reasonably request. (b) DELIVERIES BY THE PURCHASER. At the Closing, Purchaser shall deliver or cause to be delivered to the Seller payment of the Purchase Price in cash by either (x) wire transfer of immediately available funds to an account designated in writing by Seller prior to the date hereof, or (y) bank or cashier's check; (ii) an executed copy of this Agreement; and (iii) an executed copy of the Registration Rights Agreement. ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE SELLER The Seller represents and warrants to the Purchaser as follows: 2.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH LAW. Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation. Seller is duly licensed or qualified to do business as a foreign corporation and is in good standing under the laws of any other state of the United States in -2- which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except where the failure to be so qualified or to be in good standing would not have a material adverse effect on the business, results of operations or financial condition of Seller and its subsidiaries taken as a whole (a "Material Adverse Effect. Each of Seller's subsidiaries ("Subsidiaries") is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has the corporate or partnership power and authority to own its properties and to carry on its business as it is now being conducted, and is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its property or the conduct of its business requires such qualification, except for jurisdictions in which such failure to be so qualified or to be in good standing would not have a Material Adverse Effect on Seller. Neither Seller nor any Subsidiary is in violation in any material respect of any order of any court, governmental authority or arbitration board or tribunal, or any law, ordinance, governmental rule or regulation to which Seller or any of its Subsidiaries or any of their respective properties or assets is subject. Seller and its Subsidiaries have obtained all licenses, permits and other authorizations and have taken all actions required by applicable law or governmental regulations in connection with their business as now conducted. The copies of Seller's Certificate of Incorporation and Bylaws delivered to Purchaser in connection herewith are true and correct. 2.2. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Seller has the requisite corporate power and authority to execute and deliver this Agreement and all agreements and documents contemplated hereby and to perform its obligations hereunder and thereunder. The consummation by Seller of the transactions contemplated hereby has been duly authorized by all requisite corporate action. This Agreement constitutes, and all agreements and documents contemplated hereby (when executed and delivered pursuant hereto for value received) will constitute, the valid and legally binding obligations of Seller, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights and general principles of equity. 2.3. CAPITALIZATION. The authorized capital stock of Seller consists of 20,000,000 shares of Common Stock, $0.001 par value ("Seller Common Stock"), and 5,000,000 shares of Preferred Stock, $0.001 par value ("Seller Preferred Stock"). As of the date of this Agreement, there were 8,857,210 shares of Seller's Common Stock and zero shares of Seller Preferred Stock, issued and outstanding. Seller has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of Seller on any matter, other than outstanding warrants and options (including out-of-the-money warrants and options) to purchase up to 3,625,158 shares of common stock. All issued and outstanding shares of Seller Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. 2.4. SUBSIDIARIES. Seller owns directly or indirectly all of the outstanding shares of capital stock or membership or partnership interests of each of Seller's Subsidiaries. As applicable, each of the outstanding shares of capital stock of each of Seller's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable, and each share or interest is owned, directly or indirectly, by Seller free and clear of all liens, pledges, security interests, claims or -3- other encumbrances other than liens imposed by local law which are not material. The name and jurisdiction of incorporation of each Subsidiary of Seller is attached hereto as Schedule 1.4. 2.5. OTHER INTERESTS. Except for interests in the Seller Subsidiaries, neither Seller nor any Seller Subsidiary owns directly or indirectly any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or entity (other than investments in short-term investment securities and corporate partnering, development, cooperative marketing and similar undertakings and arrangements entered into in the ordinary course of business). 2.6. NO VIOLATION. Neither the execution and delivery by Seller of this Agreement, nor the consummation by Seller of the transactions contemplated hereby in accordance with the terms hereof, will: (i) conflict with or result in a breach of any provisions of the Certificate of Incorporation or Bylaws of Seller; (ii) violate, conflict with, result in a breach of any provision of, constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, result in the termination or in a right of termination or cancellation of, accelerate the performance required by, result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties of Seller or its Subsidiaries under, or result in being declared void, voidable, or without further binding effect, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust or any material license, franchise, permit, lease, contract, agreement or other instrument, preemptive right, commitment or obligation to which Seller or any of its Subsidiaries is a party, or by which Seller or any of its Subsidiaries or any of their respective properties is bound or affected; or (iii) require any material consent, approval or authorization of, or declaration, filing or registration with, any domestic governmental or regulatory authority. 