10.1 Common Stock Purchase Agreement between MediaX Corporation and AMRO
International, S.A.
COMMON STOCK PURCHASE AGREEMENT
Between
MediaX Corporation
and
the Investors Signatory Hereto
COMMON STOCK PURCHASE AGREEMENT dated as of April 25, 2000 (the "Agreement"),
between the Investors signatory hereto (each an "Investor" and together the
"Investors"), and MediaX Corporation, a corporation organized and existing under
the laws of the State of Nevada (the "Company"). WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investors, and the Investors shall purchase Five
Hundred Thousand Dollars ($500,000) of Common Stock (as defined below). WHEREAS,
such investments will be made in reliance upon the provisions of Section 4(2)
("Section 4(2)") and/or 4(6) of the United States Securities Act and/or
Regulation D ("Regulation D") and the other rules and regulations promulgated
thereunder (the "Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments in securities to be made hereunder. NOW,
THEREFORE, the parties hereto agree as follows:
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Certain Definitions
"Capital Shares" shall mean the Common Stock and any shares of any other class
of common stock whether now or hereafter authorized, having the right to
participate in the distribution of earnings and assets of the Company.
"Capital Shares Equivalents" shall mean any securities, rights, or obligations
that are convertible into or exchangeable for or give any right to subscribe for
any Capital Shares of the Company or any warrants, options or other rights to
subscribe for or purchase Capital Shares or any such convertible or exchangeable
securities.
"Closing" shall mean each closing of the purchase and sale of the Common Stock
pursuant to Section 2.1.
"Closing Date" shall mean the date on which all conditions to the Closing have
been satisfied (as defined in Section 2.1 (b) hereto) and the Closing shall have
occurred.
"Common Stock" shall mean the Company's common stock, $0.0001 par value per
share.
"Damages" shall mean any loss, claim, damage, judgment, penalty, deficiency,
liability, costs and expenses (including, without limitation, reasonable
attorney's fees and disbursements and reasonable costs and expenses of expert
witnesses and investigation).
"Effective Date" shall mean the date on which the SEC first declares effective
a Registration Statement registering the resale of the Registrable Securities as
set forth in the Registration Rights Agreement.
"Escrow Agent" shall have the meaning set forth in the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement in substantially the form
of Exhibit A hereto executed and delivered contemporaneously with this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Initial Shares" shall mean the Five Hundred Thousand Dollars ($500,000) of
Common Stock purchased at the initial Closing.
"Legend" shall mean the legend set forth in Section 9.1.
"Market Price" shall mean the single lowest trade price (as reported by
Bloomberg L.P.) of the Common Stock on the Principal Market during the period of
five (5) Trading Days ending on the Trading Day prior to the date in question.
"Material Adverse Effect" shall mean any effect on the business, operations,
properties, prospects or financial condition of the Company that is material and
adverse to the Company and its subsidiaries and affiliates, taken as a whole,
and/or any condition, circumstance, or situation that would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement, the Registration Rights Agreement
and the Escrow Agreement.
"Outstanding" when used with reference to shares of Common Stock or Capital
Shares (collectively the "Shares"), shall mean, at any date as of which the
number of such Shares is to be determined, all issued and outstanding Shares,
and shall include all such Shares issuable in respect of outstanding scrip or
any certificates representing fractional interests in such Shares; provided,
however, that "Outstanding" shall not mean any such Shares then directly or
indirectly owned or held by or for the account of the Company.
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"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Principal Market" shall mean the OTC Bulletin Board, the New York Stock
Exchange, the NASDAQ National or SmallCap Markets or the American Stock
Exchange, whichever is at the time the principal trading exchange or market for
the Common Stock, based upon share volume.
"Purchase Price" shall mean eighty-six percent (86%) of the Market Price on
the Closing Date.
"Registrable Securities" shall mean the Shares until (i) the Registration
Statement has been declared effective by the SEC, and all Shares have been
disposed of pursuant to the Registration Statement, (ii) all Shares have been
sold under circumstances under which all of the applicable conditions of Rule
144 (or any similar provision then in force) under the Securities Act ("Rule
144") are met, (iii) all Shares have been otherwise transferred to holders who
may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Shares may be sold without any time, volume or
manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act.
"Registration Rights Agreement" shall mean the agreement regarding the filing
of the Registration Statement for the resale of the Registrable Securities,
entered into between the Company and the Investor as of the Closing Date in the
form annexed hereto as Exhibit B.
"Registration Statement" shall mean a registration statement on Form S-3 (or
on such other form promulgated by the SEC for which the Company then qualifies
and which counsel for the Company shall deem appropriate, and which form shall
be available for the resale by the Investors of the Registrable Securities to be
registered thereunder in accordance with the provisions of this Agreement, the
Registration Rights Agreement and in accordance with the intended method of
distribution of such securities), for the registration of the resale by the
Investor of the Registrable Securities under the Securities Act. "Regulation D"
shall have the meaning set forth in the recitals of this Agreement.
"Repricing Price" shall mean eighty-six percent (86%) of the Market Price on
the Effective Date.
"Repriced Shares" shall have the meaning set forth in Section 2.1(a)(ii) of
this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Section 4(2)" and "Section 4(6)" shall have the meanings set forth in the
recitals of this Agreement.
"Securities Act" shall have the meaning set forth in the recitals of this
Agreement.
"SEC Documents" shall mean the Company's latest Form 10-K or 10-KSB as of the
time in question, all Forms 10-Q or 10-QSB and 8-K filed thereafter, and the
Proxy Statement for its latest fiscal year as of the time in question until such
time as the Company no longer has an obligation to maintain the effectiveness of
a Registration Statement as set forth in the Registration Rights Agreement.
"Shares" shall mean the Initial Shares and the Repriced Shares purchased
pursuant to this Agreement.
"Trading Day" shall mean any day during which the Principal Market shall be
open for business.
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Purchase and Sale of Common Stock
Investment. Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Investors, severally and not jointly, agree to
purchase the Shares as follows:
Initial Closing. Upon satisfaction by the Company of the Closing conditions
set forth in Section 2.1(b), the Investors shall purchase Five Hundred Thousand
Dollars ($500,000) of Common Stock at the Purchase Price. The Investors
purchasing in the initial Closing shall deliver to the Escrow Agent immediately
available funds in the amounts set forth next to their signatures hereto and the
Company shall deliver the Common Stock certificates representing the Initial
Shares to the Escrow Agent, to be held by the Escrow Agent pursuant to the
Escrow Agreement. Upon satisfaction of the conditions set forth in Section
2.1(b), the initial Closing ("Closing") shall occur at the offices of the Escrow
Agent at which the Escrow Agent (x) shall release the Initial Shares purchased
to the appropriate Investor and (y) shall release the Purchase Price (after all
fees have been paid as set forth in the Escrow Agreement), pursuant to the terms
of the Escrow Agreement.
Reprice Closing. Upon the Effective Date, if the Repricing Price is less than
the Purchase Price, then each Investor may request that its Initial Shares be
repriced at the Repricing Price. Each Investor shall provide facsimile notice to
the Company within five (5) Trading Days of the end of the Repricing Period
concerning the number of Repriced Shares, if any, that the Investor wishes to
reprice. Subject to the limitations set forth in Sections 2.1(a)(ii)(1) and
2.1(a)(ii)(2) below, upon receipt of facsimile notice that Investor wishes to
reprice some or all of the Repriced Shares, the Company will issue within five
(5) Trading Days to Investor the number of additional Shares as determined
according to the following formula:
((Purchase Price - Repricing Price) x (No. of Repriced Shares))/Repricing Price
If by way of any reprice pursuant to this Section, the Investor would receive a
number of Repriced Shares such that the total number of Shares beneficially
owned (within the meaning of Section 13(d) of the Exchange Act) by the Investor
as of the date of such adjustment would be greater than 9.99% but less than
13.0% of the total outstanding Common Stock of the Company, then the Company
shall not effect the repricing required by this Section to the extent necessary
to avoid causing the aforesaid limitation to be exceeded until 120 days
following the date such repricing would have otherwise been made.
If by way of any reprice pursuant to this Section, the Investor would receive a
number of Repriced Shares such that the total number of Shares held by the
Investor as of the date of such adjustment would equal or exceed 13.0% of the
total outstanding Common Stock of the Company, then the Company shall not effect
the repricing required by this Section to the extent necessary to avoid causing
the aforesaid limitation to be exceeded until 180 days following the date such
repricing would have otherwise been made.
The initial Closing is subject to the satisfaction or waiver by the party sought
to be benefited thereby of the following conditions:
acceptance and execution by the Company and by the Investors, of this Agreement
and all Exhibits hereto;
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delivery into escrow by each Investor of immediately available funds in the
amount of the Purchase Price of the Common Stock, as more fully set forth in the
Escrow Agreement;
all representations and warranties of the Investors contained herein shall
remain true and correct as of the initial Closing Date (as a condition to the
Company's obligations);
all representations and warranties of the Company contained herein shall remain
true and correct as of the initial Closing Date (as a condition to the
Investors' obligations);
the Company shall have obtained all permits and qualifications required by any
state for the offer and sale of the Common Stock, or shall have the availability
of exemptions therefrom;
the sale and issuance of the Common Stock hereunder, and the proposed issuance
by the Company to the Investors of the Common Stock underlying the Common Stock
upon the conversion or exercise thereof shall be legally permitted by all laws
and regulations to which the Investors and the Company are subject and there
shall be no ruling, judgment or writ of any court prohibiting the transactions
contemplated by this Agreement;
delivery of the original fully executed Common Stock certificates to the Escrow
Agent;
delivery to the Escrow Agent of an opinion of Weed & Co. L.P., counsel to the
Company, in the form of Exhibit C;
delivery to the Escrow Agent of the Irrevocable Instructions to Transfer Agent
in the form attached hereto as Exhibit D;
and delivery to the Escrow Agent of the Registration Rights Agreement.
