RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT (the "Agreement") is made as of the _____
day of May, 2002 (the "Effective Date"), by and between Kirshner
International, Inc., a Delaware corporation (the "Company") and
those certain holders (collectively, the "Stockholders") of the
common stock par value $.001 of the Company (the "Common Stock").
WHEREAS, the Stockholders are the beneficial owners of an
aggregate of 23,910,000 shares of Common Stock;
WHEREAS, the Company is a party to that certain Stock Exchange
Agreement dated May 6, 2002 (the "Stock Exchange Agreement");
WHEREAS, it is a condition to the Closing (as such term is
defined in the Stock Exchange Agreement) for Stockholders to
execute this Agreement, and the Stockholders have determined that it
is in the best interests of Stockholders for the transactions
contemplated by the Stock Exchange Agreement to be undertaken;
WHEREAS, to induce the parties to the Stock Exchange Agreement
to conclude the Closing (as such term is defined in the Stock
Exchange Agreement) the Stockholders and the Company are willing to
enter into this Agreement.
NOW THEREFORE, for $10.00 and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed between the parties as follows:
1. Term of Agreement. The term of this Agreement shall
commence upon the Effective Date and terminate six (6) months after
the Effective Date (the "Term"). Upon expiration of the Term, this
Agreement shall be null, void and of no further force or effect,
whereupon the Stockholders shall no longer have any obligation
hereunder and any Legend (as hereinafter defined) affixed to any
certificate representing the Common Stock subject to this Agreement
shall be removed.
2. Agreements.
(a) During the Term, the Stockholders agree to hold all
Common Stock registered in such Stockholder's name or beneficially
owned by such stockholder as of the Effective Date and any and all
other securities of the Company legally or beneficially acquired by
such stockholder after the Effective Date (hereinafter collectively
referred to as the "Subject Shares") subject to, and to vote the
Subject Shares in accordance with, the provisions of this Agreement.
(b) Election of Directors. During the Term, on all
matters relating to the election of directors of the Company, each
Stockholder agrees to vote all Subject Shares so as to elect members
of the Company's Board of Directors as follows:
(1) Xxxxxx Xxxxxxxxxxxx ("Xxxxxxxxxxxx") or such
other party as may be designated by Xxxxxxxxxxxx shall be
designated by the Stockholders as a director;
(2) Xxxxxx Xxxxxxxx ("Xxxxxxxx") or such other party
as may be designated by Kirshner shall be designated by the
Stockholders as a director; and
(3) with respect to any remaining vacancies on the
Board of Directors, the individual or individuals to be elected
to such vacancies shall be designated by Kirshner.
(c) No Short Form Registration. During the Term, the
Company shall not effect a registration on Form S-3 (or any
successor to Form S-3), on Form S-8 (or any successor to Form S-8)
or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of any of
its Common Stock.
(d) Restriction on issuance of Common Stock. During the
Term, the Company shall not, except upon unanimous consent of the
Directors, authorize the issuance of any Common Stock or other
equity securities of any kind or class, or options, rights or
warrants to purchase equity securities in the Company, to any person
or entity, except that it is specifically agreed that the Company
may issue up to Ten Million 10,000,000 shares of Common Stock to
employees, consultants and purchasers thereof in connection with
capital raising transactions.
(e) Reports. With a view to making available to the
Stockholder the benefits of certain rules and regulations of the
Securities and Exchange Commission (the "SEC") which may permit the
sale of the Subject Shares to the public without registration, the
Company agrees to use its best efforts during the Term to:
(1) Make and keep public information available, as
those terms are understood and defined in SEC Rule 144 or any
similar or analogous rule promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), at all times during
the Term;
(2) File with the SEC, in a timely manner, all
reports and other documents required of the Company under the
Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act"); and
(3) furnish to a Stockholder forthwith upon request:
(i) a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 under the
Securities Act and under the Exchange Act; (ii) a copy of the
most recent annual or quarterly report of the Company; and
(iii) such other reports and documents as a Stockholder may
reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without
registration.
(f) Directors Compensation. During the Term, Company
shall pay Xxxxxxxxxxxx the sum of $4,000.00 per month in connection
with the performance of his duties as a member of the Board of
Directors.
3. Legend.
(a) Concurrently with the execution of this Agreement,
there shall be imprinted or otherwise placed, on certificates
representing the Subject Shares the following restrictive legend
(the "Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A RIGHTS AGREEMENT WHICH PLACES CERTAIN
RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY.
ANY PERSON ACCEPTING ANY INTEREST IN SUCH SHARES SHALL BE
DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS
OF SUCH AGREEMENT. A COPY OF SUCH RIGHTS AGREEMENT WILL BE
FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
PLACE OF BUSINESS."