2.7. SEC DOCUMENTS. Seller has delivered (incorporated by reference to the Seller's filings as reported on the SEC's web site) to Purchaser each registration statement, report, proxy statement or information statement prepared and filed with the Securities and Exchange Commission by it since June 30, 2003, including, without limitation, its Annual Report on Form 10-KSB for the year ended June 30, 2003, each in the form (including exhibits and any amendments thereto) filed with the SEC (collectively, the "Seller Reports"). As of their respective dates, the Seller Reports (i) complied as to form in all material respects with the applicable requirements of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each of the consolidated balance sheets included in or incorporated by reference into the Seller Reports (including the related notes and schedules) fairly presents, in all material respects, the consolidated financial position of Seller and its Subsidiaries as of its date, and each of the consolidated statements of income, retained earnings and cash flows included in or incorporated by reference into the Seller Reports (together with the related notes and schedules) fairly presents, in all material respects, the results of operations, retained earnings or cash flows, as the case may be, of Seller and its Subsidiaries for the periods set forth therein (subject to the lack of footnote disclosure and normal year-end audit adjustments which would not be material in amount or effect), in each case in accordance with generally -4- accepted accounting principles consistently applied during the periods involved, except as may be noted therein. Except as and to the extent set forth in the consolidated balance sheet of Seller and its Subsidiaries at June 30, 2003, including all notes thereto, or as set forth in the Seller Reports, neither Seller nor any of its Subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on, or reserved against in, a balance sheet of Seller or in the notes thereto, prepared in accordance with generally accepted accounting principles consistently applied, except liabilities arising in the ordinary course of business since such date. 2.8. LITIGATION. There are no actions, suits or proceedings pending against Seller or its Subsidiaries or, to the knowledge of Seller, threatened against Seller or any of its Subsidiaries, at law or in equity, or before or by any federal or state commission, board, bureau, agency or instrumentality, that are reasonably likely to have a Seller Material Adverse Effect. 2.9. ABSENCE OF CERTAIN CHANGES. Since June 30, 2003, Seller has conducted its business only in the ordinary course of such business, and, other than as set forth in the Seller Reports, there has not been (i) any Seller Material Adverse Effect; (ii) any declaration, setting aside or payment of any dividend or other distribution with respect to its capital stock; or (iii) any material change in its accounting principles, practices or methods. In June 2004, Seller permitted an elderly former preferred shareholder who did not timely accept Seller's offer of conversion concluded on December 31, 2003 to resolve the matter by issuing 250,000 unregistered shares of common stock in return for repayment of dividends and other consideration, such that, Seller and the former preferred shareholder are in similar positions as if the former preferred shareholder had accepted the offer of conversion on December 31, 2003. 2.10. TAXES. Seller and each of its Subsidiaries (i) have timely filed all material federal, state and foreign tax returns required to be filed by any of them for tax years ended prior to the date of this Agreement or requests for extensions have been timely filed and any such request shall have been granted and not expired, and all such returns are complete in all material respects, (ii) have paid or accrued all taxes shown to be due and payable on such returns, (iii) have properly accrued all such taxes for such periods subsequent to the periods covered by such returns, and (iv) have no "open" years for federal income tax returns. 2.11. LABOR MATTERS. Neither Seller nor any of its Subsidiaries is a party to, or bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization. There is no unfair labor practice or labor arbitration proceeding pending or, to the actual knowledge of the executive officers of Seller, threatened against Seller or its Subsidiaries relating to their business. To the actual knowledge of the executive officers of Seller, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened involving employees of Seller or any of its Subsidiaries. 2.12. SELLER COMMON STOCK. The issuance and delivery by Seller of all shares of Seller Common Stock to be issued in connection with this Agreement have been duly and validly authorized by all necessary corporate action on the part of Seller and no shareholder approval is required in connection therewith. The shares of Seller Common Stock to be issued in connection -5- with this Agreement, when issued in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable, and issued without violation of any preemptive right of any other person or entity. Seller has more than 300 shareholders of record and, to the best knowledge of Seller, no 20 individual shareholders (excluding Purchaser), together with their family members and affiliates, together own, directly or indirectly through one or more affiliates, shares of Seller Common Stock carrying fixed entitlements to more than 75% of Seller's income, capital or voting rights. 2.13. NO BROKERS. Seller has not entered into any contract, arrangement or understanding with any person or firm which may result in the obligations of Seller to pay any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby. Seller is not aware of any claim for payment of any finder's fees, brokerage or agent's commissions or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby. ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby represents and warrants as follows: 3.1 EXISTENCE AND POWER. The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. 3.2 AUTHORIZATION. The execution, delivery and performance by the Purchaser of this Agreement, the Related Documents to which the Purchaser is a party, and the consummation by the Purchaser of the transactions contemplated hereby have been duly authorized, and no additional action is required for the approval of this Agreement by the Purchaser. This Agreement and the related documents to which the Purchaser is a party have been or, to the extent contemplated hereby, will be duly executed and delivered and constitute valid and binding agreements of the Purchaser, enforceable against the Purchaser in accordance with their terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors and except that enforceability of their obligations thereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.3 INVESTMENT. The Purchaser is acquiring the Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with the intention of distributing or reselling the same, provided, however, that by making the representation herein, the Purchaser does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act of 1933, as amended ("Securities Act"). The Purchaser is aware that none of the Shares has been registered under the Securities Act or under applicable state securities or blue sky laws, and that the Shares -6- will bear appropriate restrictive legend. The Purchaser is an "Accredited Investor" as such term is defined in Rule 501 of Regulation D, as promulgated under the Securities Act. 3.4 RELIANCE ON EXEMPTIONS. The Purchaser understands that the Common Stock is being offered and sold to the Purchaser in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Seller is relying upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Securities. 