Liquidated Damages. The parties hereto acknowledge and agree that the sums
payable pursuant to the Registration Rights Agreement shall constitute
liquidated damages and not penalties. The parties further acknowledge that (a)
the amount of loss or damages likely to be incurred is incapable or is difficult
to precisely estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Investors in connection with the
failure by the Company to timely cause the registration of the Registrable
Securities and (c) the parties are sophisticated business parties and have been
represented by sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.
Representations and warranties of Investor
Each Investor, severally and not jointly, represents and warrants to the Company
that:
Intent. The Investor is entering into this Agreement for its own account and not
with a view to or for sale in connection with any distribution of the Common
Stock. The Investor has no present arrangement (whether or not legally binding)
at any time to sell the Shares to or through any person or entity; provided,
however, that by making the representations herein, the Investor does not agree
to hold such securities for any minimum or other specific term and reserves the
right to dispose of the Shares at any time in accordance with federal and state
securities laws applicable to such disposition.
Sophisticated Investor. The Investor is a sophisticated investor (as described
in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined in
Rule 501 of Regulation D), and Investor has such experience in business and
financial matters that it has the capacity to protect its own interests in
connection with this transaction and is capable of evaluating the merits and
risks of an investment in the Common Stock. The Investor acknowledges that an
investment in the Common Stock is speculative and involves a high degree of
risk.
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Authority. This Agreement and each agreement attached as an Exhibit hereto which
is required to be executed by Investor has been duly authorized and validly
executed and delivered by the Investor and is a valid and binding agreement of
the Investor enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of, creditors' rights and remedies or by other
equitable principles of general application.
Not an Affiliate. The Investor is not an officer, director or "affiliate" (as
that term is defined in Rule 405 of the Securities Act) of the Company.
Absence of Conflicts. The execution and delivery of this Agreement and each
agreement which is attached as an Exhibit hereto and executed by the Investor in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby, and compliance with the requirements hereof and thereof by
the Investor, will not violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on Investor or (a) violate any provision of
any indenture, instrument or agreement to which Investor is a party or is
subject, or by which Investor or any of its assets is bound; (b) conflict with
or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by Investor to
any third party; or (d) require the approval of any third-party (which has not
been obtained) pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which Investor is subject or to which any of
its assets, operations or management may be subject.
Disclosure; Access to Information. The Investor has received all documents,
records, books and other publicly available information pertaining to Investor's
investment in the Company that have been requested by the Investor. The Company
is subject to the periodic reporting requirements of the Exchange Act, and the
Investor has reviewed copies of all SEC Documents deemed relevant by Investor.
Manner of Sale. At no time was Investor presented with or solicited by or
through any leaflet, public promotional meeting, television advertisement or any
other form of general solicitation or advertising.
Representations and warranties of the Company
The Company represents and warrants to the Investors that, except as set forth
in the SEC Documents:
Organization of the Company. The Company is a corporation duly incorporated and
existing in good standing under the laws of the State of Nevada and has all
requisite corporate authority to own its properties and to carry on its business
as now being conducted. The Company does not have any subsidiaries and does not
own more that fifty percent (50%) of or control any other business entity except
as set forth in the SEC Documents. The Company is duly qualified and is in good
standing as a foreign corporation to do business in every jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
Authority. (i) The Company has the requisite corporate power and corporate
authority to enter into and perform its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement and to issue the Shares,
pursuant to their respective terms, (ii) the execution, issuance and delivery of
this Agreement, the Registration Rights Agreement, the Escrow Agreement, the
Common Stock certificates by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
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Board of Directors or stockholders is required, and (iii) this Agreement, the
Registration Rights Agreement, the Escrow Agreement and the Common Stock
certificates representing the Shares have been duly executed and delivered by
the Company and at each Closing shall constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application. The Company has duly and validly authorized and reserved for
issuance shares of Common Stock sufficient in number for the reprice of the
Initial Shares.
Capitalization. As of April __, 2000, the authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock, $0.0001 par value per
share, of which 7,251,810 shares are issued and outstanding, 10,000,000 shares
of preferred stock, $0.0001 par value per share, of which none are issued or
outstanding. Except for (i) outstanding options and warrants as set forth in the
SEC Documents, and (ii) as set forth in the Disclosure Schedule, there are no
outstanding Capital Shares Equivalents nor any agreements or understandings
pursuant to which any Capital Shares Equivalents may become outstanding. The
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities. All
of the outstanding shares of Common Stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.
Common Stock. The Company has registered its Common Stock pursuant to Section
12(b) or (g) of the Exchange Act and is in full compliance with all reporting
requirements of the Exchange Act, and the Company is in compliance with all
requirements for the continued listing or quotation of its Common Stock, and
such Common Stock is currently listed or quoted on, the Principal Market. As of
the date hereof, the Principal Market is the OTC Bulletin Board and the Company
has not received any notice regarding, and to its knowledge there is no threat,
of the termination or discontinuance of the eligibility of the Common Stock for
such listing.
SEC Documents. The Company has made available to the Investors true and complete
copies of the SEC Documents. The Company has not provided to the Investors any
information that, according to applicable law, rule or regulation, should have
been disclosed publicly prior to the date hereof by the Company, but which has
not been so disclosed. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act, and rules
and regulations of the SEC promulgated thereunder and the SEC Documents did not
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, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
10
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the financial statements or the notes thereto
included in the SEC Documents or was not incurred in the ordinary course of
business consistent with the Company's past practices since the last date of
such financial statements.
Exemption from Registration; Valid Issuances. Subject to the accuracy of the
Investors' representations in Article III, the sale of the Shares will not
require registration under the Securities Act and/or any applicable state
securities law. Neither the sales of the Shares, pursuant to, nor the Company's
performance of its obligations under, this Agreement, the Registration Rights
Agreement or the Escrow Agreement will (i) result in the creation or imposition
by the Company of any liens, charges or claims or other encumbrances upon the
Shares, except as contemplated herein, any of the assets of the Company, or (ii)
entitle the holders of Outstanding Capital Shares to preemptive or other rights
to subscribe for or acquire the Capital Shares or other securities of the
Company. The Shares shall not subject the Investors to personal liability to the
Company or its creditors by reason of the possession thereof.
No General Solicitation or Advertising in Regard to this Transaction. Neither
the Company nor any of its affiliates nor, to the knowledge of the Company, any
person acting on its or their behalf (i) has conducted or will conduct any
general solicitation (as that term is used in Rule 502(c) of Regulation D) or
general advertising with respect to the sale of the Shares or (ii) made any
offers or sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the Shares under the
Securities Act.
No Conflicts. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby, including without limitation the issuance of the Shares, do not and will
not (i) result in a violation of the Company's Articles of Incorporation or
By-Laws or (ii) conflict with, or constitute a material default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
any material agreement, indenture or instrument, or any "lock-up" or similar
provision of any underwriting or similar agreement to which the Company is a
party, or (iii) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or by which any material
property or asset of the Company is bound or affected, nor is the Company
otherwise in violation of, conflict with or default under any of the foregoing
(except in each case for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not have, individually or
in the aggregate, a Material Adverse Effect). The business of the Company is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either singly or in the
aggregate would not have a Material Adverse Effect. The Company is not required
under any Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Shares in accordance with
the terms hereof (other than any SEC or state securities filings that may be
required to be made by the Company subsequent to Closing, any registration
statement that may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Investors
herein.
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No Material Adverse Change. Since December 31, 1999, no Material Adverse Effect
has occurred or exists with respect to the Company, except as disclosed in the
SEC Documents.
No Undisclosed Events or Circumstances. Since December 31, 1999, no event or
circumstance has occurred or exists with respect to the Company or its
businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
No Integrated Offering. Other than pursuant to an effective registration
statement under the Securities Act, or pursuant to the issuance or exercise of
employee stock options, or pursuant to its discussion with the Investors in
connection with the transactions contemplated hereby, the Company has not
issued, offered or sold its Common Stock, or any securities convertible into or
exchangeable or exercisable for Common Stock within the six-month period next
preceding the date hereof, and the Company shall not permit any of its
directors, officers or affiliates directly or indirectly to take, any action
(including, without limitation, any offering or sale to any Person of the
Shares), so as to make unavailable the exemption from Securities Act
registration being relied upon by the Company for the offer and sale to
Investors of the Shares as contemplated by this Agreement.
Litigation and Other Proceedings. Except as disclosed in the SEC Documents,
there are no lawsuits or proceedings pending or, to the knowledge of the
Company, threatened, against the Company or any subsidiary, nor has the Company
received any written or oral notice of any such action, suit, proceeding or
investigation, which could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the SEC Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company, requested of any court, arbitrator or governmental agency which could
result in a Material Adverse Effect.
No Misleading or Untrue Communication. The Company and, to the knowledge of the
Company, any person representing the Company, or any other person selling or
offering to sell the Shares in connection with the transaction contemplated by
this Agreement, have not made, at any time, any oral communication in connection
with the offer or sale of the same which contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
Material Non-Public Information. The Company has not disclosed to the Investors
any material non-public information that (i) if disclosed, would reasonably be
expected to have a material effect on the price of the Common Stock or (ii)
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company prior to the date hereof but which has not been so
disclosed.
