EDNET, INC.,
a Colorado corporation
Private Offering of up to
$3,000,000 of Units
(Consisting of One Share of Common Stock and One Warrant)
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SUBSCRIPTION, REPRESENTATION AND
SECURITIES TRANSFER RESTRICTION
AGREEMENT
DATED JULY 18, 1996
TO BE USED ONLY IN CONJUNCTION WITH
AN INVESTMENT IN SHARES AND WARRANTS DESCRIBED HEREIN
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INSTRUCTIONS TO SUBSCRIBERS
If you wish to subscribe for Units (consisting of one share of
Common Stock (the "Shares") and one warrant (a "Warrant")) of EDNET, Inc., a
Colorado corporation (the "Company"), please complete and sign the Subscription,
Representation and Securities Transfer Restriction Agreement (the "Agreement")
marked "Execution Copy," following the instructions carefully. If you have any
questions concerning any of the information called for, you may ask your lawyer,
accountant or financial advisor for assistance, and if you desire, contact the
individual indicated below.
Because the price of each Unit will not be known at the time you
complete this Agreement, you must subscribe for Units by indicating the
aggregate purchase price (a minimum of $35,000) you are enclosing. The completed
and signed Agreement, together with your check in the amount of your total
subscription payable to "EDNET, Inc.," should then be sent to the address set
forth below. You should make a copy of the executed Agreement for your files.
ANSWER ALL QUESTIONS.
ALL INFORMATION WILL BE TREATED CONFIDENTIALLY.
EDNET, Inc.
Xxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
President and Chief Operating Officer
Telephone Number: (000) 000-0000
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THE SHARES, WARRANTS AND SHARES PURCHASABLE UPON THE EXERCISE OF THE
WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER THE CALIFORNIA CORPORATE SECURITIES LAW OF
1968, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY OTHER JURISDICTION, AND MAY ONLY BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF BY AN INVESTOR IF SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS THE COMPANY DETERMINES THAT EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION REQUIREMENTS ARE AVAILABLE.
SUBSCRIPTION, REPRESENTATION AND
SECURITIES TRANSFER RESTRICTION
AGREEMENT
EDNET, Inc.
Xxx Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
1. Subscription. By executing and delivering this Subscription, Representation
and Stock Transfer Restriction Agreement (the "Agreement"), the undersigned (and
each of the undersigned if more than one) hereby applies to purchase Units (each
Unit consisting of one share of Common Stock (the "Shares") and one warrant (a
"Warrant") of EDNET, Inc., a Colorado corporation (the "Company"), on the terms
and conditions described herein, for a price per Unit equal to the lesser of:
(i) $3.00; or (ii) the average closing bid price of the Common Stock during a
consecutive thirty (30) day period immediately preceding the Termination Date
(as defined below) minus thirty percent (30%) (the Shares, the Warrants and the
Shares purchasable pursuant to the Warrants may be hereinafter collectively
referred to as the "Securities"). The minimum purchase is $35,000. This offering
of Units will terminate on August 31, 1996 or such earlier date which the
Company shall select in its sole discretion (the "Termination Date").
The purchase price for each Warrant is one-tenth of one cent
($0.001) per Warrant. Each Warrant is exercisable until July 31, 1999, and
entitles the holder to purchase one Share at an exercise price equal to the
lesser of: (i) $4.75; or (ii) the average closing bid price of the Common Stock
during a consecutive thirty (30) day period immediately preceding the
Termination Date (subject to adjustment in certain circumstances). In the event
that the average closing bid price of the Shares exceeds one hundred sixty
percent (160%) of the Warrant exercise price for thirty (30) consecutive trading
days, then the Company may, within three business days following the end of such
thirty (30) day period, give notice of its intent to repurchase the Warrants at
a purchase price of one-tenth of one cent ($0.001) per Warrant. Holders will
have (30) days following the date of the Company's notice to exercise the
Warrants. In the event the Company exercises the right to redeem the Warrants,
such Warrants will be exercisable until the close of business on the business
day immediately preceding the date for redemption fixed in such notice. If any
Warrant called for redemption is not exercised by such time, it will cease to be
exercisable and the Holder will be entitled only to the redemption price. For a
more complete description of the Warrants, please see the form of Warrant
attached hereto as Exhibit "A".