3.5 EXPERIENCE OF THE PURCHASER. The Purchaser has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. ARTICLE IV - COVENANTS OF THE SELLER 4.1 PUBLIC ANNOUNCEMENTS. Neither the Purchaser nor the Seller shall (and each such party shall use its reasonable efforts to cause its Subsidiaries, affiliates, directors, officers, employees and authorized representatives not to), issue any press release, make any public announcement or furnish any written statement to its employees or stockholders generally concerning the transactions contemplated by this Agreement without the consent of the other party (which consent shall not be unreasonably withheld), except to the extent required by applicable law or as otherwise contemplated herein (and in either such case such party shall, to the extent consistent with timely compliance with such requirement, consult with the other party prior to making the required release, announcement or statement). 4.2 TAXES AND CLAIMS. All liabilities for income tax attributable to the sale of the Shares by the Seller to Purchaser pursuant to this Agreement shall be and remain the sole liability of the Seller and Purchaser shall have no responsibility therefor. 4.3 PURCHASER REPRESENTATIVE ON BOARD OF DIRECTORS. At and as a condition to the Purchaser's obligations to carry out the Closing, Mr. Alan Bazaar shall be elected to the Board of Directors of the Seller. Seller shall take all necessary action for the election of Mr. Bazaar to the Board prior to Closing. 4.4 STATE SECURITIES LAWS. The Seller shall timely prepare and file such applications, consents to service of process and similar documents and take such other steps and perform such further acts with respect to the sale of the Shares under this Agreement as shall be required by the state securities law requirements of the jurisdiction where the Purchaser resides. 4.5 ANTIDILUTION. In the event, at any time and from time to time, that Seller shall issue shares of Seller Common Stock to former holders of Seller's Series A Preferred Stock in consideration of their Series A Preferred Stock ("Additional Issuance"), Seller shall immediately issue additional shares of Common Stock to Purchaser so that the percentage of the Seller -7- Common Stock represented by the 1,000,000 shares of Seller Common Stock acquired at Closing following such additional issuance to Purchaser shall be the same as the percentage of Seller Common Stock represented by the 1,000,000 Seller Common Stock acquired at Closing. For example, Seller is acquiring 1,000,000 shares, representing 10.1448585% (1,000,000/ (8,857,210 + 1,000,000)) of the outstanding after issuance, and if Seller issues 200,000 shares as an Additional Issuance to former Series A preferred stock holders, Seller shall be immediately issued an additional 22,580 shares. (1,000,000 + 22,580) / (9,857,210 + 200,000 + 22,580) = 10.1448585%. 4.6 FURTHER ASSURANCES. The Seller shall, at its cost and expense, upon written request of the Purchaser, duly execute and deliver, or cause to be duly executed and delivered, to the Purchaser such further instruments and do and cause to be done such further acts as may be necessary, advisable or proper, in the reasonable discretion of the Purchaser, to carry out more effectually the provisions and purposes of this Agreement. ARTICLE V - INDEMNIFICATION AND TERMINATION 5.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided herein, the representations and warranties of the Seller and the Purchaser contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing Date and shall continue in full force and effect for a period of two (2) years from the Closing; provided, however, that the Seller's warranties and representations under Sections 2.10 (Taxes), 2.4 (Subsidiaries) and 2.3 (Capitalization), shall survive the Closing Date and continue in full force and effect until the expiration of all applicable statutes of limitation. The Seller's warranties and representations shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Seller or the Purchaser. 5.2 INDEMNIFICATION. (a) The Seller agrees to indemnify and hold harmless the Purchaser, its affiliates, each of its officers, directors, employees and agents and their respective successors and assigns, from and against any losses, damages, or expenses which are caused by or arise out of (i) any breach or default in the performance by the Seller or any Subsidiary of any covenant or agreement made by the Seller or any Subsidiary in this Agreement or in any of the documents contemplated hereby; (ii) any breach of warranty or representation made by the Seller or any Subsidiary in this Agreement or in any of the documents contemplated hereby, and (iii) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to any of the foregoing. (b) The Purchaser agrees to indemnify and hold harmless the Seller, its affiliates, each of its officers, directors, employees and agents and their respective successors and assigns, from and against any third party losses, damages, or expenses which are caused by or arise out of (A) any breach or default in the performance by the Purchaser of any covenant or agreement made by the Purchaser in this Agreement or in any of the documents contemplated hereby; (B) any breach of warranty or representation made by the Purchaser in this Agreement or in any of the documents contemplated hereby; and (C) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees -8- and expenses) incident to any of the foregoing, provided, however, that in no event shall Purchaser's liability hereunder exceed the Purchase Price paid by the Purchaser. 5.3 INDEMNITY PROCEDURE. (a) A party or parties hereto agreeing to be responsible for or to indemnify against any matter pursuant to this Agreement is referred to herein as the "Indemnifying Party" and the other party or parties claiming indemnity is referred to as the "Indemnified Party". (b) An Indemnified Party under this Agreement shall, with respect to claims asserted against such party by any third party, give written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity under this Agreement within sixty (60) business days of the receipt of any written claim from any such third party, but not later than twenty (20) days prior to the date any answer or responsive pleading is due, and with respect to other matters for which the Indemnified Party may seek indemnification, give prompt written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity; provided, however, that any failure to give such notice will not waive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are materially prejudiced. (c) The Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense, compromise or settlement of any third Person claim, action or suit against such Indemnified Party as to which indemnification will be sought by any Indemnified Party from any Indemnifying Party hereunder, and in any such case the Indemnifying Party shall cooperate in connection therewith and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the Indemnified Party in connection therewith; provided, that the Indemnifying Party may participate, through counsel chosen by it and at its own expense, in the defense of any such claim, action or suit as to which the Indemnified Party has so elected to conduct and control the defense thereof; and provided, further, that the Indemnified Party shall not, without the written consent of the Indemnifying Party (which written consent shall not be unreasonably withheld), pay, compromise or settle any such claim, action or suit, except that no such consent shall be required if, following a written request from the Indemnified Party, the Indemnifying Party shall fail, within 14 days after the making of such request, to acknowledge and agree in writing that, if such claim, action or suit shall be adversely determined, such Indemnifying Party has an obligation to provide indemnification hereunder to such Indemnified Party. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay, settle or compromise any such claim, action or suit without such consent, provided, that in such event the Indemnified Party shall waive any right to indemnity therefor hereunder unless such consent is unreasonably withheld. (d) The parties agree to cooperate in defending such third party claims, and the Indemnified Party shall provide such cooperation and such access to its books, records and properties as the Indemnifying Party shall reasonably request with respect to any matter for which indemnification is sought hereunder; and the parties hereto agree to cooperate with each other in order to ensure the proper and adequate defense thereof. -9- (e) With regard to claims of third parties for which indemnification is payable hereunder, such indemnification shall be paid by the Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment against the Indemnified Party and the expiration of any applicable appeal period, or if earlier, five (5) days prior to the date that the judgment creditor has the right to execute the judgment; (ii) the entry of an unappealable judgment or final appellate decision against the Indemnified Party; or (iii) a settlement of the claim. Notwithstanding the foregoing, the reasonable fees and disbursements of counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party if such fees and disbursements are a liability of the Indemnifying Party. With regard to other claims for which indemnification is payable hereunder, such indemnification shall be paid promptly by the Indemnifying Party upon demand by the Indemnified Party. ARTICLE VI - MISCELLANEOUS 6.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement. 6.2 FEES AND EXPENSES. Seller shall be responsible for the payment of Seller's legal fees and expenses relating to the preparation and negotiation of this Agreement, and for the payment of Purchaser's reasonable legal fees and expenses relating to the preparation and negotiation of this Agreement in the amount of up to $7,500. Purchaser shall be responsible for all other of Purchaser's legal fees and expenses. 6.3 NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:00 p.m. (New York City time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a business day or later than 5:00 p.m. (New York City time) on any business day, or (c) the business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service such as Federal Express. The address for such notices and communications shall be as follows:
If to the Purchaser, to: If to the Seller, to: GFX Investments, LLC Media Sciences International, Inc. c/o Richard L. Scott Investments, LLC 40 Boroline Road 100 First Stamford Place Allendale, New Jersey Stamford, Ct. 06902 Att'n: Michael W. Levin Att'n: Alan Bazaar Fax No.: 201-818-9040 Fax No.: 203-602-7758
-10-
With a copy to: With a copy to: Boult, Cummings, Conners & Berry, PLC Law Offices of Dan Brecher 414 Union Street, Suite 1600 99 Park Avenue, 16th Floor P.O. Box 198062 New York, NY 10016 Nashville, Tennessee 37219 Att'n: Dan Brecher, Esq. Att'n: Steve Braun, Esq. Fax No.: 212-808-4155 Fax No.: 615-252-6300
Unless otherwise stated above, such communications shall be effective when they are received by the addressee thereof in conformity with this Section. Any party may change its address for such communications by giving notice thereof to the other parties in conformity with this Section. 6.4 GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and enforced in accordance with the laws of the State of Delaware without reference to the choice of law principles thereof. 6.5 SUCCESSORS AND ASSIGNS. This Agreement is personal to each of the parties and may not be assigned without the written consent of the other parties; provided, however, that Purchaser shall be permitted to assign their rights under this Agreement to any affiliate of the Purchaser. 6.6 SEVERABILITY. If any provision of this Agreement, or the application thereof, shall for any reason or to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances shall continue in full force and effect and in no way be affected, impaired or invalidated. 6.7 ENTIRE AGREEMENT. This Agreement and the other agreements and instruments referenced herein constitute the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings. 6.8 OTHER REMEDIES. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law, or in equity on such party, and the exercise of any one remedy shall not preclude the exercise of any other. 6.9 AMENDMENT AND WAIVERS. Any term or provision of this Agreement may be amended, and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a writing signed by the Seller and the Purchaser. The waiver by a party of any breach hereof or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. This Agreement may not be amended or supplemented by any party hereto except pursuant to a written amendment executed by the Seller and Purchaser. -11- 6.10 NO WAIVER. The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions. 6.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original as against any party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as signatories. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 6.12 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 6.13 GENDER, SINGULAR AND PLURAL. The use of any gender shall be construed to include all other genders, unless the context clearly indicates that less than all the genders is intended. The use of the singular or the plural shall include both the singular and the plural unless the context clearly indicates that only the singular or only the plural is intended. [SIGNATURE PAGE FOLLOWS:] -12- IN WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as of the date first above written.
PURCHASER: SELLER: GFX INVESTMENTS, LLC, a Delaware limited MEDIA SCIENCES INTERNATIONAL, INC., a liability company Delaware corporation By: /s/ Richard L. Scott By: /s/ Michael W. Levin --------------------------------- --------------------------------- Name: Richard L. Scott Name: Michael W. Levin Title: Managing Member Title: President