Insurance. The Company and each subsidiary maintains property and casualty,
general liability, workers' compensation, environmental hazard, personal injury
and other similar types of insurance with financially sound and reputable
insurers that is adequate, consistent with industry standards and the Company's
historical claims experience. The Company has not received notice from, and has
no knowledge of any threat by, any insurer (that has issued any insurance policy
to the Company) that such insurer intends to deny coverage under or cancel,
discontinue or not renew any insurance policy presently in force.
Tax Matters. The Company and each subsidiary has filed all Tax Returns which it
is required to file under applicable laws; all such Tax Returns are true and
accurate and has been prepared in compliance with all applicable laws; the
Company has paid all Taxes due and owing by it or any subsidiary (whether or not
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such Taxes are required to be shown on a Tax Return) and have withheld and paid
over to the appropriate taxing authorities all Taxes which it is required to
withhold from amounts paid or owing to any employee, stockholder, creditor or
other third parties; and since December 31, 1998, the charges, accruals and
reserves for Taxes with respect to the Company (including any provisions for
deferred income taxes) reflected on the books of the Company are adequate to
cover any Tax liabilities of the Company if its current tax year were treated as
ending on the date hereof.
No claim has been made by a taxing authority in a jurisdiction where the Company
does not file tax returns that the Company or any subsidiary is or may be
subject to taxation by that jurisdiction. There are no foreign, federal, state
or local tax audits or administrative or judicial proceedings pending or being
conducted with respect to the Company or any subsidiary; no information related
to Tax matters has been requested by any foreign, federal, state or local taxing
authority; and, except as disclosed above, no written notice indicating an
intent to open an audit or other review has been received by the Company or any
subsidiary from any foreign, federal, state or local taxing authority. There are
no material unresolved questions or claims concerning the Company's Tax
liability. The Company (A) has not executed or entered into a closing agreement
pursuant to ss. 7121 of the Internal Revenue Code or any predecessor provision
thereof or any similar provision of state, local or foreign law; and (B) has not
agreed to or is required to make any adjustments pursuant to ss. 481 (a) of the
Internal Revenue Code or any similar provision of state, local or foreign law by
reason of a change in accounting method initiated by the Company or any of its
subsidiaries or has any knowledge that the IRS has proposed any such adjustment
or change in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company. The Company has not been a
United States real property holding corporation within the meaning of ss.
897(c)(2) of the Internal Revenue Code during the applicable period specified in
ss. 897(c)(1)(A)(ii) of the Internal Revenue Code. The Company has not made an
election under ss. 341(f) of the Internal Revenue Code. The Company is not
liable for the Taxes of another person that is not a subsidiary of the Company
under (A) Treas. Reg. ss. 1.1502-6 (or comparable provisions of state, local or
foreign law), (B) as a transferee or successor, (C) by contract or indemnity or
(D) otherwise. The Company is not a party to any tax sharing agreement. The
Company has not made any payments, is obligated to make payments or is a party
to an agreement that could obligate it to make any payments that would not be
deductible under ss. 280G of the Internal Revenue Code.
For purposes of this Section 4.16:
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign, or other income,
gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other withholding,
employment, social security, severance, stamp, occupation, alternative or add-on
minimum, estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not. "Tax Return" means any return, information
report or filing with respect to Taxes, including any schedules attached thereto
and including any amendment thereof.
Property. Neither the Company nor any of its subsidiaries owns any real
property. Each of the Company and its subsidiaries has good and marketable title
to all personal property owned by it, free and clear of all liens, encumbrances
and defects except such as do not materially affect the value of such property
13
and do not materially interfere with the use made and proposed to be made of
such property by the Company; and to the Company's knowledge any real property,
mineral or water rights, and buildings held under lease by the Company as tenant
are held by it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
intended to be made of such property, mineral or water rights, and buildings by
the Company.
Intellectual Property. Each of the Company and its subsidiaries owns or
possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted. To the Company's knowledge, except as disclosed
in the SEC Documents neither the Company nor any of its subsidiaries is
infringing upon or in conflict with any right of any other person with respect
to any Intangibles. Except as disclosed in the SEC Documents, no adverse claims
have been asserted by any person to the ownership or use of any Intangibles and
the Company has no knowledge of any basis for such claim.
Regulatory Compliance. The Company has all necessary permits and licenses and
has made all necessary filings to such regulatory bodies to conduct its business
as it is now being conducted, and is not in material violation of any thereof.
Internal Controls and Procedures. The Company maintains books and records and
internal accounting controls which provide reasonable assurance that (i) all
transactions to which the Company or any subsidiary is a party or by which its
properties are bound are executed with management's authorization; (ii) the
recorded accounting of the Company's consolidated assets is compared with
existing assets at regular intervals; (iii) access to the Company's consolidated
assets is permitted only in accordance with management's authorization; and (iv)
all transactions to which the Company or any subsidiary is a party or by which
its properties are bound are recorded as necessary to permit preparation of the
financial statements of the Company in accordance with U.S. generally accepted
accounting principles.
Payments and Contributions. Neither the Company, any subsidiary, nor any of its
directors, officers or, to its knowledge, other employees has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other similar payment to any
person with respect to Company matters.
No Misrepresentation. The representations and warranties of the Company
contained in this Agreement, any schedule, annex or exhibit hereto and any
agreement, instrument or certificate furnished by the Company to the Investors
pursuant to this Agreement, do 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 therein, in light of the circumstances under which they
were made, not misleading.
14
Covenants of the Investors
Each Investor, severally and not jointly, covenants with the Company that:
Compliance with Law. The Investor's trading activities with respect to shares of
the Company's Common Stock will be in compliance with all applicable state and
federal securities laws, rules and regulations and rules and regulations of the
Principal Market on which the Company's Common Stock is listed.
Covenants of the Company
Registration Rights. The Company shall cause the Registration Rights Agreement
to remain in full force and effect and the Company shall comply in all material
respects with the terms thereof and shall use best efforts to timely prepare and
file the Registration Statement.
Reservation of Common Stock. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to issue the Shares at the reprice Closing. The number of shares so
reserved from time to time, as theretofore increased or reduced as hereinafter
provided, may be reduced by the number of shares actually delivered pursuant to
any reprice by an Investor and the number of shares so reserved shall be
increased or decreased to reflect potential increases or decreases in the Common
Stock that the Company may thereafter be obligated to issue by reason of
adjustments to the Investor's rights to demand Repriced Shares.
Listing of Common Stock. The Company hereby agrees to maintain the listing of
the Common Stock on a Principal Market, and as soon as reasonably practicable
following the Closing to list the Shares on the Principal Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Principal Market, it will include in such application the Shares, and will
take such other action as is necessary or desirable in the opinion of the
Investors to cause the Shares to be listed on such other Principal Market as
promptly as possible. The Company will take all action to continue the listing
and trading of its Common Stock on a Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of the Principal Market and shall provide Investors with copies
of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Investors have disposed of all of their
Registrable Securities.
Exchange Act Registration. The Company will cause its Common Stock to continue
to be registered under Section 12(b) or (g) of the Exchange Act, will use its
best efforts to comply in all respects with its reporting and filing obligations
under the Exchange Act, and will not take any action or file any document
(whether or not permitted by the Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act until the Investors have disposed of all
of their Registrable Securities.
Legends. The certificates evidencing the Registrable Securities shall be free of
legends, except as set forth in Article IX.
Corporate Existence; Conflicting Agreements. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company. The
Company shall not enter into any agreement, the terms of which agreement would
restrict or impair the right or ability of the Company to perform any of its
obligations under this Agreement or any of the other agreements attached as
exhibits hereto.
15
Consolidation; Merger. The Company shall not, at any time after the date hereof,
effect any merger or consolidation of the Company with or into, or a transfer of
all or substantially all of the assets of the Company to, another entity (a
"Consolidation Event") unless the resulting successor or acquiring entity (if
not the Company) assumes by written instrument or by operation of law the
obligation to deliver to the Investors such shares of stock and/or securities as
the Investors are entitled to receive pursuant to this Agreement.
Issuance of Common Stock. The sale of the Shares shall be made in accordance
with the provisions and requirements of Section 4(2), 4(6) or Regulation D and
any applicable state securities law. The Company shall make any necessary SEC
and "blue sky" filings required to be made by the Company in connection with the
sale of the Securities to the Investors as required by all applicable laws, and
shall provide a copy thereof to the Investors promptly after such filing.
Future Financing. The Company agrees that it will enter into an equity financing
arrangement for up to Six Million Dollars ($6,000,000) arranged through Triton
West Group or other equity financing agreement approved by all of the Investors
within thirty (30) days of the Closing Date. The Company agrees that it will not
enter into any other sale of its securities for cash at a discount to its
then-current bid price until 180 days after the Effective Date of the
Registration Statement except for any sales (i) pursuant to any presently
existing employee benefit plan which plan has been approved by the Company's
stockholders, (ii) pursuant to any compensatory plan for a full-time employee or
key consultant, (iii) pursuant to any underwritten public offering (including
any equity line of credit), or (iv) with the prior approval of a majority in
interest of the Investors, which will not be unreasonably withheld, in
connection with a strategic partnership or other business transaction, the
principal purpose of which is not simply to raise money.