2. Acknowledgments. The undersigned (and each of the undersigned if more than
one) acknowledges that:
2.1 This subscription may be rejected in whole or in part at the sole
discretion of the Company, and the execution and delivery of this
Agreement does not constitute an agreement to sell the Securities
or any other securities to me unless and until it has been
accepted by the Company.
2.2 The Company will rely upon the information contained herein for
purposes of determining my suitability as an investor in the
Company.
2.3 The funds submitted with this Agreement will be held in escrow by
the Company in a non-interest bearing account at a financial
institution selected by the Company until the earlier to occur of
the following: (a) August 31, 1996; or (b) the date the Company
receives subscriptions for at least
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$300,000 of Units (the "Minimum Subscription"). If the Minimum
Subscription is not received by August 31, 1996, the Company shall
terminate the offering and return all funds to subscribers.
2.4 If the Company receives subscriptions for the Minimum Subscription
by August 31, 1996, the Company may continue to sell Units up to a
maximum amount of $3,000,000 of Units, provided, however, the
Company has no obligation to sell more than $300,000 of Units.
2.5 The Company may elect to sell a lesser number of Units to the
undersigned and upon so doing, the Company shall return to the
undersigned the difference between the subscription price tendered
and the subscription price required to purchase such Units.
2.6 The management of the Company is vested in the Board of Directors
and that being a shareholder confers no right to participate in
the Company's business or in the decisions of its directors and
officers.
2.7 The offering of Units described in this Agreement terminates on
the Termination Date, or such date as the Company shall elect, and
the Company shall have no obligation to sell Units to the
undersigned thereafter.
3. Representations. The undersigned (and each of the undersigned if more than
one) hereby makes the following representations and warranties to the Company:
3.1 I have received and carefully reviewed this Agreement and I have
separately received and carefully reviewed the Company's
Confidential Business Plan dated July, 1996 (the "Business Plan").
3.2 I have obtained from the Company satisfactory responses to all
questions and requests for further information regarding the
business and plans of the Company, the contents of the Business
Plan the terms and conditions of the offering, and all other
relevant matters.
3.3 I have been given access to and the opportunity to obtain such
additional information as I have deemed necessary to verify the
accuracy of the information provided to me by the Company.
3.4 I have not received and am not relying upon any written offering
literature or prospectus other than this Agreement and the
materials contained in the Business Plan, and have not received
and am not relying upon any oral representations which are in any
manner inconsistent with the information contained therein.
3.5 I personally have substantial knowledge and experience in
financial and business matters, have specific experience making
investment decisions of a similar nature, and am capable, without
the use of a financial advisor, of utilizing and analyzing the
information made available in connection with this offering and of
evaluating the merits and risks of an investment in Securities. I
will provide the Company, upon request, with such information
concerning my prior investment experience, business or
professional experience and other information as the Company may
deem necessary to further evaluate the foregoing representations.
3.6 I am subscribing to acquire the Securities for investment purposes
only, for my own account, and not for resale to others or in
connection with (or with any view to) any further distribution of
the Securities.
3.7 I understand that (i) the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), nor qualified under the California Corporate Securities Law
of 1968, as amended, or the securities laws of any other
jurisdiction, (ii) the Securities cannot be resold unless they
subsequently are registered under the Securities Act and qualified
under applicable state securities laws, unless the Company
determines that exemptions from such registration and
qualification requirements are available, and (iii) consequently,
purchasers must bear the economic risk of an investment in the
Securities for an indefinite period of time. I understand that
only a very limited public market now exists for any of the
securities issued by the Company and that it is uncertain whether
a substantial public market will ever exist for the Securities.
3.8 I am aware that an investment in the Securities is speculative and
involves a high degree of risk.