(b) The Company agrees that, during the Term, it will not
remove, and will not permit to be removed (upon registration,
transfer, reissuance or otherwise), the Legend from any certificate
representing the Subject Shares and will place or cause the Legend
to be placed on any new certificate issued to represent any
certificate theretofore represented by a certificate carrying the
Legend.
4. Successors. The provisions of this Agreement shall be
binding upon the successors in interest to any of the Subject
Shares. The Company shall not permit the transfer of any of the
Subject Shares on its books or issue a new certificate representing
any of the Subject Shares unless and until the person to whom such
security is to be transferred shall have executed a counterpart
signature page of this Agreement, pursuant to which such person
becomes a party to this Agreement and agrees to be bound by all the
provisions hereof as a Stockholder. If and whenever Subject Shares
are sold or transferred, the transferring Stockholder or the
personal representative of the Stockholder shall do all things and
execute and deliver all documents and cause any transferee of the
Subject Shares to do all things and execute and deliver all
additional documents, as may be necessary to consummate such
transfer consistent with this Agreement and to keep such transferred
shares subject to the terms of this Agreement.
5. Other Rights. Except as provided by this Agreement or any
other agreement entered into in connection with the Stock Exchange
Agreement, each Stockholder shall exercise the full rights of a
holder of capital stock of the Company with respect to the Subject
Shares.
6. Refusal to Transfer. The Company shall not be required
(i) to transfer on its books any Subject Shares which shall have
been transferred in violation of any of the provisions set forth in
this Agreement or (ii) to treat as owner of such shares of Subject
Shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such Subject Shares have been so
transferred.
7. Miscellaneous.
(a) Attorneys' Fees. Stockholder shall reimburse the
Company for all costs incurred by the Company in enforcing the
performance of, or protecting its rights under, any part of this
Agreement, including reasonable costs of investigation and
attorneys' fees.
(b) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original and
all of which together shall constitute one instrument.
(c) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes and merges all prior
agreements or understandings, whether written or oral. This
Agreement may not be amended, modified or revoked, in whole or in
part, except by an agreement in writing signed by each of the
parties hereto.
(d) Further Execution. The parties agree to take all
such further action(s) as may reasonably be necessary to carry out
and consummate this Agreement as soon as practicable.
(e) Governing Law; Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware. The parties agree that any action brought by either
party to interpret or enforce any provision of this Agreement shall
be brought in, and each party agrees to, and does hereby, submit to
the jurisdiction and venue of, the appropriate state or federal
court for the district encompassing the Company's principal place of
business.
(f) Independent Counsel. Stockholder has been provided
with an opportunity to consult with Stockholder's own counsel with
respect to this Agreement.
(g) Notices. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of
the recipient; if not, then on the next business day, (iii) five (5)
days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one (1) day after
deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the
address as set forth on the signature pages hereof or at such other
address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
(h) Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the
parties agree to renegotiate such provision in good faith. In the
event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (i) such provision
shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded
and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.
(i) Severability. The parties hereto hereby declare that
it is impossible to measure in money the damages which will accrue
to a party hereto or to their heirs, personal representatives, or
assigns by reason of a failure to perform any of the obligations
under this Agreement and agree that the terms of this Agreement
shall be specifically enforceable. If any party hereto or his
heirs, personal representatives, or assigns institutes any action or
proceeding to specifically enforce the provisions hereof, any person
against whom such action or proceeding is brought hereby waives the
claim or defense therein that such party or such personal
representative has an adequate remedy at law, and such person shall
not offer in any such action or proceeding the claim or defense that
such remedy at law exists.
(j) Successors and Assigns. This Agreement shall inure
to the benefit of the successors and assigns of the Remaining
Shareholder and the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Stockholder and his
heirs, beneficiaries and personal representatives.
(Signatures Appear Next Page)
In Witness Whereof, the parties hereto have executed this
Agreement as of the day and year first above written.
Corporation:
Kirshner International Corporation
By: ____________________________________
Xxxxxx Xxxxxxxx, President
Stockholders:
______________________________________
Xxxxxx Xxxxxxxx, as Tenant by the Entirety
with Xxxxxx Xxxxxxxx
_______________________________________
Xxxxxx Xxxxxxxx, as Tenant by the
Entirety with Xxxxxx Xxxxxxxx
_______________________________________
Xxxxxxx Xxxxx
_______________________________________
Xxxxx Xxxxx
_______________________________________
Xxxxxxx Xxxxx, as Tenant by the
Entirety with Xxxxxxx Xxxxx
_______________________________________
Xxxxxxx Xxxxx, as Tenant by the
Entirety with Xxxxxxx Xxxxx
_______________________________________
Xxxxx Xxxx
_______________________________________
Xxxxx Xxxxx, as Custodian for
Xxxxxxxx Xxxxx
_______________________________________
Xxxxx Xxxxx, as Custodian for
Xxxxxxxxx Xxxxx