Survival; Indemnification
Survival. The representations, warranties and covenants made by each of the
Company and each Investor in this Agreement, the annexes, schedules and exhibits
hereto and in each instrument, agreement and certificate entered into and
delivered by them pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated hereby. In the event of a breach
or violation of any of such representations, warranties or covenants, the party
to whom such representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it under the
provisions of this Agreement, irrespective of any investigation made by or on
behalf of such party on or prior to the Closing Date.
Indemnity. (a) The Company hereby agrees to indemnify and hold harmless the
Investors, their respective Affiliates and their respective officers, directors,
partners and members (collectively, the "Investor Indemnitees"), from and
against any and all Damages, and agrees to reimburse the Investor Indemnitees
for all reasonable out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by the Investor
Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact or breach of any of the Company's
representations or warranties contained in this Agreement, the annexes,
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Company pursuant to this Agreement; or
(ii) any failure by the Company to perform in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Agreement,
the annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this Agreement;
or
(iii) any action instituted against the Investors, or any of them, by any
stockholder of the Company who is not an Affiliate of an Investor, with respect
to any of the transactions contemplated by this Agreement.
Each Investor, severally and not jointly, hereby agrees to indemnify and hold
harmless the Company, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Company Indemnitees"), from and against
any and all Damages, and agrees to reimburse the Company Indemnitees for
reasonable all out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by the Company
Indemnitees and to the extent arising out of or in connection with any
misrepresentation, omission of fact, or breach of any of the Investor's
representations or warranties contained in this Agreement, the annexes,
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Investor pursuant to this Agreement. Notwithstanding
anything to the contrary herein, the Investor shall not be liable under this
Section 7.2(b) for any amount in excess of the net proceeds to such Investor as
a result of the sale of Registrable Securities pursuant to the Registration
Statement.
Notice. Promptly after receipt by either party hereto seeking indemnification
pursuant to Section 7.2 (an "Indemnified Party") of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both the Indemnifying Party and
the Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees,
out-of-pocket costs and expenses, (y) the Indemnified Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
17
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
All fees and expenses of the Indemnified Party (including reasonable costs of
defense and investigation in a manner not inconsistent with this Section and all
reasonable attorneys' fees and expenses) shall be paid to the Indemnified Party,
as incurred, within ten (10) Trading Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
Direct Claims. In the event one party hereunder should have a claim for
indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.
Due Diligence Review; Non-Disclosure of Non-Public Information.
Due Diligence Review. Subject to Section 8.2, the Company shall make available
for inspection and review by the Investors, advisors to and representatives of
the Investors (who may or may not be affiliated with the Investors and who are
reasonably acceptable to the Company), any underwriter participating in any
disposition of the Registrable Securities on behalf of the Investors pursuant to
the Registration Statement, any such registration statement or amendment or
supplement thereto or any blue sky, Nasdaq or other filing, all SEC Documents
and other filings with the SEC, and all other publicly available corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees to supply all such publicly available information reasonably requested
by the Investors or any such representative, advisor or underwriter in
connection with such Registration Statement (including, without limitation, in
response to all questions and other inquiries reasonably made or submitted by
any of them), prior to and from time to time after the filing and effectiveness
of the Registration Statement for the sole purpose of enabling the Investors and
such representatives, advisors and underwriters and their respective accountants
and attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Non-Disclosure of Non-Public Information. The Company shall not disclose
material non-public information to the Investors, advisors to or representatives
of the Investors unless prior to disclosure of such information the Company
identifies such information as being non-public information and provides the
Investors, such advisors and representatives with the opportunity to accept or
refuse to accept such non-public information for review. Other than disclosure
of any comment letters received from the SEC staff with respect to the
Registration Statement, the Company may, as a condition to disclosing any
non-public information hereunder, require the Investors' advisors and
representatives to enter into a confidentiality agreement in form and content
reasonably satisfactory to the Company and the Investors.
Nothing herein shall require the Company to disclose material non-public
information to the Investors or their advisors or representatives, and the
Company represents that it does not disseminate material non-public information
to any investors who purchase stock in the Company in a public offering, to
money managers or to securities analysts, provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, promptly notify the advisors and representatives of the
Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
19
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section 8.2 shall be construed to mean that such persons or entities
other than the Investors (without the written consent of the Investors prior to
disclosure of such information as set forth in Section 8.2(a)) may not obtain
non-public information in the course of conducting due diligence in accordance
with the terms of this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their opinion that based on
such due diligence by such persons or entities, that the Registration Statement
contains an untrue statement of a material fact or omits a material fact
required to be stated in the Registration Statement or necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
Legends; Transfer Agent Instructions
Legends. Unless otherwise provided below, each certificate representing
Registrable Securities will bear the following legend or equivalent (the
"Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH REGISTRATION.
Transfer Agent Instructions. Upon the execution and delivery hereof, the Company
is issuing to the transfer agent for its Common Stock (and to any substitute or
replacement transfer agent for its Common Stock upon the Company's appointment
of any such substitute or replacement transfer agent) instructions substantially
in the form of Exhibit D hereto. Such instructions shall be irrevocable by the
Company from and after the date hereof or from and after the issuance thereof to
any such substitute or replacement transfer agent, as the case may be.
No Other Legend or Stock Transfer Restrictions. No legend other than the one
specified in Section 9.1 has been or shall be placed on the share certificates
representing the Registrable Securities and no instructions or "stop transfer
orders," "stock transfer restrictions," or other restrictions have been or shall
be given to the Company's transfer agent with respect thereto other than as
expressly set forth in this Article IX.
Investors' Compliance. Nothing in this Article shall affect in any way each
Investor's obligations to comply with all applicable securities laws upon resale
of the Common Stock.
20
Choice of Law; Arbitration
Governing Law/Arbitration. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
in New York by persons domiciled in New York City and without regard to its
principles of conflicts of laws. Any dispute under this Agreement shall be
submitted to arbitration under the American Arbitration Association (the "AAA")
in New York City, New York, and shall be finally and conclusively determined by
the decision of a board of arbitration consisting of three (3) members
(hereinafter referred to as the "Board of Arbitration") selected according to
the rules governing the AAA. The Board of Arbitration shall meet on consecutive
business days in New York City, New York, and shall reach and render a decision
in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the losing party is
required to pay to the other party in respect of a claim filed. In connection
with rendering its decisions, the Board of Arbitration shall adopt and follow
the laws of the State of New York unless the matter at issue is the corporation
law of the company's state of incorporation, in which event the corporation law
of such jurisdiction shall govern such issue. To the extent practical, decisions
of the Board of Arbitration shall be rendered no more than thirty (30) calendar
days following commencement of proceedings with respect thereto. The Board of
Arbitration shall cause its written decision to be delivered to all parties
involved in the dispute. Any decision made by the Board of Arbitration (either
prior to or after the expiration of such thirty (30) calendar day period) shall
be final, binding and conclusive on the parties to the dispute, and entitled to
be enforced to the fullest extent permitted by law and entered in any court of
competent jurisdiction. The Board of Arbitration shall be authorized and is
hereby directed to enter a default judgment against any party failing to
participate in any proceeding hereunder within the time periods set forth in the
AAA rules. The prevailing party shall be awarded its costs, including attorneys'
fees, from the non-prevailing party as part of the arbitration award. Any party
shall have the right to seek injunctive relief from any court of competent
jurisdiction in any case where such relief is available. The prevailing party in
such injunctive action shall be awarded its costs, including attorney's fees,
from the non-prevailing party.
Assignment
Assignment. Neither this Agreement nor any rights of the Investors or the
Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Shares purchased or acquired by any Investor hereunder with respect to the
Shares held by such person, and (b) upon the prior written consent of the
Company, which consent shall not unreasonably be withheld or delayed, each
Investor's interest in this Agreement may be assigned at any time, in whole or
in part, to any other person or entity (including any Affiliate of the Investor)
who agrees to make the representations and warranties contained in Article III
and who agrees to be bound by the terms of this Agreement.
Notices
Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) hand delivered, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
21
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
If to the Company: 8522 National Blvd., Suite #110
Culver City, CA 9023
Attn: Rainer Poertner
Telephone: (310) 815-8002
Facsimile:
with a copy to (shall not constitute notice):
Weed & Co. L.P.
4695 MacArthur Court, Suite 530
Newport Beach, CA 92660
Attention: Richard O. Weed, Esq.
Telephone: (949) 475-9086
Facsimile: (949) 475-9087
if to the Investors: As set forth on the signature pages hereto
with a copy to (shall not constitute notice):
Robert F. Charron, Esq.
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York
Telephone: (212) 351-4500
Facsimile: (212) 661-0989
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.
Miscellaneous
Counterparts/ Facsimile/ Amendments. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument. Except as otherwise stated herein, in
lieu of the original documents, a facsimile transmission or copy of the original
documents shall be as effective and enforceable as the original. This Agreement
may be amended only by a writing executed by all parties.
22
Entire Agreement. This Agreement, the agreements attached as Exhibits hereto,
which include the Escrow Agreement, and the Registration Rights Agreement, set
forth the entire agreement and understanding of the parties relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written
relating to the subject matter hereof. The terms and conditions of all Exhibits
to this Agreement are incorporated herein by this reference and shall constitute
part of this Agreement as is fully set forth herein.
Severability. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that such severability shall be ineffective if it materially
changes the economic benefit of this Agreement to any party.
Headings. The headings used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
Number and Gender. There may be one or more Investors parties to this Agreement,
which Investors may be natural persons or entities. All references to plural
Investors shall apply equally to a single Investor if there is only one
Investor, and all references to an Investor as "it" shall apply equally to a
natural person.