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3.9 I have adequate means of providing for my current needs and
possible personal contingencies and have no need for liquidity in
an investment in the Securities. I am able to bear the economic
risk of an investment in the Securities, can afford to hold the
Securities for an indefinite period of time and, at the present
time, could afford a complete loss of such investment.
3.10 I may be deemed to be an accredited investor, because I meet the
requirements of one or more of the following categories:
(Please initial all boxes which apply to you.)
[ ] I am a director or executive officer of the Company.
[ ] I am a natural person whose individual net worth, or joint
net worth with my spouse, exceeds $1,000,000.
[ ] I am a natural person and had individual (not joint) income
in excess of $200,000 in each of the two most recent years
and reasonably expect to reach the same income level in the
current year, or I am a natural person and had joint income
(together with my spouse) in excess of $300,000 in each of
the two most recent years and reasonably expect to reach
the same income level in the current year.
[ ] The undersigned is a private business investment company as
defined in section 202(a)(22) of the Investment Advisers
Act of 1940.
[ ] The undersigned is a corporation, trust, Massachusetts or
similar business trust, partnership or other organization
described in section 501(c)(3) of the Internal Revenue Code
of 1986 as amended (i.e., tax exempt entities), not formed
for the specific purpose of acquiring the Securities, with
total assets in excess of $5 million according to its most
recent audited financial statements, and the investment
decisions of which are directed by one or more persons who
have substantial knowledge and experience in financial and
business matters, have specific experience making
investment decisions of a similar nature, and are capable,
without the use of a financial advisor, of utilizing and
analyzing the information made available in connection with
this offering and of evaluating the merits and risks of an
investment in the Securities.
[ ] The undersigned is a (i) small business investment company
licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment
Company Act of 1958; (ii) any investment company registered
under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of that
Act; or (iii) U.S. bank or savings and loan association,
whether acting for itself or as a trustee, or an insurance
company.
[ ] The undersigned is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974, the investment decision of which are
made by a plan fiduciary, as defined in section 9(21) of
such Act, which is either a bank, a savings and loan
association, an insurance company, or a registered
investment adviser.
[ ] The undersigned is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income
Security Act of 1974, which either has total assets in
excess of $5,000,000 or is a self-directed plan, the
investment decisions of which are made solely by one or
more persons able to make the representations contained in
section 3.5 above and who fits into one of the above
categories.
[ ] The undersigned is an entity in which all of the equity
owners are accredited investors, falling into one or more
of the categories described above.
(NOTE: The Company will not sell Securities to an investor unless
the investor falls within one or more of the above categories.)
3.11 All information which I have provided to the Company concerning
myself, my financial position and my knowledge of and experience
with financial and business matters is correct and complete as of
the date
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set forth at the end of this Agreement, and if there should be any
material change in such information prior to the closing of this
offering, I will immediately provide the Company with such
information.
3.12 If an individual, the undersigned is at least 21 years of age. If
an entity other than an individual, the undersigned is duly
authorized to purchase and hold the Securities.
3.13 If an individual, the residence, or, if an entity other than an
individual, the principal place of business, of the undersigned is
as set forth on the signature page of this Agreement. This address
is the true and correct address of the undersigned and is the only
jurisdiction in which an offer to sell the Securities was made to
the undersigned. The undersigned has no present intention, if an
individual, of becoming a resident of, or, if an entity other than
an individual, of moving its principal place of business to, any
other state or jurisdiction.