-13- SCHEDULE 1.4 Subsidiaries State of Incorporation Cadapult Graphic Systems, Inc. NJ Media Sciences, Inc. NJ -14- EX-2 3 g89862exv2.txt EX-2 REGISTRATION RIGHTS AGREEMENT 06/30/04 EXHIBIT 2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of June 30, 2004, among MEDIA SCIENCES INTERNATIONAL, INC., a Delaware corporation (the "Company"), and GFX INVESTMENTS, LLC, a Delaware limited liability company ("Stockholder" or "Holder"). RECITAL: The Company and Stockholder are parties to that certain Common Stock Purchase Agreement of even date herewith (the "Purchase Agreement"), whereby Stockholder purchased 1,000,000 shares of the common stock of the Company, par value $0.001 per share (the "Common Stock"). Capitalized terms used but not defined in this Agreement have the meanings assigned to such terms in the Purchase Agreement. As an inducement to Stockholder to enter into the Purchase Agreement, the Company agrees with Stockholder as follows: AGREEMENT: NOW, THEREFORE, the parties hereby agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: 1.1 AFFILIATES. "Affiliate" shall mean any person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any party specified in this Agreement. 1.2 COMMISSION. "Commission" shall mean the United States Securities Exchange Commission or any other federal agency at the time administering the Securities Act. 1.3 COMMON SHARES. "Common Shares" shall mean the shares of Common Stock issued at any time to the Stockholder pursuant to the Purchase Agreement. 1.4 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. 1.5 PERSON. "Person" shall mean any individual, partnership, limited liability company, corporation, trust or other entity. 1.6 REGISTER; REGISTERED; REGISTRATION. "Register," "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement by the Commission. -1- 1.7 REGISTRABLE SHARES. "Registrable Shares" shall mean (i) the Common Shares and (ii) all shares of the Company's Common Stock issued as a dividend on, or other distribution with respect to, or in exchange or in replacement of, the Common Shares, until, in the case of any such security, the earliest of (i) its effective registration under the Securities Act and resale in accordance with the registration statement covering it, (ii) the earliest date all of such shares may be sold pursuant to Rule 144 under the Securities Act, (iii) its sale pursuant to Rule 144 or otherwise, except in sales referenced in the proviso to Section 5.1. 1.9 REGISTRATION EXPENSES. "Registration Expenses" shall mean all expenses incurred by the Company in complying with Section 3, including all registration and filing fees, exchange listing fees, printing expenses, fees and disbursements of counsel for the Company, state securities' law fees and expenses, and the expense of any special consents and advice or similar audit services of independent auditors incident to or required by any such registration. 1.10 SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. 1.11 SELLING EXPENSES. "Selling Expenses" shall mean any underwriting discounts and selling commissions associated with the sale of Registrable Securities by a Holder hereunder. Selling Expenses are and shall be the responsibility of the Holder. 2. RESTRICTIONS ON TRANSFER. 2.1 RESTRICTIVE LEGEND. Each certificate representing the Common Shares or securities issued in respect of the Common Shares, shall, until such shares are sold under the Shelf Registration Statement or otherwise are no longer Registrable Securities, be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable state securities laws): The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended and may not be sold, transferred, pledged, hypothecated or otherwise disposed of in the absence of (i) an effective registration statement for such securities under said Act or (ii) an opinion of company counsel that such registration is not required. 2.2 NOTICE OF PROPOSED TRANSFERS. Unless there is an effective registration statement under the Securities Act covering a proposed transfer, Stockholder shall notify the Company of its intention to affect a transfer of any of its Common Shares. Such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail, and shall be accompanied (except that the requirements set forth in the balance of this sentence need not be complied with where the proposed transaction complies with Rule 144 as long as the Company is furnished with evidence of compliance with such rule) by: -2- (a) an unqualified written opinion of legal counsel which is reasonably satisfactory to the Company addressed to the Company's counsel, to the effect that the proposed transfer of the Common Shares may be effected without registration of the Securities Act; or (b) a "no action" letter from the Commission to the effect that the distribution of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto; provided, that this Section 2.2 shall not require a legal opinion or "no action letter" in connection with any transfer described in the proviso to Section 5.1 of this Agreement. 2.3 COMPLIANCE. Each certificate evidencing the Common Shares transferred as above provided shall bear the appropriate restrictive legend set forth in Section 2.1, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for the Company such legend is not required in order to establish compliance with any provisions of the Securities Act or applicable state securities laws. 3. REGISTRATION RIGHTS 3.1 SHELF REGISTRATION. (a) The Company shall prepare and file with the Commission as soon as practicable but in no event later than 30 days after the Closing Date, a registration statement (the "Initial Shelf Registration Statement," and together with any Subsequent Shelf Registration Statement (as defined below), including, in each case, the prospectus, amendments and supplements to such registration statements, including post-effective amendments, all exhibits, and all materials incorporated by reference or deemed to be incorporated by reference in such registration statements, are herein collectively referred to as the "Shelf Registration Statement") for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933, as amended (the "Securities Act") (the "Shelf Registration"), registering the resale from time to time by Stockholder of all of the Registrable Securities. The Initial Shelf Registration Statement shall be on an appropriate form under the Securities Act permitting registration of such Registrable Securities for resale by Stockholder from time to time as set forth in the Initial Shelf Registration Statement. The Company shall use its best efforts to cause the Initial Shelf Registration Statement to be declared effective under the Securities Act as promptly as is practicable and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf Registration Statement) continuously effective under the Securities Act to permit the prospectus included therein to be lawfully delivered by the Stockholder, for a period that will terminate when (i) all the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant thereto or (except in sales described in the proviso to Section 5.1) otherwise or (ii) such Registrable Securities may be sold pursuant to the provisions of Rule 144 under the Securities Act (such period, the "Effectiveness Period"). (b) If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the Effectiveness Period (other than because all Registrable Securities registered thereunder have been resold pursuant thereto or -3- have otherwise ceased to be Registrable Securities), the Company shall use its best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days of such cessation of effectiveness amend such Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional Shelf Registration Statement covering all of the securities that as of the date of such filing are Registrable Securities (a "Subsequent Shelf Registration Statement"). If a Subsequent Shelf Registration Statement is filed, the Company shall use its best efforts to cause the Subsequent Shelf Registration Statement to become effective as promptly as is practicable after such filing and to keep such Subsequent Shelf Registration Statement continuously effective until the end of the Effectiveness Period. (c) The Company shall supplement and amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act. (d) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. 