Replacement of Certificates. Upon (i) receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of a
certificate representing the Shares and (ii) in the case of any such loss, theft
or destruction of such certificate, upon delivery of an indemnity agreement or
security reasonably satisfactory in form to the Company (which shall not include
the positing of any bond) or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate of like tenor.
Fees and Expenses. Each of the Company and the Investors agrees to pay its own
expenses incident to the performance of its obligations hereunder, except that
the Company shall pay the fees, expenses and disbursements of Epstein Becker &
Green, P.C., counsel to the Investors, in an amount equal to $5,000 all as set
forth in the Escrow Agreement.
Brokerage. Each of the parties hereto represents that it has had no dealings in
connection with this transaction with any finder or broker who will demand
payment of any fee or commission from the other party. The Company on the one
hand, and the Investors, on the other hand, agree to indemnify the other against
and hold the other harmless from any and all liabilities to any person claiming
brokerage commissions or finder's fees on account of services purported to have
been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.
Publicity. The Company agrees that it will not issue any press release or other
public announcement of the transactions contemplated by this Agreement without
the prior consent of the Investors, which shall not be unreasonably withheld nor
delayed by more than two (2) Trading Days from their receipt of such proposed
release. No release shall name the Investors without their express consent.
23
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement
to be executed by the undersigned, thereunto duly authorized, as of the date
first set forth above.
Dated: April 25, 2000
MEDIAX CORPORATION
By: __________________________________
Rainer Poertner, Chairman
AMRO INTERNATIONAL, S.A.
c/o Ultra Finanz AG
Grossmuensterplatz 6
Zurich CH-8022 Switzerland
Fax: 011-411-262-5515 By: __________________________________
Amount subscribed for: H.U. Bachofen, Director
$500,000
24
EXHIBIT A
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of April 25, 2000 by and
among MediaX Corporation, a corporation incorporated under the laws of the State
of Nevada (the "Company"), the investors signatory hereto (each an "Investor"
and together the "Investors"), and Epstein Becker & Green, P.C., (the "Escrow
Agent"). Capitalized terms used but not defined herein shall have the meanings
set forth in the Common Stock Purchase Agreement referred to in the first
recital.
W I T N E S S E T H:
WHEREAS, the Investors will be purchasing from the Company Five Hundred Thousand
Dollars ($500,000) of Common Stock (the "Shares") at the Purchase Price set
forth in the Common Stock Purchase Agreement (the "Purchase Agreement") dated
the date hereof between the Investors and the Company, which will be issued as
per the terms contained herein and in the Purchase Agreement; and
WHEREAS, it is intended that the purchase of the securities be consummated in
accordance with the requirements set forth by Sections 4(2) and/or 4(6) and/or
Regulation D promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Investors have requested that the Escrow Agent hold
the Purchase Price with respect to the initial Closing in escrow until the
Escrow Agent has received the certificates representing the Initial Shares;
NOW, THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
25
TERMS OF THE ESCROW
The parties hereby agree to establish an escrow account with the Escrow Agent
whereby the Escrow Agent (i) shall hold the funds for the purchase of $500,000
of Common Stock, all as contemplated by the Purchase Agreement. (ii) At the
initial Closing, upon Escrow Agent's receipt of the applicable Purchase Price
for the Closing into its attorney trustee account from the Investors, together
with executed counterparts of this Agreement, the Purchase Agreement and the
Registration Rights Agreement, it shall telephonically advise the Company, or
the Company's designated attorney or agent, of the amount of funds it has
received into its account.
Wire transfers to the Escrow Agent shall be made as follows:
Epstein Becker & Green, P.C.
Master Escrow Account
Chase Manhattan Bank
1411 Broadway - Fifth Floor
New York, New York 10018
ABA No. 021000021
Account No. 035-1-346036
Attention: L. Borneo
At the initial Closing, the Company, upon receipt of said notice, shall deliver
to the Escrow Agent the certificates representing the Initial Shares to be
issued to each Investor together with: the original executed Registration Rights
Agreement in the form of Exhibit B to the Purchase Agreement;
Instructions to Transfer Agent in the form of Exhibit D to the Purchase
Agreement; the original executed opinion of Weed & Co. L.P. in the form of
Exhibit C to the Purchase Agreement; and an original counterpart of this Escrow
Agreement.
In the event that the foregoing items are not in the Escrow Agent's possession
within three (3) Trading Days of the Escrow Agent notifying the Company that the
Escrow Agent has custody of the Purchase Price, then each Investor shall have
the right to demand the return of said sum.
At the initial Closing, once Escrow Agent confirms the validity of the issuance
of the Shares by means of its receipt of a Release Notice in the form attached
hereto as Exhibit X executed by the Company and each Investor, it shall wire
that amount of funds necessary to purchase the Shares per the written
instructions of the Company net of legal and escrow administrative costs of Five
Thousand Dollars ($5,000) to Epstein Becker & Green, P.C. ("EB&G"), 250 Park
Avenue, New York, NY 10177, and a finder's fee of five percent (5%) of the
Purchase Price as directed by Triton West Group.
Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Initial Share
certificates, the Registration Rights Agreement and the opinion of counsel
delivered as per instructions from the Investors and to deliver the Instructions
to Transfer Agent to the Transfer Agent.
In the event that the foregoing items are not in the Escrow Agent's possession
within three (3) Trading Days of the Escrow Agent notifying the Company that the
Escrow Agent has custody of the Purchase Price applicable to such Shares, then
each Investor shall have the right to demand the return of said sum.
26
MISCELLANEOUS
No waiver or any breach of any covenant or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof, or of any other
covenant or provision herein contained. No extension of time for performance of
any obligation or act shall be deemed any extension of the time for performance
of any other obligation or act.
All notices or other communications required or permitted hereunder shall be in
writing, and shall be sent as set forth in the Purchase Agreement.
This Escrow Agreement shall be binding upon and shall inure to the benefit of
the permitted successors and permitted assigns of the parties hereto. This
Escrow Agreement is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto. This Escrow Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations hereunder
be waived, except by written instrument signed by the parties to be charged or
by its agent duly authorized in writing or as otherwise expressly permitted
herein.
Whenever required by the context of this Escrow Agreement, the singular shall
include the plural and masculine shall include the feminine. This Escrow
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.
The parties hereto expressly agree that this Escrow Agreement shall be governed
by, interpreted under and construed and enforced in accordance with the laws of
the State of New York. Any action to enforce, arising out of, or relating in any
way to, any provisions of this Escrow Agreement shall only be brought in a state
or Federal court sitting in New York City.
The Escrow Agent's duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, each Investor and the Escrow Agent.
The Escrow Agent shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by the Escrow
Agent to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall not be personally liable for any act the Escrow
Agent may do or omit to do hereunder as the Escrow Agent while acting in good
faith, and any act done or omitted by the Escrow Agent pursuant to the advice of
the Escrow Agent's attorneys-at-law shall be conclusive evidence of such good
faith.
The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.
The Escrow Agent shall not be liable in any respect on account of the identity,
authorization or rights of the parties executing or delivering or purporting to
execute or deliver the Purchase Agreement or any documents or papers deposited
or called for thereunder.
27
The Escrow Agent shall be entitled to employ such legal counsel and other
experts as the Escrow Agent may deem necessary properly to advise the Escrow
Agent in connection with the Escrow Agent's duties hereunder, may rely upon the
advice of such counsel, and may pay such counsel reasonable compensation
therefor. The Escrow Agent has acted as legal counsel for the Investors, and may
continue to act as legal counsel for the Investors, from time to time,
notwithstanding its duties as the Escrow Agent hereunder. The Company consents
to the Escrow Agent in such capacity as legal counsel for the Investors and
waives any claim that such representation represents a conflict of interest on
the part of the Escrow Agent. The Company understands that the Investors and the
Escrow Agent are relying explicitly on the foregoing provision in entering into
this Escrow Agreement.
The Escrow Agent's responsibilities as escrow agent hereunder shall terminate if
the Escrow Agent shall resign by written notice to the Company and the
Investors. In the event of any such resignation, the Investors and the Company
shall appoint a successor Escrow Agent. If the Escrow Agent reasonably requires
other or further instruments in connection with this Escrow Agreement or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.
It is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the documents or the escrow
funds held by the Escrow Agent hereunder, the Escrow Agent is authorized and
directed in the Escrow Agent's sole discretion (1) to retain in the Escrow
Agent's possession without liability to anyone all or any part of said documents
or the escrow funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned by a final order, decree or judgment
or a court of competent jurisdiction after the time for appeal has expired and
no appeal has been perfected, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings or (2) to deliver the
escrow funds and any other property and documents held by the Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the City of New York in accordance with the
applicable procedure therefor.
The Company and each Investor agree jointly and severally to indemnify and hold
harmless the Escrow Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses in any
way arising from or relating to the duties or performance of the Escrow Agent
hereunder or the transactions contemplated hereby or by the Purchase Agreement
other than any such claim, liability, cost or expense to the extent the same
shall have been determined by final, unappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
Dated: April 25, 2000
MediaX Corporation
By: _____________________________
Rainer Poertner, Chairman
INVESTOR
AMRO International, S.A.
By: _____________________________
H.U. Bachofen, Director
ESCROW AGENT:
EPSTEIN BECKER & GREEN, P.C.