4. Registration Rights.
4.1 Piggyback Registrations. The Company shall notify all persons
owning of record Shares that have not been sold to the public
("Holders") in writing at least thirty (30) days prior to the
filing of any registration statement under the Securities Act for
purposes of any public offering of securities by the Company, on
Form S-1 or any other available form, initiated by the Company
(but excluding registration statements relating to employee
benefit plans or with respect to corporate reorganizations or
other transactions under Rule 145 of the Securities Act) and will
afford each such Holder an opportunity to include in such
registration statement all or part of such Shares held by such
Holder or into which the Warrants could be converted ("Registrable
Shares"). Each Holder desiring to include in any such registration
statement all or any part of its Registrable Shares shall, within
fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state
the intended method of disposition of such Registrable Shares. If
a Holder decides not to include all of its Registrable Shares in
any registration statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include
its Registrable Shares in any subsequent such registration
statement or registration statements as may be filed by the
Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
4.1.1 Underwriting. If the registration statement under which the
Company gives notice under this Section 4.1 is for an
underwritten offering, the Company shall so advise the
Holders. In such event, the right of any such Holder to be
included in a registration pursuant to this Section 4.1
shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's
Registrable Shares in the underwriting to the extent
provided herein. All Holders proposing to distribute their
Registrable Shares through such underwriting shall enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Company. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of
shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to
the Company; and second, to the Holders on a pro rata basis
based on the total number of Registrable Shares held by the
Holders. No such reduction shall reduce the securities
being offered by the Company for its own account to be
included in the registration and underwriting.
4.1.2 Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated
by it under this Section 4.1 prior to the effectiveness of
such registration whether or not any Holder has elected to
include securities in such registration. The Registration
Expenses (as defined below) of such withdrawn registration
shall be borne by the Company in accordance with Section
4.3 hereof.
4.1.3 Expiration. A Holder's registration rights under this
Section 4.1 shall expire if all Registrable Shares held by
such Holder may be sold under Rule 144 during any ninety
(90) day period.
4.2 Form S-3 Registration. Subject to the conditions of this Section
4.2, if the Company shall receive a written request from the
Holders of more than sixty-six and two-thirds percent (66-2/3%) of
the Registrable Shares then outstanding that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any
similar short-form registration statement and any related
qualification or
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compliance with respect to all or a part of the Registrable Shares
owned by such Holder or Holders, the Company will:
4.2.1 promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other
Holders of Shares; and
4.2.2 as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution
of all or such portion of such Holder's or Holders'
Registrable Shares as are specified in such request,
provided, however, that the Company shall not be obligated
to effect any such registration, qualification or
compliance pursuant to this Section 4.2:
(a) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders; or
(b) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Shares
and such other securities (if any) at an aggregate
price to the public of less than $500,000; or
(c) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of
Directors of the Company stating that in the good
faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the
Company and its shareholders for such Form S-3
Registration to be effected at such time, in which
event the Company shall have the right to defer the
filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt
of the request of the Holder or Holders under this
Section 4.2; or
(d) if the Company shall have previously filed a
registration on Form S-3 at the request of the Holders
with respect to the same Registrable Shares; or
(e) in any particular jurisdiction in which the Company
would be required to qualify to do business or to
execute a general consent to service of process in
effecting such registration, qualification or
compliance.
4.2.3 A Holder's registration rights under this Section 4.2 shall
expire if all Registrable Shares held by such Holder may be
sold under Rule 144 during any ninety (90) day period.
4.3 Expenses of Registration. Except as specifically provided herein,
all Registration Expenses incurred in connection with any
registration under Sections 4.1 or 4.2 shall be borne by the
Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the
securities so registered pro rata on the basis of the number of
shares so registered. The Company shall not, however, be required
to pay for expenses of any registration proceeding begun pursuant
to Section 4.2, the request of which has been subsequently
withdrawn by the Holders unless (a) the withdrawal is based upon
material adverse information concerning the Company of which the
Holders were not aware at the time of such request or (b) the
Holders of a majority of Registrable Shares agree to forfeit their
right to registration pursuant to Section 4.2, in which event such
right shall be forfeited by all Holders). If the Holders are
required to pay the Registration Expenses, such expenses shall be
borne by the Holders of securities (including Registrable Shares)
requesting such registration in proportion to the number of shares
for which registration was requested. If the Company is required
to pay the Registration Expenses of a withdrawn offering pursuant
to clause (a) above, then the Holders shall not forfeit their
rights pursuant to Section 4.2 to a demand registration. As used
herein, "Registration Expenses" means all expenses incurred by the
Company in complying with Sections 4.1 and 4.2, including, without
limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Company, reasonable fees
and disbursements of a single special counsel for the Holders,
blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall
be paid in any event by the Company), and "Selling Expenses" means
all underwriting discounts and selling commissions applicable to
the sale of Registrable Shares.