3.2 REGISTRATION PROCEDURES. In connection with the Shelf Registration contemplated by Section 3.1 hereof, the following provisions shall apply: (a) The Company shall (i) furnish to Stockholder, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and the Company shall use its best efforts to reflect in the Shelf Registration Statement, when so filed with the Commission, such comments as the Stockholder may reasonably and timely propose. (b) The Company shall give written notice to Stockholder (which notice pursuant to clauses (ii) through (v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when the Shelf Registration Statement or any amendment thereto has been filed with the Commission and when the Shelf Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Shelf Registration Statement or the prospectus included therein or for additional information; -4- (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (v) of the happening of any event that requires the Company to make changes in the Shelf Registration Statement or the prospectus in order that the Shelf Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading. (c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Shelf Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale. (d) The Company shall furnish to Stockholder, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Stockholder so requests, all exhibits thereto (including those, if any, incorporated by reference). (e) The Company shall, during the Effectiveness Period, deliver to Stockholder, without charge, except for normal copying and actual delivery costs, as many copies of the prospectus (including each preliminary prospectus, if any) included in the Shelf Registration Statement and any amendment or supplement thereto as Stockholder may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by Stockholder in connection with the offering and sale of the Registrable Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (f) Prior to any public offering of the Registrable Securities pursuant to any Shelf Registration Statement the Company shall register or qualify or cooperate with the Stockholder and its counsel in connection with the registration or qualification of the Registrable Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as Stockholder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by such Shelf Registration Statement, provided, however, that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where it would not, but for the requirements of this paragraph (f), be required to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction. -5- (g) The Company shall cooperate with Stockholder to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold pursuant to any Shelf Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Registrable Securities pursuant to such Shelf Registration Statement. Stockholder shall provide such representations as may be reasonably requested by the Company's transfer agent in this regard. (h) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3.2(b) above during the period for which the Company is required to maintain an effective Shelf Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Shelf Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Stockholder, the 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 under which they were made, not misleading. If the Company notifies the Stockholder in accordance with paragraphs (ii) through (v) of Section 3.2(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Stockholder shall suspend use of such prospectus and, if so directed by the Company, destroy or deliver to the Company all copies then in Stockholder's possession of the prospectus covering such Registrable Securities that was in effect at the time of such notice (such period during which the availability of the Shelf Registration Statement and any related prospectus is suspended being a "Deferral Period"). The period of effectiveness of the Shelf Registration Statement provided for in Section 3.1(a) above shall be extended by the number of days from and including the date of the giving of such notice to and including the date when the Holders of Registrable Securities shall have received such amended or supplemented prospectus pursuant to this Section 3.2(h). The Company will use its best efforts to ensure that the use of the prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3.2(h) to suspend the availability of the Shelf Registration Statement or any prospectus for one or more periods not to exceed 30 days in any 3 month period and not to exceed, in the aggregate, 90 days in any 12 month period. (i) The Company shall prepare and file with the Commission such amendments and post-effective amendments to each Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement continuously effective for the applicable period specified in Section 3.1(a) and shall cause the related prospectus to be supplemented by any required prospectus supplement to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act. The Company will comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Shelf Registration and the Company will make generally available to its securityholders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Shelf Registration Statement, which statement shall cover such 12-month period. -6- (j) The Company may require Stockholder to furnish to the Company such information regarding the Stockholder and the distribution of the Registrable Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement. (k) The Company shall (i) make reasonably available for inspection by Stockholder, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by Stockholder or any such underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company's officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by Stockholder or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons, to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act. (l) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Registrable Securities covered by a Shelf Registration Statement contemplated hereby. (m) The Company shall as promptly as practicable (if reasonably requested by Stockholder), incorporate in a prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as Stockholder or shall, on the basis of an opinion of nationally recognized counsel experienced in such matters, determine to be required to be included therein and make any required filings of such prospectus supplement or such post-effective amendment; provided that the Company shall not be required to take any actions under this Section 3.2(m) that are not, in the reasonable opinion of counsel for the Company, in compliance with applicable law. 3.3 EXPENSES OF REGISTRATION. The Company shall pay all Registration Expenses incurred in connection with the performance of the Company's obligations under this Agreement. 