By: _____________________________
Robert F. Charron
Authorized Signatory
28
Exhibit X to
Escrow Agreement
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of April 25, 2000
among MediaX Corporation, the Investors signatory thereto and Epstein Becker &
Green, P.C., as Escrow Agent (the "Escrow Agreement"; capitalized terms used
herein and not defined shall have the meaning ascribed to such terms in the
Escrow Agreement), hereby notify the Escrow Agent that each of the conditions
precedent to the purchase and sale of the Shares set forth in the Common Stock
Purchase Agreement have been satisfied. The Company and the undersigned Investor
hereby confirm that all of their respective representations and warranties
contained in the Purchase Agreement remain true and correct and authorize the
release by the Escrow Agent of the funds and documents to be released at the
Closing as described in the Escrow Agreement. This Release Notice shall not be
effective until executed by the Company and the Investor. This Release Notice
may be signed in one or more counterparts, each of which shall be deemed an
original.
IN WITNESS WHEREOF, the undersigned have caused this Release Notice to be duly
executed and delivered as of this 25th day of April, 2000.
MEDIAX CORPORATION
By: _____________________________
Rainer Poertner, President
INVESTOR:
AMRO International, S.A.
By: _____________________________
H.U. Bachofen, Director
29
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of April 25, 2000
between the investor or investors signatory hereto (each an "Investor" and
together the "Investors"), and MediaX Corporation, a Nevada corporation (the
"Company").
WHEREAS, simultaneously with the execution and delivery of this Agreement, the
Investors are committing to purchasing from the Company, pursuant to a Common
Stock Purchase Agreement dated the date hereof (the "Purchase Agreement"), Five
Hundred Thousand Dollars ($500,000) of Common Stock (terms not defined herein
shall have the meanings ascribed to them in the Purchase Agreement); and
WHEREAS, the Company desires to grant to the Investors the registration rights
set forth herein with respect to the Shares purchased pursuant to the Purchase
Agreement (hereinafter referred to as the "Stock" or "Securities" of the
Company).
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means the Securities until (i) the Registration Statement
has been declared effective by the Commission, and all Securities have been
disposed of pursuant to the Registration Statement, (ii) all Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) all Securities have been otherwise transferred to
holders who may trade such Securities without restriction under the Securities
Act, and the Company has delivered a new certificate or other evidence of
ownership for such Securities not bearing a restrictive legend or (iv) such time
as, in the opinion of counsel to the Company, all Securities may be sold without
any time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in effect) under the Securities Act. The term "Registrable
Securities" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be deemed to be made
in the definition of "Registrable Security" as is appropriate in order to
prevent any dilution or enlargement of the rights granted pursuant to this
Agreement.
Section 2. Restrictions on Transfer. Each Investor
acknowledges and understands that prior to the registration of the Securities as
provided herein, the Securities are "restricted securities" as defined in Rule
144 promulgated under the Act. Each Investor understands that no disposition or
transfer of the Securities may be made by Investor in the absence of (i) an
opinion of counsel to the Investor, in form and substance reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act, pursuant to Regulation S or another exemption, or (ii)
such registration.
30
With a view to making available to the Investors the benefits
of Rule 144 under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investors to sell securities of
the Company to the public without registration ("Rule 144"), the Company agrees
to:
(a) comply with the provisions of paragraph (c)(1) of
Rule 144; and
(b) file with the Commission in a timely manner all
reports and other documents required to be filed with the Commission pursuant to
Section 13 or 15(d) under the Exchange Act by companies subject to either of
such sections, irrespective of whether the Company is then subject to such
reporting requirements.
Section 3. Registration Rights With Respect to the Securities.
(a) The Company agrees that it will prepare and file
with the Securities and Exchange Commission ("SEC"), within forty-five (45) days
after the date hereof, a registration statement (on Form S-1, S-3, or other
appropriate form of registration statement) under the Securities Act (the
"Registration Statement"), at the sole expense of the Company (except as
provided in Section 3(c) hereof), so as to permit a public offering and resale
of the Securities under the Act by the Investors.
The Company shall use its best efforts to cause the
Registration Statement to become effective within ninety (90) days from the date
hereof, or, if earlier, within five (5) days of SEC clearance to request
acceleration of effectiveness. The number of shares designated in the
Registration Statement to be registered shall be all of the Securities plus such
number of shares as the Company believes in good faith it will be required to
reprice at the time of filing the Registration Statement and shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted by
the Commission. The Company will notify Investors of the effectiveness of the
Registration Statement within one Trading Day of such event. The Company will
notify Investors of the effectiveness of the Registration Statement within one
(1) Trading Day of such event. In the event that the number of shares so
registered shall for any reason prove to be insufficient to register the resale
of all of the Securities, then the Company shall be obligated to file, within
thirty (30) days of notice from any Investor, a further Registration Statement
registering such remaining shares and shall use diligent best efforts to
prosecute such additional Registration Statement to effectiveness within ninety
(90) days of the date of such notice.
(b) The Company will maintain the Registration
Statement or post-effective amendment filed under this Section 3 effective under
the Securities Act until the earlier of (i) the date that none of the Securities
covered by such Registration Statement are or may become issued and outstanding,
(ii) the date that all of the Securities have been sold pursuant to such
Registration Statement, (iii) the date the Investors receive an opinion of
counsel to the Company, which counsel shall be reasonably acceptable to the
Investors, that the Securities may be sold under the provisions of Rule 144
without limitation as to volume, (iv) all Securities have been otherwise
transferred to persons who may trade such shares without restriction under the
Securities Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive legend, or
(v) all Securities may be sold without any time, volume or manner limitations
31
pursuant to Rule 144(k) or any similar provision then in effect under the
Securities Act in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Investor (the "Effectiveness Period").
(c) All fees, disbursements and out-of-pocket expenses
and costs incurred by the Company in connection with the preparation and filing
of the Registration Statement under subparagraph 3(a) and in complying with
applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Investors
shall bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the fees
and expenses of their counsel. The Investors and their counsel shall have a
reasonable period, not to exceed five (5) Trading Days, to review the proposed
Registration Statement or any amendment thereto, prior to filing with the
Commission, and the Company shall provide each Investor with copies of any
comment letters received from the Commission with respect thereto within two (2)
Trading Days of receipt thereof. The Company shall qualify any of the securities
for sale in such states as any Investor reasonably designates and shall furnish
indemnification in the manner provided in Section 6 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers, or which will
require the Company to qualify to do business in such state or require the
Company to file therein any general consent to service of process. The Company
at its expense will supply the Investors with copies of the applicable
Registration Statement and the prospectus included therein and other related
documents in such quantities as may be reasonably requested by the Investors.
(d) The Company shall not be required by this Section 3
to include an Investor's Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Investor and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Investor and the Company)
the proposed offering or other transfer as to which such registration is
requested is exempt from applicable federal and state securities laws and would
result in all purchasers or transferees obtaining securities which are not
"restricted securities", as defined in Rule 144 under the Securities Act.
(e) In the event that (i) the Registration Statement to
be filed by the Company pursuant to Section 3(a) above is not delivered to
Investors' counsel within forty-five (45) days from the first Closing Date (ii)
such Registration Statement is not declared effective by the Commission within
the earlier of ninety (90) days from the Closing Date or five (5) days of
clearance by the Commission to request effectiveness, (iii) such Registration
Statement is not maintained as effective by the Company for the period set forth
in Section 3(b) above or (iv) the additional Registration Statement referred to
in Section 3(a) is not filed within thirty (30) days or declared effective
within ninety (90) days as set forth therein (each a "Registration Default")
then the Company will pay Investor (pro rated on a daily basis), as liquidated
damages for such failure and not as a penalty two percent (2%) of the purchase
price of the shares of Common Stock purchased from the Company and held by the
Investor for each month until such Registration Statement has been filed, and in
the event of late effectiveness (in case of clause (ii) above) or lapsed
effectiveness (in the case of clause (iii) above), two percent (2%) of the
32
purchase price of the shares of Common Stock purchased from the Company and held
by the Investor for each month (regardless of whether one or more such
Registration Defaults are then in existence) until such Registration Statement
has been declared effective. Such payment of the liquidated damages shall be
made to the Investors in cash or in shares of Common Stock, as elected by each
Investor in is discretion, within five (5) calendar days of demand, provided,
however, that the payment of such liquidated damages shall not relieve the
Company from its obligations to register the Securities pursuant to this
Section. The market value of the Common Stock for this purpose shall be the
closing price (or last trade, if so reported) on the Principal Market for each
day during such Registration Default.
If the Company does not remit the payment to the
Investors as set forth above, the Company will pay the Investors reasonable
costs of collection, including attorneys' fees, in addition to the liquidated
damages. The registration of the Securities pursuant to this provision shall not
affect or limit the Investors' other rights or remedies as set forth in this
Agreement.
(f) No provision contained herein shall preclude the
Company from selling securities pursuant to any Registration Statement in which
it is required to include Securities pursuant to this Section 3.
(g) If at any time or from time to time after the
effective date of any Registration Statement, the Company notifies the Investors
in writing of the existence of a Potential Material Event (as defined in Section
3(h) below), the Investors shall not offer or sell any Securities or engage in
any other transaction involving or relating to Securities, from the time of the
giving of notice with respect to a Potential Material Event until the Investors
receive written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event; provided, however, that the Company may not so suspend the right
to such holders of Securities for more than twenty (20) days in the aggregate
during any twelve month period, during the period the Registration Statement is
required to be in effect, and if such period is exceeded, such event shall be a
Registration Default. If a Potential Material Event shall occur prior to the
date a Registration Statement is required to be filed, then the Company's
obligation to file such Registration Statement shall be delayed without penalty
for not more than twenty (20) days, and such delay or delays shall not
constitute a Registration Default. The Company must, if lawful, give the
Investors notice in writing at least two (2) Trading Days prior to the first day
of the blackout period.