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4.4 Obligations of the Company. Whenever required to effect the
registration of any Registrable Shares, the Company shall, as
expeditiously as reasonably possible:
4.4.1 Prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement with
respect to such Registrable Shares and use all reasonable
efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a
majority of the Registrable Shares registered thereunder,
keep such registration statement effective for up to ninety
(90) days or, if earlier, until the Holder or Holders have
completed the distribution related thereto.
4.4.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the
prospectus used in connection with such registration
statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of
all securities covered by such registration statement.
4.4.3 Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and
such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Shares
owned by them.
4.4.4 Use all reasonable efforts to register and qualify the
securities covered by such registration statement under
such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of
process in any such states or jurisdictions.
4.4.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating
in such underwriting shall also enter into and perform its
obligations under such an agreement.
4.4.6 Notify each Holder of Registrable Shares covered by such
registration statement at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of
which the prospectus included in such 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.
4.4.7 Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such
Registrable Shares are delivered to the underwriters for
sale, if such securities are being sold through
underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration
statement with respect to such securities becomes
effective, (a) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given
to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting
registration of Registrable Shares and (b) a letter dated
as of such date, from the independent certified public
accountants of the Company, in form and substance as is
customarily given by independent certified public
accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed
to the underwriters, if any, and if permitted by applicable
accounting standards, to the Holders requesting
registration of Registrable Shares.
4.5 Delay of Registration; Furnishing Information. No Holder shall
have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Article 4. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to Sections 4.1 or 4.2 that the selling Holders shall
furnish to the Company such information regarding themselves, the
Registrable
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Shares held by them and the intended method of disposition of such
securities as shall be required to effect the registration of
their Registrable Shares.
4.6 Indemnification. In the event any Registrable Shares are included
in a registration statement under Sections 4.1 or 4.2:
4.6.1 To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers,
directors and legal counsel of each Holder, any underwriter
(as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or
violations (collectively a "Violation") by the Company: (i)
any untrue statement or alleged untrue statement of a
material fact contained in such registration statement,
including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto,
(ii) 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, or (iii) any
violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law
or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration
statement; and the Company will reimburse each such Holder,
partner, officer or director, underwriter or controlling
person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided
however, that the indemnity agreement contained in this
Section 4.6.1 shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any
such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with
such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
4.6.2 To the extent permitted by law, each Holder will, if
Registrable Shares held by such Holder are included in the
securities as to which such registration qualifications or
compliance is being effected, indemnify and hold harmless
the Company, each of its directors, its officers, and legal
counsel and each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such
registration statement or any of such other Holder's
partners, directors or officers or any person who controls
such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or
other such Holder, or partner, director, officer or
controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information
furnished by such Holder under an instrument duly executed
by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or
partner, officer, director or controlling person of such
other Holder in connection with investigating or defending
any such loss, claim, damage, liability or action if it is
judicially determined that there was such a Violation;
provided, however, that the indemnity agreement contained
in this Section 4.6.2 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably
withheld; provided further, that in no event shall any
indemnity under this Section 4.6 exceed the proceeds from
the offering received by such Holder.
4.6.3 Promptly after receipt by an indemnified party under this
Section 4.6 of notice of the commencement of any action
(including any governmental action), such indemnified party
will, if
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a claim in respect thereof is to be made against any
indemnifying party under this Section 4.6, deliver to the
indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified
party and any other party represented by such counsel in
such proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial
to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified
party under this Section 4.6, but the omission so to
deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 4.6.
4.6.4 If the indemnification provided for in this Section 4.6 is
held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in
connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall
be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission; provided, however, that in no event shall any
contribution by a Holder hereunder exceed the proceeds from
the offering received by such Holder.