4. INDEMNIFICATION 4.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless Stockholder and its Affiliates, against all claims, losses, damages and liabilities, joint or several (or actions in respect thereof, and including, but not limited to, any claims, losses, damages, liabilities or actions relating to purchases and sales of the Registrable Securities), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, to which any of them may become subject under the Securities Act, the Exchange Act or other federal or state law, arising out of or based on the following: (a) any untrue statement or alleged untrue statement of a material fact contained in any such registration statement, preliminary prospectus, prospectus, offering circular or other similar document (including any related registration statement, notification or the like, and including any amendment or supplement thereto) incident to any such registration, -7- or based on any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (b) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company in connection with any such registration, qualification or compliance; and (c) any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as incurred related to the foregoing. 4.2 INDEMNIFICATION BY STOCKHOLDER. If Registrable Securities held by Stockholder are included in the securities as to which such registration is being effected, Stockholder shall indemnify the Company, each of its officers and directors, each underwriter and each person who controls any underwriter, and each person, if any, who controls the Company or any such underwriter within the meaning of Section 15 of the Securities Act, and each person affiliated with or retained by the Company and who may be subject to liability under any applicable securities laws, against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, to which they may become subject under the Securities Act or other federal or state law, arising out of or based on: (a) any untrue statement or alleged untrue statement of a material fact contained in any such registration statement, prospectus, offering circular or other similar document, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by Stockholder and stated to be specifically for use therein; and (b) any legal and other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as incurred. 4.3 LIMITATION ON THE INDEMNIFICATION OBLIGATION. (a) No party required to provide indemnification under this Section 4 (the "Indemnifying Party") shall be liable, and shall have any indemnification obligation hereunder, for any amounts paid in settlement by any party entitled to indemnification hereunder (the "Indemnified Party") of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnifying Party (which consent shall not be unreasonably withheld). (b) The Company shall not be liable under Section 4.1 hereof for any such claim, loss, damage, liability or expense to the extent it arises out of or is based on any untrue -8- statement or omission, made in reliance on and in conformity with written information furnished to the Company by an instrument duly executed by Stockholder, underwriter or controlling person and stated to be specifically for use therein. 4.4 INDEMNIFICATION PROCEDURE. Each Indemnified Party" shall give notice to the Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and SHALL PERMIT THE INDEMNIFYING PARTY TO ASSUME THE DEFENSE OF ANY SUCH CLAIM OR ANY LITIGATION RESULTING THEREFROM, provided the Indemnifying Party acknowledges its obligations to indemnify the Indemnified Party with respect to the claim and provided further that counsel for the Indemnifying Party, WHO SHALL CONDUCT THE DEFENSE OF SUCH CLAIM OR LITIGATION, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 4 except to the extent that the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses but shall bear the expense of such defense nevertheless. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement 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 to such claim or litigation. If the Indemnifying Party does not assume the defense of any claim or proceeding resulting therefrom, the Indemnified Party may defend against such claim or proceeding as the Indemnified Part may deem appropriate and MAY SETTLE SUCH CLAIM OR PROCEEDING in such manner as the Indemnified Party may deem appropriate, ALL WITHOUT PREJUDICE TO ITS RIGHT TO INDEMNIFICATION hereunder. 4.5 CONTRIBUTION, ALLOCATION, ETC. If the indemnification provided for in this Section 4 is unavailable or insufficient to hold harmless an Indemnified Party under such paragraphs in respect of any losses, claims, damages or liabilities or actions in respect thereof referred to therein, then each Indemnifying Party shall in lieu of indemnifying such Indemnified Party contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or actions in such proportion as appropriate to reflect the relative fault of the Company, on the one hand, and the underwriters and Stockholder, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or actions as well as any other relevant equitable considerations, including the failure to give any notice under Section 4.4. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the Company, on the one hand, or the underwriters or Stockholder, on the other, and to the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and Stockholder agree that it would not be just and equitable if contributions pursuant to this paragraph were determined by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above in this paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages, liabilities or action in respect thereof, referred to above in this paragraph, shall be deemed to include any legal or other -9- expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this paragraph, Stockholder shall not be required to contribute any amount in excess of the lesser of (i) the proportion that the public offering price of shares sold by Stockholder under such registration statement bears to the total public offering price of all securities sold thereunder, but not to exceed the proceeds received by Stockholder for the sale of Registrable Shares covered by such registration statement and (ii) the amount of any damages which it would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission. No person guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of the Securities Act), shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. 