(h) "Potential Material Event" means any of the
following: (a) the possession by the Company of material information not ripe
for disclosure in a registration statement, as determined in good faith by the
Chief Executive Officer or the Board of Directors of the Company that disclosure
of such information in a Registration Statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or activity
by the Company which would, in the good faith determination of the Chief
Executive Officer or the Board of Directors of the Company, be adversely
affected by disclosure in a registration statement at such time, which
determination shall be accompanied by a good faith determination by the Chief
Executive Officer or the Board of Directors of the Company that the applicable
Registration Statement would be materially misleading absent the inclusion of
such information.
33
Section 4. Cooperation with Company. The Investors will
cooperate with the Company in all respects in connection with this Agreement,
including timely supplying all information reasonably requested by the Company
(which shall include all information regarding the Investors and proposed manner
of sale of the Registrable Securities required to be disclosed in any
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Registrable
Securities and entering into and performing their obligations under any
underwriting agreement, if the offering is an underwritten offering, in usual
and customary form, with the managing underwriter or underwriters of such
underwritten offering. Nothing in this Agreement shall obligate any Investor to
consent to be named as an underwriter in any Registration Statement. The
obligation of the Company to register the Registrable Securities shall be
absolute and unconditional as to those Securities which the Commission will
permit to be registered without naming the Investors as underwriters. Any delay
or delays caused by the Investors by failure to cooperate as required hereunder
shall not constitute a Registration Default.
Section 5. Registration Procedures. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Act, the Company
shall (except as otherwise provided in this Agreement), as expeditiously as
possible, subject to the Investors' assistance and cooperation as reasonably
required with respect to each Registration Statement:
(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Act with respect to the sale
or other disposition of all securities covered by such registration statement
whenever the Investors shall desire to sell or otherwise dispose of the same
(including prospectus supplements with respect to the sales of securities from
time to time in connection with a registration statement pursuant to Rule 415
promulgated under the Act) and (ii) take all lawful action such that each of (A)
the Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
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 and (B) the prospectus forming part of the Registration Statement,
and any amendment or supplement thereto, does not at any time during the
Registration Period include an untrue statement of a material fact or omit to
state a 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;
(b) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Investors as required by Section 3(c) and reflect in such
documents all such comments as the Investors (and their counsel) reasonably may
propose and (ii) furnish to each Investor such numbers of copies of a prospectus
including a preliminary prospectus or any amendment or supplement to any
prospectus, as applicable, in conformity with the requirements of the Act, and
such other documents, as such Investor may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by such
Investor;
34
(c) register and qualify the Registrable Securities
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Investors shall reasonably request (subject to
the limitations set forth in Section 3(c) above), and do any and all other acts
and things which may be necessary or advisable to enable each Investor to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Investor;
(d) list such Registrable Securities on the Principal
Market, if the listing of such Registrable Securities is then permitted under
the rules of such Principal Market;
(e) notify each Investor at any time when a prospectus
relating thereto covered by the Registration Statement is required to be
delivered under the Act, of the happening of any event of which it has knowledge
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and the Company shall prepare and file a curative amendment under
Section 5(a) as quickly as commercially possible;
(f) as promptly as practicable after becoming aware of
such event, notify each Investor who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) cooperate with the Investors to facilitate the
timely preparation and delivery of certificates for the Registrable Securities
to be offered pursuant to the Registration Statement and enable such
certificates for the Registrable Securities to be in such denominations or
amounts, as the case may be, as the Investors reasonably may request and
registered in such names as the Investors may request; and, within three (3)
Trading Days after a Registration Statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Investors) an appropriate instruction
and, to the extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Investors of their
Registrable Securities in accordance with the intended methods therefor provided
in the prospectus which are customary for issuers to perform under the
circumstances;
(i) in the event of an underwritten offering, promptly
include or incorporate in a prospectus supplement or post-effective amendment to
the Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably object
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment; and
35
(j) maintain a transfer agent and registrar for its
Common Stock.
Section 6. Indemnification.
(a) To the maximum extent permitted by law, the Company
agrees to indemnify and hold harmless the Investors and each person, if any, who
controls an Investor within the meaning of the Securities Act (each a
"Distributing Investor") against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees and expenses), to which the Distributing Investor may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, or any related final prospectus or
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent, and
only to the extent, that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by the
Distributing Investor, its counsel, affiliates or any underwriter, specifically
for use in the preparation thereof. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) To the maximum extent permitted by law, each
Distributing Investor agrees that it will indemnify and hold harmless the
Company, and each officer and director of the Company or person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages or liabilities (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees and expenses) to which the
Company or any such officer, director or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, or any related final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration Statement, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Investor, its counsel, affiliates or any underwriter, specifically
for use in the preparation thereof. This indemnity agreement will be in addition
to any liability which the Distributing Investor may otherwise have.
Notwithstanding anything to the contrary herein, the Distributing Investor shall
be liable under this Section 6(b) for only that amount as does not exceed the
net proceeds to such Distributing Investor as a result of the sale of
Registrable Securities pursuant to the Registration Statement.
36
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 6, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve the indemnifying party from
any liability which it may have to any indemnified party except to the extent
the failure of the indemnified party to provide such written notification
actually prejudices the ability of the indemnifying party to defend such action.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified parties as a group
shall have the right to employ one separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party unless (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by its counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party or any other
indemnified party (in which case the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified party, it
being understood, however, that the indemnifying party shall, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable only for the reasonable fees and expenses of one
separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). No settlement of any action
against an indemnified party shall be made without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld so long
as such settlement includes a full release of claims against the indemnified
party.
All fees and expenses of the indemnified party
(including reasonable costs of defense and investigation in a manner not
inconsistent with this Section and all reasonable attorneys' fees and expenses)
shall be paid to the indemnified party, as incurred, within ten (10) Trading
Days of written notice thereof to the indemnifying party (regardless of whether
it is ultimately determined that an indemnified party is not entitled to
indemnification hereunder; provided, that the indemnifying party may require
such indemnified party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such indemnified party is
not entitled to indemnification hereunder).
37
Section 7. Contribution. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Investor shall contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees and expenses), in either such case (after contribution from
others) on the basis of relative fault as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the applicable
Distributing Investor on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Investor agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
Notwithstanding any other provision of this Section 7, in no
event shall any (i) Investor be required to undertake liability to any person
under this Section 7 for any amounts in excess of the dollar amount of the
proceeds received by such Investor from the sale of such Investor's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act and (ii) underwriter be
required to undertake liability to any person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation payable to
such underwriter with respect to the Registrable Securities underwritten by it
and distributed pursuant to such Registration Statement.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be delivered as set forth in the Purchase Agreement.
Section 9. Assignment. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. The rights granted the Investors under this
Agreement may be assigned to any purchaser of substantially all of the
Registrable Securities (or the rights thereto) from an Investor, as otherwise
permitted by the Purchase Agreement.
38
Section 10. Additional Covenants of the Company. The Company
agrees that at such time as it otherwise meets the requirements for the use of
Securities Act Registration Statement on Form S-3 for the purpose of registering
the Registrable Securities, it shall file all reports and information required
to be filed by it with the Commission in a timely manner and take all such other
action so as to maintain such eligibility for the use of such form.
Section 11. Counterparts/Facsimile. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
Section 12. Remedies. The remedies provided in this Agreement
are cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.
Section 13. Conflicting Agreements. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement or otherwise prevents the Company from complying with all of its
obligations hereunder.
Section 14. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 15. Governing Law, Arbitration. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made in New York by persons domiciled in New York
City and without regard to its principles of conflicts of laws. Any dispute
under this Agreement shall be submitted to arbitration under the American
Arbitration Association (the "AAA") in New York City, New York, and shall be
finally and conclusively determined by the decision of a board of arbitration
consisting of three (3) members (hereinafter referred to as the "Board of
Arbitration") selected as according to the rules governing the AAA. The Board of
Arbitration shall meet on consecutive business days in New York City, New York,
and shall reach and render a decision in writing (concurred in by a majority of
the members of the Board of Arbitration) with respect to the amount, if any,
which the losing party is required to pay to the other party in respect of a
claim filed. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
39
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the parties to
the dispute, and entitled to be enforced to the fullest extent permitted by law
and entered in any court of competent jurisdiction. The Board of Arbitration
shall be authorized and is hereby directed to enter a default judgment against
any party failing to participate in any proceeding hereunder within the time
periods set forth in the AAA rules. The prevailing party shall be awarded its
costs, including attorneys' fees, from the non-prevailing party as part of the
arbitration award. Any party shall have the right to seek injunctive relief from
any court of competent jurisdiction in any case where such relief is available.
The prevailing party in such injunctive action shall be awarded its costs,
including attorney's fees, from the non-prevailing party.
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and year first
above written.
Dated: April 25, 2000
MEDIAX CORPORATION
By: _____________________________
Rainer Poertner, Chairman
AMRO INTERNATIONAL, S.A.
By: _____________________________
H.U. Bachofen, Director
40
EXHIBIT C
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
[Date]
AMRO International, S.A.
c/o Ultrafinanz AG
Grossmuensterplatz AG
Zurich CH-8022 Switzerland
Re: Common Stock Agreement between the Investors Signatory thereto and MediaX
Corporation
Ladies and Gentlemen:
This opinion is furnished to you pursuant to the Common Stock Purchase Agreement
by and between the investors signatory thereto (the "Investors") and MediaX
Corporation, a Nevada corporation (the "Company"), dated as of April 25, 2000
(the "Purchase Agreement"), which provides for the issuance and sale by the
Company of Five Hundred Thousand Dollars ($500,000) of the Company's Common. All
terms used herein have the meanings defined for them in the Purchase Agreement
unless otherwise defined herein.