4.6.5 The obligations of the Company and Holders under this
Section 4.6 shall survive completion of any offering of
Registrable Shares in a registration statement. No
Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. [In the
event any offering of Registrable Shares is underwritten,
and the underwriting agreement provides for indemnification
and/or contribution by the Company and the Holders offering
securities thereunder, the indemnification and/or
contribution obligations of the Company and the Holders
hereunder shall in no event exceed the obligations of the
parties set forth in such underwriting agreement.]
4.7 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Shares pursuant to this Article 4 may not
be assigned by a Holder without the prior written consent of the
Company.
4.8 Amendment of Registration Rights. Any provision of this Article 4
may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and
the Holders of at least [sixty-six and two-thirds percent
(66-2/3%)] of the Registrable Shares. Any amendment or waiver
effected in accordance with this Section 4.8 shall be binding upon
each Holder and the Company. By acceptance of any benefits under
this Article 4, Holders of Registrable Shares hereby agree to be
bound by the provisions hereunder.
4.9 "Market Stand-Off" Agreement. If requested by the Company as the
representative of the underwriters of Registrable Shares (or other
securities) of the Company, each Holder shall not sell or
otherwise transfer or dispose of any Registrable Shares (or other
securities) of the Company held by such each Holder (other than
those included in the registration) for a period specified by the
representative of the underwriters not to exceed one hundred
eighty (180) days following the effective date of a registration
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statement of the Company filed under the Securities Act. The
obligations described in this Section 4.9 shall not apply to a
registration relating solely to employee benefit plans on Form S-1
or Form S-8 or similar forms that may be promulgated in the
future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be promulgated
in the future. The Company may impose stop-transfer instructions
with respect to the Registrable Shares (or other securities)
subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
4.10 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Shares to the public without
registration, the Company agrees to use its best efforts to: (i)
make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous
rule promulgated under the Securities Act, at all times after the
effective date of the first registration filed by the Company for
an offering of its securities to the general public; (ii) file
with the SEC, in a timely manner, all reports and other documents
required of the Company under the Exchange Act; and (iii) so long
as a Holder owns any Registrable Shares, furnish to such Holder
forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 of
the Securities Act, and of the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the
most recent annual or quarterly report of the Company and such
other reports and documents as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it
to sell any such securities without registration.
5. Restrictions on Transfer of Securities. The undersigned (and each of the
undersigned if more than one) hereby makes the following further agreements,
representations and warranties regarding the restrictions on the transferability
of the Securities:
5.1 I agree that I will not directly or indirectly sell, assign,
pledge, distribute, donate, or otherwise transfer or dispose of,
or offer to do any of the foregoing with respect to, any of the
Securities which I purchase from the Company, or any beneficial
interest in such Securities, unless either (i) such Securities are
registered under and sold in accordance with the Securities Act
and the rules and regulations promulgated thereunder, and are
registered or qualified under and sold in accordance with the
provisions of any applicable state securities laws, or (ii) the
Company has determined that exemptions from such registration and
qualification requirements are available.
5.2 I understand and agree that a legend will be stamped on each
certificate representing the Securities substantially in the
following form:
The Securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or qualified under the
California Corporate Securities Law of 1968, as amended, or
the securities laws of any other jurisdiction. The
Securities represented hereby cannot be sold, assigned,
pledged, distributed, donated or otherwise transferred or
disposed of without such registration under the Securities
Act and registration or qualification under applicable
state securities laws, unless the Company determines that
exemptions from such registration and qualification
requirements are available.
5.3 I understand and agree that the Company may issue such stop
transfer instructions to its transfer agents, if any, as it may
deem necessary to enforce the above transfer restrictions.
6. Joint Signers; Successors and Assigns. If this Agreement is signed by more
than one person or entity, then the obligations of the undersigned shall be
joint and several, and the acknowledgements, representations, warranties and
agreements herein contained shall be deemed to be made by and be binding upon
each such person or entity. This Agreement shall survive the death or disability
of the undersigned and shall be binding upon the undersigned's heirs, executors,
administrators, successors and assigns.
7. Miscellaneous.
7.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts
between California residents entered into and to be performed
entirely within the State of California.
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7.2 Except as otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors and
assigns of the parties hereto.
7.3 This Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof.
7.4 This Agreement may be executed in counterparts, each of which
shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one
instrument.
7.5 In the case any provision of this agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
8. CERTIFICATION AS TO TAXPAYER IDENTIFICATION NUMBER & BACKUP WITHHOLDING AND
NON-FOREIGN STATUS-SUBSTITUTE FORM W-9. SOCIAL SECURITY OR TAX ID NUMBER.
Under penalties of perjury, I certify by my signature below that (1) the
number shown on this form is my correct taxpayer identification number, (2) I am
not subject to backup withholding either because (a) I am exempt from backup
withholding, (b) I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (c)
the Internal Revenue Service has notified me that I am no longer subject to back
withholding, (3) I am not a non-resident alien for purposes of U.S. income
taxation, (4) my home address (individual) or business address (entity) set
forth in the Agreement is correct, and (5) if I become a non-resident alien, I
will notify the Company within 60 days of doing so.
IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE PRESENTLY SUBJECT TO BACKUP
WITHHOLDING, STRIKE OUT THE LANGUAGE UNDER (2) ABOVE BEFORE SIGNING.
9. Type of Ownership for the Securities Subscribed (Check the Appropriate Box)
[ ] INDIVIDUAL OWNERSHIP BY UNMARRIED PERSON
[ ] OWNERSHIP BY MARRIED PERSON AS SOLE AND SEPARATE PROPERTY
(if you live in a state which has community property laws,
signatures of both spouses may be required)
[ ] COMMUNITY PROPERTY (signatures of both spouses are
required)
[ ] JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (both parties must
sign)
[ ] TENANTS-IN-COMMON (both parties must sign)
[ ] CORPORATION*
[ ] PARTNERSHIP*
[ ] TRUST*
[ ] OTHER ENTITY*
* Any person executing this Agreement on behalf of such
entities hereby represents and agrees that: (i) he or she
is duly authorized to act on behalf of such corporation,
partnership, trust or other entity, (ii) such corporation,
partnership, trust or other entity was formed on
________________________, 19__, and (iii) he or she will
provide such information as the Company may request
confirming the authority to sign on behalf of such entity.
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10. Subscription Details and Execution. IN WITNESS WHEREOF, the undersigned
hereby subscribe(s) for the amount of Securities indicated in the subscription
price indicated below, provide(s) the information indicated, and execute(s) and
deliver(s) this Agreement as of the date indicated. Following the Termination
Date, the Company shall mail to you at the address indicated below original
Warrants and stock certificates representing the purchased Shares.
Subscription Price Enclosed: $_________________________
(minimum purchase: $35,000; make checks payable to "EDNET, Inc.")
Date of Execution: _______________, 1996
------------------------------------------------ ------------------------------------------------
Investor #1 (Print or Type Name) Investor #2 (Print or Type Name)
------------------------------------------------ ------------------------------------------------
Signature Signature
------------------------------------------------ ------------------------------------------------
Social Security or Tax ID # Social Security or Tax ID #
------------------------------------------------ ------------------------------------------------
Residence Xxxxxx Xxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxx
------------------------------------------------ ------------------------------------------------
City and State Zip City and State Zip
------------------------------------------------ ------------------------------------------------
Residence Telephone Residence Telephone
------------------------------------------------ ------------------------------------------------
Business Name Business Name
------------------------------------------------ ------------------------------------------------
Business Address Business Address
------------------------------------------------ ------------------------------------------------
City and State Zip City and State Zip
------------------------------------------------ ------------------------------------------------
Business Telephone Business Telephone
Mail Correspondence to: Mail Correspondence to:
[ ] Residence [ ] Business [ ] Residence [ ] Business
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SUBSCRIPTION ACCEPTED:
EDNET, INC.
By: ____________________________
Xxxxxx Xxxxxxxxx
Chairman and
Chief Executive Officer
Date: ___________, 1996
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Exhibit "A"
(Form of Warrant)
[to be attached]
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