4.6 CONFLICTS WITH UNDERWRITING AGREEMENT. Notwithstanding anything in this Section 4 to the contrary, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 5. MISCELLANEOUS PROVISIONS. 5.1 NO TRANSFER OF REGISTRATION RIGHTS. The registration rights granted under this Agreement may not be assigned or otherwise conveyed by Stockholder without the consent of the Company, which consent shall not be unreasonably withheld; provided, that registration rights may be assigned by a Stockholder in connection with a sale or other transfer to an immediate family member or to an entity controlled by or under common control with Stockholder. 5.2 GOVERNING LAW. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to conflict of laws or any other rules or principles which may require the application of the laws of any other jurisdiction. 5.3 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power or remedy accruing to Stockholder, upon any breach or default by the Company under this Agreement, shall impair any such right, power or remedy of Stockholder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of Stockholder or any breach or default under this Agreement, or any waiver on the part of Stockholder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to Stockholder, shall be cumulative and not alternative. 5.4 RULE 144. The Company shall use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, -10- if at any time, the Company is not required to file such reports, it will, upon the request of Stockholder, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rule 144 under the Securities Act. The Company covenants that it will take such further action as Stockholder may reasonably request, all to the extent required from time to time to enable Stockholder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. Upon the request of Stockholder, the Company shall deliver to Stockholder a written statement as to whether it has complied with such filing requirements. Notwithstanding the foregoing, nothing in this Section 5.5 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act if not otherwise registered. 5.5 REMEDIES. Each of the parties hereto acknowledges and agrees that any failure by a party to perform its obligations hereunder or otherwise breach this Agreement, irreparable injury may occur for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, a party may obtain such relief as may be required to specifically enforce the other party's obligations hereunder. 5.6 NO INCONSISTENT AGREEMENTS. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to Stockholder in this Agreement or otherwise conflicts with the provisions hereof. The Company represents and warrants that the rights granted to Stockholder hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of securities of the Company under any agreement in effect on the date hereof. 5.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, correspondence, arrangements and understandings relating to the subject matter hereof. 5.8 BINDING EFFECT. All of the terms, provisions and conditions hereof shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto, and their respective heirs, personal representatives, successors and assigns. 5.9 HEADINGS; CONSTRUCTION. The headings contained herein are for the purposes of convenience only, and will not be deemed to constitute a part of this Agreement or to affect the meaning or interpretation of this Agreement in any way. Unless the context clearly states otherwise, the use of the singular or plural in this Agreement shall include the other and the use of any gender shall include all others. The parties have participated jointly in the negotiation and drafting of this Agreement. If any ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. All references herein to Sections shall refer to this Agreement unless the context clearly otherwise requires. 5.10 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon (a) transmitter's confirmation of receipt of a facsimile -11- transmission, (b) confirmed delivery by a standard overnight carrier or when delivered by hand or (c) the expiration of five (5) business days (or seven (7) business days where the addressee is not in the United States) after the day when mailed by certified or registered mail, postage prepaid, to: THE COMPANY Media Sciences International, Inc. 40 Boroline Road Allendale, New Jersey Att'n: Michael W. Levin Fax No.: 201-818-9040 With a copy to: Law Offices of Dan Brecher 99 Park Avenue, 16th Floor New York, NY 10016 Att'n: Dan Brecher, Esq. Fax No.: 212-808-4155 STOCKHOLDERS GFX Investments, LLC c/o Richard L. Scott Investments, LLC 100 First Stamford Place Stamford, Ct. 06902 Att'n: ________________ Fax No.: ____________ With a copy to: Boult, Cummings, Conners & Berry, PLC 414 Union Street, Suite 1600 P.O. Box 198062 Nashville, Tennessee 37219 Att'n: Steve Braun, Esq. Fax No.: 615-252-6300 or to such other address as any party may, from time to time, designate in a written notice given in a like manner. 5.11 SEVERABILITY OF PROVISIONS. If a court in any proceeding holds any provision of this Agreement or its application to any person or circumstance invalid, illegal or unenforceable, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it was held to be invalid, illegal or unenforceable, shall not be affected, and shall be valid, legal and enforceable to the fullest extent permitted by law, but only if and to the extent such enforcement would not materially and adversely frustrate the parties' essential objectives as expressed in this Agreement. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties intend that the court add to this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be valid and enforceable, so as to effect the original intent of the parties to the greatest extent possible. -12- 5.12 NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and will not be construed as creating, any rights enforceable by any person not a party to this Agreement. 5.13 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING FROM ANY SOURCE INCLUDING, BUT NOT LIMITED TO, THE CONSTITUTION OF THE UNITED STATES OR ANY STATE THEREIN, COMMON LAW OR ANY APPLICABLE STATUTE OR REGULATIONS. EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY. 5.14 AMENDMENT. This Agreement may be amended, modified, superseded, or canceled only by a written instrument signed by all of the parties hereto and any of the terms, provisions and conditions hereof may be waived, only by a written instrument signed by the waiving party. 5.15 COUNTERPARTS. This Agreement may be executed in any number of counterparts and each such counterpart shall for al purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Signature Page Follows -13- IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date first written above. MEDIA SCIENCES INTERNATIONAL, INC. By: /s/ Michael W. Levin ----------------------------------- Name: Michael W. Levin Title: President GFX INVESTMENTS, LLC By: /s/ Richard L. Scott ----------------------------------- Name: Richard L. Scott --------------------------------- Title: Managing Member -------------------------------- -14- -----END PRIVACY-ENHANCED MESSAGE-----