We have acted as counsel for the Company in connection with the negotiation of
the Purchase Agreement, the Registration Rights Agreement between the Investors
and the Company, dated as of April 25, 2000 (the "Registration Rights
Agreement"), and the Escrow Agreement between the Investors, the Company and
Epstein Becker & Green, P.C., dated as of April 25, 2000 (the "Escrow
Agreement"), and together with the Purchase Agreement and the Registration
Rights Agreement (the "Agreements"). As counsel, we have made such legal and
factual examinations and inquiries as we have deemed advisable or necessary for
the purpose of rendering this opinion. In addition, we have examined, among
other things, originals or copies of such corporate records of the Company,
certificates of public officials and such other documents and questions of law
that we consider necessary or advisable for the purpose of rendering this
opinion. In such examination we have assumed the genuineness of all signatures
on original documents, the authenticity and completeness of all documents
submitted to us as originals, the conformity to original documents of all copies
submitted to us as copies thereof, the legal capacity of natural persons, and
the due execution and delivery of all documents (except as to due execution and
delivery by the Company) where due execution and delivery are a prerequisite to
the effectiveness thereof.
As used in this opinion, the expression "to our knowledge" refers to the current
actual knowledge of the attorneys of this firm who have worked on matters for
the Company solely in connection with the Agreements and the transactions
contemplated thereby, and without any independent investigation of any
underlying facts or situations.
For purposes of this opinion, we have assumed that you have all requisite power
and authority, and have taken any and all necessary corporate action, to execute
and deliver the Agreements, and we are assuming that the representations and
warranties made by each Investor in the Agreements and pursuant thereto are true
and correct.
Based upon and subject to the foregoing, we are of the opinion that:
41
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has all requisite corporate
power and authority to carry on its business and to own, lease and operate its
properties and assets as described in the Company's SEC Documents. To our
knowledge, the Company does not have any subsidiaries and does not own more than
fifty percent (50%) of the outstanding capital stock of or control any other
business entity other than as disclosed in the SEC Documents.
2. The Company has the requisite corporate power and authority to enter into and
perform its obligations under the Agreements and to issue the Shares. The
execution and delivery of the Agreements by the Company and the consummation by
it of the transactions contemplated thereby have been duly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of the
Agreements has been duly executed and delivered by the Company and each of the
Agreements constitutes valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application.
3. The execution, delivery and performance of the Agreements by the Company and
the consummation by the Company of the transactions contemplated thereby,
including, without limitation, the issuance of the Shares, do not and will not
(i) result in a violation of the Company's Articles of Incorporation or By-Laws;
(ii) to our knowledge, conflict with, or constitute a material default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture, instrument or any "lock-up"
or similar provision of any underwriting or similar agreement to which the
Company is a party; or (iii) result in a violation of any federal or state law,
rule or regulation applicable to the Company or by which any property or asset
of the Company is bound or affected, except for such violations as would not,
individually or in the aggregate, have a Material Adverse Effect. To our
knowledge, the Company is not in violation of any terms of its Articles of
Incorporation or Bylaws.
4. The issuance of the Shares in accordance with the Purchase Agreement will be
exempt from registration under the Securities Act of 1933, as amended, and will
be in compliance with the state securities laws of the Company's principal place
of business. When so issued, the Shares will be duly and validly issued, fully
paid and nonassessable, and free of any liens, encumbrances and preemptive or
similar rights contained in the Company's Articles of Incorporation or Bylaws
or, to our knowledge, in any agreement to which the Company is party.
5. We have not been engaged to devote substantive attention to any claims,
actions, suits, proceedings or investigations that are pending against the
Company or its properties, or against any officer or director of the Company in
his or her capacity as such. To our knowledge, the Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality.
6. The authorized capital stock of the Company, as of April __, 2000, consists
of 25,000,000 shares of Common Stock, $0.0001 par value per share, of which
7,251,810 shares are issued and outstanding, 10,000,000 shares of Preferred
Stock, par value $0.0001, none of which are issued and outstanding. All of such
issued and outstanding shares have been duly authorized and are fully paid and
non-assessable. No person has rescission rights with respect to any shares of
the Company's Common Stock.
This opinion is furnished to the Investors solely for their benefit in
connection with the transactions described above and may not be relied upon by
any other person or for any other purpose without our prior written consent.
Very truly yours,
42
EXHIBIT D
INSTRUCTIONS TO TRANSFER AGENT
MediaX Corporation
_______________, 2000
[Address of Transfer Agent]
Dear Sirs:
Reference is made to the Common Stock Purchase Agreement and all Exhibits
thereto (the "Agreement") dated as of April 25, 2000, between the investors
signatory thereto (the "Investors") and MediaX Corporation (the "Company").
Pursuant to the Agreement, and subject to the terms and conditions set forth in
the Agreement, the Company has issued to the Investors Five Hundred Thousand
($500,000) of Common Stock (the "Shares"). As a condition to the effectiveness
of the Agreement, the Company has agreed to issue to you, as the transfer agent
for the Common Stock (the "Transfer Agent"), these instructions relating to the
Common Stock to be issued to the Investors (or a permitted assignee) pursuant to
the Agreement. All capitalized terms used herein and not otherwise defined shall
have the meaning set forth in the Agreement.
ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Agreement and the Registration Rights Agreement, the Company is
required to prepare and file with the Securities and Exchange Commission
("SEC"), and maintain the effectiveness of, a registration statement or
registration statements registering the resale of the Common Stock to be
acquired by the Investors as provided in the Registration Rights Agreement. The
Company will advise the Transfer Agent in writing of the effectiveness of any
such registration statement promptly upon its being declared effective, and
shall deliver an opinion of its counsel to that effect. The Transfer Agent shall
be entitled to rely on such advice and such opinion and shall assume that such
registration statement remains in effect unless the Transfer Agent is otherwise
advised in writing by the Company or such counsel, and the Transfer Agent shall
not be required to independently confirm the continued effectiveness of such
registration statement. In the circumstances set forth in the following three
paragraphs, the Transfer Agent shall deliver to the appropriate Investor
certificates representing Common Stock not bearing the Legend without requiring
further advice or instruction or additional documentation from the Company or
its counsel or the Investor or its counsel or any other party (other than as
described in such paragraphs):
At any time after the effective date of the registration statement (provided
that the Company has not informed the Transfer Agent in writing that such
registration statement is not effective) upon any surrender of one or more
certificates evidencing Common Stock which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered, in such names and in such denominations as
the Investor may request, provided that in connection with any such event, the
Investor (or its permitted assignee) shall confirm in writing to the Transfer
Agent that (i) the Investor has sold, pledged or otherwise transferred or agreed
43
to sell, pledge or otherwise transfer such Common Stock in a bona fide
transaction to a third party that is not an affiliate of the Company; and (ii)
the Investor confirms to the transfer agent that the Investor has complied with
the prospectus delivery requirement. In the event a registration statement is
not filed by the Company, or for any reason the registration statement which is
filed by the Company is not declared effective by the SEC, the Investor, or its
permitted assignee, or its broker confirms to the Transfer Agent that (i) the
Investor has beneficially owned the shares of Common Stock for at least one
year, (ii) counting the shares surrendered as being sold upon the date the
unlegended Certificates would be delivered to the Investor (or the Trading Day
immediately following if such date is not a Trading Day), the Investor will not
have sold more than the greater of (a) one percent (1%) of the total number of
outstanding shares of Common Stock or (b) the average weekly trading volume of
the Common Stock for the preceding four weeks during the three months ending
upon such delivery date (or the Trading Day immediately following if such date
is not a Trading Day), and (iii) the Investor has complied with the manner of
sale and notice requirements of Rule 144 under the Securities Act; or
The Investor (or its permitted assignee) shall represent that it is permitted to
dispose of such shares of Common Stock without limitation as to amount or manner
of sale pursuant to Rule 144(k) under the Securities Act.
In the case of subparagraphs (b) or (c), the Transfer Agent shall be entitled to
require an opinion of counsel to the Company or from counsel to the Investor
(which opinion shall be from an attorney or law firm reasonably acceptable to
the Transfer Agent and be in form and substance reasonably acceptable to the
Transfer Agent). Any advice, notice, or instructions to the Transfer Agent
required or permitted to be given hereunder may be transmitted via facsimile to
the Transfer Agent's facsimile number of [______________].
FEES OF TRANSFER AGENT; INDEMNIFICATION The Company agrees to pay the Transfer
Agent for all fees incurred in connection with these Irrevocable Instructions.
The Company agrees to indemnify the Transfer Agent and its officers, employees
and agents, against any losses, claims, damages or liabilities, joint or
several, to which it or they become subject based upon the performance by the
Transfer Agent of its duties in accordance with the Irrevocable Instructions,
other than as a result of the Transfer Agent's gross negligence or willful
misconduct.
THIRD PARTY BENEFICIARY The Company and the Transfer Agent acknowledge and agree
that the Investors are each an express third party beneficiary of these
Irrevocable Instructions and shall be entitled to rely upon, and enforce, the
provisions thereof.
MEDIAX CORPORATION
By: _____________________________
Rainer Poertner, Chairman
AGREED:
By: _____________________________
Name:
Title: